Sequans (SQNS) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Nov. 3, 2026

CALL PARTICIPANTS

• Investor Relations – David Hanover
• Chief Executive Officer and Chairman – Georges Karam
• Chief Financial Officer – Norman Brodt

TAKEAWAYS

• Revenue — $9.1 million, representing sequential growth of 21.9% and a 182.8% increase year over year.
• Product Revenue Growth — increased 20.5% sequentially and more than fourfold year over year, representing the majority of total quarterly revenue.
• Gross Margin — 33.0%, representing an increase of 7.7 percentage points from 25.3% in the prior year period.
• Operating Loss — $1.0 million, which included a realized net gain of $6.2 million from the sale of digital assets.
• Net Loss — $1.5 million, or $0.10 per diluted ADS, compared to a net loss of $16.6 million in the third quarter of 2025.
• Non-IFRS Net Loss — $0.6 million, or $0.04 per diluted ADS, excluding non-cash impairments and interest adjustments.
• Cash and Short-Term Deposits — $39.7 million at Sept. 30, 2026, up from $21 million at the end of the second quarter.
• Bitcoin Strategy Exit — $24.6 million in total proceeds were generated from the sale of the remaining 314 Bitcoin at an average price of approximately $78,500.
• Operating Expenses — $10.3 million, representing a 14% sequential reduction and a 25% decrease year over year following cost-optimization plans.
• Post-Quarter Cash Inflow — $2.5 million, representing a final payment for the Chengdu development received from the French government in Oct. 2026.
• Design Win Pipeline — $300 million in potential three-year revenue, with nine new projects and eight advanced engagements added in the third quarter.
• Mass Production Pipeline — targeted to exceed $180 million by year-end, following the transition of two additional projects into mass production in the third quarter.
• Monarch CAT-M Revenue — accounted for more than 80% of product revenue in the third quarter, led by asset tracking and smart metering applications.
• Iris RF Transceiver Pipeline — approximately $30 million in three-year revenue potential, supported by more than 20 customer leads and one drone customer moving to production.
• Licensing Opportunity Pipeline — exceeds $75 million in total potential revenue, with active discussions ranging from several hundred thousand dollars to more than $10 million.
• Nine-Month Revenue — $22.6 million for the first three quarters of 2026, exceeding total 2025 revenue of $18.3 million.
• Q4 Revenue Guidance — $9.5 million to $11 million, assuming limited contributions from major licensing and services deals.
• Book-to-Bill Ratio — remained well above 1.0 for the third consecutive quarter, with a backlog extending into the second half of 2027.
• Debt Obligations — limited to approximately $3 million in expected reimbursements for government-financed R&D projects over the next five years.
• Quarterly Cash Burn — $5.9 million in the third quarter, in line with company projections.
• 5G eRedCap Timeline — revenue generation expected in 2028 following lab testing at the end of 2026 and customer engagement in the second half of 2027.

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RISKS

• Karam warned that TSMC will be operating under capacity allocation for all mature nodes in 2027, which requires the company to manage silicon supply to meet customer demand growth.
• Karam stated, “I believe I remain cautious on the margin in Q4,” due to volatile memory component pricing that requires monthly adjustments and creates challenges in anticipating cost increases.

SUMMARY

Sequans Communications S.A. (SQNS +10.89%) reported a strategic pivot back to its core semiconductor operations following the full exit from its Bitcoin treasury strategy and the redemption of its convertible debt. Management reported that the company is now focused on scaling its 4G IoT product business and expanding into the defense and drone sectors via its RF transceiver platform. The company stated that growth is being driven by the conversion of its design-win pipeline into mass production revenue, particularly within the smart metering and telematics verticals. Efforts are also underway to transition the product roadmap from 4G to 5G technology, with development kit shipments and lab testing advancing for next-generation applications. Sequans is managing supply chain constraints through diversified sourcing while maintaining a simplified capital structure to support its path toward breaking even.

• CEO Karam stated, “Sequans no longer holds any digital assets, and we have no outstanding debt other than a small amount tied to government-financed R&D projects,” marking the end of the company’s cryptocurrency investment strategy.
• Management noted that all new IoT designs are expected to transition to 5G by the end of 2027, which the company believes will offer a more favorable competitive landscape and higher average selling prices.
• CEO Karam indicated that the Iris RF transceiver platform has generated more than 20 leads across defense, drone, and space applications since development kit shipments began in the second quarter.
• Norman Brodt indicated that the company targets a sustainable quarterly operating expense level by focusing investments primarily on 5G technologies while tapering 4G investment.
• Management noted that timing for individual licensing deals remains difficult to predict, although the company aims to close a portion of its 75 million dollar licensing pipeline in the fourth quarter.

INDUSTRY GLOSSARY

• Monarch CAT-M: A cellular IoT chip designed specifically for LTE-M and NB-IoT applications requiring low power.
• Calliope Cat 1bis: An LTE Cat 1 chip optimized for mid-range IoT applications using a single antenna.
• 5G RedCap/eRedCap: Reduced Capability 5G standards designed for mid-tier IoT devices that require lower power and cost than high-throughput 5G.
• Iris RF Transceiver: A programmable radio frequency chip used in software-defined radio applications for defense and industrial systems.
• Book-to-bill: The ratio of orders received to units shipped and billed for a specific period, used as a growth indicator.
• ADS: American Depositary Share, which represents shares in a non-U.S. company that are held by a U.S. depositary bank.
• LTE-M: Long Term Evolution for Machines, a cellular technology specifically for IoT devices.
• NB-IoT: Narrowband Internet of Things, a low-power wide-area network radio technology standard.

Full Conference Call Transcript

Operator: Hello, and welcome to the third quarter 2026 Sequans earnings conference call. My name is Towanda, and I will be your operator for today’s call. At this time, all participants are on a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will

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