Sequans munications S.A.(SQNS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q3 2024 increased by 29.5% to $10.1 million from$ 7.8 million in Q3 2023, and increased sequentially by 4.2% [27] - Product revenue accounted for 23.4% of total revenues compared to 9.7% in Q3 2023 and 25.2% in the prior quarter [27] - Licensing revenue was $7.7 million, a 9.8% increase compared to$ 7 million in the prior year quarter [28] - Gross margin in Q3 2024 was 82.5%, stable compared to 84% in Q2 2024 [28] - Net profit for Q3 2024 was $80.5 million or$ 2.91 per diluted ADS, compared to a non-IFRS net loss of $5.8 million in Q2 2024 [31] Business Line Data and Key Metrics Changes - Product revenue gross margin was 36.9% in Q3 compared to 39.1% in Q2 [28] - The company recognized$ 6.7 million in revenue from a partial delivery under a 5G license to Qualcomm [28] - The design win pipeline represents approximately $250 million of future revenue, covering various IoT applications [12] Market Data and Key Metrics Changes - The company anticipates fourth quarter product revenue to double from Q3 2024 [19] - The design win pipeline remains robust with projects transitioning into mass production starting in Q4 2024 [15] - The company expects approximately 10% sequential growth in Q4 2024 [33] Company Strategy and Development Direction - The company is focused on massive IoT and plans to invest in R&D while managing cash burn [11] - Sequans retained perpetual licensing rights to its 4G IoT technology, allowing for continued support of existing customers and development of next-generation 5G solutions [10] - The company aims to achieve breakeven by 2026, supported by anticipated revenue growth [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory towards growth and long-term success following the Qualcomm deal [9] - The company is optimistic about near-term revenue growth, with a strong backlog and new design win projects expected to move to mass production [19] - Management highlighted the importance of delivering product innovation to remain competitive in the rapidly evolving IoT market [21] Other Important Information - The company fully repaid all mature debt and cleared overdue payables, marking a significant turning point in financial stability [11] - The company is implementing actions to reduce cash operating expenses to below$ 10 million per quarter in 2025 [20] - The company plans to continue expanding its licensing and services business, targeting new opportunities in 2025 [18] Q&A Session Summary Question: Can you provide more detail on the product recovery and design win pipeline? - Management confirmed that the design win pipeline is intact and that new projects are expected to ramp up in 2025, with a focus on Cat 1 and Cat M technologies [39][40] Question: How is the RedCap technology relevant to customer roadmaps? - Management explained that RedCap and eRedCap are becoming increasingly relevant for industrial IoT applications, with expectations for market introduction in the coming years [45][46] Question: What is the outlook for licensing opportunities? - Management expressed optimism about ongoing licensing recognition from Qualcomm and a strong pipeline of opportunities for new licensing deals in 2025 [51][52]