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POET cuts losses, despite sales falling in Q3 due to weaker industry-wide demand

posted on Nov 25, 2019 12:47PM

Semiconductor Today's take on the financials:

25 November 2019

POET cuts losses, despite sales falling in Q3 due to weaker industry-wide demand

For third-quarter 2019, POET Technologies Inc of Toronto, Ontario, 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 revenue of US$1.183m, up on US$0.907m a year ago but down on US$1.358m last quarter. The sequential decline was due to a slowing of device sales from Singapore-based subsidiary DenseLight Semiconductor Pte Ltd resulting from weaker industry-wide demand.

Results include DenseLight as a discontinued operation, after a definitive agreement was signed on 20 August for its sale (which was finalized on 8 November). All financial data hence represent the combined results from both continuing and discontinued operations.

Gross margin was 71%, up only slightly from 70% last quarter but improving substantially on 59% a year ago, due to the higher proportion of non-recurring engineering (NRE) in the revenue mix.

Net loss has been cut from US$4.939m ($0.02 per share) a year ago and US$3.8m ($0.01 per share) last quarter to US$2.944m ($0.01 per share).

During Q3/2019, the fifth and final tranche of convertible debenture private placement was closed for gross proceeds of US$137,000 (C$182,000), bringing the total capital raised through convertible debentures to about US$3.7m (C$5m).

After the quarter end, on 24 October, a Special Meeting was also held at which 99% of shareholders voted in favor of the sale of DenseLight. The first-tranche payment of US$8m was received from the buyer on 8 November (POET has subsequently repaid its debt in full to secured lenders and hence all security interests in the firm’s assets have been discharged). Two additional tranche payments of US$13m and US$5m should be received on or before 31 December 2019 and 31 May 2020, respectively. In connection with the sale, POET recognized a gain of about US$10m.

POET will continue reporting revenues consolidated with DenseLight through 8 November, since the bulk of its R&D, production and sales activities were conducted there. With the sale now completed, DenseLight is expected to remain a key development partner and supplier to POET.