WISeKey International Holding Ltd

Greetings, ladies and gentlemen, and welcome to the Wiseking International Holding Full Year 2023 Financial Results Earnings Conference Call. As a reminder, this conference call contains forward-looking statements. Such statements involve certain known and unknown risks, uncertainties, and other factors, which could cause the actual results, financial condition, performance, or achievements of Wiseking International Holding Limited to be materially different from any future results. performance or achievements expressed or implied by such forward-looking statements. WiseKey is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events, or otherwise. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce Carlos Moreira, founder and chief executive officer of WiseKey. Mr. Moreira, please go ahead.

Thank you very much, and good afternoon to all of you joining us from Europe, and good morning to all of you joining us from the United States. I am joined today on this call by your chief financial officer, Peter Ward. And I'll start this call by providing a brief highlights on the company performance and activities for the full year 2023. Then Peter will provide commentary on our financial condition in greater details. And before opening the floor to Q&A, I will discuss the growth opportunities for 2024 and beyond. Just as a recap, WiseKey operates as a holding company located in Switzerland in Zug. with several distinctive operational companies that they are covering the full spectrum of YSK related technologies. The concept was that in the fourth industrial revolution, companies need to solve several problems if they want to be on the market longer as the major players are building very large platforms and companies need to deploy alternative solution to these very big players and they have unlimited financial resources creating monopolistic platform or angle is that wise key is a trusted platform with a higher level of cyber security and trust than many other platforms as we do not monetize consumer data or personal information from our clients we do respect So this holding company structure remains the same as the one we established in 2022 and comprise CLSQ, which you are all familiar, which is the formerly Wieske Semiconductor, which was listed on the NASDAQ in May, 2023, under the symbol LAES, L-A-E-S. So this is a semiconductor company, very niche in developing next generation of semiconductors. Then we have Wieske, SA, the original startup company that is a cybersecurity player with very strong assets on digital identity, root of trust, and public infrastructure. The wise key cryptography, RootKey, is one of the dominants. RootKey has been operating now for over 25 years and is a very well distributed root of trust internationally on the internet. Then we have YSAT.Space, which is the space technology company that has sent several Pico satellites to the space already operational in order to provide IoT connectivity from space, which is a very good option to land-based connectivity, which are much more expensive and does not cover the planet. And then we have WISE.R, which is the blockchain, trusted blockchain platform, for the commercialization of digital assets, NFTs and equivalent. So each of these subsidiaries contribute in meaningful ways to the overall mission on YSK holding, while also operating independently as a specific focus on their particular area of R&D and expertise and integrating their respective technology into the YSK platform. So just to give you an example of how that works, In WiseKey, you are able to issue digital identity for people and objects. Those digital identities will be issued by a company, WiseKey. Those digital identities need to be decentralized on ledgers so anyone can check them, and that is done through the blockchain company with the name WiseArt. Then you will need to track and trace those identities that might be installed in semiconductors, and this we do with CLHQ. And then the final connectivity, in order to be sure that you can trace anywhere in the world those chips, installing devices is done through YSAT. So those companies play an interrelated role among themselves. And once they reach maturity, they reinforce the other two layers. Some of them, they are pre-revenue. So there are new companies, like the case of YSAT and YSART, Some of them, they are more mature, like the case of WiseKey and CLSQ. With this structure, we are able to focus our revenues in areas where we saw the most promising opportunities and diversity on revenue sources. As a result, we continue to see significant improved financial and operational results. While Peter will discuss the details of our full 2023 results, shortly, I would like to emphasize that for the full year 2023, as compared to the full year 2022, we reported 30% revenue growth to $31 million, a 5 million improvement in gross profit to $50 million, with a profit margin of 48%. and continue investing money in R&D for the development of what we believe is going to be a major revenue generator in the years to come, which is our post-quantum microchip, which is based on RISC-V and TPN, and we have been selected as being one of the five companies in the world developing these new generation chips, and also the deployment of the satellite constellation, and investment R&D has been done as well to conceptualize the personalization center, semiconductor personalization center that WiseKey now is locating in several countries. So these ventures together with new ventures such as CL Coin constitute the next generation of a revenue stream. Our balance sheet remains robust with a total asset of $48 million and a healthy cash position end of 2023 of $50 million, which has even been further improved during the first six months of 24, with now $30 million cash on the group level. Our full 2023 results represent the strength of our current business strategy and investment in the past, as well as continued progress in our growth initiatives. The strong cash position also put us in a situation where we can continue investing into the next generation revenue generators and be a major player in the interoperability and innovation required for the industry 4.50. I will now turn the call over to Peter who will provide further insights into our 2023 financial highlights. Peter, please go ahead.

Thanks, Carlos. As Carlos mentioned earlier, the full year 2023 results continue to demonstrate improved financial performance for Wysky due to focused execution on operating discipline by our team. Specifically, Wysky revenue for the fiscal year 2023 was $31 million compared to $24 million in fiscal year 2022. This 30% increase is attributable to our successful expansion in key markets in 2023 as well as strong demand for our IoT solutions. The shortage in semiconductors raw material during the COVID-19 pandemic has attracted new customers to Wysky. The shortage also pushed customers to make long-term commitments so as to secure their supply, which meant that they placed orders for delivery over more than six months, which provided Wysky with a very significant backlog of orders. 54% of our net sales for fall year 2023 came from North America, a trend that we expect to continue. We have therefore made advancements to further our presence, specifically in the US, by hiring a sales director for CLSQ, unannounced in the development of an OSAT center, which Carlos will discuss shortly. Our next largest market was Europe, Middle Eastern Africa, which constituted 35% of our net sales for 2023. Asia Pacific represented the remaining 11%. Moving on to gross profits, we reported $15 million with a profit margin of 48% for fall year 2023. A $5 million improvement from 2022 is 10 million. In addition to higher revenues, this was also due to enhanced operational efficiencies across our subsidiaries. Our net loss for the year decreased to 15 million. as compared to a net loss of $29 million in 2022. This improvement is primarily due to the disposal of the loss-making subsidiary Arago GmbH, completed in 2022, as well as strategic cost management initiatives. Our cash and cash equivalents at December 31st, 2023 was $15 million. This indicates not only strong financial stability, but the ability to fund strategic initiatives as our subsidiaries continue to thrive. I'm turning the line back now to Carlos, who will discuss these initiatives and our growth plan for 2024 and beyond. Carlos, please go ahead.