PARIS, May 3, 2023
/PRNewswire/ -- Sequans Communications S.A. (NYSE: SQNS), a leading
developer and provider of 5G/4G solutions for IoT devices, today
announced financial results for the first quarter ended
March 31, 2023,
First Quarter 2023 Summary Results Table:
(in US$ millions,
except share and per share data)
|
Q1
2023
|
Q4 2022
|
Q1 2022
|
Revenue
|
$11.9
|
$15.9
|
$13.9
|
Gross profit
|
9.3
|
12.0
|
9.5
|
Gross margin
(%)
|
78.5 %
|
75.3 %
|
68.1 %
|
Operating profit
(loss)
|
(4.0)
|
(1.0)
|
(2.0)
|
Net profit
(loss)
|
(5.0)
|
(5.0)
|
2.0
|
Diluted earnings (loss)
per ADS
|
($0.10)
|
($0.10)
|
$0.05
|
Non-IFRS diluted
earnings (loss) per ADS *
|
($0.09)
|
($0.06)
|
($0.04)
|
Weighted average number
of diluted ADS (IFRS)
|
48,382,629
|
47,951,407
|
46,013,404
|
Weighted average number
of diluted ADS (Non-IFRS)
|
48,382,629
|
47,951,407
|
41,142,823
|
|
* See Use of
Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net
Profit (Loss) includes significant non-cash interest expense, debt
amendment and change in value of embedded derivative that are
excluded from Non-IFRS measures
|
"The first quarter revenue was in line with our guidance, which
reflected the impact of delayed project launches and customers'
inventory rationalization that we discussed last quarter, " said
Georges Karam, CEO of Sequans. "We
anticipate a clear step up in revenue from the first half to the
second half of 2023, primarily driven by the expected transition of
some of our design wins into full production. We are especially
encouraged by seeing a couple of projects reaching this phase
already in Q1. Additionally, we continue gaining traction in our
design win pipeline, with new design wins for both Monarch 2 and
Calliope 2, bringing the potential total 3-year life revenue
pipeline above $750 million."
Mr. Karam concluded, "Additionally, we are making strides toward
sampling our 5G Taurus chipset later this year while actively
engaging with customers on this platform. These efforts are also
aiding our progress in our 5G IP licensing discussions, and we
remain optimistic that we can finalize an agreement before the end
of the year. Furthermore, the recent achievement of a
$20 million private placement in
April has strengthened the company's position in our ongoing
discussions engaged by the Board strategic committee. We remain
committed to delivering value to our shareholders and customers and
are excited about the opportunities ahead."
Q2 2023 Outlook
The following statement is based on management's current
assumptions and expectations. This statement is forward-looking and
actual results may differ materially.
As a result of our primary 5G IP agreement's payment structure,
licensing revenue is expected to normalize to a lower quarterly
level beginning in Q2. As product shipments are not expected to
accelerate before Q3, management expects revenue to be in the range
of $9 million to $11 million, with gross margin expected to be
around 65% for the quarter ending June 30,
2023.
First Quarter 2023 Highlights:
Revenue: Revenue was $11.9
million, a decrease of 25.2% compared to the fourth quarter
of 2022 and a decrease of 14.3% compared to the first quarter of
2022.
Gross margin: Gross margin was 78.5% compared to 75.3% in
the fourth quarter of 2022 and compared to 68.1% in the first
quarter of 2022.
Operating profit / loss: Operating loss was
$4.0 million compared to operating
profit of $1.0 million in the fourth
quarter of 2022 and operating loss of $2.0
million in the first quarter of 2022.
Net profit / loss: Net loss was $5.0 million, or ($0.10) per diluted ADS, compared to a net loss
of $5.0 million, or ($0.10) per diluted ADS, in the fourth quarter of
2022 and net profit of $2.0 million,
or $0.05 per diluted ADS, in the
first quarter of 2022. Net loss in the first quarter of 2023
includes a $2.3 million gain on the
change in fair value of the convertible debt derivative whereas in
the fourth quarter of 2022 there was a gain of $1.0 million and a gain of $6.4 million in the first quarter of 2022.
Non-IFRS loss and diluted loss per
ADS: Excluding the non-cash stock-based
compensation, the non-cash impact of the fair-value, the amendment
and effective interest adjustments related to the convertible debt
with embedded derivatives and other financings, non-IFRS net loss
was $4.2 million, or ($0.09) per diluted ADS, compared to non-IFRS net
loss of $2.8 million, or ($0.06) per diluted ADS in the fourth quarter of
2022, and a non-IFRS net loss of $1.8
million, or ($0.04) per
diluted ADS, in the first quarter of 2022. The non-IFRS net loss
includes foreign exchange losses of $0.2
million, or ($0.00) per
diluted ADS, in the first quarter of 2023, $1.5 million, or ($0.03) per diluted ADS in the fourth quarter of
2022 and foreign exchange gain of $0.4
million, or $0.01 per diluted
ADS, in the first quarter of 2022.
Cash: Cash and cash equivalents and short-term
deposits at March 31, 2023 totaled
$5.3 million compared to $10.7 million at December
31, 2022. The quarter-end cash balance does not reflect the
$20 million proceeds from the private
placement, which closed on April 12,
2023.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the first quarter of 2023 today,
May 3, 2023 at 8:00 a.m. ET
/14:00 CET. To participate in the
live call, analysts and investors should dial 844-826-3033 or ++1
412-317-5185 if outside the U.S. When prompted, provide the event
title or access code: 10177160. A live and archived webcast of the
call will be available from the Investors section of the Sequans
website at
https://www.sequans.com/company/investor-relations/webcasts-and-presentations/.
An audio replay of the conference call will be available until
May 10, 2023, by dialing toll free
844-512-2921 or 412-317-6671 from outside the U.S., using the
following access code: 10177160.
Forward Looking Statements
This press release contains projections and other
forward-looking statements regarding future events and our future
financial performance. All statements other than present and
historical facts and conditions contained in this release,
including any statements regarding our future results of operations
and financial positions, business strategy, plans, including the
ability to enter into new 5G strategic agreements, the exploration
of strategic options, expectations for Massive IoT sales, our
ability to convert our pipeline to revenue, and our objectives for
future operations, are forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended). These
statements are only predictions and reflect our current beliefs and
expectations with respect to future events and are based on
assumptions and subject to risk and uncertainties and subject to
change at any time. We undertake no obligation to update the
information made in this release in the event facts or
circumstances subsequently change after the date of this press
release. We operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. Given these risks
and uncertainties, you should not rely on or place undue reliance
on these forward-looking statements. Actual events or results may
differ materially from those contained in the projections or
forward-looking statements. In addition to the risk factors
contained in our Form 20-F for the fiscal year ended December 31, 2022, some of the factors that could
cause actual results to differ materially from the forward-looking
statements contained herein include, without limitation: (i) the
contraction or lack of growth of markets in which we compete and in
which our products are sold, (ii) unexpected increases in our
expenses resulting from inflationary pressures and rising interest
rates, including manufacturing and operating expenses and interest
expense, (iii) our inability to adjust spending quickly enough to
offset any unexpected revenue shortfall, (iv) delays or
cancellations in spending by our customers, (v) unexpected average
selling price reductions, (vi) the significant fluctuations to
which our quarterly revenue and operating results are subject due
to cyclicality in the wireless communications industry and
transitions to new process technologies, (vii) our inability to
anticipate the future market demands and future needs of our
customers, (viii) our inability to achieve new design wins or for
design wins to result in shipments of our products at levels and in
the timeframes we currently expect, (ix) our inability to enter
into and execute on strategic alliances, (x) our ability to meet
performance milestones under strategic license agreements, (xi) the
impact of natural disasters on our sourcing operations and supply
chain, (xii) the impact of the Ukraine-Russia conflict on our independent contractors
located in Ukraine, (xiii) our
ability to raise debt and equity financing, and (xiv) other factors
detailed in documents we file from time to time with the Securities
and Exchange Commission.
Use of Non-IFRS/non-GAAP Financial Measures
To supplement our unaudited consolidated financial statements
prepared in accordance with IFRS, we disclose certain non-IFRS, or
non-GAAP, financial measures. These measures exclude the
non-cash stock-based compensation and the non-cash impacts of
convertible debt amendments, conversions and repayments, effective
interest adjustments related to the convertible debt with embedded
derivatives and other financings; and deferred tax benefit or
expense related to the convertible debt and other financings.
We believe that these measures can be useful to facilitate
comparisons among different companies. These non-GAAP
measures have limitations in that the non-GAAP measures we use may
not be directly comparable to those reported by other
companies. We seek to compensate for this limitation by
providing a reconciliation of the non-GAAP financial measures to
the most directly comparable IFRS measures in the table attached to
this press release.
About Sequans Communications
Sequans Communications S.A. (NYSE: SQNS) is a leading developer
and provider of 5G and 4G chips and modules for IoT devices. For
5G/4G massive IoT applications, Sequans provides a comprehensive
product portfolio based on its flagship Monarch LTE-M/NB-IoT and
Calliope Cat 1 chip platforms, featuring industry-leading low power
consumption, a large set of integrated functionalities, and global
deployment capability. For 5G/4G broadband and critical IoT
applications, Sequans offers a product portfolio based on its
Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip
platforms, optimized for low-cost residential, enterprise, and
industrial applications. Founded in 2003, Sequans is based in
Paris, France with additional
offices in the United States,
United Kingdom, Israel, Hong
Kong, Singapore,
Finland, Taiwan, South
Korea, and China.
Visit Sequans online
at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans
Media Relations: Kimberly
Tassin, +1.425.736.0569, Kimberly@sequans.com
Investor Relations: Kimberly Rogers,
+1 385.831-7337, krogers@sequans.com
Condensed financial tables follow
SEQUANS
COMMUNICATIONS S.A.
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
Three months
ended
|
|
(in thousands of
US$, except share and per share amounts)
|
March 31,
2023
|
|
December
31, 2022
|
|
March 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
:
|
|
|
|
|
|
|
|
Product
revenue
|
$
2,340
|
|
$
4,990
|
|
$
5,925
|
|
|
License and services
revenue
|
9,559
|
|
10,921
|
|
7,966
|
|
Total
revenue
|
11,899
|
|
15,911
|
|
13,891
|
|
Cost of
revenue
|
2,556
|
|
3,935
|
|
4,436
|
|
Gross
profit
|
9,343
|
|
11,976
|
|
9,455
|
|
Operating expenses
:
|
|
|
|
|
|
|
|
Research and
development
|
7,488
|
|
7,361
|
|
6,414
|
|
|
Sales and
marketing
|
3,033
|
|
2,561
|
|
2,521
|
|
|
General and
administrative
|
2,818
|
|
3,040
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
13,339
|
|
12,962
|
|
11,427
|
|
Operating profit
(loss)
|
(3,996)
|
|
(986)
|
|
(1,972)
|
|
Financial income
(expense):
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
(2,515)
|
|
(2,543)
|
|
(2,672)
|
|
|
Change in fair value of
convertible debt derivative
|
2,302
|
|
1,011
|
|
6,397
|
|
|
Foreign exchange gain
(loss)
|
(165)
|
|
(1,536)
|
|
370
|
|
Profit (Loss) before
income taxes
|
(4,374)
|
|
(4,054)
|
|
2,123
|
|
Income tax
expense
|
666
|
|
907
|
|
104
|
|
Profit
(Loss)
|
$
(5,040)
|
|
$
(4,961)
|
|
$
2,019
|
|
Attributable to
:
|
|
|
|
|
|
|
|
Shareholders of the
parent
|
(5,040)
|
|
(4,961)
|
|
2,019
|
|
|
Minority
interests
|
—
|
|
—
|
|
—
|
|
Basic loss per
ADS
|
($0.10)
|
|
($0.10)
|
|
$0.05
|
|
Diluted loss per
ADS
|
($0.10)
|
|
($0.10)
|
|
$0.04
|
|
Weighted average number
of ADS used for computing:
|
|
|
|
|
|
|
— Basic
|
48,382,629
|
|
47,951,407
|
|
41,142,823
|
|
— Diluted
|
48,382,629
|
|
47,951,407
|
|
46,013,404
|
SEQUANS
COMMUNICATIONS S.A.
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
|
At March
31,
|
|
At Dec
31,
|
(in thousands of
US$)
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
$
7,744
|
|
$
8,489
|
|
Intangible
assets
|
51,473
|
|
48,705
|
|
Deposits and other
receivables
|
795
|
|
783
|
|
Other non-current
financial assets
|
343
|
|
337
|
|
Total non-current
assets
|
60,355
|
|
58,314
|
|
Current
assets
|
|
|
|
|
Inventories
|
8,552
|
|
9,387
|
|
Trade
receivables
|
3,645
|
|
8,494
|
|
Contract
assets
|
1,959
|
|
176
|
|
Prepaid
expenses
|
1,907
|
|
1,399
|
|
Other
receivables
|
5,093
|
|
5,799
|
|
Research tax credit
receivable
|
5,855
|
|
4,515
|
|
Short-term
deposits
|
—
|
|
5,000
|
|
Cash and cash
equivalents
|
5,344
|
|
5,671
|
|
Total current
assets
|
32,355
|
|
40,441
|
Total
assets
|
$
92,710
|
|
$
98,755
|
EQUITY AND
LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Issued capital, euro
0.01 nominal value, 194,258,298 shares authorized, issued and
outstanding at March 31, 2023 (193,426,478 shares at December
31, 2022 and euro 0.02 nominal value)
|
$
2,315
|
|
$
2,306
|
|
Share
premium
|
2,409
|
|
2,418
|
|
Other capital
reserves
|
64,651
|
|
62,870
|
|
Accumulated
deficit
|
(70,139)
|
|
(65,099)
|
|
Other components of
equity
|
(498)
|
|
(391)
|
|
Total
equity
|
(1,262)
|
|
2,104
|
|
Non-current
liabilities
|
|
|
|
|
Government grant
advances, loans and other liabilities
|
5,633
|
|
6,235
|
|
Convertible
debt
|
45,472
|
|
43,455
|
|
Convertible debt
embedded derivative
|
901
|
|
3,203
|
|
Lease
liabilities
|
2,109
|
|
2,278
|
|
Trade
payables
|
1,067
|
|
1,788
|
|
Provisions
|
2,176
|
|
2,196
|
|
Deferred tax
liabilities
|
266
|
|
258
|
|
Contract
liabilities
|
404
|
|
404
|
|
Total non-current
liabilities
|
58,028
|
|
59,817
|
|
Current
liabilities
|
|
|
|
|
Trade
payables
|
11,626
|
|
9,342
|
|
Interest-bearing
receivables financing
|
6,528
|
|
7,723
|
|
Lease
liabilities
|
1,312
|
|
1,291
|
|
Government grant
advances and loans
|
3,947
|
|
4,159
|
|
Contract
liabilities
|
3,211
|
|
5,774
|
|
Other current
liabilities and provisions
|
9,320
|
|
8,545
|
|
Total current
liabilities
|
35,944
|
|
36,834
|
Total equity and
liabilities
|
$
92,710
|
|
$
98,755
|
SEQUANS
COMMUNICATIONS S.A.
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
|
|
|
|
Three months ended
March 31,
|
(in thousands of
US$)
|
2023
|
|
2022
|
Operating
activities
|
|
|
|
|
Profit (Loss) before
income taxes
|
$
(4,374)
|
|
$
2,123
|
|
Non-cash adjustment to
reconcile income before tax to net cash from (used in) operating
activities
|
|
|
|
|
|
Depreciation and
impairment of property, plant and equipment
|
1,028
|
|
826
|
|
|
Amortization and
impairment of intangible assets
|
2,727
|
|
1,574
|
|
|
Share-based payment
expense
|
1,781
|
|
1,315
|
|
|
Increase in
provisions
|
(20)
|
|
70
|
|
|
Interest expense,
net
|
2,515
|
|
2,672
|
|
|
Change in the fair
value of convertible debt embedded derivative
|
(2,302)
|
|
(6,397)
|
|
|
Foreign exchange loss
(gain)
|
182
|
|
(89)
|
|
Working capital
adjustments
|
|
|
|
|
|
Decrease (Increase) in
trade receivables and other receivables
|
3,170
|
|
8,215
|
|
|
Decrease (increase) in
inventories
|
835
|
|
(1,106)
|
|
|
Increase in
research tax credit receivable
|
(829)
|
|
(659)
|
|
|
Increase (Decrease) in
trade payables and other liabilities
|
2,351
|
|
(4,286)
|
|
|
Decrease in contract
liabilities
|
(2,858)
|
|
(5,456)
|
|
|
Decrease in government
grant advances
|
(239)
|
|
(1,200)
|
|
Income tax
paid
|
(475)
|
|
(298)
|
Net cash flow
provided by (used in) operating activities
|
3,492
|
|
(2,696)
|
Investing
activities
|
|
|
|
|
Purchase of intangible
assets and property, plant and equipment
|
(858)
|
|
(1,259)
|
|
Capitalized development
expenditures
|
(5,731)
|
|
(4,231)
|
|
Sale (Purchase) of
financial assets
|
(18)
|
|
66
|
|
Decrease of short-term
deposit
|
5,000
|
|
(16,500)
|
|
Interest
received
|
36
|
|
—
|
Net cash flow
provided by (used in) investments activities
|
(1,571)
|
|
(21,924)
|
Financing
activities
|
|
|
|
|
Public and private
equity offering proceeds, net of transaction costs paid
|
—
|
|
30,139
|
|
Proceeds (Repayment of)
from interest-bearing receivables financing
|
(1,232)
|
|
359
|
|
Payment of lease
liabilities
|
(321)
|
|
(246)
|
|
Repayment of government
loans
|
(439)
|
|
(110)
|
|
Repayment of
interest-bearing research project financing
|
(437)
|
|
(241)
|
|
Interest
paid
|
(368)
|
|
(311)
|
Net cash flows from
(used in) financing activities
|
(2,252)
|
|
29,590
|
|
Net increase (decrease)
in cash and cash equivalents
|
(331)
|
|
4,970
|
|
Net foreign exchange
difference
|
4
|
|
(2)
|
|
Cash and cash
equivalents at January 1
|
5,671
|
|
4,835
|
Cash and cash
equivalents at end of the period
|
5,344
|
|
9,803
|
SEQUANS
COMMUNICATIONS S.A.
|
|
UNAUDITED
RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
|
|
(in thousands of
US$, except share and per share amounts)
|
Three months
ended
|
March 31,
2023
|
|
December
31, 2022
|
|
March 31,
2022
|
Net IFRS gain (loss)
as reported
|
$
(5,040)
|
|
$
(4,961)
|
|
$
2,019
|
Add
back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
1,781
|
|
1,810
|
|
1,315
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
(2,302)
|
|
(1,011)
|
|
(6,397)
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
1,408
|
|
1,404
|
|
1,218
|
|
Non-cash impact of
convertible debt amendment
|
—
|
|
—
|
|
—
|
Non-IFRS gain (loss)
adjusted
|
$
(4,153)
|
|
$
(2,758)
|
|
$
(1,845)
|
IFRS basic gain
(loss) per ADS as reported
|
($0.10)
|
|
($0.10)
|
|
$0.05
|
Add
back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
$0.04
|
|
$0.04
|
|
$0.03
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
($0.05)
|
|
($0.02)
|
|
($0.15)
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
$0.03
|
|
$0.02
|
|
$0.03
|
|
Non-cash impact of
convertible debt amendment
|
$0.00
|
|
$0.00
|
|
$0.00
|
Non-IFRS basic gain
(loss) per ADS
|
($0.09)
|
|
($0.06)
|
|
($0.04)
|
IFRS diluted gain
(loss) per ADS
|
($0.10)
|
|
($0.10)
|
|
$0.04
|
Add
back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
$0.04
|
|
$0.04
|
|
$0.03
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
($0.05)
|
|
($0.02)
|
|
($0.14)
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
$0.04
|
|
$0.02
|
|
$0.03
|
|
Non-cash impact of
convertible debt amendment
|
$0.00
|
|
$0.00
|
|
$0.00
|
Non-IFRS diluted
gain (loss) per ADS
|
($0.09)
|
|
($0.06)
|
|
($0.04)
|
|
|
|
|
|
|
|
|
|
(1) Included in the
IFRS loss as follows:
|
|
|
|
|
|
|
|
Cost of product
revenue
|
$
32
|
|
$
45
|
|
$
29
|
|
|
Research and
development
|
470
|
|
601
|
|
470
|
|
|
Sales and
marketing
|
347
|
|
286
|
|
290
|
|
|
General and
administrative
|
932
|
|
878
|
|
526
|
|
(2) Related to the
difference between contractual and effective interest
rates
|
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SOURCE Sequans Communications