Spectra7 Announces Omar Javaid as the New CEO

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

SAN JOSE, Calif., Nov. 11, 2024 /CNW/ - (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.

 

	Three Months Ended September 30,							Nine Months Ended September 30,
	(In thousands)							(In thousands)
	2024		2023		Change			2024		2023		Change
	$		$		$	%		$		$		$	%
Revenue	152		3,154		(3,002)	(95 %)		1,830		9,555		(7,725)	(81 %)
Cost of sales	169		1,568		(1,399)	(89 %)		966		3,950		(2,984)	(76 %)
Gross profit	(17)		1,586		(1,603)	(101 %)		864		5,605		(4,741)	(85 %)
Gross margin %	(11 %)		50 %		(61 %)			47 %		59 %		(12 %)

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.

		in thousands
		2022		2023					2024
		Dec 31		Mar 31	Jun 30	Sep 30	Dec 31		Mar 31	Jun 30	Sep 30
		$		$	$	$	$		$	$	$
Total expenses - IFRS		3,210		3,053	3,330	3,086	4,479		2,575	9,866	2,461
Share‑based compensation		469		541	486	288	334		182	270	143
Interest on lease obligation of right-of-use assets		3		1	4	4	3		1	3	4
Accretion expense		425		370	389	411	493		538	142	-
Other income		-		-	(12)	(30)	(9)		-	10	-
Foreign exchange gain		354		(72)	57	(110)	143		(211)	27	(1)
Extingushment of convertible debt		-		-	-	-	-		-	6,922	-
Non-IFRS operating expenses		1,959		2,212	2,407	2,523	3,515		2,065	2,491	2,315
		in thousands
		2022		2023					2024
		Dec 31		Mar 31	Jun 30	Sep 30	Dec 31		Mar 31	Jun 30	Sep 30
		$		$	$	$	$		$	$	$
Research and development, net of investment tax credits and including amortization of licenses		928		995	1,195	1,409	1,154		1,040	1,123	1,033
Sales and marketing		280		269	252	271	325		279	270	236
General and administrative		684		881	891	762	1,947		657	1,014	963
Depreciation of right-of-use assets		60		60	60	60	60		60	57	56
Depreciation of property and equipment		8		8	8	21	28		28	28	27
Non-IFRS operating expenses		1,959		2,212	2,407	2,523	3,515		2,065	2,491	2,315

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.

		in thousands
		2022		2023					2024
		Dec 31		Mar 31	Jun 30	Sep 30	Dec 31		Mar 31	Jun 30	Sep 30
		$		$	$	$	$		$	$	$
Net loss		(1,231)		(1,090)	(1,275)	(1,500)	(4,315)		(2,242)	(9,318)	(2,477)
Depreciation of right-of-use assets		60		60	60	60	60		60	57	56
Depreciation of property and equipment		8		8	8	21	28		28	28	27
Depreciation expense - COGS		35		35	30	31	31		32	32	25
Amortization - intangible assets		55		76	105	90	179		167	167	167
Share-based compensation		469		541	486	288	334		182	270	143
Interest on lease obligation of right-of-use assets		3		1	4	4	3		1	3	4
Accretion expense		425		370	389	411	493		538	142	-
Other income		-		-	(12)	(30)	(9)		-	10	-
Foreign Tax		(216)		-	-	-	(119)		-	-	-
Foreign exchange gain		354		(72)	57	(110)	143		(211)	27	(1)
Extingushment of convertible debt		-		-	-	-	-		-	6,922	-
EBITDA		(38)		(70)	(148)	(734)	(3,172)		(1,445)	(1,659)	(2,056)

 

ABOUT SPECTRA7 MICROSYSTEMS INC.

Spectra7 Microsystems Inc. is a leader in high-performance analog semiconductors for powering the AI revolution in broadband connectivity markets, hyperscale data centers, and Spatial Computing.  Spectra7 is based in San Jose, California with a design center in Cork, Ireland and a technical support location in Dongguan, China. For more information, please visit www.spectra7.com. 

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY NOTES

Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, the Company's timeline for its 224Gbps product, the new CEO's ability to transform the Company's strategy, secure key customer wins, and accelerate growth, the Company's strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, the risk factors discussed in the Company's management's discussion and analysis for the year ended December 31, 2023.. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

For more information, please contact: 

Matt Kreps, Managing Director
Darrow Associates Investor Relations
[e-mail]
214-597-8200

Spectra7 Microsystems Inc.
Dave Mier
Interim Chief Financial Officer
925-858-7011
[e-mail]

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/spectra7-announces-omar-javaid-as-the-new-ceo-302300914.html

SOURCE Spectra7 Microsystems Inc.

Copyright 2024 Canada NewsWire