With a new strategic partner, Sequans Communications S.A. (NYSE: SQNS), a developer and provider of 5G/4G solutions for IoT devices, closed a multi-year, strategic 5G licencing agreement today.
The revenue for the first three years is anticipated to exceed $50 million under the conditions of the contract. Within 30 days of the closing, an initial payment in excess of 25% of the licence will be made. Subsequent milestone payments are expected to be made on a monthly basis over the following three years. In exchange for agreed-upon royalties on future chipset sales, the partner gets the right to produce and market the Taurus platform solely in the Chinese market.
“We are delighted to announce this new 5G strategic licensing agreement for our Taurus platform, which we expect to fund the balance of its development and expand our addressable market to China, a market currently not served by Sequans,” stated Georges Karam, CEO of Sequans. “The agreement will generate licensing revenue over the first three years and royalty revenue for 20 years on the sale of partner’s products based on our 5G technology. For the remainder of 2022, we expect this licensing revenue, when combined with our current expectations for the rest of our business, will enable us to target non-IFRS operating profitability for the second half of the year and non-IFRS operating break-even in 2023.”
Mr. Karam concluded, “We believe our Taurus technology is uniquely positioned to be a leading 5G solution fully optimized for enhanced broadband and critical IoT applications. This, combined with the flexibility of our business model, makes us an attractive potential partner to many players interested in new 5G applications and markets.”
The following assertion is based on management’s current expectations and assumptions and makes no assumptions on the impact of supply chain disruptions, China’s pandemic lockdowns, or the severity or duration of the COVID-19 pandemic on the timing of product shipments or project advancement. Since this statement is forward-looking, actual outcomes could differ significantly.
In the third quarter of 2022, management aims for sequential sales growth of at least 10% and a gross margin of over 65%.
