Sequans Communications (NYSE:SQNS) reported third-quarter revenue of $9.1 million, up 22% sequentially and 183% from a year earlier, as product sales in its cellular IoT business increased more than fourfold year over year. Management said the company has completed its exit from Bitcoin holdings and is directing its financial resources toward IoT semiconductors, defense and drone applications, and its 5G eRedCap roadmap.
CEO and Chairman Georges Karam said the company sold its remaining 314 Bitcoin during the quarter at an average price of about $78,500 per Bitcoin, generating $24.6 million in proceeds. The sale completed an exit that began with the redemption of convertible debt in May. Sequans said it no longer holds digital assets and has no outstanding debt apart from a small amount associated with government-financed research and development projects.
At Sept. 30, cash, cash equivalents and short-term deposits totaled $39.8 million, compared with $21 million in cash and 314 Bitcoin at June 30. CFO Norman Brodt said the company also received a $2.5 million final payment related to the closing of its Chengdu development in October, which was not included in the quarter-end cash balance.
IoT Product Revenue and Pipeline Growth
For the first nine months of 2026, Sequans reported revenue of $22.6 million, exceeding its full-year 2025 revenue of $18.3 million excluding $8 million of non-recurring Qualcomm-related revenue recognized during the first half of 2025.
Karam said the company’s backlog now extends into the second half of 2027 and that its third-quarter book-to-bill ratio was again well above one. Sequans maintained its reported cellular IoT design-win pipeline of $300 million in potential three-year product revenue, a figure it updates annually. The company added nine design-win projects and eight advanced engagements during the third quarter.
Of the $300 million pipeline, $165 million was in mass production and generating revenue as of the end of the second quarter. Two additional projects entered mass production during the third quarter, and management expects the portion of the pipeline in production to exceed $180 million by year-end.
During a question-and-answer session, Karam said the expected more-than-$180 million production pipeline represents revenue over three years and should not be interpreted as a $60 million run rate in the first year. He said the business is expected to ramp over the period, with the average implying roughly $60 million annually.
- Monarch CAT-M products accounted for more than 80% of third-quarter product revenue, led by asset tracking and smart-metering applications.
- Calliope Cat 1bis revenue was supported by telematics and security projects that have entered mass production.
- Smart metering, telematics and asset tracking remained the company’s strongest vertical markets.
5G, Defense and Drone Opportunities
Sequans said it has begun substantive discussions with potential customers for 5G eRedCap projects as cellular IoT customers prepare for a transition from 4G to 5G. The company’s 5G eRedCap test chip is in-house, and it expects to complete end-to-end lab testing late in 2026. Management plans to begin customer engagements in the second half of 2027 and expects revenue from the product in 2028.
Karam said the company expects new IoT product designs to increasingly require 5G capabilities by late 2027 as carriers transition their networks. He said the company sees the opportunity for higher average selling prices and a potentially more favorable competitive environment than it faced in 4G.
Separately, the company’s Iris RF transceiver is gaining interest for defense, drone and space applications. Since beginning development-kit shipments in the second quarter, Sequans has generated more than 20 customer leads, including what it described as many tier-one customers. The company has shipped more than 30 development units, according to Karam.
Its first announced drone customer is ready for production, with initial shipments expected in the fourth quarter. Management said the current RF lead pipeline represents more than $30 million in potential three-year revenue, though most opportunities remain in the engagement phase. Karam said the initial drone design win is smaller than that total opportunity estimate.
Margins, Expenses and Outlook
Third-quarter gross margin was 33%, compared with 32.9% in the prior quarter and 25.3% a year earlier. Operating expenses were approximately $10.3 million, down from $11.9 million in the second quarter and $13.7 million in the third quarter of 2025.
Brodt said the company recorded a $6.2 million realized net gain from the final Bitcoin sale and no digital-asset impairment during the quarter, compared with a $3 million impairment in the second quarter. Sequans reported an operating loss of $1 million and a net loss of $1.5 million, or $0.10 per diluted ADS. On a non-IFRS basis, the company reported a net loss of $0.6 million, or $0.04 per diluted ADS.
Third-quarter cash burn was about $5.9 million, in line with management’s plan. Sequans said it is seeking to reduce cash burn as revenue grows and is aiming to reach break-even as quickly as possible.
For the fourth quarter, Sequans forecast revenue of $9.5 million to $11 million. The outlook assumes limited contributions from licensing and services. Management said revenue could exceed that range if it closes a major licensing agreement, but noted that the timing of revenue recognition can vary even when agreements are signed.
The company said its licensing and strategic-engagement pipeline exceeds $75 million in potential revenue, with individual opportunities ranging from several hundred thousand dollars to more than $10 million. Management aims to close some agreements in the fourth quarter.
Karam also cautioned that gross margins may remain pressured in the fourth quarter by volatile memory costs. The company is pursuing multiple sourcing arrangements for components and materials, including flash memory, and expects those initiatives to have a greater effect in 2027. Sequans said it has secured most of its anticipated wafer requirements for 2027 but continues to work with TSMC to obtain remaining capacity amid allocation constraints for mature semiconductor nodes.
About Sequans Communications (NYSE:SQNS)
Sequans Communications SA is a fabless semiconductor company that develops cellular connectivity solutions for the Internet of Things (IoT). Its technology is designed to connect devices and equipment to 4G and 5G networks, supporting applications such as asset tracking, smart metering, industrial monitoring, security systems, and connected consumer products.
The company offers chipsets, modules, and related software for several cellular IoT applications. Its product portfolio has included solutions for LTE-M and NB-IoT, which are intended for low-power, wide-area connectivity, as well as products supporting broader 4G and 5G applications.
