Sequans Communications SA Q1 FY2023 earnings call

• Strengthened balance sheet with a $20 million private placement post-quarter end. - Strategic committee evaluating various options, with plans to share more on second quarter earnings call. - Progress on 5G Taurus chipset, aiming to start sampling later this year and engage alpha customers. - Pipeline increased to over $750 million of 3-year life revenue, driven by Calliope 2 and 5G Taurus. - Massive IoT segment had sequential decline due to inventory rationalization and delayed project launches, but 3 customers confirmed to resume production in 2023. - Broadband IoT segment's future growth tied to Taurus 5G platform, with testing to begin by end of Q3. - Partnerships with Renesas and module vendors deepening, with new deals in progress.

Sequans' first quarter 2023 revenue was $11.9 million. The Massive IoT segment accounted for approximately 28% of total revenue in Q1 2023, with Cat 1 revenue affected by a customer's inventory rationalization. The Broadband IoT segment made up 72% of total revenue, driven by 5G licensing revenue. Gross margin in Q1 2023 was a historic high of 78.5%, primarily due to a higher proportion of licensing revenue in the mix.

• Q2 revenue expected to be in the range of $9 million to $11 million with gross margin around 65%. - Non-IFRS operating expenses in 2023 expected to average about $12 million per quarter. - Expect total interest expense in Q2 on IFRS basis to be approximately $2.8 million. - Not providing guidance on embedded derivative revaluation or foreign exchange impacts as they depend on market conditions.

• Operate in a very competitive and rapidly changing environment with new risks emerging from time to time. - Macro economic conditions could potentially lead to project delays or impact customer spending.

Q: On the cash front, whether a $7 million scheduled payment from China relationship happened in Q1 and if remaining payments are on track; clarification on European and French loans; and 5G timeline.

A: Deborah stated the $7 million payment from China came in and remaining payments in Q2 are on track. European and French financing options could provide over $50 million over a couple of years. Georges mentioned 5G execution is on track.

Q: On Taurus revenue timing, expected ASP uptick, mix of licensing and product revenue.

A: Georges said real product revenue from Taurus is more towards late 2024 and 2025, with licensing potentially contributing in Q4 2023.

Q: On pipeline design wins in production and revenue ramp in 2024.

A: Georges explained about design wins, with 20% of the pipeline already in shipment mode and remaining projects on track to ramp in 2024.

Q: On macro-related risks to IoT adoption and inflection points.

A: Georges stated belief in IoT node adoption eventually happening, with no major impact seen on project progress in Q1.

Q: On 5G ASP uptick, mix of licensing and product revenue, and key customers with 5G.

A: Georges mentioned 5G Taurus will bring higher ASP compared to previous products, with mix shifting towards product revenue over time and expecting key customers to transition to 5G.