Sequans Communications Announces Third Quarter 2011 Financial Results

Sequans Communications S.A. (NYSE: SQNS), a 4G chipmaker supplying LTE and WiMAX chips to equipment manufacturers for mobile operators worldwide, today announced financial results for the third quarter ended September 30, 2011.

Third Quarter 2011 Highlights:

Revenues are in line with guidance; gross margin and non-IFRS earnings per share are better than guidance.

Revenue: Revenue of $26.2 million decreased 14% sequentially from the second quarter of 2011 and increased 39% compared to the third quarter of 2010.

Gross margin: Gross margin of 53.6% was higher than the gross margin in the second quarter of 2011, which was 46.6%, due mainly to the effect of product cost reduction during the quarter, combined with the impact of customer mix.

Operating income: Operating income of $1.9 million was the same as the second quarter of 2011, and increased 35% compared to the third quarter of 2010. Operating margin in the third quarter was 7.1%, compared to 6.2% in the second quarter of 2011 and 7.3% in the third quarter of 2010.

Net Profit: Net profit was $3.2 million, or $0.09 per diluted share/ADS, compared to a net profit of $0.1 million, or $0.00 per share/ADS in the second quarter of 2011 and a net profit of $0.8 million, or $0.03 per share/ADS in the third quarter of 2010.

Non-IFRS Net Profit: Excluding stock-based compensation and the change in the fair value of the option component of convertible notes, non-IFRS net profit was $2.8 million ($0.08 per diluted share/ADS), compared to a non-IFRS net profit of $2.8 million ($0.08 per diluted share/ADS) in the second quarter of 2011, and a non-IFRS net profit of $1.1 million ($0.04 per diluted share/ADS) in the third quarter of 2010.

In millions of $US except percentages, shares and per share amounts			Key Metrics
			Q3 2011			%*			Q2 2011			%*			Q3 2010			%*
Revenues			$26.2						$30.6						$18.9
Gross profit			14.0			53.6%			14.3			46.6%			8.9			47.4%
Operating income			1.9			7.1%			1.9			6.2%			1.4			7.3%
Net profit			3.2			12.3%			0.1			0.2%			0.8			4.4%
Diluted EPS			$0.09						$0.00						$0.03
Number of diluted shares/ADS			35,089,236						35,209,641						26,426,760
Cash flow from (used in) operations			5.9						(0.4)						(4.8)
Cash and cash equivalents			65.5						61.9						8.0
Additional information:
Stock-based compensation included in operating result
			1.3						1.1						0.3
Change in the fair value of convertible notes option component included in financial result			(1.7)						1.7						-
Non-IFRS diluted EPS (excludes stock-based compensation and change in fair value of the option component)			$0.08						$0.08						$0.04
* Percentage of revenues

“We achieved several important milestones during Q3, particularly in LTE,” said Georges Karam, Sequans CEO. “Although the recent developments in the US WiMAX market will continue to affect us in the near term, we believe that they will have no impact on our long-term prospects. With our new LTE chips sampling in the fourth quarter, we expect LTE design wins to accelerate beginning in Q1 2012, for both the FDD and TDD markets, with the related revenues expected to begin ramping in the second half of 2012.

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