Sequans Communications (SQNS) Q2 2024 earnings summary

Executive summary

• Announced agreement to sell 4G IoT technology to Qualcomm for $200 million in cash, retaining a perpetual license for ongoing use and development, and 5G IP.

• Transaction expected to close by end of October 2024, subject to French regulatory approval.

• Sequans will maintain ownership of 5G assets and continue developing both 4G and 5G IoT solutions.

• Approximately 230 personnel will remain, with 75% focused on R&D and customer support.

• Q2 2024 revenue reached $9.7 million, up 60.5% sequentially and 5.6% year-over-year.

Financial highlights

• Q2 2024 product revenue was $2.4 million, flat sequentially but up 144.5% year-over-year.

• Service/license revenue reached $7.2 million, largely from a Monarch 2 manufacturing license agreement with Qualcomm.

• Gross margin improved to 84.0% from 63.9% in Q1 2024 and 82.3% in Q2 2023.

• Net loss narrowed to $0.9 million in Q2 2024 from $11.8 million in Q1 2024 and $9.1 million in Q2 2023.

• Cash and cash equivalents rose to $13.1 million at June 30, 2024, from $0.5 million at March 31, 2024.

Outlook and guidance

• Anticipates modest product revenue increase in Q3 and stronger performance in Q4 2024.

• Expects higher product revenue for full year 2025 compared to 2024, driven by more customer products entering mass production.

• Design win activity expected to accelerate as financial position improves.

• Impact of Qualcomm transaction on licensing/services results for H2 2024 not yet finalized.