Sequans Communications (NYSE: SQNS), a leading developer and provider of cellular IoT (Internet of Things) technology, reported a transformative third quarter in 2024, marked by a significant deal with Qualcomm (NASDAQ:QCOM) and a strong financial turnaround. CEO George Karam and CFO Deborah Choate outlined the company's substantial progress, including the elimination of nearly all debt, a robust design win pipeline, and the launch of new 5G products.
Key Takeaways
- Sequans Communications closed a $200 million deal with Qualcomm, enhancing financial stability and technological leadership.
- The company retained perpetual licensing rights for its 4G IoT technology.
- Sequans expects to reach breakeven by 2026, supported by a design win pipeline worth $250 million.
- Q3 2024 revenues rose by 29.5% year-over-year to $10.1 million.
- Gross margin stood strong at 82.5%, with an IFRS operating profit of $87 million.
- Net profit for Q3 reached $80.5 million or $2.91 per diluted ADS.
- Product revenue is projected to double in Q4 2024 with continued growth in 2025.
Company Outlook
- Sequans anticipates breakeven by 2026 and a 10% sequential growth in Q4 2024.
- Product revenue is expected to double in the next quarter.
- New design wins and ongoing licensing opportunities are projected to drive growth in 2025.
Bearish Highlights
- The company faced a non-cash impairment charge of $56.6 million related to the suspended 5G Taurus Project.
- Plans to reduce cash operating expenses to below $10 million per quarter on average in 2025 indicate a strategic cost-cutting measure.
Bullish Highlights
- The significant deal with Qualcomm has solidified Sequans' market position.
- The company has maintained key customer and supplier relationships, crucial for future growth.
- Sequans is launching eRedCap in 2024 and RedCap in 2025, expanding its product offerings.
Misses
- There were no specific misses mentioned in the provided context.
Q&A Highlights
- Karam discussed the importance of future-proofing devices, given the concern about the longevity of 4G networks.
- Sequans is optimistic about signing additional licensing deals in 2025, building on a strong historical performance in this area.
Sequans Communications' third quarter of 2024 has been pivotal, with the company successfully navigating a strategic transformation, largely due to the closure of a lucrative deal with Qualcomm. This partnership not only fortified Sequans' financial position but also cemented its leadership in the cellular IoT market. The company's ability to maintain perpetual licensing rights for its 4G IoT technology ensures ongoing support for existing products while pivoting focus to the development of next-generation 5G solutions.
The financial health of Sequans has markedly improved, with the company eliminating nearly all debt and setting a clear path to achieving breakeven by 2026. This optimistic financial trajectory is underpinned by a substantial design win pipeline, estimated to be worth around $250 million. The third quarter saw a significant year-over-year revenue increase, with a notable rise in product revenue, which is anticipated to double in the fourth quarter of 2024.
Sequans' commitment to innovation in the IoT space is evident in its upcoming product launches, including eRedCap in 2024 and RedCap in 2025. These products are designed to meet the diverse needs of high-end and cost-sensitive IoT applications, respectively, and are contingent on the rollout of standalone 5G networks, particularly in the U.S. market.
Overall, Sequans Communications appears poised for continued growth, leveraging strong customer relationships, a robust pipeline of design wins, and strategic licensing opportunities. The company's focus on cost management and R&D investment in 5G technologies positions it well to expand its market share in the evolving IoT landscape.
InvestingPro Insights
Sequans Communications' recent transformative quarter aligns with several key metrics and insights from InvestingPro. The company's significant deal with Qualcomm and its improved financial outlook are reflected in some of the data points.
According to InvestingPro, Sequans has shown a strong return over the last three months, with a price total return of 106.06%. This aligns with the company's reported financial turnaround and the positive impact of the Qualcomm deal. Additionally, the stock has seen a large price uptick over the last six months, with a 86.64% total return, further supporting the bullish sentiment surrounding the company's recent developments.
However, it's important to note that despite these recent gains, InvestingPro data shows that Sequans' revenue for the last twelve months as of Q2 2024 was $28.26 million, with a revenue growth of -47.17% over the same period. This contrasts with the company's reported 29.5% year-over-year revenue increase in Q3 2024, suggesting a potential turnaround in revenue trends.
InvestingPro Tips highlight that analysts anticipate a sales decline in the current year, which may be a factor for investors to consider alongside the company's optimistic projections for product revenue doubling in Q4 2024. The tips also indicate that Sequans is not profitable over the last twelve months, which is consistent with the company's goal to reach breakeven by 2026.
It's worth noting that Sequans generally trades with high price volatility, which could be attributed to its position in the dynamic IoT market and recent strategic shifts. This volatility may present both opportunities and risks for investors.
For those interested in a deeper analysis, InvestingPro offers 10 additional tips for Sequans Communications, providing a more comprehensive view of the company's financial health and market position.
Full transcript - Sequans Communications SA (NYSE:SQNS) Q3 2024:
Operator: Good morning, ladies and gentlemen, and welcome to the Sequans Communications Third Quarter 2024 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. [Operator Instructions]. This call is being recorded on Tuesday, November 5, 2024. I would now like to turn the conference over to Ms. Kim Rogers (NYSE:ROG), Managing Director of Hayden IR. Please go ahead.
Kim Rogers: Thank you, Chloe, and thank you to everyone participating in today's call. Joining me on the call today from Sequans is George Karam, Chairman and CEO; and Deborah Choate, Chief Financial Officer. Before turning the call over to George, I would like to remind our participants, of the following important information on behalf of Sequans. First, Sequans issued the earnings press release this morning, which was posted to the company's website at www.sequans.com under the Newsroom section. Before we start, I would like to remind everyone that this conference call 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 within this release, including any statements regarding our business strategy, cost optimization plans, strategic options, the ability to enter into new strategic agreements, expectations for Massive IoT sales, our ability to convert our pipeline to revenue, 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 1993, 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. More information on factors that could affect our business and financial results are included in our public filings made with the Security and Exchange Commission. And now, I'd like to hand the call over to Georges Karam. Please go ahead, George.
Georges Karam: Thank you, Kim. Good morning, everyone. I'd like to thank you all for joining us today. I'm excited to share an update on where Sequans stands as we continue our transformation following the successful closing of the Qualcomm deal. As you may know, we've been navigating a rebuilding phase and I'm pleased to say that we believe Sequans is on a strong trajectory towards growth and long-term success. Let me walk you through the recent development highlighting why we believe in our future success and growth. First, we successfully closed the Qualcomm transaction securing $200 million in funding for the company. This was a critical milestone for us. The deal not only enhances our financial standing, but more importantly validates our technological leadership in the cellular IoT space. This bolster the confidence of both our existing and potential customers in our ability to innovate, compete, and support them in multi-year relationships. Our financial stability is no longer a challenge and a major industrial leader has endorsed our technology. Second, as we have retained perpetual licensing rights to our 4G IoT technology, we can maintain and enhance our 4G product offerings with the LTM and the IoT Monarch 2 and Cat 1bis Calliope 2 platforms. This enables us to support our design win pipeline and drive short-term revenue growth. Meanwhile, we'll focus our R&D resources on developing next-generation innovative 5G RedCap and eRedCap solutions to continue our growth trajectory and create more value for our shareholders. Let me provide more detail on these points. 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. The testimonial in our recent press release affirm their view of the value of our technology and of Sequans as a trusted partner. The recognition of our leadership in the 4g, 5g IoT industry underscores the competitive strength of our products and solution. Now with our team solely focused on executing our business strategy, we are devoting all of our energy and resources to driving growth. Importantly, we are more confident than ever in our competitive edge. This confidence stems from our ability to execute on innovative product strategy that enhances our existing 4g IoT platform and drives the introduction of next generation 5g Redcap and e-Redcap products. We expect this will accelerate new design wins while the existing design win projects move to mass production. Let's take a closer look at our revenue growth and outlook for the upcoming quarters. two key factors provide us with a strong visibility into our revenue trajectory from the coming year and beyond for the coming year and beyond. First, on the product side, our design win pipeline remain robust with more projects transitioning into mass production starting in the Q4 of this year and continuing through 2025. Second, we have a line of sight for new projects coming online in 2025 that we expect to accelerate our growth in 2026. All this anticipated growth is based on existing matured Monarch and Calliope 2 platforms that require limited R&D investments. Our design wins pipeline is built with industry-leading customers such as Itron (NASDAQ:ITRI), Honeywell (NASDAQ:HON) and Geotab as well as with major ODM partners aggregating numerous OEM customers. Many of these design wins have an average lifecycle that exceeds 5 years, providing stable revenue streams over the long term. Similarly, we are engaged with Tier 1 customers on numerous new opportunities that we are targeting to close in the coming quarters. It's important to highlight that in addition to 4G/5G product sales Sequans will continue expanding its licensing and services business. First, we continue supporting our existing Chinese partner and expect this relationship to generate services and royalty revenue in the future. Second, we have other engagements we believe could lead to new licensing and service deals in 2025. In fact, our existing 5G IP and future innovations on RedCap and eRedCap should allow us to secure new licensing deals similar to what we have done in the past. Our licensing strategy involves addressing new market segments or regions through partnerships and securing new business opportunities with limited investment. This approach could bring incremental growth through high-margin licensing and service revenue. Further advancing our path to break. We are optimistic about near-term revenue growth. With backlog in hand, we expect fourth quarter product revenue to double from the third quarter. Looking ahead to 2025, we anticipate product revenue growth to continue as new design win projects move to mass production. Additionally, we expect some licensing and service revenue from existing engagements, any new deals that we target closing in 2025. Operationally, we are targeting cash operating expenses, meaning excluding depreciation amortization and equity compensation expense to fall below $10 million per quarter in 2025. Driven by a combination of cost efficiencies and focused R&D investments supporting our revenue growth. This reduction in expenses will allow us to reduce our cash needs. Now, as a last point, I want to dive into one of the key questions on investors' mind. How Sequans will remain competitive in the IoT market, especially in such a rapidly evolving industry. The answer lies in our ability to continue delivering product innovation. I'm proud to say that we've retained world-class engineering team with deep expertise in 4G and 5G. This team's expertise is the driving force behind our roadmap for improving Monarch 2 and Calliope 2 platforms and introducing next generation 5G products. Sequans also has a differentiated go-to-market strategy with the flexibility to support our customers in unique ways by providing everything required as one-stop shop, chips, modules, and software solutions, which are customizable as needed for a broad scope of IoT applications. Additionally, 5G RedCap and eRedCap technology are gaining significant importance with IoT industrial customers who are looking for a future-proof cellular connectivity solution in anticipation of the evolution of the network to pure 5G. Our roadmap is closely aligned with 5G standalone deployments with a first to market approach setting the stage for us to take advantage of the growing demand for next generation 5g connectivity solution. Another factor supporting our continued relevance is the industry's growing need for at least two reliable sources of western design technology from suppliers fully committed to cellular IoT with a comprehensive 4G and 5G product offering. This means that customers, especially those in North America, Europe, and Japan need more than 1 chip alternative to address sovereign challenges and avoid relying too heavily on one supplier. This factor combined with the current geopolitical situation positions Sequans exceptionally well particularly after the endorsement of our technology with the Qualcomm transaction. In summary, there are four key indicators that demonstrate Sequans is in a dynamic rebuilding phase. First, we significantly transformed our balance sheet eliminating nearly all of our debt and substantially strengthening our cash position. Second, we've retained the rights to our 4G IoT technology which enables us to continue supporting our existing customers while building new products and next-generation 5G solution. Third, we've preserved our critical customers and supplier relationships ensuring that the design wins we've secured are entering mass production, giving us visibility into product revenue growth for 2025. Last, we anticipate generating new licensing and services revenue sources that will further limit our cash burn. I will now turn the call over to Deborah to review the Q3 financial results in detail. Deborah?
Deborah Choate: Thank you, George, and good morning to everyone. Before we get started, please note that the financial results released today are preliminary. Our final results are subject to finalization of the purchase price allocation, including receiving purchase price allocation input from Qualcomm, which is expected to be completed in December. This process involves allocating the purchase price among the acquired intangible and intangible assets based on their estimated fair market value. This process is required for both financial reporting and tax purposes. Now moving on to our Q3 overview. Our revenues for the Q3 of 2024 increased 29.5% to $10.1 million from $7.8 million in the Q3 of 2023 and increased sequentially by 4.2%. Product revenue accounted for 23.4% of total revenues compared to 9.7% in the Q3 of 2023 and 25.2% in the prior quarter. We experienced a shipment delay at the end of September, which prevented us from shipping about $500,000 of product. Licensing revenue was $7.7 million a 9.8% increase compared to $7 million in the prior year quarter and a 6.7% increase compared to $7.2 million in the Q2 of this year. This quarter, we recognized $6.7 million in revenue from partial delivery under a 5G license to Qualcomm as part of the overall transaction. We expect additional licensing revenue under this agreement to be recognized in Q4 and into 2025. Gross margin in the third quarter of 2024 of 82.5% continues to reflect the favorable impact of higher margin license revenue, dominating the mix and is stable compared to 84% gross margin in Q2. Gross margin on product revenue was 36.9% in Q3 compared to 39.1% in Q2. IFRS operating profit was $87 million in the quarter compared to operating losses of $3.7 million in Q2 of 2024 and $7.8 million in the third quarter of 2023. The increase in operating profit compared to the prior quarters is due to the net gain on the sale of the 4G assets sold to Qualcomm of $152.7 million. Our estimation of the value of the assets sold is $175.4 million. This gross gain was reduced by the net book value of R&D capitalized for Monarch 2 and Calliope 2 of $18.4 million and by deal-related fees and expenses. This gain was partially offset by a non-cash impairment charge of $56.6 million for intangible and tangible assets related to our Taurus product. As a result of our decision to indefinitely suspend development of the 5G Taurus Project, we determined it was appropriate to write off assets on the balance sheet that were dedicated to Taurus. We had an increase in R&D expense due to no longer capitalizing the R&D related to Taurus, but we continued to capitalize Calliope 2 costs through the date of the asset sale, and we had increases in all lines of operating expenses due to an exceptional bonus to all employees and management. Interest expense decreased compared to the prior quarter due to lower interest expense on matured debt. Interest in Q3 was accrued at the contract rate with no IFRS impact on a non-IFRS basis. Our net profit for Q3 2024 was $80.5 million or $2.91 per diluted ADS, as compared to a non-IFRS net loss of $5.8 million or $0.23 per diluted ADS in the prior quarter and a non-IFRS net loss of $6.8 million or $0.29 per diluted ADS in the third quarter of 2023. The per ADS numbers reflect the change in our ADS to ordinary share ratio effective on October 9th, we changed to one ADS representing 10 ordinary shares from one ADS representing four ordinary shares. Cash and cash equivalence totaled $173.6 million at the end of Q3 compared to $13.1 million at the end of Q2. The Q3 balance includes $172 million in proceeds from the Qualcomm transaction received on September 30th, 2024. Subsequent to quarter end, we repaid about $85 million in mature debt and accrued interest lowering the debt balance shun on the balance sheet as of September 30th, by the same amount. Our remaining debt is a loan from the French government as well as advances for R&D projects including for 5G eRedCap development repayable once we begin to commercialize the underlying products. In October, we also paid down overdue supplier accounts and fees related to the transaction. Turning to the outlook we expect approximately 10% sequential growth in Q4, 2024. Product revenue is expected to double from Q3 and licensing and service revenues will remain significant, including a licensing component related to the Qualcomm deal. Note that as of the end of September 2024, there is around $13 million of licensing revenue related to the Qualcomm deal that will be recognized between Q4, 2025, and the timing will depend on the timing of delivery of various IP components. In addition, as George mentioned, we are implementing actions to reduce our cash operating expenses, meaning excluding depreciation, amortization and equity compensation expense to be below $10 million per quarter on average in 2025. On a final note, we are attending the upcoming ROTH and then MKM conference in New York City on November 20th. Please contact your ROTH representative to schedule a one-on-one with us. In addition, Kim Rogers, our IR consultant, can assist in scheduling a call with George and me. Kim's contact information is at the bottom of today's press release. At the conclusion of this call, we will post a written version of our formal remarks in the Investor Relations section of our website on the Webcast and Presentations page, the same location where you can find the audio replay. And now I'll turn the call back to George.
Georges Karam: Thank you, Deborah. Operator, we are ready to open the call for Q&A please.
Operator: [Operator Instructions]. Our first question comes from the line of Scott Searle from Roth Capital. Please go ahead.
Scott Searle: Good morning, and good afternoon. Congrats on getting the deal closed, George, and congrats on the improving outlook and customers returning to buy Sequans product. George, maybe just to start on that front, the product recovery seems to be strongly underway. You provided some details in some of the verticals. I'm wondering if you could go a little bit more into detail to seeing how that recovery progresses into 2025. I know there's a lot of meter opportunities, there's a lot of fleet opportunities that are in the pipeline. And how you expect that to kind of continue to ramp in 2025 given that you've got a $250 million design win pipeline? And kind of how that's starting to break down also by technologies? Are you starting to skew more towards Cat 1 versus Cat M? Any color on that front would be helpful.
Georges Karam: I mean, Scott, as you mentioned, I mean, really the design win pipeline is intact and this is maybe the best thing we achieved, I will say during the last couple of years of challenge or a year and a half of challenge because we could lose a lot of deals, but customers stick with us and they continue to design. And I mentioned a little bit like, although the design win conversions was not fast or was very minimum I should say, now it's back to life and we are seeing traction again and we start closing new deals. But to talk about the specifically the growth, you need to imagine that this year, most of our business was really focusing in terms of product on Cat MNOG2 revenue, which are projects that they were, they moved to production beginning of the year and they were progressing. We start seeing new ones coming in Q4, and this will continue next year with more projects turning. And when I talk about projects, not necessarily always by the way, new customers, sometimes we have the same customer with whom we have like multiple projects. And in the first year we saw only one project converging to revenue, and we are shipping to this customer, but the shipment level remain, I'll say low in comparison to the potential of this customer when three more projects will be turning to mass production as scheduled by our customer executing. So, we're going to see sequential growth, maybe Q1 will be a little bit Q4, as I said, will double Q1 will be okay, and then we'll continue from there. Growing every quarter based on what we are seeing in terms of convergence of product, really one customer. We just only waiting for the customer to turn to mass fraction. And there is an inflection point as well next year related really to what you mentioned about the product nature. As I said, we are shipping more to the Monarch and Cat M. Cat 1bis platform, we didn't ship much, will be shipping a little bit in Q4, but really the beginning of this. However, we had many customers projects where turning again to mass production, we start getting backlog for next year with some customer ready already with their platform and others to turn to production in more towards end of Q1 and Q2. So next year we are going to have continuity of Monarch 2 projects growth with more projects win. And really the conversions of the design win of Calliope 2 turning to mass production next year. I will not say like half next year, maybe in dollar amount that will be 60/40, because the Cat 1 value is higher. The Cat 1 is still in the beginning of the ram. However, in 2026 we could see Cat 1 as big, as Cat M even a little bit higher, I tend to say.
Scott Searle: Very helpful. And, maybe to just build on that and kind of wrap RedCap into the conversation, it's clear from going to industry trade shows and events that, you guys have kind of been pulled into center stage post the Qualcomm acquisition. It seems like from a design activity standpoint, from a relevant standpoint, validation standpoint, that's driving that opportunity pipeline, that design when pipeline. So, I wonder if you could address that as well with RedCap. The timing of RedCap and it seems like it's becoming increasingly more relevant with customer roadmaps, particularly on the industrial IoT front in terms of your ability to not only offer Cat M and Cat 1, but to migrate to Red Cap. And so how that's all playing together and when RedCap starts to become relevant and who the competition is.
Georges Karam: Yes, I mean, maybe just one clarification. When we talk about RedCap, obviously it's the family reduced capacity of 5G, so it's, let's call it low cost 5G, and we talk about RedCap and eRedCap and the difference between the two that RedCap is really for high-end IoT for camera application because it allows you to do 100 megabit to 150 megabit per second, while when you go to eRedCap, you limit the speed really to let's say 10 megabit and below. And the eRedCap is the solution that will be, I would say the 5G flavor of Cat 1bis and LTM, and the RedCap will be like addressing high end industrial application. So, we're working on the two as we said. Our eRedCap will be faster and will bring something to market, next year. I don't want to say more on this because we'll be announcing this and, our customer, they know on NDA what we are telling them, and we believe eRedCap will follow the following year to market from execution point of view. In a high-level view what I'm saying here. Now, when you look to the demand, this will be, you need to understand that to get RedCap and eRedCap, you need 5G to be standalone. 5G deployments standalone where today most of that 5G deployment are non-standalone. In other words, the device will connect first immediately on 5G. The device doesn't need at all 4G to connect. And we know that in the U.S., carriers started their deployment of standalone and this will take them maybe a couple of years to be, I would say, nationwide coverage where the RedCap and eRedCap will be almost a must in every place. However, you need to think about it like the customers have concern and because they want really to address the evolution of the network and how they can deploy device today, let's say a meter, which is going to stay there for 10 years and I would like to get this meter operating over 10 years even more. You could say today maybe it's okay if I deploy today because I can expect 10 more years of 4G network still available. So, if I deploy a 4G product, it's fine. If you project this 2 years, 3 years down the road, you start feeling the same customer even if 4G is still operating, he is going to challenge that what he is going to deploy maybe will have a problem in 5 years, 6 years, or 7 years down the road. This means those customers will start asking to have a device capable of supporting eRedCap even if they don't want to use it immediately, but they want to have it future proof eRedCap capable. And this is where why we are pushing for this and essentially support our customer with this transition of the network from 4G to 5G. And as I said, we have a very matured platform LTM and Cat 1bis. We'll be making some improvement and as usual on existing product. However, the focus of our R&D will be to innovate on a new platform coming for eRedCap to plan discontinuity and support our customers.
Scott Searle: Great. Very helpful. And lastly, if I could, just on the licensing front, looks like near term you're going to have some ongoing licensing recognition or RedCap from Qualcomm. But it sounds like there's also a pipeline of opportunities building on the RedCap and eRedCap front that are similar to the licensing deals you've won in the past. I'm wondering if you could elaborate on that front, just how active the engagement pipeline is, and then I'll get back in the queue.
Georges Karam: I mean, Scott, I mean, as you know, track record of Sequans, if you go back even 10 years, I mean, there is no 1 year where we didn't do strong licensing and revenue. It's not the business that scales to many 100 million or whatever I mean, but this business exists and gives the capability to Sequans to always get $10 plus maybe sometimes $20 plus and $30 plus million depending on the platform and so. And this is because we are always on the edge with our innovation and we have customer and partner interested in approaching us and get access to this technology. And we believe this will continue. We are engaged with many partners, obviously we'll be selective on the partner because we always do those deals to avoid impacting our product revenue, I'll say in terms of relationship by selecting the nature of this partnership. But we are quite optimistic and positive. We have few deals under discussion and I'm sure we'll sign more next year in 2025.
Scott Searle: Thanks, so much. Congrats on closing the deal and looking forward to 2025.
Georges Karam: Thanks, Scott.
Operator: [Operator Instructions]. There are no question at this time. Please continue.
Georges Karam: Thank you, Operator. Thank you again for joining the call today. Just a few words to conclude this call. As I said, with a $250 million three years product revenue design win pipeline and the strong support of our customers to the new position of Sequans and our innovative product roadmap, we are confident in our ability to expand our market share in the 4G and 5G IoT market. The road ahead is exciting and I believe Sequans is in a strong position to grow and be success. I extend the heartfelt thanks to all our stakeholder who have stood by us and we look forward to your continued support. Thank you very much. Thanks, operator. We can close the call now.
Operator: This concludes today's conference call. Thank you and you may now disconnect.
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