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 Sequans Communications Announces Fourth Quarter and Full Year 2016 Financial Results
   Tuesday, February 14, 2017 6:00:01 AM ET

4G chipmaker Sequans Communications S.A. (SQNS ) today announced financial results for the fourth quarter and full year ended December 31, 2016.

Fourth Quarter and Full Year 2016 Highlights:

Revenue: Revenue of $14.0 million increased 12.0% compared to the third quarter of 2016, and increased 28.4% compared to the fourth quarter of 2015. In both cases, this was due to higher product sales partly offset by lower license and service revenues. Full-year revenue increased 40.1% to $45.6 million in 2016 from $32.5 million in 2015.

Gross margin: Gross margin was 38.2% compared to gross margin of 46.8% in the third quarter of 2016, and compared to 42.5% in the fourth quarter of 2015, due to a less favorable revenue mix in the fourth quarter of 2016, primarily lower license and service revenues. Full-year gross margin increased to 43.8% in 2016 from 40.2% in 2015.

Operating loss: Operating loss was $4.9 million compared to an operating loss of $4.0 million in the third quarter of 2016 and an operating loss of $5.2 million in the fourth quarter of 2015, reflecting higher revenues offset by lower gross profit and higher operating expenses. Full year operating loss for 2016 was $19.7 million compared to an operating loss of $23.6 million for 2015.

Net loss: Net loss was $5.4 million, or ($0.07) per diluted share/ADS, compared to a net loss of $5.1 million, or ($0.08) per diluted share/ADS, in the third quarter of 2016 and a net loss of $9.9 million, or ($0.17) per diluted share/ADS, in the fourth quarter of 2015. Full year net loss for 2016 was $24.8 million, or ($0.39) per diluted share/ADS, compared to a net loss of $27.4 million, or ($0.46) per diluted share/ADS, for 2015.

Non-IFRS Net loss: Excluding the non-cash items of stock-based compensation, the fair-value (in 2015) and effective interest adjustments related to the convertible debt and other financings, and the provision for WiMAX inventory (in 2015), non-IFRS net loss was $4.2 million, or ($0.06) per diluted share/ADS, compared to a non-IFRS net loss of $4.3 million, or ($0.07) per diluted share/ADS in the third quarter of 2016, and a non-IFRS net loss of $4.5 million, or ($0.08) per diluted share/ADS, in the fourth quarter of 2015. Full year non-IFRS net loss for 2016 was $19.9 million, or ($0.31) per diluted share/ADS, compared to a full year non-IFRS net loss of $23.3 million, or ($0.39) per diluted share/ADS in 2015.

Cash: Cash, cash equivalents and short-term deposit at December 31, 2016 totaled $20.5 million compared to $8.7 million at December 31, 2015.

In millions of US$ except percentages, shares and per share amounts                                                                                                                                                                        Key Metrics                                                                                                                                                                                         
                                                                                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                  Q4 2016                       %*                  Q3 2016                       %*                  Q4 2015                       %*           Full year 2016                       %*           Full year 2015                       %*
------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Revenue                                                                                                                      $14.0                                             $12.5                                             $10.9                                             $45.6                                             $32.5    
Gross profit                                                                                                                   5.3                                                          38.2%                                                            5.8                                                          46.8%                                                            4.6                                                          42.5%                                                           20.0                                                          43.8%                                                           13.1                                                          40.2%
Operating loss                                                                                                               (4.9)                                                        (34.9%)                                                          (4.0)                                                        (31.7%)                                                          (5.2)                                                        (47.7%)                                                         (19.7)                                                         -43.3%                                                         (23.6)                                                        (72.7%)
Net loss                                                                                                                     (5.4)                                                        (38.5%)                                                          (5.1)                                                        (41.1%)                                                          (9.9)                                                        (90.7%)                                                         (24.8)                                                         -54.4%                                                         (27.4)                                                        (84.2%)
Diluted EPS                                                                                                                ($0.07)                                                                                                                       ($0.08)                                                                                                                       ($0.17)                                                                                                                       ($0.39)                                                                                                                       ($0.46)
Weighted average number of diluted shares/ADS                                                                           74,501,387                                                                                                                    61,642,549                                                                                                                    59,145,393                                                                                                                    63,805,442                                                                                                                    59,144,905
Cash flow from (used in) operations                                                                                          (5.7)                                                                                                                         (9.5)                                                                                                                         (2.2)                                                                                                                        (15.6)                                                                                                                        (16.4)
Cash, cash equivalents and short-term deposit at quarter-end                                                                  20.5                                                                                                                          24.7                                                                                                                           8.7                                                                                                                          20.5                                                                                                                           8.7
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Additional information on non-cash items:
 - Stock-based compensation included in operating result                                                                       0.5                                                                                                                           0.2                                                                                                                           0.2                                                                                                                           1.1                                                                                                                           0.9
 - Change in the fair value of convertible debt embedded derivative                                                              -                                                                                                                             -                                                                                                                           4.2                                                                                                                           1.6                                                                                                                           2.0
 - Non-cash interest on convertible debt and other financing                                                                   0.7                                                                                                                           0.6                                                                                                                           0.3                                                                                                                           2.2                                                                                                                           0.8
 - Impact of revaluation of interest-free government loan                                                                        -                                                                                                                             -                                                                                                                         (0.1)                                                                                                                         (0.1)                                                                                                                         (0.3)
 - WiMAX inventory provision                                                                                                     -                                                                                                                             -                                                                                                                           0.8                                                                                                                             -                                                                                                                           0.8
Non-IFRS diluted EPS (excludes stock-based compensation, fair value                                                        ($0.06)                                                                                                                       ($0.07)                                                                                                                       ($0.08)                                                                                                                       ($0.31)                                                                                                                       ($0.39)
and effective interest adjustments related to the convertible debt
and its embedded derivative, and the non-cash impact of revaluation
of interest-free government loan)
                                                                                                            
------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
* Percentage of revenue
 

"We are pleased to report revenue growth of 40% in 2016, a year in which we became the technology leader in LTE for IoT," said Georges Karam, Sequans CEO. "During 2016, we grew and also diversified our customer base, expanded our relationships with operators all over the world, and engaged in several new technology partnerships.

"We expect continued strong momentum in design wins and a growing pipeline of new opportunities to result in higher annual revenue growth in 2017, accelerating more in 2018, as the broadband access business continues to grow and the pace of the IoT ramp continues to gain momentum."

Q1 2017 Outlook

The following statements are based on management’s current assumptions and expectations. These statements are forward-looking and actual results may differ materially. Sequans undertakes no obligation to update these statements.

Sequans expects revenue for the first quarter of 2017 to be in the range of $11.5 to $13.5 million, reflecting typical seasonality, with non-IFRS gross margin above 40%. Based on this revenue range and expected gross margin, non-IFRS net loss per diluted share/ADS is expected to be between ($0.07) and ($0.09) for the first quarter of 2017, based on approximately 75.0 million weighted average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes the impact of stock based compensation, the non-cash fair-value and effective interest adjustments related to the convertible debt and other financings, and any other relevant non-cash or non-recurring expenses.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the fourth quarter of 2016 today, February 14, 2017 at 8:00 a.m. EST / 14:00 CET. To participate in the live call, analysts and investors should dial 800-230-1059 (or +1 612-234-9960 if outside the U.S.). A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/. A replay of the conference call will be available until March 14, 2017 by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside the U.S., using the following access code: 414366.

Forward-Looking Statements

This press release contains projections and other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations and potential strategic partnerships, 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 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. 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) the impact of natural disasters on our sourcing operations and supply chain, and (xi) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

Use of Non-IFRS/non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude non-cash charges relating to stock-based compensation, the non-cash financial expense related to the convertible debt and its embedded derivative issued in April 2015 and April 2016 and the impact of revaluation of an interest-free government loan issued in October 2015. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release. We are not able to provide a non-GAAP reconciliation for forward-looking IFRS estimates for gross margin and net loss per diluted share without unreasonable efforts, because certain adjustments are not known until the end of the period. The impact of these adjustment could be significant to our actual IFRS results.

About Sequans Communications

Sequans Communications S.A. (SQNS ) is a leading provider of single-mode 4G LTE wireless semiconductor solutions for Internet of Things (IoT) and a wide range of broadband data devices. Founded in 2003, Sequans has developed and delivered seven generations of 4G technology and its chips are certified and shipping in 4G networks around the world. Today, Sequans offers two LTE product lines: StreamliteLTE(TM), optimized for IoT and M2M devices and StreamrichLTE(TM), optimized for feature-rich mobile computing and home and portable router devices. The company is based in Paris, France with additional offices in the United States, United Kingdom, Sweden, Israel, Hong Kong, Singapore, Taiwan, South Korea, and China.

Visit Sequans online at www.sequans.com; www.facebook.com/sequans; www.twitter.com/sequans

Condensed financial tables follow

 
                                                                                                                                                                    SEQUANS COMMUNICATIONS S.A.
 
                                                                                                                                                     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                                                                   
-------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                                                                         Three months ended
(in thousands of US$, except share and per share amounts)                                                                                                   Dec 31,                                                 Sept 30,                                                  Dec 31,
                                                                                                      2016                                                     2016                                                     2015
-------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------------------------------------- -------------------- ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                                                                                                                                                                                              
Revenue :
    Product revenue                                                                                                               $     11,947                                                                                   $      9,523                                                                                   $      6,551
    Other revenue                                                               2,006              2,934              4,319  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total revenue                                                                  13,953             12,457             10,870  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Cost of revenue
    Cost of product revenue                                                                                                              7,879                                                                                          5,900                                                                                          5,628
    Cost of other revenue                                                         740                731                621  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total cost of revenue                                                           8,619              6,631              6,249  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Gross profit                                                                    5,334              5,826              4,621  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Operating expenses :
    Research and development                                                                                                             6,327                                                                                          6,391                                                                                          6,752
    Sales and marketing                                                                                                                  2,204                                                                                          1,926                                                                                          1,509
    General and administrative                                                  1,669              1,459              1,540  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total operating expenses                                                       10,200              9,776              9,801  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Operating loss                                                                 (4,866 )                              (3,950 )                              (5,180 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Financial income (expense):
    Interest income (expense), net                                                                                                      (1,080 )                                                                                       (1,062 )                                                                                         (545 )
    Change in the fair value of convertible debt embedded derivative                                                                         -                                                                                              -                                                                                         (4,249 )
    Foreign exchange gain (loss)                                                  670                (61 )                                 234  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Loss before income taxes                                                       (5,276 )                              (5,073 )                              (9,740 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Income tax expense (benefit)                                                       95                 53                117  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Loss                                                                                                                              $     (5,371 )                                                                                 $     (5,126 )                                                                                       (9,857 )
Attributable to :
    Shareholders of the parent                                                                                                          (5,371 )                                                                                       (5,126 )                                                                                       (9,857 )
    Minority interests                                                              -                  -                  -  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Basic loss per share                                                           ($0.07 )                              ($0.08 )                              ($0.17 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Diluted loss per share                                                         ($0.07 )                              ($0.08 )                              ($0.17 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Weighted average number of shares used for computing:
-- Basic                                                                                                                74,501,387                                                                                     61,642,549                                                                                     59,145,393
-- Diluted                                                     74,501,387         61,642,549         59,145,393  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                              
 
                                                                                                                    SEQUANS COMMUNICATIONS S.A.
 
                                                                                                     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                             
-------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                        Year ended December 31,
(in thousands of US$, except share and per share amounts)                                                                2016                                                     2015
-------------------------------------------------------------------- -------------------- -------------------- ------------------------------------------------------------------------- -------------------- -----------------------------------------------------
                                                                                                                                                                       
Revenue :
    Product revenue                                                                                                               $     34,581                                                                                   $     24,669
    Other revenue                                                              10,998              7,863  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total revenue                                                                  45,579             32,532  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Cost of revenue
    Cost of product revenue                                                                                                             22,574                                                                                         17,970
    Cost of other revenue                                                       3,022              1,481  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total cost of revenue                                                          25,596             19,451  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Gross profit                                                                   19,983             13,081  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Operating expenses :
    Research and development                                                                                                            26,334                                                                                         25,305
    Sales and marketing                                                                                                                  7,126                                                                                          5,985
    General and administrative                                                  6,267              5,428  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Total operating expenses                                                       39,727             36,718  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Operating loss                                                                (19,744 )                             (23,637 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Financial income (expense):
    Interest income (expense), net                                                                                                      (3,686 )                                                                                       (1,516 )
    Other financial expense                                                                                                                (83 )                                                                                         (145 )
    Change in the fair value of convertible debt embedded derivative                                                                    (1,583 )                                                                                       (2,036 )
    Foreign exchange gain                                                         593                249  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Loss before income taxes                                                      (24,503 )                             (27,085 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Income tax expense (benefit)                                                                                                               284                                                                                            317
Loss                                                                                                                                   (24,787 )                                                                                      (27,402 )
Attributable to :
    Shareholders of the parent                                                                                                         (24,787 )                                                                                      (27,402 )
    Minority interests                                                              -                  -  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Basic loss per share                                                           ($0.39 )                              ($0.46 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Diluted loss per share                                                         ($0.39 )                              ($0.46 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
Weighted average number of shares used for computing:
-- Basic                                                                                                                63,805,442                                                                                     59,144,905
-- Diluted                                                     63,805,442         59,144,905  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                               
                                                                                                               SEQUANS COMMUNICATIONS S.A.
 
                                                                                            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                                                     
-------------------------------------------------------------- -------------------- -------------------- ----------------------------------------------------------------------- -------------------- ---------------------------------------------------
                                                                                                                                    At December 31,
(in thousands of US$)                                                                                            2016                                                 2015 *
-------------------------------------------------------------- -------------------- -------------------- ----------------------------------------------------------------------- -------------------- ---------------------------------------------------
                                                                                                                                                               
ASSETS
    Non-current assets
    Property, plant and equipment                                                                                           $    6,659                                                                                   $    7,116
    Intangible assets                                                                                                            7,707                                                                                        5,255
    Deposits and other receivables                                                                                                 332                                                                                          345
    Available for sale assets                                             310              321  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
        Total non-current assets                                       15,008           13,037  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
    Current assets
    Inventories                                                                                                                  8,693                                                                                        4,065
    Trade receivables                                                                                                           15,285                                                                                       16,497
    Prepaid expenses and other receivables                                                                                       3,172                                                                                        3,170
    Recoverable value added tax                                                                                                    470                                                                                          541
    Research tax credit receivable                                                                                               1,902                                                                                        2,865
    Short term deposit                                                                                                             345                                                                                          393
    Cash and cash equivalents                                          20,202            8,288  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
        Total current assets                                           50,069           35,819  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
Total assets                                                                                                                $   65,077                                                                                   $   48,856
                                                                                                                                                                                                       
EQUITY AND LIABILITIES
    Equity
                                                                                                                            $    1,923                                                                                   $    1,568
    Issued capital, euro 0.02 nominal value, 75,030,078 shares
    authorized, issued and outstanding at December 31, 2016
    (59,166,741 at December 31, 2015)
    Share premium                                                                                                              189,029                                                                                      165,536
    Other capital reserves                                                                                                      28,257                                                                                       16,864
    Accumulated deficit                                                                                                       (209,553 )                                                                                   (184,766 )
    Other components of equity                                           (796 )                              (450 )
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
        Total equity (deficit)                                          8,860           (1,248 )
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
    Non-current liabilities
    Government grant advances, loans and other liabilities                                                                       5,355                                                                                        5,385
    Convertible debt and accrued interest                                                                                       16,338                                                                                        8,984
    Provisions                                                                                                                   1,306                                                                                        1,396
    Other Liabilities                                                      22            3,267  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
        Total non-current liabilities                                  23,021           19,032  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
    Current liabilities
    Trade payables                                                                                                              18,358                                                                                        9,498
    Interest-bearing receivables financing                                                                                       7,712                                                                                        6,472
    Government grant advances                                                                                                      390                                                                                          916
    Convertible debt embedded derivative                                                                                             -                                                                                        6,091
    Finance lease obligations                                                                                                        -                                                                                           12
    Other current liabilities                                                                                                    4,415                                                                                        4,604
    Deferred revenue                                                                                                             2,275                                                                                        3,162
    Provisions                                                             46              317  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
        Total current liabilities                                      33,196           31,072  
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------- -------------------- -------------------- -------------------- -------------------- -------- --------------------
Total equity and liabilities                                                                                                $   65,077                                                                                   $   48,856
* Prior to the issuance of the audited 2015 financial statements,
the estimate of costs to complete one service contract was revised
based on the best information available at that time, resulting in a
remeasurement of the percentage of completion as of December 31,
2015. This remeasurement resulted in a shift of $177,000 in revenue
from the fourth quarter of 2015 to the first quarter of 2016, and a
corresponding increase in net loss in the fourth quarter of 2015.
 
 
                                                                                           SEQUANS COMMUNICATIONS S.A.
 
                                                                            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                                                                                                 Year ended December 31,
(in thousands of US$)                                                                   2016                                    2015
------------------------------------------------------------------------ -------------------- -------------------- ------------------------------------ -------------------- ------------------------------------
                                                                                                                                      
Operating activities
    Loss before income taxes                                                                                           $ (24,503 )                                                $ (27,085 )
    Non-cash adjustment to reconcile income before tax to net cash from
    (used in) operating activities
        Depreciation and impairment of property, plant and equipment                                                       3,080                                                      3,408
        Amortization and impairment of intangible assets                                                                   2,215                                                      1,867
        Share-based payment expense                                                                                        1,122                                                        867
        Increase (decrease) in provisions                                                                                   (240 )                                                      152
        Financial expense (income)                                                                                         3,686                                                      1,516
        Change in the fair value of convertible debt embedded derivative                                                   1,583                                                      2,036
        Other financial expenses                                                                                              83                                                        145
        Foreign exchange loss (gain)                                                                                         (18 )                                                     (340 )
        Loss (Gain) on disposal of property, plant and equipment                                                               2                                                          5
    Working capital adjustments
        Decrease (Increase) in trade receivables and other receivables                                                       705                                                     (9,091 )
        Decrease (Increase) in inventories                                                                                (4,628 )                                                    5,134
        Decrease (Increase) in research tax credit receivable                                                                963                                                        578
        Increase (Decrease) in trade payables and other liabilities                                                        2,354                                                      2,041
        Increase (Decrease) in deferred revenue                                                                             (737 )                                                    2,848
        Increase (Decrease) in government grant advances                                                                  (1,030 )                                                     (170 )
                                                                                                                            (226 )                                                     (312 )
    Income tax paid
Net cash flow used in operating activities                                                                               (15,589 )                                                  (16,401 )
                                                                                                                                                                              
Investing activities
    Purchase of intangible assets and property, plant and equipment                                                       (5,390 )                                                   (5,483 )
    Sale (purchase) of financial assets                                                                                       24                                                        345
    Sale of short-term deposit                                                                                                48                                                       (233 )
    Interest received                                                                                                         48                                                         26
Net cash flow used in investments activities                                                                              (5,270 )                                                   (5,345 )
                                                                                                                                                                              
Financing activities
    Public equity offering proceeds, net of transaction costs paid                                                        23,569                                                          -
    Proceeds from issue of warrants, exercise of stock options/warrants                                                      279                                                         29
    Proceeds from Interest-bearing receivables financing                                                                   1,240                                                      4,339
    Proceeds from interest-bearing research project financing                                                              1,021                                                          -
    Proceeds from government loans, net of transaction cost                                                                    -                                                      2,134
    Proceeds from convertible debt, net of transaction cost                                                                6,932                                                     11,572
    Repayment of borrowings and finance lease liabilities                                                                    (12 )                                                     (183 )
    Interest paid                                                                                                           (251 )                                                     (181 )
Net cash flows used in financing activities                                                                               32,778                                                     17,710
                                                                                                                                                                              
    Net increase (decrease) in cash and cash equivalents                                                                  11,919                                                     (4,036 )
    Net foreign exchange difference                                                                                           (5 )                                                       (5 )
    Cash and cash equivalent at January 1                                                                                  8,288                                                     12,329
Cash and cash equivalents at end of the period                                                                         $  20,202                                                  $   8,288
                                                                                                                                                                                             
 
                                                                                                                                                              SEQUANS COMMUNICATIONS S.A.
 
                                                                                                                                                UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
                                                                                                                           
-------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
                                                                                                                                                                                   Three months ended
(in thousands of US$, except share and per share amounts)                                                                                               Dec 31,                                             Sept 30,                                              Dec 31,
                                                                                                  2016                                                 2016                                                 2015
-------------------------------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Net IFRS loss as reported                                                                                                         $ (5,371 )                                                                                 $ (5,126 )                                                                                 $ (9,857 )
Add back
    Stock-based compensation expense according to IFRS 2 (1)                                                                           459                                                                                        183                                                                                        246
    Change in the fair value of convertible debt embedded derivative                                                                     -                                                                                          -                                                                                      4,249
    Non-cash interest on Convertible debt and other financing (2)                                                                      671                                                                                        646                                                                                        267
    Non-cash impact of revaluation of interest-free government loan                                                                      -                                                                                          -                                                                                       (148 )
    WiMAX inventory provision (3)                                                                                                        -                                                                                          -                                                                                        760
Non-IFRS loss adjusted                                                                      $ (4,241 )                                           $ (4,297 )                                           $ (4,483 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                      
IFRS basic loss per share as reported                                                                                               ($0.07 )                                                                                   ($0.08 )                                                                                   ($0.17 )
Add back
                                                                                                                                                                                                                                                                                                      
    Stock-based compensation expense according to IFRS 2 (1)                                                                        ($0.00 )                                                                                 $   0.00                                                                                   $   0.00
    Change in the fair value of convertible debt embedded derivative                                                              $   0.00                                                                                   $   0.00                                                                                   $   0.07
    Non-cash interest on Convertible debt and other financing (2)                                                                 $   0.01                                                                                   $   0.01                                                                                   $   0.00
    WiMAX inventory provision (3)                                               -              -                          $   0.01  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
Non-IFRS basic loss per share                                              ($0.06 )                          ($0.07 )                          ($0.08 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
IFRS diluted loss per share                                                                                                         ($0.07 )                                                                                   ($0.08 )                                                                                   ($0.17 )
Add back
    Stock-based compensation expense according to IFRS 2 (1)                                                                        ($0.00 )                                                                                 $   0.00                                                                                   $   0.00
    Change in the fair value of convertible debt embedded derivative                                                              $   0.00                                                                                   $   0.00                                                                                   $   0.07
    Non-cash interest on Convertible debt and other financing (2)                                                                 $   0.01                                                                                   $   0.01                                                                                   $   0.00
    WiMAX inventory provision (3)                                               -              -                          $   0.01  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
Non-IFRS diluted loss per share                                            ($0.06 )                          ($0.07 )                          ($0.08 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                      
    (1) Included in the IFRS loss as follows:
        Cost of product revenue                                                                                                   $      -                                                                                   $      4                                                                                   $      3
        Research and development                                                                                                       192                                                                                         79                                                                                        107
        Sales and marketing                                                                                                            131                                                                                         31                                                                                         29
        General and administrative                                                                                                     136                                                                                         69                                                                                        107
                                                                                                                                                                                                                                                                                                      
    (2) Related to the difference between contractual and effective
    interests
                                                                                                                                                                                                                                                                                                      
    (3) All included in cost of goods sold in the IFRS loss
                                                                                                                                                                                                                                                                                                      
 
                                                                                                                 SEQUANS COMMUNICATIONS S.A.
 
                                                                                                   UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS
                                                                                                             
                                                                                                               ---------------------------------------------------------------------- -------------------- --------------------------------------------------
(in thousands of US$, except share and per share amounts)                                                                                                                  Year ended December 31,
                                                                                                   2016                                                  2015
-------------------------------------------------------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- --------------------------------------------------
Net IFRS loss as reported                                                                                                           (24,787 )                                             (27,402 )
Add back
    Stock-based compensation expense according to IFRS 2 (1)                                                                          1,122                                                                                         867
    Change in the fair value of convertible debt embedded derivative                                                                  1,583                                                                                       2,036
    Non-cash interest on Convertible debt and other financing (2)                                                                     2,238                                                                                         755
    Non-cash impact of revaluation of interest-free government loan                                                                     (57 )                                                                                      (269 )
    WiMAX inventory provision (3)                                                                                                         -                                                                                         760
Non-IFRS loss adjusted                                                     (19,901 )                          (23,253 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
                                                                                                                                                                                                            
IFRS basic loss per share as reported                                                                                                ($0.39 )                                                                                    ($0.46 )
Add back
    Stock-based compensation expense according to IFRS 2 (1)                                                                      $    0.02                                                                                   $    0.01
    Change in the fair value of convertible debt embedded derivative                                                              $    0.03                                                                                   $    0.04
    Non-cash interest on Convertible debt and other financing (2)                                                                 $    0.04                                                                                   $    0.01
    Non-cash impact of revaluation of interest-free government loan                                                                       -                                                                                      ($0.00 )
    WiMAX inventory provision (3)                                                -                          $    0.01  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Non-IFRS basic loss per share                                               ($0.31 )                           ($0.39 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
IFRS diluted loss per share                                                                                                          ($0.39 )                                                                                    ($0.46 )
Add back
    Stock-based compensation expense according to IFRS 2 (1)                                                                      $    0.02                                                                                   $    0.01
    Change in the fair value of convertible debt embedded derivative                                                              $    0.03                                                                                   $    0.04
    Non-cash interest on Convertible debt and other financing (2)                                                                 $    0.04                                                                                   $    0.01
    Non-cash impact of revaluation of interest-free government loan                                                                       -                                                                                   $    0.00
    WiMAX inventory provision (3)                                                -                          $    0.01  
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Non-IFRS diluted loss per share                                             ($0.31 )                           ($0.39 )
-------------------------------------------------------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
                                                                                                                                                                                                            
    (1) Included in the IFRS loss as follows:
       Cost of product revenue                                                                                                    $      11                                                                                   $      17
       Research and development                                                                                                         475                                                                                         372
       Sales and marketing                                                                                                              236                                                                                         132
       General and administrative                                                                                                       400                                                                                         346
                                                                                                                                                                                                            
    (2) Related to the difference between contractual and effective
    interests
                                                                                                                                                                                                            
    (3) All included in cost of goods sold in the IFRS loss
                                                                                                                                                                                                            

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SOURCE: Sequans Communications S.A."> <Property FormalName="PrimaryTwitterHandle" Value="@sequans

Sequans Communications S.A. 
Media Relations: 
Kimberly Tassin, +1-425-736-0569 
Kimberly@sequans.com 
or 
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Claudia@sequans.com


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