4G chipmaker Sequans Communications S.A. (NYSE:SQNS) today
announced financial results for the second quarter ended June 30,
2015.
Second Quarter 2015 Highlights:
Revenue: Revenue of $7.5 million increased 56% compared
to the first quarter of 2015, reflecting sales coming from new
design wins, higher sales from previous design wins and higher
service revenues. Revenue increased 48% compared to the second
quarter of 2014 due to an increase in revenues from the LTE
markets, primarily from new design wins in the United States.
Gross margin: Gross margin was 36.3% compared to gross
margin of 40.0% in the first quarter of 2015, and 41.3% in the
second quarter of 2014, due to a less favorable revenue mix.
Non-IFRS gross margin was 36.4% compared to gross margin of 40.0%
in the first quarter of 2015, and compared to 41.5% in the second
quarter of 2014.
Operating loss: Operating loss was $6.0 million compared
to an operating loss of $8.2 million in the first quarter of 2015
and an operating loss of $8.7 million in the second quarter of
2014.
Net loss: Net loss was $7.1 million, or ($0.12) per
diluted share/ADS, compared to a net loss of $8.0 million, or
($0.14) per diluted share/ADS in the first quarter of 2015 and a
net loss of $8.7 million, or ($0.15) per diluted share/ADS in the
second quarter of 2014.
Non-IFRS Net loss: Excluding stock-based compensation
and, in the second quarter of 2015 the non-cash fair-value and
effective interest adjustments related to the convertible debt and
its embedded derivative issued in April 2015, non-IFRS net loss was
$6.4 million, or ($0.11) per diluted share/ADS, compared to a
non-IFRS net loss of $7.8 million, or ($0.13) per diluted share/ADS
in the first quarter of 2015, and a non-IFRS net loss of $8.4
million, or ($0.14) per diluted share/ADS, in the second quarter of
2014.
Cash, cash equivalents and short-term deposit: Cash
position of $13.0 million at June 30, 2015 does not reflect the
proceeds from €2 million in debt accorded by the French government
development bank in June 2015 and expected to be received during
the third quarter of 2015.
In millions of US$ except percentages, shares and per share amounts
Key Metrics Q2
2015 %* Q1 2015
%* Q2 2014 %* Revenue
$7.5 $4.8
$5.1 Gross profit
2.7 36.3% 1.9
40.0% 2.1 41.3% Operating loss
(6.0) (80.6%) (8.2) (170.0%)
(8.7) (171.2%) Net loss
(7.1) (94.3%) (8.0) (167.4%) (8.7)
(171.4%) Diluted EPS
($0.12) ($0.14) ($0.15) Weighted
average number of diluted shares/ADS
59,144,741 59,144,741
59,144,398 Cash flow used in operations
(8.2) (3.6) (3.3)
Cash, cash equivalents and short-term deposit at quarter-end
13.0 7.7 22.1 Additional information:
Stock-based compensation included in
operating result
0.2 0.2 0.3 Change in the fair value of convertible debt
embedded derivative
0.3 - - Interest on convertible debt
0.2 - -
Non-IFRS diluted EPS (excludes stock-based
compensation, non-cash fair value and effective interest
adjustments related to the convertible debt and its embedded
derivative)
($0.11) ($0.13) ($0.14)
* Percentage of revenue
“We are pleased with the significant sequential increase in
revenues in the second quarter while controlling operating
expenses,” said Georges Karam, Sequans CEO. “During the second
quarter, we transformed keen interest in our first-to-market CAT1
solution into new design wins, in addition to gaining traction with
our other products. We also finalized new strategic relationships
with OEM module makers such as Gemalto, and completed certification
of our CAT1 module at Verizon. Our accomplishments during the
quarter position us to continue sequential growth during the
balance of the year and to make 2016 a year of accelerating growth
with a transition to profitability.”
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 2015 to be in
the range of $8.5 to $10.5 million, with non-IFRS gross margin of
at least 35%. Based on this revenue range and expected gross
margin, non-IFRS net loss per diluted share/ADS is expected to be
between ($0.07) and ($0.09) for the third quarter of 2015, 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, and the non-cash fair-value and effective
interest adjustments related to the convertible debt and its
embedded derivative issued in April 2015.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the second quarter of 2015 today,
July 23, 2015, 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
651-291-5254 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 23, 2015, 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:363586.
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 and, in the second
quarter of 2015, the non-cash financial expense related to the
convertible debt and its embedded derivative issued in April 2015.
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,
2015 2015
2014 Revenue :
Product revenue $ 6,243 $ 3,988 $ 4,404 Other revenue
1,253 820 664
Total revenue 7,496
4,808 5,068
Cost of revenue Cost of product revenue 4,427 2,762 2,932
Cost of other revenue 345 124
44
Total cost of revenue
4,772 2,886
2,976 Gross profit
2,724 1,922
2,092 Operating expenses : Research and
development 6,135 6,893 7,518 Sales and marketing 1,348 1,722 1,454
General and administrative 1,286 1,483 1,796
Total operating expenses
8,769 10,098
10,768 Operating loss
(6,045 ) (8,176 )
(8,676 ) Financial income
(expense): Interest income (expense), net (432 ) (34 ) (1 )
Other financial expense (141 ) - - Change in the fair value of
convertible debt embedded derivative (275 ) - - Foreign exchange
gain (loss) (120 ) 226
30
Loss before income taxes
(7,013 ) (7,984 )
(8,647 ) Income tax expense
55 64 41
Loss $ (7,068 ) $ (8,048
) (8,688 ) Attributable to :
Shareholders of the parent (7,068 ) (8,048 ) (8,688 ) Minority
interests - -
- Basic loss per share ($0.12 )
($0.14 ) ($0.15 ) Diluted loss per share
($0.12 ) ($0.14 ) ($0.15
) Weighted average number of shares used for computing: — Basic
59,144,741 59,144,741 59,144,398 — Diluted 59,144,741
59,144,741 59,144,398
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended June 30,
(in thousands of US$, except share and per share amounts)
2015 2014 Revenue :
Product revenue 10,231 8,504 Other revenue 2,073
1,068
Total revenue 12,304
9,572 Cost of revenue Cost of
product revenue 7,189 5,575 Cost of other revenue 469
126
Total cost of revenue 7,658
5,701 Gross profit
4,646 3,871 Operating
expenses : Research and development 13,028 14,436 Sales and
marketing 3,070 2,633 General and administrative 2,769 3,749
Total operating expenses
18,867 20,818 Operating
loss (14,221 ) (16,947
) Financial income (expense): Interest income
(expense), net (466 ) 10 Other financial expense (141 ) - Change in
the fair value of convertible debt embedded derivative (275 ) -
Foreign exchange gain 106 74
Loss
before income taxes (14,997 )
(16,863 ) Income tax expense (benefit) 119 83
Loss (15,116 ) (16,946 )
Attributable to : Shareholders of the parent (15,116 )
(16,946 ) Minority interests - - Basic
loss per share ($0.26 ) ($0.29 ) Diluted loss per
share ($0.26 ) ($0.29 )
Weighted average number of shares used for
computing:
— Basic 59,144,741 59,138,642 — Diluted 59,144,741
59,138,642
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION At
June 30, At December 31, (in thousands of US$)
2015 2014
ASSETS Non-current assets Property, plant and
equipment $ 7,747 $ 8,743 Intangible assets 2,876 3,440 Deposits
and other receivables 309 320 Available for sale assets
330 597
Total non-current
assets 11,262 13,100
Current assets Inventories 7,462 9,199 Trade receivables
5,208 7,749 Prepaid expenses and other receivables 3,579 2,988
Recoverable value added tax 377 447 Research tax credit receivable
4,279 3,443 Deposit maturing in less than 90 days 502 160 Cash and
cash equivalents 12,489 12,329
Total current assets 33,896
36,315
Total assets $
45,158 $ 49,415 EQUITY AND
LIABILITIES Equity
Issued capital, euro 0.02 nominal value,
59,144,741
shares authorized, issued and outstanding
at June 30,
2015 ( 59,144,741 at December 31,
2014)
$ 1,568 $ 1,568 Share premium 165,508 165,507 Other capital
reserves 16,433 15,997 Accumulated deficit (172,479 ) (157,363 )
Other components of equity (518 ) (594
)
Total equity 10,512
25,115
Non-current liabilities Government grant
advances and loans 3,916 4,013 Finance lease obligations - 9
Provisions 1,500 1,228 Deferred tax liabilities 2 2 Convertible
debt and accrued interest 8,060
-
Total non-current liabilities 13,478
5,252
Current liabilities Trade
payables 6,344 11,231 Interest-bearing receivables financing 3,798
2,133 Convertible debt embedded derivative 4,330 - Government grant
advances 993 603 Finance lease obligations 85 202 Other current
liabilities 5,362 4,017 Deferred revenue 240 314 Provisions
16 548
Total current
liabilities 21,168 19,048
Total equity and liabilities $ 45,158
$ 49,415 SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS Six months ended June 30, (in thousands
of US$) 2015
2014 Operating activities Loss before
income taxes
$ (14,997 ) $
(16,863 ) Non-cash adjustment to reconcile income
before tax to net cash from (used in) operating activities
Amortization and impairment of property, plant and equipment 1,753
1,742 Amortization and impairment of intangible assets 879 916
Share-based payment expense 436 726 Increase (decrease) in
provisions (260 ) (389 ) Financial expense (income) 466 (10 )
Change in the fair value of convertible debt embedded derivative
275 - Other financial expenses 141 - Foreign exchange loss (gain)
(275 ) (20 ) Loss (Gain) on disposal of property, plant and
equipment (3 ) 27 Working capital adjustments Decrease (Increase)
in trade receivables and other receivables 2,574 (1,312 ) Decrease
(Increase) in inventories 1,737 635 Decrease (Increase) in research
tax credit receivable (836 ) 2,388 Increase (Decrease) in trade
payables and other liabilities (3,517 ) 418 Increase (Decrease) in
deferred revenue (74 ) 45 Increase (Decrease) in government grant
advances (22 ) 135 Income tax paid (68 ) (165 )
Net cash flow
used in operating activities (11,791 )
(11,727 ) Investing activities Purchase
of intangible assets and property, plant and equipment (1,073 )
(3,962 ) Sale (purchase) of financial assets 278 951 Sale of
short-term investments (342 ) - Interest received 18 79
Net cash
flow used in investments activities (1,119 )
(2,932 ) Financing activities Public
equity offering, net of costs 1 (298 ) Proceeds from issue of
warrants and exercise of stock options/warrants - 22 Proceeds from
Interest-bearing receivables financing 1,665 - Proceeds from
convertible debt, net of transaction cost 11,582 - Repayment of
borrowings and finance lease liabilities (110 ) (128 ) Interest
paid (64 ) (69 )
Net cash flows from financing activities
13,074 (473 ) Net increase (decrease)
in cash and cash equivalents 165 (15,132 ) Net foreign exchange
difference (5 ) 2 Cash and cash equivalent at January 1 12,329
37,244
Cash and cash equivalents at end of the period
$ 12,489 $ 22,114 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,
2015 2015
2014 Net IFRS loss as reported $
(7,068 ) $ (8,048 ) $
(8,688 ) Add back Stock-based compensation
expense according to IFRS 2 (1) 197 238 331 Change in the fair
value of convertible debt embedded derivative 275 - - Interest on
Convertible debt 215 - -
Non-IFRS loss adjusted
$ (6,381 ) $ (7,810
) $ (8,357 ) IFRS basic
loss per share as reported ($0.12 ) ($0.14 ) ($0.15 ) Add back
Stock-based compensation expense according to IFRS 2 $ 0.00 $ 0.01
$ 0.01 Change in the fair value of convertible debt embedded
derivative $ 0.01 - - Interest on Convertible debt $ 0.00
- - Non-IFRS basic
loss per share ($0.11 ) ($0.13 )
($0.14 ) IFRS diluted loss per share ($0.12 ) ($0.14 )
($0.15 ) Add back Stock-based compensation expense according to
IFRS 2 $ 0.00 $ 0.01 $ 0.01 Change in the fair value of convertible
debt embedded derivative $ 0.01 - - Interest on Convertible debt
$ 0.00 - -
Non-IFRS diluted loss per share ($0.11 )
($0.13 ) ($0.14 ) (1) Included in the
IFRS loss as follows: Cost of product revenue $ 4 $ 6 $ 13 Research
and development 84 101 137 Sales and marketing 34 40 57 General and
administrative 75 91 124
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,
2015 2014 Net IFRS
loss as reported (15,116 ) (16,946
) Add back Stock-based compensation expense according
to IFRS 2 (1) 435 727 Change in the fair value of convertible debt
embedded derivative 275 - Interest on Convertible debt 215 -
Non-IFRS loss adjusted (14,681 )
(16,219 ) IFRS basic loss per
share as reported ($0.26 ) ($0.29 ) Add back Stock-based
compensation expense according to IFRS 2 $ 0.00 $ 0.02 Change in
the fair value of convertible debt embedded derivative $ 0.00 -
Interest on Convertible debt $ 0.01 -
Non-IFRS basic loss per share ($0.25 )
($0.27 ) IFRS diluted loss per share ($0.26 ) ($0.29 ) Add
back Stock-based compensation expense according to IFRS 2 $ 0.00 $
0.02 Change in the fair value of convertible debt embedded
derivative $ 0.00 - Interest on Convertible debt $ 0.01
- Non-IFRS diluted loss per share
($0.25 ) ($0.27 ) (1) Included
in the IFRS loss as follows: Cost of product revenue 10 28 Research
and development 185 296 Sales and marketing 74 125 General and
administrative 166 278
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Sequans Communications S.A.Media Relations:Kimberly Tassin,
+1-425-736-0569Kimberly@sequans.comorInvestor Relations:Claudia
Gatlin, +1-212-830-9080Claudia@sequans.com
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