10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____  to ____

Commission File Number: 001-38270

AQUANTIA CORP.

(Exact Name of Registrant as Specified in its Charter)

Delaware	20-1199709
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

91 E. Tasman Drive, Suite 100

San Jose, CA 95134

(Address of principal executive offices)

Registrant’s telephone number, including area code: (408) 228-8300

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value	AQ	New York Stock Exchange

As of May 3, 2019, the registrant had 35,532,571 shares of common stock, $0.00001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2019 and 2018	4
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2019 and 2018	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2019 and 2018	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 6.	Exhibits	29
Signatures		30

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

AQUANTIA CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for par value and share amounts)

(unaudited)

	March 31,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	8,480		$	6,684
Short-term investments		53,895			60,730
Accounts receivable		10,350			16,927
Inventories		17,015			14,474
Prepaid expenses and other current assets		1,801			2,018
Total current assets		91,541			100,833
Property and equipment, net		11,211			9,225
Operating lease assets, net		5,644			—
Intangible assets, net		3,546			3,748
Other assets		616			617
Total assets	$	112,558		$	114,423
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,349		$	5,495
Accrued liabilities		15,750			13,907
Operating lease liabilities - short term		839			—
Total current liabilities		22,938			19,402
Operating lease liabilities - long term		6,251			—
Other long-term liabilities		413			1,799
Total liabilities		29,602			21,201
Commitments and contingencies (Note 3 and Note 6)
Stockholders’ equity:
Common stock, $0.00001 par value, 95,000,000 shares authorized as of each    of March 31, 2019 and December 31, 2018; 35,508,553 and 35,050,425 shares    outstanding at March 31, 2019 and December 31, 2018, respectively		—			—
Additional paid-in capital		303,473			300,791
Accumulated other comprehensive loss		(4	)		(123	)
Accumulated deficit		(220,513	)		(207,446	)
Total stockholders’ equity		82,956			93,222
Total liabilities and stockholders’ equity	$	112,558		$	114,423

See accompanying notes to condensed consolidated financial statements.

3

AQUANTIA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended
	March 31,
	2019			2018
Revenue	$	17,022		$	28,358
Cost of revenue		8,056			12,241
Gross profit		8,966			16,117
Operating expenses:
Research and development		16,070			12,574
Sales and marketing		2,719			2,287
General and administrative		3,422			2,997
Total operating expenses		22,211			17,858
Loss from operations		(13,245	)		(1,741	)
Other income (expense):
Other income, net		368			248
Total other income (expense)		368			248
Loss before income tax expense		(12,877	)		(1,493	)
Provision for (benefit from) income taxes		190			(125	)
Net loss	$	(13,067	)	$	(1,368	)
Net loss per share, basic and diluted	$	(0.37	)	$	(0.04	)
Weighted-average shares used to compute net loss per share, basic and diluted		35,158			33,495
Comprehensive income:
Net loss	$	(13,067	)	$	(1,368	)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) - short-term investments		119			(131	)
Comprehensive loss	$	(12,948	)	$	(1,499	)

See accompanying notes to condensed consolidated financial statements.

4

AQUANTIA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share amounts)

									Accumulated
						Additional			Other						Total
	Common Stock					Paid-In			Comprehensive			Accumulated			Stockholders'
	Shares			Amount		Capital			loss			Deficit			Equity (Deficit)
BALANCE—December 31, 2018		35,050,425			—		300,791			(123	)		(207,446	)		93,222
Other comprehensive loss (gain) - unrealized    loss (gain) on short-term investments		—			—		—			119			—			119
Exercise of stock options		132,692			—		392			—			—			392
Issuance of restricted stock units		325,436			—		—			—			—			—
Stock-based compensation expense		—			—		2,290			—			—			2,290
Net loss		—			—		—			—			(13,067	)		(13,067	)
BALANCE—March 31, 2019		35,508,553		$	—	$	303,473		$	(4	)	$	(220,513	)	$	82,956
									Accumulated
						Additional			Other						Total
	Common Stock					Paid-In			Comprehensive			Accumulated			Stockholders'
	Shares			Amount		Capital			loss			Deficit			Equity (Deficit)
BALANCE—December 31, 2017		33,523,683			—		288,719			(96	)		(197,709	)		90,914
Cumulative effect upon adoption of ASC 606		—			—		—			—			35			35
Other comprehensive loss (gain) - unrealized    loss (gain) on short-term investments		—			—		—			(131	)		—			(131	)
Exercise of stock options		3,466			—		—			—			—			—
Issuance of restricted stock units		102,500			—		—			—			—			—
Issuance of restricted stock units (reversed, not yet issued)		(137,529	)		—		—			—			—			—
Issuance of common stock, net    upon exercise of warrants		48,305			—		—			—			—			—
Repurchase of stock options		(3,626	)		—					—			—			—
IPO Costs		—			—		(22	)		—			—			(22	)
Stock-based compensation expense		—			—		978			—			—			978
Net loss		—			—		—			—			(1,368	)		(1,368	)
BALANCE—March 31, 2018		33,536,799		$	—	$	289,675		$	(227	)	$	(199,042	)	$	90,406

See accompanying notes to condensed consolidated financial statements.

5

AQUANTIA CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2019			2018
Cash flows from operating activities
Net loss	$	(13,067	)	$	(1,368	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		1,616			1,385
Stock-based compensation expense		2,290			978
Accretion of investment premium, net of amortization of discount		(112	)		—
Changes in operating assets and liabilities:
Accounts receivable		6,577			4,595
Inventories		(2,541	)		2,313
Operating lease assets, net		254			—
Prepaid expenses and other assets		218			1,953
Accounts payable		(1,870	)		(1,193	)
Accrued and other liabilities		1,873			(860	)
Operating lease liabilities		(224	)		—
Net cash provided by (used in) operating activities		(4,986	)		7,803
Cash flows from investing activities
Purchases of property and equipment		(676	)		(731	)
Proceeds from sales of short-term investments		1,000			—
Proceeds from maturities of short-term investments		14,000			5,400
Purchases of short-term investments		(7,934	)		(15,604	)
Net cash provided by (used in) investing activities		6,390			(10,935	)
Cash flows from financing activities
Proceeds from exercise of stock options		392			—
Purchases of IP licenses		—			(26	)
Payment of costs related to initial public offering		—			(276	)
Net cash provided by (used in) financing activities		392			(302	)
Net decrease in cash and cash equivalents		1,796			(3,434	)
Cash and cash equivalents at beginning of period		6,684			8,040
Cash and cash equivalents at end of period	$	8,480		$	4,606
Supplemental disclosures of cash flow information
Cash paid for interest	$	10		$	—
Cash paid for income taxes	$	125		$	—
Cash paid for amounts included in the lease liabilities	$	418		$	—
Cashless exercises of warrants, net of assumed proceeds from shares	$	—		$	550
Property and equipment received and accrued	$	2,810		$	345

See accompanying notes to condensed consolidated financial statements.

6

AQUANTIA CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization, Description of Business and Basis for Presentation

Organization—Aquantia Corp. (together with its subsidiaries, the “Company”) was incorporated in Delaware on January 27, 2004. The Company is a leader in the design, development and marketing of advanced high-speed communications integrated circuits, or ICs, for Ethernet connectivity in the data center, enterprise infrastructure, access and automotive markets.

Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements included herein have been prepared by us in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, normal recurring adjustments considered necessary for a fair presentation have been reflected in these condensed consolidated financial statements.  Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements for the fiscal year then ended included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2019 (the “2018 Annual Report on Form 10-K”), but does not include all of the information and notes required by U.S. GAAP for complete consolidated financial statements. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended December 31, 2018 and the related notes thereto included in the 2018 Annual Report on Form 10-K.

2. Summary of Significant Accounting Policies

During the three months ended March 31, 2019, there have been no changes in our significant accounting policies as described in the Company’s 2018 Annual Report on Form 10-K, except as discussed below:

Recent Accounting Pronouncements—

Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. It clarifies the accounting for implementation costs in cloud computing arrangements. The new guidance requires companies to recognize the implementation costs as expense over the noncancelable term of the cloud computing arrangement plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. The guidance is effective for fiscal year beginning after December 15, 2019. Early adoption is permitted. The Company adopted this guidance on January 1, 2019 on a prospective basis to costs incurred after that date. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2018, the FASB released ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S tax reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (herein referred to as “ASC 842”). The new guidance requires entities to recognize assets and liabilities for leases and additional disclosures to better understand the amount, timing and uncertainty of cash flows arising from leases. The guidance was effective for financial statements issued for fiscal years beginning after December 15, 2018. Early adoption was permitted. The Company adopted this guidance in the first quarter of 2019 using the modified retrospective approach, electing the package of practical expedients, which allows for the carryforward of the Company’s historical lease classification and assessment on whether a contract is or contains a lease, and the practical expedient to not separate lease and non-lease components. The Company has elected not to record on the balance sheet leases with an initial term of twelve months or less and that do not have a purchase option that the Company is reasonably certain to exercise. The Company also elected the optional transition method that permits adoption of the new standard as of the effective date without adjusting comparative periods presented. Adoption of the standard resulted in the recognition of $5.9 million of right-of-use assets and $7.3 million of lease liabilities on our condensed consolidated balance sheet at adoption related to our leases. The difference of $1.4 million represented lease incentives and deferred rent for leases that existed as of the date of adoption, which reduced the right-of-use asset recorded at the date of adoption. The adoption of the standard on January 1, 2019 did not have a material impact on the Company’s consolidated statements of operations, stockholders’ equity or cash flows. See Note 3 for additional information.

7

3. Balance Sheet Components

Inventories consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Processed wafers	$	1,277	$	1,233
Work in process		7,445		5,990
Finished goods		8,293		7,251
Total inventories	$	17,015	$	14,474

Property and equipment, net consisted of the following (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
Machinery and equipment	2-3 years	$	15,925		$	15,237
Production masks	4 years		8,101			5,401
Software and computer equipment	3 years		4,459			4,492
Leasehold improvements	Shorter of estimated life of asset or remaining lease term		1,414			1,414
Office furniture and fixtures	3 years		163			117
Total property and equipment			30,062			26,661
Less: accumulated depreciation and    amortization			(18,851	)		(17,436	)
Property and equipment, net		$	11,211		$	9,225

Depreciation and amortization of property and equipment totaled $1.4 million and $1.2 million for the three months ended March 31, 2019 and 2018, respectively.

Intangible assets, net were carried at cost, less accumulated amortization. Intangible assets were as follows (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
IP license	7 years	$	5,416		$	5,416
Patents	10-12 years		348			348
Total intangible assets			5,764			5,764
Less: accumulated amortization			(2,218	)		(2,016	)
Intangible assets, net		$	3,546		$	3,748

Amortization of intangible assets totaled $0.2 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively.

Amortization expense related to amortizable intangibles in future periods as of March 31, 2019 is expected to be as follows (in thousands):

2019 (remaining)	$	606
2020		808
2021		808
2022		800
2023 and thereafter		524
Total	$	3,546

8

Operating lease asset and liabilities

The Company has entered into operating leases primarily for real estate. As of adoption these leases have terms which range from 1 year to 6 years, and often include one or more options to renew. These renewal terms can extend the lease term from 1 to 9 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. After the adoption of ASC 842 on January 1, 2019, an asset has been included on the Company’s condensed consolidated balance sheet as “operating lease assets, net” which represents the Company’s right to use the underlying asset for the lease term. Similarly, the Company has recorded its obligation to make lease payments within its condensed consolidated balance sheet as “operating lease liabilities” and classified these liabilities as short-term (“operating lease liabilities – short term”) and long-term (“operating lease liabilities – long term”) based on the timing and amounts of payment. The Company determines whether an arrangement is a lease at inception. Some lease agreements contain the lease and non-lease components, which are accounted for a single lease component. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As of March 31, 2019, total right-of-use assets and operating lease liabilities were approximately $5.6 million and $7.1 million, respectively and presented within the condensed consolidated balance sheet as noted above. The Company has entered into various short-term operating leases, primarily for office equipment, automotive, and other facilities, with an initial term of twelve months or less. Leases with a lease term of twelve months or less have not been recorded on the Company’s condensed consolidated balance sheet. No new leases were entered into during the quarter ended March 31, 2019.

All operating lease expense is recognized on a straight-line basis over the lease term. In the three months ended March 31, 2019, the Company recognized approximately $0.5 million in total lease costs.  

Because the rate implicit in each lease is not readily determinable, the Company used the estimated interest rate for collateralized loan over a similar term to determine the present value of the lease payments. The weighted-average remaining lease term was 3.3 years and the weighted-average discount rate used was 8.5%.

Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):

2019 (remaining)	$	1,020
2020		1,513
2021		2,018
2022		2,059
2023		1,793
2024 and thereafter		431
Total		8,834
Less imputed interest		(1,744	)
Total lease liabilities	$	7,090

Refer to Note 6 for the future minimum operating lease payments under ASC 840.

Accrued liabilities consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Accrued compensation and related benefits	$	4,759	$	5,301
Customer Deposit		-		40
Accrued IP License		5,266		4,829
Accrued technical consulting and professional services		237		412
Accrued royalty, rebates and commission		583		443
Other accrued liabilities		4,905		2,882
Total accrued liabilities	$	15,750	$	13,907

9

4. Financial Instruments

The following is a summary of financial instruments (in thousands):

	As of March 31, 2019
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,939	$	—	$	(1	)	$	10,938
Money market funds		736		—		—			736
Corporate bonds		45,971		—		(4	)		45,967
U.S. government securities		1,980		2		—			1,982
Total available-for-sale securities	$	59,626	$	2	$	(5	)	$	59,623
Reported in:
Cash and cash equivalents								$	5,728
Short-term investments									53,895
Total available-for-sale securities								$	59,623

	As of December 31, 2018
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,173	$	—	$	(9	)	$	10,164
Money market funds		403		—		—			403
Corporate bonds		52,448		—		(114	)		52,334
U.S. government securities		1,972		—		-			1,972
Total available-for-sale securities	$	64,996	$	—	$	(123	)	$	64,873
Reported in:
Cash and cash equivalents								$	4,143
Short-term investments									60,730
Total available-for-sale securities								$	64,873

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	As of March 31, 2019
	Amortized Cost Basis		Estimated Fair Value
Due in one year or less	$	59,626	$	59,623
Due between one and five years		—		—
	$	59,626	$	59,623

Gross realized gains and gross realized losses on sales of available-for-sale securities for the three months ended March 31, 2019 were not significant.As of March 31, 2019 and December 31, 2018, there were no individual securities that had been in a continuous loss position for 12 months or longer. As of March 31, 2019 and December 31, 2018, there were $11.0 million and $19.2 million, respectively, of securities that had been in a continuous loss position for 12 months or longer.

10

5. Fair Value Measurements

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which to transact and the market-based risk. The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company categorizes assets and liabilities recorded at fair value based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical, unrestricted assets, or liabilities.

Level 2—Quoted prices for similar assets or liabilities, or inputs other than quoted prices in active markets that are observable either directly or indirectly.

Level 3—Unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability. Valuation techniques include use of option-pricing models, discounted cash flows models, and similar techniques.

The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The following tables represent the Company’s financial assets measured at fair value on a recurring basis categorized by the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

	As of March 31, 2019
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	736	$	—	$	—	$	736
Commercial paper		—		10,938		—		10,938
Corporate bonds		—		45,967		—		45,967
U.S. government securities		—		1,982		—		1,982
Total financial asset—available-for-sales securities	$	736	$	58,887	$	—	$	59,623

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	403	$	—	$	—	$	403
Commercial paper		—		10,164		—		10,164
Corporate bonds		—		52,334		—		52,334
U.S. government securities		—		1,972		—		1,972
Total financial asset—available-for-sales securities	$	403	$	64,470	$	—	$	64,873

There were no transfers within the hierarchy during the three months ended March 31, 2019 and 2018.

6. Commitments and Contingencies

Lease and purchase obligations—The Company leases office and research facilities under operating leases for its U.S. headquarters and international locations that expire at various dates through March 2024. Under any lease agreement that contains escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term.In addition, the Company has purchase obligations which included agreements and issued purchase orders containing non-cancelable payment terms to purchase goods and services.

11

As previously disclosed in our Annual Report on Form 10-K for the year endedDecember 31, 2018 and under the previous lease accounting standard ASC 840, the aggregate future non-cancelable minimum rental payments on our operating leases, as of December 31, 2018, were as follows (in thousands):

					Total
	Operating		Purchase		Lease and Purchase
	Leases		Obligations		Obligations
2019	$	1,482	$	15,674	$	17,156
2020		1,516		4,247		5,763
2021		1,993		1,008		3,001
2022		2,033		—		2,033
2023 and thereafter		2,217		—		2,217
Total	$	9,241	$	20,929	$	30,170

Litigation—The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss and the Company has made an assessment of the probability of incurring any such losses and whether or not those losses are estimable.

Although the Company is not currently subject to any litigation, and the Company is not aware of any litigation currently threatened against it, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that it believes will result in a probable loss that is reasonably estimable.

To the extent there is a reasonable possibility that a loss exceeding amounts already recognized may be incurred and the amount of such additional loss would be material, the Company will either disclose the estimated additional loss or state that such an estimate cannot be made. The Company does not currently believe that it is reasonably possible that losses in connection with litigation arising in the ordinary course of business would be material.

Indemnification—Under the indemnification provisions of the Company’s standard sales-related contracts, the Company agrees to defend its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such claims. Certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its directors and certain of its officers while they are serving in good faith in such capacities. To date, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As of March 31, 2019 and December 31, 2018, no liability associated with such indemnifications had been recorded.

7. Common Stock and Share-based Compensation

The Company’s certificate of incorporation, as of March 31, 2019 and December 31, 2018, authorized the Company to issue up to 95,000,000 shares of common stock and 5,000,000 shares of preferred stock, each at $0.00001 par value per share.

As of March 31, 2019, no preferred stock was outstanding. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends out of funds legally available. No dividends have been declared to date.

2015 Equity Incentive Plan and 2004 Equity Incentive Plan

Under the Company’s 2015 Equity Incentive Plan and 2004 Equity Incentive Plan, shares of common stock were reserved for the issuance of incentive stock options (“ISO”); nonstatutory stock options (“NSO”); or the sales of restricted common stock to employees, officers, directors, and consultants of the Company. The exercise price of an option is determined by the board of directors when the option is granted and may not be less than 85% of the fair market value of the shares on the date of grant, provided that the exercise price of an ISO is not less than 100% of the fair market value of the shares on the date of grant and the exercise price of any option granted to a 10% stockholder is not less than 110% of the fair market value of the shares on the date of grant. ISOs granted under the Plan generally vest 25% after the completion of 12 months of service and the balance in equal monthly installments over the next 36 months of service and expire 10 years from the grant date. NSOs vest as per the specific agreement and expire 10 years from the date of grant. The Plan allows for early exercise of options prior to full vesting as determined by the board of directors and set forth in the stock option agreements governing such options. Exercises of unvested options are subject to repurchase by the Company at not less than the original exercise price upon termination of employment.

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2017 Equity Incentive Plan

In November 2017, the Company adopted the 2017 Equity Incentive Plan, or 2017 Plan, and all shares reserved for grant under the 2015 Equity Incentive Plan and 2004 Equity Incentive Plan were cancelled. The 2017 Plan had 5,047,440 common shares reserved, plus any shares subject to outstanding stock options or other stock awards that were granted under the 2015 Equity Incentive Plan and 2004 Equity Incentive Plan that were forfeited, terminate, expire or are otherwise not issued. In addition, the shares reserved under the 2017 Plan will automatically increase on the first day of each calendar year until January 1, 2027, by an amount equal to 5% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of the automatic increase, or a lesser number of shares determined by the board ofdirectors prior to the date of such automatic increase. The 2017 Plan provides for the grant of common stock awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units, performance units and performance shares to employees, directors, and consultants of the Company. All granted shares that are canceled, forfeited or expired are returned to the 2017 Plan and are available for grant in conjunction with the issuance of new equity awards. Stock options may be granted at an exercise price per share not less than 100% of the fair market value at the date of grant. If a stock option is granted to a 10% stockholder, then the exercise price per share must not be less than 110% of the fair market value per share of common stock on the grant date. Options granted are exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years. As of March 31, 2019, 3,444,533 shares are available for grant.

Stock Options

Activity under the Company’s stock option plan is set forth below:

						Weighted-
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic Value
	Number of Shares			Price		Term (Years)		(in thousands)
Balance—December 31, 2018		2,297,403		$	4.49		6.9	$	9,858
Granted		—		$	—
Exercised		(132,692	)	$	2.95
Canceled		(7,981	)	$	6.26
Balance—March 31, 2019		2,156,730		$	4.58		6.8	$	9,683
Vested and exercisable—March 31, 2019		1,524,974		$	3.93		6.4	$	7,842
Vested and exercisable—December 31, 2018		1,547,754		$	3.74		6.5	$	7,803

As of March 31, 2019, approximately $1.7 million of unrecognized stock compensation costs related to awards were expected to be recognized over a weighted-average period of 2.8 years. As of December 31, 2018, approximately $2.0 million of unrecognized stock compensation costs related to awards were expected to be recognized over a weighted-average period of 2.8 years.

The aggregate intrinsic value of options exercised during the three months ended March 31, 2019 was $0.7 million. The aggregate intrinsic value of options exercised during the year ended December 31, 2018 was $7.1 million.

There were no options granted during the three months ended March 31, 2019 and 2018. The weighted-average grant-date fair value of options granted during the year ended December 31, 2018 was $5.46 per share.

Restricted Stock Unit Awards

The Company grants restricted stock units (RSU) to employees under the 2017 Plan. RSUs granted typically vest ratably over a four-year period and are converted into shares of the Company’s common stock upon vesting on a one-for-one basis subject to the employee’s continued service to the Company over that period. The fair value of RSUs is determined using the fair value of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest. Compensation expense is recognized on a straight-line basis over the requisite service period of each grant. Each RSU award granted from the 2017 Plan will reduce the number of shares available for issuance under the 2017 Plan by one share.

For the three months ended March 31, 2019, unamortized compensation expense related to RSU was approximately $19.6 million, to be recognized over 3.1 years. For the year ended December 31, 2018, unamortized compensation expense related to RSU was approximately $15.8 million, to be recognized over 3.0 years.  

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Activity under the Company’s RSU is set forth below:

				Weighted
				Average
				Market
	Number of Shares			Value
Balance—December 31, 2018		1,554,089		$	12.73
Granted		670,941		$	8.51
Released		(325,436	)	$	12.76
Canceled		(14,010	)	$	12.22
Balance—March 31, 2019		1,885,584		$	11.02

Employee Stock Purchase Plan

Concurrent with the completion of the Company’s initial public offering (“IPO”) in November 2017, the Company adopted the 2017 Employee Stock Purchase Plan, or ESPP. The ESPP authorizes the issuance of 2,018,975 shares of common stock outstanding under purchase rights granted to its employees. In addition, the shares reserved under the ESPP Plan will automatically increase on the first day of each calendar year until January 1, 2027, by the lesser of (i) an amount equal to 2% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of the automatic increase, (ii) 1,000,000 shares of common stock, and (iii) a lesser number of shares determined by the board of directors prior to the date of such automatic increase. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP generally provides for offering periods and purchase periods every six months, and at the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the purchase period or on the last trading day of the offering period. 366,369 shares were issued as of December 31, 2018 under the ESPP. Shares expected to be issued under the ESPP were 191,446 for the offering period outstanding as of March 31, 2019. The calculated fair value of the shares under the ESPP for the period started on November 16, 2018 was estimated using the Black-Scholes model with the following assumptions: risk-free interest rate of 2.36%, expected term of 0.5 year, expected dividends of 0% and volatility of 22%. For the three months ended March 31, 2019, unamortized compensation expense related to ESPP was approximately $0.2 million, to be recognized over approximately two months.  For the year ended December 31, 2018, unamortized compensation expense related to ESPP was approximately $0.5 million, to be recognized over approximately five months.  

The Company uses the straight-line vesting attribution method to record stock-based compensation expense. Stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss for options, restricted stock units and ESPP was as follows (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Cost of revenue	$	66	$	25
Research and development		1,232	573
Sales and marketing	350		111
General and administrative	642		269
Total	$	2,290	$	978

No income tax benefit associated with stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and 2018.

8. Income Taxes

The Company recorded an income tax provision of $0.2 million and benefit of $0.1 million for the three months ended March 31, 2019 and 2018, respectively. The income tax benefit for the three months ended March 31, 2018 consisted primarily of a credit to foreign jurisdiction.

Although the Company files U.S. federal and various state tax returns, the Company’s only major tax jurisdictions are the United States and California. As a result of NOL carryforwards, all of the Company’s tax years are open to federal and state examination in the United States. All tax years are open to examination in various foreign countries.

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9. Net Loss Per Share

The following table summarizes the computation of basic and diluted net loss per share (in thousands, except per share data):

	Three Month Ended
	March 31,
	2019			2018
Net loss	$	(13,067	)	$	(1,368	)
Weighted-average common shares outstanding		35,158,470			33,494,807
Less: Shares subject to repurchase		—			—
Weighted-average shares outstanding		35,158,470			33,494,807
Net loss per share, basic and diluted	$	(0.37	)	$	(0.04	)

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares):

	As of		As of
	March 31,		December 31,
	2019		2018
Stock options to purchase common stock		2,156,730		2,297,403
Unvested restricted stock units		1,885,584		1,554,089
Common stock warrants		83,695		83,695
Total		4,126,009		3,935,187

10. Segment Reporting

The Company operates in one reportable segment related to the design, development and sale of network communication integrated circuits. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer, who reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Substantially all of the Company’s long-lived assets were attributable to operations in the United States as of March 31, 2019 and December 31, 2018.

The following table summarizes revenue by market (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Revenue by market:
Data Center	$	8,211	$	16,269
Enterprise Infrastructure		5,471		9,511
Access		3,206		2,531
Automotive		134		47
Total revenue	$	17,022	$	28,358

The Company sells its products worldwide and attributes revenue to the geography where the product is shipped. The geographical distribution of revenue as a percentage of total revenue for the periods indicated was as follows:

	Three Months Ended
	March 31,
	2019			2018
Malaysia		42	%		62	%
China		32			22
United States		8			1
Other		18			15
Total		100	%		100	%

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11. Concentrations

Credit—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash equivalents consist of cash and money market accounts with a financial institution that management believes to be of high-credit quality; however, at times, balances exceed federally insured limits. Amounts held on deposit at financial institutions in excess of Federal Deposit Insurance Corporation-insured amounts were $0.6 million and $1.1 million as of March 31, 2019 and December 31, 2018, respectively.

Significant Customers—Credit risk with respect to accounts receivable is concentrated with two large customers that contribute a majority of the Company’s business and is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. The fair value of accounts receivable approximates their carrying value. Revenue and accounts receivable concentrated with significant customers and their manufacturing subcontractors as a percentage of accounts receivable and total revenue were as follows:

	As of			As of
	March 31,			December 31,
	2019			2018
Accounts Receivable:
Customer A		34	%		42	%
Customer B	8			19

	Three Months Ended
	March 31,
	2019			2018
Revenue:
Customer A		40	%		55	%
Customer B	16			28

Significant Suppliers — The Company depends on a limited number of subcontractors and suppliers for its wafer and substrate supply and to fabricate, assemble, and test its semiconductor devices. The Company generally sources its production through standard purchase orders and has wafer supply and assembly and test agreements with certain outside contractors. While the Company seeks to maintain a sufficient level of supply and endeavors to maintain ongoing communications with suppliers to guard against interruptions or cessation of supply, business and results of operations could be adversely affected by a stoppage or delay of supply, substitution of more expensive or less reliable products or services, receipt of defective semiconductor devices, an increase in the price of products, or an inability to obtain reduced pricing from suppliers in response to competitive pressures.

12. Employee Benefit Plan

The Company has established a 401(k) plan, which permits participants to make contributions by salary deduction pursuant to Section 401(k) of the Internal Revenue Code. The Company may, at its discretion, make matching contributions to the 401(k) Plan. The Company has made no contributions to the 401(k) Plan since its inception.

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13. Subsequent Event

On May 6, 2019, the Company and Marvell Technology Group Ltd., a Bermuda exempted company (“Marvell”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Marvell and Aquantia Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Marvell (“Merger Sub”) providing for the merger of Merger Sub with and into the Company (the “Merger”) with the Company surviving the Merger as a wholly owned subsidiary of Marvell.

Under the terms of the definitive agreement, Marvell will acquire all outstanding shares of the Company’s common stock in exchange for consideration of $13.25 per share in cash.  The Merger Agreement contains representations and warranties customary for transactions of this type. The completion of the Merger is subject to the satisfaction or waiver of a number of closing conditions. The Merger Agreement provides Marvell and the Company with certain termination rights and, under certain circumstances, may require Marvell or the Company to pay a termination fee.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements, including statements based upon or relating to our expectations, estimates, and projections, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipates,” “believes,” “contemplates,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “target,” or “will” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements.

We discuss many of these risks in Part II of this Quarterly Report on Form 10-Q in greater detail under the heading “Risk Factors” and in other filings we make from time to time with the SEC. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. Unless required by federal securities laws, we assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made. Given these uncertainties, readers should not place undue reliance on these forward-looking statements.

The following discussion should be read in conjunction with (1) our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and (2) our audited consolidated financial statements and the related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 2018 included in our Annual Report filed on Form 10-K and filed with the SEC on March 6, 2019, or the 2018 Annual Report on Form 10-K. Unless otherwise indicated, all references in this Form 10-Q to Aquantia, we, us, our, and the Company refer to Aquantia Corp. and its subsidiaries.

Overview

We are a leader in the design, development and marketing of advanced high-speed communications integrated circuits, or ICs, for Ethernet connectivity in the data center, enterprise infrastructure, access and automotive markets. Our Ethernet solutions provide a critical interface between the high-speed analog signals transported over wired infrastructure and the digital information used in computing and networking equipment. Our products are designed to cost-effectively deliver leading-edge data speeds for use in the latest generation of communications infrastructure to alleviate network bandwidth bottlenecks caused by the exponential growth of global Internet Protocol, or IP, traffic. Many of our semiconductor solutions have established benchmarks in the industry in terms of performance, power consumption and density. Our innovative solutions enable our customers to differentiate their product offerings, position themselves to gain market share and drive the ongoing equipment infrastructure upgrade cycles in the data center, enterprise infrastructure, access and automotive markets.

We are a fabless semiconductor company. We have shipped tens of millions of ports to customers across multiple advanced semiconductor process generations. We derive revenue from our products, which include our 10GBASE-T physical layer devices, or PHYs, custom ASICs for Intel and our recently developed AQrate product line. We currently generate revenue from the sale of our products directly to IC suppliers, original equipment manufacturers, or OEMs, and original design manufacturers, or ODMs. We market and sell our products through our direct sales force.

We shipped our first products in 2009. Historically, a substantial majority of our revenue has been generated from our largest customer, Intel, including sales to contract manufacturers or ODMs at the direction of this customer in the data center server market, in particular the server portion of that market in support of our relationship with Intel. For the year ended December 31, 2018, Intel accounted for 49% and Cisco accounted for 27% of our revenue. For the three months ended March 31, 2019, Intel accounted for 40% and Cisco accounted for 16% of our revenue. To continue to grow our revenue, it is important that we acquire new customers and sell additional products to our existing customers.

While we intend to expand our customer base over time, the markets we serve tend to be highly concentrated, and we expect that a large portion of our revenue will continue to be derived from a relatively small number of customers for the foreseeable future. As the markets expand, the market share of our largest customers may not increase proportionally or may decrease as competition enters into the market. This has in the past materially impacted our revenues and our market share, and it may continue to do so in the future until the diversification of our customer base lessens the impact of this significant customer concentration.

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Recent Developments

Merger Agreement

On May 6, 2019, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Marvell Technology Group Ltd., a Bermuda exempted company (“Marvell”) and Aquantia Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Marvell (“Merger Sub”), providing for the merger of Merger Sub with and into us (the “Merger”), and we will survive the Merger as a wholly owned subsidiary of Marvell. Under the terms of the Merger Agreement, Marvell will acquire all of the outstanding shares of our common stock in exchange for consideration of $13.25 per share in cash.

For additional information about the Merger Agreement and the transactions contemplated thereby, see Item 1. Financial Statements (Unaudited) – Note 13 included elsewhere in this Quarterly Report on Form 10-Q.

Key Factors Affecting Our Performance

Pricing and Product Cost. Our pricing and margins depend on the volumes and the features of the ICs we provide to our customers. We believe the primary driver of gross margin is the average selling prices, or ASPs, negotiated between us and our customers relative to volume, material costs and manufacturing yield. Typically, our selling prices are contractually set for multiple quarters and our prototype selling prices are higher than our selling prices at volume production. In certain cases, we have agreed in advance to modest price reductions, generally over a period of time ranging from 18 months to five years, once the specified product begins to ship in volume. However, our customers may change their purchase orders and demand forecasts at any time with limited notice, which can sometimes lead to price renegotiations. Although these price renegotiations can sometimes result in ASPs of our products fluctuating over the shorter term, we expect ASPs generally to decline over the longer term as our products mature. These declines often coincide with improvements in manufacturing yields and lower wafer, assembly and testing costs, which offset some or all of the margin reduction that results from lower ASPs. Since we rely on third-party wafer foundries and assembly and test contractors to manufacture, assemble and test our ICs, we maintain a close relationship with our suppliers to improve quality, increase yields and lower manufacturing costs. In addition, our customers may seek to renegotiate product pricing under the contracts or purchase orders we have with them based on volume or other factors, which could drive fluctuations in ASPs.

Design Wins with New and Existing Customers. Our existing and prospective customers tend to be multinational enterprises with large annual purchases of ICs that are continuously developing new products for existing and new application areas. Our solutions enable our customers to differentiate their product offerings and position themselves to gain market share and drive the next upgrade cycles in data center and enterprise infrastructure. We have programs in place to help our existing customers use our solutions throughout their product portfolio, and we work closely with our existing and prospective customers to understand their product roadmaps and strategies. Because of our extended sales cycle, our revenue in future years is highly dependent on design wins we are awarded today. Further, because we expect our revenue relating to our mature products to decline in the future, we consider design wins critical to our future success and anticipate being increasingly dependent on revenue from newer design wins for our newer products.

Customer Demand and Product Life Cycles. Once customers design our ICs into their products, we closely monitor all phases of the product life cycle, including the initial design phase, prototype production, volume production and inventories. For example, during the periods presented, we had several products progressing through their product life cycles. In the data center market, the majority of our revenue for the periods presented was derived from our 10GBASE-T custom ASIC product, which we refer to as Twinville. In late 2015, we introduced and began to record revenue from our Sageville and Coppervale products. We anticipate that our Twinville product will transition to these two newer ASIC products over time, although the timing and rate of such transition will depend on our customers’ adoption of these products and the demand for our customers’ products. In the enterprise infrastructure market, during the periods presented, we developed our 5GBASE-T and 2.5GBASE-T AQrate product. We first shipped our AQrate products into the enterprise infrastructure market in the fourth quarter of 2014. We began shipping AQrate products in volume in 2015 and 2016. We also started to ship our multiple lines of products into the access market in the fourth quarter of 2016. We expect the revenue from our AQrate products, and therefore the percentage of our total revenue attributable to the enterprise infrastructure and access markets, to increase from the current levels. We are also shipping products into the automotive market but do not expect significant volume production to occur before 2020.

We also carefully monitor changes in customer demand and end-market demand, including seasonality, cyclicality and the competitive landscape. Our customers share their development schedules with us, including the projected launch dates of their product offerings. Once our customers are in production, they generally will provide nine to 12-month forecasts of expected demand, which gives us an indication of future demand. However, our customers may change their purchase orders and demand forecasts at any time with limited notice. In light of our significant customer concentration, our revenue is likely to be materially and disproportionally, due in part to fluctuating end-market demand, impacted by the purchasing decisions of our largest customers.

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Seasonality

Our revenue is subject to some seasonal variation as we begin to serve many markets and end-markets which historically experience lower sales in the first quarter of the year which may result in slower growth and lower sales as compared to other quarters.

Components of Results of Operations

Revenue

The revenue recognition accounting policy described below relates to revenue transactions from January 1, 2018 and onward, which are accounted for in accordance with ASC Topic 606.

We generate revenue from the sale of our products. Product revenues consist of sales to customers which are mainly comprised of end customers, their manufacturing subcontractors, and distributors. Revenue is recognized after we (a) identify the contract with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) satisfy the performance obligation when the control of products is transferred to the customer. We offer a limited number of customer rebates and accrue an estimate of such rebates at the time revenue is recognized. Such rebates were not material in any of the periods presented, and the differences between the actual amount of such rebates and our estimates also were not material. Sales to most of our distributors are made under contracts that allow for pricing credits upon shipment to the end customer and rights of return for on hand inventory at the distributor.  Under the accounting guidance, revenue is recognized at the point of transfer of control to the distributor, which typically occurs at the point of shipment.  We adjust the transaction price for any unprocessed claims and for future estimated pricing credits which is recorded in accrued liabilities on the consolidated balance sheets based on historical trends and distributor provided reports. 

Our success and future revenue depend on our ability to achieve design wins and to convince our current and prospective customers to design our products into their product offerings. In addition, our revenue may fluctuate as a result of a variety of factors including customer demand and product life cycles, product cost and product mix sold during the period.

In the fourth quarter of 2014, we first began to ship into the enterprise infrastructure market and began shipping in volume in 2015. Due to the introduction of our AQrate products, we anticipate that revenue from the enterprise infrastructure market will grow at a greater rate than revenue from the data center market over the next two years. In the fourth quarter of 2016, we started to sample our first access market products. We believe that the access market will represent a significant portion of our revenue in the near future. We are also shipping products into the automotive market but do not expect significant volume production to occur before 2020.

We anticipate that our revenue will fluctuate based on a variety of factors including the amount and timing of customer and end-market demand, product life cycles, average selling price which declines as our product reaches maturity, production schedule, and product mix sold during the period. For example, revenue in the data center market is expected to decrease significantly in 2019 based on customer forecast. In addition, we may introduce new products at lower average selling price than our existing products with the intent of increasing the market demand for our products, which may cause a fluctuation in our revenues during the period in which these new products are introduced.

Cost of Revenue

Cost of revenue consists of costs of materials, primarily wafers processed by third-party foundries, costs associated with packaging, assembly and testing paid to our third-party contract manufacturers, and personnel and other costs associated with our manufacturing operations. Our cost of revenue also includes allocation of overhead and facility costs, depreciation of production equipment, inventory write-downs and amortization of production mask costs. As we introduce new products, the cost of revenue will fluctuate depending on yield, volume and production cost of these products.

Gross Margin

Gross margin, or gross profit as a percentage of revenue, has been, and will continue to be, affected by a variety of factors, including product mix, ASPs, material costs, production costs that are themselves dependent upon improvements to yield, production efficiencies, elimination or addition to production processes as required by our end customers and timing of such improvements, and increasing manufacturing overhead to support the greater number of products and markets we serve.

We expect our gross margin to fluctuate on a quarterly basis as a result of changes in ASPs due to new product introductions, existing product transitions to high-volume manufacturing, product maturation and fluctuations in manufacturing costs.

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Operating Expenses

Our operating expenses consist of research and development, sales and marketing and general and administrative expenses, and a collaboration and development charge. Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, stock-based compensation and commissions. Our operating expenses also include allocated costs of facilities, information technology, depreciation and amortization. Although our operating expenses may fluctuate, we expect our overall operating expenses to increase in absolute dollars over time.

• Research and Development. Our research and development expenses consist primarily of personnel costs, pre-production engineering mask costs, software license and intellectual property expenses, design tools and prototype-related expenses, facility costs, supplies and depreciation expense. We expense research and development costs as incurred. In addition, we enter into development agreements with some of our customers that provide fees that partially offset development costs. Such fees are recognized upon completion of the contract deliverables or milestones, and acceptance by the customer if required. We believe that continued investment in our products and services is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase on an absolute basis.

• Sales and Marketing. Sales and marketing expenses consist of personnel costs, field application engineering support, travel costs, professional and consulting fees and allocated overhead costs. We expect sales and marketing expense to increase in absolute dollars as we increase our sales and marketing personnel and grow our international operations.

• General and Administrative. General and administrative expenses consist of personnel costs, professional and consulting fees, legal and allocated overhead costs. We expect general and administrative expense to increase in absolute dollars as we grow our operations and incur additional expenses associated with operating as a public company.

Other Income (Expense)

Other income (expense) consists primarily of interest income from marketable securities and investments, finance cost related to our capital lease and foreign exchange gains and losses.

Income Tax Expense

Income tax expense consists primarily of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We have a full valuation allowance for deferred tax assets as the realization of the full amount of our deferred tax assets is uncertain, including net operating loss, or NOL, carryforwards, and tax credits related primarily to research and development. We expect to maintain this full valuation allowance until realization of the deferred tax assets becomes more likely than not.

Results of Operations

The following table summarizes our results of operations for the periods presented. The period-to-period comparison of results is not necessarily indicative of results to be expected for future periods.

	Three Months Ended
	March 31,
	2019			2018
Consolidated Statements of Operations Data:	(in thousands)
Revenue	$	17,022		$	28,358
Cost of revenue		8,056			12,241
Gross profit		8,966			16,117
Operating expenses:
Research and development		16,070			12,574
Sales and marketing		2,719			2,287
General and administrative		3,422			2,997
Total operating expenses		22,211			17,858
Loss from operations		(13,245	)		(1,741	)
Other income (expense):
Other income, net		368			248
Total other income (expense)		368			248
Loss before income tax expense		(12,877	)		(1,493	)
Provision for (benefit from) income taxes		190			(125	)
Net loss	$	(13,067	)	$	(1,368	)

21

The following table summarizes our results of operations as a percentage of revenue for each of the periods indicated:

	Three Months Ended
	March 31,
	2019				2018
Consolidated Statements of Operations Data:
Revenue		100		%		100		%
Cost of revenue		47				43
Gross profit		53				57
Operating expenses:
Research and development		94				44
Sales and marketing		16				8
General and administrative		20				11
Total operating expenses		130				63
Loss from operations		(77	)			(6	)
Other income (expense):
Other income, net		2				1
Total other income (expense)		2				1
Loss before income tax expense		(75	)			(5	)
Provision for (benefit from) income taxes		1				—
Net loss		(76	)	%		(5	)	%

Comparison of the Three Months Ended March 31, 2019 and 2018

Revenue

	Three Months Ended
	March 31,
	2019		2018		Change			% Change
	(dollars in thousands)
Revenue by market
Data center	$	8,211	$	16,269	$	(8,058	)		(50	)	%
Enterprise infrastructure		5,471		9,511		(4,040	)		(42	)
Access		3,206		2,531		675			27
Automotive		134		47		87			185
Total Revenue	$	17,022	$	28,358	$	(11,336	)		(40	)

Revenue decreased by $11.3 million, or 40%, for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to lower product sales volume in the data center and enterprise infrastructure markets which accounted for $12.1 million decrease, offset by higher product sales volume in the access and automotive markets of $0.8 million.  

Cost of Revenue, Gross Profit and Gross Margin

	Three Months Ended
	March 31,
	2019			2018			Change			% Change
	(dollars in thousands)
Cost of revenue	$	8,056		$	12,241		$	(4,185	)		(34	)	%
Gross Profit	$	8,966		$	16,117		$	(7,151	)		(44	)	%
Gross Margin		53	%		57	%					(4	)	pts

22

Cost of revenue decreased by $4.2 million, or 34%, for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to lower product costs of $4.7 million on lower sales volume in the data center and enterprise infrastructure markets, offset by $0.5 million in higher overhead and depreciation expenses.

Gross profit decreased by $7.1 million, or 44%, for the three months ended March 31, 2019 compared to the corresponding period in 2018. Gross margin decreased by 4 percentage point for the three months ended March 31, 2019 compared to the corresponding period in 2018 mainly due to fixed expenses such as overhead and depreciation expenses representing a higher percentage of revenue.

Operating Expenses

	Three Months Ended
	March 31,
	2019		2018		Change		% Change
	(dollars in thousands)
Operating expenses:
Research and development	$	16,070	$	12,574	$	3,496		28	%
Sales and marketing		2,719		2,287		432		19
General and administrative		3,422		2,997		425		14
Total operating expenses	$	22,211	$	17,858	$	4,353		24

Research and development expenses increased by $3.5 million, or 28%, for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to increase in design tools and prototype-related expenses of $0.9 million, increase in expensed equipment and network of $0.7 million, increase in stock-based compensation expense of $0.7 million, increase in personnel-related costs of $0.3 million as we continued to expand our research and development headcount, and increase in consulting and design fees of $0.2 million.

Sales and marketing expenses increased by $0.4 million, or 19%, for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to an increase in personnel-related costs of $0.3 million, and increase in stock-based compensation of $0.2 million, offset by decrease in consulting fees related to product marketing of $0.2 million.

General and administrative expenses increased by $0.4 million, or 14%, for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to increase in stock-based compensation of $0.4 million.

Other Income (Expense)

	Three Months Ended
	March 31,
	2019		2018		Change		% Change
	(dollars in thousands)
Other income (expense):
Other income, net		368		248		120	48		%
Total other income (expense):	$	368	$	248	$	120		48

Total other income (expense), net for the three months ended March 31, 2019 increased by $.1 million compared to the corresponding period in 2018, primarily due to increase in investment income.

Income Tax Expense

	Three Months Ended
	March 31,
	2019		2018			Change		% Change
	(dollars in thousands)
Provision for (benefit from) Income    taxes	$	190	$	(125	)	$	315	*	%

* Percentage change not meaningful

23

Income tax expense increased by $0.3 million for the three months ended March 31, 2019 compared to the corresponding period in 2018, primarily due to the increased tax expenserelated to our foreign subsidiaries.

Liquidity and Capital Resources

As of March 31, 2019, we had cash, cash equivalents and short-term investments of $62.4 million. We believe that our existing cash and cash equivalents and short-term investments, our expected cash flows from product sales, and funds available for borrowing under our credit facilities will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, and the continuing market acceptance of our solutions.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three Months Ended
	March 31,
	2019			2018
	(in thousands)
Net cash provided by (used in) operating activities	$	(4,986	)	$	7,803
Net cash used in investing activities		6,390			(10,935	)
Net cash used in financing activities		392			(302	)
Net increase (decrease) in cash and cash equivalents	$	1,796		$	(3,434	)

Operating Activities

We have historically used cash in operating activities due to our net losses, adjusted for changes in our operating assets and liabilities, particularly from accounts receivable, inventories, prepaid expenses and other assets, accounts payable and accrued expenses, deferred revenue and non-cash expense items such as depreciation and amortization, stock-based compensation expense, and prior to November 2017, issuance of convertible preferred stock warrants and the change in fair value of our convertible preferred stock warrant liability and amortization of our debt discount.

For the three months ended March 31, 2019, cash used in operating activities was approximately $5.0 million. The cash used in operating activities was primarily due to net loss of $13.1 million and increase in inventory of $2.5 million offset by a decrease in accounts receivable of $6.6 million and non-cash expenses of $4.2 million.

For the three months ended March 31, 2018, cash provided by operating activities was approximately $7.8 million. The cash from operating activities was primarily from the decrease in accounts receivable of $4.6 million and inventory of $2.3 million offset by a decrease in accounts payable and accrued liabilities of $2.1 million.

Investing Activities

Our investing activities consist of capital expenditures for property and equipment purchases and IP licenses. Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and equipment, leasehold improvements, software and computer equipment used internally, and production masks to manufacture our products.

For the three months ended March 31, 2019, cash provided by investing activities was approximately $6.4 million primarily from proceeds of sales and maturities of purchases of short-term investments net of purchases of $7.0 million offset by purchases of lab equipment, software and production equipment for general business purposes.

For the three months ended March 31, 2018, we used approximately $10.9 million in investing activities primarily for purchases of short-term investments net of sales and maturity of $10.2 million and for purchases of lab equipment, software and production equipment for general business purposes.

Financing Activities

Cash generated by financing activities includes proceeds from our issuance of common stock following employee stock option exercises and employee stock purchase plan. Cash used in financing activities includes payment of costs related to our IPO in November 2017.

24

For the three months ended March 31, 2019, cash provided by financing activities of $0.4 million consisting primarily of proceeds from the exercise of employee stock options.

For the three months ended March 31, 2018, we used $0.3 million of cash in financing activities consisting primarily of costs related to our IPO.

Contractual Obligations and Commitments

There have been no material changes outside the ordinary course of our business to the contractual obligations during the three months ended March 31, 2019, as compared to those disclosed in the 2018 Annual Report on Form 10-K. See Notes 6 to our condensed consolidated financial statements for more information.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Credit—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash equivalents consist of cash and money market accounts with a financial institution that management believes to be of high-credit quality; however, at times, balances exceed federally insured limits. Amounts held on deposit at financial institutions in excess of Federal Deposit Insurance Corporation-insured amounts were $0.6 million and $1.1 million as of March 31, 2019 and December 31, 2018, respectively.

Concentration of Credit Risk - We are exposed to the credit risk of our customers. Our concentration of accounts receivable with our significant customers and their manufacturing subcontractors as of March 31, 2019 and December 31, 2018 and revenue for the three months ended March 31, 2019 and 2018 was as follows:

	As of			As of
	March 31,			December 31,
	2019			2018
Accounts Receivable:
Customer A		34	%		42	%
Customer B	8			19

	Three Months Ended
	March 31,
	2019			2018
Revenue:
Customer A		40	%		55	%
Customer B	16			28

Foreign Currency Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. All of our revenue is denominated in U.S. dollars. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States and to a lesser extent in India, the Netherlands, Russia and Taiwan. Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. The effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have a material impact on our consolidated financial statements.

25

Interest Rate and Investment Risk

We established an investment policy to preserve principal, maintain liquidity and capture a market rate of return. The policy requires minimum credit ratings of marketable securities, diversification of credit risk and lowers long-term interest rate risk by limiting the maturity duration of marketable securities. Our interest rate risk relates primarily to interest income from investments as we repaid our outstanding debt in full as of December 31, 2018. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. The effect of a hypothetical 10% change in interest rates relating to our marketable securities would not have a material impact on our consolidated financial statements.

Our marketable securities consisting primarily of commercial paper, U.S. government securities, corporate bonds and money market funds are classified as available-for-sale securities and are recorded on our balance sheet at fair value with their related unrealized gains or losses reflected as a component of accumulated other comprehensive loss in the consolidated statement of stockholders’ equity. We are exposed to market risk as it relates to changes in the market value of our investments in addition to the liquidity and credit worthiness of the underlying issuers of our investments. We currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue but we cannot ensure that this will not change. Our investments are subject to fluctuations in fair value due to the volatility of the credit markets and prevailing interest rates for such securities. As of March 31, 2019 and December 31, 2018, our cash, cash equivalent and short-term investment balance was $62.4 million and $67.4 million, respectively, and our unrealized loss was $4,000 and $123,000, respectively.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2019, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent limitations

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, operating results, financial condition or cash flows.

Item 1A.Risk Factors

Our operations and financial results are subject to various risks and uncertainties including those described below. You should consider carefully the risks and uncertainties described in Part I, Item IA, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2018, which are incorporated by reference herein, as our business, financial condition and results of operations could be adversely affected by any or the risks and uncertainties described therein. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, except the following:

The announcement and pendency of our agreement to be acquired by Marvell may have an adverse effect on our business, operating results and our stock price, and may result in the loss of employees, customers, suppliers and other business partners.

On May 6, 2019, we entered into an Agreement and Plan of Merger, or the Merger Agreement, with Marvell Technology Group Ltd., a Bermuda exempted company, or Marvell, and Aquantia Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Marvell, or Merger Sub. The Merger Agreement provides for the merger of Merger Sub with and into Aquantia (the “Merger”) with Aquantia surviving the Merger as a wholly owned subsidiary of Marvell. We are subject to risks in connection with the announcement and pendency of the Merger, including, but not limited to, the following:

• market reaction to the announcement of the Merger;

• changes in our business, operations, financial position and prospects;

• market assessments of the likelihood that the Merger will be consummated;

• the amount of cash offered per share will not be increased to account for positive changes in our business, assets, liabilities, prospects, outlook, financial condition or results of operations during the pendency of the Merger, including any successful execution of our current strategy as an independent company or in the event of any change in the market price of, analyst estimates of, or projections relating to, our common stock;

• potential adverse effects on our relationships with our current customers, suppliers and other business partners, or those with which we are seeking to establish business relationships, due to uncertainties about the Merger;

• we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, and many of these fees and costs are payable by us regardless of whether the Merger is consummated;

• potential adverse effects on our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles and relationships with us following the completion of the Merger, and the possibility that our employees could lose productivity as a result of uncertainty regarding their employment following the Merger;

• the pendency and outcome of any legal proceedings that may be instituted against us, our directors, executive officers and others relating to the transactions contemplated by the Merger Agreement; and

• the possibility of disruption to our business, including increased costs and diversion of management time and resources that could otherwise have been devoted to other opportunities that may have been beneficial to us.

While the Merger is pending, we are subject to contractual restrictions that could harm our business, operating results and our stock price.

The Merger Agreement includes restrictions on the conduct of our business prior to the completion of the Merger, generally requiring us to conduct our businesses in the ordinary course, consistent with past practice, and restricting us from taking certain specified actions absent Marvell’s prior written consent. We may find that these and other obligations in the Merger Agreement may delay or prevent us from or limit our ability to respond effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management and board of directors think they may be advisable. These restrictions could adversely impact our business, operating results and our stock price and our perceived acquisition value, regardless of whether the Merger is completed.

27

The failure to complete the Merger may adversely affect our business and our stock price.

The Merger with Marvell is subject to a number of conditions, including, among other things, (i) adoption of the Merger Agreement by the holders of a majority of our outstanding common stock, (ii) the clearance of the Merger by the Committee on Foreign Investment in the United States without the imposition of a Burdensome Condition (as defined in the Merger Agreement), (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, without the imposition of a Burdensome Condition, (iv) the absence of any “material adverse effect” on us occurring after the date of the Merger Agreement that is continuing, (v) the absence of any legal restraints prohibiting the Merger, (vi) the absence of certain legal proceedings brought by a governmental entity relating to the Merger, and (vii) subject to certain materiality qualifications, the continued accuracy of our representations and warranties, and our continued compliance with covenants and obligations (to be performed at or prior to the closing of the Merger).  There can be no assurance that these conditions to the completion of the Merger will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe or at all.  If the Merger is not completed, we may be subject to negative publicity or be negatively perceived by the investment or business communities and our stock price could fall to the extent that our current stock price reflects an assumption that the Merger will be completed. Furthermore, if the Merger is not completed, we may suffer other consequences that could adversely affect our business and results of our operations.

The Merger Agreement with Marvell limits our ability to pursue alternative transactions which could deter a third party from proposing an alternative transaction.

The Merger Agreement contains provisions that, subject to certain exceptions, limit our ability to initiate, solicit, knowingly encourage, assist, knowingly induce or knowingly facilitate, or participate or engage in any negotiations or discussions regarding, or furnish information in response to inquiries with respect to, an alternative transaction. It is possible that these or other provisions in the Merger Agreement might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our outstanding common stock from considering or proposing an acquisition or might result in a potential competing acquirer proposing to pay a lower per share price to acquire our common stock than it might otherwise have proposed to pay.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Equity Securities

None

Issuer Purchases of Equity Securities

None

(c) Issuer Purchases of Equity Securities

Not applicable.

28

Item 6. Exhibits

Exhibit		Incorporation By Reference
Number	Description	Form	SEC File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation	8-K	001-38270	3.1	Jul. 3, 2018
3.2	Amended and Restated Bylaws	S-1	333-220871	3.4	October 6, 2017
4.1	Form of Common Stock Certificate of the Registrant.	S-1	333-220871	4.1	October 6, 2017
31.1*	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of the Principal Executive Officer and Principal Financial Officer pursuant to the 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS***	XBRL Instance Document
101.SCH***	XBRL Taxonomy Extension Schema Document
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** This certification is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

*** Submitted electronically with this Report.

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Aquantia Corp.
Date:   May 9, 2019	By:	/s/ Mark Voll
		Mark Voll
		Chief Financial Officer (On behalf of Registrant and as Principal Financial and Accounting Officer)

30

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Faraj Aalaei, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Aquantia Corp. (the “registrant”) for the fiscal quarter ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:   May 9, 2019	By:	/s/ Faraj Aalaei
		Faraj Aalaei
		Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark Voll, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Aquantia Corp. (the “registrant”) for the fiscal quarter ended March 31, 2019;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:   May 9, 2019	By:	/s/ Mark Voll
		Mark Voll
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, as Principal Executive Officer and as Principal Financial Officer of Aquantia Corp. (the “Company”), respectively, certify that, to the best of their knowledge and belief, the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2019, which accompanies this certification fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2019 fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated therein. The foregoing certifications are made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be relied upon for any other purpose.

/s/ Faraj Aalaei

Faraj Aalaei

Chairman, President and Chief Executive Officer

(Principal Executive Officer)

May 9, 2019

/s/ Mark Voll

Mark Voll

Chief Financial Officer

(Principal Financial and Accounting Officer)

May 9, 2019

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Aquantia Corp. and will be retained by Aquantia Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 03, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	AQ
Entity Registrant Name	AQUANTIA CORP
Entity Central Index Key	0001316016
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Small Business	false
Entity Common Stock, Shares Outstanding		35,532,571

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 8,480	$ 6,684
Short-term investments	53,895	60,730
Accounts receivable	10,350	16,927
Inventories	17,015	14,474
Prepaid expenses and other current assets	1,801	2,018
Total current assets	91,541	100,833
Property and equipment, net	11,211	9,225
Operating lease assets, net	5,644
Intangible assets, net	3,546	3,748
Other assets	616	617
Total assets	112,558	114,423
Current liabilities:
Accounts payable	6,349	5,495
Accrued liabilities	15,750	13,907
Operating lease liabilities - short term	839
Total current liabilities	22,938	19,402
Operating lease liabilities - long term	6,251
Other long-term liabilities	413	1,799
Total liabilities	29,602	21,201
Commitments and contingencies (Note 3 and Note 6)
Stockholders’ equity:
Additional paid-in capital	303,473	300,791
Accumulated other comprehensive loss	(4)	(123)
Accumulated deficit	(220,513)	(207,446)
Total stockholders’ equity	82,956	93,222
Total liabilities and stockholders’ equity	$ 112,558	$ 114,423

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares outstanding	35,508,553	35,050,425

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Revenue	$ 17,022	$ 28,358
Cost of revenue	8,056	12,241
Gross profit	8,966	16,117
Operating expenses:
Research and development	16,070	12,574
Sales and marketing	2,719	2,287
General and administrative	3,422	2,997
Total operating expenses	22,211	17,858
Loss from operations	(13,245)	(1,741)
Other income (expense):
Other income, net	368	248
Total other income (expense)	368	248
Loss before income tax expense	(12,877)	(1,493)
Provision for (benefit from) income taxes	190	(125)
Net loss	$ (13,067)	$ (1,368)
Net loss per share, basic and diluted	$ (0.37)	$ (0.04)
Weighted-average shares used to compute net loss per share, basic and diluted	35,158	33,495
Comprehensive income:
Net loss	$ (13,067)	$ (1,368)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) - short-term investments	119	(131)
Comprehensive loss	$ (12,948)	$ (1,499)

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive loss	Accumulated Deficit
Cumulative effect upon adoption of ASC 606	$ 35				$ 35
BALANCE at Dec. 31, 2017	90,914		$ 288,719	$ (96)	(197,709)
BALANCE, Shares at Dec. 31, 2017		33,523,683
Other comprehensive loss (gain) - unrealized loss (gain) on short-term investments	(131)			(131)
Exercise of stock options, shares		3,466
Issuance of restricted stock units		102,500
Issuance of restricted stock units (reversed, not yet issued)		(137,529)
Issuance of common stock, netupon exercise of warrants		48,305
Repurchase of stock options, shares		(3,626)
IPO Costs	22		22
Stock-based compensation expense	978		978
Net loss	(1,368)				(1,368)
BALANCE at Mar. 31, 2018	90,406		289,675	(227)	(199,042)
BALANCE, Shares at Mar. 31, 2018		33,536,799
IPO Costs	(22)		(22)
BALANCE at Dec. 31, 2018	$ 93,222		300,791	(123)	(207,446)
BALANCE, Shares at Dec. 31, 2018	35,050,425	35,050,425
Other comprehensive loss (gain) - unrealized loss (gain) on short-term investments	$ 119			119
Exercise of stock options	392		392
Exercise of stock options, shares		132,692
Issuance of restricted stock units		325,436
Stock-based compensation expense	2,290		2,290
Net loss	(13,067)				(13,067)
BALANCE at Mar. 31, 2019	$ 82,956		$ 303,473	$ (4)	$ (220,513)
BALANCE, Shares at Mar. 31, 2019	35,508,553	35,508,553

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net loss	$ (13,067)	$ (1,368)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	1,616	1,385
Stock-based compensation expense	2,290	978
Accretion of investment premium, net of amortization of discount	(112)
Changes in operating assets and liabilities:
Accounts receivable	6,577	4,595
Inventories	(2,541)	2,313
Operating lease assets, net	254
Prepaid expenses and other assets	218	1,953
Accounts payable	(1,870)	(1,193)
Accrued and other liabilities	1,873	(860)
Operating lease liabilities	(224)
Net cash provided by (used in) operating activities	(4,986)	7,803
Cash flows from investing activities
Purchases of property and equipment	(676)	(731)
Proceeds from sales of short-term investments	1,000
Proceeds from maturities of short-term investments	14,000	5,400
Purchases of short-term investments	(7,934)	(15,604)
Net cash provided by (used in) investing activities	6,390	(10,935)
Cash flows from financing activities
Proceeds from exercise of stock options	392
Purchases of IP licenses		(26)
Payment of costs related to initial public offering		(276)
Net cash provided by (used in) financing activities	392	(302)
Net decrease in cash and cash equivalents	1,796	(3,434)
Cash and cash equivalents at beginning of period	6,684	8,040
Cash and cash equivalents at end of period	8,480	4,606
Supplemental disclosures of cash flow information
Cash paid for interest	10
Cash paid for income taxes	125
Cash paid for amounts included in the lease liabilities	418
Cashless exercises of warrants, net of assumed proceeds from shares		550
Property and equipment received and accrued	$ 2,810	$ 345

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Organization, Description of Business and Basis for Presentation

3 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization, Description of Business and Basis for Presentation

1. Organization, Description of Business and Basis for Presentation

Organization—Aquantia Corp. (together with its subsidiaries, the “Company”) was incorporated in Delaware on January 27, 2004. The Company is a leader in the design, development and marketing of advanced high-speed communications integrated circuits, or ICs, for Ethernet connectivity in the data center, enterprise infrastructure, access and automotive markets.

Basis of Presentation and Principles of Consolidation—The accompanying unaudited condensed consolidated financial statements included herein have been prepared by us in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, normal recurring adjustments considered necessary for a fair presentation have been reflected in these condensed consolidated financial statements.  Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited financial statements for the fiscal year then ended included in the Company’s Annual Report on Form 10-K filed with the SEC on March 6, 2019 (the “2018 Annual Report on Form 10-K”), but does not include all of the information and notes required by U.S. GAAP for complete consolidated financial statements. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements as of and for the fiscal year ended December 31, 2018 and the related notes thereto included in the 2018 Annual Report on Form 10-K.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

During the three months ended March 31, 2019, there have been no changes in our significant accounting policies as described in the Company’s 2018 Annual Report on Form 10-K, except as discussed below:

Recent Accounting Pronouncements—

Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. It clarifies the accounting for implementation costs in cloud computing arrangements. The new guidance requires companies to recognize the implementation costs as expense over the noncancelable term of the cloud computing arrangement plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. The guidance is effective for fiscal year beginning after December 15, 2019. Early adoption is permitted. The Company adopted this guidance on January 1, 2019 on a prospective basis to costs incurred after that date. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2018, the FASB released ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S tax reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (herein referred to as “ASC 842”). The new guidance requires entities to recognize assets and liabilities for leases and additional disclosures to better understand the amount, timing and uncertainty of cash flows arising from leases. The guidance was effective for financial statements issued for fiscal years beginning after December 15, 2018. Early adoption was permitted. The Company adopted this guidance in the first quarter of 2019 using the modified retrospective approach, electing the package of practical expedients, which allows for the carryforward of the Company’s historical lease classification and assessment on whether a contract is or contains a lease, and the practical expedient to not separate lease and non-lease components. The Company has elected not to record on the balance sheet leases with an initial term of twelve months or less and that do not have a purchase option that the Company is reasonably certain to exercise. The Company also elected the optional transition method that permits adoption of the new standard as of the effective date without adjusting comparative periods presented. Adoption of the standard resulted in the recognition of $5.9 million of right-of-use assets and $7.3 million of lease liabilities on our condensed consolidated balance sheet at adoption related to our leases. The difference of $1.4 million represented lease incentives and deferred rent for leases that existed as of the date of adoption, which reduced the right-of-use asset recorded at the date of adoption. The adoption of the standard on January 1, 2019 did not have a material impact on the Company’s consolidated statements of operations, stockholders’ equity or cash flows. See Note 3 for additional information.

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Balance Sheet Components

3 Months Ended

Mar. 31, 2019

Balance Sheets Components [Abstract]

Balance Sheet Components

3. Balance Sheet Components

Inventories consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Processed wafers	$	1,277	$	1,233
Work in process		7,445		5,990
Finished goods		8,293		7,251
Total inventories	$	17,015	$	14,474

Property and equipment, net consisted of the following (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
Machinery and equipment	2-3 years	$	15,925		$	15,237
Production masks	4 years		8,101			5,401
Software and computer equipment	3 years		4,459			4,492
Leasehold improvements	Shorter of estimated life of asset or remaining lease term		1,414			1,414
Office furniture and fixtures	3 years		163			117
Total property and equipment			30,062			26,661
Less: accumulated depreciation and    amortization			(18,851	)		(17,436	)
Property and equipment, net		$	11,211		$	9,225

Depreciation and amortization of property and equipment totaled $1.4 million and $1.2 million for the three months ended March 31, 2019 and 2018, respectively.

Intangible assets, net were carried at cost, less accumulated amortization. Intangible assets were as follows (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
IP license	7 years	$	5,416		$	5,416
Patents	10-12 years		348			348
Total intangible assets			5,764			5,764
Less: accumulated amortization			(2,218	)		(2,016	)
Intangible assets, net		$	3,546		$	3,748

Amortization of intangible assets totaled $0.2 million and $0.2 million for the three months ended March 31, 2019 and 2018, respectively.

Amortization expense related to amortizable intangibles in future periods as of March 31, 2019 is expected to be as follows (in thousands):

2019 (remaining)	$	606
2020		808
2021		808
2022		800
2023 and thereafter		524
Total	$	3,546

Operating lease asset and liabilities

The Company has entered into operating leases primarily for real estate. As of adoption these leases have terms which range from 1 year to 6 years, and often include one or more options to renew. These renewal terms can extend the lease term from 1 to 9 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. After the adoption of ASC 842 on January 1, 2019, an asset has been included on the Company’s condensed consolidated balance sheet as “operating lease assets, net” which represents the Company’s right to use the underlying asset for the lease term. Similarly, the Company has recorded its obligation to make lease payments within its condensed consolidated balance sheet as “operating lease liabilities” and classified these liabilities as short-term (“operating lease liabilities – short term”) and long-term (“operating lease liabilities – long term”) based on the timing and amounts of payment. The Company determines whether an arrangement is a lease at inception. Some lease agreements contain the lease and non-lease components, which are accounted for a single lease component. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As of March 31, 2019, total right-of-use assets and operating lease liabilities were approximately $5.6 million and $7.1 million, respectively and presented within the condensed consolidated balance sheet as noted above. The Company has entered into various short-term operating leases, primarily for office equipment, automotive, and other facilities, with an initial term of twelve months or less. Leases with a lease term of twelve months or less have not been recorded on the Company’s condensed consolidated balance sheet. No new leases were entered into during the quarter ended March 31, 2019.

All operating lease expense is recognized on a straight-line basis over the lease term. In the three months ended March 31, 2019, the Company recognized approximately $0.5 million in total lease costs.  

Because the rate implicit in each lease is not readily determinable, the Company used the estimated interest rate for collateralized loan over a similar term to determine the present value of the lease payments. The weighted-average remaining lease term was 3.3 years and the weighted-average discount rate used was 8.5%.

Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):

2019 (remaining)	$	1,020
2020		1,513
2021		2,018
2022		2,059
2023		1,793
2024 and thereafter		431
Total		8,834
Less imputed interest		(1,744	)
Total lease liabilities	$	7,090

Refer to Note 6 for the future minimum operating lease payments under ASC 840.

Accrued liabilities consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Accrued compensation and related benefits	$	4,759	$	5,301
Customer Deposit		-		40
Accrued IP License		5,266		4,829
Accrued technical consulting and professional services		237		412
Accrued royalty, rebates and commission		583		443
Other accrued liabilities		4,905		2,882
Total accrued liabilities	$	15,750	$	13,907

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Financial Instruments

3 Months Ended

Mar. 31, 2019

Investments All Other Investments [Abstract]

Financial Instruments

4. Financial Instruments

The following is a summary of financial instruments (in thousands):

	As of March 31, 2019
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,939	$	—	$	(1	)	$	10,938
Money market funds		736		—		—			736
Corporate bonds		45,971		—		(4	)		45,967
U.S. government securities		1,980		2		—			1,982
Total available-for-sale securities	$	59,626	$	2	$	(5	)	$	59,623
Reported in:
Cash and cash equivalents								$	5,728
Short-term investments									53,895
Total available-for-sale securities								$	59,623

	As of December 31, 2018
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,173	$	—	$	(9	)	$	10,164
Money market funds		403		—		—			403
Corporate bonds		52,448		—		(114	)		52,334
U.S. government securities		1,972		—		-			1,972
Total available-for-sale securities	$	64,996	$	—	$	(123	)	$	64,873
Reported in:
Cash and cash equivalents								$	4,143
Short-term investments									60,730
Total available-for-sale securities								$	64,873

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	As of March 31, 2019
	Amortized Cost Basis		Estimated Fair Value
Due in one year or less	$	59,626	$	59,623
Due between one and five years		—		—
	$	59,626	$	59,623

Gross realized gains and gross realized losses on sales of available-for-sale securities for the three months ended March 31, 2019 were not significant.As of March 31, 2019 and December 31, 2018, there were no individual securities that had been in a continuous loss position for 12 months or longer. As of March 31, 2019 and December 31, 2018, there were $11.0 million and $19.2 million, respectively, of securities that had been in a continuous loss position for 12 months or longer.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which to transact and the market-based risk. The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company categorizes assets and liabilities recorded at fair value based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:

Level 1—Observable inputs, such as quoted prices in active markets for identical, unrestricted assets, or liabilities.

Level 2—Quoted prices for similar assets or liabilities, or inputs other than quoted prices in active markets that are observable either directly or indirectly.

Level 3—Unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions about the assumptions market participants would use in pricing the asset or liability. Valuation techniques include use of option-pricing models, discounted cash flows models, and similar techniques.

The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The following tables represent the Company’s financial assets measured at fair value on a recurring basis categorized by the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

	As of March 31, 2019
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	736	$	—	$	—	$	736
Commercial paper		—		10,938		—		10,938
Corporate bonds		—		45,967		—		45,967
U.S. government securities		—		1,982		—		1,982
Total financial asset—available-for-sales securities	$	736	$	58,887	$	—	$	59,623

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	403	$	—	$	—	$	403
Commercial paper		—		10,164		—		10,164
Corporate bonds		—		52,334		—		52,334
U.S. government securities		—		1,972		—		1,972
Total financial asset—available-for-sales securities	$	403	$	64,470	$	—	$	64,873

There were no transfers within the hierarchy during the three months ended March 31, 2019 and 2018.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

Lease and purchase obligations—The Company leases office and research facilities under operating leases for its U.S. headquarters and international locations that expire at various dates through March 2024. Under any lease agreement that contains escalating rent provisions, lease expense is recorded on a straight-line basis over the lease term.In addition, the Company has purchase obligations which included agreements and issued purchase orders containing non-cancelable payment terms to purchase goods and services.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 and under the previous lease accounting standard ASC 840, the aggregate future non-cancelable minimum rental payments on our operating leases, as of December 31, 2018, were as follows (in thousands):

					Total
	Operating		Purchase		Lease and Purchase
	Leases		Obligations		Obligations
2019	$	1,482	$	15,674	$	17,156
2020		1,516		4,247		5,763
2021		1,993		1,008		3,001
2022		2,033		—		2,033
2023 and thereafter		2,217		—		2,217
Total	$	9,241	$	20,929	$	30,170

Litigation—The Company accrues for contingencies when it believes that a loss is probable and that it can reasonably estimate the amount of any such loss and the Company has made an assessment of the probability of incurring any such losses and whether or not those losses are estimable.

Although the Company is not currently subject to any litigation, and the Company is not aware of any litigation currently threatened against it, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that it believes will result in a probable loss that is reasonably estimable.

To the extent there is a reasonable possibility that a loss exceeding amounts already recognized may be incurred and the amount of such additional loss would be material, the Company will either disclose the estimated additional loss or state that such an estimate cannot be made. The Company does not currently believe that it is reasonably possible that losses in connection with litigation arising in the ordinary course of business would be material.

Indemnification—Under the indemnification provisions of the Company’s standard sales-related contracts, the Company agrees to defend its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such claims. Certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its directors and certain of its officers while they are serving in good faith in such capacities. To date, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As of March 31, 2019 and December 31, 2018, no liability associated with such indemnifications had been recorded.

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Common Stock and Share-based Compensation

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Common Stock and Share-based Compensation

7. Common Stock and Share-based Compensation

The Company’s certificate of incorporation, as of March 31, 2019 and December 31, 2018, authorized the Company to issue up to 95,000,000 shares of common stock and 5,000,000 shares of preferred stock, each at $0.00001 par value per share.

As of March 31, 2019, no preferred stock was outstanding. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends out of funds legally available. No dividends have been declared to date.

2015 Equity Incentive Plan and 2004 Equity Incentive Plan

Under the Company’s 2015 Equity Incentive Plan and 2004 Equity Incentive Plan, shares of common stock were reserved for the issuance of incentive stock options (“ISO”); nonstatutory stock options (“NSO”); or the sales of restricted common stock to employees, officers, directors, and consultants of the Company. The exercise price of an option is determined by the board of directors when the option is granted and may not be less than 85% of the fair market value of the shares on the date of grant, provided that the exercise price of an ISO is not less than 100% of the fair market value of the shares on the date of grant and the exercise price of any option granted to a 10% stockholder is not less than 110% of the fair market value of the shares on the date of grant. ISOs granted under the Plan generally vest 25% after the completion of 12 months of service and the balance in equal monthly installments over the next 36 months of service and expire 10 years from the grant date. NSOs vest as per the specific agreement and expire 10 years from the date of grant. The Plan allows for early exercise of options prior to full vesting as determined by the board of directors and set forth in the stock option agreements governing such options. Exercises of unvested options are subject to repurchase by the Company at not less than the original exercise price upon termination of employment.

2017 Equity Incentive Plan

In November 2017, the Company adopted the 2017 Equity Incentive Plan, or 2017 Plan, and all shares reserved for grant under the 2015 Equity Incentive Plan and 2004 Equity Incentive Plan were cancelled. The 2017 Plan had 5,047,440 common shares reserved, plus any shares subject to outstanding stock options or other stock awards that were granted under the 2015 Equity Incentive Plan and 2004 Equity Incentive Plan that were forfeited, terminate, expire or are otherwise not issued. In addition, the shares reserved under the 2017 Plan will automatically increase on the first day of each calendar year until January 1, 2027, by an amount equal to 5% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of the automatic increase, or a lesser number of shares determined by the board ofdirectors prior to the date of such automatic increase. The 2017 Plan provides for the grant of common stock awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units, performance units and performance shares to employees, directors, and consultants of the Company. All granted shares that are canceled, forfeited or expired are returned to the 2017 Plan and are available for grant in conjunction with the issuance of new equity awards. Stock options may be granted at an exercise price per share not less than 100% of the fair market value at the date of grant. If a stock option is granted to a 10% stockholder, then the exercise price per share must not be less than 110% of the fair market value per share of common stock on the grant date. Options granted are exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years. As of March 31, 2019, 3,444,533 shares are available for grant.

Stock Options

Activity under the Company’s stock option plan is set forth below:

						Weighted-
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic Value
	Number of Shares			Price		Term (Years)		(in thousands)
Balance—December 31, 2018		2,297,403		$	4.49		6.9	$	9,858
Granted		—		$	—
Exercised		(132,692	)	$	2.95
Canceled		(7,981	)	$	6.26
Balance—March 31, 2019		2,156,730		$	4.58		6.8	$	9,683
Vested and exercisable—March 31, 2019		1,524,974		$	3.93		6.4	$	7,842
Vested and exercisable—December 31, 2018		1,547,754		$	3.74		6.5	$	7,803

As of March 31, 2019, approximately $1.7 million of unrecognized stock compensation costs related to awards were expected to be recognized over a weighted-average period of 2.8 years. As of December 31, 2018, approximately $2.0 million of unrecognized stock compensation costs related to awards were expected to be recognized over a weighted-average period of 2.8 years.

The aggregate intrinsic value of options exercised during the three months ended March 31, 2019 was $0.7 million. The aggregate intrinsic value of options exercised during the year ended December 31, 2018 was $7.1 million.

There were no options granted during the three months ended March 31, 2019 and 2018. The weighted-average grant-date fair value of options granted during the year ended December 31, 2018 was $5.46 per share.

Restricted Stock Unit Awards

The Company grants restricted stock units (RSU) to employees under the 2017 Plan. RSUs granted typically vest ratably over a four-year period and are converted into shares of the Company’s common stock upon vesting on a one-for-one basis subject to the employee’s continued service to the Company over that period. The fair value of RSUs is determined using the fair value of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest. Compensation expense is recognized on a straight-line basis over the requisite service period of each grant. Each RSU award granted from the 2017 Plan will reduce the number of shares available for issuance under the 2017 Plan by one share.

For the three months ended March 31, 2019, unamortized compensation expense related to RSU was approximately $19.6 million, to be recognized over 3.1 years. For the year ended December 31, 2018, unamortized compensation expense related to RSU was approximately $15.8 million, to be recognized over 3.0 years.  

Activity under the Company’s RSU is set forth below:

				Weighted
				Average
				Market
	Number of Shares			Value
Balance—December 31, 2018		1,554,089		$	12.73
Granted		670,941		$	8.51
Released		(325,436	)	$	12.76
Canceled		(14,010	)	$	12.22
Balance—March 31, 2019		1,885,584		$	11.02

Employee Stock Purchase Plan

Concurrent with the completion of the Company’s initial public offering (“IPO”) in November 2017, the Company adopted the 2017 Employee Stock Purchase Plan, or ESPP. The ESPP authorizes the issuance of 2,018,975 shares of common stock outstanding under purchase rights granted to its employees. In addition, the shares reserved under the ESPP Plan will automatically increase on the first day of each calendar year until January 1, 2027, by the lesser of (i) an amount equal to 2% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of the automatic increase, (ii) 1,000,000 shares of common stock, and (iii) a lesser number of shares determined by the board of directors prior to the date of such automatic increase. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP generally provides for offering periods and purchase periods every six months, and at the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the purchase period or on the last trading day of the offering period. 366,369 shares were issued as of December 31, 2018 under the ESPP. Shares expected to be issued under the ESPP were 191,446 for the offering period outstanding as of March 31, 2019. The calculated fair value of the shares under the ESPP for the period started on November 16, 2018 was estimated using the Black-Scholes model with the following assumptions: risk-free interest rate of 2.36%, expected term of 0.5 year, expected dividends of 0% and volatility of 22%. For the three months ended March 31, 2019, unamortized compensation expense related to ESPP was approximately $0.2 million, to be recognized over approximately two months.  For the year ended December 31, 2018, unamortized compensation expense related to ESPP was approximately $0.5 million, to be recognized over approximately five months.  

The Company uses the straight-line vesting attribution method to record stock-based compensation expense. Stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss for options, restricted stock units and ESPP was as follows (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Cost of revenue	$	66	$	25
Research and development		1,232	573
Sales and marketing	350		111
General and administrative	642		269
Total	$	2,290	$	978

No income tax benefit associated with stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2019 and 2018.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

The Company recorded an income tax provision of $0.2 million and benefit of $0.1 million for the three months ended March 31, 2019 and 2018, respectively. The income tax benefit for the three months ended March 31, 2018 consisted primarily of a credit to foreign jurisdiction.

Although the Company files U.S. federal and various state tax returns, the Company’s only major tax jurisdictions are the United States and California. As a result of NOL carryforwards, all of the Company’s tax years are open to federal and state examination in the United States. All tax years are open to examination in various foreign countries.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net Loss Per Share

9. Net Loss Per Share

The following table summarizes the computation of basic and diluted net loss per share (in thousands, except per share data):

	Three Month Ended
	March 31,
	2019			2018
Net loss	$	(13,067	)	$	(1,368	)
Weighted-average common shares outstanding		35,158,470			33,494,807
Less: Shares subject to repurchase		—			—
Weighted-average shares outstanding		35,158,470			33,494,807
Net loss per share, basic and diluted	$	(0.37	)	$	(0.04	)

Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares):

	As of		As of
	March 31,		December 31,
	2019		2018
Stock options to purchase common stock		2,156,730		2,297,403
Unvested restricted stock units		1,885,584		1,554,089
Common stock warrants		83,695		83,695
Total		4,126,009		3,935,187

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Segment Reporting

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Reporting

10. Segment Reporting

The Company operates in one reportable segment related to the design, development and sale of network communication integrated circuits. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer, who reviews operating results on an aggregate basis and manages the Company’s operations as a whole for the purpose of evaluating financial performance and allocating resources. Substantially all of the Company’s long-lived assets were attributable to operations in the United States as of March 31, 2019 and December 31, 2018.

The following table summarizes revenue by market (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Revenue by market:
Data Center	$	8,211	$	16,269
Enterprise Infrastructure		5,471		9,511
Access		3,206		2,531
Automotive		134		47
Total revenue	$	17,022	$	28,358

The Company sells its products worldwide and attributes revenue to the geography where the product is shipped. The geographical distribution of revenue as a percentage of total revenue for the periods indicated was as follows:

	Three Months Ended
	March 31,
	2019			2018
Malaysia		42	%		62	%
China		32			22
United States		8			1
Other		18			15
Total		100	%		100	%

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Concentrations

3 Months Ended

Mar. 31, 2019

Risks And Uncertainties [Abstract]

Concentrations

11. Concentrations

Credit—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company’s cash equivalents consist of cash and money market accounts with a financial institution that management believes to be of high-credit quality; however, at times, balances exceed federally insured limits. Amounts held on deposit at financial institutions in excess of Federal Deposit Insurance Corporation-insured amounts were $0.6 million and $1.1 million as of March 31, 2019 and December 31, 2018, respectively.

Significant Customers—Credit risk with respect to accounts receivable is concentrated with two large customers that contribute a majority of the Company’s business and is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. The fair value of accounts receivable approximates their carrying value. Revenue and accounts receivable concentrated with significant customers and their manufacturing subcontractors as a percentage of accounts receivable and total revenue were as follows:

	As of			As of
	March 31,			December 31,
	2019			2018
Accounts Receivable:
Customer A		34	%		42	%
Customer B	8			19

	Three Months Ended
	March 31,
	2019			2018
Revenue:
Customer A		40	%		55	%
Customer B	16			28

Significant Suppliers — The Company depends on a limited number of subcontractors and suppliers for its wafer and substrate supply and to fabricate, assemble, and test its semiconductor devices. The Company generally sources its production through standard purchase orders and has wafer supply and assembly and test agreements with certain outside contractors. While the Company seeks to maintain a sufficient level of supply and endeavors to maintain ongoing communications with suppliers to guard against interruptions or cessation of supply, business and results of operations could be adversely affected by a stoppage or delay of supply, substitution of more expensive or less reliable products or services, receipt of defective semiconductor devices, an increase in the price of products, or an inability to obtain reduced pricing from suppliers in response to competitive pressures.

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Employee Benefit Plan

3 Months Ended

Mar. 31, 2019

Text Block [Abstract]

Employee Benefit Plan

12. Employee Benefit Plan

The Company has established a 401(k) plan, which permits participants to make contributions by salary deduction pursuant to Section 401(k) of the Internal Revenue Code. The Company may, at its discretion, make matching contributions to the 401(k) Plan. The Company has made no contributions to the 401(k) Plan since its inception.

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Subsequent Event

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Event

13. Subsequent Event

On May 6, 2019, the Company and Marvell Technology Group Ltd., a Bermuda exempted company (“Marvell”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Marvell and Aquantia Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Marvell (“Merger Sub”) providing for the merger of Merger Sub with and into the Company (the “Merger”) with the Company surviving the Merger as a wholly owned subsidiary of Marvell.

Under the terms of the definitive agreement, Marvell will acquire all outstanding shares of the Company’s common stock in exchange for consideration of $13.25 per share in cash.  The Merger Agreement contains representations and warranties customary for transactions of this type. The completion of the Merger is subject to the satisfaction or waiver of a number of closing conditions. The Merger Agreement provides Marvell and the Company with certain termination rights and, under certain circumstances, may require Marvell or the Company to pay a termination fee.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements—

Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. It clarifies the accounting for implementation costs in cloud computing arrangements. The new guidance requires companies to recognize the implementation costs as expense over the noncancelable term of the cloud computing arrangement plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. The guidance is effective for fiscal year beginning after December 15, 2019. Early adoption is permitted. The Company adopted this guidance on January 1, 2019 on a prospective basis to costs incurred after that date. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2018, the FASB released ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S tax reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018. The adoption of this guidance did not result in a significant impact to the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (herein referred to as “ASC 842”). The new guidance requires entities to recognize assets and liabilities for leases and additional disclosures to better understand the amount, timing and uncertainty of cash flows arising from leases. The guidance was effective for financial statements issued for fiscal years beginning after December 15, 2018. Early adoption was permitted. The Company adopted this guidance in the first quarter of 2019 using the modified retrospective approach, electing the package of practical expedients, which allows for the carryforward of the Company’s historical lease classification and assessment on whether a contract is or contains a lease, and the practical expedient to not separate lease and non-lease components. The Company has elected not to record on the balance sheet leases with an initial term of twelve months or less and that do not have a purchase option that the Company is reasonably certain to exercise. The Company also elected the optional transition method that permits adoption of the new standard as of the effective date without adjusting comparative periods presented. Adoption of the standard resulted in the recognition of $5.9 million of right-of-use assets and $7.3 million of lease liabilities on our condensed consolidated balance sheet at adoption related to our leases. The difference of $1.4 million represented lease incentives and deferred rent for leases that existed as of the date of adoption, which reduced the right-of-use asset recorded at the date of adoption. The adoption of the standard on January 1, 2019 did not have a material impact on the Company’s consolidated statements of operations, stockholders’ equity or cash flows. See Note 3 for additional information.

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Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2019

Balance Sheets Components [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Processed wafers	$	1,277	$	1,233
Work in process		7,445		5,990
Finished goods		8,293		7,251
Total inventories	$	17,015	$	14,474

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
Machinery and equipment	2-3 years	$	15,925		$	15,237
Production masks	4 years		8,101			5,401
Software and computer equipment	3 years		4,459			4,492
Leasehold improvements	Shorter of estimated life of asset or remaining lease term		1,414			1,414
Office furniture and fixtures	3 years		163			117
Total property and equipment			30,062			26,661
Less: accumulated depreciation and    amortization			(18,851	)		(17,436	)
Property and equipment, net		$	11,211		$	9,225

Schedule of Intangible Assets

Intangible assets, net were carried at cost, less accumulated amortization. Intangible assets were as follows (in thousands):

		As of March 31,			As of December 31,
	Estimated Useful Lives	2019			2018
IP license	7 years	$	5,416		$	5,416
Patents	10-12 years		348			348
Total intangible assets			5,764			5,764
Less: accumulated amortization			(2,218	)		(2,016	)
Intangible assets, net		$	3,546		$	3,748

Schedule of Amortization Expense Related to Amortizable Intangibles In Future Periods

Amortization expense related to amortizable intangibles in future periods as of March 31, 2019 is expected to be as follows (in thousands):

2019 (remaining)	$	606
2020		808
2021		808
2022		800
2023 and thereafter		524
Total	$	3,546

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):

2019 (remaining)	$	1,020
2020		1,513
2021		2,018
2022		2,059
2023		1,793
2024 and thereafter		431
Total		8,834
Less imputed interest		(1,744	)
Total lease liabilities	$	7,090

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	As of March 31,		As of December 31,
	2019		2018
Accrued compensation and related benefits	$	4,759	$	5,301
Customer Deposit		-		40
Accrued IP License		5,266		4,829
Accrued technical consulting and professional services		237		412
Accrued royalty, rebates and commission		583		443
Other accrued liabilities		4,905		2,882
Total accrued liabilities	$	15,750	$	13,907

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Investments All Other Investments [Abstract]

Summary of Financial Instruments

The following is a summary of financial instruments (in thousands):

	As of March 31, 2019
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,939	$	—	$	(1	)	$	10,938
Money market funds		736		—		—			736
Corporate bonds		45,971		—		(4	)		45,967
U.S. government securities		1,980		2		—			1,982
Total available-for-sale securities	$	59,626	$	2	$	(5	)	$	59,623
Reported in:
Cash and cash equivalents								$	5,728
Short-term investments									53,895
Total available-for-sale securities								$	59,623

	As of December 31, 2018
			Gross		Gross
			Unrealized		Unrealized			Estimated Fair
	Cost		Gains		Losses			Values
Available-for sale securities
Commercial paper	$	10,173	$	—	$	(9	)	$	10,164
Money market funds		403		—		—			403
Corporate bonds		52,448		—		(114	)		52,334
U.S. government securities		1,972		—		-			1,972
Total available-for-sale securities	$	64,996	$	—	$	(123	)	$	64,873
Reported in:
Cash and cash equivalents								$	4,143
Short-term investments									60,730
Total available-for-sale securities								$	64,873

Summary of Contractual Maturities of Available-for-sale Securities

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):

	As of March 31, 2019
	Amortized Cost Basis		Estimated Fair Value
Due in one year or less	$	59,626	$	59,623
Due between one and five years		—		—
	$	59,626	$	59,623

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured at Fair Value on a Recurring Basis

The following tables represent the Company’s financial assets measured at fair value on a recurring basis categorized by the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):

	As of March 31, 2019
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	736	$	—	$	—	$	736
Commercial paper		—		10,938		—		10,938
Corporate bonds		—		45,967		—		45,967
U.S. government securities		—		1,982		—		1,982
Total financial asset—available-for-sales securities	$	736	$	58,887	$	—	$	59,623

	As of December 31, 2018
	Level 1		Level 2		Level 3		Total
Financial asset— available-for-sales securities
Money market funds	$	403	$	—	$	—	$	403
Commercial paper		—		10,164		—		10,164
Corporate bonds		—		52,334		—		52,334
U.S. government securities		—		1,972		—		1,972
Total financial asset—available-for-sales securities	$	403	$	64,470	$	—	$	64,873

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Schedule of Aggregate Future Non-Cancelable Minimum Rental Payments on Operating Leases Under ASC 840

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 and under the previous lease accounting standard ASC 840, the aggregate future non-cancelable minimum rental payments on our operating leases, as of December 31, 2018, were as follows (in thousands):

					Total
	Operating		Purchase		Lease and Purchase
	Leases		Obligations		Obligations
2019	$	1,482	$	15,674	$	17,156
2020		1,516		4,247		5,763
2021		1,993		1,008		3,001
2022		2,033		—		2,033
2023 and thereafter		2,217		—		2,217
Total	$	9,241	$	20,929	$	30,170

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Common Stock and Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Summary of Activity under Stock Option Plan

Activity under the Company’s stock option plan is set forth below:

						Weighted-
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic Value
	Number of Shares			Price		Term (Years)		(in thousands)
Balance—December 31, 2018		2,297,403		$	4.49		6.9	$	9,858
Granted		—		$	—
Exercised		(132,692	)	$	2.95
Canceled		(7,981	)	$	6.26
Balance—March 31, 2019		2,156,730		$	4.58		6.8	$	9,683
Vested and exercisable—March 31, 2019		1,524,974		$	3.93		6.4	$	7,842
Vested and exercisable—December 31, 2018		1,547,754		$	3.74		6.5	$	7,803

Summary of Activity under Company's RSU

Activity under the Company’s RSU is set forth below:

				Weighted
				Average
				Market
	Number of Shares			Value
Balance—December 31, 2018		1,554,089		$	12.73
Granted		670,941		$	8.51
Released		(325,436	)	$	12.76
Canceled		(14,010	)	$	12.22
Balance—March 31, 2019		1,885,584		$	11.02

Schedule of Stock-Based Compensation Expense

Stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss for options, restricted stock units and ESPP was as follows (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Cost of revenue	$	66	$	25
Research and development		1,232	573
Sales and marketing	350		111
General and administrative	642		269
Total	$	2,290	$	978

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Net Loss Per Share Attributable to Common Shareholders

The following table summarizes the computation of basic and diluted net loss per share (in thousands, except per share data):

	Three Month Ended
	March 31,
	2019			2018
Net loss	$	(13,067	)	$	(1,368	)
Weighted-average common shares outstanding		35,158,470			33,494,807
Less: Shares subject to repurchase		—			—
Weighted-average shares outstanding		35,158,470			33,494,807
Net loss per share, basic and diluted	$	(0.37	)	$	(0.04	)

Summary of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Weighted-average Shares Outstanding

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares):

	As of		As of
	March 31,		December 31,
	2019		2018
Stock options to purchase common stock		2,156,730		2,297,403
Unvested restricted stock units		1,885,584		1,554,089
Common stock warrants		83,695		83,695
Total		4,126,009		3,935,187

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Schedule of Revenue from Segments

The following table summarizes revenue by market (in thousands):

	Three Months Ended
	March 31,
	2019		2018
Revenue by market:
Data Center	$	8,211	$	16,269
Enterprise Infrastructure		5,471		9,511
Access		3,206		2,531
Automotive		134		47
Total revenue	$	17,022	$	28,358

Schedule of Geographical Distribution of Revenue

The geographical distribution of revenue as a percentage of total revenue for the periods indicated was as follows:

	Three Months Ended
	March 31,
	2019			2018
Malaysia		42	%		62	%
China		32			22
United States		8			1
Other		18			15
Total		100	%		100	%

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Concentrations (Tables)

3 Months Ended

Mar. 31, 2019

Risks And Uncertainties [Abstract]

Schedule of Customer Concentration as Percentage of Accounts Receivable and Total Revenue

Revenue and accounts receivable concentrated with significant customers and their manufacturing subcontractors as a percentage of accounts receivable and total revenue were as follows:

	As of			As of
	March 31,			December 31,
	2019			2018
Accounts Receivable:
Customer A		34	%		42	%
Customer B	8			19

	Three Months Ended
	March 31,
	2019			2018
Revenue:
Customer A		40	%		55	%
Customer B	16			28

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Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Summary Of Significant Accounting Policy [Line Items]
Lease term	12 months
Operating lease assets, net	$ 5,644
Lease liabilities	$ 7,090
ASU 2016-02
Summary Of Significant Accounting Policy [Line Items]
Lease term	12 months
Operating lease assets, net	$ 5,900
Lease liabilities	7,300
Operating lease incentives and deferred rent reduced right-of-use asset	$ 1,400

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Balance Sheet Components - Schedule of Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Processed wafers	$ 1,277	$ 1,233
Work in process	7,445	5,990
Finished goods	8,293	7,251
Total inventories	$ 17,015	$ 14,474

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Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 30,062	$ 26,661
Less: accumulated depreciation and amortization	(18,851)	(17,436)
Property and equipment, net	11,211	9,225
Machinery and Equipment
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 15,925	15,237
Machinery and Equipment | Minimum
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	2 years
Machinery and Equipment | Maximum
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Production Masks
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	4 years
Property and equipment, gross	$ 8,101	5,401
Software and Computer Equipment
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Property and equipment, gross	$ 4,459	4,492
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	Shorter of estimated life of asset or remaining lease term
Property and equipment, gross	$ 1,414	1,414
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Property and equipment, gross	$ 163	$ 117

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Balance Sheets Components [Line Items]
Depreciation and amortization of property and equipment	$ 1,400	$ 1,200
Amortization of intangible assets	$ 200	$ 200
Lease term	12 months
Option to extend, existence, operating lease	true
Operating lease right-of-use assets	$ 5,644
Operating lease liability	7,090
Lease cost	$ 500
Operating lease weighted average remaining lease term	3 years 3 months 18 days
Operating lease weighted average discount rate	8.50%
Minimum
Balance Sheets Components [Line Items]
Lease term	1 year
Operating lease renewal term	1 year
Maximum
Balance Sheets Components [Line Items]
Lease term	6 years
Operating lease renewal term	9 years

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Balance Sheet Components - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 5,764	$ 5,764
Less: accumulated amortization	(2,218)	(2,016)
Intangible assets, net	$ 3,546	3,748
IP license
Finite Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives	7 years
Intangible assets, gross	$ 5,416	5,416
Patents
Finite Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 348	$ 348
Patents | Minimum
Finite Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives	10 years
Patents | Maximum
Finite Lived Intangible Assets [Line Items]
Intangible assets, estimated useful lives	12 years

XML

Balance Sheet Components - Schedule of Amortization Expense Related to Amortizable Intangibles In Future Periods (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2019 (remaining)	$ 606
2020	808
2021	808
2022	800
2023 and thereafter	524
Intangible assets, net	$ 3,546	$ 3,748

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Balance Sheet Components - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Leases [Abstract]
2019 (remaining)	$ 1,020
2020	1,513
2021	2,018
2022	2,059
2023	1,793
2024 and thereafter	431
Total	8,834
Less imputed interest	(1,744)
Operating lease liability	$ 7,090

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Balance Sheet Components - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Accrued Liabilities Current [Abstract]
Accrued compensation and related benefits	$ 4,759	$ 5,301
Customer Deposit		40
Accrued IP License	5,266	4,829
Accrued technical consulting and professional services	237	412
Accrued royalty, rebates and commission	583	443
Other accrued liabilities	4,905	2,882
Total accrued liabilities	$ 15,750	$ 13,907

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Financial Instruments - Summary of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Cost	$ 59,626	$ 64,996
Gross Unrealized Gains	2
Gross Unrealized Losses	(5)	(123)
Estimated Fair Values	59,623	64,873
Commercial Paper
Schedule Of Available For Sale Securities [Line Items]
Cost	10,939	10,173
Gross Unrealized Losses	(1)	(9)
Estimated Fair Values	10,938	10,164
Money Market Fund
Schedule Of Available For Sale Securities [Line Items]
Cost	736	403
Estimated Fair Values	736	403
Corporate Bonds
Schedule Of Available For Sale Securities [Line Items]
Cost	45,971	52,448
Gross Unrealized Losses	(4)	(114)
Estimated Fair Values	45,967	52,334
U.S. Government Securities
Schedule Of Available For Sale Securities [Line Items]
Cost	1,980	1,972
Gross Unrealized Gains	2
Estimated Fair Values	1,982	1,972
Cash and Cash Equivalents
Schedule Of Available For Sale Securities [Line Items]
Estimated Fair Values	5,728	4,143
Short-term Investments
Schedule Of Available For Sale Securities [Line Items]
Estimated Fair Values	$ 53,895	$ 60,730

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Financial Instruments - Summary of Contractual Maturities of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Amortized Cost Basis
Due in one year or less	$ 59,626
Cost	59,626	$ 64,996
Estimated Fair Values
Due in one year or less	59,623
Total	$ 59,623	$ 64,873

XML

Financial Instruments - Additional Information (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Available for sale securities, continuous loss position, 12 months or longer	$ 11,000,000	$ 19,200,000
Individual Securities
Schedule Of Available For Sale Securities [Line Items]
Available for sale securities, continuous loss position, 12 months or longer	$ 0	$ 0

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Fair Value Measurements - Schedule of Financial Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	$ 59,623	$ 64,873
Corporate Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	45,967	52,334
Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	59,623	64,873
Recurring Basis | Money Market Fund
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	736	403
Recurring Basis | Commercial Paper
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	10,938	10,164
Recurring Basis | U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	1,982	1,972
Recurring Basis | Corporate Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	45,967	52,334
Recurring Basis | Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	736	403
Recurring Basis | Level 1 | Money Market Fund
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	736	403
Recurring Basis | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	58,887	64,470
Recurring Basis | Level 2 | Commercial Paper
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	10,938	10,164
Recurring Basis | Level 2 | U.S. Government Securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	1,982	1,972
Recurring Basis | Level 2 | Corporate Bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total financial asset—available-for-sales securities	$ 45,967	$ 52,334

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Fair Value Measurements - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Transfers within hierarchy	$ 0	$ 0

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Commitments and Contingencies - Schedule of Aggregate Future Non-Cancelable Minimum Rental Payments on Operating Leases Under ASC 840 (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Operating Leases
2019	$ 1,482
2020	1,516
2021	1,993
2022	2,033
2023 and thereafter	2,217
Total	9,241
Purchase Obligations
2019	15,674
2020	4,247
2021	1,008
Total	20,929
Total Lease and Purchase Obligations
2019	17,156
2020	5,763
2021	3,001
2022	2,033
2023 and thereafter	2,217
Total	$ 30,170

XML

Commitments and Contingencies - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Commitments And Contingencies Disclosure [Abstract]
Liability associated with indemnifications	$ 0	$ 0
Operating Leases, Indemnification Agreements, Description	Under the indemnification provisions of the Company’s standard sales-related contracts, the Company agrees to defend its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such claims. Certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its directors and certain of its officers while they are serving in good faith in such capacities. To date, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

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Common Stock and Share-based Compensation - Additional Information (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Nov. 30, 2017
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Common stock, shares authorized	95,000,000		95,000,000
Common stock, par value	$ 0.00001		$ 0.00001
Preferred stock, shares authorized	5,000,000		5,000,000
Preferred stock, par value	$ 0.00001		$ 0.00001
Preferred stock, shares outstanding	0
Dividends declared	$ 0
Unrecognized stock compensation costs	$ 1,700,000		$ 2,000,000
Unrecognized stock compensation costs recognition period	2 years 9 months 18 days		2 years 9 months 18 days
Aggregate intrinsic value of options exercised	$ 700,000		$ 7,100,000
Options granted	0	0
Weighted-average grant-date fair value of options granted			$ 5.46
Income tax benefit associated with stock-based compensation expense	$ 0	$ 0
2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Exercise price determination description	The exercise price of an option is determined by the board of directors when the option is granted and may not be less than 85% of the fair market value of the shares on the date of grant, provided that the exercise price of an ISO is not less than 100% of the fair market value of the shares on the date of grant and the exercise price of any option granted to a 10% stockholder is not less than 110% of the fair market value of the shares on the date of grant.
Exercise price per share	85.00%
Equity incentive plan expiration period	10 years
2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Nonstatutory Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Equity incentive plan expiration period	10 years
2017 Equity Incentive Plan
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting period	4 years
Common shares reserved	5,047,440
Percentage of increase in common shares reserved	5.00%
Shares available for grant	3,444,533
Description of restricted stock unit awards conversion basis upon vesting	one-for-one
Number of shares reduced from shares available for issuance upon restricted stock unit awards grants	1
2017 Equity Incentive Plan | Restricted Stock Unit Awards
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting period	4 years
Unrecognized stock compensation costs recognition period	3 years 1 month 6 days		3 years
Unamortized compensation expense to be recognized	$ 19,600,000		$ 15,800,000
ESPP
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Common shares reserved	1,000,000
Shares available for grant	191,446
Unrecognized stock compensation costs recognition period	2 months		5 months
Unamortized compensation expense to be recognized	$ 200,000		$ 500,000
Common stock shares authorized				2,018,975
Percentage of shares of capital stock outstanding	2.00%
Percentage of payroll deduction on eligible compensation	15.00%
Percentage of shares purchased at fair market value of common stock	85.00%
Shares issued under plan	366,369
Risk free interest rate	2.36%
Expected term	6 months
Expected dividends	0.00%
Volatility	22.00%
Share-based Compensation Award, Tranche One | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting percentage	25.00%
Vesting period	12 months
Share-based Compensation Award, Tranche Two | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting percentage	25.00%
Vesting period	12 months
Share-based Compensation Award, Tranche Three | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting percentage	25.00%
Vesting period	12 months
Share Based Compensation Award Tranche Four | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Vesting percentage	25.00%
Vesting period	12 months
Maximum
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Common stock, shares authorized	95,000,000		95,000,000
Maximum | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Exercise price per share	100.00%
Maximum | 2015 Equity Incentive Plan and 2004 Equity Incentive Plan | Incentive Stock Options | 10% stockholder
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Exercise price per share	110.00%
Maximum | 2017 Equity Incentive Plan
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Exercise price per share	100.00%
Options granted exercise period	10 years
Maximum | 2017 Equity Incentive Plan | 10% stockholder
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Exercise price per share	110.00%

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Common Stock and Share-based Compensation - Summary of Activity under Stock Option Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted	0	0
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Beginning balance	2,297,403
Exercised	(132,692)
Canceled	(7,981)
Ending balance	2,156,730		2,297,403
Vested and exercisable—March 31, 2019	1,524,974		1,547,754
Weighted average exercise price, beginning balance	$ 4.49
Weighted average exercise price, exercised	2.95
Weighted average exercise price, canceled	6.26
Weighted average exercise price, ending balance	4.58		$ 4.49
Weighted average exercise price, vested and exercisable	$ 3.93		$ 3.74
Weighted average remaining contractual term	6 years 9 months 18 days		6 years 10 months 24 days
Weighted average remaining contractual term, vested and exercisable	6 years 4 months 24 days		6 years 6 months
Aggregate intrinsic value	$ 9,683		$ 9,858
Aggregate intrinsic value, vested and exercisable	$ 7,842		$ 7,803

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Common Stock and Share-based Compensation - Summary of Activity under Company's RSU (Details) - Restricted Stock Unit Awards	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares, beginning balance | shares	1,554,089
Number of Shares, Granted | shares	670,941
Number of Shares, Released | shares	(325,436)
Number of Shares, Canceled | shares	(14,010)
Number of Shares, ending balance | shares	1,885,584
Weighted Average Market Value, beginning balance | $ / shares	$ 12.73
Weighted Average Market Value, Granted | $ / shares	8.51
Weighted Average Market Value, Released | $ / shares	12.76
Weighted Average Market Value, Canceled | $ / shares	12.22
Weighted Average Market Value, ending balance | $ / shares	$ 11.02

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Common Stock and Share-based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 2,290	$ 978
Cost of Revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	66	25
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	1,232	573
Sales and Marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	350	111
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 642	$ 269

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Provision for (benefit from) income taxes	$ 190	$ (125)

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Net Loss Per Share - Summary of Computation of Basic and Diluted Net Loss Per Share Attributable to Common Shareholders (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net loss	$ (13,067)	$ (1,368)
Weighted-average common shares outstanding	35,158,470	33,494,807
Weighted-average shares outstanding	35,158,470	33,494,807
Net loss per share, basic and diluted	$ (0.37)	$ (0.04)

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Net Loss Per Share - Summary of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Weighted-average Shares Outstanding (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive securities outstanding excluded from computation of diluted weighted-average shares outstanding	4,126,009	3,935,187
Incentive Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive securities outstanding excluded from computation of diluted weighted-average shares outstanding	2,156,730	2,297,403
Unvested Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive securities outstanding excluded from computation of diluted weighted-average shares outstanding	1,885,584	1,554,089
Common Stock Warrants
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Potential dilutive securities outstanding excluded from computation of diluted weighted-average shares outstanding	83,695	83,695

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Segment Reporting (Details)	3 Months Ended
	Mar. 31, 2019 Segment
Segment Reporting [Abstract]
Number of reportable segments	1

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Segment Reporting - Schedule of Revenue from Segments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Revenue	$ 17,022	$ 28,358
Data Center
Segment Reporting Information [Line Items]
Revenue	8,211	16,269
Enterprise Infrastructure
Segment Reporting Information [Line Items]
Revenue	5,471	9,511
Access
Segment Reporting Information [Line Items]
Revenue	3,206	2,531
Automotive
Segment Reporting Information [Line Items]
Revenue	$ 134	$ 47

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Segment Reporting - Schedule of Geographical Distribution of Revenue (Details) - Revenue - Geographic Concentration Risk	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of revenue	100.00%	100.00%
Malaysia
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of revenue	42.00%	62.00%
China
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of revenue	32.00%	22.00%
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of revenue	8.00%	1.00%
Other
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of revenue	18.00%	15.00%

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Concentrations - Additional Information (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Risks And Uncertainties [Abstract]
Amounts held on deposit at financial institutions in excess of FDIC insured limits	$ 0.6	$ 1.1

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Concentrations - Schedule of Customer Concentration as Percentage of Accounts Receivable and Total Revenue (Details) - Customer Concentration Risk	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Accounts Receivable | Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	34.00%		42.00%
Accounts Receivable | Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	8.00%		19.00%
Revenue | Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	40.00%	55.00%
Revenue | Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	16.00%	28.00%

XML

Employee Benefit Plan - Additional Information (Details)	3 Months Ended
	Mar. 31, 2019 USD ($)
401 (k)
Defined Contribution Plan Disclosure [Line Items]
Company contribution	$ 0

XML

Subsequent Event - Additional Information (Details) - Marvell Technology Group Ltd - Subsequent Event	May 06, 2019 $ / shares
Subsequent Event [Line Items]
Merger agreement date	May 06, 2019
Common Stock
Subsequent Event [Line Items]
Per share in cash paid under the agreement	$ 13.25