Sequans Investor Briefing: 5G and IoT · 2021. 1. 8. · Sequans Focus: 4G/5G IoT Sequans’ Focus...
Transcript of Sequans Investor Briefing: 5G and IoT · 2021. 1. 8. · Sequans Focus: 4G/5G IoT Sequans’ Focus...
-
Dr. Georges Karam, CEO
Sequans Investor Briefing: 5G and IoT
January 2021
Capitalizing on Important Trends of the Decade
-
©2021 Sequans Communications 2
Interactive Q&ADial-in numbers:
1 (800) 263 0877 1 (720) 543 0197
-
©2021 Sequans Communications 3
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 statements regarding our expected revenue for the fourth quarter of 2020, future revenue
potential, results of operations and financial positions, business strategy and plans, expectations for Massive IoT and Broadband and Critical IoT sales, the ability to continue to operate remotely
(as required) at high levels of productivity, increasing backlog of orders, the impact of the coronavirus on our manufacturing operations, and on customer demand, 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). 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. Except as required by law, we assume no obligation to update any forward-looking statements publicly, whether as a result of new information,
future events or otherwise. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2019, some of the factors that could cause actual results to differ
materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are
sold, (ii) unexpected increases in our expenses, including manufacturing expenses, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or
cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due
to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers,
(viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, (ix) our inability to enter into and
execute on strategic alliances, (x) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain,
(xii) our ability to remediate material weaknesses in our internal controls relating to the impact of accounting changes relating to deferred tax assets and deferred tax liabilities related to the
application of IFRS to deferred taxes on debt instruments with equity components, (xiii) the impact of the coronavirus on the ability to operate our business and research, production of our
products, or demand for our products by customers whose supply chain is impacted or whose operations have been impacted by government shelter-in-place or similar orders, and (xiv) other
factors detailed in documents we file from time to time with the Securities and Exchange Commission. This presentation also contains estimates and other statistical data obtained from
independent third parties related to market size and growth. You are cautioned not to give undue weight to such estimates and data.
-
©2021 Sequans Communications 4
Welcome & Agenda
Market & Strategy – Georges Karam
Financial Model – Deborah Choate
Questions & Answers
-
©2021 Sequans Communications 5
We are Capitalizing on Two Major Technology Trends
-
©2021 Sequans Communications 6
We are Capitalizing on Two Major Technology Trends
~$8 Billion Opportunity
2021-2025
-
©2021 Sequans Communications 7
Enabling IoT with Cellular 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, and enabling key environmental/social responsibility objectives.
• To realize these objectives, cloud/edge computing and AI must also have global, reliable and secure wireless (cellular) connectivity.
Cloud/Edge Computing & AI
WirelessConnectivity
Industry 4.0 Productivity
SustainableDevelopment
OptimizedEnergy
-
©2021 Sequans Communications 8
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 | Proprietary & Confidential 9
Cellular Technology Evolution
Voice Oriented Technology Adding Data Data Oriented Technology Adding More Data
2000s 2010s1990s 2020s
2G 3G 4G 5G
40-384 kb/s
Voice SMS Voice SMS www
Voice SMS www
LPWA Video
Voice SMS www
LPWAHighly
ReliableLow
Latency
56 Mb/s 150 Mb/s 5 Gb/s
-
©2021 Sequans Communications 10
4G/5G IoT 2G/3G IoT
Sequans Focus: 4G/5G IoT
Sequans’ Focus
Source: Ericsson Mobility Report November 2020
Cellular IoT Connections (billions)
-
©2021 Sequans Communications 11
8 Technology Generations of 4G/5G Leadership
Sequans Technology Maturity
2003
Foundersbegan developing 4G WiMAX chips
2005-2009
Introduced 3 generations of 4G WiMAX chips for broadband and mobile apps
2011
Introduce first 4G LTE-only (FDD/TDD) chip
2015
Introduced first 4G LTE Cat 1 chip optimized for IoT
2016
Introduced world’s first LTE-M/NB-IoT chip
2019
Introduced 2nd
generation LTE-M/NB-IoT platform for IoT(5G-compliant)
2022
Plan to introduce first 5G NR solution for Broadband & Critical IoT
2021
Introduced 2nd
generation Cat 1 solution for IoT (5G-compliant)
-
©2021 Sequans Communications 12
IoT Vision in the Coming 5G World
5G
Massive IoTCritical IoT
Broadband IoT
-
©2021 Sequans Communications | Proprietary & Confidential 13
Evolving and Diverging Technical Priorities
EnterpriseRouter
Indoor/OutdoorCPE
Smart Meters
High Speed/Bandwidth Efficiency
HighReliability
LowLatency
Low Power Consumption/Cost
Broadband IoT Critical IoT Massive IoT
Robotics E-Health
AR/VR
Cloud Gaming
Security
-
©2021 Sequans Communications 14
Technology Choice Depends on Use Case
Industrial Applications
Indoor/OutdoorCPE
Security Advanced Robotics
CloudGaming
PetTracking
HealthMonitoring
GasMeter
Fleet Management
Air QualitySensor
AssetTracking
AutonomousVehicle
Consumer Applications
-
©2021 Sequans Communications | Proprietary & Confidential 15
Technology Choice Depends on Use Case
Industrial ApplicationsConsumer Applications
Cat 1 LTE-M LTE-M 5G NR Cat 1 5G NRNB-IoT
5G NR LTE-M 5G NR Cat 1
-
©2021 Sequans Communications 16
Key Strength: Fully-Optimized ProductsSequans 5G/4G Product Portfolio Video
-
©2021 Sequans Communications 17
SAM excludes:• Smart phones/tablets
• Operators asking for 2G/3G fallback
• China
SAM growth by category:
5-yr CAGR Units 5-yr CAGR $
Broadband/Critical IoT 32% 47%
Massive IoT 51% 36%
Total 46% 42%
Our Served Market
0
500
1000
1500
2000
2500
2020 2021 2022 2023 2024 2025
Served Cellular IoT Market($ millions)
Broadband/Critical IoT Massive IoT
Source: ABI Research, Techno Systems Research and Sequans’ estimates
-
©2021 Sequans Communications | Proprietary & Confidential 18
Dan Shey – Vice President Enabling Platforms, ABI Research
Industry Outlook
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, connectivity, platforms, applications, big data/analytics, convergence, and strategic analysis of the entire IoT value chain extending from devices through value-added services. He plays an essential role in helping clients decipher the complex relationships and opportunities across the “digital first” and “physical first” domains.
With more than 25 years of industry experience, Dan frequently authors reports and insights that extend across the IoT, industrial, consumer and enterprise segments. Dan is frequently quoted in major industry trade and business media, including The Wall Street Journal, Forbes, CNN, Wireless Week, PC World, Cellular-News, and Network World.
-
©2021 Sequans Communications 19
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 20
Smart Home and Consumer IoT Video
-
©2021 Sequans Communications | Proprietary & Confidential 21
Recent Developments
-
©2021 Sequans Communications 22
New Markets - Private Networks
Stadium
College Campus
Factory
Train Station
Airport
Utility
-
©2021 Sequans Communications 23
CBRS in the U.S.
-
©2021 Sequans Communications | Proprietary & Confidential 24
CBRS ModulesNick Taluja – EVP Worldwide Sales
-
©2021 Sequans Communications 25
New Go-To-Market Initiatives
MCUPartners
Reps
Distributors
• Reps
• Distributors
Scale Sales Capability
• MCU Vendors
Scale Channel Partners
-
©2021 Sequans Communications 26
• 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 development kits
• Branded module
• More integrated solutions can follow
Current Relationships Cover 55-60% of Microcontroller Market
MCU Partners
-
©2021 Sequans Communications 27
Next Generation ProductsMonarch 2
-
©2021 Sequans Communications 28
Next Generation ProductsCalliope 2
-
In Development: Taurus for 5G Broadband & Critical IoT
©2021 Sequans Communications 29
Critical IoT(Automotive, Surveillance Camera, AR/VR, Drones)
FixedWireless Access
(Home, Business)
Private 4G/5GDeployment
(Vertical Sectors, Harbors, Airports, Mining, Campus)
Industrial(Factories, Robotic, Power
Plants, Wireless Machinery)
MobileRouters
(MiFi, Mobile Computing)
-
©2021 Sequans Communications 30
• Unique team delivering superior solutions compared with competitors with much larger teams
• Sustained our R&D investment level to be aligned with Cellular IoT market potential and maintain technology leadership
• In 2021 shifting substantial resources from 4G to 5G Broadband IoT
Moderate Increase in Headcount Relative to Opportunity Being Created
Valuable R&D Resources
0
100
200
300
400
2013 2015 2017 2019 2021 2023 2025
R&D Headcount
0
500
1000
1500
2000
2500
2013 2015 2017 2019 2021 2023 2025
Served Market Opportunity($ millions)
Source: ABI, Sequans estimates
-
40% Secured by Design Wins
©2021 Sequans Communications 31
• Represents specific customer projects where unit demand can be estimated
• Assumes 3 years of revenue from initial production – some projects in production and some will be in 2021-2023
• Revenue from services not included
~ $500M of Potential Product Revenue
Large Business Pipeline
Engagements and Qualified Opportunities
Product Design Wins
-
©2021 Sequans Communications 32
Software Services for Vertical Markets
* Examples of announced partners and customers
Satellite
Avionics
Public Safety,Military
-
©2021 Sequans Communications 33
• 2019 – major $35+ million strategic partnership with Fortune Global 500 company
• 2020 – recently announced a technology access and license agreement with Renesas
• 2021 – leading a consortium in 5G project funded by French government, just awarded
• Ongoing discussions with multiple potential strategic partners
Relationship with Sequans Addresses Multiple Challenges for Partners
5G Partnerships
Sovereignty
Avoid Single
Vendor
Extensive Cellular
Expertise
IoT Focus 5G
-
©2021 Sequans Communications 34
Financial Discussion
-
©2021 Sequans Communications 35
Annual Revenues ($MM)
Revenue Trends – Reacceleration of Annual Growth Expected in 2020
$6.0
$7.0
$8.0
$9.0
$10.0
$11.0
$12.0
$13.0
$14.0
$15.0
$16.0
Q3:19 Q4:19 Q1:20 Q2:20 Q3:20 Q4:20G
(unaudited)
(1)
Quarterly Revenues ($MM)
0
10
20
30
40
50
60
2018 2019 2020 Target
Massive IoT Vertical Broadband IoT
(1)
$40.3
$30.9
>60% y/y growth
(1) Q4:20 target of 10% sequential revenue growth from Q3
-
©2021 Sequans Communications 36
% of Revenue 2019 YTD 2020 At Scale
Gross Margin 40% 46% 50%
Research & Development 75.5% 63.1% 15-20%
SG&A 49.4% 33.1% 10-15%
Operating Income (Loss) Margin (84.8%) (49.7%) >20%
At End of Period ($millions) 2019Sept 30, 2020, on proforma basis *
Cash & Equivalents, Short-term Deposits $14.1 $25.3
Short-term receivables financing $4.1 $14.4
Government advances & loans $19.9 $23.4
Convertible debt $30.7 $24.6
Key Financial Metrics and Long-term Model (non-IFRS)
* Reflects conversion of notes in December 2020, reducing convertible debt from $35M reported at Sept. 30; no other changes to previously published numbers.
-
©2021 Sequans Communications 37
• Fabless semiconductor model is highly scalable
• Required growth in opex is much lower than target revenue growth rate
>20% Operating Margin at Scale (non-IFRS)
Highly Scalable Business Model
0
50
100
150
200
Breakeven At Scale
Revenue & Operating Leverage
Gross Profit Opex Operating Income
($M)
>20%
* Assumes no investment in new technology
-
©2021 Sequans Communications 38
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 funding 5G development
• Unique collection of very valuable assets – IP, knowhow, platforms, relationships
• The current market valuation does not fully reflect the company’s intrinsic value
-
©2021 Sequans Communications 39
Interactive Q&ADial-in numbers:
1 (800) 263 0877 1 (720) 543 0197
-
©2021 Sequans Communications 40
Smart City and Asset Management Video