Sequans Communications S.A. Q3 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

  • Revenue: $16.5M in Q3 2022, up 39% YoY and 16% QoQ. Driven primarily by a surge in licensing revenue from the new 5G strategic partnership.
  • Non-IFRS Profitability: Achieved non-IFRS net income of $424,000 or $0.01 per diluted ADS vs. a $5.3M loss or $0.15 per ADS in Q3 2021.
  • Gross Margin: 77.6% in Q3 2022, significantly improved from 49.2% in Q3 2021 and 60.7% in Q2 2022, mainly due to the high-margin licensing revenues.
  • Operating Income: $1.2M in Q3 2022 vs. a loss of $5.1M in Q3 2021. Non-IFRS operating expenses increased to $10.5M from $9.6M in Q2 2022.
  • Cash Flow: $2.9M cash used in operations in Q3, partially offset by $13.5M payment received in October from a 5G partner. Cash stood at $5.8M at quarter-end.

Business Segment Performance

  • Massive IoT: Majority of product revenue came from this segment. Cat-M grew 62% YTD. Product sales slowed due to lockdowns in China and supply chain disruptions.
  • Cat 1 Calliope 2: Launched successfully with initial design wins worth $30M over three years. 7 additional opportunities under discussion could add $100M more over three years.
  • Design Win Pipeline: Grown to $700M in potential product revenue over a 3-year design life span (about 50% secured design wins).

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Operator: Greetings, and welcome to Sequans Communications S.A. Third Quarter 2022 Financial Results Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kim Rogers of Investor Relations. Please go ahead. Kimberly Rogers: Thank you, Vikram and thank you to everyone participating in today’s call. Joining me on the call today from Sequans Communications are Georges Karam, Chairman and Chief Executive Officer; and Deborah Choate, Chief Financial Officer. Before turning the call over to Georges, I'd like to remind our participants of the following important information on behalf of Sequans. Sequans issued the earnings press release this morning, which was posted to the company’s website at www.sequans.com under the Newsroom section. Before we start, I would like to remind everyone that this conference call contains projections and other forward-looking statements regarding future events or our future financial performance and potential financing sources. All statements other than present and historical facts and conditions contained in this call, including any statements regarding future results of operations and financial positions, business strategy and plans, expectations for future sale, the impact of the COVID-19 on our supply chain and on our customer demand, the impa

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