Your browser is not supported. Please update it.

3 May 2018

Quantenna revenue surge continues, as does mystery MSO saga

Quantenna Communications just keeps on growing, pumping first quarter 2018 revenue up to $45.1 million, from $37.8 million in the same period last year. Perhaps we should contain our surprise, considering the WiFi chip maker only recently won a shiny new Comcast contract – an assumption which would be entirely mistaken.

In fact, Quantenna isn’t shouting about Comcast at all – choosing not to make a single mention of its deal with the mammoth US operator in its financial report or earnings transcript published this week. There are a couple of possible explanations, however. Quantenna’s revenue by region shows North America accounting for just $14,000 for the quarter, up from $13,000 last year. The explanation for this is that all the set top and home gateway manufacturers have factories in China and Asia, and then ship the products back home to distribute in the US. It also coincidentally makes it fairly easy to move profit to wherever the company wants to make it, to lessen its overall tax burden.

We know that Comcast deployed a Quantenna QSR10G WiFi chip in its new Xfinity DOCSIS 3.1 gateway, using Wave 3 10G technology – supplanting a previous Quantenna chip in the process.

That gateway, manufactured by Arris, is therefore being put together overseas so the Comcast deal is actually being hidden within the company’s results, in Asia Pacific revenues, which increased 17.6% to $40.7 million.

In the meantime, where’s next for the Californian chip firm? Faultline Online Reporter learned at Mobile World Congress back in February about a foray into mobile being on the company’s near roadmap, which CEO Sam Heidari backed up this week, by describing the Quantenna’s new cloud-based WiFi management platform, Vision, as having the most advanced access point features for mobile clients on the market today.

Quantenna is working indirectly in the mobile market through partners Intel, Samsung, Qualcomm and Broadcom. Qualcomm is putting a lot of weight behind 8×8, particularly on the mobile side – marking a synergy with the mobile guys which is a new frontier for Quantenna in 2018.

A significant piece of news from Quantenna’s earnings call is the projection for ax deployments to be ready in 2019, although there is apparently a huge differentiation in the Wave 3 11ac products with its 8×8 and tying this architecture into 11ax. Putting even 4 x 4 clients on phones is still a ways off, mostly due to power concerns and battery usage, so whether 8 x 8 is a serious direction here is not certain, although 5G enthusiasts are definitely exploring the use of massive MIMO, although for the most part from the sending end, not the receive. But to be honest, Quantenna is so far ahead on MIMO design in WiFi that it may well have an edge in 5G.

Other WiFi players are preparing ax deployments later this year, but Quantenna stresses it strives for its technology “to not only be 11ax but to be the best 11ax of its time.”

“I’m not aware of anyone else right now who has a product such as ours in the market, we’ve seen announcements which have been pretty old by now, but we’ve not seen any evidence of that in the market place,” said Heidari.

A pain point for Quantenna will be healthy net income being just out of reach in Q1, making a net loss of $3.25 million but reporting gross profit of $22.76 million before operating expenses.

“Our first quarter strength bolsters our Wave 3 10G growth strategy as we experienced accelerated deployment momentum with our key cable MSO customer coupled with an additional cable MSO initiating full volume rollout. Additionally, these deployments are now sourced through two separate OEM partners, which adds additional capacity to serve demand and diversifies the supply chain. We also continue to receive inbound interest for Wave 3 10G designs due to its superior performance in the WiFi landscape,” said Quantenna CEO Dr. Sam Heidari.

This key cable MSO customer has been mentioned on numerous occasions by Quantenna, so in the wake of Comcast being confirmed as a customer, the reason for still shrouding the customer name in mystery is anyone’s guess. The deal is clearly of high importance to Quantenna, as a delayed deployment of wireless chips at the key cable MSO in Q4 caused its stock price to tumble as much as 35.4%, while stock spiked 18.2% following this week’s earnings release.