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Technology Stocks : Sequans Communications
SQNS 1.92+3.2%Nov 22 8:04 PM ESTNews

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From: FUBHO10/31/2017 6:09:37 AM
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Sequans Communications Announces Third Quarter 2017 Financial Results

Business Wire Business Wire
October 31, 2017


PARIS--(BUSINESS WIRE)--

4G chipmaker Sequans Communications S.A. ( SQNS) today announced financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Highlights:

Revenue: Revenue was $11.3 million. Revenue for the third quarter of 2017 decreased 14.5% compared to the second quarter of 2017 and decreased 9.3% compared to the third quarter of 2016, reflecting decreases in both product and other revenue.

Gross margin: Gross margin was 44.3% compared to 42.1% in the second quarter of 2017 and compared to 46.8% in the third quarter of 2016, reflecting an increase in the proportion of chip sales in the product mix in the third quarter of 2017 compared to the prior quarter and the impact of fixed costs on a lower product revenue base in the third quarter of 2017 compared to the same quarter in the prior year.

Operating loss: Operating loss was $5.6 million compared to an operating loss of $4.1 million in the second quarter of 2017 and an operating loss of $4.0 million in the third quarter of 2016.

Net loss: Net loss was $6.9 million, or ($0.09) per diluted share/ADS, compared to a net loss of $6.0 million, or ($0.08) per diluted share/ADS, in the second quarter of 2017 and a net loss of $5.1 million, or ($0.08) per diluted share/ADS, in the third quarter of 2016.

Non-IFRS Net loss: Excluding the non-cash items of stock-based compensation and the effective interest adjustments related to the convertible debt and other financings, non-IFRS net loss was $5.9 million, or ($0.07) per diluted share/ADS, compared to a non-IFRS net loss of $4.9 million, or ($0.06) per diluted share/ADS in the second quarter of 2017, and a non-IFRS net loss of $4.3 million, or ($0.07) per diluted share/ADS, in the third quarter of 2016.

Cash: Cash, cash equivalents and short-term deposit at September 30, 2017 totaled $13.3 million compared to $19.5 million at June 30, 2017.

In millions of US$ except percentages, shares and per share amountsKey Metrics
Q3 2017 %* Q2 2017 %* Q3 2016 %*
Revenue$11.3 $13.2 $12.5
Gross profit5.044.3%5.642.1%5.846.8%
Operating loss(5.6)(49.2)%(4.1)(30.9)%(4.0)(31.7)%
Net loss(6.9)(61.2)%(6.0)(45.3)%(5.1)(41.1)%
Diluted EPS($0.09)($0.08)($0.08)
Weighted average number of diluted shares/ADS79,774,10375,896,81561,642,549
Cash flow from (used in) operations(5.3)(4.4)(9.5)
Cash, cash equivalents and short-term deposit at quarter-end13.319.524.7
Additional information on non-cash items:
- Stock-based compensation included in operating result0.30.30.2
- Change in the fair value of convertible debt embedded derivative
- Non-cash interest on convertible debt and other financing0.80.80.6
Non-IFRS diluted EPS (excludes stock-based compensation, effective interest adjustments related to the convertible and other debt and embedded derivative) ($0.07) ($0.06) ($0.07)
* Percentage of revenue

"Our IoT business continues to grow as expected," said Georges Karam, Sequans' CEO. "Our visibility is improving as our Cat 1 customers continue to ramp and are pursuing plans to serve more operators. We expect accelerating growth from IoT next year, based on a full year of Cat 1 revenue as well as the Cat M1/NB1 ramp from design wins already in hand. We also expect our broadband business to stabilize during Q4 and to improve during the course of 2018.

"We also reached an agreement with the institutional holders of our convertible notes maturing in April, 2018 and in April, 2019 to extend each maturity by one year in exchange for adjustments to certain terms, as described in the filing we made today on Form 6-K. We believe this agreement is in the best interests of all our shareholders because it removes a significant near-term cash requirement and allows us to focus on the business."

Q4 2017 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 fourth quarter of 2017 to be in the range of $11 to $13 million with non-IFRS gross margin above 40%. Based on this revenue range and expected gross margin, non-IFRS net loss per diluted share/ADS is expected to be between ($0.06) and ($0.08) for the fourth quarter of 2017, based on approximately 79.8 million weighted average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes the impact of stock-based compensation, the non-cash fair-value and effective interest adjustments related to the convertible debt and other financings, and any other relevant non-cash or non-recurring expenses.
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