Sequans Communications Q3 2025 Earnings Call - Proactive Bitcoin Debt Reduction and Accelerating IoT Revenue Growth

Jonathan, Conference Call Operator: Welcome to the Third Quarter twenty twenty five Sequence Earnings Conference Call. My name is Jonathan, and I will be your operator for today’s call. At this time, all participants are in listen only mode. After the speakers’ remarks, there will be a question and answer session. As a reminder, today’s program is being recorded.

I would now like to turn the program over to David Hanover, Investor Relations. David, you may begin.

David Hanover, Investor Relations, Sequans Communications: Thank you, Jonathan, and thank you to everyone participating in today’s call. Joining me on the call from Sequans Communications are Georges Perron, CEO and Chairman and David 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 historical facts and conditions contained in this release, including any statements regarding our business strategy, cost optimization, strategic plans, 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 1999, Section 27A of 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 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 or 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 Perron, CEO and Chairman, Sequans Communications: Thank you, David. Good morning to everyone. We announced this morning that Sequans has taken a proactive approach to reduce its debt by 50% through strategic asset reallocation of its Bitcoin treasury. We remain fully committed to our Bitcoin treasury strategy, which we continue to believe will deliver meaningful long term value for our shareholders. This is why we executed our major financing deal in July as the starting foundation of our bitcoin strategy.

As you know, the financing deal included both equity and convertible debt components that introduced approximately 50% leverage into our treasury structure. Initially, we thought the shares would appreciate following the deal announcement and the debt would convert due to share price appreciation. While there is no urgency for us, as we are not paying interest on the debt for the first twelve months, we have chosen to act proactively given current digital asset treasury market conditions. With many of our peers currently trading significantly below an MNAP of one, we find ourselves constrained by the lack of available options to meaningfully advance our treasury strategy at this time. Thus, we have opted to move forward and negotiate with our debt holder to reduce our debt exposure and provide us with a greater flexibility moving forward.

As a result, we announced today that we are reducing by half our convertible debt via a tactical sale of a portion of our Bitcoin holdings. We undertook this action for the following reasons. First, it has lowered our debt to NAV ratio closer to the 35% range, a more appropriate level while still maintaining decent leverage on the remaining portion of the convertible debt. This put us in a better position for issuing preferred shares in the future. Second, we have reduced some of the debt covenant constraints, increasing our ability to use all of the treasury tools at our disposal, including buying back ADS and executing on the ATM based on market conditions.

With respect to our ADS buyback program, factoring in the current valuation, selling Bitcoin on a tactical basis makes sense in this environment to fund the repurchase of our ADS, which are trading at a significant discount to our Bitcoin net value plus our net cash. Note that our current valuation does not reflect the value creating opportunities we believe are available to us through our IoT business, which I will discuss shortly. And lastly, we have freed up some of the Bitcoin we hold, enabling us to generate some yield with minimum risk. Such yield can be deployed to buy Bitcoin. So to summarize this move was undertaken to unlock shareholder value and put us in a better position to execute on our treasury strategy.

We intend to continue to follow a disciplined and opportunistic approach to Bitcoin accumulation. We’ll be patient with market condition, but we remain proactive. Ongoing Bitcoin purchases could be funded by assurance of debt, equity or preferred as well as IoT business monetization and operating cash flow. We have the tools or option in place to execute the strategy. An ATM, which provides us with the option that when our share price is much higher than where it is today, we’ll be able to execute opportunistically on our Bitcoin accumulation strategy in an accretive manner.

We have also an ADS buyback program in place, which has been approved by the board. And given the current share price, we’ll execute on this as soon as we are able to. We have reduced our debt exposure, which affords us the option to consider other new instruments like preferred shares in the future. Returning to my earlier point about the large valuation discrepancy in our shares, I wanted to stress that our current net equivalent cash position that includes equivalent cash of Bitcoin net asset value minus debt is above $170,000,000 This is approximately $12 per outstanding ADS. You can see the deep discount our shares are trading at on this basis alone.

This ignores any IoT business value we are creating and expect to create in the future. It also ignores the leverage we can create with our Bitcoin treasury strategy. While Bitcoin treasury companies as a whole may be in a transition phase that has affected current equity valuations, we continue to be fully committed to the Bitcoin treasury strategy we have initiated and are exploring all opportunities to unlock shareholder value through our Bitcoin treasury alongside our IoT operations. Our goal remains to create long term value to our shareholders. As for our IoT business itself, it’s moving in the right direction.

Our pipeline remains healthy, representing about $550,000,000 in a potential three years product revenue across our four gs and RF product lines. In Q3, we won six new products, and I’m pleased to announce that around $300,000,000 of this pipeline are design win projects, a 20% increase versus our last reported figure. Some of the design win projects are in mass production phase currently generating revenue, and others are under development by our customers with revenue potential in 2026 and beyond. Our execution remains focused on increasing the design win pipeline, but more importantly, on helping our customers with projects not yet in production, finishing the development and certification of their products and turning them to revenue generating design wins. In Q3, three design win projects transitioned to production.

In Q4, we expect to add five more positioning us to enter 2026 with over 45% of our design win projects in production and generating revenue. This aligns with the target we set at the 2025 and represents a more than 2x improvement of this key business metric. We anticipate this positive trend to continue into the 2026, supporting our revenue growth in the 2026. Our design win projects span multiple verticals. Tracking, fleet management and smart metering remain the strongest verticals for us with good presence in security and e health and medical.

Looking at smart metering, we are now shipping product for three projects of Honeywell and two of Itron and should have two new metering customers ramping early twenty twenty six. In fleet management, Geotab is ramping and we will have another customer ramping in early twenty twenty six. We continue to have strong business with AsiaTel, a channel partner addressing auto tracking and other vertical applications. Now I will briefly review the third quarter business and discuss our fourth quarter outlook. Let me start by highlighting that Q3 was the first quarter without any remaining revenue, revenue recognition tailwind from the Qualcomm deal closed last year.

While this has an optical impact on the licensing and services revenue component, it does not affect cash flow. Q3 product revenue was impacted by minor delays as some customer projects shifted their ramp up scheduled to Q4. While this has postponed our expected Q3 revenue growth, we remain confident that the ramp will materialize in Q4 as planned. In addition, we faced some late production challenges with our OSAT partner and revenue fell short of our target due to substrate availability issue. The impact was around $1,000,000 in Q3.

Substrate lead times became extended last quarter due to industry demand from AI leaders. We mitigated this by working with suppliers and anticipating orders. However, our execution timing was right on the edge of the quarter end. This ended up delaying some of our shipments by a couple of weeks. However, this issue is now under control for our fourth quarter shipments.

Given our Q4 visibility, our current Q4 view is that product revenue will exceed $6,000,000 with around $1,000,000 revenue of services and IP license. We aim to finish the Q4 with revenue above $7,000,000 by adding the two components. On the product development front, we launched our four gs Cat one BIS worldwide SKU module and have made very good progress on our five gs IoT. In this regard, I’m pleased to announce that we have just taped out our five gs eRAD cap test chip as planned. This is a major milestone in our five gs IoT project.

This program will enable us to sample our third generation of IoT chips supporting five gs eRAD cap late twenty twenty six. This is an extremely advanced technology that we believe has significant value. In summary, our four gs IoT business will grow and generate positive cash flow in 2026, becoming a profitable business line for us with the potential to grow further in 2027 by around 50% year over year. This business is helping to fund our ongoing investment in five gs R and D, which can start generating product revenue in 2027 and licensing revenue in 2026. We expect the IP created with this five gs investment could result in strategic deals with significant near term value creation as we have successfully demonstrated in the past with four More generally, we have launched a new IP initiatives and announced a portfolio of IP that we are willing to license.

We have done a few licensing deals in the past, but here we are shifting from an opportunistic approach to a proactive go to market strategy, maximizing our customer reach and accelerating the monetization of our IP portfolio, all without additional investment. Currently, we have several opportunities under discussion and we hope to conclude a few of them in the coming quarters. We believe services and IP licensing should contribute high margin revenue in 2026. We further expect longer term product revenue strength based on current design wins and order backlog of four gs chips and module and radio transceivers. Considering the $300,000,000 product design win pipeline we currently have in hand and factoring that we will enter 2026 with 45% of the design win projects generating revenue, This could generate $45,000,000 average annual product revenue over the coming three years.

This doesn’t include the growing number of projects that are expected to enter into production in 2026, the new projects we are working on to win or IP licensing and services contribution. On the operating expense front, our goal is to limit cash burn in 2026 in order to reach breakeven in Q4. To support this, we are implementing a 20% cost reduction program across functions, while safeguarding core innovation. This approach provides downside protection and preserves flexibility to scale up if upside revenue opportunities materialize. I will now take a moment to discuss some of the IoT related strategic alternatives we are currently evaluating.

Since launching our Bitcoin treasury, we have been actively reassessing how best to position our IoT business to ensure shareholders benefit from its full value potential. Our board is currently evaluating a range of strategic alternatives we have. While several options being explored, I can share that we are in serious discussions regarding a few strategic partnership opportunities for our IoT business. The objective is to accelerate the path to breakeven, enhance the business overall value and strengthen its cash flow generating capability. I will now turn the call over to Deborah to review the third quarter twenty twenty five preliminary financial results in greater detail.

Deborah?

Deborah, CFO, Sequans Communications: Thank you, George, and good morning, everyone. I’ll cover our third quarter financial results and then speak more about our Bitcoin holdings. Total revenues in Q3 twenty twenty five were $4,300,000 a decrease of 47.3% compared to the 2025 as the last license revenues from Qualcomm finished in Q2 twenty twenty five. Gross margin was 40.9% compared to 64.4 in Q2, again reflecting much lower high margin license revenue in the mix in Q3. Operating expenses in Q3 twenty twenty five, excluding the unrealized loss on the mark to market of the Bitcoin Treasury asset were $14,000,000 stable compared with Q2 twenty twenty five.

Both quarters included a number of nonrecurring expenses related to various legal and advisory fees related to our strategic transactions. Operating expenses in Q3 included nearly $800,000 in noncash stock compensation expense and $1,600,000 in amortization and depreciation expense. As George mentioned, we are putting in place cost reduction measures to reduce cash operating expenses, meaning excluding stock comp and depreciation expense, to be below $10,000,000 per quarter in 2026. Operating loss was $20,400,000 in Q3 compared to an operating loss of $8,700,000 in the 2025. The operating loss in the 2025 included an $8,200,000 unrealized loss on impairment of the value of our Bitcoin asset, which is mark to market.

For the 2025, our net loss was $6,700,000 or $0.48 per diluted ADS compared to a net loss of $9,100,000 or a loss of $3.59 per diluted ADS in Q2 twenty twenty five. Net loss in the 2025 included a noncash $20,000,000,600,000 gain on the change in value of the embedded derivative related to the convertible debt issued in July and included net interest expense of $6,900,000 that was also primarily non cash and related to the IFRS accounting with the convertible debt issued in July. Our non IFRS loss in Q3 twenty twenty five was $11,000,000 compared to a non IFRS net loss of $8,100,000 in Q2 twenty twenty five. Cash and cash equivalents at 09/30/2025 totaled $13,400,000 compared to $41,600,000 at 06/30/2025. The September 30 balance does not include the $10,000,000 final payment from the 2024 Qualcomm transaction that was released from escrow in October 2025, giving us a pro form a ending cash of $23,400,000 At 09/30/2025, the company held 3,234 bitcoin with a market value of $365,600,000 all of which was pledged as security for the $189,000,000 of convertible debt issued in July.

Following the recently announced amendment of the debt agreement, $16.17 bitcoin are being released from the pledge, and the company has sold $9.70 bitcoin in order to reimburse half of the debt. The remaining $6.47 unsledged Bitcoin remain in our treasury that are able to that are available for the previously announced ADS repurchase program if needed. I’d also like to refer you to our Bitcoin dashboard on our website at sequins.com/bitcointreasury, where investors can find our Bitcoin related statistics in one location. We now have many tools in place to pursue our Bitcoin treasury strategy and strategic options for our IoT business. We will use these to maximize shareholder value based on our own specific circumstances.

And now I’ll turn the call back to George before we begin Q and A.

Georges Perron, CEO and Chairman, Sequans Communications: Thank you, Deborah. So to conclude this call before the Q and A, I would like to stress like the two points. On the Bitcoin, we continue to be committed to the Bitcoin treasury strategy we’ve launched. Given the current digital asset treasury market condition, we decided to adjust our treasury structure and redeem half of the debt in order to be in a better shape to execute on our Bitcoin treasury strategy. With this move, we have now a more appropriate debt to NAV ratio while still maintaining decent leverage.

Also put ourselves in a stronger position to execute on the ADS buyback program as well as other financial instruments. On the IoT business, our design win pipeline is growing well and we remain on track to have by end of this year, more than 45 of the projects of the customer projects moving to mass production and generating revenue. In parallel, we are taking all action needed to control our OpEx and limit cash burn with the target to reach breakeven in Q4 twenty twenty six. And finally, we are seriously considering a few strategic alternatives to ensure shareholders benefit from the full value potential of our IoT business. With that, let’s now begin the Q and A session.

Operator?

Jonathan, Conference Call Operator: Certainly. Our next question comes from our first question comes from the line of Scott Thurow from ROTH. Your question, please.

Scott Thurow, Analyst, ROTH: Hey. Good morning. Good afternoon. Thanks for taking the questions. Hey.

Deborah, maybe just to dive in quickly. In the third quarter, were there any licensing or service revenues a part of the $4,300,000 trying to understand if there was sequential uptick in the product revenues? Also, I just want to clarify the timing on the OpEx going below $10,000,000 And George, from a high level, kind of looking at where the net asset value of the company is relative to the current stock price, how aggressive will you be on the buyback? Have you got another 600 bitcoin available to pursue that strategy, given the stock is trading at $7 versus net asset value around $12 would seem like it’s pretty good arbitration move to do that. So how quickly and how aggressively do you plan to tackle that?

Georges Perron, CEO and Chairman, Sequans Communications: Yes. I mean, Scott, first of all, just to take your last point, as aggressive as needed and as as directional makes sense. Right? I mean, our Bitcoin value, the very the Bitcoin get acquired with a share at $14. So technically, if the share is at 7, will be making 50 percent gain by selling a bitcoin that you purchased at 14 and and you recover the price you paid for it at 7.

Right? I mean, which is your share. So we have all in place. Board resolution is there. We were not able to execute on it in this period because as you know, we were on the on the in the the window, I mean, we we were restricted and we could not act on this.

But in a I don’t know that in a one or two days will be will be free and we’ll be moving on this. And obviously, you know, considering depending where where the stock is, but it makes full sense for shareholder today to buy back the shares of the company if it’s trading low. And for the people staying with the company, we’ll get the value of the NAV we have there. So we are completely committed to be aggressive on this if needed.

Deborah, CFO, Sequans Communications: Scott, on the revenue side, we are about twothree product, onethree licensing and services in Q3. And in terms of the OpEx reduction, the this is being put in place now. We expect it will be mostly realized in Q1 and we’re looking at fully in place by Q2, but with an overall for the year being below $10,000,000 a quarter. That includes the new costs of managing the Bitcoin treasury.

Scott Thurow, Analyst, ROTH: Okay. Very helpful. And then, George, maybe to follow-up in terms of the pipeline building for the IoT business. It’s a lot of momentum in one quarter where you’re growing about 20% in terms of your design wins. I guess you’ll kind of enter 2026 at almost double digit revenues, Somewhere that 10,000,000 to $11,000,000 I guess is the run rate off of that 45% that go into production.

I think in the past, talked about what you might be exiting 2026. Is there a figure that you’re thinking about right now? Because it sounds like that gets you to breakeven, particularly given the OpEx reductions that you have ongoing. So we should see that by the ’26.

Georges Perron, CEO and Chairman, Sequans Communications: Scott and the business, the IoT business as you know is many, many projects and each project is not huge. So that makes if you want like at the beginning when you’re ramping, it’s a little bit slow and frustrating to some extent. But once the product are in shipment, our customer is shipping is there for seven years in average, like if you take meters, sometimes even more than this. So and give us very good visibility for the future. I’m very happy as we are exiting this year close to our range of 50%.

But this will continue because as you know, the design win project, I don’t qualify them like 100% secured, but we could have the risk on what we have a win in hand is very, very minimum, more than 90% based on the history of the project continue. I mean, really some small projects or small companies that you could have over the executional projects, some surprises, but we are dealing with tier one players that are there when you decide to launch a project they are in. It may take them longer than what we thought to be ready for production, but they get it there. So I believe 2026 will continue ramping and we should be because the pipeline will continue. I could not say what we have in hand today maybe close to 90% plus will be in a production.

But obviously in the meantime, we’ll be adding new projects. So when we exit the pipeline should be more than 300 exit 26 And obviously, the percentage will be less than 90. But this is what will be funding the growth we’ll have in 2027, which I predict to be at minimum 40% to 50% year over year. Thanks to this.

David Hanover, Investor Relations, Sequans Communications: Got it.

Deborah, CFO, Sequans Communications: And Scott, at some point on Q1, we do tend to have a little bit of seasonality in the

Georges Perron, CEO and Chairman, Sequans Communications: I mean, that is the average, your number, you’re right. I mean, just to talk about the digital. I’m giving you the $45,000,000 three years average, right? I mean, all this is lumpy. You know, you you imagine the shape.

There was a new project starting today. It’s not going to yield that full full revenue in the first quarter. It takes, like, two quarters or three quarters to go to the full revenue. So there is a ramp up phase obviously with every project adding up.

Scott Thurow, Analyst, ROTH: And a couple of follow ups if I could then. Congrats on getting the tape out on the REDCap front. I know that’s a big milestone for the company. I think you’ve talked about licensing opportunities for REDCap. I’m wondering if you could elaborate on that in terms of what might be in the pipeline, kind of frame it in terms of size and opportunities.

And Iris has been ramping up as well, I think, in terms of the potential opportunities. I’m wondering where that fits into the overall design win pipeline that you’ve talked about, the magnitude of those opportunities, particularly ramping into 2026.

Georges Perron, CEO and Chairman, Sequans Communications: Yeah. I mean, obviously, in IPL licensing, we have some piece of this which is established even in our revenue next year. We have already in the backlog revenue of royalty that we are collecting from a couple of customers to whom we did licensing with them and we’ll have in other words, all design win with licensing. And now we’re collecting royalty in 2026. We collect even with one a little bit this year as well.

But since we launched this IP strategy, we realized like at least we had more than dozen of leads talking with us. That doesn’t mean that they need the full REDCap or the full e REDCap or REDCap solution from us. As you know, we have very advanced radio transceiver technology. We have layer two, layer three protocol that no one have it. And obviously, we have a lot of IP in the modem and as well we have the full solution.

So you could have customers whether looking for full solution of modem, mainly to adapt to move from a cellular to something else, if you want like to satellite or defense application, other radio environment. And some other they want just only a piece of the technology what we have. So we’re talking about licensing these that could be, I would say 3 to $5,000,000 license. I’m not talking about royalty like upfront. Up to these, they could be equal to $1,520,000,000 dollars.

And all those under discussion and we have really nice number in discussion. And for sure next year we’ll have something converging and helping to feed our IP licensing revenue next year.

Scott Thurow, Analyst, ROTH: Got you. And lastly, if I could, George, just to follow-up on the strategic comments. Could you frame that a little bit more? Are you talking about more partnerships? Are you talking about potential outright sale of of the IoT business at the current time?

Thanks.

Georges Perron, CEO and Chairman, Sequans Communications: Yeah. I mean, Scott, I I don’t want to comment much on this. You know, obviously, the the question take the problem like this. Like, okay. The the company has a serious IoT business, which is extremely valuable in my opinion.

It has as well a nice Bitcoin holding, which is extremely valuable as well. And from there, we’re moving as a company to hopefully succeed on both front, building more Bitcoin and building the treasury and buying more, accumulating more Bitcoin. And on the other side, scale the revenue and the IP potential of the IoT. For the time being, they are not conflicting to each other. They are manageable.

But if you project down the road, could say maybe for shareholder, you can give more value by separating the tool, by doing something different, I would say that. And obviously, this take the factor as well discussing with other partners on the business front to to do, you know, some strategic partnership and maybe more together. I cannot say more, Scott. I mean, allow me, but we have serious discussion there. And hopefully, when things will be close to sign or signed, we’ll be able to announce it to market.

Scott Thurow, Analyst, ROTH: Thanks so much.

Jonathan, Conference Call Operator: Thank you. And our next question comes from the line of Mike Grondahl from Northland. Your question please.

Mike Grondahl, Analyst, Northland: Hey, thank you, George and Deborah. George, talk a little bit about your confidence in $7,000,000 of revenue in 4Q and this $45,000,000 kind of annual run rate you’re striving to?

Georges Perron, CEO and Chairman, Sequans Communications: Yeah. Hi, Mike. Obviously, for Q4, I mean, you never say I’m 100 sure, right? I mean, we’re giving a number that we believe it’s in the backlog if you want and secure. Out of, I would say, extraordinary accident, we were very confident about.

If we talk about the annual revenue, I want just again to stress the math I did is I took 45% of the $300,000,000, which will be in production divided by three, give you 45 over three years. So this is the average. Obviously, this doesn’t mean necessarily that it’s flat first year, flat second year, flat second, third year. It’s the reverse. It will start lower and it go up over three years because you have the ramp of those products.

And obviously, it’s it’s quite I’m I’m quite comfortable with the number even if the projection here you’re talking about, you know, longer program. You you need to know that in our design win today, when I look, for example, to product shipping, I spoke, for example, about Honeywell. I can name even smaller guy like we think, like Coyote, like customer like this, that they are smaller but very steady because they ship since more than one year. So we have history about their ramp. We know that they are how much they do and we have extreme confidence in their future projection, forecast and so on.

Obviously, we can we take our, I would say optimization there. We maybe cut 10% for the risk things, but we are very confident. When you have a new project coming in, even a tier one customer saying, okay, now my product is shipping and I’m planning to ship like per year, let’s say to do half a million unit. Obviously, you are going to compute the RAM first year maybe 200, the second three fifty and then we’ll ramp up to 500. There is still some risk not factored in, which is related to the fact that this customer we have, if you want experience about his previous shipment, previous forecast and so on.

So in other words, in this number, already more than half of those 45% are already in production. I am extremely confident about them. The other half are ramping now like Q3 and Q4. There will be a little bit of risk, but measurable risk. That’s why we are representing this one.

Mike Grondahl, Analyst, Northland: Got it. In the cost reduction efforts, have you started those, or do those do those start later this year?

Georges Perron, CEO and Chairman, Sequans Communications: We we started many things. And and, you know, cost reduction, we have a lot of stuff. We have even I can tell you, for example, our offices, we shave like we had the chance to renegotiate the pieces of the OpEx third party and so on. And obviously, some reduction here and there when it’s needed. We started a little bit, and some of it, not everything is implemented, but some is defined.

As I’m speaking, I know what you are going to do if you want in q four and q one. And all this is set without impacting if you want our innovation and investment into the five gs R and D. A lot of this as well, like our four gs, if you want product line is becoming fully, I will say mature because we were still working on some development during the year we finish it. So we have even some reduction of effort there. And more general, I would say on the G and A and so on controlling this one.

Mike Grondahl, Analyst, Northland: Got it. Got it. And then have you disclosed what price you got per Bitcoin for the 970 you sold? We we didn’t. It will

Georges Perron, CEO and Chairman, Sequans Communications: be on our it will it will be showing up on our website, but I can give it to you. It will be $1.00 8.6 thousands. $100.108.0.6 thousands. Okay. Unfortunately, we didn’t have the best period to to to sell.

Started selling at 115 and ended by selling at $1.00 6.

Mike Grondahl, Analyst, Northland: Got it. Okay. Hey. Thank you, and good luck.

Georges Perron, CEO and Chairman, Sequans Communications: Thank you, Thank

Jonathan, Conference Call Operator: you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your Our next question comes from the line of Fedor Chabalin from B. Riley Securities. Your question please.

Fedor Chabalin, Analyst, B. Riley Securities: You very much operator and good morning, good afternoon everyone. Georges and Deborah, I completely understand the rationale behind the bitcoin sale. You mentioned that this transaction enables company to pursue wider set of strategic initiatives to develop and grow the treasury. So could you provide more details on what additional initiatives you’re considering beyond the ATM program and share buybacks? And any color on your strategic priorities here would be helpful.

Thank you.

Georges Perron, CEO and Chairman, Sequans Communications: You. Hi, Feder. Thanks for the question. I mean, and again, I want to stress one point. The company, when one of the issues, if you want, our destruction of the debt, there is it was not there is even some people I don’t know if people were because the collateral was fixed.

We didn’t have to readjust the price of the Bitcoin. It was just one of the collateral is all the Bitcoin that we have and they are sitting there. We cannot do anything with them. We cannot do anything with your Bitcoin, obviously, that the original plan was like the conversion the debt will convert at least over the first six months and so. And then by definition, some of those Bitcoin will be free and from there we can use them.

So we took this initiative really not under the pressure because we have interest rate to pay or because we are afraid about having the Bitcoin at $100 and have to face any issue. The company will not face any issue even if we stay on this Bitcoin longer. However, the company was stuck. In other words, I could not do anything. I cannot buy Bitcoin.

I cannot generate yield on the Bitcoin. I cannot be aggressive on buyback because you can do a buyback, but at the end of the day, I have cash, but this cash needs as well to serve the operational business and the GNA even to manage the treasury. From this situation, we felt like even if it’s not, I will say we maybe we are the first treasury doing this. And we took the decision to act to be proactive and maybe some people they don’t like it because no one sells Bitcoin in principle in the treasury. I mean, is our aim was as well, but we felt it makes absolute sense now to change the ratio of debt.

This often obviously preferred other structure of debt, which is today, I mean, it’s not an urgent topic for the company. But now they are possible because if your debt is around 30%, it’s easy to have 10% preferred next to it. And if you reduce the debt further, you can do more. So this is one option. If we have free Bitcoin, those can be generating yield depending on the risk you want to take there.

But if you want to take very low risk, you can generate like 4% yield and this will be nice cash that you can use to buy Bitcoin or to fund the G and A of serving the treasury. And obviously the buyback that gives us that boost the program because we don’t need to sacrifice anything on the operation. If really the shares stays low, the rationale means sell Bitcoin and buy shares and support the shareholders staying with us. So that’s the whole logic around it. This is really all the topic that we have.

Now I know that there are other topic maybe you’re raising for this, which is like consolidating and something with other treasury. I know that when happened in the market today and everybody saw this, I don’t believe there is urgency on this. For me, honestly, there is not a clear idea currently what’s the issue of the treasury strategy in general. Why all this is trading below on NAV, which is not logical at the level where it is. And this is not for us, for all our peers.

So we’re trying to unlock it from where we are by taking it, put ourselves in a position where we are much stronger. And from there, we’ll see how things will develop in the coming six months or

Fedor Chabalin, Analyst, B. Riley Securities: Okay. Thank you, George. This is helpful. And you you already partially answered my follow-up question on debt to NAV ratio. But I just wanna understand what will be different in the treasury approach going forward.

I heard you plan to issue preferred, but if you can just throw some time line on this would be helpful. Thank you.

Georges Perron, CEO and Chairman, Sequans Communications: Yeah. I mean, Peter, obviously, I mean, the first priority now is really the buyback program. This is what I have on my table if you want to execute on this and see how things will develop there. And obviously, the second one will be the preferred and the yield on the Bitcoin. These are the three options.

No no timeline. Honestly, the option is there, but I don’t want to give more timeline when we’ll do something like this because, you know, depends on negotiation as well.

Fedor Chabalin, Analyst, B. Riley Securities: Thank you very much. This is helpful. Georges and team, continue best of luck.

David Hanover, Investor Relations, Sequans Communications: Thank you. Thank you.

Jonathan, Conference Call Operator: Thank you. This does conclude the question and answer session of today’s program. I’d like to hand the program back to George Carran for any further remarks.

Georges Perron, CEO and Chairman, Sequans Communications: Thank you, Jonathan, for helping us with this. Thank you, everybody, staying on the call and follow your questions, and looking forward to see you in the next opportunity. Thank you very much.

Jonathan, Conference Call Operator: Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.