Sequans Communications closes multi-year 5G partnership agreement
Paris, 30 August 2022 – Sequans Communications S.A., a developer and provider of 5G/4G solutions for IoT devices, today announced the closing of a multi-year, strategic 5G licensing agreement with a new strategic partner.
Under the terms of the agreement, the first three years’ revenue is expected to be in excess of $50 million (€50.49 million). An initial payment in excess of 25% of the license will be received within 30 days of the closing, with additional milestone payments scheduled to be received regularly over the next three years. The partner has the rights to manufacture and sell the Taurus platform exclusively in the Chinese market for negotiated royalty payments on its future chipset sales.
“We are delighted to announce this new 5G strategic licensing agreement for our Taurus platform, which we expect to fund the balance of its development and expand our addressable market to China, a market currently not served by Sequans,” states Georges Karam, CEO of Sequans. “The agreement will generate licensing revenue over the first three years and royalty revenue for 20 years on the sale of partner’s products based on our 5G technology. For the remainder of 2022, we expect this licensing revenue, when combined with our current expectations for the rest of our business, will enable us to target non-IFRS operating profitability for the second half of the year and non-IFRS operating break-even in 2023.”
Mr. Karam concluded, “We believe our Taurus technology is uniquely positioned to be a leading 5G solution fully optimised for enhanced broadband and critical IoT applications. This, combined with the flexibility of our business model, makes us an attractive potential partner to many players interested in new 5G applications and markets.”
The following statement is based on management’s current assumptions and expectations and assumes no increase in the severity or duration of the COVID-19 pandemic, China’s pandemic lockdowns and supply chain disruptions on the timing of product shipments and project advancement. This statement is forward-looking and actual results may differ materially.
Management is targeting sequential revenue growth of at least 10% in the third quarter of 2022, with gross margin in excess of 65%.
Sequans plans to conduct a teleconference and live webcast to discuss the 5G strategic partnership agreement today, August 30, 2022 at 8:00 a.m. ET /14:00 CET.
To participate in the live call, analysts and investors should dial 877-407-0792 or +1 201-689-8263 if outside the U.S. When prompted, provide the event title or access code 13732569. A live and archived webcast of the call will be available from the Investors section of the Sequans website here.