Q1 2025 Sequans Communications SA Earnings Call
All lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator. This call is being recorded and Tuesday May 620, 25, I would not like to turn the conference over to you.
Operator: At this time, all lines are in listen-only mode.
Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator.
Operator: This call is being recorded on Tuesday, May 6, 2025.
Kim Rogers: Kim Rogers. Please go ahead ma'am.
Kimberly Rogers: I would now like to turn the conference over to Kim Rogers. Please go ahead, ma'am. Thank you, Operator, and thank you to everyone participating in today's call.
Speaker Change: Thank you operator, and thank you to everyone participating in today's call joining me on the call from <unk> Communications are George Karam C E O and chairman and Deborah Choate CFO before turning the call over to George I would like to remind our participants of the following important information on behalf of <unk>.
Kimberly Rogers: Joining me on the call from Sequans Communications are Georges Karam, 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 of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Speaker Change: First sequence issued an earnings press release, this morning, and Youll find a copy of the release on the Companys website at Www <unk> Dot com under the newsroom section.
Speaker Change: 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.
Speaker Change: 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 1095 section 20 <unk>.
Speaker Change: <unk> of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of $19 34 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 uncertain.
Kimberly Rogers: 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 risk 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.
Speaker Change: Ts 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 <unk>.
Speaker Change: <unk> 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.
Kimberly Rogers: 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.
Speaker Change: And now I'd like to hand, the call over to George Karam. Please go ahead George.
Georges Karam: And now I'd like to hand the call over to George Karam. Please go ahead, George. Thank you, Kim. Good morning to everyone. We are pleased to report that we delivered first quarter revenue of $8.1 million. slightly above the high end of our guidance and. reflecting steady execution of our drilling into the details. product revenue was $3.5 million in line with our target. This represents an increase of 42% compared to first quarter 2024. mainly driven by the continued rollout of our Monarch 2 project. Also, license and services revenue grew 28% year over year, largely due to the timing of revenue recognition from the 5G tourist license to Qualcomm.
George Karam: Thank you Tim good morning to everyone.
George Karam: We are pleased to report that we delivered corporate revenue.
George Karam: $1 million.
George Karam: Slightly above the high end of our guardrail.
George Karam: Reflecting steady execution of Heartland.
Speaker Change: Good evening and through the detail.
Speaker Change: Product revenue was $3 $5 million in line with our partner.
Speaker Change: This represents an increase of 42% converted.
Speaker Change: Quarterly plentiful.
Speaker Change: Mainly driven by the continued rollout of our monarch two products.
Speaker Change: Also license and services revenue grew 28% year over year.
Speaker Change: Due to the timing of revenue recognition from the <unk> told us lifestyles to Qualcomm.
Speaker Change: As explained on our previous earnings call. The sequential decline was due to the timing of various deliveries under the bulk of lifestyles.
Georges Karam: As explained on our previous earlier call, the sequential decline was due to the timing of various deliveries under the Qualcomm license. and variability of product shipments with some design wind projects still moving through pre-launch phases. On the product and technology front, we are making substantial progress. Monarch II remains the key driver of our revenue growth, with many design-win projects in the pipeline. In the first quarter, we saw new momentum with several metering projects entering the pilot rollout. Also, the MONARCH2 pipeline continues to expand with new projects in tracking, metering, e-health, and other industrial segments. We began shipping Calliope 2 to our first DesignWin customers.
And variability of product shipments.
Speaker Change: Some design wind projects still moving through prelaunch phases.
Speaker Change: On the product and technology firms.
Speaker Change: We're making substantial progress.
Speaker Change: Monarch two remains the key driver of our revenue growth.
Speaker Change: Many design win projects in the pipeline.
Speaker Change: In the first quarter, we saw new momentum with several metering projects entering the pilot rollout phase.
Speaker Change: Also the monarch two pipeline continues to expand with new products and tracking metering ehealth and other industrial segments.
Speaker Change: We began shipping <unk> to our first design win customers.
Speaker Change: Preparing for product launches in the second half of 2025.
Georges Karam: preparing for product launches in the second half of 2025. We expect Calliope 2 shipments to ramp through the second half of this year and accelerate in 2026, particularly in telematic and security markets. Our next generation Monarch 3 and Calliope 3 chip. which we announced at Mobile World Congress are planned for launch by the end of 2021. These chips will further improve cost structure, power consumption, and radio performance while supporting 5G e-REDCAP modem category to help customers future-proof the network's transition from 4G to 5G IUs. The market response has been extremely positive. And we are engaged in advanced discussions with several customers and partners interested in collaborating with us more closely on this technology.
Speaker Change: We expect <unk> shipments to run through the second half of this year.
Speaker Change: And accelerate in 2026, particularly in telematic and security markets.
Speaker Change: Our next generation monarch, three and <unk> three chips.
Speaker Change: Which we announced at mobile World Congress are planned for launch by the end of 2026.
Speaker Change: These chips will further improve cost structure.
Speaker Change: Power consumption, our radio performance, while supporting <unk> modem category.
Customers future proof.
Speaker Change: Network transition from <unk> to <unk>.
Speaker Change: The market response has been extremely positive.
Speaker Change: And we are engaged in advanced discussions with several customers and partners.
Speaker Change: Instead of Susan collaborated with US more closely on this takes off.
Speaker Change: The ECP acquisition accelerated our <unk> Euro Cup roadmap.
Georges Karam: The ACP acquisition accelerated our 5G ERADCA roadmap by approximately 18 months. giving us a first-time first-to-market advantage. We expect this next generation of chips to contribute to our revenue in late 2026. We're also excited about our 5G REDCap platform called TORUS-LT. as it's derived from our high-end 5G broadband Torus IP. 5G REDCap is targeting high bandwidth IUT applications with speeds exceeding 100 megabits per second. like cameras, edge routers, and high-end industrial devices. We plan to sample this platform to early customers by year-end. completing our portfolio to address the full range of IoT connectivity needs. Additionally, with the technology and resources gained from the ACP acquisition, we now offer RF transceiver chips that serve vertical markets such as defense, public safety, and proprietary radio devices.
Speaker Change: By approximately 18 months.
Speaker Change: Giving us the first time.
Speaker Change: First to market advantage.
Speaker Change: We expect this next generation of chips to contribute revenue in late 2020.
Speaker Change: We're also excited about our <unk> arrest cap that phone.
Speaker Change: Called Taurus LLP.
Speaker Change: As this is derived from our high end <unk> broadband prototypes.
Speaker Change: <unk> GAAP is targeting high bandwidth Iot applications with speeds exceeding 100 megabits per second like.
Speaker Change: <unk> edge routers and high end industrial devices.
Speaker Change: We plan to sample this platform to early customers by year end.
<unk> our portfolio to address the full range of Iot connectivity needs.
Speaker Change: Additionally.
Speaker Change: With the technology and resources gained from the ECP acquisition, we now offer RF transceiver chips.
Speaker Change: The third vertical markets, such as defense public safety and proprietary redo device.
Speaker Change: Particularly we have a very advanced 22 nanometer RF transceiver shipping to one customer.
Georges Karam: Particularly, we have a very advanced 22 nanometer RF transceiver shipping to one customer and under evaluation with a few others. We are preparing for a broader commercial launch. supported by an enhanced marketing campaign to expand our market. This represents a significant new opportunity with meaningful revenue contributions expected to begin in late 2021. With our comprehensive and rich portfolio, Sequans is one of the few comprehensive cellular IoT providers outside of China. This has become a meaningful differentiator in today's geopolitical environment and has already contributed to new opportunities and design ways. Turning to customer interest. we are seeing strong momentum across the board.
Speaker Change: And under evaluation with a few others.
Speaker Change: We are preparing for a broader commercial launch.
Speaker Change: Supported by an enhanced marketing campaign to expand our market reach.
Speaker Change: This represents a significant new opportunity with meaningful revenue contributions expected to begin in late 2026.
Speaker Change: With our comprehensive outage portfolio sequence is one of the few comprehensive cellular Iot providers outside of China.
This has become a meaningful differentiator into.
Speaker Change: In today's geopolitical environment and has already contributed to new opportunities and design wins.
Speaker Change: Turning to customer interests.
Speaker Change: We are seeing strong momentum across the board.
Our total pipeline, representing advanced customer engagements or design ins.
Georges Karam: Our total pipeline, representing advanced customer engagements or design-ins, on one side and Secure Design Wins on the other side is reaching approximately $480 million of potential revenue. counting the first three years of sales for each product. More than half of this pipeline, $250 million, is already in the design win phase. and the balance, $230 million, covers the design in process. I'm pleased to report that we were awarded 90 new projects in the first quarter. from six customers, including four new ones. They cover applications in telematics, metering, and e-health and represent much more than $10 million in expected annual revenue at full production.
Speaker Change: On one side and secured design wins on the other side is reaching approximately $480 million of potential revenue.
Speaker Change: Mounting the first three years of sales for each product.
Speaker Change: More than half of this pipeline to $150 million is already in the design win phase and.
Speaker Change: And the balance to $130 million covers the design in projects.
Speaker Change: I'm pleased to report that we were awarded nine new projects in the first quarter.
Speaker Change: From six customers, including four new ones.
Speaker Change: They cover applications and telematic metering and he has.
Speaker Change: Ah represents much more than $10 million and expected annual revenue at full production.
Speaker Change: Some of them are part of our high velocity targets.
Georges Karam: Some of them are part of our high-velocity targets. and expected to contribute to revenue in 2026. These projects will be classified as full design wins in our pipeline as soon as our customers have initial hardware designs sampling with our chip or microchip. Also, we have made progress on many other design-in opportunities where we are shortlisted for final evaluation and selection. So how does the DesignWin pipeline translate to revenue growth? about 18 design win projects are currently in production. contributing to revenue, representing around 20% of our design win revenue. We expect this number to grow to over 30 projects.
Speaker Change: And expect it to contribute revenue in 2026.
Speaker Change: These projects will be classified as full design wins in our pipeline as soon as our customers have initial hardware designs sampling with our chip power module.
Speaker Change: Also we have made progress on many other design in opportunities.
Speaker Change: We are shortlisted for final evaluation and selection.
Speaker Change: So how does the design win pipeline translates to revenue growth.
Speaker Change: About 18 design win projects are currently in production.
Speaker Change: Contributing to revenue.
Speaker Change: Presenting around 20% of our design win revenue pipeline.
Speaker Change: Expect this number to grow to over 30 projects by the end of 2025.
Georges Karam: by the end of 2025, where around 50% of our design wind pipeline will generate revenue. and most of the remaining design win projects should reach the production phase by the end of 2021. On the licensing side, we are also seeing progress. Our Chinese partner who licensed our 5G Taurus broadband platform is advancing swiftly with its product development, and we expect to begin receiving royalty revenue from this partner in 2026. Separately, we are engaged in discussions on three new strategic deals. all leveraging our 5G REDCap and eREDCap ideas. We anticipate closing one or more of these deals by year end 2021.
Speaker Change: At around 50% of our design win pipeline will generate revenue.
Speaker Change: And most of the remaining design win projects should reach the production phase by the end of 2026.
Speaker Change: On the licensing side, we're also seeing progress.
Speaker Change: Our Chinese partner, who licensed our <unk> Taurus broadband platform.
Is that advancing swiftly with its product development.
Speaker Change: And we expect to begin receiving royalty revenue from this partner in 2026.
Speaker Change: Separately, we are engaged in discussions on three new strategic deals.
Speaker Change: All leveraging our <unk> red Kap and year end cap IP.
Speaker Change: We anticipate closing one or more of these deals by year end.
Speaker Change: 2025.
Speaker Change: Looking ahead, our strategic priorities for the rest of 2025.
Georges Karam: Looking ahead, our strategic priorities for the rest of 2025 are clear. will continue moving design wind projects into production. converting Monarch II and ramping Calliope II projects. will remain focused on winning new customers. Spending Our Design Win Pipeline, and Capturing Shares in High-Growth Markets like Security, Fleet Management, and Asset Tracking. We are also aggressively executing our REDCap and eREDCap product roadmap to further solidify our leadership position in next generation 5G IoT and secure new strategic and licensing deals. Finally, we are expanding our vertical market sales by leveraging the RF chip opportunities we acquired with ACP.
Speaker Change: We'll continue moving design win projects into production.
Speaker Change: Converting one attitude and ramping highlighted two projects.
Speaker Change: We remain focused on winning new customers.
Speaker Change: Expanding our design win pipeline and capturing share in the high growth markets like security fleet management and asset tracking.
Speaker Change: We are also aggressively executing our red kap and ear at cap product roadmap.
Speaker Change: To further solidify our leadership position in next generation <unk> and secure new strategic in licensing deals.
Speaker Change: Finally, we are expanding our vertical market sales by leveraging the RF chip opportunities, we acquired with ACP.
Speaker Change: Financially, we remain disciplined and focused on execution.
Georges Karam: Financially, we remain disciplined and focused on execution. While macroeconomic conditions are uncertain, we are managing what we can control. We remain focused on our target to achieve operating income breakeven in 2026. We are managing our cash operating expenses with a target of below $10 million per quarter. We have two important levers to help with this. First, the maturity of our MONARCH2-ENCAL IP2 product line. which require limited additional investment. and second, the flexibility to adjust spending on next generation chips if needed. As revenue increases, we expect to reduce our cash burn rate to below $5 million per quarter by the end of 2025.
While macroeconomic macroeconomic conditions are uncertain, we are managing what we can control we remain focused on our target to achieve operating income breakeven in 2026.
Speaker Change: Yeah.
Speaker Change: We are managing our cash operating expenses with a target of below $10 million per quarter.
We have two important levers to help with this first the maturity of our monarch two anchor light two product lines.
Speaker Change: Which require limited additional investment.
Speaker Change: And second the flexibility to adjust spending on next generation chips if needed.
As revenue increases, we expect to reduce our cash burn rate to below $5 million per quarter by the end of 2025 and.
Speaker Change: And continue growing to achieve our breakeven targets from there.
Georges Karam: and continue growing to achieve our breakeven target from there. Many new design wind projects are expected to begin production in the second half of the year. While there is some market uncertainty around potential new U.S. tariffs, it's too early to draw firm conclusions. We are monitoring the situation closely and will respond as needed. For now, we are not seeing a direct impact on our. on the corporate governance side.
Many new design win projects are expected to begin production in the second half of the year.
Speaker Change: While there is some market uncertainty around potential new U S studies.
Speaker Change: It's too early to draw firm conclusions.
We are monitoring the situation closely and will respond as needed.
Speaker Change: Now we are not seeing a direct impact on our business.
Speaker Change: On the corporate governance side.
Speaker Change: The Board Governance Committee recommended refreshing our board of directors.
Georges Karam: The Board Governance Committee recommended refreshing our Board of Directors. strengthen our strategic execution and refine our long-term vision.
Speaker Change: Strengthen our strategic execution and refine our long term vision.
Speaker Change: More information will be provided in our may proxy filing.
Georges Karam: More information will be provided in our May proxy file.
Speaker Change: In closing I want to thank our employees customers partners.
Georges Karam: And in closing, I want to thank our employees, customers, partners, and shareholders for their continued support. We are proud of the progress we've made in the first quarter of 2025. and are excited about the opportunities ahead. with the strength of our product portfolio. the accelerating pace of projects into production. and the strategic initiatives we are executing on, we believe we are well-positioned to drive significant value for all our stakeholders.
Speaker Change: And shareholders for their continued support.
Speaker Change: We're proud of the progress we've made in the first quarter of 2025.
Speaker Change: We are excited about the opportunities ahead.
With the strength of our product portfolio.
The accelerating pace of projects into production.
And the strategic initiatives, we are executing on we believe we are well positioned to drive significant value for all our.
Speaker Change: The stakeholders.
David: I will now turn the call over to David <unk>.
Speaker Change: To review the first quarter of 2025.
Deborah Choate: I will now turn the call over to Deborah to review the first quarter 2025 preliminary financial results in detail. Thank you, George, and good morning to everyone. Before we get started, please note that the financial results released today are preliminary, subject to the finalization of the ACP purchase price out. Revenues for the first quarter of 2025 increased 34% to $8.1 million, up from $6.1 million in the first quarter of 2024, and as projected, declined sequentially by 27%. Product revenue reached $3.5 million in the quarter and accounted for 44% of total revenue. Product revenue increased 42% from the year-ago period and declined 26% sequentially, as we had a large customer shipment in Q4 that did not repeat in QYP.
David: <unk> financial results in details.
Speaker Change: Thank you George and good morning, everyone I just wanted.
Speaker Change: Let me get started please note that the financial aid all Chinese today are preliminary and subject to the finalization of the ACP purchase price allocation.
Speaker Change: Revenues for the first quarter of 2025 increased 34% to $8 $1 million.
Speaker Change: From $6 1 million in the first quarter of 2024 and is projected declined sequentially by 27%.
Speaker Change: Revenue reached $3 $5 million in the quarter and accounted for 44% of total revenues.
Speaker Change: Product revenues increased 22% from the year ago period, and declined 26% sequentially and we had a large customer shipment in Q4 that did not repeat.
Speaker Change: Yeah.
Licensing and other revenue was $4 $5 million, an increase compared to $3 $6 million in the prior year quarter, and a 28% decline compared to $6 $3 million in the fourth quarter of 2024.
Deborah Choate: Licensing and other revenue was $4.5 million, an increase compared to $3.6 million in the prior year quarter, and a 28% decline compared to $6.3 million in the fourth quarter of 2024. Due to the...
Speaker Change: Hello can you hear me.
Speaker Change: Yes.
Deborah Choate: Hello, can you hear me? Yes. Can you... Can you hear us?
Speaker Change: Yeah.
Speaker Change: Can you hear us.
Speaker Change: Got it okay.
Speaker Change: Well anyway, so licensing the licensing revenue variation is due to the distribution of revenue recognition.
Deborah Choate: The licensing revenue variation is due to the distribution of revenue recognition from the 5G Taurus license to Qualcomm. This quarter we recognized $3.9 million in revenue versus $5.5 million in Q4 2024 from partial delivery under this license, which was part of the overall Qualcomm transaction. Gross margin in the first quarter of 2025 was 64.5%, compared to 67.4% in the prior quarter and 63.9% in the first quarter of 2024, reflecting the mix of revenues we have between chip, model, and licensing and services. Product growth margin was 31% in Q1 versus 35.5% in Q4 2024, reflecting a higher portion of model sales, as well as initial sales of Calliope 2 with higher costs incurred during the product introduction phase.
Speaker Change: <unk> twice license to Qualcomm.
Speaker Change: This quarter, we recognized $3 $9 million in revenue versus $5 5 million in Q4 of 2024 from partial delivery ended this license, which was part of the overall Qualcomm transaction.
Speaker Change: Gross margin in the first quarter of 2025 was 64, 5% compared to 67, 4% in the prior quarter and 63, 9% in the first quarter at 2024, reflecting the mix of revenues, we had between chip model and licensing and services.
Speaker Change: Product gross margin was 31% in Q1 versus 35, 5% in Q4 of 2024.
Speaker Change: Taking a higher portion of module sales as well as initial sales at calliope, two with higher costs incurred during the product introduction phase.
Speaker Change: I have first operating loss was $6 $8 million in the quarter compared to an operating loss of $5 $6 million in Q4 of 2024, and a loss of $8 $5 million in the first quarter of 2024.
Deborah Choate: IFRS operating loss was $6.8 million in the quarter compared to an operating loss of $5.6 million in Q4 2024 and a loss of $8.5 million in the first quarter of 2024. Please note that our non-IFRS operating expenses of $11 million declined from $12.5 million in Q4, even with ACP operating expenses now included in Q1. operating expenses also declined from the prior year period of $11.3 million. The Q1 2024 number included the benefit of capitalizing $9.1 million of R&D costs, whereas no R&D costs were capitalized in Q1 2025 or in Q4 2024. The reductions in our operating expenses show that we are making progress toward our goal to bring cash operating expenses down below $11 million on a quarterly basis.
Speaker Change: Please note that our non <unk> operating expenses of $11 million declined from $12 $5 million in Q4, even with ACP operating expenses now included in Q1.
Speaker Change: Operating expenses also declined from the prior year period of $11 $3 million.
Speaker Change: The Q1 2024 number included the benefit of capitalizing at $9 $1 million of R&D cost, whereas no R&D costs were capitalized in Q1 2025 or in Q4 2024.
Speaker Change: The reductions in our operating expenses show that we are making progress toward our goal to bring in cash operating expenses down below $11 million on a quarterly basis.
Speaker Change: We recorded net interest income in Q1 and in Q4 of 2024 compared to net interest expense in the first quarter of 2024 due to our investment of excess cash from the Qualcomm deal after repayment of omnicare debt in October 2024.
Deborah Choate: We recorded net interest income in Q1 and in Q4 2024, compared to net interest expense in the first quarter of 2024, due to our investment of excess cash from the Qualcomm deal after repayment of all mature debt in October 2024. Net loss in Q1 2025 was $7.3 million or $0.29 per diluted ADS. This compares to a net loss of $2.4 million or $0.10 per diluted ADS in Q4 2024 and to a net loss in the first quarter of last year of $11.8 million or $0.48 per diluted ADS.
Speaker Change: Net loss in Q1, 2025 was $7 $3 million or 29 cents per diluted ads.
Speaker Change: This compares to a net loss of $2 4 million or 10 cents per diluted ads in Q4 2024.
Speaker Change: And to a net loss in the first quarter of last year of $11 $8 million or <unk> 48 cents per diluted EPS.
Speaker Change: The net loss in Q4 of 2024 benefited from a reduction in the estimated tax expense recorded in the third quarter related to the gain on the Qualcomm transaction, therefore, showing a tax benefit in Q4.
Deborah Choate: The net loss of Q4 2024 benefited from the reduction of the estimated tax expense recorded in the third quarter related to the gain on the Qualcomm transaction, therefore showing a tax benefit in Q4. On a non-IFRS basis, our net loss for Q1 2025 was $6.1 million, or $0.24 per diluted ADS, compared to a $1.8 million loss, or $0.07 per diluted ADS in the prior quarter, and a non-IFRS net loss of $8.8 million, or $0.36 per diluted ADS in the first quarter of 2024.
Speaker Change: On a non <unk> basis, our net loss for Q1, 2025 was $6 $1 million or 24.
Diluted EPS compared to a $1 8 million dollar loss or seven cents per diluted EPS in the prior quarter and is on ice for a net loss of $8 8 million or 36 cents per diluted EPS in the first quarter of 2024.
Speaker Change: Cash and short term deposits totaled $45 $9 million at the end of Q1 compared to $62 $1 million at the end of 2024.
Deborah Choate: Cash and short-term deposits totaled $45.9 million at the end of Q1, compared to $62.1 million at the end of 2024. We had several non-operating or unusual items that had an approximate $9 million drag on cash burn in the first quarter, including the payment of bonus and severance packages expensed in 2024, the impact of the termination of our factoring agreement, and the ACP acquisition payment. Excluding these items, the normalized operating cash burn for the first quarter would have been around $7.2 million. We anticipate certain non-recurring items again in Q2, including final payments to ACP shareholders. However, we maintain a disciplined spending approach and target to finish 2025 with over $25 million in cash.
Speaker Change: We had several nonoperating or unusual items that had an approximate $9 million drag on cash burn in the first quarter, including the payment of bonuses and severance packages and Expensed in 2024.
Speaker Change: The impact of the termination of our factoring agreement.
Speaker Change: D a C P acquisition payments.
Speaker Change: Excluding these items the normalized operating cash or cash burn for the first quarter would have been around $7 million.
Speaker Change: We anticipate certain nonrecurring items again in Q2, including final payments to HCP shareholders.
Speaker Change: However, we went big that we maintain a disciplined spending approach and target to finish 2025 with over $25 million in cash.
Speaker Change: Based on our capital allocation plan, we did not foresee the need for an equity raise in 2025 or 2026.
Deborah Choate: Based on our capital allocation plan, we did not foresee the need for an equity raise in 2025 or 2020.
Speaker Change: Turning to the outlook for the second quarter of 2025, we expect total revenue in the range of $8 million to $9 million.
Deborah Choate: Turning to the outlook for the second quarter of 2025, we expect total revenue in the range of $8 to $9 million, including final revenue recognition related to the 5G license to Qualcomm.
Speaker Change: Including final revenue recognition related to the five new license to Qualcomm.
Speaker Change: And now for a few highest housekeeping items. After this call. We will post a written version of our formal remarks in the Investor Relations section of our website.
Deborah Choate: And now for a few housekeeping items. After this call, we will post a written version of our formal remarks in the investor relations section of our website on the webcast and presentations page, the same location where you will find the audio.
Speaker Change: The webcast and presentations page the same location, where you will find the audio replay.
Speaker Change: And we filed our annual report on form 20-F last week on April 30, and now I'll turn the call back to George.
Deborah Choate: and we filed our annual report on form 20th last week on April 30th and now i'll turn the call back Thank you, Deborah. Thank you again for joining the call today.
George Karam: Oh, Thank you Debra.
Speaker Change: Thank you again for joining the call today are as we wrap up I want to reiterate our confidence in the direction of our business.
Georges Karam: As we wrap up, I want to reiterate our confidence in the direction of our business. the strength of our revenue pipeline, the ramp-up of key design wind projects into production. and the progress on our 5G REDCap and eREDCap roadmap, all position Sequans for long-term value creation. they are staying focused on execution. scaling our product portfolio. deepening and broadening customer engagement. and Managing Expenses with this.
George Karam: The strength of our revenue pipeline.
Speaker Change: The ramp up of key design wind projects into production.
Speaker Change: And the progress on our five G that cap in Iraq Cup roadmap.
Speaker Change: Coalition sequels for long term value creation.
Speaker Change: We're staying focused on execution.
Speaker Change: Killing our product portfolio.
Speaker Change: Deepening and broadening customer engagements.
Speaker Change: Managing expenses with discipline.
Speaker Change: With this strong demand for our solutions we are confident.
Georges Karam: With a strong demand for our solutions, we are confident not only in reaching break-even in 2026, but in unlocking meaningful growth beyond that. Thank you again for your continued support.
Speaker Change: Not only are reaching breakeven in 2006, but in unlocking meaningful growth beyond that thank.
Speaker Change: Thank you again for your continued support.
Speaker Change: Operator, we can now the call for Q&A. Please.
Operator: operator, we can turn now the call for Q&A. Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your Touchtone filing and you will hear a problem. That's your hand has it been a race should you wish to decline from the polling process. Please press <unk>.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone and you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you use a speakerphone, please lift the handset before pressing any. One moment, please, for your first question.
Speaker Change: The star followed by the number it's Hugh if you use the speaker phone. Please lift the handset before pressing any keys one moment. Please for your first question.
Your first question comes from Scott surely with Roth Capital. Please go ahead.
Scott Shirley: Your first question comes from Scott Shirley with Roth Capital. Please go ahead. Hey, good morning, good afternoon. Thanks for taking the questions. A nice job on the first quarter. Hey, George, maybe to dive in, in terms of the pipeline composition, I think you said now the design in opportunity is around $230 million. Last quarter, I guess about 60 or so days ago, was about $200 million. It sounds like you've had $10-plus million worth of wins. So in that 60-day period, we've added about another $40 million of opportunities. Just wanted to confirm that. And then in terms of the velocity of what's in that pipeline, we've been skewing more towards quick design opportunities that translate into revenue a lot sooner.
Scott Surely: Hey, good morning, good afternoon, thanks for taking the questions and nice job on the first quarter.
Speaker Change: Hi, Scott Thanks, Scott.
Speaker Change: George maybe to dive in in terms of the pipeline composition I think he said now the design in opportunities around 230 million last quarter, I guess about 60, or so days ago was about $200 million. It sounds like you've had 10 plus million dollars' worth of wins. So in that 60 day period, we've added about.
Speaker Change: Another $40 million of opportunities just wanted to confirm that and then in terms of the velocity of whats in that pipeline of been skewing more towards quick design opportunities that that translate into revenue a lot sooner I wonder if you could provide a little bit more color. I think you gave some of the end market categories, but how quickly some of those revenue or those those design in opportunities.
Scott Shirley: I wonder if you could provide a little bit more color. I think you gave some of the end market categories, but how quickly some of those revenue or those design in opportunities should be able to translate into revenue? Is it nine months, 12 months, 18 months? And then I had a couple follow-ups.
Speaker Change: These should be able to translate into revenue was it nine months 12 months 18 months and then I had a couple of follow ups.
Scott Surely: Yes, Hi, Scott so far for the first question regarding the pipeline.
Georges Karam: Yes, hi Scott. So for the first question regarding the pipeline, as I said, you know, we secured the nine projects this quarter and the only problem of our KPI, you know, I mean, we want, we have a lot of discipline on measuring design win and we don't measure it as award, as design win before really being sure that the customer has achieved a key milestone on his hardware, which is the of the hardware in hand that we can see it because we never know sometimes, you know, customers, they can delay the ramp or it takes them some time.
Scott Surely: As I said you know we secured a nine project this quarter and are.
Scott Surely: The only the only problem a hardcopy I you know I mean, we want we have a lot of discipline on measuring the design win and we don't measure It as award as design win before really being sure that the customer has achieved a key milestone on his hardware, which is the availability of the hardwood in hand that we can see it because we.
Never know, sometimes you know customer if they can delay that onboard it takes them. Some time. So so we don't want to change the pipeline by adding number then deduct them the following quarter.
Georges Karam: So we don't want to change the pipeline by adding numbers and deduct them the following quarter. So we are prudent on this. So, but when you look to the $230 million there, this means some of this is awarded, but not yet moved to the design win. And this will be done in the coming quarter or the following quarter, depending on the speed of the execution on each project. But in the same time, it shows as well more opportunity in this new deal. And with many of them, by the way, advanced because we are in only a few of them in the short list.
Scott Surely: So we had put up on this so but when you look to the $230 million of that just means some of this is awarded but not yet.
Scott Surely: Well move to the design win.
Scott Surely: And this will be done in the in the coming quarter over the following quarters, depending on the speed of execution on each project, but at the same time it shows as well more opportunity in this new deals.
Scott Surely: And with many of them by the way advanced because we are in on a few of them in the shortlist. We we have been notified that we are shortlisted and we're finalizing the negotiation with the customer to close it. So yes. All this is is progressing well and your understanding is right in the 60 days progress we have done since then.
Georges Karam: We have been notified that we are shortlisted and we are finalizing the negotiation with the customer to close it. So yes, all this is progressing well and your understanding is right in the 60 days progress we have done.
Scott Surely: Now on the velocity of the market and in reality you know, we we spoke a lot about it in the past and this was a level of frustration. We all had that we have a lot of design win projects.
Georges Karam: In terms now on the velocity of the market, in reality, you know, we spoke a lot about it in the past and this was a level of frustration we all had that we have a lot of design win projects in the metering space. And unfortunately, the metering is taking longer time to converge to revenue because the design is complex and the design cycle in general is much more complicated than regular other business. Indeed, when you go to other IoT devices like fleet management, like security, we expect time to revenue to be faster. But what happens specifically, and I mentioned this, that some of the new deals will generate revenue, we are sure about it, in 2026 and very likely beginning of 2026.
Projects in the metering space and unfortunately, the metering.
Scott Surely: It's taking longer time to convert to revenue.
Scott Surely: The design is complex and the design cycle in general over is much more complicated than drag a lot of the other businesses. Indeed, when you go to other Iot devices like fleet management like.
Scott Surely: Security, we expect time time to revenue to be faster, but what happened specifically and I mentioned this that some of the new deals will generate revenue for about it in 2026, and and very likely beginning of 'twenty six.
They are on one side related to the nature of the business as I mentioned, the automatic metering Dod and a high velocity segment, but also some of those views there were like a customer's changing the modem. If you want not redesigning the full product and just wanted to changing that modem.
Scott Shirley: They are on one side related to the nature of the business. As I mentioned, they are not in metering, they are in high velocity segment. But also some of those deals, they were like customers changing the modem, if you want, not redesigning the full product and just only changing the modem for some related to the geopolitical situation, for some related to some people exiting the market, where sequence one, those queues, and the refresh of this product was much faster. So we're expecting revenue from, let's say, a couple of those projects to happen in less than 12 months, you know, as we are.
Scott Surely: Some related to the geopolitical institution for some related to some people exiting the market or sequence one those skus and the refresh of this product was much faster. So we're expecting revenue from let's say a couple of those projects will happen in less than 12 months you know as we are speaking.
Scott Surely: Very very helpful. Thank you and George.
Scott Shirley: Very, very helpful. Thank you. And George, you know, it sounds like we're looking for a little bit of a product inflection as we get into the second half of this year. I think some of those have been some longstanding metering projects, but what's your comfort and visibility to, to that product revenue starting to accelerate in the second half of this year? Yeah, I mean, honestly, Scott, all is progressing very well in terms of design. Unfortunately, you have always sometimes customer, you're not sure about the level of ramp. In other words, the execution, I believe, it's moving.
Speaker Change: It sounds like we're looking for a little bit of a product inflection as we get into the second half of this year I think some of those have been some long standing metering projects, but what's your comfort and visibility to two that product revenue starting to accelerate in the second half of this year.
Speaker Change: Yeah, I mean honestly Scott all of it is progressing very well in terms of design.
Scott Surely: You know unfortunately, I've always sometimes customer you're not sure about.
Scott Surely: The level of ramp in other words as you know the execution I believe it's moving but we're seeing I mentioned couple of metering by doing projects that they moved to a baidu plays a dol the phase from pilot to full mass production, we are a little bit you know India India.
Georges Karam: We're seeing, I mentioned, a couple of metering, by the way, projects that they moved to pilot phase. Now, the phase from pilot to full mass production, we are a little bit, you know, in the, you know, we don't have full visibility on it because it depends on the end customer validation and so on. So this can take more than six months, maybe less, maybe a little bit more, but this is the order of magnitude on those projects. So we have that. On the others that they are in the space of fleet and other application related, by the way, to the automotive segment, we're seeing some progress and we have confidence that we get the order, you know, and we'll be shipping in the second half.
Scott Surely: We don't have full visibility on it because it depends on the end customer validation and so on so this can take.
Scott Surely: Six months, maybe maybe less maybe a little bit more but this is the order of magnitude on those projects. So we have that on the others that they are in the space of our fleet and in other application.
Related by the way to the automotive segment, we're seeing some progress and we have confidence that.
Scott Surely: We get the order right.
Scott Surely: We will be shipping in the second half. So so definitely all is positive it's more of the order of magnitude, where we are a little bit you know are.
Scott Shirley: So definitely all is positive. It's more the order of magnitude where we are a little bit, you know, we have uncertainty around it, if you want, like quarter to quarter, because it depends if the guys will move their ramp very quickly in the first quarter or it takes them two quarters to ramp and we need to make some estimate for the time being, Gotcha.
Scott Surely: We have uncertainty around it if you want like quarter to quarter because it depends.
Scott Surely: You guys would move.
Scott Surely: That I'm very quickly in the first quarter or takes them two quarters to them.
Scott Surely: And we need to make some estimates for the time being but that's all positive and progressing.
Gotcha, Thank you and George I think for the first time, we've heard you talk a little bit about additional RF transceiver opportunities going.
Georges Karam: Thank you. And George, I think for the first time we've heard you talk a little bit about additional RF or transceiver opportunities going into some other markets, be it defense, public safety. I'm wondering if you could quantify the size of that and the timeline of that opportunity. Indeed, I mean, you know, we didn't, by the way, more will come from us towards the end of the quarter because we'll be making lunch of this product. We decided to take a little bit of time and after the acquisition of ACP, although we knew about it, but we want really to assess the market, understand and so on.
Speaker Change: Going into some other markets be it defense public safety I'm wondering if you could quantify the size of that and the timeline of that opportunity.
Speaker Change: Uh Huh, Indeed, I mean, we didn't by the way more will come from us towards the end of the quarter because it will be making a launch of this product.
Speaker Change: We decided to take a little bit of time and now after the acquisition of ECP, Although we knew about it but we want really to assess the market understand and so on but as I mentioned, we have strong expertise in radio whether they sell.
Georges Karam: But, as I mentioned, we have strong expertise in radio where they sell, ACP sold, you know, in hundreds of millions of those IP, you know, to many, many products in the past. And we have an existing product, very, very advanced in mass production, shipping to one customer, by the way, in China, initial shipment, not big shipment for this customer. But assessing, you know, all those application of defense and public safety, we realize, like, there is a real demand for this chip, which is very advanced in comparison to what you can find in the market. So, we'll be moving there.
Speaker Change: S piece of that.
Speaker Change: And how did the opinions of those IP north of many many product in the past and we have an existing product very very advanced ER and mass production shipping to one customer by doing in China.
Speaker Change: Shipments not not that big shipment for this customer.
Speaker Change: But assessing all those application of defense and public safety realized like there is a real demand for this chip, which is very advanced in comparison to what you can find it in the market.
Speaker Change: So we'll be moving that we engaged already few customer all the feedback was extremely positive. So that's why we are excited to launch the product and put it on our portfolio and to stop selling.
Georges Karam: We engaged already a few customers. All the feedback was extremely positive. So, that's why we are excited to launch the product and put it on our portfolio and start selling and marketing this. Opportunity could be, you know, I mean, if we, we should be able to do 10 million dollars per year easily just to give to give a number, you know, the market is very, I would say diverse. You know, so it's very, very hard to look to the study where you can attack because you can go to base station. You can go to a point to point radio.
Speaker Change: And Martinez.
Speaker Change: Opportunity.
Speaker Change: Could be you know I mean, if we we should be able to do $10 million pretty easily just to give them to give you a number you know the market is very.
Speaker Change: I'll say diverse you know so it's very very hard to look to study what do you can attack because you can go to base station you can go to a point to point the Adriatic and go to defense you can go to drones obligation. So many obligation of our poker with the customer and everyone gross customer like this product.
Georges Karam: You can go to defense. You can go to drones application. So, many application. We're talking with the customer and everyone goes customer like this product. Any, I will give it, like, 12 to 18 months to ramp to revenue, but we should I have, you know, I'm quite positive that even in 2026, we could generate, you know, maybe 5M dollar to give a number like this from this product. Great. Very helpful.
Speaker Change: Any I would give it like 12 to 18 months to ramp to revenue, but we should I have you know I'm quite positive that even in 2026th we could generate.
Speaker Change: Maybe $5 million to give a number like this from this pipeline.
Speaker Change: Great very helpful and lastly, if I could just on the licensing front, it's encouraging to hear the Chinese customer converting to royalties, but it also sounds like you remain pretty actively engaged on the red Kap and eat Red Kap I'm wondering if you could just provide a little bit more color on that front and Deborah just on the cash.
Georges Karam: And lastly, if I could, just on the licensing front, it's encouraging to hear the Chinese customer converting to royalties, but it also sounds like you remain pretty actively engaged on REDCap and eREDCap. I'm wondering if you could just provide a little bit more color on that front. And Deborah, just on the cash, you know, I just wanted to clarify, I think that there were some final escrow payments coming from Qualcomm of $10 million sometime in the second half of this year, and then with some additional grant money. I'm wondering if you could just clarify that.
Speaker Change: Just wanted to clarify I think that there were some final escrow payments coming from Qualcomm or 10 million sometime in the second half of this year and then with some additional grant money I'm wondering if you could just clarify that thanks.
Speaker Change: Yeah, I mean I'll let.
Georges Karam: Thanks. Yep. I mean, unless I think, indeed, you know, with our Chinese partner, they are reaching the MP version of the chip. I mean, it's still not MP tip out, I should say. It should go to production for sure towards the end of the year, and we should start getting revenue from them next year. So it's good, you know, with the geopolitical environment, you could imagine those guys selling in China, they should be able to make some good number. China is full speed on 5G I'd say, so REDCap will be will be quite strong market there.
Speaker Change: I think indeed, you know with our Chinese partner about each in good empty version of the chip I mean, it's still not tip.
Bob: Hey, Bob I should say.
Bob: It should go to production for sure towards the end of the year and we should start getting revenue from them next year. So it's good you know with the geopolitical environment you could imagine those guys selling in China, they should be able to make some good number China as a full speed on five GSA. So that cap will be will be quite strong market depth and this could generate.
Bob: $2 million for us, but here in terms of garanti, depending on the volume that they can do.
Georges Karam: And this could generate a few million dollars for us per year in terms of royalty, depending on the volume, what they can do. Today, we're not putting this yet in our forecast. So this will be like an upside for us next year, part of the servicing, part of the service and licensing. But also we're engaged with, as you mentioned, a few other opportunities, all interested in REDCap, IRADCap, or other application or for different regions as well. We're quite advanced, you know, I cannot say more on this, but there are serious opportunities, well-identified engagement and negotiation is there.
Bob: Today, we are not putting just yet in our forecast. So this will be like an upside for us next year as part of the servicing part of the service and licensing.
Bob: But also we're engaged with the as we mentioned if you others opportunities are all into this isn't a.
Bob: A copy of that cap.
Bob: Or are there other application or for different regions as well we're.
Bob: We're quite advanced and I cannot say more on this but.
Bob: But there are serious opportunity, while you don't find engagements that negotiation is that.
Bob: We feel comfortable that we should close something this year, you know, it's not something to drag.
Georges Karam: And we feel comfortable that we should close something this year, you know, it's not to drag for next year. You will hear from us, I would say, hopefully, in the second half of the year, closing at least one, maybe two opportunities.
Bob: Next year.
Bob: Well you you and you will hear from US I would say hopefully in the second half of the year to closing at least one maybe two opportunities.
Bob: Yeah, and Scott on the cash, yes, we have $10 million in ESCO somehow Qualcomm deal that we're expecting to have released on September 30th.
Deborah Choate: Yeah, and Scott, on the cash, yes. We have $10 million in ESCO from the Qualcomm deal that we're expecting to have released on. And in terms of government grants, in the second half of the year, we're expecting about $5.5 million. Great. Thanks so much. Nice quarter. Thank you, Scott. Thank you.
Bob: And in terms of government grants in the second half of the year, we're expecting about five and a half million dollars to come in.
Bob: Great. Thanks, so much nice quarter.
Speaker Change: Thank you Oscar and Scott.
Bob: Thank you.
Bob: The next question comes from Nick style.
Nick Doyle: The next question comes from Nick Doyle with Needham. Please go ahead. Hey guys, thanks for taking my questions.
Bob: With Needham. Please go ahead Sir.
Bob: Right.
Bob: Hey, guys. Thanks for taking my questions.
Speaker Change: Further non-GAAP non-GAAP gross margin that came in a little below and you discussed some drivers but my question is what is our calliope two gross margin improvement roadmaps, how long until that drag goes away on product gross margin. Thanks.
Nick Doyle: For the non-gap gross margin that came in a little below and you discussed some drivers, but my question is what is the Calliope II gross margin improvement roadmap? How long until that drag grows away on product gross margin? Thanks.
Speaker Change: Hi, Nick.
Georges Karam: Hi Nick. Essentially, first of all, you know, in a more generic Nick, all our chip business stand around the 50% gross margin. Yeah, it can vary. You could have, you know, depending on the phase of the life cycle or depending on the size of the deal, you could be a little bit below 50 or you could be above 50, up to 55. With the volume I'm talking about today, you know, we're not talking about improvement over time, which definitely will happen when the volume will grow, will solidify it and make it above 50 and hopefully closer to 55.
Speaker Change: Essentially.
Speaker Change: First of all you know monogenetic, Nick all our chip business and that all of the 50% gross margin yeah. It can vary you could you could have.
Speaker Change: Depending on the phase of the lifecycle or depending on the size of the deal it could be a little bit below 50, or it could be about 50 up to 55 with the volume I've spoken about today you know, we're not talking about the improvement overtime, which definitely will happen when the volume will grow we will solidify it and make it a.
Speaker Change: About 50 and hopefully.
Speaker Change: Closer to justify the module business as we said in the past. This this VAT as well around the 30% number because the 35 it could be 25 again, depending on the deal and so the mix of the two gives you the product gross margin, which as you know in the above 40 today, if we whether we should be at around 40%.
Georges Karam: The module business, as we said in the past, this varies as well around the 30% number. It could be 35, it could be 25, again, depending on the deal and so on. So the mix of the two give you the product gross margin, which is, you know, in the above 40 today if we, where we should be, around 40%. Now for this quarter, again, you know, you have two elements when you look to the margin currently. We have a fixed cost of our manufacturing costs, which is included. In other words, if we have a revenue of a few million dollars, this fixed cost is going to impact by more than maybe close to five points in our margin.
Speaker Change: Now for this quarter again, you know you'll have two element when you look to the margin currently.
Speaker Change: We have the fixed cost of our manufacturing costs, which is included in other words, if we have a revenue of a few million dollar of this fixed cost is going to impact by by more than maybe close to five points and our margin. So it's all a variable gross margin today is not what you see you need to have like 5%.
Georges Karam: So our variable gross margin today is not what you see. You need to add like 5% as we grow, just only by growing volume, this cost will be like negligible to our variable gross margin. And we had specifically this quarter, you know, the mix of module and chip plus some lunch of initial production of CalIP2. As you know, the initial production will come a little bit at high cost of the module, just serving the customer with the first thousands, 10,000 units here and there. So the cost is not really optimized. But there is nothing unique to CalIP2, I'll say, which is different from the MONAC2 recipe.
Speaker Change: As we grow just only by growing volume.
Speaker Change: Discussed will be like a negligible two with all of them.
Variable gross margin, but and we had specifically this quarter you know the mix of module and chip plus some lunch of initial production of Calliope two as you know the initial production will come a little bit at the high cost of the module.
Speaker Change: Serving the customer was the first thousands 10 thousands units here and there. So the cost is not really optimized but there is nothing unique to collect it to Oh, let's say.
Speaker Change: Which is different from the monarch two a recipe an eye in terms of gross margin, whether it'd work toward calliope, two or even in the future of United Gap that will pay play with a number.
Georges Karam: And in terms of gross margin, whether MONAC2 or CalIP2, or even in the future eRADCAP, they will play with the number I explained to you more generically, 50% of the chip, 35% for the module, and obviously licensing and services about 70%. Yeah, that makes sense. It sounds a lot more like a volume leverage issue.
Speaker Change: They do a motor genetically.
Speaker Change: 3% of the chip, 35% for the module and obviously licensing and services.
Speaker Change: About 70%.
Speaker Change: Yes that makes sense it sounds a lot more like a volume leverage.
Speaker Change: Yeah issue.
Speaker Change: I know, we'll find out soon but maybe you can give us a hint at what kind of board changes are being discussed thank you.
Georges Karam: So I know we'll find out soon, but maybe you can give us a hint at what kind of board changes are being discussed. Thank you. Yeah, I mean, you know, obviously, we don't want to I give you the guideline, obviously, you know, the board, we have, you know, great, great people on our board, but they serve many mandates. And, and I believe for the interest of the company is to refresh, you know, bring new blood. So this is one trend, if you want. Also, we believe the size of the board could be a little bit lower at some time we increase the size, you know, we have the complexity of when we added some strategic, you know, when we get the Renaissance on board, and then we had to we had to increase the size of the board to compensate for the U.S.
Speaker Change: No I mean, obviously, we don't want to no I can't give you. The guideline obviously you know the board Oh, we have.
Speaker Change: You know great great people to our board, but they serve many mandates and and I believe for the interest of the company.
Speaker Change: Is to refresh you know, bringing new block. So this is one brand. If you want also we believe the size of the board could be little bit lower at some time, we increased the size you know we have the complexity of.
Speaker Change: Well when we added some strategic you know when we get the.
Speaker Change: The rest is on board and then we had to.
Speaker Change: We had to.
Speaker Change: <unk> increased the size of the board.
Speaker Change: To compensate for the U S versus non U S. As we are for them to follow the shore. So this adds another constraint when we built our board, but now we believe we know we can reduce the size of the board to be you know in any case six and then it gets below seven people in total and have at least a couple of new guys in there.
Georges Karam: versus non-U.S. as we are foreign issuer. So this adds another constraint when we build our board. But now we believe we can reduce the size of the board to be in any case maybe six, in any case below seven people in total, and have at least a couple of new guys. In the same time, obviously, some people will be reaching their term now, and they will be leaving immediately. But also others are very likely, as soon as we hire other board members, they will be resigning and leaving afterwards.
Speaker Change: Same time, obviously, some people are already reaching director them now and I will be leaving immediately.
Speaker Change: But also others, but very likely as soon as we have higher other board member that would be resigning and leaving.
Speaker Change: Afterwards, so this is a you know.
Speaker Change: The process that we will engage now starting you know obviously would be would the next shareholder meeting.
Georges Karam: So this is, you know, a process that we will engage now, starting, you know, obviously, with the next shareholder meeting. And in the coming, I'll say, two or three quarters, we should be able to this target, reduce the size of the board to six, or maybe in any case below seven or six, and have almost more half of the board, new blood and new people that they are serving for their first mandate on our Thank you very much.
Speaker Change: And in the coming I would say two or three quarters, we should be able to achieve this target to reduce the size of the board.
Speaker Change: To six or maybe in any case below seven or six.
Speaker Change: And have almost more than half of the board the new new blonder, new people that they are serving for their first mandates on our own.
Thank you very much.
Speaker Change: Thank you Nick.
Speaker Change: Thank you.
Nick Doyle: Thank you, Nick. Thank you.
Speaker Change: There are no further questions at this time.
Operator: There are no further questions at this time.
Speaker Change: I would now like to turn the call over to Dr. George Karam, President and CEO. Please go ahead Sir.
Georges Karam: I would now like to turn the call over to Dr. Georges Karam, President and CEO. Please go ahead. Thank you, operators, and thank you all again, and looking forward to speak whether on next earning calls or before if we have the opportunity to have this. Thank you very much.
Speaker Change: Thank you operator, and thank you all again and looking forward to speak with our next earning calls or before if you have the opportunity to have this thank you very much.
Speaker Change: Operator, we can close that.
Speaker Change: Thank you.
Operator: operator, we can close. Thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.