Sequans Communications (SQNS) Q3 2024 earnings summary

Executive summary

• Closed the Qualcomm transaction, securing $200 million in funding and validating technological leadership in cellular IoT.

• Achieved $10.1 million in Q3 2024 revenue, up 29.5% year-over-year and 4.2% sequentially, driven by strong license and services revenue.

• Net profit reached $72.3 million (IFRS) and $80.5 million (Non-IFRS), primarily due to a $152.7 million gain on sale of 4G IP assets to Qualcomm.

• Balance sheet nearly debt-free after repaying $85 million in matured debt and overdue payables post-quarter, with cash and cash equivalents at $173.6 million.

• Retained perpetual licensing rights to 4G IoT technology, enabling continued support and enhancement of Monarch 2 and Calliope 2 platforms.

Financial highlights

• Q3 2024 revenue was $10.1 million, up 29.5% year-over-year; product revenue was $2.4 million, up 144.5% year-over-year.

• Licensing revenue was $7.7 million, up 9.8% year-over-year, mainly from the Qualcomm Taurus 5G license.

• Gross margin at 82.5%, stable versus prior quarter, driven by high-margin licensing revenue.

• IFRS operating profit of $87 million, reflecting a $152.7 million net gain from the Qualcomm asset sale and a $56.6 million impairment loss on 5G Taurus assets.

• Cash and cash equivalents at quarter-end were $173.6 million, up from $13.1 million in Q2, reflecting Qualcomm proceeds.

Outlook and guidance

• Expect approximately 10% sequential revenue growth in Q4 2024.

• Product revenue projected to double in Q4; licensing and service revenues to remain significant.

• $13 million in licensing revenue from Qualcomm deal to be recognized between Q4 and 2025.

• Targeting cash operating expenses below $10 million per quarter in 2025.

• Confident in achieving break-even by 2026, supported by revenue growth and cost efficiencies.