WISeKey International Holding AG Q4 FY2023 earnings call

• Strategic investments aligned with growth initiatives, transitioning to recurring revenue for subsidiaries.
• Market moving towards identity-required markets with initiatives like master certification in the US and CyberTrust Mark.
• WISe.ART platform expanding with new content, artists, and use by entities like the Vatican and UN.
• WISeSat launching new satellites in cooperation with the Swiss Army and SpaceX, with plans for satellite IoT services.
• OSAT centers being developed in the US and Europe to expand semiconductor presence.
• Quasar program advancing, with expected commercialization of post-quantum semiconductors starting in 2025.

WISeKey operates through several subsidiaries. CLSQ is a semiconductor company. In 2023, WISeKey's total revenue was $31 million, a 30% increase from $24 million in 2022. Net sales in 2023 were 54% from North America, 35% from Europe, Middle East and Africa, and 11% from Asia Pacific. Gross profit was $15 million in 2023 with a margin of 48%, up from $10 million in 2022. WISeKey SA is a cybersecurity player with strong digital identity and root of trust. WISeSat Space is a space technology company with picosatellites and IoT connectivity. WISe.ART is a blockchain platform for digital assets and NFTs.

• 2024 is a transition year with expected temporary dip in existing semiconductor revenue due to market shift to new semiconductors.
• Anticipate revenue from new certifications (CyberTrust Mark) and related standards starting in 2024, with full impact from initiatives like sealed coin and new microchips expected from 2025/2026.
• WISe.ART platform growth expected to continue, with Phase 3 journey into Web 3.0.
• Track and trace technology from smart containers to generate revenue as new requirements are imposed on shipping companies.

• Competition in the semiconductor market, with other large companies developing post-quantum chips.
• Geopolitical tensions and supply chain issues affecting semiconductor production and revenue.
• Complexity in scaling new initiatives like satellite constellations and blockchain platforms, which may impact timely revenue generation.

Q: After testing the next-generation chip, how long does it take for customers to begin implementing and shipping it on new products?

A: The chip design is complete, with prototypes tested in June. Penetration testing and accreditation process will take until early 2025, with sales starting around May 2025.

Q: Can you quantify the backlog?

A: The backlog is between $60 million and $100 million, with recurring revenue from clients who continue buying chips and related services, and it's sticky as it's hard for companies to switch suppliers.

Q: Do you think quantum technology might pare down the number of competitors?

A: Yes, as not all competitors are as advanced, and being a non-US company gives an advantage in global markets like the EU.