Q4 2024 Summary
Published Feb 12, 2025, 2:37 AM UTC- The company's existing $250 million design win pipeline represents more than four years of future revenue, equating to an annual average of approximately $60 million starting in 2026, providing a strong foundation for future growth.
- Sequans is experiencing significant acceleration in new customer engagements, with a $200 million design-in pipeline, particularly in faster-turn IoT applications such as telematics, security, and industrial, which have shorter design cycles of about two years, potentially leading to increased revenue starting in 2025.
- Geopolitical dynamics around China and the challenges faced by competitors like Ublox are positioning Sequans in a unique position to capture market share, as customers seek alternative suppliers and value the innovation and flexibility Sequans offers, enhancing their competitive advantage.
- Sequans' significant revenue growth depends heavily on long-term projects, especially in the metering segment, which accounts for over 50% of their current pipeline. These projects have a long time-to-revenue, potentially up to 4 years, and the company admits they are "not there today," which could postpone expected revenue growth beyond 2026.
- The company faces increased competition from major players like Qualcomm, who will be competing directly with Sequans on key products such as the Cat 1bis. Georges Karam acknowledges that "Qualcomm...will be competing with us with the same product," potentially challenging Sequans' market share and margins.
- Sequans is relying on anticipated financing, including government R&D funding of around $7 million in 2025 and an expected $10 million escrow release from the Qualcomm deal at the end of September, to manage cash burn until breakeven in 2026. Any delays or issues with these funding sources could affect their cash position.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Q1 2025 Revenue | Q1 2025 | no prior guidance | $7 million to $8 million with product revenue contributing approximately 50% | no prior guidance |
Licensing Revenue | Q1 2025 | Around $13 million of licensing revenue to be recognized between Q4 2024 and 2025 | Approximately $8 million remains to be recognized in Q1 2025 (noting it will be lower than the $5.5 million recognized in Q4 2024) | lowered |
Operating Cash Expenses | Q1 2025 | Targeting cash operating expenses to fall below $10 million per quarter on average in 2025 | Expected to average below $10 million per quarter in 2025 | no change |
Breakeven Timeline | Q1 2025 | Aim to achieve breakeven by 2026 | Goal reiterated to achieve non-IFRS operating income breakeven by the second half of 2026 | lowered |
Government R&D Financing | Q1 2025 | no prior guidance | Approximately $7 million in government R&D financing in 2025 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Design Win Pipeline | In Q2 2024, it did not diminish but had a slow conversion rate due to financial concerns. In Q3 2024, it was described as robust, with a $250M value and multiple projects moving to mass production. | In Q4 2024, the pipeline remains $250M, spanning 3+ years of revenue, with about 50% from metering, leading to longer revenue recognition. | Consistent emphasis, with more detailed timing updates and stronger confidence in future revenue realization. |
5G RedCap and eRedCap | In Q2 2024, seen as a 2-3 year path to mass market, targeting a shift from 4G to 5G stand-alone use cases. In Q3 2024, highlighted for industrial and IoT customers needing future-proof connectivity. | In Q4 2024, emphasized as critical to the future roadmap, with development progress continuing and expected market introduction in 2026. | Increasing focus as a key future differentiator, with investment to ensure timely 5G offerings. |
Competition with Qualcomm | In Q2 2024, the agreement was described as not restricting competition, but rather creating more market options. In Q3 2024, there was no direct mention of head-to-head competition. | In Q4 2024, Sequans pointed out minimal competition outside China for Cat 1bis, acknowledging Qualcomm as the primary competitor but emphasizing its own unique position. | Growing clarity on the competitive interplay, with Sequans emphasizing its unique product offerings. |
Qualcomm Transaction & Financing | In Q2 2024, a $200M deal was announced, aimed at clearing debt and strengthening finances, pending French approval. In Q3 2024, the deal closed, generating a $152.7M gain and near-debt-free status. | In Q4 2024, completion of the $200M transaction was confirmed, resulting in a $152.9M gain, repayment of $85M in debt, and additional licensing revenue to come. | Transaction finalized, providing a significantly improved balance sheet and ongoing licensing income. |
Revenue Timing & Delays | In Q2 2024, customers delayed decisions due to Sequans’ financial uncertainty, though improved revenue was expected in 2H 2024. In Q3 2024, a $500K shipment delay and around $13M in deferred licensing revenue were noted. | In Q4 2024, the longer time-to-revenue chiefly stems from inventory overhang and metering’s complex qualification steps, but faster ramps are expected post-2025. | Ongoing caution around timing, but management remains optimistic about a revenue ramp in late 2025 and beyond. |
Metering Segment Reliance | In Q2 2024, highlighted leadership in smart metering (e.g., Itron partnership), extending device battery life for long-term deployments. In Q3 2024, it remained a major market in the $250M pipeline. | In Q4 2024, over 50% of the design win pipeline still comes from metering, contributing to lengthier revenue delays due to complex qualification. | Consistent reliance on metering, with extended timelines impacting near-term revenue recognition. |
Shorter Design Cycles in Telematics, Security, Industrial IoT | No specific mention in Q2 2024 [N/A]. No specific mention in Q3 2024 [N/A]. | In Q4 2024, cited as having faster design-to-revenue cycles (~18–24 months) vs. metering’s 4-year cycle, helping to accelerate revenue. | Newly highlighted as a swifter-growth segment, potentially boosting nearer-term revenue. |
Geopolitical Factors around China | In Q2 2024, noted market shifts made Sequans’ 4G/5G portfolio more strategically valuable. In Q3 2024, emphasized the industry’s need for two Western suppliers, benefiting Sequans. | In Q4 2024, referenced as heightening customer interest in Sequans due to limited OEM options and the need for double sourcing. | Heightened emphasis on geopolitical advantages, reinforcing Sequans’ position with Western customers. |
Regulatory Approvals for Qualcomm Transaction | In Q2 2024, French FDI approval was the key requirement to finalize the $200M Qualcomm deal. In Q3 2024, no further mention [N/A]. | In Q4 2024, no mention of regulatory approvals, implying the transaction had been finalized [N/A]. | No new discussions after Q2’s emphasis on French FDI clearance. |
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Revenue Pipeline & Breakeven
Q: Will $50-60M from $250M wins start by 2026?
A: Yes, the $250 million pipeline extends over more than four years, averaging $60 million annually starting around 2026. This underpins our confidence in achieving our financial goals and reaching breakeven by 2026. -
Design Wins & Pipeline Growth
Q: Details on the $200 million pipeline applications?
A: We have a new $200 million pipeline with applications in telematics, security, and industrial sectors, featuring shorter design cycles of 18 months to 2 years. About one-third will be decided soon, providing quicker revenue compared to longer metering projects. -
Cat 1bis and RedCap Demand
Q: Is interest mainly in Cat 1bis and RedCap?
A: There's significant traction for our unique Cat 1bis chip, with minimal competition outside China. Customers are interested in eRedCap for future transitions, and we're investing to be ready by 2026. -
Geopolitical Impact & Ublox Opportunity
Q: Are China tensions affecting customer interest?
A: Yes, dynamics around China and Ublox are uniquely positioning us. Customers see the need for a real double-sourcing strategy, and this tension enhances our position in shortlists. -
Licensing Progress & RedCap Development
Q: How are licensing deals and RedCap progressing?
A: We're advancing licensing deals, aiming for sustainable arrangements. Our RedCap developments, leveraging past 5G investments, are progressing efficiently with minimal R&D effort, and customers are responding positively. -
Cash Flow & Breakeven Timeline
Q: What's the cash burn outlook until breakeven?
A: We've structured operations to average less than $10 million per quarter. With continued government financing and an expected $10 million from Qualcomm escrow in September, we're comfortable with our cash position to reach breakeven, even if it's in the second half of 2026.