Sequans Communications S ((SQNS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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During the latest earnings call, Sequans Communications S expressed a cautiously optimistic sentiment. Significant achievements were highlighted, such as the pivotal Qualcomm deal, which has bolstered revenue and financial performance. Despite some challenges, including a decline in licensing revenue and an operating loss in Q4, the company’s focus remains on future growth and profitability.
Successful Qualcomm Deal
The completion of a $200 million deal with Qualcomm has been a game-changer for Sequans Communications. Not only did it significantly improve the company’s financial standing, but it also doubled product revenue in the fourth quarter compared to the previous quarter, solidifying Sequans’ position as a leader in technology.
Revenue Growth
Sequans reported a notable increase in total revenue for 2024, climbing by 9% from $33.6 million in 2023 to $36.8 million. The fourth quarter alone saw a remarkable 130% increase in revenues, reaching $11 million compared to the same quarter in the previous year.
Strong Gross Margin
The company achieved a robust gross margin of 75.5% for 2024, up from 71.8% in 2023. Additionally, the product gross margin rose significantly to 35.1% from a mere 6.2% the previous year, which speaks to the company’s improved cost efficiency and pricing power.
Design Win Pipeline
Sequans’ design win pipeline, valued at around $250 million, indicates strong future revenue potential. The company has reported solid customer commitments, particularly within smart metering, which is expected to drive significant contributions to future earnings.
Net Profit Achievement
A significant turnaround was noted in the company’s financials, with a non-IFRS net profit of $77.5 million in 2024, as opposed to a non-IFRS net loss of $30.6 million in 2023. This achievement was largely driven by the Qualcomm transaction, marking a notable shift towards profitability.
Licensing Revenue Decline
Despite the positive strides in other areas, Sequans experienced a 19% decline in licensing and other revenue during the fourth quarter of 2024 compared to the third quarter. This decline poses a challenge that the company will need to address moving forward.
Operating Loss in Q4
The company reported an IFRS operating loss of $5.3 million in the fourth quarter of 2024, contrasting with an operating profit of $87.1 million in the third quarter. This loss highlights some of the financial challenges faced in the latter part of the year.
Forward-Looking Guidance
Looking to the future, Sequans Communications is aiming for sustained growth, driven by its approximately $250 million design win pipeline expected to yield $60 million in average annual revenue from 2025 to 2028. The company anticipates reaching non-IFRS operating income breakeven by 2026, leveraging its expanding design-in pipeline valued at $200 million.
In summary, the earnings call from Sequans Communications S presented a cautiously optimistic outlook. While the company has faced some challenges, like a decline in licensing revenue and Q4 losses, the successful Qualcomm deal and strong revenue growth highlight its potential for future profitability and expansion. The strategic focus on a robust design win pipeline underscores its commitment to driving sustainable growth in the coming years.
