Sequans Communications S.A. reports 43.4% CAPEX growth in 2018 while 16.6% Revenue decline
02/19/2019 • About Sequans Communications S.A. (
$SQNS) • By InTwits
Sequans Communications S.A. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -63.0%
- Sequans Communications S.A. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -53.3%
- Sequans Communications S.A. has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.0%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $9m in 2018, $6m in 2017, $5m in 2016, $5m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -165.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sequans Communications S.A.'s Revenue dropped on 16.6%. Revenue decline showed acceleration in 18Q4 - it was 46.3% YoY. Revenue decline was accelerating on average at -20.1 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 34.1 pp from -28.9% to -63.0% in 2018. During the last 5 years EBITDA Margin topped in 2017 at -28.9%.
Gross Margin decreased on 4.3 pp from 43.8% to 39.5% in 2018. During the last 5 years Gross Margin topped in 2016 at 43.8% and was declining since that time. SG&A as a % of Revenue jumped on 16.4 pp from 32.0% to 48.4% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2016 at 29.4% and was growing since that time.
Net Income margin dropped on 35.8 pp from -54.2% to -90.0% in 2018. During 2014-2018 Net Income margin topped in 2017 at -54.2%.
Investments (CAPEX, working capital and M&A)
In 2018 Sequans Communications S.A. had CAPEX/Revenue of 22.9%. Sequans Communications S.A. showed CAPEX/Revenue growth of 6.0 pp from 16.9% in 2015 to 22.9% in 2018. It's average level of CAPEX/Revenue for the last three years was 16.0%.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2018. Debt increased on 9.4% while cash surged on 310%.
Sequans Communications S.A. has no short term refinancing risk: cash is higher than short term debt (1,756.7%).
Financial and operational results
FY ended 12/31/2018
Sequans Communications S.A. ($SQNS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 22.602 | 32.532 | 45.579 | 48.263 | 40.250 | -16.6% |
| Gross Profit | 6.821 | 13.081 | 19.983 | 21.141 | 15.888 | -24.8% |
| SG&A | 12.247 | 11.413 | 13.393 | 15.464 | 19.496 | 26.1% |
| EBITDA | -28.760 | -18.362 | -14.449 | -13.950 | -25.354 | |
| Net Income | -34.124 | -27.402 | -24.787 | -26.160 | -36.224 | |
Balance Sheet
|
|---|
| Cash | 12.329 | 8.288 | 20.202 | 2.948 | 12.086 | 310.0% |
| Short Term Debt | 0.202 | 0.928 | 0.601 | 1.592 | 0.688 | -56.8% |
| Long Term Debt | 0.009 | 8.984 | 16.338 | 17.063 | 19.723 | 15.6% |
Cash flow
|
|---|
| Capex | 0.000 | 5.483 | 5.390 | 6.422 | 9.208 | 43.4% |
Ratios
|
|---|
| Revenue growth | 64.8% | 43.9% | 40.1% | 5.9% | -16.6% | |
| EBITDA growth | -1.2% | -36.2% | -21.3% | -3.5% | 81.7% | |
|
|---|
| Gross Margin | 30.2% | 40.2% | 43.8% | 43.8% | 39.5% | -4.3% |
| EBITDA Margin | -127.2% | -56.4% | -31.7% | -28.9% | -63.0% | -34.1% |
| SG&A, % of revenue | 54.2% | 35.1% | 29.4% | 32.0% | 48.4% | 16.4% |
| Net Income Margin | -151.0% | -84.2% | -54.4% | -54.2% | -90.0% | -35.8% |
| CAPEX, % of revenue | 0.0% | 16.9% | 11.8% | 13.3% | 22.9% | 9.6% |
|
|---|
| ROIC | -80.0% | -139.1% | -114.6% | -80.3% | -165.0% | -84.7% |
| ROE | -81.2% | | | -402.2% | | |
Sequans Communications S.A. ($SQNS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 11 | 13 | 10 | 6 | | -9.6% | -4.2% | -9.0% | -46.3% |
| EBITDA | -6 | -5 | -6 | -8 | | | | | |
| Net Income | -9 | -8 | -10 | -9 | | | | | |
Balance Sheet
|
|---|
| Cash | 15 | 7 | 5 | 12 | | 3.4% | -65.1% | -60.1% | 310.0% |
| Short Term Debt | 2 | 15 | 1 | 1 | | 192.5% | 13.5% | -94.0% | -56.8% |
| Long Term Debt | 18 | 6 | 17 | 20 | | 5.1% | 4.8% | 180.7% | 15.6% |
Ratios
|
|---|
| Gross Margin | 41.7% | 39.4% | 35.0% | 43.3% | | -5.4% | -2.7% | -9.4% | 1.5% |
| EBITDA Margin | -51.2% | -42.4% | -61.8% | -129.7% | | -27.2% | -21.2% | -23.5% | -95.8% |
| Net Income Margin | -77.9% | -63.9% | -96.4% | -156.0% | | -32.8% | -18.6% | -35.1% | -88.4% |
Peers in Semiconductors
Below we provide Sequans Communications S.A. benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 11.0% | 5.0% |
|---|
| Sequans Communications S.A. ($SQNS) | | 43.9% | 40.1% | 5.9% | -16.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Sequans Communications S.A. ($SQNS) | 30.2% | 40.2% | 43.8% | 43.8% | 39.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.5% | 9.2% | 10.7% | 10.0% |
|---|
| Sequans Communications S.A. ($SQNS) | -127.2% | -56.4% | -31.7% | -28.9% | -63.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
|---|
| Sequans Communications S.A. ($SQNS) | 0.0% | 16.9% | 11.8% | 13.3% | 22.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.7% | 3.8% | 1.7% | 3.2% | 5.2% |
|---|
| Sequans Communications S.A. ($SQNS) | -80.0% | -139.1% | -114.6% | -80.3% | -165.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (46 companies) | -0.5x | -0.2x | 0.2x | 0.4x | 0.3x |
|---|
