Q4 2024 Sequans Communications S.A. Earnings Call
Yeah.
Speaker Change: Excuse me, ladies and gentlemen, this is the operator today's call branches are scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
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Speaker Change: Good morning, ladies and gentlemen, and welcome to the sequence communications fourth quarter and year end 'twenty 'twenty four financial results conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this call Uruguay.
Speaker Change: These fresh start zero for the operator.
Speaker Change: This call is being recorded on Tuesday February 11, 2025, I would now like to turn the conference over to Kim Rogers Investor Relations at peak once please go ahead.
Kim Rogers: Thank you operator.
Speaker Change: Thank you to everyone participating in today's call.
Kim Rogers: Joining me on the call today from sequence communications is Georgetown.
Georgetown: Chairman and C E O.
Deborah Choate: And Deborah Choate yeah.
Speaker Change: So before turning the call over short I would like to remind all participants of the following important information on behalf of sequence.
Speaker Change: First big ones issued an earnings press release. This morning, you can find a copy of the release on the company's website at www quantum dot com under the newsroom section.
Speaker Change: 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.
Speaker Change: Regarding our business strategy cost optimization plans strategic options.
Speaker Change: The ability to enter into new strategic agreements expectations for massive Iot 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 20 <unk>.
And a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 1934 as amended.
Speaker Change: 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.
Speaker Change: And uncertainties, you should not rely on our 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 or information on factors that could affect our business and financial results are included in our public filings made with the security and exchange.
George: Commission and now I'd like to hand, the call over to Georgetown. Please go ahead George.
George: Thank you Kim.
George: Good morning, everyone.
George: I would like to thank you all for joining us today.
George: I'm excited to review all of our remarkable transformation in 'twenty 'twenty four.
George: The year that demonstrated our resilience.
George: Showcase the strength of our cellular Iot intellectual property and a product portfolio.
George: And to position us for sustained growth.
George: The key milestone was the successful completion of the $200 million of Qualcomm DS.
George: This transaction ensures the future a whole lot for your business.
George: And advancement of a whole lot of five G that company that kept solutions.
George: While also significantly improving our financial position.
George: And those yards by the momentous event.
George: We double product revenue in the fourth quarter compared to the previous quarter.
George: We delivered $11 million in total revenue.
George: Representing a nine nine.
George: 9% sequential increase.
George: In line with our guidance.
George: Notably.
George: Product revenue in the fourth quarter increased to $4 $7 million from $2 4 million dollar in the period in the prior quarter.
George: And $4 million in the fourth quarter of 'twenty targets.
George: Also we are at a hard highly encouraged.
George: The positive response from our customers and partners following that quite closely.
George: The strengthening of our financial position.
George: Has it been a catalyst.
George: Securing our design win pipeline.
George: New customer acquisition.
George: Any new project wins.
George: The deal also validates our technology leadership.
George: Reinforces the superiority of whole life products.
George: Which are fully optimized for Iot application.
But the power efficiency radio performance.
George: Costs are the critical factors.
I'm gratified to conclude it with the board with the strong fundamentals.
George: That position sic was on their robust trajectory towards the growth.
And sustainable long term success.
George: Switching gears to discuss the factors, we believe will drive product revenue growth over the next two years.
Let me walk you through.
George: The two main drivers.
George: The first is our design win pipeline and how the corresponding project wins will move into mass production in 2025, and one Gen six Kim.
George: Converting into monarch, two and Calliope two product revenues.
George: The second is.
George: The development of a lot of design in pipeline with new opportunities and new customers that we are working on to secure and at all of our design win pipeline.
George: Despite the challenging years, we have maintained most of our existing design win projects.
George: Customers.
George: Counting three years, all future revenue for each well.
George: Once they begin shipment.
George: Our design win pipeline represents at all $250 million.
George: While some of these projects are currently in shipment mode.
George: The majority are still in the design phase and are expected to launch within the next two years.
George: Our design wins spans various ICT segment.
George: Including smart metering telematics.
Speaker Change: Security he has and industrial applications.
Speaker Change: Smart metering is a very successful market segments for us.
Speaker Change: Accounts for over 50% of our current pipeline.
Speaker Change: The time to revenue for most of these projects was delayed by the invented overhang there.
Speaker Change: The industry has faced in the last two years.
Speaker Change: But customers have favored the shipment of legacy products over the launch of new ones.
Speaker Change: Additionally, the transformation of the design win pipeline revenue.
It was impacted by a large percentage and metering what product qualification requirements are complex.
Speaker Change: Longing the types of products.
Speaker Change: We are confident that our customers remain committed to sequence.
Speaker Change: And that the launch of more projects in the second half of 'twenty five.
Speaker Change: And 26 will support our revenue growth over the next two years.
Speaker Change: Catherine This calliope two is scheduled to start shipping this year and will be a key driver of growth later this calendar year.
Speaker Change: Do you think to the increasing revenue from LTM what are too.
Speaker Change: Our primary product.
Speaker Change: Yeah.
Speaker Change: Note that the long term nature of these Iot projects with.
Speaker Change: With lifecycle spanning up to eight years.
Speaker Change: Ensures sustained revenue once they enter production and it will continue driving our revenue growth well beyond 2026.
Speaker Change: While working on turning design wins into revenue.
Speaker Change: Our next focus is on new business opportunities and adding new customers to grow our design win pipeline.
Speaker Change: This will add another driver of revenue growth Influencer 96 N B L.
Speaker Change: We have strengthened our sales team.
Speaker Change: <unk> focused our sales strategy on increasing market share in high velocity the market segments.
Speaker Change: New project wins can generate revenue within two years typically faster than metering with.
Speaker Change: Following our highly productive meetings at CES 2025.
Speaker Change: <unk> seen significant acceleration in new customer engagements.
Speaker Change: This marks a major shift from last year when.
Speaker Change: When our financial troubles limited, our ability to win new customers and projects.
Speaker Change: I'm pleased to say that our design in pipeline.
Speaker Change: Which includes advanced customer engagements, we are working to secure and move to design wins.
Speaker Change: Now exceeds $200 million and a projected three years revenue sorry.
Speaker Change: Starting from the lunch date of each project.
Speaker Change: Notably one third of this pipeline is spending award decisions expected in the first quarter.
Speaker Change: With this strong start to the year.
We have increased conviction that our $250 million of design win pipeline will also grow this year.
Speaker Change: Turning to sequence competitive advantages in the eye.
Speaker Change: Mark.
Speaker Change: Our position as a European semiconductor company is a key differentiator.
Speaker Change: With increasingly restriction on Chinese manufacturer.
Speaker Change: The number of chips and module competitors outside China is shrinking.
Speaker Change: We expect this to trend.
Speaker Change: We expect this trend to intensify in the slides.
Speaker Change: Positioning <unk> as a key beneficiary and evolving market landscape.
Speaker Change: Additionally.
Speaker Change: OEM module makers are facing increasing pressure to consolidate.
Speaker Change: Or exit the market such as the recent announcements from your blocks.
Speaker Change: Validating our business model with sales of buffs chips and modules.
Speaker Change: This enables sequels to offer differentiated customer support in addition to.
Speaker Change: Our new innovative product portfolio now what are recognized as best in class.
Speaker Change: He also has a comprehensive product portfolio that spans the full range of Iot applications.
Speaker Change: So on the high speed cat four for real time video.
Speaker Change: <unk> got one calliope two for security and telematics.
Speaker Change: And down to try efficient LTM monarch tool for tracking metering and other industrial applications.
Speaker Change: This robust portfolio ensures we can fully support customer demand on existing <unk> networks.
Speaker Change: Looking ahead as the industry transitions to <unk>.
Speaker Change: Our customers will see cadet to captain ear at gap.
Speaker Change: Two emerging <unk> modem categories set.
Speaker Change: Set to replace or does he cat four cat one with an L. P M.
Speaker Change: <unk> was at the forefront of this evolution.
Speaker Change: Or five G IP expertise.
Speaker Change: Combined with the addition of an expanded wireless IP portfolio.
Speaker Change: And top engineering talent through our recent acquisition of ACB in Zurich.
Speaker Change: Positions us strongly to execute on our Red Kap and <unk> product roadmap for 2026.
Speaker Change: This strategic advantage enables us to maintain our technology leadership and competitive edge.
Speaker Change: As we introduce new generation of ships within enhancement with enhanced <unk> sport.
Speaker Change: Extended feature sets and significant advancements and power efficiency radio performance and cost optimization.
Speaker Change: In addition to advancing our cellular Iot business.
Speaker Change: We are actively pursuing.
Speaker Change: Strategic expansion into new vertical markets.
Speaker Change: Our extensive IP and the product portfolio.
Speaker Change: Enables us to offer our advanced video solutions.
Speaker Change: For satellite communication public safety and defense.
Speaker Change: We have already established business leads in these sectors and are focused on further developing these opportunities.
Speaker Change: Drive broader product adoption and value added services services.
Speaker Change: Similarly, we expect to.
Speaker Change: Expand our addressable market through licensing agreements.
Speaker Change: Following the successful model, we implemented in China.
Speaker Change: We are confident in our ability to deliver tangible results from these new initiatives over the next 12 to 18 months.
Speaker Change: Our financial strategy remains focused.
Speaker Change: On a achieving 995 S operating income breakeven by 2026.
Speaker Change: Driven largely by the acceleration of monarch, two and Calliope two shipments.
Speaker Change: Which will fuel product revenue growth in 2025.
Speaker Change: While not all design wind projects are currently in production.
Speaker Change: Our $250 million design win pipeline.
Speaker Change: <unk> more than 40 years product Ravi.
Speaker Change: Equating to an annual average of approximately <unk>.
Speaker Change: $60 million from 'twenty to 'twenty five to 2028.
Speaker Change: As these projects transition into production in 'twenty, five and six we expect annual revenue contributions will progress their eyes.
Speaker Change: Progressive Lear is surpassing this average in the later half of the period.
Speaker Change: Additionally, in 2026, we expect to see revenue contributions from new design wins.
Speaker Change: Sure this year's sourced from our current two.
Speaker Change: 300 million that our pipeline of design in projects.
Speaker Change: Lost in addition to product revenue, we anticipate revenue generation from licensing and services.
Partnerships and strategic initiatives, we are conducting.
These factors.
Speaker Change: Combined with financial discipline will ensure we remain on track to achieve our financial goals in 2026.
Speaker Change: In summary.
Speaker Change: Because it's built on a solid foundation.
Speaker Change: Our sustained growth.
Speaker Change: With a clear path to future profitability.
Speaker Change: Driven by it all of US design win pipeline and the new customer engagements.
Speaker Change: Our advanced product roadmap.
Speaker Change: Reinforces our technology leadership.
Speaker Change: In our strategic initiatives.
Speaker Change: So develop vertical markets and expand our licensing business position us well for the future.
Speaker Change: As we continue to innovate and expand we remain committed to delivering long term value for our stakeholders, while shaping the future of <unk>.
Deborah Choate: I'll turn the call over to Deborah to review, the fourth quarter and annual 2024 preliminary financial results. Indeed.
Deborah Choate: Thank you Ken good morning, everyone.
Deborah Choate: Before we get started please note that the financial results released today are preliminary or final results are subject to finalization of article future procedures in preparation with our disclosures to be filed in our annual report on form 20-F in April.
Deborah Choate: Revenues for the full year 2024 increased 9%.
Deborah Choate: $33 6 million in 2023 to $36 8 million.
Deborah Choate: Gross margin for 2024 remains strong at 75, 5% versus 71, 8% in 2023, primarily due to a product mix weighted more towards chipset cells and modules compared to 2023.
Deborah Choate: Product gross margin for the year was 35, 1% compared to six 2% in 2023.
Deborah Choate: Over time, we expect product gross margins to be in the mid forty's as we transition to more module sales ticket sales.
Deborah Choate: Okay.
Deborah Choate: In addition.
Turning to lowering our operating expenses, we benefited from the $152 9 million dollar gain on the Qualcomm transaction in 2024, which was the main driver behind our achieving in <unk> operating profit of $69 $5 million, that's kind of an operating loss of $29 8 million.
Deborah Choate: For the full year 2023.
Deborah Choate: On a non I Srs basis.
Deborah Choate: It was $77 $5 million in 2024 or.
Deborah Choate: Or $2 73 per diluted EPS.
Deborah Choate: Tagged with a non <unk> net loss of $30 6 million or $1.36 loss per diluted ads in 2023.
Deborah Choate: Turning to our fourth quarter results revenues for the fourth quarter of 2024 increased 130% to $11 million up from $4 $8 million in the fourth quarter of 2023.
Deborah Choate: And increased sequentially by 9%.
Deborah Choate: Product revenue reached $4 $7 million in the quarter and accounted for 43% of total revenues compared to 83% in the fourth quarter of 2023 and 22% in the prior quarter.
Deborah Choate: Product revenue doubled sequentially and increased 19% from the year ago period.
Deborah Choate: Licensing and other revenue was $6 $2 million, an increase compared to $880000 in the prior year quarter.
Deborah Choate: The 19% decline compared to $7 7 million in the third quarter of 2024.
Deborah Choate: This quarter, we recognized $5 $5 million versus $6 $7 million in revenue in Q3, some partial deliveries of IP under its five key broadband license to Qualcomm as part of the overall transaction.
Deborah Choate: We expect to nearly $8 million remaining in licensing revenue under this agreement to be recognized over the course of 2025.
Deborah Choate: Gross margin in the fourth quarter at 2024 was 68, 1% compared to 82, 5% in Q3, 2024, which reflected the higher product revenue contribution in the quarter.
Deborah Choate: Product gross margin was 37, 6% in Q4.
Deborah Choate: It was 36, 9% in Q3.
Deborah Choate: Reflecting a higher portion of chip sales offset partially by the inventory provisions for two products approaching end of life.
Deborah Choate: <unk> operating loss was $5 $3 million in the quarter compared to operating profit of $87 1 million in Q3, 2024, and compared to a loss of $12 6 million in the fourth quarter of 2023.
Deborah Choate: As a reminder, the third quarter 2024 operating profit was due to the net gain on the sale of the swanky asset adult to Qualcomm.
Deborah Choate: $152 $9 million.
Deborah Choate: Our estimation of the value of the assets sold is $175 $4 million. The gross gain was reduced by the net book value of $18 $5 million for the R&D capitalized for the monarch, two and Calliope two platforms.
Deborah Choate: By deal related fees and expenses.
Deborah Choate: We recorded net interest income in Q4 compared to interest expense in prior quarters due to our investment of excess cash in the Qualcomm deal after the repayment of omnicare debt and accrued interest in October.
Deborah Choate: On a non highest risk basis, our net loss for Q4 of 2024 with $2 1 million or eight loss per diluted ads.
Deborah Choate: Parents to an 85 million profit or 2.91, I'm, sorry, $2 91, <unk> profit per diluted EPS in the prior quarter.
Deborah Choate: Non <unk> net loss of $13 $7 million or 56 cents loss per diluted ads in the fourth quarter of 2023.
Deborah Choate: Loss per a D. S. In prior periods have been restated to reflect the ratio change.
Deborah Choate: Every night 2024.
Deborah Choate: Cash and short term deposits totaled $52 $1 million at the end of Q4 compared to $173 6 million at the end of Q3.
Deborah Choate: Subsequent to the end of the third quarter, we repaid approximately $85 million matured debt and accrued interest. We also paid down a good supplier accounts fees and costs related to the Qualcomm transaction and an initial payment related to the acquisition of ACP.
Deborah Choate: Turning to the outlook for the first quarter of 2025, we expect total revenue to be in the range of $7 million to $8 million with product revenue contributing about 50%, reflecting Q1 seasonality.
Note that as of the end of December 2024, there's close to $8 million of licensing revenue related to the Qualcomm deal that will be recognized as we make final deliveries of IP technology blocks.
Deborah Choate: The portion that will be recognized in Q1 2025 is expected to be lower than the $5 5 million recognized in Q4.
Deborah Choate: In recognition of the final question will depend on the timing of the delivery of the last IP components.
Deborah Choate: We are implementing actions to reduce our net cash operating expenses to be below $10 million per quarter on average in 2025.
Deborah Choate: Our net cash operating expenses, excluding non cash expenses, such as depreciation amortization and equity compensation expense.
Deborah Choate: And include cash receipts from R&D tax credits and government funded R&D programs.
Deborah Choate: The cost reduction actions are expected to be implemented over the course of the first part of the year in.
Deborah Choate: In addition, we are we are expecting to receive funding from government R&D financing around $7 million in 2025.
Deborah Choate: Turning now to some housekeeping items at the conclusion of this call. We will post a written version of our formal remarks in the Investor Relations section of our website under webcast and presentations page. The same location, where you will find the audio replay.
Deborah Choate: He clients will intend to attend the 37th annual Roth Conference, which is to be held in Laguna Beach, California, Georgia, and I will host one on ones in a fireside chat without Raj analyst Scott Searle on Tuesday March 18th please contact your watch representative to register.
Deborah Choate: For more information.
Deborah Choate: And lastly, we expect to file our annual report on form 20-F by the end of April which is the deadline for foreign filers, we will take advantage of the audit procedures around this to also filed its form S. Eight to register.
Deborah Choate: Equity players and to file a shelf registration statement on form F Street in the past, we've always kept the shelf active whether we needed it or not but the last one expired in November 2023, and we have not had the opportunity to renew like this for now.
Deborah Choate: And now I'll turn the call back to George Thank.
George Thank: Thank you Debra.
George Thank: Operator, we are ready to open the call for Q&A. Please.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session to ask a question you May press star followed by the number one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing any keys did withdraw. Your question you May Press Star two once again, please press star.
George Thank: Harlan to ask a question.
Speaker Change: And your first question comes from the line of Scott Searle with Roth Capital Partners. Please go ahead.
Scott Searle: Hey, good morning, good afternoon, thanks for taking the questions nice to see the design activity is starting to Reaccelerate.
Speaker Change: Hey, George maybe you could just dive in on the $250 million of preexisting wins I thought I heard you say $50 million to $60 million of that should start to be the annualized number as we get out of the 26 and beyond just wanted to just wanted to clarify that and then in terms of the ramping pipeline leading up to see.
Speaker Change: Yes, and post CES of 200 million plus can you give us an idea in terms of some of the applications that you're starting to see that inbound interest on it sounds like they are faster turn design cycles. So maybe if you could talk a little bit about.
Speaker Change: Some of the applications some of the design cycles.
Speaker Change: As well as the technology implementations right now is it is it mostly cat one business are you starting to have those red kap discussions.
Scott Searle: Hi, Scott Thanks, Thanks for the questions.
Speaker Change: Starting in on the 250 is your understanding is right I mean.
Speaker Change: Talking about because you know the pipeline of $202 million as we decided to present three years revenue for each projects from the launch date as all of them are not in production. So we cannot talk about $302 million to do over three years and the reality is more than four years. If you will if you look to the detail of the project and I mentioned that more than 50.
Speaker Change: Percent of this is coming from metering and those are.
Speaker Change: Projects that they tend to have quite a long time to revenue I would say.
Speaker Change: So as such if you divide trying to victory over 40 years 40 years, plus we're talking about an average of 60, which obviously received in the second half of this period of four years, which means the.
Speaker Change: Our our planning you know and again I'm, giving those guidance to help investors understanding how the company and why you are confident about our financial Gulfport fixed because essentially the design win in hand, which is very solid and customer committed then we sold the ups and downs of sequels, we are on it and they are real.
Speaker Change: Particularly they took longer than expected for many many reasons that I explained, but that happening and once they turned to production there will be there for many many years and on this basis. If you compute all this you would see like the company has in hand.
Speaker Change: Over $60 million over four years, obviously, we're not there today, we'll be approaching.
Speaker Change: Fortunately in 2026, and really exceeded the Alto <unk> six that's what I was saying and obviously this helps one one important let's say for the breakeven points. The other one is the one you had mentioned <unk> in the last two year I could say almost our design in pipeline seriously I could not talk about.
Speaker Change: Schuh tens of million dollar or was some customers still fighting go on to Wyndham thinks.
Speaker Change: Things have changed extremely wild and I'm extremely pleased by the reception of the customer to the Saudi of sequels post Qualcomm. These they understood. They got it they saw the or the like.
Speaker Change: The competitive landscape, what's happening and they saw the value of the technology of <unk> and the value of the offer of CCAR is a customer support this attractive when the customer and in almost every couple of months, we are talking about $200 million pipeline many of them.
Speaker Change: Like almost one third of them will be decided soon so maybe maybe in six months will be to we'll be giving more clarity on what we have there, but indeed the point you had mentioned you know we had a very big win in metering and metering because it's not like we're stopping we keep working on this we want to win more projects, but there are like time to revenue of those projects could be even.
Speaker Change: 40 years.
Speaker Change: While many other area you know when you go for example to telematics to security to industrial some industrial applications. They tend to be two years will be okay. The timeline I mean, sometimes it could be 18 months to two years. So these are the application we are seeing and we're seeing a lot of traction around our cat one business product.
Speaker Change: As you know this is a kind of unique chip outside of China, because no one has invested in <unk>.
Speaker Change: And we have almost no competition other than.
Speaker Change: Qualcomm, who will get the technology in hand, then obviously in the future it will be competing with us with the same product, but that he says we are speaking today, everyone understand that's only sequence hesitant this attraction attracting a lot of customers.
Speaker Change: And part of the Euro.
Speaker Change: The rest of the story is really customer want to hear this for the future. So it's not like you need it now it's not we need this to sell and make revenue, but we need this really.
Speaker Change: To support our customer transitioning towards the future.
Speaker Change: And Thats why we are investing in digital to be ready in 2026th to bring an evolution from catlin basically get outcome.
Speaker Change: Those customers.
Speaker Change: Thanks, that's very helpful and George if I could follow up on your comments, both on China, and new blocks I'm wondering how many of those conversations are a direct result of the geopolitical environment with China and then as it relates to you blocks is the opportunity there for you to pick up those design wins going forward from a module.
Speaker Change: Active or are you looking to attack it from a couple of different angles with your existing module partners.
No I mean, it's got definitely you know, it's always hard to say well you know why are your customers coming to but but the dynamic at all China.
Speaker Change: And that make up all in all <unk>, So I call. It like the limited number of OEM or let's say, even the sustainable business model of those guys, whether they have stuck a little bit between the chip price and the EMS and the value that they can offer to this this positioning sequenced really in a unique position and that's what I understood.
Speaker Change: They need to play with sequel, I still have a real.
Speaker Change: That was putting strategy, if I have to call it like this or or at least an angle of innovation and flexibility hopefully without providing yeah definitely on the deals we're talking like the out a new customer and we didn't know those guys, but the tension around it and the position of sequels from a shortlist and so on obviously is influenced.
Speaker Change: By what's happening at all or helping us so I don't want to cry victory before getting them in design win but we feel very good about this and this is helping us.
Speaker Change: Great and maybe lastly, if I could licensing.
Speaker Change: It sounds like there are discussions cropping up on that front again and not to get too far ahead of any culmination of new relationships, but redcat puts you guys in a very unique position going forward versus the competitive landscape, how we're licensing deals progressing on that front.
Speaker Change: How is red cap doing in general I think it's very important in terms of the product and differentiation roadmap for you guys, but it sounds like customers are responding to that and lastly.
Speaker Change: From a cash flow perspective, it sounds like you guys are tightening up a little bit just just wanted to get your thoughts in terms of you know our cash burn until breakeven in 'twenty six.
Speaker Change: Okay.
Speaker Change: I mean, obviously you know this is a very.
Speaker Change: A very important element for us and I'm I'm talking even beyond licensing you know we will develop this small realized as soon as we have.
Speaker Change: I will say it will be in a position to talk about it but we're attacking we did very good deals in the past on vertical in licensing and we are really learning from our lesson to make it much more sustainable and stable. There. So definitely we are progressing on this call.
Speaker Change: And we'll have more to say to the market. This year about the results hopefully we'll be able to achieve that.
Speaker Change: It helps obviously.
Speaker Change: Only the cash burn, but help us as I said, we have markets that we do know how to address it or segment market doesn't know how to address it today.
Speaker Change: Other than through partnerships and we have technology that can go to to a market, which is not the cellular market where customers are happy to pay customization of software at all of it and buy the product just because it's not only the licensing by chips and modules at high ASP at a higher margin. So this is something definitely.
Speaker Change: We want to develop to create like a second leg for the company that obviously will help.
Speaker Change: Our.
Speaker Change: Breakeven points. If you want are going forward and the growth of the company down the road and obviously the fact that we have a red kap.
Speaker Change: Just keep in mind that all our investment in <unk> that you have done in the past five years your broadband within through this away I mean, we have this IP and we own it and this is really our red caps, but also you know what the acquisition of ACP, helping us to accelerate mainly the RF.
Speaker Change: Investment.
Speaker Change: IP, but other IP as well to bring to you that cap any efficient way to market I will say right on time, but also with minimum.
Speaker Change: Effort in R&D spending.
Speaker Change: So this is really very positive and I'm very optimistic about.
Speaker Change: <unk>.
Speaker Change: Bringing <unk> to market with.
Speaker Change: Those elements.
Speaker Change: Oh gosh.
Scott Searle: So Scott we have with the size of the company and the operating structure. So that we feel comfortable that even in a in a conservative scenario, we have adequate cash to take us to the breakeven point.
Speaker Change: And if that isn't enough.
Speaker Change: The second half of 2026 as I mentioned, we're looking now at an operating cash Chuck shared that.
Speaker Change: Less than that or on average $10 million per quarter.
Speaker Change: We also have continue to have good financing coming in from that.
Speaker Change: From the from the government projects and expect that in 2026 as well.
Speaker Change: And we're also expecting to collect.
Speaker Change: All of the escrow amount from the Qualcomm deal at the end of September, which is 10 million coming in as well. So I think we feel pretty comfortable about our about the cash position.
Speaker Change: Okay, great. Thanks, so much and look forward to seeing the product revenue continue to ramp thanks, so much.
Speaker Change: Thanks Scott.
Speaker Change: Alright, Thank you and once again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Okay.
Speaker Change: And I'm showing no further questions at this time I would like to turn it back to our CEO George <unk> for closing remarks.
George Thank: So thank you again for joining the call all.
George Thank: We remain confident as I said in our ability to achieve operating income breakeven by 2026.
George Thank: Our optimism is fueled by key design wins in our pipeline moving to mass production.
Seen in Q4.
George Thank: And the addition of new customers in 2025.
George Thank: Our focus on increasing our market share.
George Thank: In under penetrated IGT markets with faster time to revenue.
George Thank: We are developing new vertical markets and delivering the best thing generation products.
George Thank: This strategic focus on product differentiation innovation and market expansion will drive growth in the years that.
George Thank: I extend my heartfelt thanks to our team partners and investors for their unwavering support and dedication.
George Thank: Thank you very much operator, we can close the call.
George Thank: Yeah.
Presenters and ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.
George Thank: Yes.
George Thank: Okay.
George Thank: Yeah.
George Thank: [music].
George Thank: Yes.