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Technology Stocks : Investing in Exponential Growth

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From: Paul H. Christiansen8/9/2017 1:20:18 AM
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8-8-2017 – Excerpts from QTNA Quarterly Earnings Report

(QTNA is one of our UVM Picks for exponential growth potential. Comments are from QTNA CEO Sam Heidari. Slides # 7 and 8 can be accessed by selecting the second URL at the end of this report.)

Now, let me take a moment to discuss IP network. Referring to Slide 7 in our supplemental Q2 presentation, we have graphically illustrated the different layers of the network, as well as the exclusive growth that is expected in IP traffic. Up in the cloud layer, we are seeing 100 gigabit per second connectivity infrastructure being implemented at a rapid pace. Falling off behind this on the distribution side of the network is DOCSIS 3.1, G.fast, fiber and related upgrades are currently underway. These upgrades are enabling up to 10 gigabit per second connectivity into your home.

Today, we believe current Wi-Fi speed is being well below 1 gigabit per second, or the bottleneck on the end-to-end network. This threat on the Wi-Fi portion will only glow – grow at the function of time. And this is not going to slowdown anytime soon.

According to Cisco, total worldwide monthly IP data will increase from 96 exabyte to 278 exabyte over the next five years. And almost half of that growth delta will be delivered via Wi-Fi. This represents a 36% compound annual growth just for the Wi-Fi delivered IP content. This is a great reason for why you, as a consumer, need a best Wi-Fi in your home. Later in this presentation, we’ll provide an example of why it is also critical for the service provider to grow this strategy.

. . . we have discussed that traditional cable operators are in a very dynamic environment and some are moving rapidly towards offering mobile phone services to the existing customers through a sticky bundling agreement. This is accomplished by leasing the network – the mobile network connectivity from an incumbent provider. The industry uses the acronym MVNO to refer to this Mobile Virtual Network Operators.

While we often talk about how better Wi-Fi performance improve user experience, the need for better Wi-Fi is broader than that. It has multiple economic benefits to the service providers, specifically MVNO. If you refer to Slide 8, we have detailed data on the economics of this mobile builds-out by cable operator. In this example, beside the model created by new 3G search that is based on Xfinity’s MVNO cost.

This model estimates the revenue per subscriber at $39 per month. While MVNOs operational cost varies, these costs are significantly improved by utilization of the Wi-Fi data offload. This data is compelling. For starters with other Wi-Fi, MVNO as a strategy loses money. But as it leverages Wi-Fi offload, it becomes increasingly profitable.

For instance, 70% of the mobile offload, the monthly EBITDA per subscriber is $1. But this extends to $11 if the offload climbs to 80%. Another way to look at this is that, for every 1% of mobile – of the Wi-Fi data offload – EBITDA margin grows 2.7%. In other words, Wi-Fi offload is a requirement for the cable MSOs to succeed with MVNO strategy.

Leading-edge solutions by Quantenna are enabling this to occur. Quantenna is not just participating in this growth, we are enabling this growth. We can offer service providers a force multiplier on their return on investment.

https://seekingalpha.com/article/4096108-quantenna-communications-qtna-ceo-sam-heidari-q2-2017-results-earnings-call-transcript?part=single\

https://seekingalpha.com/article/4096044-quantenna-communications-2017-q2-results-earnings-call-slides



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