4G chipmaker Sequans Communications S.A. (NYSE: SQNS) today
announced financial results for the second quarter ended June 30,
2014.
Second Quarter 2014 Highlights:
Revenue: Revenue of $5.1 million increased 13% compared
to the first quarter of 2014, due to higher sales of chipsets and
higher other revenue. Revenue increased 116% compared to the second
quarter of 2013 due to higher sales of products for the LTE
markets.
Gross margin: Gross margin was 41.3% compared to gross
margin of 39.5% in the first quarter of 2014, and 41.1% in the
second quarter of 2013, due to a more favorable revenue mix
including more other revenue.
Operating loss: Operating loss was $8.7 million compared
to an operating loss of $8.3 million in the first quarter of 2014
and an operating loss of $9.2 million in the second quarter of
2013, due to higher operating expenses primarily related to product
development costs.
Net loss: Net loss was $8.7 million, or ($0.15) per
diluted share/ADS, compared to a net loss of $8.3 million, or
($0.14) per diluted share/ADS in the first quarter of 2014 and a
net loss of $9.1 million, or ($0.20) per diluted share/ADS in the
second quarter of 2013.
Non-IFRS Net loss: Excluding stock-based compensation,
non-IFRS net loss was $8.4 million, or ($0.14) per diluted
share/ADS, compared to a non-IFRS net loss of $7.9 million, or
($0.13) per diluted share/ADS in the first quarter of 2014, and a
non-IFRS net loss of $8.6 million, or ($0.19) per diluted
share/ADS, in the second quarter of 2013.
In millions of US$ except percentages, shares and per share
amounts
Key Metrics Q2 2014
%* Q1 2014 %* Q2 2013 %* Revenue
$5.1 $4.5 $2.3 Gross
profit
2.1 41.3% 1.8 39.5% 1.0 41.1% Operating loss
(8.7) (171.2%) (8.3) (183.6%) (9.2) (392.7%) Net loss
(8.7) (171.4%) (8.3) (183.3%) (9.1) (387.3%) Diluted EPS
($0.15) ($0.14) ($0.20) Weighted average number of diluted
shares/ADS
59,144,398 59,136,031 44,683,839 Cash flow used
in operations
(3.3) (8.4) (8.1) Cash, cash equivalents and
short-term investments at quarter-end
22.1 27.9 24.9
Additional information: Stock-based compensation included in
operating result
0.3 0.4 0.5 Non-IFRS diluted EPS (excludes
stock-based compensation)
($0.14) ($0.13) ($0.19)
* Percentage of revenue
“We have begun shipping for the build of a mobile computing
design win targeting a Q4 launch in the U.S. and our home/portable
router business is providing a growing base of revenues,” said
Georges Karam, Sequans CEO. “During Q2, we added several
new design wins for routers and M2M applications, and we are in
advanced discussions on a number of others, including several
mobile computing opportunities. The new Colibri platform introduced
in June has been gaining a lot of traction, especially among module
manufacturers. Looking ahead, we see a growing pipeline of
follow-on design wins and new carrier opportunities in the U.S.,
APAC, and the rest of the world,” concluded Dr. Karam.
Third Quarter 2014 Outlook
The following statements are based on management’s current
assumptions and expectations. These statements are forward-looking
and actual results may differ materially. Sequans undertakes no
obligation to update these statements.
Sequans expects revenue for the third quarter of 2014 to be in
the range of $6.5 to $7.5 million, with non-IFRS gross margin of
above 35%. Based on this revenue range and expected gross margin,
non-IFRS net loss per diluted share/ADS is expected to be between
($0.12) and ($0.14) for the third quarter of 2014, based on
approximately 59.1 million weighted average number of diluted
shares/ADSs. Non-IFRS EPS guidance excludes primarily the impact of
stock based compensation.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the second quarter of 2014 today,
July 24, 2014, at 8:00 a.m. EDT /14:00 CEST. To participate in the
live call, analysts and investors should dial 877-260-8898 (or +1
612-332-0802 if outside the U.S.). A live and archived webcast of
the call will be available from the Investors section of the
Sequans website at www.sequans.com/investors/. A replay of the
conference call will be available until August 24, 2014, by dialing
toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside
the U.S., using the following access code: 330549.
Forward Looking Statements
This press release contains projections and other
forward-looking statements regarding future events or 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 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 operate in a
very competitive and rapidly changing environment. New risks emerge
from time to time. Given these risks and uncertainties, you should
not 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. 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, including
WiMAX and LTE markets, (ii) unexpected increases in our expenses,
including manufacturing expenses, (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
fluctuation 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, and (ix) other factors
detailed in documents we file from time to time with the Securities
and Exchange Commission. Forward-looking statements in this release
are made pursuant to the safe harbor provisions contained in the
Private Securities Litigation Reform Act of 1995.
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 non-cash
charges relating to stock-based compensation. 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 4G chipmaker and
leading provider of single-mode LTE chipset solutions to wireless
device manufacturers worldwide. Founded in 2003, Sequans has
developed and delivered six generations of 4G technology and its
chips are certified and shipping in 4G networks, both LTE and
WiMAX, around the world. Today, Sequans offers two LTE product
lines: StreamrichLTE™, optimized for feature-rich mobile computing
and home/portable router devices, and StreamliteLTE™, optimized for
M2M devices and other connected devices for the Internet of Things.
Sequans is based in Paris, France with additional offices in the
United States, United Kingdom, Israel, Hong Kong, Singapore,
Taiwan, South Korea, and China. Visit Sequans online
at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans
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) June 30, March 31, June
30, 2014 2014
2013
Revenue :
Product revenue 4,404 4,100 1,799 Other revenue 664
404 548
Total revenue 5,068
4,504 2,347 Cost of revenue Cost
of product revenue 2,932 2,643 1,332 Cost of other revenue
44 82 51
Total cost of revenue
2,976 2,725 1,383 Gross
profit 2,092 1,779
964 Operating expenses : Research and development
7,518 6,918 7,248 Sales and marketing 1,454 1,179 1,135 General and
administrative 1,796 1,953 1,798
Total operating expenses
10,768 10,050 10,181
Operating loss (8,676) (8,271)
(9,217) Financial income (expense): Interest
income (expense), net (1) 11 10 Foreign exchange gain
30 44 167
Loss before income taxes
(8,647) (8,216) (9,040)
Income tax expense 41 42 51
Loss
(8,688) (8,258) (9,091) Attributable to
: Shareholders of the parent (8,688) (8,258) (9,091)
Minority interests - - - Basic loss per share
($0.15) ($0.14) ($0.20) Diluted loss per share
($0.15) ($0.14) ($0.20) Weighted average
number of shares used for computing: — Basic 59,144,398 59,136,031
44,683,839 — Diluted 59,144,398 59,136,031
44,683,839
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
Six months ended June 30, (in thousands of US$, except
share and per share amounts) 2014 2013
Revenue : Product revenue 8,504 2,895 Other
revenue 1,068 1,754
Total revenue
9,572 4,649 Cost of revenue Cost of
product revenue 5,575 2,594 Cost of other revenue 126
371
Total cost of revenue 5,701
2,965 Gross profit 3,871
1,684 Operating expenses : Research and development
14,436 13,762 Sales and marketing 2,633 2,274 General and
administrative 3,749 4,119
Total operating expenses 20,818
20,155 Operating loss (16,947)
(18,471) Financial income (expense): Interest
income, net 10 29 Foreign exchange gain 74 35
Loss before income taxes (16,863)
(18,407) Income tax expense (benefit) 83 88
Loss (16,946) (18,495) Attributable to
: Shareholders of the parent (16,946) (18,495) Minority
interests - - Basic loss per share ($0.29)
($0.44) Diluted loss per share ($0.29) ($0.44)
Weighted average number of shares used for
computing:
— Basic 59,138,642 41,810,911 — Diluted 59,138,642
41,810,911
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
At June 30, At December 31, (in thousands of
US$) 2014 2013 ASSETS
Non-current assets Property, plant and equipment 8,734 6,622
Intangible assets 3,859 4,679 Deposits and other receivables 349
471 Available for sale assets 269 1,098
Total
non-current assets 13,211 12,870
Current
assets Inventories 5,947 6,582 Trade receivables 6,425 5,486
Prepaid expenses and other receivables 2,655 2,832 Recoverable
value added tax 734 508 Research tax credit receivable 5,618 8,006
Cash and cash equivalents 22,114 37,244
Total
current assets 43,493 60,658
Total assets
56,704 73,528 EQUITY AND LIABILITIES
Equity Issued capital, euro 0.02 nominal value, 59,144,741
shares authorized, issued and outstanding at June 30, 2014 (
59,129,639 at December 31, 2013) 1,568 1,567 Share premium 165,510
165,785 Other capital reserves 15,447 14,721 Accumulated deficit
(140,185) (123,239) Other components of equity 114 95
Total equity 42,454 58,929
Non-current
liabilities Government grant advances and interest-free loans
478 604 Finance lease obligations 104 240 Provisions 608 460
Deferred tax liabilities 38 37
Total non-current
liabilities 1,228 1,341
Current
liabilities Trade payables 7,774 7,252 Government grant
advances and interest-free loans 372 435 Finance lease obligations
264 261 Other current liabilities 4,178 4,384 Deferred revenue 388
343 Provisions 46 583
Total current
liabilities 13,022 13,258
Total equity and
liabilities 56,704 73,528
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS Six months ended June 30, (in thousands
of US$) 2014 2013
Operating activities Loss before income taxes
(16,863) (18,407) Non-cash adjustment to reconcile
income before tax to net cash from (used in) operating activities
Amortization and impairment of property, plant and equipment 1,742
2,055 Amortization and impairment of intangible assets 916 954
Share-based payment expense 726 1,050 Increase (decrease) in
provisions (389) (71) Financial income (10) (29) Foreign exchange
loss (gain) (20) 60 Loss (Gain) on disposal of property, plant and
equipment 27 - Working capital adjustments Decrease (Increase) in
trade receivables and other receivables (1,312) 1,059 Decrease
(Increase) in inventories 635 (455) Decrease (Increase) in research
tax credit receivable 2,388 (1,577) Increase (Decrease) in trade
payables and other liabilities 418 900 Increase (Decrease) in
deferred revenue 45 281 Increase (Decrease) in government grant
advances 135 (180) Income tax paid (165) (210)
Net cash flow
used in operating activities (11,727) (14,570)
Investing activities Purchase of intangible assets
and property, plant and equipment (3,962) (2,623) Sale (purchase)
of financial assets 951 (103) Interest received 79 82
Net cash
flow used in investments activities (2,932)
(2,644) Financing activities Initial Public
Offer, net of costs (298) 13,548 Proceeds from issue of warrants
and exercise of stock options/warrants 22 - Repayment of borrowings
and finance lease liabilities (128) (122) Interest paid (69) (54)
Net cash flows from (used in) financing activities
(473) 13,372 Net increase (decrease) in cash
and cash equivalents (15,132) (3,842) Net foreign exchange
difference 2 (3) Cash and cash equivalent at January 1 37,244
28,751
Cash and cash equivalents at end of the period
22,114 24,906 SEQUANS COMMUNICATIONS
S.A. UNAUDITED
RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
Three months
ended (in thousands of US$, except share and per share
amounts) June 30, March 31, June 30,
2014 2014
2013 Net IFRS loss as reported (8,688)
(8,258) (9,091) Add back Stock-based
compensation expense according to IFRS 2 331 395 488
Non-IFRS
loss adjusted (8,357) (7,863)
(8,603) IFRS basic loss per share as reported
($0.15) ($0.14) ($0.20) Add back Stock-based compensation
expense according to IFRS 2 $0.01 $0.01 $0.01
Non-IFRS basic loss per share ($0.14) ($0.13)
($0.19) IFRS diluted loss per share ($0.15) ($0.14) ($0.20) Add
back Stock-based compensation expense according to IFRS 2
$0.01 $0.01 $0.01 Non-IFRS diluted loss per
share ($0.14) ($0.13) ($0.19)
SEQUANS COMMUNICATIONS S.A.
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
Six months
ended (in thousands of US$, except share and per share
amounts) June 30, June 30,
2014 2013 Net IFRS loss as
reported (16,946) (18,495) Add back
Stock-based compensation expense according to IFRS 2 727 1,050
Non-IFRS loss adjusted (16,219)
(17,445) IFRS basic loss per share as reported
($0.29) ($0.44) Add back Stock-based compensation expense
according to IFRS 2 $0.02 $0.02 Non-IFRS basic loss
per share ($0.27) ($0.42) IFRS diluted loss per share
($0.29) ($0.44) Add back Stock-based compensation expense
according to IFRS 2 $0.02 $0.02 Non-IFRS diluted loss
per share ($0.27) ($0.42)
Sequans Communications S.A.Media Relations: Kimberly Tassin,
+1.425.736.0569, Kimberly@sequans.comInvestor Relations: Claudia
Gatlin, +1 212.830.9080, Claudia@sequans.com
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