Sequans Communications Announces

Fourth Quarter and Full Year 2021 Financial Results

PARIS - February 8, 2022 - Sequans Communications S.A. (NYSE: SQNS), a leading developer and provider of 5G/4G solutions for IoT devices, today announced financial results for the fourth quarter and full year ended December 31, 2021.

Fourth Quarter and Full Year 2021 Summary Results Table:

(in US$ millions, except share and per share data)			Q4 2021			Q3 2021			Q4 2020			Full year 2021			Full year 2020
Revenue			$13.8			$11.9			$15.8			$50.9			$50.9
Gross profit			7.9			5.8			7.1			27.2			23.5
Gross margin (%)			57.1		%	49.2		%	45.1		%	53.4		%	46.1		%
Operating loss			(4.0)			(5.1)			(5.4)			(18.3)			(24.7)
Net Profit (Loss)			(7.7)			0.2			(11.3)			(20.3)			(54.5)
Diluted earnings (loss) per ADS			($0.21)			$—			($0.36)			($0.55)			($1.94)
Non-IFRS diluted earnings per ADS *			($0.09)			($0.14)			($0.28)			($0.53)			($1.17)
Weighted average number of diluted ADS			37,497,367			41,024,405			31,044,769			36,672,946			28,108,247
* See Use of Non-IFRS/non-GAAP Financial Measures disclosure on page 3. IFRS Net Profit (Loss) includes significant non-cash interest expense and change in value of embedded derivative that are excluded from Non-IFRS measures

“Sequans exited 2021 with growing momentum in our Massive IoT and CBRS Broadband businesses, setting us up for improved results for 2022 as more design wins in our pipeline move to mass production, " said Georges Karam, CEO of Sequans. "Fourth quarter revenue grew by 16.1% sequentially and, when adjusted to exclude last year’s Jetpack contribution (1), increased by 61.4% year-over-year, mainly driven by Massive IoT and CBRS Broadband. While supply chain constraints remain a potential disruptor, we have improved visibility at this time for sufficient capacity to meet our customer demand in 2022, as the majority of the anticipated shortfall has been resolved.

“Our expanded partnership with Renesas strengthens our go-to-market opportunities for our products and provides an opportunity to reduce our manufacturing costs and increase supply capacity,” continued Mr. Karam. “Sequans’ family of MCU and channel partners, with their globally recognized brands, are the foundation of our go-to-market strategy and important growth drivers for us that are expected to accelerate in 2022. We are entering 2022 with a record backlog, and our pipeline now exceeds $650 million of potential product revenue, of which design wins represent almost 50%. We are extending our success in 2021 with our CAT-M Monarch 2 platform and enjoying an enthusiastic response to the recent launch of our CAT-1 Calliope 2 solution. At this time, around 80% of our design wins are for Massive IoT applications, where we are engaged in over 100 projects, many with high-profile, Tier-1 customers."

Mr. Karam concluded, “My team and I are committed to expanding our 5G Massive IoT and Broadband IoT leadership, leveraging our relationships with our strategic partners and channels and maximizing value for shareholders. As stated on our last earnings call, Sequans is exploring options to finance our 5G investment. We are engaged in productive dialogs with potential strategic partners and are encouraged by their level of interest. Our proven track record of closing strategic deals reinforces our confidence in reaching a mutually beneficial agreement with a new 5G partner.”

Q1 2022 Outlook

The following statement is based on management’s current assumptions and expectations and assumes no increase in the severity or duration of the COVID-19 pandemic. This statement is forward-looking and actual results may differ materially.

Taking into consideration current customer demand and expectations for component availability, management is targeting revenues to be flat for the quarter ending March 31, 2022, despite the historically seasonally lower activity in the first quarter, with a lower operating loss.

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(1) Revenues from the Verizon Jetpack were $7.2 million in the fourth quarter of 2020. There were no revenues from the Verizon Jetpack in the fourth quarter of 2021

Fourth Quarter and Full Year 2021 Highlights:

Revenue: Revenue was $13.8 million, an increase of 16.1% compared to the third quarter of 2021 and a decrease of 12.5% compared to the fourth quarter of 2020. Full-year revenue was $50.9 million for each 2021 and 2020.

Gross margin: Gross margin was 57.1% compared to 49.2% in the third quarter of 2021 and compared to 45.1% in the fourth quarter of 2020. Full-year gross margin increased from 46.1% in 2020 to 53.4% in 2021.

Operating loss: Operating loss was $4.0 million compared to $5.1 million in the third quarter of 2021 and $5.4 million in the fourth quarter of 2020. Full year operating loss for 2021 was $18.3 million compared to $24.7 million for 2020.

Net profit / loss: Net loss was $7.7 million, or ($0.21) per diluted ADS, compared to net profit of $0.2 million, or $0.01 per ADS, in the third quarter of 2021 and a net loss of $11.3 million, or ($0.36) per ADS, in the fourth quarter of 2020. Net loss in the fourth quarter of 2021 includes a $1.2 million loss on the change in fair value of the convertible debt derivative whereas in the third quarter there was a gain of $7.7 million. Full year net loss for 2021 was $20.3 million, or ($0.55) per ADS, compared to $54.5 million, or ($1.94) per ADS, for 2020. Net loss for the full year includes a $3.8 million gain on the change in fair value of the convertible debt derivative whereas in 2020 there was a loss of $13.1 million.

Net loss and diluted loss per ADS: Excluding the non-cash stock-based compensation, the non-cash impact of the fair-value and effective interest adjustments related to the convertible debt with embedded derivatives and other financings, the non-cash impact of convertible debt amendments, and deferred tax benefit or expense related to the convertible debt and other financings, non-IFRS net loss was $3.5 million, or ($0.09) per ADS, compared to $5.3 million, or ($0.14) per ADS in the third quarter of 2021, and $8.5 million, or ($0.28) per ADS, in the fourth quarter of 2020. The non-IFRS net loss includes foreign exchange gains of $118,000, or less than $0.01 per ADS, in the fourth quarter of 2021 and $409,000, or ($0.01) per ADS, in the third quarter of 2021 and a foreign exchange loss of $1.9 million, or ($0.06) per ADS, in the fourth quarter of 2020. Full year non-IFRS net loss for 2021 was $19.5 million, or ($0.53) per ADS, compared to $33.0 million, or ($1.17) per ADS in 2020. Full year non-IFRS net loss for 2021 includes foreign exchange gains of $921,000, or $0.03 per ADS, compared with foreign exchange losses of $2.7 million, or ($0.09) per ADS, in 2020.

Cash: Cash and cash equivalents and short-term deposits at December 31, 2021 totaled $4.8 million compared to $18.5 million at December 31, 2020. The balance at the end of 2021 does not reflect $16.7 million received after December 31, 2021 in proceeds from the Renesas strategic agreement and investment announced in January 2022.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the fourth quarter of 2021 today, February 8, 2022 at 8:00 a.m. ET /14:00 CET. To participate in the live call, analysts and investors should dial 877-407-0792 or +1 201-689-8263 if outside the U.S. When prompted, provide the event title or access code: 13725431. A live and archived webcast of the call will be available from the Investors section of the Sequans website at https://www.sequans.com/company/investor-relations/webcasts-and-presentations/. An audio replay of the conference call will be available until February 22, 2022 by dialing toll free 844-512-2921 or 412-317-6671 from outside the U.S., using the following access code: 13725431.

Forward Looking Statements

This press release contains projections and other forward-looking statements regarding future events or our future financial performance and potential financing sources. All statements other than present and historical facts and conditions contained in this release, including any statements regarding future results of operations and financial positions, business strategy and plans, including financing alternatives for our 5G business and ability to enter into a new 5G strategic agreement, expectations for Massive IoT sales, the impact of the Covid-19 on our supply chain and on customer demand, our expectation for sufficient capacity to meet customer demand in 2022, the impact of component shortages and manufacturing capacity, our ability to convert our pipeline to revenue and our objectives for future operations, 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 undertake no obligation to update the information made in this release in the event facts or circumstances subsequently change after the date of this press release. 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 rely on or 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. In addition to the risk factors contained in our Form 20-F for the fiscal year ended December 31, 2020, 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) our ability to meet performance milestones under strategic license agreements, (xi) the impact of natural disasters on our sourcing operations and supply chain, (xii) the impact of Covid-19 on the ability to operate our business and research, production of our products or demand for our products by customers whose supply chain is impacted or whose operations have been impacted by government shelter-in-place or similar orders, (xiii) our ability to raise debt and equity financing, and (xv) other factors detailed in documents we file from time to time with the Securities and Exchange Commission.

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 the non-cash stock-based compensation and the non-cash impacts of convertible debt amendments, conversions and repayments, effective interest adjustments related to the convertible debt with embedded derivatives and other financings; and deferred tax benefit or expense related to the convertible debt and other financings. 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.

About Sequans Communications

Sequans Communications S.A. (NYSE: SQNS) is a leading developer and provider of 5G and 4G chips and modules for IoT devices. For 5G/4G massive IoT applications, Sequans provides a comprehensive product portfolio based on its flagship Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring industry-leading low power consumption, a large set of integrated functionalities, and global deployment capability. For 5G/4G broadband and critical IoT applications, Sequans offers a product portfolio based on its Cassiopeia 4G Cat 4/Cat 6 and planned high-end Taurus 5G chip platforms, optimized for low-cost residential, enterprise, and industrial applications. Founded in 2003, Sequans is based in Paris, France with additional offices in the United States, United Kingdom, Israel, Hong Kong, Singapore, Finland, Taiwan, South Korea, and China.

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

Media Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.com

Investor Relations: Kimberly Rogers, +1 385.831-7337, krogers@sequans.com

Condensed financial tables follow