8. Sequans Communications S.A. (NYSE:SQNS)
Number of Hedge Fund Holders In Q3 2024: 6
Sequans Communications S.A. (NYSE:SQNS) is a French specialty semiconductor company. The firm makes and sells baseband chips, radio frequency transceivers, and systems-on-chips (SoCs) that are used in 4G and 5G networks and gadgets. As a result, the firm’s performance depends on the health of the telecommunications and smartphone industries. Both of these are cyclical sectors and tend to perform well when the economy is robust. Since it’s a small and custom company, Sequans Communications S.A. (NYSE:SQNS) benefits when larger players are interested in acquiring it. The firm also suffers when the opposite is true, and this was the case in February when after Renesas terminated its acquisition deal for Sequans Communications S.A. (NYSE:SQNS), the stock tanked by 65%. Since then, it has only seen some tailwinds after Qualcomm acquired the firm’s 4G IoT tech, which also enabled Sequans Communications S.A. (NYSE:SQNS) to retire its debt and become cash-healthy. On a broader level, the firm’s hypothesis depends on its ability to develop new technologies and keep attracting larger players.
Sequans Communications S.A. (NYSE:SQNS)’s management commented on how the Qualcomm deal will help it for years to come during the Q3 2024 earnings call. Here is what they said:
“Starting with financial stability. I’m pleased to confirm that in October, we fully repaid all mature debt and it cleared all overdue payables to our suppliers. Our balance sheet is now nearly debt-free, marking a significant turning point in our ability to operate with a greater flexibility. With our strategy centered on massive IoT, we are now well positioned to make targeted investments in R&D, while effectively managing and reducing our cash burn rate in 2025. Combined with anticipated revenue growth next year, we are confident in our trajectory toward achieving breakeven by 2026. I want to recognize the incredible support we have received from our customers. Over the past year, our customers have remained steadfastly committed to Sequans despite our challenges.
As a result, we have retained almost 100% of our existing design win projects, representing a corresponding 3-year revenue pipeline that accounts for approximately $250 million of future revenue. These design wins cover a variety of IoT applications for multiyear deployments with must in the large markets of metering, tracking and fleet management. While previous financial challenges limited our ability to secure new project wins, this didn’t reduce our customer traction, particularly in our Cat 1bis Calliope 2 product. Now with a solid financial footing, we are back to work on the pipeline of opportunities and anticipate securing new design wins in 2025. In fact, both existing and potential new customers as well as partners were impressed by our Qualcomm transaction and they fully support our strategy post-deal.”
