4G chipmaker Sequans Communications S.A. (NYSE: SQNS) today
announced financial results for the third quarter ended September
30, 2014.
Third Quarter 2014 Highlights:
Revenue: Revenue of $6.5 million increased 27.4% compared
to the second quarter of 2014, due to higher sales of chipsets and
higher other revenue. Revenue increased 58.7% compared to the third
quarter of 2013 due to higher sales of products primarily for the
LTE markets.
Gross margin: Gross margin was 39.4% compared to gross
margin of 41.3% in the second quarter of 2014, due to a slightly
less favorable revenue mix, and compared to 25.1% in the third
quarter of 2013, due to higher revenues allowing for a better
absorption of fixed production costs.
Operating loss: Operating loss was $8.0 million compared
to an operating loss of $8.7 million in the second quarter of 2014
and an operating loss of $8.8 million in the third quarter of 2013,
reflecting higher gross profit and slightly lower operating
expenses.
Net loss: Net loss was $8.1 million, or ($0.14) per
diluted share/ADS, compared to a net loss $8.7 million, or ($0.15)
per diluted share/ADS in the second quarter of 2014 and a net loss
of $8.8 million, or ($0.20) per diluted share/ADS in the third
quarter of 2013.
Non-IFRS Net loss: Excluding stock-based compensation,
non-IFRS net loss was $7.8 million, or ($0.13) per diluted
share/ADS, compared to a non-IFRS net loss of $8.4 million, or
($0.14) per diluted share/ADS in the second quarter of 2014, and a
non-IFRS net loss of $8.3 million, or ($0.19) per diluted
share/ADS, in the third quarter of 2013.
In millions of US$ except percentages, shares and per share
amounts
Key Metrics Q3
2014 %* Q2 2014 %* Q3 2013
%* Revenue
$6.5 $5.1 $4.1
Gross profit
2.5 39.4% 2.1 41.3% 1.0 25.1%
Operating loss
(8.0) (123.3%) (8.7) (171.2%) (8.8) (215.5%)
Net loss
(8.1) (126.0%) (8.7) (171.4%) (8.8) (215.4%)
Diluted EPS
($0.14) ($0.15) ($0.20) Weighted average number
of diluted shares/ADS
59,144,741 59,144,398 44,683,839 Cash
flow used in operations
(7.0) (3.3) (9.5) Cash, cash
equivalents and short-term investments at quarter-end
16.9
22.1 15.0 Additional information: Stock-based compensation
included in operating result
0.3 0.3 0.4 Non-IFRS diluted
EPS (excludes stock-based compensation)
($0.13) ($0.14)
($0.19)
* Percentage of revenue
“Our third quarter revenues reflect a 68% increase in LTE
product revenues compared to the second quarter, driven mainly by
the growing momentum from emerging and green field operators,” said
Georges Karam, Sequans CEO. “We are anticipating to start volume
shipments in the fourth quarter for new LTE-only devices in the
United States, with expansion to other regions next year.”
Fourth 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 fourth quarter of 2014 to be in
the range of $7 to $8 million, with non-IFRS gross margin 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 fourth quarter of 2014, based on
approximately 59.1 million weighted average number of diluted
shares/ADSs. Non-IFRS EPS guidance excludes the impact of stock
based compensation and any other relevant non-cash or non-recurring
expenses. During the fourth quarter, Sequans expects to receive
approximately $7 to $8 million in the form of a research tax credit
and research and development funding from the French government,
which will augment Sequans’ cash on hand.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the third quarter of 2014 today,
October 23, 2014, at 8:00 a.m. EDT /14:00 CEST. To participate in
the live call, analysts and investors should dial 800-230-1074 (or
+1 612-234-9960 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 November 23, 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: 338240.
Sequans may choose to use social media channels such as its
website (www.sequans.com), Twitter account
(www.twitter.com/Sequans) and Facebook page
(www.facebook.com/Sequans) as a means of disclosing material
information. A list of these social media channels will be posted
on Sequans website at www.sequans.com/investors/ and may be updated
from time to time.
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 LTE
and WiMAX 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) Sept 30, June 30, Sept
30, 2014
2014 2013 Revenue
: Product revenue 5,573 4,404 3,842 Other revenue
885 664 227
Total revenue
6,458 5,068
4,069 Cost of revenue Cost of product revenue
3,824 2,932 3,026 Cost of other revenue 87
44 21
Total cost of revenue
3,911 2,976
3,047 Gross profit 2,547
2,092 1,022 Operating
expenses : Research and development 7,603 7,518 7,339 Sales and
marketing 1,390 1,454 1,101 General and administrative 1,516 1,796
1,350
Total operating expenses 10,509
10,768 9,790 Operating
loss (7,962 ) (8,676
) (8,768 ) Financial income
(expense): Interest income (expense), net (7 ) (1 ) 3
Foreign exchange gain (121 ) 30 52
Loss before income taxes (8,090
) (8,647 ) (8,713
) Income tax expense 45 41
53
Loss (8,135 )
(8,688 ) (8,766 ) Attributable to
: Shareholders of the parent (8,135 ) (8,688 ) (8,766 )
Minority interests - - -
Basic loss per share ($0.14 ) ($0.15 ) ($0.20
) Diluted loss per share ($0.14 ) ($0.15 )
($0.20 ) Weighted average number of shares used for computing: —
Basic 59,144,741 59,144,398 44,683,839 — Diluted 59,144,741
59,144,398 44,683,839
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months
ended Sept 30, (in thousands of US$, except share and per
share amounts) 2014 2013
Revenue : Product revenue 14,077 6,737
Other revenue 1,953 1,981
Total
revenue 16,030 8,718
Cost of revenue Cost of product revenue 9,399 5,620
Cost of other revenue 213 392
Total
cost of revenue 9,612 6,012
Gross profit 6,418
2,706 Operating expenses : Research and
development 22,039 21,101 Sales and marketing 4,023 3,375 General
and administrative 5,265 5,469
Total operating expenses 31,327
29,945 Operating loss
(24,909 ) (27,239 ) Financial
income (expense): Interest income, net 3 32 Foreign
exchange gain (47 ) 87
Loss before income
taxes (24,953 ) (27,120
) Income tax expense (benefit) 128 141
Loss
(25,081 ) (27,261 ) Attributable to
: Shareholders of the parent (25,081 ) (27,261 )
Minority interests - - Basic loss per
share ($0.42 ) ($0.64 ) Diluted loss per share
($0.42 ) ($0.64 )
Weighted average number of shares used for
computing:
— Basic 59,140,697 42,779,077 — Diluted 59,140,697
42,779,077
SEQUANS COMMUNICATIONS
S.A. UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
At Sept 30, At December 31, (in
thousands of US$) 2014 2013
ASSETS Non-current assets Property,
plant and equipment 8,308 6,622 Intangible assets 3,428 4,679
Deposits and other receivables 330 471 Available for sale assets
618 1,098
Total non-current
assets 12,684 12,870
Current
assets Inventories 8,198 6,582 Trade receivables 6,100 5,486
Prepaid expenses and other receivables 3,090 2,832 Recoverable
value added tax 385 508 Research tax credit receivable 5,824 8,006
Cash and cash equivalents 16,865 37,244
Total current assets 40,462 60,658
Total assets 53,146 73,528
EQUITY AND LIABILITIES Equity Issued capital, euro
0.02 nominal value, 59,144,741 shares authorized, issued and
outstanding at September 30, 2014 ( 59,129,639 at December 31,
2013) 1,568 1,567 Share premium 165,507 165,785 Other capital
reserves 15,781 14,721 Accumulated deficit (148,320 ) (123,239 )
Other components of equity 130 95
Total equity 34,666 58,929
Non-current liabilities Government grant advances and
interest-free loans 429 604 Finance lease obligations 43 240
Provisions 768 460 Deferred tax liabilities 36
37
Total non-current liabilities 1,276
1,341
Current liabilities Trade payables 9,659
7,252 Interest-bearing receivables financing 2,670 - Government
grant advances and interest-free loans 360 435 Finance lease
obligations 236 261 Other current liabilities 3,861 4,384 Deferred
revenue 332 343 Provisions 86 583
Total current liabilities 17,204 13,258
Total equity and liabilities 53,146
73,528 SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months
ended Sept 30, (in thousands of US$) 2014
2013 Operating activities
Loss before income taxes
(24,953 ) (18,407
) Non-cash adjustment to reconcile income before tax to net
cash from (used in) operating activities Amortization and
impairment of property, plant and equipment 2,621 2,055
Amortization and impairment of intangible assets 1,361 954
Share-based payment expense 1,060 1,050 Increase (decrease) in
provisions (189 ) (71 ) Financial income (3 ) (29 ) Foreign
exchange loss (gain) (21 ) 60 Loss (Gain) on disposal of property,
plant and equipment 26 - Working capital adjustments Decrease
(Increase) in trade receivables and other receivables (1,170 )
1,059 Decrease (Increase) in inventories (1,616 ) (455 ) Decrease
(Increase) in research tax credit receivable 2,182 (1,577 )
Increase (Decrease) in trade payables and other liabilities 1,999
900 Increase (Decrease) in deferred revenue (11 ) 281 Increase
(Decrease) in government grant advances 171 (180 ) Income tax paid
(211 ) (210 )
Net cash flow used in operating activities
(18,754 ) (14,570 ) Investing
activities Purchase of intangible assets and property, plant
and equipment (4,450 ) (2,623 ) Sale (purchase) of financial assets
621 (103 ) Interest received 109 82
Net cash flow used in
investments activities (3,720 ) (2,644
) Financing activities Public equity offering,
net of costs (300 ) 13,548 Proceeds from issue of warrants and
exercise of stock options/warrants 22 - Proceeds from
Interest-bearing receivables financing 2,670 - Repayment of
borrowings and finance lease liabilities (193 ) (122 ) Interest
paid (104 ) (54 )
Net cash flows from financing activities
2,095 13,372 Net increase (decrease) in cash
and cash equivalents (20,379 ) (3,842 ) Net foreign exchange
difference (3 ) Cash and cash equivalent at January 1 37,244 28,751
Cash and cash equivalents at end of the period 16,865
24,906 SEQUANS COMMUNICATIONS S.A.
UNAUDITED RECONCILIATION OF NON-IFRS
FINANCIAL RESULTS
Three months ended (in thousands of
US$, except share and per share amounts) Sept 30,
June 30, Sept 30,
2014 2014
2013 Net IFRS loss as reported (8,135
) (8,688 ) (8,766 ) Add
back Stock-based compensation expense according to IFRS 2 334
331 427
Non-IFRS loss adjusted (7,801 )
(8,357 ) (8,339
) IFRS basic loss per share as reported ($0.14 )
($0.15 ) ($0.20 ) Add back Stock-based compensation expense
according to IFRS 2 ($0.00 ) $ 0.01 $
0.01 Non-IFRS basic loss per share ($0.13 )
($0.14 ) ($0.19 ) IFRS diluted loss per share
($0.14 ) ($0.15 ) ($0.20 ) Add back Stock-based compensation
expense according to IFRS 2 ($0.00 ) $ 0.01
$ 0.01 Non-IFRS diluted loss per share ($0.13
) ($0.14 ) ($0.19 )
SEQUANS COMMUNICATIONS S.A.
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
Nine months
ended (in thousands of US$, except share and per share
amounts) Sept 30, Sept 30,
2014 2013
Net IFRS loss as reported (25,081 )
(27,261 ) Add back Stock-based compensation
expense according to IFRS 2 1,060 1,477
Non-IFRS loss
adjusted (24,021 )
(25,784 ) IFRS basic loss per share as
reported ($0.42 ) ($0.64 ) Add back Stock-based compensation
expense according to IFRS 2 $ 0.01 $ 0.04
Non-IFRS basic loss per share ($0.41 )
($0.60 ) IFRS diluted loss per share ($0.42 ) ($0.64 ) Add
back Stock-based compensation expense according to IFRS 2
$ 0.01 $ 0.04 Non-IFRS diluted loss per
share ($0.41 ) ($0.60 )
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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