PARIS, May 3, 2022
/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, 2022.
First Quarter 2022 Summary Results Table:
(in US$ millions,
except share and per share data)
|
Q1
2022
|
Q4 2021
|
Q1 2021
|
Revenue
|
$13.9
|
$13.8
|
$12.3
|
Gross profit
|
9.5
|
7.9
|
6.2
|
Gross margin
(%)
|
68.1
%
|
57.1 %
|
50.1 %
|
Operating
loss
|
(2.0)
|
(4.0)
|
(5.8)
|
Net Profit
(Loss)
|
2.0
|
(7.7)
|
(11.4)
|
Diluted earnings (loss)
per ADS
|
$0.04
|
($0.21)
|
($0.33)
|
Non-IFRS diluted
earnings per ADS *
|
($0.04)
|
($0.09)
|
($0.15)
|
Weighted average number
of diluted ADS
|
46,013,404
|
37,497,367
|
34,664,779
|
|
* See Use of
Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net
Profit (Loss) includes significant non-cash interest expense and
change in value of embedded derivative that are excluded from
Non-IFRS measures
|
"Sequans is off to a strong start in 2022. First quarter revenue
grew by more than 12% year-over-year and, when adjusted to exclude
the $1.1 million of the Verizon
Jetpack contribution from the first quarter 2021, revenue grew by
23.7% year-over-year," said Georges
Karam, CEO of Sequans. "The main revenue growth driver in
the quarter was our LTE-M/NB business with our Monarch products
family, which grew more than 24% sequentially and 125%
year-over-year, driven by design wins moving into mass production.
Also, the Broadband category grew 35% year-over-year, attributable
to increased services and licensing revenue from our existing 5G
agreements with our strategic partner and Renesas. This increase in
service and licensing revenue significantly boosted our gross
margin in the first quarter to 68.1%, up from 50.1% in the same
quarter last year and 57.1% in the prior quarter. The increased
margin contribution narrowed our operating loss and reduced our
non-IFRS net loss to $1.8 million
from a non-IFRS net loss of $5.1
million in the first quarter of 2021.
"We successfully executed an MOU with a new strategic partner
that, once concluded, is expected to fully fund the balance of our
5G investment in the Taurus platform," continued Mr. Karam. "The
definitive agreement is currently being finalized with the goal of
closing by June 30th. In parallel
with this new strategic partnership, our strong position in 5G has
led to other additional non-exclusive, high-potential strategic
discussions. These are opportunities that would further expand our
addressable market by increasing penetration in existing markets or
providing access to new markets that we do not currently serve. We
expect to have further clarity on these initiatives over the course
of the year."
Mr. Karam concluded, "We are closely monitoring potential
business hurdles for the remainder of 2022, including the recent
lockdowns in China, the upsurge in
the Russia-Ukraine war, and our wafer supply from TSMC.
Regarding the lockdown in China,
we have managed to limit the impact on our shipment in Q1 and we
continue to monitor this closely. In terms of our small R&D
team located in Ukraine, they
continue to work and successfully meet their deliverables. The
impact of the Ukrainian crisis on our execution was minimal.
Lastly, with the help of TSMC, we expect to have sufficient wafers
supply to meet our customers' demand for 2022. Sequans has a close
working relationship with the team at TSMC, who support our goals
and our cellular IoT strategy."
Q2 2022 Outlook
The following statement is based on management's current
assumptions and expectations and assumes no increase in the
severity or duration of the COVID-19 pandemic. This statement is
forward-looking and actual results may differ materially.
Management is targeting sequential growth in the second quarter
but continues to monitor potential impacts on revenue of
China's pandemic lockdowns and of
supply chain disruptions on the timing of product shipments and
project advancement. Gross margin is expected to be above 55%
in the quarter, driven by a strong component of service and
licensing revenue.
Management plans to update the outlook once the strategic 5G
agreement is closed.
First Quarter 2022 Highlights:
Revenue: Revenue was $13.9
million, an increase of 0.6% compared to the fourth quarter
of 2021 and an increase of 12.7% compared to the first quarter of
2021.
Gross margin: Gross margin was 68.1% compared to 57.1% in
the fourth quarter of 2021 and compared to 50.1% in the first
quarter of 2021.
Operating loss: Operating loss was $2.0 million compared to $4.0 million in the fourth quarter of 2021 and
$5.8 million in the first quarter of
2021.
Net profit / loss: Net profit was $2.0 million, or $0.04 per diluted ADS, compared to net loss of
$7.7 million, or ($0.21) per ADS, in the fourth quarter of 2021
and a net loss of $11.4 million, or
($0.33) per ADS, in the first quarter
of 2021. Net profit in the first quarter of 2022 includes a
$6.4 million gain on the change in
fair value of the convertible debt derivative whereas in the fourth
quarter of 2021 there was a loss of $1.2
million.
Net loss and diluted loss per ADS: Excluding
the non-cash stock-based compensation, the non-cash impact of the
fair-value and effective interest adjustments related to the
convertible debt with embedded derivatives and other
financings, non-IFRS net loss was $1.8
million, or ($0.04) per ADS,
compared to $3.5 million, or
($0.09) per ADS in the fourth quarter
of 2021, and $5.1 million, or
($0.15) per ADS, in the first quarter
of 2021. The non-IFRS net loss includes foreign exchange gains of
$370,000, or $0.01 per ADS, in the first quarter of 2022,
$135,000, or less than $0.01 per ADS, in the fourth quarter of 2021 and
$1.4 million, or $0.04 per ADS, in the first quarter of 2021.
Cash: Cash and cash equivalents and short-term deposits
at March 31, 2022 totaled
$26.3 million compared to
$4.8 million at December 31, 2021.
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to
discuss the financial results for the first quarter of 2022 today,
May 3, 2022 at 8:00 a.m. ET
/14:00 CET. o participate in the live
call, analysts and investors should dial 877-407-0792 or +1
201-689-8263 if outside the U.S. When prompted, provide the event
title or access code: 13728393. 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 24, 2022, by dialing toll free
844-512-2921 or 412-317-6671 from outside the U.S., using the
following access code: 13728393.
Forward Looking Statements
This press release contains projections and other
forward-looking statements regarding future events, including
strategic agreements, or our future financial performance and
potential financing sources. All statements other than present and
historical facts and conditions contained in this release,
including any statements regarding future results of operations and
financial positions, business strategy and plans, including
financing alternatives for our 5G business and ability to enter
into a new 5G strategic agreement, expectations for Massive IoT
sales, the impact of the Covid-19 on our supply chain and on
customer demand, our expectation for sufficient capacity to meet
customer demand in 2022, the impact of component shortages and
manufacturing capacity, 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, 2021,
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) 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 Covid-19 on the ability to operate our business and
research, production of our products or demand for our products by
customers whose supply chain is impacted or whose operations have
been impacted by government shelter-in-place or similar orders,
(xiii) our ability to raise debt and equity financing, and (xv)
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,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue :
|
|
|
|
|
|
|
|
Product
revenue
|
$
5,925
|
|
$
6,924
|
|
$
8,548
|
|
|
Services and license
revenue
|
7,966
|
|
6,886
|
|
3,773
|
|
Total revenue
|
13,891
|
|
13,810
|
|
12,321
|
|
Cost of revenue
|
4,436
|
|
5,922
|
|
6,143
|
|
Gross profit
|
9,455
|
|
7,888
|
|
6,178
|
|
Operating expenses :
|
|
|
|
|
|
|
|
Research and
development
|
6,414
|
|
6,678
|
|
7,254
|
|
|
Sales and
marketing
|
2,521
|
|
2,342
|
|
2,294
|
|
|
General and
administrative
|
2,492
|
|
2,897
|
|
2,460
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
11,427
|
|
11,917
|
|
12,008
|
|
Operating loss
|
(1,972)
|
|
(4,029)
|
|
(5,830)
|
|
Financial income (expense):
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
(2,672)
|
|
(2,475)
|
|
(2,711)
|
|
|
Change in fair value of
convertible debt derivative
|
6,397
|
|
(1,176)
|
|
(4,090)
|
|
|
Foreign exchange gain
(loss)
|
370
|
|
135
|
|
1,358
|
|
Profit (Loss) before income
taxes
|
2,123
|
|
(7,545)
|
|
(11,273)
|
|
Income tax expense
|
104
|
|
173
|
|
147
|
|
Profit (Loss)
|
$
2,019
|
|
$
(7,718)
|
|
$
(11,420)
|
|
Attributable to :
|
|
|
|
|
|
|
|
Shareholders of the
parent
|
2,019
|
|
(7,718)
|
|
(11,420)
|
|
|
Minority
interests
|
—
|
|
—
|
|
—
|
|
Basic loss per
ADS
|
$0.05
|
|
($0.21)
|
|
($0.33)
|
|
Diluted loss per
ADS
|
$0.04
|
|
($0.21)
|
|
($0.33)
|
|
Weighted average number
of ADS used for computing:
|
|
|
|
|
|
|
— Basic
|
41,142,823
|
|
37,497,367
|
|
34,664,779
|
|
— Diluted
|
46,013,404
|
|
37,497,367
|
|
34,664,779
|
|
SEQUANS COMMUNICATIONS S.A.
|
|
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
|
At March 31,
|
|
At Dec 31,
|
(in thousands of US$)
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
$
7,700
|
|
$
8,010
|
|
Intangible
assets
|
44,255
|
|
37,984
|
|
Deposits and other
receivables
|
2,252
|
|
2,311
|
|
Other non-current
financial assets
|
350
|
|
357
|
|
Total non-current
assets
|
54,557
|
|
48,662
|
|
Current assets
|
|
|
|
|
Inventories
|
7,539
|
|
6,433
|
|
Trade
receivables
|
5,551
|
|
13,622
|
|
Contract
assets
|
973
|
|
789
|
|
Prepaid
expenses
|
2,153
|
|
2,108
|
|
Other
receivables
|
6,722
|
|
7,252
|
|
Research tax credit
receivable
|
7,136
|
|
5,863
|
|
Short-term
deposits
|
16,500
|
|
—
|
|
Cash and cash
equivalents
|
9,803
|
|
4,835
|
|
Total current
assets
|
56,377
|
|
40,902
|
Total assets
|
$
110,934
|
|
$
89,564
|
EQUITY AND LIABILITIES
|
|
|
|
|
Equity
|
|
|
|
|
Issued capital, euro
0.02 nominal value, 186,564,726 shares authorized, issued
and
outstanding at March 31, 2022 (151,419,322 shares at
December 31, 2021)
|
$
4,554
|
|
$
3,687
|
|
Share
premium
|
327,661
|
|
298,389
|
|
Other capital
reserves
|
58,513
|
|
57,198
|
|
Accumulated
deficit
|
(381,535)
|
|
(383,554)
|
|
Other components of
equity
|
(181)
|
|
(26)
|
|
Total
equity
|
9,012
|
|
(24,306)
|
|
Non-current liabilities
|
|
|
|
|
Government grant
advances, loans and other liabilities
|
8,005
|
|
9,354
|
|
Convertible
debt
|
38,103
|
|
36,373
|
|
Convertible debt
embedded derivative
|
3,684
|
|
10,081
|
|
Lease
liabilities
|
3,040
|
|
3,373
|
|
Trade
payables
|
3,798
|
|
964
|
|
Provisions
|
2,212
|
|
2,137
|
|
Deferred tax
liabilities
|
134
|
|
138
|
|
Contract
liabilities
|
2,269
|
|
2,706
|
|
Total non-current
liabilities
|
61,245
|
|
65,126
|
|
Current liabilities
|
|
|
|
|
Trade
payables
|
11,396
|
|
13,916
|
|
Interest-bearing
receivables financing
|
9,738
|
|
9,518
|
|
Lease
liabilities
|
1,261
|
|
1,247
|
|
Government grant
advances and loans
|
5,811
|
|
6,206
|
|
Contract
liabilities
|
4,122
|
|
8,677
|
|
Other current
liabilities and provisions
|
8,349
|
|
9,180
|
|
Total current
liabilities
|
40,677
|
|
48,744
|
Total equity and liabilities
|
$
110,934
|
|
$
89,564
|
|
|
|
SEQUANS COMMUNICATIONS S.A.
|
|
|
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
|
|
|
Three months ended March 31,
|
(in thousands of US$)
|
2022
|
|
2021
|
Operating activities
|
|
|
|
|
Profit (Loss) before
income taxes
|
$
2,123
|
|
$
(11,273)
|
|
Non-cash adjustment to
reconcile income before tax to net cash from (used in)
operating activities
|
|
|
|
|
|
Depreciation and
impairment of property, plant and equipment
|
826
|
|
875
|
|
|
Amortization and
impairment of intangible assets
|
1,574
|
|
1,895
|
|
|
Share-based payment
expense
|
1,315
|
|
1,160
|
|
|
Increase in
provisions
|
70
|
|
41
|
|
|
Interest expense,
net
|
2,672
|
|
2,734
|
|
|
Change in the fair
value of convertible debt embedded derivative
|
(6,397)
|
|
4,090
|
|
|
Foreign exchange loss
(gain)
|
(89)
|
|
(1,115)
|
|
Working capital
adjustments
|
|
|
|
|
|
Decrease (Increase) in
trade receivables and other receivables
|
8,215
|
|
10,141
|
|
|
Decrease (increase) in
inventories
|
(1,106)
|
|
1,604
|
|
|
Increase in
research tax credit receivable
|
(659)
|
|
380
|
|
|
Increase in trade
payables and other liabilities
|
(4,286)
|
|
208
|
|
|
Decrease in contract
liabilities
|
(5,456)
|
|
(2,812)
|
|
|
Increase (Decrease) in
government grant advances
|
(1,200)
|
|
1,390
|
|
Income tax
paid
|
(298)
|
|
(120)
|
Net cash flow provided by (used in) operating
activities
|
(2,696)
|
|
9,198
|
Investing activities
|
|
|
|
|
Purchase of intangible
assets and property, plant and equipment
|
(1,259)
|
|
(3,610)
|
|
Capitalized development
expenditures
|
(4,231)
|
|
(2,279)
|
|
Purchase of financial
assets
|
66
|
|
(2,698)
|
|
Decrease (increase) of
short-term deposit
|
(16,500)
|
|
10,900
|
|
Interest
received
|
—
|
|
23
|
Net cash flow provided by (used in) investments
activities
|
(21,924)
|
|
2,336
|
Financing activities
|
|
|
|
|
Proceeds from issue of
warrants, exercise of stock options/warrants
|
—
|
|
87
|
|
Public and private
equity offering proceeds, net of transaction costs paid
|
30,139
|
|
—
|
|
Proceeds (Repayment of)
from interest-bearing receivables financing
|
359
|
|
(2,976)
|
|
Proceeds from
interest-bearing research project financing
|
—
|
|
(181)
|
|
Payment of lease
liabilities
|
(246)
|
|
(448)
|
|
Repayment of government
loans
|
(110)
|
|
(121)
|
|
Repayment of venture
debt
|
—
|
|
(1,460)
|
|
Repayment of
interest-bearing research project financing
|
(241)
|
|
—
|
|
Interest
paid
|
(311)
|
|
(533)
|
Net cash flows from (used in) financing
activities
|
29,590
|
|
(5,632)
|
|
Net increase (decrease)
in cash and cash equivalents
|
4,970
|
|
5,902
|
|
Net foreign exchange
difference
|
(2)
|
|
10
|
|
Cash and cash
equivalents at January 1
|
4,835
|
|
7,574
|
Cash and cash equivalents at end of the
period
|
9,803
|
|
13,486
|
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,
2022
|
|
December 31, 2021
|
|
March 31,
2021
|
Net IFRS loss as reported
|
$
2,019
|
|
$
(7,718)
|
|
$
(11,420)
|
Add back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
1,315
|
|
1,861
|
|
1,160
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
(6,397)
|
|
1,176
|
|
4,090
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
1,218
|
|
1,219
|
|
1,085
|
Non-IFRS loss adjusted
|
$
(1,845)
|
|
$
(3,462)
|
|
$
(5,085)
|
IFRS basic loss per ADS as
reported
|
$0.05
|
|
($0.21)
|
|
($0.33)
|
Add back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
$0.03
|
|
$0.05
|
|
$0.03
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
($0.15)
|
|
$0.03
|
|
$0.12
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
$0.03
|
|
$0.03
|
|
$0.03
|
Non-IFRS basic loss per ADS
|
($0.04)
|
|
($0.09)
|
|
($0.15)
|
IFRS diluted loss per ADS
|
$0.04
|
|
($0.21)
|
|
($0.33)
|
Add back
|
|
|
|
|
|
|
Non-cash stock-based
compensation expense according to IFRS 2 (1)
|
$0.03
|
|
$0.05
|
|
$0.03
|
|
Non-cash change in the
fair value of convertible debt embedded derivative
|
($0.14)
|
|
$0.03
|
|
$0.12
|
|
Non-cash interest on
convertible debt and other financing
(2)
|
$0.03
|
|
$0.03
|
|
$0.03
|
Non-IFRS diluted loss per ADS
|
($0.04)
|
|
($0.09)
|
|
($0.15)
|
|
|
|
|
|
|
|
|
|
(1) Included in the
IFRS loss as follows:
|
|
|
|
|
|
|
|
Cost of product
revenue
|
$
29
|
|
$
14
|
|
$
15
|
|
|
Research and
development
|
470
|
|
555
|
|
554
|
|
|
Sales and
marketing
|
290
|
|
346
|
|
217
|
|
|
General and
administrative
|
526
|
|
946
|
|
374
|
|
(2) Related to the
difference between contractual and effective interest
rates
|
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SOURCE Sequans Communications