4G chipmaker Sequans Communications S.A. (NYSE:SQNS) today
announced financial results for the third quarter ended September
30, 2016.
Third Quarter 2016 Highlights:
Revenue: Revenue of $12.5 million increased 26.0%
compared to the second quarter of 2016, reflecting significantly
higher levels of both product revenue and other revenue. Revenue
increased 33.1% compared to the third quarter of 2015, due to both
higher product revenue and higher other revenue.
Gross margin: Gross margin was 46.8% compared to gross
margin of 44.6% in the second quarter of 2016, and compared to
40.8% in the third quarter of 2015.
Operating loss: Operating loss was $4.0 million, compared
to an operating loss of $5.7 million in the second quarter of 2016
and an operating loss of $4.2 million in the third quarter of
2015.
Net loss: Net loss was $5.1 million, or ($0.08) per
diluted share/ADS, compared to a net loss of $5.1 million, or
($0.09) per diluted share/ADS in the second quarter of 2016 and a
net loss of $2.4 million, or ($0.04) per diluted share/ADS in the
third quarter of 2015.
Non-IFRS Net loss: Excluding the non-cash items of
stock-based compensation, the fair-value and effective interest
adjustments related to the convertible debt and other financings,
non-IFRS net loss was $4.3 million, or ($0.07) per diluted
share/ADS, compared to a non-IFRS net loss of $5.8 million, or
($0.10) per diluted share/ADS in the second quarter of 2016, and a
non-IFRS net loss of $4.6 million, or ($0.08) per diluted
share/ADS, in the third quarter of 2015.
Cash: Cash, cash equivalents and short-term deposit at
September 30, 2016 totaled $24.7 million, reflecting the net
proceeds from the issuance of 15.2 million shares in the September
2016 equity financing. The underwriter purchased an additional 0.5
million shares pursuant to the over-allotment option in October
2016.
In millions of US$ except percentages, shares and per
share amounts
Key Metrics Q3 2016
%* Q2 2016 %*
Q3 2015 %* Revenue
$12.5 $9.9
$9.4 Gross profit
5.8 46.8% 4.4 44.6% 3.8 40.8%
Operating loss
(4.0) (31.7%) (5.7) (58.0%) (4.2) (45.3%) Net
loss
(5.1) (41.1%) (5.1) (51.2%) (2.4) (26.0%) Diluted EPS
($0.08) ($0.09) ($0.04) Weighted average number of diluted
shares/ADS
61,642,549 59,280,702 59,144,741 Cash flow from
(used in) operations
(9.5) (4.2) (8.2) Cash, cash
equivalents and short-term deposit at quarter-end
24.7 7.5
13.0 Additional information on non-cash items: - Stock-based
compensation included in operating result
0.2 0.2 0.2 -
Change in the fair value of convertible debt embedded derivative
- (1.5) -2.5 - Non-cash interest on convertible debt and
other financing
0.6 0.6 0.3 Non-IFRS diluted EPS (excludes
stock-based compensation, fair value and effective interest
adjustments related to the convertible debt and its embedded
derivative, and the non-cash impact of revaluation of interest-free
government loan)
($0.07) ($0.10) ($0.08)
* Percentage of
revenue
“We reported a 26% sequential increase in revenue and a smaller
than expected loss for the third quarter,” said Georges Karam,
Sequans CEO. “Assuming the mid-point of our Q4 guidance, we are on
track to report a 40% increase in revenue for the full year
compared to 2015.
“We gained new design wins across all our platforms and products
during Q3. The breadth of our design wins demonstrates the success
of our strategy to supply a variety of tailored solutions optimized
for the broadband and IoT markets. We continue to expect our growth
to accelerate in 2017 and beyond as multiple products on several
platforms, including Cat M1 and NB1, ramp on more LTE networks
around the world.”
Q4 2016 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 2016 to be in
the range of $13 to $15 million, with non-IFRS gross margin above
40%. Based on this revenue range and expected gross margin,
non-IFRS net loss per diluted share/ADS is expected to be between
($0.05) and ($0.07) for the fourth quarter of 2016, based on
approximately 75.0 million weighted average number of diluted
shares/ADSs. Non-IFRS EPS guidance excludes the impact of
stock-based compensation, the non-cash fair-value and effective
interest adjustments related to the convertible debt and other
financings, and any other relevant non-cash or non-recurring
expenses.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the third quarter of 2016 today,
October 27, 2016 at 8:00 a.m. EDT/14:00 CEST. To participate in the
live call, analysts and investors should dial 800-230-1085 (or +1
612-288-0340 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/webcasts-and-presentations/. A replay of
the conference call will be available until November 27, 2016 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: 403282.
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 and potential strategic
partnerships, 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, (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, (ix) our inability to enter into and execute on
strategic alliances, (x) the impact of natural disasters on our
sourcing operations and supply chain, and (xi) 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, the non-cash
financial expense related to the convertible debt and its embedded
derivative issued in April 2015 and April 2016 and the impact of
revaluation of an interest-free government loan issued in October
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. We are
not able to provide forward-looking IFRS estimates for gross margin
and net loss per diluted share without unreasonable efforts,
because certain adjustments are not known until the end of the
period. The impact of these adjustment could be significant to our
actual IFRS results.
About Sequans Communications
Sequans Communications S.A. (NYSE:SQNS) is a leading provider of
single-mode 4G LTE wireless semiconductor solutions for Internet of
Things (IoT) and a wide range of broadband data devices. Founded in
2003, Sequans has developed and delivered seven generations of 4G
technology and its chips are certified and shipping in 4G networks
around the world. Today, Sequans offers two LTE product lines:
StreamliteLTE™, optimized for IoT and M2M devices, and
StreamrichLTE™, optimized for feature-rich mobile computing and
home and portable router devices. The company is based in Paris,
France with additional offices in the United States, United
Kingdom, Sweden, Israel, Hong Kong, Singapore, Taiwan, South Korea,
and China.
Visit Sequans online
at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans
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, 2016
2016 2015
Revenue : Product revenue $ 9,523 $ 7,699 $ 7,887 Other
revenue 2,934 2,185
1,471
Total revenue
12,457
9,884 9,358
Cost of revenue Cost of product revenue 5,900 4,667 5,153
Cost of other revenue 731
804 391
Total cost of
revenue 6,631
5,471 5,544
Gross profit 5,826
4,413 3,814
Operating expenses : Research and development 6,391 6,889
5,525 Sales and marketing 1,926 1,495 1,406 General and
administrative 1,459
1,761 1,119
Total operating
expenses 9,776
10,145 8,050
Operating loss (3,950 )
(5,732 )
(4,236 ) Financial income (expense): Interest
income (expense), net (1,062 ) (916 ) (509 ) Other financial
expense - (83 ) - Change in the fair value of convertible debt
embedded derivative - 1,544 2,488 Foreign exchange gain (loss)
(61 ) 196
(91 )
Loss before income taxes
(5,073 ) (4,991 )
(2,348 ) Income tax expense
(benefit) 53 70
81
Loss $
(5,126 ) $ (5,061 )
(2,429 ) Attributable to : Shareholders of the
parent (5,126 ) (5,061 ) (2,429 ) Minority interests
- - -
Basic loss per share ($0.08 )
($0.09 ) ($0.04 ) Diluted loss per
share ($0.08 ) ($0.09 )
($0.04 ) Weighted average number of shares used for
computing: — Basic 61,642,549 59,280,702 59,144,741 — Diluted
61,642,549 59,280,702
59,144,741
SEQUANS COMMUNICATIONS S.A. UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended Sept 30,
(in thousands of US$, except share and per share amounts)
2016 2015
Revenue : Product revenue $ 22,634 $ 18,118
Other revenue 8,992 3,544
Total revenue 31,626
21,662 Cost of revenue
Cost of product revenue 14,695 12,342 Cost of other revenue
2,282 860
Total cost
of revenue 16,977
13,202 Gross profit
14,649 8,460
Operating expenses : Research and development 20,007 18,553
Sales and marketing 4,922 4,476 General and administrative
4,598 3,888
Total
operating expenses 29,527
26,917 Operating loss
(14,878 ) (18,457
) Financial income (expense): Interest income
(expense), net (2,606 ) (975 ) Other financial expense (83 ) (141 )
Change in the fair value of convertible debt embedded derivative
(1,583 ) 2,213 Foreign exchange gain (77 )
15
Loss before income taxes
(19,227 ) (17,345
) Income tax expense (benefit) 189 200
Loss
(19,416 ) (17,545 ) Attributable to
: Shareholders of the parent (19,416 ) (17,545 ) Minority
interests - -
Basic loss per share ($0.32 )
($0.30 ) Diluted loss per share ($0.32 )
($0.30 ) Weighted average number of shares used for
computing: — Basic 60,049,335 59,144,741 — Diluted
60,049,335 59,144,741
SEQUANS COMMUNICATIONS S.A.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION At Sept
30, At December 31, (in thousands of US$)
2016 2015 * ASSETS
Non-current assets Property, plant and equipment $ 6,859 $
7,116 Intangible assets 6,553 5,255 Deposits and other receivables
678 345 Available for sale assets 328
321
Total non-current assets
14,418 13,037
Current
assets Inventories 6,968 4,065 Trade receivables 14,263 16,497
Prepaid expenses and other receivables 3,874 3,170 Recoverable
value added tax 607 541 Research tax credit receivable 1,925 2,865
Short term deposit 344 393 Cash and cash equivalents
24,307 8,288
Total current
assets 52,288 35,819
Total assets $ 66,706 $
48,856 EQUITY AND LIABILITIES Equity
Issued capital, euro 0.02 nominal value, 74,498,762 shares
authorized, issued and outstanding at September 30, 2016
(59,166,741 at December 31, 2015) $ 1,911 $ 1,568 Share premium
188,265 165,536 Other capital reserves 27,798 16,864 Accumulated
deficit (204,182 ) (184,766 ) Other components of equity
(491 ) (450 )
Total equity
(deficit) 13,301
(1,248 )
Non-current liabilities Government grant advances,
loans and other liabilities 5,249 5,385 Convertible debt and
accrued interest 15,477 8,984 Provisions 1,610 1,396 Other
Liabilities 1,914 3,267
Total non-current liabilities 24,250
19,032
Current
liabilities Trade payables 15,056 9,498 Interest-bearing
receivables financing 5,629 6,472 Government grant advances 1,065
916 Convertible debt embedded derivative - 6,091 Finance lease
obligations - 12 Other current liabilities 4,487 4,604 Deferred
revenue 2,718 3,162 Provisions 200
317
Total current liabilities
29,155 31,072
Total
equity and liabilities $ 66,706 $
48,856 * Prior to the issuance of the audited 2015
financial statements, the estimate of costs to complete one service
contract was revised based on the best information available at
that time, resulting in a remeasurement of the percentage of
completion as of December 31, 2015. This remeasurement resulted in
a shift of $177,000 in revenue from the fourth quarter of 2015 to
the first quarter of 2016, and a corresponding increase in net loss
in the fourth quarter of 2015.
SEQUANS COMMUNICATIONS S.A. UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months
ended Sept 30, (in thousands of US$)
2016 2015 Operating
activities Loss before income taxes
$ (19,227
) $ (17,345 ) Non-cash adjustment to
reconcile income before tax to net cash from (used in) operating
activities Depreciation and impairment of property, plant and
equipment 2,353 2,579 Amortization and impairment of intangible
assets 1,532 1,385 Share-based payment expense 663 621 Increase
(decrease) in provisions 50 (41 ) Financial expense (income) 2,616
975 Change in the fair value of convertible debt embedded
derivative 1,583 (2,213 ) Other financial expenses 83 141 Foreign
exchange loss (gain) 181 (208 ) Loss (Gain) on disposal of
property, plant and equipment - (3 ) Working capital adjustments
Decrease (Increase) in trade receivables and other receivables
1,504 (814 ) Decrease (Increase) in inventories (2,903 ) 2,977
Decrease (Increase) in research tax credit receivable 940 1,141
Increase (Decrease) in trade payables and other liabilities 1,893
(2,996 ) Increase (Decrease) in deferred revenue (444 ) 41 Increase
(Decrease) in government grant advances (559 ) (204 ) Income tax
paid (175 ) (192 )
Net cash flow from (used in) operating
activities (9,910 ) (14,157 )
Investing activities Purchase of intangible assets
and property, plant and equipment (3,724 ) (2,590 ) Sale (purchase)
of financial assets (11 ) 319 Sale of short-term deposit 49 (234 )
Interest received 10 23
Net cash flow used in investments
activities (3,676 ) (2,482 )
Financing activities Public equity offering proceeds, net of
transaction costs paid 23,445 - Proceeds from issue of warrants,
exercise of stock options/warrants 267 1 Proceeds from (repayment
of) Interest-bearing receivables financing (843 ) 2,024 Proceeds
from government loans, net of transaction cost - 2,134 Proceeds
from convertible debt, net of transaction cost 6,932 11,582
Repayment of borrowings and finance lease liabilities (12 ) (157 )
Interest paid (159 ) (108 )
Net cash flows used in financing
activities 29,630 15,476 Net increase
(decrease) in cash and cash equivalents 16,044 (1,163 ) Net foreign
exchange difference (25 ) (4 ) Cash and cash equivalent at January
1 8,288 12,329
Cash and cash equivalents at end of the
period $ 24,307 $ 11,162
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, 2016
2016 2015 Net IFRS
loss as reported $ (5,126 ) $
(5,061 ) $ (2,429 ) Add
back Stock-based compensation expense according to IFRS 2 (1)
183 226 186 Change in the fair value of convertible debt embedded
derivative - (1,544 ) (2,488 ) Non-cash interest on Convertible
debt and other financing (2) 626 556 254 Non-cash impact of
revaluation of interest-free government loan - - (121 )
Non-IFRS
loss adjusted $ (4,317 )
$ (5,823 ) $
(4,598 ) IFRS basic loss per share as reported
($0.08 ) ($0.09 ) ($0.04 ) Add back Stock-based compensation
expense according to IFRS 2 (1) $ 0.00 $ 0.01 $ 0.00 Change in the
fair value of convertible debt embedded derivative $ 0.00 ($0.03 )
($0.04 ) Non-cash interest on Convertible debt and other financing
(2) $ 0.01 $ 0.01 $ 0.00 Non-cash impact of revaluation of
interest-free government loan $ 0.00 $
0.00 ($0.00 ) Non-IFRS basic loss per
share ($0.07 ) ($0.10 )
($0.08 ) IFRS diluted loss per share ($0.08 ) ($0.09
) ($0.04 ) Add back Stock-based compensation expense according to
IFRS 2 (1) $ 0.00 $ 0.01 $ 0.00 Change in the fair value of
convertible debt embedded derivative $ 0.00 ($0.03 ) ($0.04 )
Non-cash interest on Convertible debt and other financing (2) $
0.01 $ 0.01 $ 0.00 Non-cash impact of revaluation of interest-free
government loan
($0.00 ) Non-IFRS diluted loss per share
($0.07 ) ($0.10 ) ($0.08
) (1) Included in the IFRS loss as follows: Cost of product
revenue $ 4 $ 4 $ 3 Research and development 79 96 81 Sales and
marketing 31 35 29 General and administrative 69 91 73 (2)
Related to the difference between contractual and effective
interests
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,
2016 2015 Net IFRS
loss as reported (19,416 ) (17,545
) Add back Stock-based compensation expense according
to IFRS 2 (1) 663 621 Change in the fair value of convertible debt
embedded derivative 1,583 2,213 Non-cash interest on Convertible
debt and other financing (2) 1,547 469 Non-cash impact of
revaluation of interest-free government loan - (121 )
Non-IFRS
loss adjusted (15,623 )
(14,363 ) IFRS basic loss per
share as reported ($0.32 ) ($0.30 ) Add back Stock-based
compensation expense according to IFRS 2 (1) $ 0.00 $ 0.01 Change
in the fair value of convertible debt embedded derivative $ 0.03 $
0.05 Non-cash interest on Convertible debt and other financing (2)
$ 0.03 ($0.00 ) Non-cash impact of revaluation of interest-free
government loan $ 0.00 ($0.00 )
Non-IFRS basic loss per share ($0.26 )
($0.24 ) IFRS diluted loss per share ($0.32 ) ($0.30 ) Add
back Stock-based compensation expense according to IFRS 2 (1) $
0.00 $ 0.01 Change in the fair value of convertible debt embedded
derivative $ 0.03 $ 0.05 Non-cash interest on Convertible debt and
other financing (2) $ 0.03 ($0.00 ) Non-cash impact of revaluation
of interest-free government loan $ 0.00
($0.00 ) Non-IFRS diluted loss per share
($0.26 ) ($0.24 ) (1) Included in the
IFRS loss as follows: Cost of product revenue
$
12
$
13 Research and development 283 266 Sales and marketing 105 103
General and administrative 263 239 (2) Related to the
difference between contractual and effective interests
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161027005618/en/
Sequans Communications S.A.Media Relations:Kimberly Tassin,
+1-425-736-0569Kimberly@sequans.comorInvestor Relations:Claudia
Gatlin, +1-212-830-9080Claudia@sequans.com
Sequans Communications (NYSE:SQNS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Sequans Communications (NYSE:SQNS)
Historical Stock Chart
From Apr 2023 to Apr 2024