Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Sequans Communications Announces Third Quarter 2023 Financial Results By: Newsfile November 02, 2023 at 06:13 AM EDT Paris, France--(Newsfile Corp. - November 2, 2023) - Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the third quarter ended September 30, 2023.Third Quarter 2023 Summary Results Table:(in US$ millions, except share and per share data)Q3 2023Q2 2023Q3 2022 Revenue$7.8$9.2$16.5Gross profit6.77.512.8Gross margin (%)85.8 %82.3 %77.6 %Operating profit (loss)(7.8)(5.4)1.2Net profit (loss)(9.6)(9.1)(2.9)Diluted earnings (loss) per ADS ($0.16)($0.16)($0.06)Non-IFRS diluted earnings (loss) per ADS *($0.12)($0.10)$0.01Weighted average number of diluted ADS (IFRS)58,586,32457,119,46847,802,526Weighted average number of diluted ADS (Non-IFRS)58,586,32457,119,46847,802,526* See Use of Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net Profit (Loss) includes significant non-cash interest expense, debt amendment and change in value of embedded derivative that are excluded from Non-IFRS measures "Our third quarter continues to be impacted by the delay of revenue product ramps shifting now to year end, as client inventory drawdowns are taking longer than expected to clear," said Georges Karam, CEO of Sequans. "However, we continue to experience strong momentum in building our revenue pipeline and securing design wins. During the third quarter, we successfully secured our first alpha customer for the 5G Taurus platform and around a dozen new designs with LTE-M/NB-IoT Monarch 2 and Cat 1 Calliope 2. These successes underscore the growth potential of Sequans' wireless IoT connectivity solutions."Third Quarter 2023 Financial Summary:Revenue: Revenue was $7.8 million, a decrease of 15.0% compared to the second quarter of 2023 and a decrease of 52.9% compared to the third quarter of 2022.Gross margin: Gross margin was 85.8% compared to 82.3% in the second quarter of 2023 and compared to 77.6% in the third quarter of 2022. Operating loss: Operating loss was $7.8 million compared to operating loss of $5.4 million in the second quarter of 2023 and operating profit of $1.2 million in the third quarter of 2022. The third quarter of 2023 operating loss reflected $2.4 million in higher general and administrative expenses from legal fees related to the Renesas tender offer, compared with $0.3 million in the second quarter of 2023 and none in the third quarter of 2022.Net loss: Net loss was $9.6 million, or ($0.16) per diluted ADS, compared to a net loss of $9.1 million, or ($0.16) per diluted ADS, in the second quarter of 2023 and a net loss of $2.9 million, or ($0.06) per diluted ADS, in the third quarter of 2022. Net loss in the third quarter of 2023 includes a $0.4 million gain on the change in fair value of the convertible debt derivative compared to a gain of $0.3 million in the second quarter of 2023 and a loss of $1.2 million in the third quarter of 2022.Non-IFRS loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the amendment and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $6.8 million, or ($0.12) per diluted ADS, compared to non-IFRS net loss of $6.0 million, or ($0.10) per diluted ADS in the second quarter of 2023, and a non-IFRS net profit of $0.4 million, or $0.01 per diluted ADS, in the third quarter of 2022. The non-IFRS net loss includes foreign exchange gain of $0.5 million, or $0.01 per diluted ADS, in the third quarter of 2023, compared to foreign exchange loss of $40,000, or ($0.00) per diluted ADS in the second quarter of 2023 and foreign exchange gain of $1.0 million, or $0.02 per diluted ADS, in the third quarter of 2022.Cash: Cash and cash equivalents and short-term deposits at September 30, 2023 totaled $6.7 million compared to $7.9 million at June 30, 2023.Conference Call Note: Sequans will not host an earnings conference due to the tender offer by Renesas Electronics Corporation launched September 11, 2023. Forward Looking Statements This press release contains projections and other forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding the growth potential of Sequans' wireless IoT connectivity solutions, our future results of operations and financial positions, business strategy, plans, including our ability to convert our pipeline to revenue, 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 undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. 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 rely on or 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. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2022, 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, (ii) unexpected increases in our expenses resulting from inflationary pressures and rising interest rates, including manufacturing and operating expenses and interest expense, (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 fluctuations 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, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine-Russia conflict on our independent contractors located in Ukraine, (xiii) our ability to raise debt and equity financing, (xiv) the potential failure to satisfy conditions to the completion of the proposed Renesas transaction due to the failure to receive a sufficient number of tendered shares in the tender offer, (xv) the failure to obtain necessary regulatory or other approvals, (xvi) the outcome of legal proceedings that may be instituted against Sequans and/or others relating to the transaction, (xvii) the possibility that competing offers will be made, (xviii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction, (xix) significant or unexpected costs, charges or expenses resulting from the proposed transaction, (xx) negative effects of this announcement or the consummation of the proposed acquisition on the market price of our ADS and ordinary shares, (xxi) other risks associated with the proposed transaction, such as the risk that the transaction may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur, and (xxii) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.Use of Non-IFRS/non-GAAP Financial MeasuresTo supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; deferred tax benefit or expense related to the convertible debt and other financings. 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.Important Additional Information and Where to Find ItIn connection with the proposed acquisition of Sequans Communications S.A. ("Sequans") by Renesas Electronics Corporation, a Japanese corporation ("Parent" or "Renesas"), Parent commenced a tender offer for all of the outstanding ordinary shares, including American Depositary Shares of Sequans, on September 11, 2023. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities of Sequans. It is also not a substitute for the tender offer materials that Parent and Renesas Electronics Europe GmbH, a direct wholly owned subsidiary of Parent ("Purchaser") filed with the Securities and Exchange Commission (the "SEC") or the solicitation/recommendation statement that Sequans filed on Schedule 14D-9 with the SEC upon commencement of the tender offer. Purchaser filed tender offer materials on Schedule TO with the SEC, and Sequans filed a Solicitation/Recommendation Statement on Schedule 14D-9 and a Schedule 13E-3 transaction statement with respect to the tender offer with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT AND TRANSACTION STATEMENT CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY AND BE CONSIDERED BY SEQUANS' SECURITYHOLDERS BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. Both the tender offer materials and the solicitation/recommendation statement and transaction statement will be made available to Sequans' investors and security holders free of charge. A free copy of the tender offer materials and the solicitation/recommendation statement and transaction statement will also be made available to all of Sequans' investors and security holders by contacting Sequans at ir@sequans.com, or by visiting Sequans' website (www.sequans.com). In addition, the tender offer materials and the solicitation/recommendation statement (and all other documents filed by Sequans with the SEC) will be available at no charge on the SEC's website (www.sec.gov) upon filing with the SEC. SEQUANS' INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE TENDER OFFER MATERIALS, THE SOLICITATION/RECOMMENDATION STATEMENT AND THE TRANSACTION STATEMENT, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED BY PARENT OR SEQUANS WITH THE SEC WHEN THEY BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE TENDER OFFER, PARENT AND SEQUANS.About Sequans CommunicationsSequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequansMedia Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.comInvestor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.comCondensed financial tables followSEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands of US$, except share and per share amounts)Three months ended Sept 30, 2023June 30, 2023Sept 30, 2022 Revenue :Product revenue$753$996$4,385License and services revenue7,0338,16212,143 Total revenue7,7869,15816,528Cost of revenue1,1051,6253,708Gross profit6,6817,53312,820 Operating expenses : Research and development 5,9746,3466,924Sales and marketing 2,9352,9822,438General and administrative 5,6183,5882,243 Total operating expenses14,52712,91611,605 Operating profit (loss)(7,846)(5,383)1,215Financial income (expense): Interest income (expense), net(2,802)(2,796)(2,784)Change in fair value of convertible debt derivative439325(1,193)Impact of debt amendment and reimbursement247-476Foreign exchange gain (loss)513(40)1,030 Profit (Loss) before income taxes(9,449)(7,894)(1,256)Income tax expense1041,2231,617 Profit (Loss)$(9,553)$(9,117)$(2,873)Attributable to : Shareholders of the parent(9,553)(9,117)(2,873)Minority interests--- Basic loss per ADS($0.16)($0.16)($0.06)Diluted loss per ADS($0.16)($0.16)($0.06)Weighted average number of ADS used for computing: - Basic58,586,32457,119,46847,802,526- Diluted58,586,32457,119,46847,802,526 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSNine months ended Sept 30, (in thousands of US$, except share and per share amounts)20232022 Revenue :Product revenue$4,089$17,984License and services revenue24,75426,656 Total revenue28,84344,640Cost of revenue5,28613,736 Gross profit23,55730,904 Operating expenses : Research and development 19,80819,249Sales and marketing 8,9507,466General and administrative 12,0247,042 Total operating expenses40,78233,757 Operating profit (loss)(17,225)(2,853)Financial income (expense): Interest income (expense), net(8,113)(8,314)Change in fair value of convertible debt derivative3,0665,867Impact of debt amendment and reimbursement247476Foreign exchange gain (loss)3082,618 Profit (Loss) before income taxes(21,717)(2,206)Income tax expense1,9931,841 Profit (Loss)$(23,710)$(4,047)Attributable to : Shareholders of the parent(23,710)(4,047)Minority interests-- Basic loss per ADS($0.43)($0.09)Diluted loss per ADS($0.43)($0.09)Weighted average number of ADS used for computing: - Basic54,732,91745,538,645- Diluted54,732,91745,538,645 SEQUANS COMMUNICATIONS S.A. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAt Sept 30,At Dec 31, (in thousands of US$)20232022 ASSETSNon-current assetsProperty, plant and equipment$7,098$8,489Intangible assets59,10248,705Deposits and other receivables760783Other non-current financial assets334337 Total non-current assets67,29458,314 Current assets Inventories8,5489,387Trade receivables4,9768,494Contract assets2,694176Prepaid expenses2,0001,399Other receivables4,4485,799Research tax credit receivable7,7794,515Short-term deposits-5,000Cash and cash equivalents 6,7405,671 Total current assets37,18540,441 Total assets$104,479$98,755 EQUITY AND LIABILITIES Equity Issued capital, euro 0.01 nominal value, 243,239,926 shares authorized, issued and outstanding at September 30, 2023 (193,426,478 shares at December 31, 2022)$2,846$2,306Share premium14,6172,418Other capital reserves68,26862,870Accumulated deficit(76,082)(65,099)Other components of equity(812)(391) Total equity8,8372,104 Non-current liabilities Government grant advances, loans and other liabilities3,8306,235Convertible debt-43,455Convertible debt embedded derivative-3,203Lease liabilities1,8542,278Trade payables-1,788Provisions2,1402,196Deferred tax liabilities263258Contract liabilities9404 Total non-current liabilities8,09659,817 Current liabilities Trade payables15,4329,342Interest-bearing receivables financing6,5727,723Lease liabilities1,2551,291Convertible debt49,871-Convertible debt embedded derivative137-Government grant advances and loans4,4794,159Contract liabilities1,0885,964Other current liabilities and provisions8,7128,355 Total current liabilities87,54636,834 Total equity and liabilities$104,479$98,755 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWNine months ended Sept 30, (in thousands of US$)20232022 Operating activitiesProfit (Loss) before income taxes$(21,717)$(2,206)Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities Depreciation and impairment of property, plant and equipment2,7832,901Amortization and impairment of intangible assets6,1255,574Share-based payment expense5,3163,667Increase in provisions79298Interest expense, net8,1138,314Change in the fair value of convertible debt embedded derivative(3,066)(5,867)Impact of debt reimbursement(247)(476)Foreign exchange loss (gain)173(897)Working capital adjustments Decrease (Increase) in trade receivables and other receivables1,009(3,412)Decrease (increase) in inventories839(3,669)Increase in research tax credit receivable(1,727)(636)Increase (Decrease) in trade payables and other liabilities5,198(7,499)Decrease in contract liabilities(5,356)(3,703)Decrease in government grant advances(364)(2,292)Income tax paid(1,561)(683)Net cash flow used in operating activities(4,403)(10,586)Investing activities Purchase of intangible assets and property, plant and equipment(3,401)(5,892)Capitalized development expenditures(17,382)(11,308)Sale (Purchase) of financial assets261,741Decrease of short-term deposit5,000-Interest received17447 Net cash flow used in investments activities(15,583)(15,412)Financing activities Public and private equity offering proceeds, net of transaction costs paid25,46630,125Proceeds (Repayment of) from interest-bearing receivables financing(1,069)342Proceeds from interest-bearing research project financing545-Payment of lease liabilities(998)(929)Repayment of government loans(1,126)(633)Repayment of interest-bearing research project financing(693)(812)Interest paid(1,052)(1,096)Net cash flows from financing activities21,07326,997 Net increase (decrease) in cash and cash equivalents1,087999Net foreign exchange difference(18)(3)Cash and cash equivalents at January 15,6714,835 Cash and cash equivalents at end of the period6,7405,831 SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Three months ended Sept 30,2023June 30, 2023Sept 30,2022 Net IFRS gain (loss) as reported$(9,553)$(9,117)$(2,873)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)1,7571,7781,133Non-cash change in the fair value of convertible debt embedded derivative(439)(325)1,193Non-cash interest on convertible debt and other financing (2)1,7091,7061,447Non-cash impact of convertible debt amendment(247)-(476)Non-IFRS gain (loss) adjusted$(6,773)$(5,958)$424 IFRS basic gain (loss) per ADS as reported($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS basic gain (loss) per ADS ($0.12)($0.10)$0.01 IFRS diluted gain (loss) per ADS($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS diluted gain (loss) per ADS($0.12)($0.10)$0.01 (1) Included in the IFRS loss as follows: Cost of product revenue$24$27$41Research and development481488370Sales and marketing393361268General and administrative859902454(2) Related to the difference between contractual and effective interest rates SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Nine months ended Sept 30, 20232022 Net IFRS gain (loss) as reported$(23,710)$(4,047)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)5,3163,667Non-cash change in the fair value of convertible debt embedded derivative(3,066)(5,867)Non-cash interest on convertible debt and other financing (2)4,8234,117Non-cash impact of convertible debt amendment(247)(476)Non-IFRS gain (loss) adjusted$(16,884)$(2,606)IFRS basic gain (loss) per ADS as reported($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS basic gain (loss) per ADS ($0.31)($0.06)IFRS diluted gain (loss) per ADS($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS diluted gain (loss) per ADS($0.31)($0.06) (1) Included in the IFRS loss as follows: Cost of product revenue$83$114Research and development1,4391,157Sales and marketing1,101846General and administrative2,6931,550(2) Related to the difference between contractual and effective interest rates To view the source version of this press release, please visit https://www.newsfilecorp.com/release/186077 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Sequans Communications Announces Third Quarter 2023 Financial Results By: Newsfile November 02, 2023 at 06:13 AM EDT Paris, France--(Newsfile Corp. - November 2, 2023) - Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the third quarter ended September 30, 2023.Third Quarter 2023 Summary Results Table:(in US$ millions, except share and per share data)Q3 2023Q2 2023Q3 2022 Revenue$7.8$9.2$16.5Gross profit6.77.512.8Gross margin (%)85.8 %82.3 %77.6 %Operating profit (loss)(7.8)(5.4)1.2Net profit (loss)(9.6)(9.1)(2.9)Diluted earnings (loss) per ADS ($0.16)($0.16)($0.06)Non-IFRS diluted earnings (loss) per ADS *($0.12)($0.10)$0.01Weighted average number of diluted ADS (IFRS)58,586,32457,119,46847,802,526Weighted average number of diluted ADS (Non-IFRS)58,586,32457,119,46847,802,526* See Use of Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net Profit (Loss) includes significant non-cash interest expense, debt amendment and change in value of embedded derivative that are excluded from Non-IFRS measures "Our third quarter continues to be impacted by the delay of revenue product ramps shifting now to year end, as client inventory drawdowns are taking longer than expected to clear," said Georges Karam, CEO of Sequans. "However, we continue to experience strong momentum in building our revenue pipeline and securing design wins. During the third quarter, we successfully secured our first alpha customer for the 5G Taurus platform and around a dozen new designs with LTE-M/NB-IoT Monarch 2 and Cat 1 Calliope 2. These successes underscore the growth potential of Sequans' wireless IoT connectivity solutions."Third Quarter 2023 Financial Summary:Revenue: Revenue was $7.8 million, a decrease of 15.0% compared to the second quarter of 2023 and a decrease of 52.9% compared to the third quarter of 2022.Gross margin: Gross margin was 85.8% compared to 82.3% in the second quarter of 2023 and compared to 77.6% in the third quarter of 2022. Operating loss: Operating loss was $7.8 million compared to operating loss of $5.4 million in the second quarter of 2023 and operating profit of $1.2 million in the third quarter of 2022. The third quarter of 2023 operating loss reflected $2.4 million in higher general and administrative expenses from legal fees related to the Renesas tender offer, compared with $0.3 million in the second quarter of 2023 and none in the third quarter of 2022.Net loss: Net loss was $9.6 million, or ($0.16) per diluted ADS, compared to a net loss of $9.1 million, or ($0.16) per diluted ADS, in the second quarter of 2023 and a net loss of $2.9 million, or ($0.06) per diluted ADS, in the third quarter of 2022. Net loss in the third quarter of 2023 includes a $0.4 million gain on the change in fair value of the convertible debt derivative compared to a gain of $0.3 million in the second quarter of 2023 and a loss of $1.2 million in the third quarter of 2022.Non-IFRS loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the amendment and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $6.8 million, or ($0.12) per diluted ADS, compared to non-IFRS net loss of $6.0 million, or ($0.10) per diluted ADS in the second quarter of 2023, and a non-IFRS net profit of $0.4 million, or $0.01 per diluted ADS, in the third quarter of 2022. The non-IFRS net loss includes foreign exchange gain of $0.5 million, or $0.01 per diluted ADS, in the third quarter of 2023, compared to foreign exchange loss of $40,000, or ($0.00) per diluted ADS in the second quarter of 2023 and foreign exchange gain of $1.0 million, or $0.02 per diluted ADS, in the third quarter of 2022.Cash: Cash and cash equivalents and short-term deposits at September 30, 2023 totaled $6.7 million compared to $7.9 million at June 30, 2023.Conference Call Note: Sequans will not host an earnings conference due to the tender offer by Renesas Electronics Corporation launched September 11, 2023. Forward Looking Statements This press release contains projections and other forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding the growth potential of Sequans' wireless IoT connectivity solutions, our future results of operations and financial positions, business strategy, plans, including our ability to convert our pipeline to revenue, 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 undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. 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 rely on or 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. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2022, 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, (ii) unexpected increases in our expenses resulting from inflationary pressures and rising interest rates, including manufacturing and operating expenses and interest expense, (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 fluctuations 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, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine-Russia conflict on our independent contractors located in Ukraine, (xiii) our ability to raise debt and equity financing, (xiv) the potential failure to satisfy conditions to the completion of the proposed Renesas transaction due to the failure to receive a sufficient number of tendered shares in the tender offer, (xv) the failure to obtain necessary regulatory or other approvals, (xvi) the outcome of legal proceedings that may be instituted against Sequans and/or others relating to the transaction, (xvii) the possibility that competing offers will be made, (xviii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction, (xix) significant or unexpected costs, charges or expenses resulting from the proposed transaction, (xx) negative effects of this announcement or the consummation of the proposed acquisition on the market price of our ADS and ordinary shares, (xxi) other risks associated with the proposed transaction, such as the risk that the transaction may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur, and (xxii) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.Use of Non-IFRS/non-GAAP Financial MeasuresTo supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; deferred tax benefit or expense related to the convertible debt and other financings. 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.Important Additional Information and Where to Find ItIn connection with the proposed acquisition of Sequans Communications S.A. ("Sequans") by Renesas Electronics Corporation, a Japanese corporation ("Parent" or "Renesas"), Parent commenced a tender offer for all of the outstanding ordinary shares, including American Depositary Shares of Sequans, on September 11, 2023. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities of Sequans. It is also not a substitute for the tender offer materials that Parent and Renesas Electronics Europe GmbH, a direct wholly owned subsidiary of Parent ("Purchaser") filed with the Securities and Exchange Commission (the "SEC") or the solicitation/recommendation statement that Sequans filed on Schedule 14D-9 with the SEC upon commencement of the tender offer. Purchaser filed tender offer materials on Schedule TO with the SEC, and Sequans filed a Solicitation/Recommendation Statement on Schedule 14D-9 and a Schedule 13E-3 transaction statement with respect to the tender offer with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT AND TRANSACTION STATEMENT CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY AND BE CONSIDERED BY SEQUANS' SECURITYHOLDERS BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. Both the tender offer materials and the solicitation/recommendation statement and transaction statement will be made available to Sequans' investors and security holders free of charge. A free copy of the tender offer materials and the solicitation/recommendation statement and transaction statement will also be made available to all of Sequans' investors and security holders by contacting Sequans at ir@sequans.com, or by visiting Sequans' website (www.sequans.com). In addition, the tender offer materials and the solicitation/recommendation statement (and all other documents filed by Sequans with the SEC) will be available at no charge on the SEC's website (www.sec.gov) upon filing with the SEC. SEQUANS' INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE TENDER OFFER MATERIALS, THE SOLICITATION/RECOMMENDATION STATEMENT AND THE TRANSACTION STATEMENT, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED BY PARENT OR SEQUANS WITH THE SEC WHEN THEY BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE TENDER OFFER, PARENT AND SEQUANS.About Sequans CommunicationsSequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequansMedia Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.comInvestor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.comCondensed financial tables followSEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands of US$, except share and per share amounts)Three months ended Sept 30, 2023June 30, 2023Sept 30, 2022 Revenue :Product revenue$753$996$4,385License and services revenue7,0338,16212,143 Total revenue7,7869,15816,528Cost of revenue1,1051,6253,708Gross profit6,6817,53312,820 Operating expenses : Research and development 5,9746,3466,924Sales and marketing 2,9352,9822,438General and administrative 5,6183,5882,243 Total operating expenses14,52712,91611,605 Operating profit (loss)(7,846)(5,383)1,215Financial income (expense): Interest income (expense), net(2,802)(2,796)(2,784)Change in fair value of convertible debt derivative439325(1,193)Impact of debt amendment and reimbursement247-476Foreign exchange gain (loss)513(40)1,030 Profit (Loss) before income taxes(9,449)(7,894)(1,256)Income tax expense1041,2231,617 Profit (Loss)$(9,553)$(9,117)$(2,873)Attributable to : Shareholders of the parent(9,553)(9,117)(2,873)Minority interests--- Basic loss per ADS($0.16)($0.16)($0.06)Diluted loss per ADS($0.16)($0.16)($0.06)Weighted average number of ADS used for computing: - Basic58,586,32457,119,46847,802,526- Diluted58,586,32457,119,46847,802,526 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSNine months ended Sept 30, (in thousands of US$, except share and per share amounts)20232022 Revenue :Product revenue$4,089$17,984License and services revenue24,75426,656 Total revenue28,84344,640Cost of revenue5,28613,736 Gross profit23,55730,904 Operating expenses : Research and development 19,80819,249Sales and marketing 8,9507,466General and administrative 12,0247,042 Total operating expenses40,78233,757 Operating profit (loss)(17,225)(2,853)Financial income (expense): Interest income (expense), net(8,113)(8,314)Change in fair value of convertible debt derivative3,0665,867Impact of debt amendment and reimbursement247476Foreign exchange gain (loss)3082,618 Profit (Loss) before income taxes(21,717)(2,206)Income tax expense1,9931,841 Profit (Loss)$(23,710)$(4,047)Attributable to : Shareholders of the parent(23,710)(4,047)Minority interests-- Basic loss per ADS($0.43)($0.09)Diluted loss per ADS($0.43)($0.09)Weighted average number of ADS used for computing: - Basic54,732,91745,538,645- Diluted54,732,91745,538,645 SEQUANS COMMUNICATIONS S.A. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAt Sept 30,At Dec 31, (in thousands of US$)20232022 ASSETSNon-current assetsProperty, plant and equipment$7,098$8,489Intangible assets59,10248,705Deposits and other receivables760783Other non-current financial assets334337 Total non-current assets67,29458,314 Current assets Inventories8,5489,387Trade receivables4,9768,494Contract assets2,694176Prepaid expenses2,0001,399Other receivables4,4485,799Research tax credit receivable7,7794,515Short-term deposits-5,000Cash and cash equivalents 6,7405,671 Total current assets37,18540,441 Total assets$104,479$98,755 EQUITY AND LIABILITIES Equity Issued capital, euro 0.01 nominal value, 243,239,926 shares authorized, issued and outstanding at September 30, 2023 (193,426,478 shares at December 31, 2022)$2,846$2,306Share premium14,6172,418Other capital reserves68,26862,870Accumulated deficit(76,082)(65,099)Other components of equity(812)(391) Total equity8,8372,104 Non-current liabilities Government grant advances, loans and other liabilities3,8306,235Convertible debt-43,455Convertible debt embedded derivative-3,203Lease liabilities1,8542,278Trade payables-1,788Provisions2,1402,196Deferred tax liabilities263258Contract liabilities9404 Total non-current liabilities8,09659,817 Current liabilities Trade payables15,4329,342Interest-bearing receivables financing6,5727,723Lease liabilities1,2551,291Convertible debt49,871-Convertible debt embedded derivative137-Government grant advances and loans4,4794,159Contract liabilities1,0885,964Other current liabilities and provisions8,7128,355 Total current liabilities87,54636,834 Total equity and liabilities$104,479$98,755 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWNine months ended Sept 30, (in thousands of US$)20232022 Operating activitiesProfit (Loss) before income taxes$(21,717)$(2,206)Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities Depreciation and impairment of property, plant and equipment2,7832,901Amortization and impairment of intangible assets6,1255,574Share-based payment expense5,3163,667Increase in provisions79298Interest expense, net8,1138,314Change in the fair value of convertible debt embedded derivative(3,066)(5,867)Impact of debt reimbursement(247)(476)Foreign exchange loss (gain)173(897)Working capital adjustments Decrease (Increase) in trade receivables and other receivables1,009(3,412)Decrease (increase) in inventories839(3,669)Increase in research tax credit receivable(1,727)(636)Increase (Decrease) in trade payables and other liabilities5,198(7,499)Decrease in contract liabilities(5,356)(3,703)Decrease in government grant advances(364)(2,292)Income tax paid(1,561)(683)Net cash flow used in operating activities(4,403)(10,586)Investing activities Purchase of intangible assets and property, plant and equipment(3,401)(5,892)Capitalized development expenditures(17,382)(11,308)Sale (Purchase) of financial assets261,741Decrease of short-term deposit5,000-Interest received17447 Net cash flow used in investments activities(15,583)(15,412)Financing activities Public and private equity offering proceeds, net of transaction costs paid25,46630,125Proceeds (Repayment of) from interest-bearing receivables financing(1,069)342Proceeds from interest-bearing research project financing545-Payment of lease liabilities(998)(929)Repayment of government loans(1,126)(633)Repayment of interest-bearing research project financing(693)(812)Interest paid(1,052)(1,096)Net cash flows from financing activities21,07326,997 Net increase (decrease) in cash and cash equivalents1,087999Net foreign exchange difference(18)(3)Cash and cash equivalents at January 15,6714,835 Cash and cash equivalents at end of the period6,7405,831 SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Three months ended Sept 30,2023June 30, 2023Sept 30,2022 Net IFRS gain (loss) as reported$(9,553)$(9,117)$(2,873)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)1,7571,7781,133Non-cash change in the fair value of convertible debt embedded derivative(439)(325)1,193Non-cash interest on convertible debt and other financing (2)1,7091,7061,447Non-cash impact of convertible debt amendment(247)-(476)Non-IFRS gain (loss) adjusted$(6,773)$(5,958)$424 IFRS basic gain (loss) per ADS as reported($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS basic gain (loss) per ADS ($0.12)($0.10)$0.01 IFRS diluted gain (loss) per ADS($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS diluted gain (loss) per ADS($0.12)($0.10)$0.01 (1) Included in the IFRS loss as follows: Cost of product revenue$24$27$41Research and development481488370Sales and marketing393361268General and administrative859902454(2) Related to the difference between contractual and effective interest rates SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Nine months ended Sept 30, 20232022 Net IFRS gain (loss) as reported$(23,710)$(4,047)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)5,3163,667Non-cash change in the fair value of convertible debt embedded derivative(3,066)(5,867)Non-cash interest on convertible debt and other financing (2)4,8234,117Non-cash impact of convertible debt amendment(247)(476)Non-IFRS gain (loss) adjusted$(16,884)$(2,606)IFRS basic gain (loss) per ADS as reported($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS basic gain (loss) per ADS ($0.31)($0.06)IFRS diluted gain (loss) per ADS($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS diluted gain (loss) per ADS($0.31)($0.06) (1) Included in the IFRS loss as follows: Cost of product revenue$83$114Research and development1,4391,157Sales and marketing1,101846General and administrative2,6931,550(2) Related to the difference between contractual and effective interest rates To view the source version of this press release, please visit https://www.newsfilecorp.com/release/186077
Paris, France--(Newsfile Corp. - November 2, 2023) - Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the third quarter ended September 30, 2023.Third Quarter 2023 Summary Results Table:(in US$ millions, except share and per share data)Q3 2023Q2 2023Q3 2022 Revenue$7.8$9.2$16.5Gross profit6.77.512.8Gross margin (%)85.8 %82.3 %77.6 %Operating profit (loss)(7.8)(5.4)1.2Net profit (loss)(9.6)(9.1)(2.9)Diluted earnings (loss) per ADS ($0.16)($0.16)($0.06)Non-IFRS diluted earnings (loss) per ADS *($0.12)($0.10)$0.01Weighted average number of diluted ADS (IFRS)58,586,32457,119,46847,802,526Weighted average number of diluted ADS (Non-IFRS)58,586,32457,119,46847,802,526* See Use of Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net Profit (Loss) includes significant non-cash interest expense, debt amendment and change in value of embedded derivative that are excluded from Non-IFRS measures "Our third quarter continues to be impacted by the delay of revenue product ramps shifting now to year end, as client inventory drawdowns are taking longer than expected to clear," said Georges Karam, CEO of Sequans. "However, we continue to experience strong momentum in building our revenue pipeline and securing design wins. During the third quarter, we successfully secured our first alpha customer for the 5G Taurus platform and around a dozen new designs with LTE-M/NB-IoT Monarch 2 and Cat 1 Calliope 2. These successes underscore the growth potential of Sequans' wireless IoT connectivity solutions."Third Quarter 2023 Financial Summary:Revenue: Revenue was $7.8 million, a decrease of 15.0% compared to the second quarter of 2023 and a decrease of 52.9% compared to the third quarter of 2022.Gross margin: Gross margin was 85.8% compared to 82.3% in the second quarter of 2023 and compared to 77.6% in the third quarter of 2022. Operating loss: Operating loss was $7.8 million compared to operating loss of $5.4 million in the second quarter of 2023 and operating profit of $1.2 million in the third quarter of 2022. The third quarter of 2023 operating loss reflected $2.4 million in higher general and administrative expenses from legal fees related to the Renesas tender offer, compared with $0.3 million in the second quarter of 2023 and none in the third quarter of 2022.Net loss: Net loss was $9.6 million, or ($0.16) per diluted ADS, compared to a net loss of $9.1 million, or ($0.16) per diluted ADS, in the second quarter of 2023 and a net loss of $2.9 million, or ($0.06) per diluted ADS, in the third quarter of 2022. Net loss in the third quarter of 2023 includes a $0.4 million gain on the change in fair value of the convertible debt derivative compared to a gain of $0.3 million in the second quarter of 2023 and a loss of $1.2 million in the third quarter of 2022.Non-IFRS loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value, the amendment and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, non-IFRS net loss was $6.8 million, or ($0.12) per diluted ADS, compared to non-IFRS net loss of $6.0 million, or ($0.10) per diluted ADS in the second quarter of 2023, and a non-IFRS net profit of $0.4 million, or $0.01 per diluted ADS, in the third quarter of 2022. The non-IFRS net loss includes foreign exchange gain of $0.5 million, or $0.01 per diluted ADS, in the third quarter of 2023, compared to foreign exchange loss of $40,000, or ($0.00) per diluted ADS in the second quarter of 2023 and foreign exchange gain of $1.0 million, or $0.02 per diluted ADS, in the third quarter of 2022.Cash: Cash and cash equivalents and short-term deposits at September 30, 2023 totaled $6.7 million compared to $7.9 million at June 30, 2023.Conference Call Note: Sequans will not host an earnings conference due to the tender offer by Renesas Electronics Corporation launched September 11, 2023. Forward Looking Statements This press release contains projections and other forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding the growth potential of Sequans' wireless IoT connectivity solutions, our future results of operations and financial positions, business strategy, plans, including our ability to convert our pipeline to revenue, 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 undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. 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 rely on or 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. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2022, 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, (ii) unexpected increases in our expenses resulting from inflationary pressures and rising interest rates, including manufacturing and operating expenses and interest expense, (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 fluctuations 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, (ix) our inability to enter into and execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of the Ukraine-Russia conflict on our independent contractors located in Ukraine, (xiii) our ability to raise debt and equity financing, (xiv) the potential failure to satisfy conditions to the completion of the proposed Renesas transaction due to the failure to receive a sufficient number of tendered shares in the tender offer, (xv) the failure to obtain necessary regulatory or other approvals, (xvi) the outcome of legal proceedings that may be instituted against Sequans and/or others relating to the transaction, (xvii) the possibility that competing offers will be made, (xviii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction, (xix) significant or unexpected costs, charges or expenses resulting from the proposed transaction, (xx) negative effects of this announcement or the consummation of the proposed acquisition on the market price of our ADS and ordinary shares, (xxi) other risks associated with the proposed transaction, such as the risk that the transaction may be more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur, and (xxii) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.Use of Non-IFRS/non-GAAP Financial MeasuresTo supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; deferred tax benefit or expense related to the convertible debt and other financings. 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.Important Additional Information and Where to Find ItIn connection with the proposed acquisition of Sequans Communications S.A. ("Sequans") by Renesas Electronics Corporation, a Japanese corporation ("Parent" or "Renesas"), Parent commenced a tender offer for all of the outstanding ordinary shares, including American Depositary Shares of Sequans, on September 11, 2023. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell securities of Sequans. It is also not a substitute for the tender offer materials that Parent and Renesas Electronics Europe GmbH, a direct wholly owned subsidiary of Parent ("Purchaser") filed with the Securities and Exchange Commission (the "SEC") or the solicitation/recommendation statement that Sequans filed on Schedule 14D-9 with the SEC upon commencement of the tender offer. Purchaser filed tender offer materials on Schedule TO with the SEC, and Sequans filed a Solicitation/Recommendation Statement on Schedule 14D-9 and a Schedule 13E-3 transaction statement with respect to the tender offer with the SEC with respect to the tender offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION/RECOMMENDATION STATEMENT AND TRANSACTION STATEMENT CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY AND BE CONSIDERED BY SEQUANS' SECURITYHOLDERS BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. Both the tender offer materials and the solicitation/recommendation statement and transaction statement will be made available to Sequans' investors and security holders free of charge. A free copy of the tender offer materials and the solicitation/recommendation statement and transaction statement will also be made available to all of Sequans' investors and security holders by contacting Sequans at ir@sequans.com, or by visiting Sequans' website (www.sequans.com). In addition, the tender offer materials and the solicitation/recommendation statement (and all other documents filed by Sequans with the SEC) will be available at no charge on the SEC's website (www.sec.gov) upon filing with the SEC. SEQUANS' INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE TENDER OFFER MATERIALS, THE SOLICITATION/RECOMMENDATION STATEMENT AND THE TRANSACTION STATEMENT, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND ANY OTHER RELEVANT DOCUMENTS FILED BY PARENT OR SEQUANS WITH THE SEC WHEN THEY BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE TENDER OFFER. THESE MATERIALS CONTAIN IMPORTANT INFORMATION ABOUT THE TENDER OFFER, PARENT AND SEQUANS.About Sequans CommunicationsSequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequansMedia Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.comInvestor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.comCondensed financial tables followSEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands of US$, except share and per share amounts)Three months ended Sept 30, 2023June 30, 2023Sept 30, 2022 Revenue :Product revenue$753$996$4,385License and services revenue7,0338,16212,143 Total revenue7,7869,15816,528Cost of revenue1,1051,6253,708Gross profit6,6817,53312,820 Operating expenses : Research and development 5,9746,3466,924Sales and marketing 2,9352,9822,438General and administrative 5,6183,5882,243 Total operating expenses14,52712,91611,605 Operating profit (loss)(7,846)(5,383)1,215Financial income (expense): Interest income (expense), net(2,802)(2,796)(2,784)Change in fair value of convertible debt derivative439325(1,193)Impact of debt amendment and reimbursement247-476Foreign exchange gain (loss)513(40)1,030 Profit (Loss) before income taxes(9,449)(7,894)(1,256)Income tax expense1041,2231,617 Profit (Loss)$(9,553)$(9,117)$(2,873)Attributable to : Shareholders of the parent(9,553)(9,117)(2,873)Minority interests--- Basic loss per ADS($0.16)($0.16)($0.06)Diluted loss per ADS($0.16)($0.16)($0.06)Weighted average number of ADS used for computing: - Basic58,586,32457,119,46847,802,526- Diluted58,586,32457,119,46847,802,526 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSNine months ended Sept 30, (in thousands of US$, except share and per share amounts)20232022 Revenue :Product revenue$4,089$17,984License and services revenue24,75426,656 Total revenue28,84344,640Cost of revenue5,28613,736 Gross profit23,55730,904 Operating expenses : Research and development 19,80819,249Sales and marketing 8,9507,466General and administrative 12,0247,042 Total operating expenses40,78233,757 Operating profit (loss)(17,225)(2,853)Financial income (expense): Interest income (expense), net(8,113)(8,314)Change in fair value of convertible debt derivative3,0665,867Impact of debt amendment and reimbursement247476Foreign exchange gain (loss)3082,618 Profit (Loss) before income taxes(21,717)(2,206)Income tax expense1,9931,841 Profit (Loss)$(23,710)$(4,047)Attributable to : Shareholders of the parent(23,710)(4,047)Minority interests-- Basic loss per ADS($0.43)($0.09)Diluted loss per ADS($0.43)($0.09)Weighted average number of ADS used for computing: - Basic54,732,91745,538,645- Diluted54,732,91745,538,645 SEQUANS COMMUNICATIONS S.A. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAt Sept 30,At Dec 31, (in thousands of US$)20232022 ASSETSNon-current assetsProperty, plant and equipment$7,098$8,489Intangible assets59,10248,705Deposits and other receivables760783Other non-current financial assets334337 Total non-current assets67,29458,314 Current assets Inventories8,5489,387Trade receivables4,9768,494Contract assets2,694176Prepaid expenses2,0001,399Other receivables4,4485,799Research tax credit receivable7,7794,515Short-term deposits-5,000Cash and cash equivalents 6,7405,671 Total current assets37,18540,441 Total assets$104,479$98,755 EQUITY AND LIABILITIES Equity Issued capital, euro 0.01 nominal value, 243,239,926 shares authorized, issued and outstanding at September 30, 2023 (193,426,478 shares at December 31, 2022)$2,846$2,306Share premium14,6172,418Other capital reserves68,26862,870Accumulated deficit(76,082)(65,099)Other components of equity(812)(391) Total equity8,8372,104 Non-current liabilities Government grant advances, loans and other liabilities3,8306,235Convertible debt-43,455Convertible debt embedded derivative-3,203Lease liabilities1,8542,278Trade payables-1,788Provisions2,1402,196Deferred tax liabilities263258Contract liabilities9404 Total non-current liabilities8,09659,817 Current liabilities Trade payables15,4329,342Interest-bearing receivables financing6,5727,723Lease liabilities1,2551,291Convertible debt49,871-Convertible debt embedded derivative137-Government grant advances and loans4,4794,159Contract liabilities1,0885,964Other current liabilities and provisions8,7128,355 Total current liabilities87,54636,834 Total equity and liabilities$104,479$98,755 SEQUANS COMMUNICATIONS S.A.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWNine months ended Sept 30, (in thousands of US$)20232022 Operating activitiesProfit (Loss) before income taxes$(21,717)$(2,206)Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities Depreciation and impairment of property, plant and equipment2,7832,901Amortization and impairment of intangible assets6,1255,574Share-based payment expense5,3163,667Increase in provisions79298Interest expense, net8,1138,314Change in the fair value of convertible debt embedded derivative(3,066)(5,867)Impact of debt reimbursement(247)(476)Foreign exchange loss (gain)173(897)Working capital adjustments Decrease (Increase) in trade receivables and other receivables1,009(3,412)Decrease (increase) in inventories839(3,669)Increase in research tax credit receivable(1,727)(636)Increase (Decrease) in trade payables and other liabilities5,198(7,499)Decrease in contract liabilities(5,356)(3,703)Decrease in government grant advances(364)(2,292)Income tax paid(1,561)(683)Net cash flow used in operating activities(4,403)(10,586)Investing activities Purchase of intangible assets and property, plant and equipment(3,401)(5,892)Capitalized development expenditures(17,382)(11,308)Sale (Purchase) of financial assets261,741Decrease of short-term deposit5,000-Interest received17447 Net cash flow used in investments activities(15,583)(15,412)Financing activities Public and private equity offering proceeds, net of transaction costs paid25,46630,125Proceeds (Repayment of) from interest-bearing receivables financing(1,069)342Proceeds from interest-bearing research project financing545-Payment of lease liabilities(998)(929)Repayment of government loans(1,126)(633)Repayment of interest-bearing research project financing(693)(812)Interest paid(1,052)(1,096)Net cash flows from financing activities21,07326,997 Net increase (decrease) in cash and cash equivalents1,087999Net foreign exchange difference(18)(3)Cash and cash equivalents at January 15,6714,835 Cash and cash equivalents at end of the period6,7405,831 SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Three months ended Sept 30,2023June 30, 2023Sept 30,2022 Net IFRS gain (loss) as reported$(9,553)$(9,117)$(2,873)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)1,7571,7781,133Non-cash change in the fair value of convertible debt embedded derivative(439)(325)1,193Non-cash interest on convertible debt and other financing (2)1,7091,7061,447Non-cash impact of convertible debt amendment(247)-(476)Non-IFRS gain (loss) adjusted$(6,773)$(5,958)$424 IFRS basic gain (loss) per ADS as reported($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS basic gain (loss) per ADS ($0.12)($0.10)$0.01 IFRS diluted gain (loss) per ADS($0.16)($0.16)($0.06)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.03$0.04$0.02Non-cash change in the fair value of convertible debt embedded derivative($0.01)($0.01)$0.03Non-cash interest on convertible debt and other financing (2)$0.03$0.03$0.03Non-cash impact of convertible debt amendment($0.01)$0.00($0.01)Non-IFRS diluted gain (loss) per ADS($0.12)($0.10)$0.01 (1) Included in the IFRS loss as follows: Cost of product revenue$24$27$41Research and development481488370Sales and marketing393361268General and administrative859902454(2) Related to the difference between contractual and effective interest rates SEQUANS COMMUNICATIONS S.A.UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS(in thousands of US$, except share and per share amounts)Nine months ended Sept 30, 20232022 Net IFRS gain (loss) as reported$(23,710)$(4,047)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)5,3163,667Non-cash change in the fair value of convertible debt embedded derivative(3,066)(5,867)Non-cash interest on convertible debt and other financing (2)4,8234,117Non-cash impact of convertible debt amendment(247)(476)Non-IFRS gain (loss) adjusted$(16,884)$(2,606)IFRS basic gain (loss) per ADS as reported($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS basic gain (loss) per ADS ($0.31)($0.06)IFRS diluted gain (loss) per ADS($0.43)($0.09)Add back Non-cash stock-based compensation expense according to IFRS 2 (1)$0.10$0.08Non-cash change in the fair value of convertible debt embedded derivative($0.06)($0.13)Non-cash interest on convertible debt and other financing (2)$0.09$0.09Non-cash impact of convertible debt amendment($0.01)($0.01)Non-IFRS diluted gain (loss) per ADS($0.31)($0.06) (1) Included in the IFRS loss as follows: Cost of product revenue$83$114Research and development1,4391,157Sales and marketing1,101846General and administrative2,6931,550(2) Related to the difference between contractual and effective interest rates To view the source version of this press release, please visit https://www.newsfilecorp.com/release/186077