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Sequans Communications reported its Q2 2025 earnings, highlighting modest revenue growth and significant strategic initiatives in IoT and Bitcoin investment. The company posted revenues of $8.1 million, a 1.1% increase year-over-year, and a net loss of $9.1 million. While the stock dipped by 1.27% to $9.32 after market close, it showed a slight premarket uptick of 0.43%. According to InvestingPro data, the company maintains a healthy current ratio of 1.83 and has achieved impressive trailing twelve-month revenue growth of 32.07%, despite recent market challenges. The stock currently trades significantly below its 52-week high of $58.30.
Key Takeaways
- Sequans’ Q2 revenue rose by 1.1% year-over-year.
- IoT product revenue surged 59% year-over-year.
- The company is investing heavily in Bitcoin, holding 3,072 bitcoins.
- Operating expenses increased to $14 million, up from $12 million in the previous quarter.
Company Performance
Sequans Communications demonstrated a stable performance in Q2 2025, with a slight increase in total revenues. The company’s focus on IoT products continues to drive growth, evidenced by a 59% year-over-year increase in IoT revenue. However, the increase in operating expenses indicates a strategic investment phase that could pressure short-term profitability.
Financial Highlights
- Revenue: $8.1 million, up 1.1% YoY
- Gross margin: 64.4%
- Operating expenses: $14 million, up from $12 million in the previous quarter
- Net loss: $9.1 million, or $0.36 per diluted ADS
- Cash and equivalents: $41.6 million, down from $45.9 million
Outlook & Guidance
Sequans is looking to streamline operations by targeting cash operating expenses of $10 million per quarter by 2025. The company aims to achieve cash flow breakeven in its IoT operations by 2026. The forward-looking strategy includes a significant focus on Bitcoin as a long-term store of value, with plans to accumulate more and target a 10-15% yield by year-end.
Executive Commentary
CEO Georges Caron emphasized the strategic importance of Bitcoin, stating, "We view Bitcoin as a long-term store of value asset and intend to strategically accumulate it over time." He also highlighted the company’s commitment to becoming a best-in-class Bitcoin treasury, aiming to deliver long-term value to shareholders.
Risks and Challenges
- Increased operating expenses could impact short-term profitability.
- Bitcoin’s price volatility poses a risk to the company’s financial stability.
- Market competition in the IoT space remains intense, potentially affecting future growth.
- The company’s reliance on new IoT projects reaching mass production by 2025 could face delays.
Q&A
During the earnings call, analysts inquired about the potential yield from the Bitcoin strategy and the expected ramp-up in IoT revenue. The company confirmed its expectations for significant IoT revenue growth and discussed the potential acquisition of an ACP, which could add $6-10 million in revenue with over 70% margins.
Full transcript - Sequans Communications SA (SQNS) Q2 2025:
Operator: Welcome to the Second Quarter twenty twenty five Sequans Earnings Conference Call. My name is Lisa, and I’ll be your operator for today’s conference. After the speakers’ presentation, there will be a question and answer session. Please note this conference is being recorded. I will now turn the call over to David Hanover, Investor Relations.
David, you may begin.
David Hanover, Investor Relations, Sequans Communications: Thank you, operator, and thank you to everyone participating in today’s call. Joining me on the call from Sequans Communications are Georges Caron, CEO and Chairman and Deborah Choate, CFO. Before turning the call over to Georges, I would like to remind our participants of the following important information on behalf of Sequans. First, Sequans issued an earnings press release this morning and you’ll find a copy of the release on the company’s website at www.sequans.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 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 sales, our ability to convert our pipeline to revenue and our objectives for future operations are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A and the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These statements are only predictions and reflect our current beliefs and expectations with respect to our 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 in our public filings made with the Securities and Exchange Commission. And now I’d like to hand the call over to Georges Caron. Please go ahead, Georges.
Georges Caron, CEO and Chairman, Sequans Communications: Thank you, David. Good morning to everyone. We are pleased to hold our first earnings conference call since our decision to adopt Bitcoin as our primary treasury reserve asset. We view Bitcoin as a long term store of value asset and intend to strategically accumulate it over time. Our approach involves actively acquiring and holding Bitcoin using net proceeds from equity and debt issuances executed from time to time based on market conditions as well as cash generated from operations and intellectual property monetization.
We are committed to this strategy and believe it will unlock significant long term value for our shareholders. We look to continue accumulate bitcoin for our treasury and do not intend to sell. At the end of last week, Sequans successfully completed the deployment of all net proceeds from the $384,000,000 offering closed on 07/07/2025 to launch our Bitcoin Treasury strategy. As of July 25, the company holds 3,072 bitcoins acquired using the full net proceeds from the offering at a total cost of approximately $358,500,000 This reflects an average purchase price including fees of $116,690 per bitcoin. According to bitcointreasuries.net, this position Sequans among the top 25 largest public bitcoin treasury companies globally.
Also, we are uniquely positioned as a European Bitcoin treasury company in The U. S, which may attract a broader international shareholder base. With the price of bitcoin today around $118,000 this represents a bitcoin NAV of around $363,000,000 We are focused on delivering best in class disclosure and transparency practices for our shareholders. We have added a metrics dashboard to our website, specifically dedicated to the Bitcoin treasury strategy. These metrics will continue to be enhanced as we work to integrate additional industry standard Bitcoin treasury KPIs into our dashboard.
Following our initial deployment, our short term strategy for the 2025 is to continue the momentum we’ve built and further expand our bitcoin reserves. We intend to pursue this through three primary channels. First, deploying a portion of the available cash on our balance sheet. Second, utilizing net proceeds expected from the exercise of common warrants issued in the offering successfully closed on July 7. And third, allocating additional capital anticipated from the public equity market.
Collectively, these initiatives are designed to establish a strong foundation for the continued evolution of our treasury strategy. Beyond this year, we are developing a plan to expand this strategy. We expect this to include the issuance of equity, debt and fixed income instruments along with other highly accretive options such as the monetization of our operational business and intellectual property. Our goal is to continue increasing the bitcoin per share and to generate bitcoin yield to our shareholders. To ensure flawless execution, we have partnered with Swan Bitcoin, a premier platform for Bitcoin wealth management and institutional services.
Through strategic Bitcoin treasury management agreement, Swan will support us with its world class team and deep expertise. This partnership positions us strongly to lead in this era of Bitcoin treasury strategy and to drive long term value for our shareholders. Now turning to our IoT business. This business continues to improve and move in the right direction. We strongly believe that we are well positioned to leverage the operating business to help accelerate our Bitcoin treasury strategy.
Our second quarter IoT revenue was $8,140,000 in line with our guidance with the product revenue of $3,850,000 up 10% quarter to quarter and 59% year over year. Product revenue growth was mainly driven by Monarch two shipment. We continue to expect product revenue to ramp in the 2025 and in 2026, driven mainly by the move of design win projects from the development phase to mass production and shipment. Business momentum continues to be focused around our four gs IoT products offering with the main two modern categories LTM and Cat one Bis supported by our Monarch and Calliope families respectively. We are adding new opportunities every week, specifically with Cat one Bis Calliope two platform, which is needed to address security and fleet management applications.
Our total three years revenue pipeline now exceeds $485,000,000 with $250,000,000 already at the design win stage. All design win projects are progressing well and we remain confident that by the 2025, approximately half of them will have reached mass production and shipment. In the second quarter, three additional design win projects advanced to this stage and are expected to contribute to our future revenue growth. In terms of new design wins, we secured five new IoT projects in the second quarter. I’m pleased to announce that we have secured a major design win with Iris, our new family of RF transceivers product that we have just launched to market, addressing many radio applications outside the usual IoT market like defense, drones and V2X automotive.
These six design wins represent in total close to $30,000,000 of three years revenue. We’ll move them to the design win stage as soon as the customers have reached the sampling phase of their products integrating our technology. Finally, regarding our five gs IoT roadmap strategy, development of the eREDCap five gs platform is progressing well. We are on track to deliver best in class technology building on the success of our four gs IoT solutions. Customer interest remains strong, driven by our unique value proposition that enables a seamless transition from four gs to five gs, while ensuring long term application viability.
Turning to licensing and services. We have a strong track record of successfully monetizing our intellectual property through strategic licensing agreement. Notable examples include our $60,000,000 five gs Taurus license with the Chinese partner and the $200,000,000 sale of our four gs IP to Qualcomm, which included a backward license. Looking ahead, we believe our eRAD cap and RF technologies will further strengthen this trajectory. Additionally, our Chinese tourist licensing partner is progressing towards production with royalty revenues expected to begin in 2026.
In summary, we are reaffirming our outlook that given the current business momentum, our IoT operations are on track to become cash flow positive in the 2026. Our objective is to leverage the value generated by this business to support further investment in our Bitcoin treasury. This will complement the capital already raised for that purpose with the goal of increasing our Bitcoin holdings and enhancing long term shareholder value. I will now turn the call over to Deborah to review the second quarter twenty twenty five financial results in greater detail. Deborah?
Deborah Choate, CFO, Sequans Communications: Thank you, George, and good morning, everyone. I’ll cover our second quarter financial results and then speak more about our Bitcoin holdings. Total revenues in Q2 twenty twenty five were $8,100,000 up 1.1% compared to the 2025. Gross margin remained strong at 64.4%. Comparisons to the 2024 or I’m sorry to the 2024 are included in the press release, but I will not comment on them here as they are not very relevant.
The company was in a very different position prior to the Qualcomm transaction that took place in the 2024. Operating expenses in Q2 twenty twenty five were $14,000,000 versus $12,000,000 in 2025, reflecting a number of non recurring expenses in the quarter in the second quarter related to some restructuring and various advisory fees related to our strategic transactions. We continue to target to reduce cash operating expense, meaning expenses excluding depreciation expense to be around $10,000,000 per quarter by the 2025. The loss from operations was $8,700,000 compared to a loss from operations of $6,800,000 in the prior quarter. And for the 2025, our net loss was $9,100,000 or $0.36 per diluted ADS compared to a net loss of $7,300,000 or $0.29 per diluted ADS in the first quarter.
Our non IFRS loss in Q2 twenty twenty five was $8,100,000 compared to a non IFRS net loss of $6,100,000 in Q1 twenty twenty five. Cash, cash equivalents and short term deposits at June 30 were $41,600,000 compared to $45,900,000 at the March, representing a significant reduction in cash burn compared with the 2025, in part due to receiving some government R and D funding earlier than expected. We continue to have strong support from EU, French and Swiss governments with various R and D funding programs. And we expect to collect the remaining $10,000,000 from Qualcomm held in escrow on 09/30/2025. On the Bitcoin treasury strategy front, as announced earlier this month, we completed the sale of 139,400,000.0 American depository shares and pre funded warrants for total gross proceeds of $195,000,000 and the issuance of 189,000,000 in principal amount of secured convertible debentures due 07/07/2028 at original issue discount of 4%.
Common warrants to purchase up to 41,200,000.0 ADSs exercisable within ninety days of the closing of the offering were also issued. Total proceeds before payment of deal fees were approximately $368,500,000 The secured convertible debentures are convertible at a conversion price of $2.1 per ADS and the common warrants have an exercise price of 1.4 per ADS. We have used all the net proceeds from these deals to purchase 3,072 bitcoins as announced earlier this week. And now we are beginning to execute the next phase of the treasury implementation as mentioned by George earlier. Under international accounting standards, our Bitcoin assets on the balance sheet will be remeasured at fair value at each balance sheet date.
Any loss from historical cost and any gain to bring the value back to historical cost will be recognized in net income. However, IFRS does not allow us to recognize unrealized gains above historical cost in the income statement, but rather directly in an equity reserve account. While this mark to market may introduce volatility into our reported results, it does not impact our cash. We also launched a Bitcoin dashboard today at on our website sequans.com/bitcointreasury, where investors will be able to find our Bitcoin related statistics in one location. We encourage investors to check back often as it will track additional Bitcoins as we announce them and provide a real time snapshot of our market and bitcoin metrics.
And beginning with our Q3 twenty twenty five results announcement, we will highlight bitcoin related statistics in our press release. And now I’ll turn the call back to George before we begin Q and A.
Georges Caron, CEO and Chairman, Sequans Communications: Thank you, Deborah. So to conclude this call, we are very excited about the bitcoin treasury strategy we’ve just launched. Following the successful deployment of the initial phase, we’ve established a short term execution plan and we are actively preparing for further expansion beyond this year. In summary, we are fully committed to flawless execution, aiming to become a best in class Bitcoin treasury and deliver long term value to our shareholders. With that, let’s begin the Q and A session.
Operator?
Operator: Thank you. And our first question will be coming from the line of Scott Scherle of Capital Roth Markets. Your line is open.
Scott Scherle, Analyst, Capital Roth Markets: Hey, George. Hey, Deborah. Good morning. Good afternoon. Thanks for taking the questions.
Deborah Choate, CFO, Sequans Communications: Hi, Maybe just
Scott Scherle, Analyst, Capital Roth Markets: to dive in on the Bitcoin treasury initiative. I know it’s early going in the days and you just launched the dashboard. So we’ll see more details on that going forward. But I’m wondering if there is a bitcoin yield number or target that you’re looking for. I think in the early going here, know it’s been three weeks in, but it looks like your annualized yield is well over 15%.
I’m wondering if you have any early thoughts on that? And kind of what the capital structure or target is if you look forward over the next eighteen to twenty four months? I know it’s premature, but I’m wondering if you have some high level thoughts on that front. And Deborah, just I was wondering if you could detail the non recurring expenses in the quarter just the magnitude of it. And then I had a couple of follow ups on the IoT front.
Georges Caron, CEO and Chairman, Sequans Communications: Yes. Thank you, Scott. I mean, the obviously in terms of yield, we have a target, I mean, on the tools, I would say for 2025. As I mentioned, we have three steps that we are doing. One, which is really a piece of the available cash on our balance sheet because we have still strong balance sheet.
We know that we have another $10,000,000 coming from Qualcomm at the end of the quarter. We are reserving for the operations on piece, but there is some of it can be used for Bitcoin and this will be executed. And obviously, there is the warrants where it depends on the exercise. I mean, I’m giving high level of I believe this would exercise, but it’s we need to wait two months to see them exercising. All this obviously will give us a level of yield.
And then from there, our ability, I will say to go back to market and raise some equity as well in fourth quarter that we put in the plan. Like depending on those three, if the three are executing, I believe there is a target maybe for sure we’ll exceed 10% yield. From today, I don’t know which the reference because the real problem of the yield to give it is to take the reference. So if I take the reference which is last week closing the transaction, from there I believe we can be above 10%. And if we are lucky, maybe we can be at 15% towards the end of the year.
Now in terms about structure for next year, I mean, again, I we are working as you can imagine on this strategy since non stop since three months. And obviously, the first phase was more about executing and I believe we executed well by closing the deal and deploy, I will say the and buy the bitcoin and reach the level where we are today in number of bitcoin that we hold. Immediately we put in place and concluded what I will say the next step just to keep the momentum in the coming four months. And this is in place. And from there, I’m working really on bigger plan to go beyond even 2026, not only to cover 2026, but even beyond, where essentially using the equity debt and preferred whatever fixed income tools, all smart idea there and are on the table and we are discussing them to work on them and be able to raise capital and continue the momentum buying Bitcoin and increasing the yield.
But obviously also there is and this is really what I consider important in Sequans and different Sequans. I mean there is a valuable piece of business that we have in hand that can be monetized in one way or another. And this can be an easy it can deliver nice yield for the shareholder, mainly considering the value or the NAV that we have today, right? I mean, if you compare the NAV versus the Sequans business today, we still have significant cash to extract from this business. And obviously, we are working on all the plans here to do.
So this is really at the high level. Deborah for the
Deborah Choate, CFO, Sequans Communications: Yeah. On the non recurring expenses, we had about $600,000 falling in R and expense that was related to some restructuring costs following the acquisition of ACP and some salary adjustment catch up that was booked in the quarter part of the integration process. And then on the G and A line, we had just a number of fees that were related to the ACP acquisition integration finalization of sort of the tax review related to the Qualcomm transaction and the favorable tax treatment we were filing for and then a number of things related to preparation for the various Bitcoin strategy. So it’s probably another $600 $700,000 related to those various fees.
Scott Scherle, Analyst, Capital Roth Markets: Got you. Very helpful. Thank you. And George, then maybe on the cash front within the business, it sounds like you’ll deploy some of that $40 plus million that is on the balance sheet around the IoT operating business. You also have $10,000,000 coming in from Qualcomm.
And it sounds like you continue to still target cash flow breakeven in the 2026. Is that all correct in terms of additional cash opportunities? And I guess you can throw on top of that some incremental licensing opportunities.
Georges Caron, CEO and Chairman, Sequans Communications: Absolutely. I mean, whether on the front of licensing or the business itself and obviously any strategic angle for all this business opportunity that we are exploring will be cash generating event for the company that can be used for the Bitcoin. And as I said, the business, as you said, as I’m reiterating, business is going very well. I mean, the convergence of design win, we have more and more customers turning their product to mass production as predicted this second half of the year and preparing forecast for next year. So this reinforce our position in the business.
And the revenue on the other side, obviously, we’re extremely disciplined in the in our target for cash spending, I would say per quarter and we’ll keep watching this to reduce it. And the two together put us still on track for our target next year to be breakeven as announced.
Scott Scherle, Analyst, Capital Roth Markets: Great. And George, on the licensing front, I know in the past, I think you’ve talked about some ongoing potential engagements or discussions. Can you give us an update on that front? It sounds also like your Chinese partner should start to transition into a royalty generating mode in 2026 as well, which can be redeployed with the Bitcoin strategy.
Georges Caron, CEO and Chairman, Sequans Communications: Absolutely. Mean, you know and Sigve, I mean, is this also could be also a turning point in our schedule or maybe versus the past, we will be more reinforcing the licensing and all those this angle of the business, because this is really it could be a recruiting business, recruiting revenue with 100 margin with very little effort behind it I would say. The Chinese partner, yes, it’s moving well. They are in they got their product in something ready to go for mass production next year and we believe this will start paying revenue, paying royalty next year. And I was working on I’m still working on a couple of opportunities that are progressing well.
We should have some kind of decisions in the Q4 around them and that could be also an injection of cash coming from those licenses.
Scott Scherle, Analyst, Capital Roth Markets: Great. Very helpful. And then lastly, if I got a couple of questions on the IoT business and I’ll get back in the queue. But just want to clarify, it sounds like you continue to expect product revenue ramp up in the second half of this year and exiting the year about 50% of those $250,000,000 worth of design wins should be going into production by the end of this year. Is that correct?
Georges Caron, CEO and Chairman, Sequans Communications: Absolutely, yes. Absolutely.
Scott Scherle, Analyst, Capital Roth Markets: Okay. And lastly, just on ACP, it seems like it’s been this stealth home run. I’m wondering if you could extrapolate a little bit on that opportunity. Very high gross margin business, a very unique business in terms of you going after defense drone, UAV and I guess some vehicle to ex markets. Just how big is that opportunity as we think about 2026 and beyond?
That’d be helpful. Thank you.
Georges Caron, CEO and Chairman, Sequans Communications: I mean, Scott, it’s important like and this was really a nice piece of the acquisition when we acquired it. We acquired them really for the IP of RF to include it into our five gs roadmap, which we did and it’s working very well and accelerate our time to market and save investments for the company, a lot of investment. However, in the same time, we discover a portfolio of product that very, very advanced ready and there is no R and D investment. So we’re not investing any penny on this, just only the product were there. We just only push it into our marketing machine and sales machine to sell it to market.
And as I announced, we won already a big deal, really very big deal that should turn to revenue Q1 next year. So there is upside there. The number, very honestly, if I have to put the targets for next year, we should be able to do on those maybe 6,000,007 million dollars very easily on the backlog above 5,000,000 in any case. And depending on some timing and some on how things will go, maybe we can reach the $10,000,000 and with very high margin exceeding 70% margin in this business. And it has as well licensing opportunity related to this as well.
David Hanover, Investor Relations, Sequans Communications: Great. All right. Thank you
Scott Scherle, Analyst, Capital Roth Markets: so much. I’ll get back in the queue.
Operator: Thank you. And that does conclude today’s Q and A session. I would like to turn the call back over to George for closing remarks. Please go ahead.
Georges Caron, CEO and Chairman, Sequans Communications: Yes. So thank you all for listening. And again, continue stressing that we are fully focused on the Bitcoin, making the transition of the company, a lot of things, lot of question. I understand it from many of you and maybe not being patient. But believe me, we’re working 20 fourseven and we are committed to this strategy and we’ll make it completely successful.
Stay tuned with us and looking forward, I will say to speak with you on the next earning call in a quarter from now and maybe if we have other opportunity in the meantime. Thank you very much. Operator, we can close the call.
Deborah Choate, CFO, Sequans Communications: Thank you
Operator: for joining today’s conference call. You may
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