Sequans Communications S.A. reports 23.3% revenue decline in 2019 and almost no change in EBITDA Margin of -63.4%
02/11/2020 • About Sequans Communications S.A. (
$SQNS) • By InTwits
Sequans Communications S.A. reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -63.4%
- Sequans Communications S.A. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2015-2019 was 0.9% while average EBITDA Margin was -46.4% for the sames years. In 2019 SBC/Revenue was even higher: 5.8%
- Sequans Communications S.A. has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.9%. At the same time it's a lot of higher than industry average of 7.8%.
- CAPEX is quite volatile: $1m in 2019, $1m in 2018, $1m in 2017, $1m in 2016, $0m in 2015
- The company has unprofitable business model: ROIC is -199.9%
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 23.3%. Annual revenue decline showed slowdown in 19Q4 - revenue jumped on 31.7%. Revenue decline was accelerating on average at -19.1 pp per annum in 2015-2019. EBITDA Margin showed almost no change in 2019. During the last 5 years EBITDA Margin topped in 2017 at -28.9% and was declining since that time.
Gross Margin increased slightly on 0.63 pp from 39.5% to 40.1% in 2019. SG&A as a % of Revenue increased on 5.1 pp from 48.4% to 53.6% in 2019. During the last 5 years SG&A as a % of Revenue bottomed in 2016 at 29.4% and was growing since that time.
Net Income margin dropped on 28.9 pp from -90.0% to -119% in 2019. During 2015-2019 Net Income margin topped in 2017 at -54.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 29.6% in 2019. The company showed fast CAPEX/Revenue growth of 17.8 pp from 11.8% in 2016 to 29.6% in 2019. Average CAPEX/Revenue for the last three years was 21.9%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 11.8% and was growing since that time.
Leverage (Debt)
Debt level is 0.0x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2019. Debt surged on 106% while cash jumped on 16.6%.
Sequans Communications S.A. has no short term refinancing risk: cash is higher than short term debt (594.4%).
Management team
The company has 4.6% shares owned by insiders.
At the end of financial year the company had 208 employees. Average revenue per employee in 2019 was
$148,385.
Financial and operational results
FY ended 12/31/2019
Sequans Communications S.A. ($SQNS) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 32.532 | 45.579 | 48.263 | 40.250 | 30.864 | -23.3% |
| Gross Profit | 13.081 | 19.983 | 21.141 | 15.888 | 12.379 | -22.1% |
| SG&A | 11.413 | 13.393 | 15.464 | 19.496 | 16.538 | -15.2% |
| EBITDA | -18.362 | -14.449 | -13.950 | -25.354 | -19.553 | |
| EBIT | | | | | -27.958 | |
| Net Income | -27.402 | -24.787 | -26.160 | -36.224 | -36.697 | |
| Stock Based Compensation | | | | | 1.797 | |
Balance Sheet
|
|---|
| Cash | 8.288 | 20.202 | 2.948 | 12.086 | 14.098 | 16.6% |
| Accounts Receivable | | | | | 8.390 | |
| Inventory | | | | | 6.664 | |
| Accounts Payable | | | | | 8.834 | |
| Short Term Debt | 0.928 | 0.601 | 1.592 | 0.688 | 2.372 | 244.8% |
| Long Term Debt | 8.984 | 16.338 | 17.063 | 19.723 | 39.767 | 101.6% |
Cash flow
|
|---|
| Capex | 5.483 | 5.390 | 6.422 | 9.208 | 9.146 | -0.7% |
Ratios
|
|---|
| Revenue growth | 43.9% | 40.1% | 5.9% | -16.6% | -23.3% | |
| EBITDA growth | -36.2% | -21.3% | -3.5% | 81.7% | -22.9% | |
|
|---|
| Gross Margin | 40.2% | 43.8% | 43.8% | 39.5% | 40.1% | 0.6% |
| EBITDA Margin | -56.4% | -31.7% | -28.9% | -63.0% | -63.4% | -0.4% |
| EBIT Margin | | | | | -90.6% |
| SG&A, % of revenue | 35.1% | 29.4% | 32.0% | 48.4% | 53.6% | 5.1% |
| SBC, % of revenue | | | | | 5.8% |
| Net Income Margin | -84.2% | -54.4% | -54.2% | -90.0% | -118.9% | -28.9% |
| CAPEX, % of revenue | 16.9% | 11.8% | 13.3% | 22.9% | 29.6% | 6.8% |
|
|---|
| ROIC | -139.1% | -114.6% | -80.3% | -165.0% | -199.9% | -34.9% |
| ROE | | | -402.2% | | | |
People
|
|---|
| Insider ownership | | | | | 4.6% | |
| Employees | | | | | 208 | |
| Revenue/Employee, th. $ | | | | | 148 | |
Sequans Communications S.A. ($SQNS) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 7 | 8 | 7 | 8 | | -37.7% | -36.8% | -31.9% | 31.7% |
| EBITDA | -5 | -5 | -6 | -4 | | | | | |
| Net Income | -9 | -9 | -9 | -10 | | | | | |
Balance Sheet
|
|---|
| Cash | 8 | 6 | 6 | 14 | | -45.3% | -10.1% | 15.9% | 15.8% |
| Short Term Debt | 9 | 9 | 13 | 2 | | 449.5% | -39.6% | 1,462.5% | 190.7% |
| Long Term Debt | 43 | 22 | 40 | 40 | | 137.8% | 273.5% | 139.4% | 102.8% |
Ratios
|
|---|
| Gross Margin | 41.0% | 40.0% | 38.0% | 41.0% | | -0.7% | 0.6% | 3.0% | -2.3% |
| EBITDA Margin | -71.4% | -62.5% | -85.7% | -50.0% | | -20.2% | -20.1% | -23.9% | 79.7% |
| Net Income Margin | -128.6% | -112.5% | -128.6% | -125.0% | | -50.7% | -48.6% | -32.2% | 31.0% |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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) | | | 63.9% | 49.5% | -23.0% |
| Adesto Technologies Corporation ($IOTS) | 4.3% | 1.6% | 27.6% | 48.8% | |
| |
|---|
| Median (68 companies) | 10.6% | 4.8% | 11.0% | 4.9% | -7.2% |
|---|
| Sequans Communications S.A. ($SQNS) | | 40.1% | 5.9% | -16.6% | -23.3% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| CEVA, Inc. ($CEVA) | 90.9% | 91.6% | 92.1% | 89.8% | |
| NVE Corporation ($NVEC) | 80.3% | 76.1% | 78.5% | 79.0% | |
| Rambus, Inc. ($RMBS) | 84.7% | 80.1% | 79.9% | 76.8% | |
| Universal Display Corporation ($OLED) | 64.2% | 83.9% | 80.8% | 75.5% | |
| Intermolecular, Inc. ($IMI) | 57.4% | 66.5% | 67.5% | 70.3% | |
| |
|---|
| Median (67 companies) | 48.1% | 48.0% | 49.1% | 50.4% | 47.5% |
|---|
| Sequans Communications S.A. ($SQNS) | 40.2% | 43.8% | 43.8% | 39.5% | 40.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| NVE Corporation ($NVEC) | 66.0% | 61.8% | 65.6% | 65.1% | |
| Micron Technology, Inc. ($MU) | | 25.4% | 47.9% | 65.0% | 54.7% |
| NXP Semiconductors N.V. ($NXPI) | 41.5% | 21.6% | 46.2% | 49.9% | |
| Texas Instruments Incorporated ($TXN) | 42.0% | 43.5% | 46.7% | 48.6% | |
| Intel Corp ($INTC) | 41.0% | 35.2% | 41.7% | 45.7% | |
| |
|---|
| Median (68 companies) | 11.4% | 9.2% | 10.7% | 9.8% | 37.4% |
|---|
| Sequans Communications S.A. ($SQNS) | -56.4% | -31.7% | -28.9% | -63.0% | -63.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 6.6% | 6.5% | 12.2% | 42.2% | |
| Renesola Ltd. ($SOL) | 0.0% | 0.0% | 78.0% | 41.7% | |
| First Solar, Inc. ($FSLR) | 4.0% | 7.9% | 17.5% | 33.0% | |
| Sigma Designs Inc ($SIGM) | 6.5% | 6.2% | 14.1% | 29.3% | |
| Micron Technology, Inc. ($MU) | | 46.9% | 23.3% | 29.2% | 41.8% |
| |
|---|
| Median (68 companies) | 4.0% | 3.6% | 4.7% | 4.2% | 11.8% |
|---|
| Sequans Communications S.A. ($SQNS) | 16.9% | 11.8% | 13.3% | 22.9% | 29.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | 2.5% | 21.5% | 51.7% | |
| Texas Instruments Incorporated ($TXN) | 29.8% | 34.9% | 43.1% | 47.5% | |
| Micron Technology, Inc. ($MU) | | 0.8% | 21.5% | 42.9% | 18.5% |
| Applied Materials Inc ($AMAT) | 15.2% | 19.0% | 31.2% | 36.4% | |
| NVIDIA Corporation ($NVDA) | 13.3% | 13.1% | 27.3% | 35.3% | |
| |
|---|
| Median (76 companies) | 3.8% | 1.7% | 3.2% | 3.0% | 18.5% |
|---|
| Sequans Communications S.A. ($SQNS) | -139.1% | -114.6% | -80.3% | -165.0% | -199.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.3x | 3.0x | 7.2x | 98.6x | |
| Inphi Corporation ($IPHI) | -6.4x | 4.5x | 33.7x | 32.2x | |
| JinkoSolar Holding Company Limited ($JKS) | 3.3x | 4.1x | 11.0x | 8.2x | |
| Lattice Semiconductor Corporation ($LSCC) | | 6.5x | 19.0x | 3.9x | |
| Renesola Ltd. ($SOL) | 35.0x | 123.6x | 2.3x | 3.3x | |
| |
|---|
| Median (46 companies) | -0.3x | 0.2x | 0.4x | 0.3x | 0.2x |
|---|
