Expanding Customer Engagements in Data Center and AI Scale-Up/Scale-Out Backend
Networks for both 112 and 224Gbps Products
Third Quarter 2024 Financial Results
(TSXV: SEV) (OTCQB: SPVNF) Spectra7 Microsystems Inc. (“Spectra7” or the “Company“), a leader in high-performance analog semiconductors for powering the AI revolution in broadband connectivity markets, hyperscale data centers, and Spatial Computing, today announced that its Board of Directors has appointed Omar Javaid, a highly accomplished tech executive, as the Company’s new Chief Executive Officer and a member of the board, effective today. The Company also announced its financial results for the quarter ended September 30, 2024. A copy of the unaudited consolidated financial statements for the three and nine months ended September 30, 2024, and the corresponding management’s discussion and analysis (the “MD&A“) will be available under the Company’s profile on www.sedarplus.ca. Unless otherwise indicated, all dollar amounts in this press release are expressed in US dollars.
With more than 25 years of experience accelerating sales growth and profitability, Mr. Javaid brings to Spectra7 a demonstrated track record in building world class teams, global product launches, executive leadership, and achieving operational excellence. Most recently, Mr. Javaid was Chief Product Officer at Avaya, where he led product development for Avaya’s worldwide portfolio, partnerships, and alliances. Prior to this, he was a Senior Vice-President and GM of Software at Qualcomm, where he led the worldwide software portfolio. He has also held senior positions at Vonage, Hewlett-Packard, Google and Motorola. He was also the CEO and co-founder of Mobilocity, which was sold to Qualcomm. Mr. Javaid holds a Bachelor of Science degree from the University of Michigan, and has completed executive programs at Harvard Business School and Stanford University.
Ron Pasek, Chair of the Board, said, “the Board is delighted to welcome Omar to Spectra7 as our new CEO. His exceptional leadership skills, strategic insights and track record of commercial and financial success make him an ideal choice to lead Spectra7 forward.”
“I am truly honored to join the Spectra7 team as CEO,” said Javaid. “With our unique position and market leading technology in analog semiconductors for powering the AI revolution, I am thrilled to transform our strategy, secure key customer wins and accelerate growth1.”
Data Center Customer Engagements
An expanding base of data center customers recognize the unique benefits of Spectra7’s analog technology, especially for the Scale-Up and Scale-Out Backend AI Networks, and are now evaluating, developing and testing products with Spectra7’s chips. The Company is engaged with an increasing number of hyperscalers, OEMs and interconnect partners with its 112Gbps silicon. Additionally, the Company is engaged with several customers on designs that will use 224Gbps signalling. The Company’s 224Gbps product is expected to be released for fabrication next month and first parts are expected in April 20251. This will be the first product in a family of chips at 224Gbps that will address multiple data center, AI and other rapidly emerging applications.
Third quarter and year-to-date 2024 financial highlights
- Revenue in the third quarter of 2024 was $0.2 million. Revenue for the nine month period was $1.8 million, or approximately 19% of the $9.6 million in the prior year.
- Gross margin2 for the nine month period was 47%, compared to 59% in the prior year.
- Non-IFRS operating expenses3 for the nine month period were $6.9 million, down from $7.1 million in 2023.
- Basic and diluted loss per share for the nine month period was $(0.15), compared with a basic and diluted loss per share of $(0.10) in the prior year.
- EBITDA4 loss for the nine month period was $5.2 million, compared with an EBITDA loss of $1.0 million for the prior year.
RSU Grants
In connection with Mr. Javaid’s appointment as CEO, the Company has granted 7,100,000 restricted share units (“RSUs“) to Mr. Javaid under the Company’s RSU plan. In addition, the Company has granted 300,000 RSUs to the Company’s Interim Chief Financial Officer.
NOTES:
1 This is forward-looking information and is based on a number of assumptions. See “Cautionary Notes” below.
2 Gross margin is a non-GAAP measure which is computed as revenue less cost of sales divided by revenue. Refer to “Revenue and Gross Margin” in the MD&A and the table below for reconciliation to measures reported in the Company’s financial statements.
3 Non-IFRS operating expenses is a non-GAAP measure which includes research and development, sales and marketing, general and administrative expenses and depreciation and amortization for capital equipment and right-of-use assets and excludes share-based compensation expense, non-recurring termination costs, interest and related financing costs, change in fair value of warrant liabilities, foreign exchange gain/loss and gain/loss from property and equipment disposal. Refer to “Non-GAAP Measures” in the MD&A and the table below for reconciliation to measures reported in the Company’s financial statements.
4 EBITDA or earnings before interest, tax, depreciation, and amortization is a non-GAAP measure. EBITDA excludes share-based compensation, amortization, depreciation, interest, and tax expenses. Refer to “Non-GAAP Measures” in the MD&A and the table below for reconciliation to measures reported in the Company’s annual financial statements.
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