Sequans Communications S.A. Q1 FY2025 earnings call

• Product revenue grew 42% y-o-y due to Monarch 2 rollout; license and services revenue up 28% y-o-y.
• Monarch 2 has metering projects in pilot, Calliope 2 shipped to first design-win customers, Monarch 3 and Calliope 3 planned for 2026 launch. ACP acquisition accelerated 5G eRedCap roadmap by 18 months.
• 5G RedCap platform TORUS-LD to sample to early customers by year-end. RF transceiver chips advanced, preparing for commercial launch.
• Pipeline: ~$480M potential revenue, $250M in design-win, $230M in design-in; 90 new projects in Q1.
• Strategic priorities: Move design-wins to production, expand pipeline, execute RedCap roadmap, expand vertical sales via ACP.
• Financials: Q1 revenue $8.1M, gross margin 64.5%, operating loss $6.8M, net loss $7.3M.

First quarter revenue was $8.1 million. Product revenue was $3.5 million, accounting for 44% of total revenue, up 42% compared to first quarter 2024, driven by the Monarch 2 process rollout. License and services revenue was $4.5 million, 56% of total revenue, up 28% year-over-year but down sequentially due to timing of deliveries and product shipments.

• Q2 revenue expected to be in the range of $8 million to $9 million.
• Target to achieve operating income break-even in 2026, with cash operating expenses below $10M per quarter, reducing cash burn to below $5M per quarter by end of 2025.
• Monarch 3 and Calliope 3 expected to contribute to revenue in late 2027.
• Anticipate closing 1 or more strategic deals leveraging 5G RedCap and eRedCap IP by end of 2025.

• Macroeconomic uncertainties.
• Potential new U.S. tariffs (monitored but no direct impact seen yet).
• Uncertainty in ramp-up of metering projects from pilot to mass production.

Q: Scott Searle asked about pipeline composition and revenue translation of design-in opportunities.

A: Georges Karam said they secured 9 projects in Q1, are prudent in measuring design-win, and many projects are advanced with some in shortlist. On revenue translation, metering projects take longer, but others in automotive segment have progress with confidence of shipping in second half.

Q: Nick Doyle inquired about Calliope 2 gross margin improvement roadmap.

A: Georges Karam said product gross margin is affected by mix of chip (around 50% gross margin) and module (around 30% margin). Variable gross margin will improve with volume growth; current margin affected by fixed manufacturing costs and initial production of Calliope 2 with higher costs.