Sequans Communications S.A.

Welcome to the fourth quarter and full year sequence earnings conference call for 2025. My name is Shannon. I will be your operator for today's call. After this speaker's presentation, there will be a question and answer session. To ask a question on the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please note that this conference is being recorded. I will now turn the call over to David Hanover, Investor Relations. David, you may begin.

Thank you, operator, and thank you to everyone participating in today's call. Joining me on the call from Sequance Communications are George Karam, CEO and Chairman, and David Schultz, CFO. Before turning the call over to George, I would like to remind our participants of the following important information on behalf of Sequance. First, Sequance issued an earnings press release this morning, and you'll find a copy of the release on the company's website at www.sequance.com under the newsroom section. Second, this conference call contains projections and other forward-looking statements regarding future events or our future financial performance and other potential financing sources. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our business strategy, cost optimization plans, strategic options, the ability to enter into new strategic agreements, expectations for sale, Our ability to convert our pipeline of revenue and our objectives for future operations are forward-looking statements within the meaning of the Private Securities Litigational Form Act of 1995, Section 27A of the Securities Act of 1933 as amended, and Section 21A 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 risks and uncertainties and subject to change at any time. 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 of forward-looking statements. More information on factors that could affect our business and financial results are included on our public filings. made with the Securities and Exchange Commission. And now I'd like to hand the call over to George Caron. Please go ahead, George.

Thank you, David, and good morning, everyone. I'd like to start with a brief update on our capital allocation framework and how we are balancing the execution of our IoT semiconductor business with the management of our digital asset treasury, all in support of long-term shareholder value creation. First and foremost, we remain focused on executing our IOT strategy and advancing our 5G product roadmap in a disciplined manner. Our objective is to unlock the full strategic value of the IOT business for our shareholders, and that remains our top operational priority. At the same time, we continue to manage our Bitcoin digital asset treasury Thoughtfully, with the goal of extracting the full value underlying our Bitcoin holdings and our treasury structure. Since launching our Bitcoin strategy, we have been deliberate in how we assess market conditions and the tools available to us, always with a focus on actions we believe can create per share value in an accurate way. In the current environment where many digital asset treasury peers are trading below an MNAV of one, we believe the most value-accurative lever available to us has been repurchasing ADS when our share price implies a significant discount to our net cash and net digital asset value. During the fourth quarter, we repurchased approximately 9.7% of the company's outstanding ADSs. In addition, our board has approved a new ADS repurchase program authorizing the buyback of up to an additional 10% of the outstanding ADSs. Overall, we are taking a balanced and disciplined approach to capital management. This includes right-sizing our operating expenses, continuing to invest in our most important R&D program, which is our 5G eRedCap chip, and allocating capital to the treasury only when it's clearly accurate, while maintaining flexibility to evaluate our options as market conditions evolve. To provide some context around our balance sheet, with Bitcoin Holdings end of Q4, and Bitcoin currently at approximately $70,000, our Bitcoin NAV is about $150 million. After adding our end of Q4 cash balance and netting out convertible debt, our net cash equivalent position exceeds $68 million. Importantly, beyond our Bitcoin and cash assets, the company's valuation should also reflect the significant value represented by our IOT revenue pipeline and our 5G and RF transceiver IP portfolio. We intend to remain patient and optimistic, staying disciplined and focused on actions that we believe can drive long-term per share value. Turning now to the operational side of the business. Our IUT semiconductor business continues to build momentum. In the fourth quarter, it generated $7 million in revenue, which was in line with our prior expectations. Revenue in the quarter was predominantly product-based, with more than 94% coming from product sales and roughly 6% from services, reflecting strong incremental growth in the product shipments. For the full year 2025, total revenue was approximately $27.2 million. This figure includes a meaningful amount of non-recurring Qualcomm-related revenue resulting from the deal we closed with them in 2024. On an adjusted basis, the underlying business was closer to $20 million And our fourth quarter run rate clearly demonstrates the ramp we have been driving throughout the year. Looking ahead to 2026, our internal plan currently targets approximately $40 million to $45 million of total global revenue supported by improving visibility and a significant order backlog. Our outlook is further supported by the strength of our design wind pipeline and the increasing percentage of projects now in production. We are exiting 2025 with the revenue funnel exceeding $550 million in a potential three-year product revenue, including over $300 million from design wind projects. Of those design wins, 44% have already reached production and are generating revenue up from 38% end of Q3. Assuming no changes to customer forecast, this represents approximately $132 million of potential three-year revenue from production stage projects alone. During the fourth quarter, We added nine new customer projects to our design win pipeline and three existing projects transitioned into production. We expect this momentum to continue through 2026 with the target of having over 50% of our current design win projects in production by the end of June. Our product Pipeline continues to be driven primarily by our 4G CAT-M and CAT-1 BIS technologies, as well as our RF transceiver product, which supports a wide range of software-defined radio applications. We are also seeing early engagements around 5G eREDCAP, which we view as the successor to 4G in IoT deployments. Smart metering, telematics, and asset tracking remain our strongest verticals, followed by security, e-health and medical, and other industrial applications. From a product family perspective, GAT-M remains a meaningful growth driver in 2026, led by asset tracking and smart metering deployments, including expanded program now entering production with customers such as Honeywell and ITROM. Gat1BIS is positioned for a breakout year in 2026, supported by multiple customer ramps in telematics and security. In RF transceivers, we have committed backlog in place with additional demand expected in the second half of the year. We also expect to begin seeing meaningful revenue from our 5G licensee partner in China. Demand for 5G eREPCAP continues to strengthen. Mobile network operators in the US are accelerating the transition from 4G to 5G to reform spectrum and IoT applications remain the final bottleneck in completing that transition. This is why having a 5G eRETCAP solution as early as possible is critical. We continue to make strong progress on this program and expect to receive our first such chips this quarter, with customer sampling beginning in mid-2027. Our IP licensing and services business is now fully integrated into our go-to-market strategy and represents attractive high margin upside in 2026. We are currently engaged in discussions with multiple potential partners with individual opportunities ranging from approximately $2 million to $10 million or more, depending on scope. Beyond revenue, these opportunities expand our reach into new markets and regions. On the supply chain side, we continue to operate in a dynamic environment. While not indicative of demand, these factors can influence shipment timing and costs quarter to quarter. We are addressing substrate constraint by adding suppliers to reduce single source exposure and improve resilience. We are also seeing memory pricing and capacity pressures, which affect both our product and our customers' devices. We are working to pass through these cost increases where appropriate while maintaining strong customer relationships. Also, we are coordinating closely with customers on ordering and delivery scales. At this stage, we expect little to no impact on our business in the first half of 2026 and limited impact in the second half. Looking ahead, we are focused on reducing cash burn over the course of the year with the objective of reaching a break-even run rate by Q4. We are taking a disciplined approach to operating expenses, right-sizing where appropriate, while protecting the innovation that underpins our differentiated position. Working capital dynamics may create short-term cash flow variability but these effects are tied directly to long-term growth. Overall, the fourth quarter underscores our progress in strengthening the core IOT business, improving financial discipline, and maintaining flexibility in our capital strategy as we position the company for sustained growth in 2026 and beyond. For Q1 2026, We currently expect revenue to be around $6.5 million, reflecting normal seasonality with the risk that approximately $1 million of revenue could shift into Q2 due to manufacturing and shipment timing planned for the end of Q1. Based on our backlog and design wind pipeline, we expect revenue to ramp through the remainder of the year and continue to believe we can approach cash flow break even in Q4. We continue to evaluate strategic alternatives that could add profitability and unlock additional value across both the IoT business and our treasury strategy. The board is actively reviewing options and we remain committed to unlocking shareholder value without rushing decisions, particularly at a time when the company is in its strongest position today. I will now turn the call over to Deborah to review our fourth quarter and full year 2025 financial results in greater detail.