Nice write up in Semiconductor Today

1 May 2019

POET’s annual revenue grows 39%

POET Technologies Inc of Toronto, Canada and San Jose, CA, USA — a designer and manufacturer of optoelectronic devices, including light sources, passive waveguides and photonic integrated circuits (PIC) for the sensing and datacom markets — has reported full-year revenue growth of 39% from US$2.8m in 2017 to US$3.9m in 2018.

Fourth-quarter 2018 revenue was US$1.6m, up 72% on US$0.9m last quarter and 117% on US$0.7m a year ago, primarily reflected a combination of higher product sales and non-recurring engineering (NRE).

Gross margin has risen further, from 46% a year ago and 58% last quarter to 67% in Q4/2018. Full-year gross margin has grown from 52% in 2017 to 62% in 2018.

Full-year net loss before taxes rose from US$13.1m ($0.05 per share) in 2017 to US$16.6m ($0.06 per share).
However, although still up from US$2.9m ($0.01 per share) a year ago, quarterly net loss before taxes was US$3.7m ($0.01 per share) in Q4/2018, cut from US$5m ($0.02 per share) in Q3/2018.

Capital investment in plant, equipment and patents rose from US$1m in 2017 to US$3.7m in 2018.

At the end of fourth-quarter 2018, the backlog of open orders (for delivery in subsequent quarters) was US$3.7m.

“Our significant revenue growth over the past year demonstrates the initial success of our strategy to grow non-recurring engineering (NRE) revenue from leading customers in data communications,” says CEO Dr Suresh Venkatesan. “We continue to advance the development and qualification of customized Optical Interposer-based product solutions with these customers, with the expectation that POET’s solutions will be included in their current and future product lines,” he adds. During Q4/2018, the first orders were received for POET’s Optical Interposer-based solutions from leading global networking companies, including sales and development contracts exceeding US$3m.

“As part of our focused strategy centered around the Optical Interposer platform, we are also making meaningful progress toward reaching a binding agreement on the proposed sale of our [Singapore-based] DenseLight subsidiary [which makes photonic sensors for test & measurement applications],” says Venkatesan. After the end of Q4/2018, POET signed a non-binding letter of intent (LOI) for the sale of DenseLight Semiconductors which (subject to approval by a majority of shareholders and the satisfaction of certain key conditions) should close in September, generating cash proceeds of US$26-30m. “This transaction would enable us to adopt a fab-light model, resulting in significantly reduced operating and capital expenses and providing an accelerated path to profitability,” he adds.

To finance operations, including the continued development of the Optical Interposer platform and for general working capital requirements between year-end and the close of the sale, POET has announced a private placement of up to about US$10m of 12% unsecured convertible debentures to qualified investors in multiple tranches. The first tranche closed on 4 April. In addition, the firm arranged for a US$5m secured credit facility from Espresso Capital Ltd and took its first eligible draw from the facility of US$2m on 23 April. This, plus the first tranche convertible debentures, raised US$3.4m collectively. “Our goal was to minimize dilution to shareholders as we bridge to the sale of DenseLight, a transaction which will provide the capital needed to grow our Optical Interposer business globally,” notes Venkatesan.

“Looking forward, as we execute on our 100G and 400G optical engine product roadmap during the remainder of 2019, we expect meaningful revenue growth from a combination of a ramp of our data communications business opportunities and increasing sales of sensing products at DenseLight,” notes Venkatesan. POET expects that revenue from DenseLight will grow to US$8–10m for full-year 2019. Historically, and until the completion of the anticipated sale of DenseLight, all revenue generated by the firm is regarded as sales from DenseLight. Gross margin should also rise, as NRE revenue (which is is typically higher margin, given that existing engineering and operational resources are not allocated to individual projects) becomes a higher percentage of POET’s consolidated revenue.

http://www.semiconductor-today.com/news_items/2019/may/poet-010519.shtml