SYS-CON MEDIA Authors: Roberto Medrano, Dmitriy Stepanov, Gilad Parann-Nissany, Srinivasan Sundara Rajan, Sean Houghton

News Feed Item

Sequans Communications Announces Fourth Quarter and Full Year 2012 Financial Results

Sequans Communications S.A. (NYSE:SQNS), a 4G chipmaker supplying LTE and WiMAX chips to equipment manufacturers for mobile operators worldwide, today announced financial results for the fourth quarter and full year ended December 31, 2012.

Fourth Quarter 2012 Highlights:

Revenue: Revenue of $3.1 million decreased 60.8% sequentially from the third quarter of 2012, reflecting a decrease in shipments of WiMAX products, partially offset by increased LTE shipments. Revenue decreased 72.8% compared to the fourth quarter of 2011, due to lower sales of WiMAX products, following changes in the WiMAX market in the United States beginning in the second half of 2011.

Gross margin: Gross margin was 9.4%, including a provision for excess inventory totaling $0.9 million. This compares to gross margin of 48.0% in the third quarter of 2012 and 52.0% in the fourth quarter of 2011. Excluding this provision, gross margin in the fourth quarter would have been 36.6%.

Operating income (loss): Operating loss was $9.8 million compared to an operating loss of $6.0 million in the third quarter of 2012 and an operating loss of $5.0 million in the fourth quarter of 2011.

Net loss: Net loss was $9.9 million, or ($0.29) per diluted share/ADS, compared to a net loss of $5.8 million, or ($0.17) per diluted share/ADS in the third quarter of 2012 and a net loss of $5.6 million, or ($0.16) per diluted share/ADS in the fourth quarter of 2011.

Non-IFRS Net loss: Excluding stock-based compensation, non-IFRS net loss was $9.7 million, or ($0.28) per diluted share/ADS, compared to a non-IFRS net loss of $5.0 million, or ($0.15) per diluted share/ADS in the third quarter of 2012, and a non-IFRS net loss of $4.3 million, or ($0.12) per diluted share/ADS, in the fourth quarter of 2011.

                                       

 

Key Metrics                        

In millions of US$ except percentages, shares and per share amounts

    Q4 2012     %*     Q3 2012     %*     Q4 2011     %*     Full year 2012     %*     Full year 2011     %*
Revenue $3.1 $8.0 $11.5 $22.3 $93.7
Gross profit 0.3 9.4% 3.8 48.0% 6.0 52.0% 10.3 46.3% 47.3 50.5%
Operating income (loss) (9.8) -314.2% (6.0) -74.7% (5.0) -43.4% (32.8) -147.2% 1.1 1.1%
Net profit (loss) (9.9) -316.7% (5.8) -72.2% (5.6) -48.9% (33.0) -148.4% (0.4) -0.5%
Diluted EPS ($0.29) ($0.17) ($0.16) ($0.95) ($0.01)
Number of diluted shares/ADS 34,683,839 34,683,839 34,626,501 34,680,227 32,610,680
 
Cash flow from (used in) operations (6.8) (3.3) (3.1) (22.9) 2.8
Cash and cash equivalents at quarter-end 28.8 36.4 57.2 28.8 57.2
 
Additional information:

Stock-based compensation included in operating result

0.2 0.7 1.3 3.2 4.2
Non-IFRS diluted EPS (excludes stock-based compensation) ($0.28) ($0.15) ($0.12) ($0.86) $0.11
                                                             
* Percentage of revenue
 

Full Year 2012 Highlights:

Revenue of $22.3 million in 2012 decreased 76.3% from 2011; gross margin declined to 46.3% in 2012 compared to 50.5% in 2011, primarily due to lower absorption of fixed costs resulting from decreased revenue.

Operating loss was $32.8 million in 2012 compared to operating income of $1.1 million in 2011, while the net loss was $33.0 million ($0.95 loss per diluted share/ADS) in 2012 compared to a net loss of $0.4 million ($0.01 loss per diluted share/ADS) in 2011. Excluding stock-based compensation, non-IFRS net loss was $29.8 million, or $(0.86) per diluted share/ADS in 2012, compared to a non-IFRS net profit of $3.7 million, or $0.11 per diluted share/ADS in 2011.

“Developments during the fourth quarter support our expectation that our LTE revenue will ramp in the second half of 2013,” said Georges Karam, Sequans CEO. “We completed Verizon’s certification process for our high-performance StreamrichLTE product, and we are working with several OEMs to serve the Verizon market opportunity. We won a significant portion of China Mobile’s first bid for expanded LTE field trials in China, and additional bids are expected to follow during this year. Our products performed well in field tests in India, where Reliance Infocomm is expected to launch commercial service in the second half of 2013, and we continue to engage with more operators including Softbank in Japan where we completed a successful trial of our LTE interference cancellation technology. Also, WiMAX operators planning a near-term transition to LTE have been testing our dual-mode WiMAX/LTE solution. We expect WiMAX revenue to continue, although at a low level, primarily in emerging markets where existing networks support the operators’ business case, with the potential to migrate to LTE in the future, leveraging our dual mode technology.

“We continue to expand the number of LTE projects with existing customers, we are adding new customers and we are seeing growing traction for LTE-only devices coming from Tier 1 operators in the U.S., Asia and Europe. This reinforces our decision to focus on maintaining our leadership in 4G and increases our confidence that, once LTE revenues begin to accelerate in the second half of 2013, we will be able to sustain our momentum,” concluded Mr. Karam.

Outlook

The following statements are based on management’s current assumptions and expectations. These statements are forward-looking and actual results may differ materially. Sequans undertakes no obligation to update these statements.

Sequans expects revenue for the first quarter of 2013 to be in the range of $2.5 to $3.5 million, with non-IFRS gross margin around 48%. Based on this revenue range and expected gross margin, non-IFRS net loss per diluted share/ADS is expected to be between ($0.23) and ($0.25) for the first quarter of 2013, based on approximately 34.7 million weighted average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes primarily the impact of stock based compensation.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the fourth quarter and full year 2012 today, February 7, 2013 at 8:00 a.m. EST/14:00 CET. To participate in the live call, analysts and investors should dial 800-230-1059 (or +1 612-234-9959 if outside the U.S.). A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/. A replay of the conference call will be available until March 7, 2013, by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside the U.S., using the following access code: 276747.

Forward-Looking Statements

This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, including WiMAX and LTE markets, (ii) unexpected increases in our expenses, including manufacturing expenses, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, and (ix) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Use of Non-IFRS/non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude non-cash charges relating to stock-based compensation. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release.

About Sequans Communications

Sequans Communications is a 4G chipmaker, supplying LTE and WiMAX chips to equipment manufacturers for mobile operators worldwide. Founded in 2003 to address the WiMAX market, the company expanded in early 2009 to address the LTE market. Sequans chips are inside 4G networks around the world. Sequans is based in Paris, France with additional offices throughout the world, including United States, United Kingdom, Israel, Hong Kong, Singapore, Taiwan, South Korea and China. www.sequans.com

                       
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               
Three months ended
(in thousands of US$, except share and per share amounts) Dec 31, Sept 30, Dec 31,
              2012         2012         2011  
 
Revenue :
Product revenue 2,844 7,452 10,996
Other revenue             286         530         491  
Total revenue             3,130         7,982         11,487  
Cost of revenue
Cost of product revenue 2,793 4,104 5,451
Cost of other revenue             44         44         64  
Total cost of revenue             2,837         4,148         5,515  
Gross profit             293         3,834         5,972  
Operating expenses :
Research and development 7,271 6,455 5,676
Sales and marketing 853 1,470 3,094
General and administrative 2,005 1,871 2,190
                               
Total operating expenses             10,129         9,796         10,960  
Operating income (loss)             (9,836 )       (5,962 )       (4,988 )
Financial income (expense):
Interest income (expense), net 38 22 (26 )
Foreign exchange gain (loss)             (45 )       249         (469 )
Profit (loss) before income taxes             (9,843 )       (5,691 )       (5,483 )
Income tax expense 70 73 132
Profit (loss) (9,913 ) (5,764 ) (5,615 )
Attributable to :
Shareholders of the parent (9,913 ) (5,764 ) (5,615 )
Minority interests             -         -         -  
Basic earnings (loss) per share             ($0.29 )       ($0.17 )       ($0.16 )
Diluted earnings (loss) per share             ($0.29 )       ($0.17 )       ($0.16 )
Number of shares used for computing:
— Basic 34,683,839 34,683,839 34,626,501
— Diluted             34,683,839         34,683,839         34,626,501  
 
                   
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         
Year ended December 31,
(in thousands of US$, except share and per share amounts)             2012           2011  
 
Revenue :
Product revenue 19,600 91,742
Other revenue             2,654           1,972  
Total revenue             22,254           93,714  
Cost of revenue
Cost of product revenue 11,781 46,167
Cost of other revenue             176           247  
Total cost of revenue             11,957           46,414  
Gross profit             10,297           47,300  
Operating expenses :
Research and development 28,408 24,935
Sales and marketing 6,562 12,963
General and administrative 8,096 8,327
                         
Total operating expenses             43,066           46,225  
Operating income (loss)             (32,769 )         1,075  
Financial income (expense):
Interest income (expense), net 137 (389 )
Foreign exchange gain (loss)             (158 )         (744 )
Profit (Loss) before income taxes             (32,790 )         (58 )
Income tax expense (benefit) 234 371
Profit (Loss) (33,024 ) (429 )
Attributable to :
Shareholders of the parent (33,024 ) (429 )
Minority interests             -           -  
Basic earnings (loss) per share             ($0.95 )         ($0.01 )
Diluted earnings (loss) per share             ($0.95 )         ($0.01 )
Number of shares used for computing:
— Basic 34,680,227 32,610,680
— Diluted             34,680,227           32,610,680  
 
                   
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                         
At December 31,
(in thousands of US$)             2012         2011
 
ASSETS
Non-current assets
Property, plant and equipment 9,187 9,334
Intangible assets 4,184 4,233
Loan and other receivables 458 531
Available for sale assets             931         677
Total non-current assets             14,760         14,775
Current assets
Inventories 7,443 11,660
Trade receivables 5,528 8,373
Prepaid expenses and other receivables 2,873 2,571
Recoverable value added tax 415 2,008
Research tax credit receivable 8,632 4,423
Cash and cash equivalents             28,751         57,220
Total current assets             53,642         86,255
Total assets 68,402 101,030
 
EQUITY AND LIABILITIES
Equity
Issued capital, euro 0.02 nominal value, 34,683,839 shares authorized, issued and outstanding at December 31, 2012 (34,667,339 at December 31, 2011) 912 912
Share premium 129,309 129,283
Other capital reserves 12,556 9,368
Accumulated deficit (87,715) (54,691)
Other components of equity             409         (628)
Total equity             55,471         84,244
Non-current liabilities
Government grant advances and interest-free loans 287 385
Finance lease obligations 236 -
Provisions 369 259
Deferred tax liabilities             85         55
Total non-current liabilities             977         699
Current liabilities
Trade payables 6,038 8,580
Government grant advances and interest-free loans 515 717
Finance lease obligations 129 -
Other current liabilities 4,133 5,846
Deferred revenue 609 869
Provisions             530         75
Total current liabilities             11,954         16,087
Total equity and liabilities 68,402 101,030
 
                   
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Year ended December 31,
(in thousands of US$)             2012           2011  
 
Operating activities
Profit (loss) before income taxes (32,790 ) (58 )
Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities
Depreciation and impairment of property, plant and equipment 4,442 4,066
Amortization and impairment of intangible assets 1,758 1,836
Share-based payment expense 3,188 4,174
Increase (decrease) in provisions 1,861 (31 )
Financial expense (income) (137 ) 471
Foreign exchange loss (gain) (57 ) (508 )
Interest free financing benefit - 178
Working capital adjustments
Decrease (Increase) in trade receivables and other receivables 3,678 5,144
Decrease (Increase) in inventories 3,369 (2,870 )
Decrease (Increase) in research tax credit receivable (4,208 ) (2,422 )
Increase (Decrease) in trade payables and other liabilities (3,317 ) (6,274 )
Increase (Decrease) in deferred revenue (260 ) (24 )
Increase (Decrease) in government grant advances (292 ) (521 )
Income tax paid (104 ) (398 )
Net cash flow from (used in) operating activities (22,869 ) 2,763
 
Investing activities
Purchase of intangible assets and property, plant and equipment (5,955 ) (11,042 )
Purchase of financial assets (181 ) 709
Net cash flow used in investments activities (6,136 ) (10,333 )
 
Financing activities
IPO proceeds, net of costs - 59,934

Proceeds from exercise of stock options and founders' warrants

26 579
Proceeds from borrowings and finance lease liabilities 382 -
Repayment of borrowings and finance lease liabilities (17 ) (3,479 )
Interest received (paid) 136 (656 )
Repayment of interest-free loans - (1,321 )
Net cash flows from financing activities 527 55,057
 
Net increase (decrease) in cash and cash equivalents (28,478 ) 47,487
Net foreign exchange difference 9 (6 )
Cash and cash equivalent at January 1 57,220 9,739
Cash and cash equivalents at end of the period 28,751 57,220
 
                       
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
                               
Three months ended
(in thousands of US$, except share and per share amounts) Dec 31, Sept 30, Dec 31,
              2012         2012         2011  
Net IFRS profit (loss) as reported (9,913 ) (5,764 ) (5,615 )
Add back
Stock-based compensation expense according to IFRS 2 222 744 1,324
Non-IFRS profit (loss) adjusted             (9,691 )       (5,020 )       (4,291 )
 
IFRS basic earnings (loss) per share as reported ($0.29 ) ($0.17 ) ($0.16 )
Add back
Stock-based compensation expense according to IFRS 2             $0.01         $0.02         $0.04  
Non-IFRS basic earnings (loss) per share             ($0.28 )       ($0.15 )       ($0.12 )
IFRS diluted earnings (loss) per share ($0.29 ) ($0.17 ) ($0.16 )
Add back
Stock-based compensation expense according to IFRS 2             $0.01         $0.02         $0.04  
Non-IFRS diluted earnings (loss) per share             ($0.28 )       ($0.15 )       ($0.12 )
 
                   
SEQUANS COMMUNICATIONS S.A.
 
UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
                         
Year ended December 31,
(in thousands of US$, except share and per share amounts) 2012           2011  
Net IFRS profit (loss) as reported (33,024 ) (429 )
Add back
Stock-based compensation expense according to IFRS 2 3,189 4,174
Non-IFRS profit (loss) adjusted             (29,835 )         3,745  
 
IFRS basic earnings (loss) per share as reported ($0.95 ) ($0.01 )
Add back
Stock-based compensation expense according to IFRS 2             $0.09           $0.12  
Non-IFRS basic earnings (loss) per share             ($0.86 )         $0.11  
IFRS diluted earnings (loss) per share ($0.95 ) ($0.01 )
Add back
Stock-based compensation expense according to IFRS 2             $0.09           $0.12  
Non-IFRS diluted earnings (loss) per share             ($0.86 )         $0.11  

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from ha...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the ...
What do a firewall and a fortress have in common? They are no longer strong enough to protect the valuables housed inside. Like the walls of an old fortress, the cracks in the firewall are allowing the bad guys to slip in - unannounced and unnoticed. By the time these thieves get in, the damage is already done and the network is already compromised. Intellectual property is easily slipped out the back door leaving no trace of forced entry. If we want to reign in on these cybercriminals, it's hig...
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cloudian, Inc., is a Foster City, California - based software company specializing in cloud storage software. The main product is Cloudian, an Amazon S3-compliant cloud object storage platform, the bedrock of cloud computing systems, that enables c...