Sequans Communications (SQNS) investor relations material

Executive summary

• Q2 2026 revenue was $7.5 million, up 23% sequentially, driven by strong IoT product sales, robust design-win pipeline conversion, and new customer segments.

• Product sales grew 83.7%–84% year-over-year, with over 40 design-win projects now in mass production and a growing backlog extending into 2027.

• The company completed full redemption of convertible debt, funded by Bitcoin sales, resulting in a debt-free balance sheet and $21 million in cash at quarter-end, with 314 Bitcoin valued at $18.4 million.

• Operating loss narrowed to $7.2 million from $50.5 million in Q1 2026, aided by realized Bitcoin gains and reduced impairment losses.

• Focus remains on scaling the IoT semiconductor business, expanding in defense and drone markets, and advancing the 5G eRedCap roadmap.

Financial highlights

• Q2 2026 revenue: $7.5 million, up 23.2% from Q1 2026 but down 8.4% year-over-year due to a large prior-year licensing deal; excluding this, revenue grew 84.2% year-over-year.

• Gross margin was 32.9%, down from 37.7% in Q1 and 64.4% in Q2 2025, reflecting a higher mix of product revenue versus licensing.

• Operating expenses were $11.9 million, flat sequentially; non-cash Bitcoin impairment of $3 million and realized net gain of $5.3 million on Bitcoin sales were recorded.

• Operating loss was $7.2 million, net loss $9.8 million ($0.65 per ADS); non-IFRS net loss was $4 million ($0.27 per ADS).

• Cash and equivalents at June 30 were $21 million, up from $10.6 million at March 31; 314 Bitcoin valued at $18.4 million remain on the balance sheet.

Outlook and guidance

• Q3 2026 revenue expected between $8.5 million and $10 million, with the upper end dependent on closing significant licensing deals.

• Sequential growth anticipated through the second half of 2026, supported by backlog and production ramps.

• Targeting operating breakeven in the first half of 2027, contingent on continued cost control and licensing revenue.

• Backlog extends into 2027, with over 40 design-win projects in mass production, representing 55% of a $300 million three-year product revenue pipeline.

• Several IP licensing projects under discussion across diverse markets and geographies.