Sequans Shares Surge Following $200M Sale Of 4G IoT Technology To Qualcomm

Sequans Communications SQNS shares are skyrocketing on Friday.

The company entered into a definitive agreement with QUALCOMM Incorporated QCOM to sell its 4G IoT technologies for $200 million.

The acquisition by QUALCOMM includes certain employees, assets, and licenses. The transaction is subject to customary closing conditions, including French regulatory approval.

With the latest development, Sequans will retain the license for its 4G IoT technology, enabling it to continue serving its IoT markets with a strengthened balance sheet, while maintaining full ownership of its 5G technology.

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“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.

This transaction will not affect Sequans’ existing contractual obligations or operations with customers, suppliers, and industry partners. It is expected to close by the end of October 2024.

Qualcomm has strengthened its Industrial IoT portfolio by offering low-power solutions that provide reliable and optimized cellular connectivity for IoT applications, further expanding and accelerating its 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 with Qualcomm, Sequans will receive $185 million in cash: $175 million will be paid at closing, with up to an additional $10 million to follow after a one-year warranty period.

Additionally, $15 million of this amount 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.

In addition, Sequans reported preliminary second-quarter results with revenues totaling $9.7 million, an 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.

“As the allocation of the purchase price of the pending Qualcomm transaction will not be finalized until the 4th quarter, we are not able to provide the expected impact of this deal on our licensing and services results for the second half of this year. Focusing on product revenue, we anticipate a modest increase in the third quarter compared to Q2 and a further stronger performance in the fourth quarter of 2024,” Sequans added.

Overall, due to the anticipated increase in products moving into mass production over the coming quarters, the company expects higher product revenue for the full year of 2025 compared to 2024.

Price Action: SQNS shares are trading higher by 157% to $1.40 premarket at last check Friday.

Photo via Shutterstock

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