Sivers Semiconductors AB

This is Vikram Batulia, the CEO at Sivers. And I'm here with Lottie Sachs, who's our CFO. Thank you for joining us. And I'm happy to host this first earnings call as the new Sivers CEO. So today's agenda, we're going to discuss the Q3 results. There'll be an executive summary. Lottie will go over the financial results. And I want to give some important market and business updates and some key takeaways for the audience today. And then we'll look at your questions and respond to them. Let's get into the executive summary. On the financial side, in the third quarter, revenues were at 58.7 million SEC. That's 1% year on year for Q3, so we're stabilizing our revenues from the strong growth from last year. And sequentially, it's a 12% increase from Q2 to Q3. Our wireless business had very healthy growth, 17% year on year for Q3, and 40% up sequentially from Q2 to Q3. If you look at the year-to-date results, Revenues are at 167 million SEC. That's 4% year-on-year. And we continue to drive towards profitability in the business. So we have an improvement of 24% year-on-year in our adjusted EBITDA. Migrating Sivers into a products business continues, and our product revenue contribution is at 32%. That's 11-point increase from the prior year, year-to-date. Some of the key highlights, as I mentioned, we continue progress on the road to profitability. On the photonics side, we had a very important demonstration with our marquee partner, IRLabs, at the European Conference on Optical Communications, where our 16-element laser array, along with the IRLabs chipsets, showed how the drive from copper to optical interconnects is going to revolutionize AI data centers. Our conversation with our photonics customers is also moving from technology and product market fit to how are we getting ready for the ramps that are going to be coming up in a couple of years. And towards that end, I want to say that we have identified a merchant foundry partner for our high volume laser productions for the AI data center market. We already talked about our focus on SATCOM, satellite communications, and we have early adopter customers that we are already working with. But importantly, now we are getting interest beyond our early adopters. So we have a new blue chip customer win in SATCOM. That's very exciting for us. As you've seen in the press releases, we have received two U.S. CHIPS Act awards. what is called Lab2Fab awards. This opens opportunities to the electronic warfare market, which is also important for our beamformer technology because it solves relevant challenges in that segment. And Lab2Fab indicates that these are technologies that the U.S. Chipset believes can be commercialized with the right partnerships. So that's also important to know. 2024, we were selected as a finalist for the Glottal Telecom Awards for Mission Critical Excellence. And it's always rewarding to see the technologies we're working on getting recognized. And finally, the SPAC option is off the table. And what I want the listeners to understand is our value proposition in the photonics market with our lasers for AI data centers is very strong. The decision has to do more with the SPAC environment. It's not about lack of attention or interest on the technology proposition for the AI data center. That continues to march on very strongly, and we will continue to look for opportunities to maximize our participation and our recognition in that space. With that, let me hand this over to the financial overview for Q3 from Lottie, and then I'll come back on the markets and customer update.

Thank you, Vikram. So revenue amounted to 58.7 million in Q3 and 167 million year-to-date, with 4% growth in constant currencies. We see a stabilized revenue base following a very strong quarter in 2023 in which we had 107% growth and actually 96% growth year to date. So in the quarter, we have a sequential growth from Q2 to Q3 of 12.2%. And we see a pattern of a strong Q3 and the second half. And actually, Q3 this year is the second highest quarter to date in the company's history. And as Vikram already mentioned, our wireless business shows solid growth of 70% in the quarter, mainly coming from SAPCOM, but also in 5G. And importantly, product sales remained on a good level a month into 17 million in Q3 and 54 million year to date. which corresponds to a growth of 58%, demonstrating a focused shift towards a product-driven revenue model. We continue to see improvements in profitability and cost efficiency stemming from improved commercial discipline and maintaining operational cost actions taken in 2023. And we do operate our business with a lean organization, and we will continue to focus on operational efficiency to ensure we leverage on increased sales volumes to improve profitability further. And Cirrus is on a promising path to profitability with a Q3 improvement of 12% and year-to-date improvement of 24% in adjusted BTAs. As mentioned, we continue to drive transformation to product business, which is demonstrated in that product share of sales grew to 32% from 21% prior year. We have a balanced distribution in sales between our two business units, as well as geographically, which is in line with prior year. We are very proud about the awarded contracts under the U.S. CHIP Act and increased activity in the North American region.

Thanks, Lottie. So that was a financial update. And now I do want to take some time. It's my first opportunity with our listeners, our investors. I want to make sure that we're all on the same page on where we want to be taking sewer semiconductors in the future. So when I look at the technologies we have, and now we have both the wireless side and the photonics side, Over the last three months, I've talked to a lot of customers, investors, partners, and what's become very clear is we are critical enablers of a greener data economy. Our focus is on energy efficient photonics and wireless solutions. So I thought I'll take some time to give you my view of what's ahead of us. And I want to make sure I give you a very practical, pragmatic view of what to expect in the coming quarters, years ahead of us. So let's start with this. It's no secret that there are two long-term secular trends that are super interesting for us, okay?