Sequans Communications (SQNS) stock soared on Friday after the company announced a definitive agreement to sell its 4G IoT technologies to Qualcomm (QCOM) for $200 million. The acquisition, which includes certain employees, assets, and licenses, is expected to close by the end of October 2024, pending customary closing conditions and French regulatory approval.
This strategic move allows Sequans to retain the license for its 4G IoT technology, enabling it to continue serving its IoT markets with a strengthened balance sheet. Importantly, Sequans will maintain full ownership of its 5G technology, positioning it for future growth in the rapidly evolving 5G landscape.
“We are dedicated to pushing the boundaries of innovation and providing cutting-edge 4G/5G semiconductor solutions that meet the advancing needs of AI-powered Internet of Things applications,” said Georges Karam, CEO of Sequans.
The transaction will not impact Sequans’ existing contractual obligations or operations with customers, suppliers, and industry partners. Qualcomm’s acquisition strengthens its Industrial IoT portfolio by offering low-power solutions that provide reliable and optimized cellular connectivity for IoT applications. This move further expands and accelerates Qualcomm’s role in digital transformation at the edge.
“Digital transformation is being driven by high-performance processing and intelligence at the edge, positioning Qualcomm for growth in one of the largest addressable opportunities,” said Nakul Duggal, group general manager, automotive, industrial and embedded IoT, and cloud computing, Qualcomm Technologies.
Under the agreement, Sequans will receive $185 million in cash: $175 million will be paid at closing, with an additional $10 million paid after a one-year warranty period. An additional $15 million was already paid under a pre-transaction manufacturing license agreement executed in June 2024 and will be credited toward the total $200 million purchase price.
Sequans also reported preliminary second-quarter results, showing revenue of $9.7 million, a slight increase from $9.2 million year-over-year. The non-IFRS diluted loss per ADS was $0.09, compared to a $0.10 loss in the previous year. Cash and equivalents as of June-end totaled $13.1 million compared to $0.5 million as of March-end.
Sequans stated that it is not yet able to provide the expected impact of the Qualcomm transaction on its licensing and services results for the second half of the year as the purchase price allocation will not be finalized until the fourth quarter. The company anticipates a modest increase in product revenue in the third quarter compared to the second quarter and a further strong performance in the fourth quarter of 2024.
Looking ahead, Sequans expects higher product revenue for the full year of 2025 compared to 2024 due to anticipated increases in products moving into mass production over the coming quarters.
Following the news, SQNS shares surged by 157% to $1.40 premarket at last check Friday.
