WISeKey International Holding Ltd

Greetings ladies and gentlemen and welcome to the YSK International Holding Full Year 2024 Financial Results Earnings Conference Call. As a reminder, this 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 YSK International Holding Limited to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. WISE-Key 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 a 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. Sir, please go ahead.

Good afternoon to all of you joining us today from Europe, and good morning to all of you joining us from the United States. I am joined today by our chief financial officer, John O'Hara. I'll start this call by providing highlights of the company performance and subsidiary level initiatives for the full year 2024 and outlook for 2025. Then John will provide a full report on our financial condition in greater details. Before I start, for all of you new to the Wyski story, I would like to provide a short overview of the corporate structure. Wyski specializes in cybersecurity, digital identity, blockchain, Internet of Things, IoT solution, and post-quantum semiconductor. As a computer infrastructure provider, Wyski delivers secure platforms for data and device management across various industries, including finance, healthcare, defense, and government. Leveraging its robust cybersecurity and public infrastructure, PKI, Wiseki ensures traditional encrypted communication and strong authentication, while also focusing on next-generation security throughout post-quantum cryptography. Wiseki Holding Company encompasses several specialized operational subsidiaries. Each subsidiary plays a crucial role in the Wiseki ecosystem, contributing throughout independent research development and expertise while integrating their technology into overall wise key platform these are specifically clsq which was listed on the nasdaq in may 2023 under the symbol laes which focuses on advanced semiconductor technology and post quantum cryptography WISE-ID offers root of trust and PKI services central to the WISE-D digital identity and encryption services. WISE-AD offers a space technology division utilizing PICO satellites for secure communication from space. Weisart is the trusted blockchain and NFT segment of the group, offering secure digital asset solution and then CL Coin AG, which incorporated in 2024 in Switzerland, develops the CL Coin platform and focuses on the decentralized physical internet, DPIN. That said, 24 has been a pivotal year for WiseKey. We ended the year with a very strong balance sheet, strategic technology milestones, and a clear roadmap to take advantage of the new opportunities ahead. from launching 17 secure satellite in partnership with SpaceX and further advancing negotiation or semiconductor personalization center strategy to scaling or blockchain platforms and developing post-quantum chips. We have created a solid foundation across every layer of digital trust infrastructure. We started 2025 on a very strong note and have now entered what I define as the year of wise key convergence. This is more than a strategy. It is a paradigm shift. We are bringing together four foundational pillars, semiconductor, satellite, blockchain, and digital identity into a unified and interoperable ecosystem. This convergence allows us to offer end-to-end solutions where each component reinforces the other, enabling exponential innovation and resilience. For instance, our post-quantum secure chips developed by a semiconductor subsidiary, CLSQ, are now being embedded into YSAT satellites to create a secure foundation for a decentralized IoT infrastructure connecting Earth to space in an encrypted way. Blockchain and identity platforms like CL Coin and YSAT-D are being deployed to power autonomous tamper-proof transactions between machines, satellites, and users. Combining this with our partnership with Hedera Distributed Ledger brings transparency and immutability to those transactions. Additionally, our work with the Swiss Army is proceeding with the testing of a secure smartphone and secure communication with our WISAT satellite. This convergence approach solutions and positions Wysky at the intersection of some of the most critical transformation of our time, such as quantum resilience security, space-based connectivity and the decentralized economy. We are not just adapting to a future digital era, we are building it. For Wysky 2025 is expected to be a year of execution on a scale whether or integrated business unit aim to deliver tangible impact. Along these lines, I'd like to briefly highlight the strategic initiatives we are undertaking at each of our subsidiaries and which we have made progress in 2024 and have set the stage for continued growth in 2025 and beyond. So starting now with CLSQ subsidiary. Throughout its Quasar platform, CLSQ developed quantum resistant technology to protect data against future quantum threats, aligning with global standards like those for NIST. Those quantum computers are to arrive into the market in the next three to five years, as disclosed by many leading organizations. So we need to be ready now. CLSQ's future strategy is building around four key priorities. The first one is the commercial launch of the post-quantum chips. We are targeting the launch of the new post-quantum chip, two of them, for IoT, PC, tablets, and mobile phones, and various industrial applications including medical, military, and automobile sectors and expansion of chip fabrication partnerships to increase output for the enterprise and government security solution. In that regard, CLSQ has set an ambitious five-year target to capture 20% of the trusted platform model market, what we call TPM, a goal supported by strong market engagement. By the end of 2024, CLSQ will have secure over 60 qualified leads and one design in for its CPM product, which are slated for commercial launch in 2025. We are also developing quantum resistant ASIC, which are basically quantum design secure chips for specific large client needs, in particular in the automobile industry. Second, we are executing targeted acquisition, investments and joint ventures. These include the completion of the negotiations to acquire 100% of IC Apps, which is a French company located in Grenoble before 2025 year end. investment in a start-up engaged in quantum computing and AI initiative as part of the project we call the SEAL Quantum Initiative and the establishment of an Observed Semiconductor Personalized and Test Center in Spain for which we are in the final state negotiation with the Spanish Authority, plus the development of similar OSPTCs in India, the United States, and the Middle East and Africa. Third, we are making R&D an investment, a strategic investment in post-quantum security. Following the investment we made, we are in the final stage of developing qualification, certification, and also industrialization process for quantum resistant TPM 2.0 chip. The commercial launch, as I mentioned before, is set by Q4, 2025. we are in discussions with over six interesting potential customers including major electronic manufacturers requiring to install this level of security in their products we are also scaling the first tpn pqc chip in broader asic offer for addressing the medical defense and iot market settlements fourth We are expanding trust services by scaling managed PKI solution for matter certification for IoT devices and home devices and enterprise security. Expanding SSL, TLS, and GSMA certificates offering and pushing adoption for our Ines platform, which is a PKI post-quantum cryptography platform, which includes the latest features. So now moving to the YSAT subsidiary. YSAT.Space is deploying low Earth orbit ecosystems to provide secure IoT connectivity for remote applications, aiming to enhance global coverage for IoT ecosystem, address growing market demand for secure satellite-based communication solution, supporting critical infrastructures and underserved regions of the world. Recent developments that we had include the strategic partnership with the Swiss Army throughout the initiation of new projects, an agreement with RUAG, the Strategic Integrator for the Swiss Army Forces, for a national army project focusing on device-to-device communication, which includes the space component. Launch of 17 mini satellites in the last three years with SpaceX into orbit through a strategic investment and partnership with a startup in Spain with the name Fossil System, which is manufacturing those satellites after integrating our technology and post-quantum semiconductors. Over the next 36 months, YSAT Space plans to deploy up to 88 new generation satellites following the successful January 2020 launch we did with SpaceX from California. In conjunction with Hedera Network, we will pioneer the change of CL coin front of space, allowing for first time to put blockchain on the space. This was successful tested in Q1 2025, marking the first ever demonstration of secure digital cryptographic and cryptocurrency transactions from space conducted from orbit and established a proof-of-concept redefining boundaries on blockchain integration. A new era of space-based digital economies has started with this project. So let's discuss cooperation between Ciel, Coin and Wysart. In 2024, CL Coin Wise Key Transactional IoT platform made significant progress towards developing and deploying decentralized digital identity solutions, leveraging blockchain to enable secure Web 3.0 transactions, using our WiseID platform to incorporate distributed identity capabilities and development timeline set for key milestones in 2025. WiseArt platform has been developed to serve galleries, artists, museums, curators and collectors that they want to create digital assets and digital twins into the platform, which is now in version 2.0 with an imminent release in the month of May of a new generation of the platform, which is backed by the WiseKey Root of Trust and blockchain compatible certificates of authenticity. So lastly, our WISE-ID subsidiary. In 2024, WISE-ID flagship digital identity platform introduced biometric authentication, self-servering identity, and post-quantum cryptography protocols, making it one of the most world-secure identity systems in operation. Complementing this, during 2024, WISE-ID announced the ongoing development and planned launch of the CL Phone, A ultra-secure smartphone designed with a privacy-by-design architecture. Currently in testing mode with several strategic clients, CL Phone Integrate, YCD, and CL Coin enable security and a post-quantum chip to secure communication, identity protection, and digital asset storage on a single hardware device and platform. So in regard to outlook, due to the several projects and technology investment I previously discussed across subsidiary, we expect Wysky performance for the full year 2025 to substantially improve as compared to the 2024. So our expectations are supported by our year-end solid cash position in excess of $90 million, which was predominantly secured via the over $80 million capital raise during December 24 by CLSQ. The availability of any additional financial should it be required and the much cleaner balance sheet put us in a very strong position. All these have put us in a position on where high growth areas such as post-quantum security, cybersecurity, next-generation semiconductors, satellite infrastructure and blockchain-based ecosystem can be further financed to reach a revenue generation level. Additionally, we have robust pipeline of secure and pending business opportunity exceeding $150 million for the period 26 to 28, supported by a growing public sector and defense partnership that they will use in this conversion I mentioned before, and in particular, getting ready for what we call quantum security. Currently, our current revenue sources, including CLSC semiconductor revenue, which has been the main revenue contributor in 2024, and also in prior years, as we spin it off the semiconductor business. We anticipated that our new quantum resistant chip will be available on the market in Q4-25, and WiseKey foresees generating substantial returns for the full scale commercial deployment of this quantum resistant chip starting in 26. The growth is expected to be driven by the integration of chip revenue from new sources and expansion in chip personalization services, additional revenue by YSAT, and the consolidated revenue from our planning investment. WiseKey has therefore taken several initiatives to develop new revenue streams and strengthen net results. This initiative includes the development of semiconductor personalization center in Spain. In that regard, WiseKey and CLSQ, jointly with a company with the name Odin and T-Protect, two Spanish companies with extensive experience in IoT, plan to establish in the region of Murcia in Spain a center of excellence in cybersecurity and microchip with a personalization capability. The project called Quantix Edge is in the final stage of approval process by SET, which is the Spanish government entity responsible for funding under the per-key CHIP budgets. Second, the consolidated revenue for the acquisition opportunity, including the potential IC-ALP acquisition, if completed, only now pending on government authorization, will booster CLSQ application, a specific integrated circuit, ASIC development and further strengthening WISE's key portfolio of products. Plus, IC-ALP's entrance into the automobile and pharmaceutical and medical industry will allow CLSQ to identify new clients in this industry that will require post-quantum capability. Third, YSAT New Generation Satellite as we are planning six more launches during 2025 and 2026 with the next one currently scheduled for June 2025 with SpaceX in California. And fourth, the commercial launch of Steelcoin T-IoT, which means Transaction on Internet of Things, following on the successful proof of concept carry out in Q1 2025 CLcoin is working to identify partners to perform other approval concepts and further demonstrate its readiness for industrialization of its TIoT solution. Fifth, the offering on quantum as a service. In 2025, Wiseki advanced his commitment to quantum computer by investing in Colibri TD, a pioneering quantum technology French company aiming to integrate Colibri quantum as a service platform into the CLSQ quantum roadmap and quantum platform. These initiatives and steps we took to scale up our global footprint via key partnerships with renowned distributors and sales representatives, it is crucial to create market presence, have a strengthened wide-scale market position, and are expected to fuel our growth by leveraging each partner's expertise and established networks. So this concludes our prepared remarks. I would like now to give the floor to John for his presentation. Thank you very much for your attention.

Thank you, Carlos. As Carlos mentioned earlier, 2024 results demonstrated WiseKey's resilience during a transitional year. For the full year 2024, we reported revenue of 11.9 million, which was down from 30.1 million in financial year 23. And this, as expected, reflected 2024 being a transitional year with semiconductor customers gradually shifting to our next generation quantum resistant solutions and therefore delaying building their inventory until the release alongside the impact of the excess inventory accumulation by customers in 2023. We ended the year with a cash balance in excess of $90 million and also had a much cleaner balance sheet with significantly reduced convertible debt and warrants overhanging as well as significantly less traditional debt. This strong cash position will help us continue investing in growth opportunities, both organic and through mergers and acquisitions. During the year, we invested $7 million in research and development for the development of new projects and technologies, including CLSQ's post-quantum chip, Sealcoin, and our YSAT next-generation satellites. On that note, the first engineering samples of our new quantum resistant secure microcontroller delivered in Q4 in 2024 in line with our semiconductors research and development plan initiated in 2022. We are on target to make our QVolt TPM the next generation of secure microcontrollers built by CLSQ on our new secure RISC-V CPU available on the market in Q4 2025 with the first revenues expected to be generated in 2026. Our $115 million pipeline of secured and pending business opportunities over the period from 2026 to 2028, as of April 15th, 2025, demonstrates, we believe, the market interest in our new products. Reinforcing Carlos's message, our strong cash position, investments in high growth areas, such as post-quantum cybersecurity, next generation semiconductors, satellite infrastructure, and blockchain-based ecosystems, Our robust pipeline of secured and pending business opportunities, which exceeds $115 million for the period from 2026 to 2028, potential merger and acquisitions, and the growing public sector and defence partnerships have put us in a very strong position to grow our revenues and improve our bottom line in 2025 and beyond. We look forward to report our progress in the coming months. This concludes our prepared marks. I would now like to open the line to Q&As.