PARIS--(BUSINESS WIRE)--Jul 31, 2018--4G chipmaker Sequans Communications S.A. (NYSE: SQNS) today announced financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights:

Revenue: Revenue was $12.7 million, an increase of 12.7% compared to the first quarter of 2018, primarily due to 30% sequential growth in product revenue, and a decrease of 4.2% compared to the second quarter of 2017, reflecting significantly higher IoT product revenue, more than offset by lower broadband product and other revenue.

Gross margin: Gross margin was 39.4% compared to 41.7% in the first quarter of 2018 and compared to 42.1% in the second quarter of 2017, primarily due to a shift in product mix toward a higher proportion of modules as well as lower license revenue.

Operating loss: Operating loss was $7.0 million compared to an operating loss of $7.3 million in the first quarter of 2018 and an operating loss of $4.1 million in the second quarter of 2017.

Net loss: Net loss was $8.1 million, or ($0.09) per diluted share/ADS, compared to a net loss $8.7 million, or ($0.10) per diluted share/ADS, in the first quarter of 2018 and a net loss of $6.0 million, or ($0.08) per diluted share/ADS, in the second quarter of 2017.

Non-IFRS Net loss: Excluding the non-cash items of stock-based compensation, the non-cash impact of convertible debt amendments and effective interest adjustments related to the convertible debt and other financings, non-IFRS net loss was $6.8 million, or ($0.07) per diluted share/ADS, compared to a non-IFRS net loss of $7.5 million, or ($0.08) per diluted share/ADS in the first quarter of 2018, and a non-IFRS net loss of $4.9 million, or ($0.06) per diluted share/ADS, in the second quarter of 2017.

Cash: Cash, cash equivalents and short-term deposit at June 30, 2018 totaled $7.0 million compared to $15.0 million at March 31, 2018. Subsequent to the balance sheet date, the Company collected over $1.5 million in a final payment for a large government grant, and expects to collect the 2017 French research credit of $3.2 million in September.

Also, to provide additional financial flexibility, Sequans has secured commitments of $5 million in additional convertible debt and is working to close another financing facility for up to $20 million. Meanwhile, the Company has made significant progress in its strategic discussions and currently anticipates that a strategic investment may be concluded before the end of the year.

“Overall momentum in our IoT business is very strong, with IoT revenue in the first half of 2018 more than double the first half of 2017, and we continue to add new projects and customers and to expand our engagements with various carriers for both LTE-M and NB-IoT in a growing number of regions,” said Georges Karam, Sequans’ CEO. “Meanwhile, our broadband revenue in Q2 improved sequentially, as expected, and this business remains on track for further gradual improvement. We continue to expect LTE-M shipments to accelerate during the second half of the year; however, a few customer-specific project delays are causing us to be slightly more cautious with Q3 guidance.

“From a strategic perspective, we are making excellent progress. Our goal is to finalize two strategic relationships during the second half of this year. We are aiming to conclude one of them, which includes a funding element, in the current quarter.”

Q3 2018 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 2018 to be in the range of $13.5 to $16 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 ($0.06) and ($0.08) for the third quarter of 2018, based on approximately 94.5 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 second quarter of 2018 today, July 31, 2018, at 8:00 a.m. EDT /14:00 CET. To participate in the live call, analysts and investors should dial 800-230-1059 (or +1 612-234-9960 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 31, 2018 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: 451278.

Forward-Looking Statements

This press release 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 release, including any statements regarding our future results of operations and financial positions, business strategy and plans, expectations for IoT and broadband sales, sources and availability of funding 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 and the non-cash financial income and expense related to the convertible debt and its embedded derivative issued in April 2015 and April 2016. 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 a non-GAAP reconciliation for 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 adjustments 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.comwww.facebook.com/sequanswww.twitter.com/sequans

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