Sequans Communications SA · NYSE:SQNS
Sequans Communications SA — Investor Presentation (January 2021)
40 slides from Sequans Communications SA's investor presentation, January 2021
Slide 1: Sequans Investor Briefing: 5G and IoT
Sequans Investor Briefing: 5G and IoT Capitalizing on Important Trends of the Decade January 2021 Dr. Georges Karam, CEO
Slide 2: Interactive Q&A
Interactive Q&A Dial-in numbers: 1 (800) 263 0877 1 (720) 543 0197 ©2021 Sequans Communications 2
Slide 3: Safe Harbor
Safe Harbor This presentation 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 presentation, including any sta
Slide 4: Welcome & Agenda
Welcome & Agenda Market & Strategy – Georges Karam Financial Model – Deborah Choate Questions & Answers ©2021 Sequans Communications 4
Slide 5: We are Capitalizing on Two Major Technology Trends
We are Capitalizing on Two Major Technology Trends ©2021 Sequans Communications 5
Slide 6: We are Capitalizing on Two Major Technology Trends
We are Capitalizing on Two Major Technology Trends ~$8 Billion Opportunity 2021-2025 ©2021 Sequans Communications 6
Slide 7: Enabling IoT with Cellular Connectivity
Enabling IoT with Cellular Connectivity Cloud/Edge Wireless Computing & AI Connectivity • Internet of Things is key to “Digital Transformation” mega-trend. • IoT is connecting all things in the world in real time to leverage AI for better decisions. • Goal is improving efficiency and productivity, a
Slide 8: What Makes Sequans Different?
What Makes Sequans Different? We are the only chip company with a complete range of cellular IoT solutions fully-optimized for non-smartphone applications ©2021 Sequans Communications 8
Slide 9: Cellular Technology Evolution
Cellular Technology Evolution Voice Oriented Technology Adding Data Data Oriented Technology Adding More Data 2G 3G 4G 5G 1990s 2000s 2010s 2020s Voice SMS www Voice SMS www Voice SMS Voice SMS www Highly Low LPWA Video LPWA Reliable Latency 40-384 kb/s 56 Mb/s 150 Mb/s 5 Gb/s ©2021 Sequans Communic
Slide 10: Sequans Focus: 4G/5G IoT
Sequans Focus: 4G/5G IoT Cellular IoT 4G/5G IoT 2G/3G IoT Connections (billions) Sequans’ Focus Source: Ericsson Mobility Report November 2020 ©2021 Sequans Communications 10
Slide 11: Sequans Technology Maturity
Sequans Technology Maturity 8 Technology Generations of 4G/5G Leadership 2011 2016 2021 Introduce first 4G LTE-only (FDD/TDD) chip Introduced Introduced 2nd world’s first 2019 generation Cat 1 2005-2009 LTE-M/NB-IoT solution for IoT 2015 chip (5G-compliant) 2003 Introduced 3 Introduced 2nd 2022 gene
Slide 12: IoT Vision in the Coming 5G World
IoT Vision in the Coming 5G World Broadband IoT 5G Critical IoT Massive IoT ©2021 Sequans Communications 12
Slide 13: Evolving and Diverging Technical Priorities
Evolving and Diverging Technical Priorities Broadband IoT Critical IoT Massive IoT High Speed/ High Bandwidth Efficiency Reliability AR/VR Security Smart Meters Enterprise Indoor/Outdoor Router Cloud Gaming Robotics E-Health CPE Low Low Power Latency Consumption/Cost ©2021 Sequans Communications | P
Slide 14: Technology Choice Depends on Use Case
Technology Choice Depends on Use Case Consumer Applications Industrial Applications Health Gas Pet Cloud Security Indoor/Outdoor Air Quality Advanced Asset Autonomous Fleet Monitoring Meter Tracking Gaming CPE Sensor Robotics Tracking Vehicle Management ©2021 Sequans Communications 14
Slide 15: Technology Choice Depends on Use Case
Technology Choice Depends on Use Case Consumer Applications Industrial Applications NB- Cat 1 LTE-M LTE-M 5G NR Cat 1 5G NR 5G NR LTE-M 5G NR Cat 1 IoT ©2021 Sequans Communications | Proprietary & Confidential 15
Slide 16: Key Strength: Fully-Optimized Products
Key Strength: Fully-Optimized Products Sequans 5G/4G Product Portfolio Video ©2021 Sequans Communications 16
Slide 17: Our Served Market
Our Served Market Served Cellular IoT Market ($ millions) SAM excludes: 2500 • Smart phones/tablets • Operators asking for 2G/3G fallback 2000 • China 1500 SAM growth by category: 1000 5-yr CAGR Units 5-yr CAGR $ 500 Broadband/Critical IoT 32% 47% 0 Massive IoT 51% 36% 2020 2021 2022 2023 2024 2025
Slide 18: Industry Outlook
Industry Outlook Dan Shey – Vice President Enabling Platforms, ABI Research Dan Shey, Managing Director and Vice President at ABI Research, manages the M2M/IoT, digital security and wearables research services, which cover the telecom, industrial, IT and OT ecosystems with a focus on devices, connec
Slide 19: Competition in 4G/5G IoT Served Market
Competition in 4G/5G IoT Served Market Massive IoT Broadband IoT LTE-M/NB-IoT Cat 1 Cat 4/Cat 6 5G NR Not Optimized NB-IoT Only Chinese Vendors not included ©2021 Sequans Communications 19
Slide 20: Smart Home and Consumer IoT Video
Smart Home and Consumer IoT Video ©2021 Sequans Communications 20
Slide 21: Recent Developments
Recent Developments ©2021 Sequans Communications | Proprietary & Confidential 21
Slide 22: New Markets - Private Networks
New Markets - Private Networks Airport Factory College Campus Stadium Utility Train Station ©2021 Sequans Communications 22
Slide 23: CBRS in the U.S.
CBRS in the U.S. ©2021 Sequans Communications 23
Slide 24: CBRS Modules
CBRS Modules Nick Taluja – EVP Worldwide Sales ©2021 Sequans Communications | Proprietary & Confidential 24
Slide 25: New Go-To-Market Initiatives
New Go-To-Market Initiatives Scale Sales Capability MCU Partners • Reps • Distributors Reps Scale Channel Partners • MCU Vendors Distributors ©2021 Sequans Communications 25
Slide 26: MCU Partners
MCU Partners Current Relationships Cover 55-60% of Microcontroller Market • Almost all IoT devices integrate an MCU • Partners strengthen our position with Tier#1 customers • Partners help us accessing the “dark pipe” of the IoT funnel • Various approaches integrating Monarch Platform • Joint develo
Slide 27: Next Generation Products: Monarch
Next Generation Products Monarch 2 ©2021 Sequans Communications 27
Slide 28: Next Generation Products: Calliope
Next Generation Products Calliope 2 ©2021 Sequans Communications 28
Slide 29: In Development: Taurus for 5G Broadband & Critical IoT
In Development: Taurus for 5G Broadband & Critical IoT Private 4G/5G Deployment (Vertical Sectors, Harbors, Airports, Mining, Campus) Fixed Mobile Wireless Access Routers (Home, Business) (MiFi, Mobile Computing) Critical IoT Industrial (Automotive, Surveillance (Factories, Robotic, Power Camera, AR
Slide 30: Valuable R&D Resources
Valuable R&D Resources R&D Headcount 400 Moderate Increase in Headcount 300 200 Relative to Opportunity Being Created 100 0 • Unique team delivering superior solutions 2013 2015 2017 2019 2021 2023 2025 compared with competitors with much larger teams Served Market Opportunity ($ millions) 2500 • Su
Slide 31: Large Business Pipeline
Large Business Pipeline Engagements and Qualified ~ $500M of Potential Opportunities Product Revenue • Represents specific customer projects where unit demand can be estimated • Assumes 3 years of revenue from initial Product Design production – some projects in production Wins and some will be in 2
Slide 32: Software Services for Vertical Markets
Software Services for Vertical Markets Satellite Avionics Public Safety, Military * Examples of announced partners and customers ©2021 Sequans Communications 32
Slide 33: 5G Partnerships
5G Partnerships Sovereignty Relationship with Sequans Addresses Multiple Challenges for Partners • 2019 – major $35+ million strategic partnership with Fortune Global 500 company IoT Focus 5G Avoid Single Vendor • 2020 – recently announced a technology access and license agreement with Renesas • 202
Slide 34: Financial Discussion
Financial Discussion ©2021 Sequans Communications 34
Slide 35: Revenue Trends – Reacceleration of Annual Growth Expected in 2020
Revenue Trends – Reacceleration of Annual Growth Expected in 2020 Annual Revenues ($MM) Quarterly Revenues ($MM) 60 Massive IoT Vertical Broadband IoT $16.0 (unaudited) >60% y/y growth $15.0 50 $14.0 $40.3 $13.0 40 $12.0 $30.9 30 $11.0 $10.0 20 $9.0 $8.0 10 $7.0 (1) 0 $6.0 (1) 2018 2019 2020 Target
Slide 36: Key Financial Metrics and Long-term Model (non-IFRS)
Key Financial Metrics and Long-term Model (non-IFRS) % of Revenue 2019 YTD 2020 At Scale Gross Margin 40% 46% 50% Research & Development 75.5% 63.1% 15-20% SG&A 49.4% 33.1% 10-15% Operating Income (Loss) Margin (84.8%) (49.7%) >20% Sept 30, 2020, on At End of Period ($millions) 2019 proforma basis *
Slide 37: Highly Scalable Business Model
Highly Scalable Business Model Revenue & Operating Leverage ($M) >20% Operating Margin 200 at Scale (non-IFRS) 150 • Fabless semiconductor model is highly scalable 100 • Required growth in opex is much lower >20% than target revenue growth rate 50 0 Breakeven At Scale Gross Profit Opex Operating Inc
Slide 38: Investment Rationale
Investment Rationale • We excel at developing vital, but difficult and complex technology • Served market expected to show strong growth sustainable for years • We have the right products and go-to-market strategy • High barriers to entry for potential competitors • Strategic partners partially fund
Slide 39: Interactive Q&A
Interactive Q&A Dial-in numbers: 1 (800) 263 0877 1 (720) 543 0197 ©2021 Sequans Communications 39
Slide 40: Smart City and Asset Management Video
Smart City and Asset Management Video ©2021 Sequans Communications 40
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