PARIS - Sequans Communications S.A. (NYSE: SQNS), a prominent developer of 5G and 4G semiconductors and IoT modules, has reported its preliminary financial results for the third quarter ended September 30, 2024. The company experienced a revenue increase to $10.1 million, up from $9.7 million in the previous quarter and a significant rise from $7.8 million in the same period last year.
Operating profit for the third quarter was recorded at $87.0 million, a substantial improvement from an operating loss of $3.7 million in the second quarter of 2024 and a $7.8 million loss in the third quarter of 2023. This includes the net gain from the sale of 4G IP assets to Qualcomm (NASDAQ:QCOM) for $152.7 million. The company also reported a net profit of $72.3 million, or $2.61 per diluted ADS, compared to a net loss in the previous quarter and year.
Sequans' gross margin for the quarter was 82.5%, a slight decrease from 84.0% in the second quarter of 2024 and 85.8% in the same quarter of the previous year. The company's cash and cash equivalents stood at $173.6 million as of September 30, 2024, a significant increase from $13.1 million at the end of the second quarter.
Following the end of the quarter, Sequans repaid $85 million in matured convertible debt, related party loans, and accrued interest. The company's CEO, Georges Karam, expressed confidence in Sequans' market position and anticipated growth in product revenue beginning in the fourth quarter of 2024, with expectations to reach breakeven in 2026.
The financial summary indicates that product revenue remained flat compared to the second quarter at $2.4 million but increased by 144.5% compared to the same period last year. License and services revenue, largely driven by the Qualcomm transaction, was reported at $7.7 million.
Management anticipates approximately 10% sequential growth in the fourth quarter of 2024, with product revenue expected to double from the third quarter. The company's outlook also includes continued significant licensing and services revenue, including a component related to the Qualcomm deal.
This article is based on a press release statement from Sequans Communications. The final results are subject to the finalization of the allocation of the Qualcomm transaction proceeds.
In other recent news, Sequans Communications and Honeywell (NASDAQ:HON) have made significant strides in their respective sectors. Sequans completed a $200 million sale of its 4G IoT technology assets to Qualcomm, transitioning from a net debt of $80 million to holding net cash of the same amount. The company also reported Q1 2024 revenues of $6.0 million and reduced its operating loss to $8.5 million. Analyst firm Roth/MKM maintained its Buy rating for Sequans, endorsing the company's technology portfolio.
On the other hand, Honeywell and Qualcomm announced a collaboration to enhance artificial intelligence solutions in the energy sector. The partnership aims to integrate Qualcomm's AI and connectivity technologies into Honeywell's applications, like the Field Process Knowledge System. Honeywell plans to incorporate computer vision into the Field PKS by 2025. These are among the recent developments for both Sequans and Honeywell.
InvestingPro Insights
Sequans Communications' recent financial results reflect a company in transition, with significant developments that align with several InvestingPro metrics and tips. The company's revenue growth of 5.65% in the most recent quarter, as reported by InvestingPro, supports the positive trend mentioned in the article, where Q3 2024 revenue increased to $10.1 million from $9.7 million in the previous quarter.
However, it's important to note that despite the recent positive quarter, InvestingPro data shows a revenue decline of 47.17% over the last twelve months. This aligns with an InvestingPro Tip indicating that analysts anticipate a sales decline in the current year. This context is crucial for investors to understand the company's overall trajectory beyond the recent quarter's performance.
The article highlights Sequans' significant operating profit of $87.0 million in Q3 2024, largely due to the sale of 4G IP assets to Qualcomm. This one-time event has dramatically improved the company's financial position, as reflected in the increased cash and cash equivalents. However, an InvestingPro Tip cautions that the company was not profitable over the last twelve months, with a negative P/E ratio of -1.23, suggesting ongoing operational challenges despite the recent windfall.
The stock's performance has been volatile, with InvestingPro data showing a strong return of 106.06% over the last three months, which aligns with the company's recent positive developments. However, the year-to-date return remains negative at -63.96%, indicating a longer-term downtrend that investors should consider.
For those seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Sequans Communications' financial health and market position. There are 5 more InvestingPro Tips available for SQNS, which could be valuable for investors looking to make informed decisions about this dynamic semiconductor company.
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