Why did SQNS outperform forecasts in Q4 2024?

Sequans Communications SA (SQNS) outperformed forecasts in Q4 2024 due to several key factors: 1. **Strong Licensing Revenue Growth**: Sequans experienced a significant increase in licensing revenue, with $7.7 million in Q3 2024, a 9.8% increase from $7 million in Q3 2023. This growth was likely driven by the company's successful $200 million deal with Qualcomm, which enhanced its financial stability and technological leadership in the cellular IoT space. 2. **Product Revenue Expansion**: Product revenue contributed 23.4% to the total revenues in Q3 2024, up from 9.7% in Q3 2023. This indicates a successful product diversification and market penetration. 3. **Gross Margin Improvement**: The company maintained a high gross margin of 82.5% in Q3 2024, compared to 84% in Q2 2024. This suggests efficient cost management and a strong market positioning, which directly impacts profitability. 4. **Operational Profitability**: Sequans reported an operating profit of $87 million in Q3 2024, a substantial improvement from an operating loss of $3.7 million in Q2 2024. This turnaround highlights improved operational efficiency and profitability. 5. **Qualcomm Deal Impact**: The deal with Qualcomm not only provided financial stability but also reinforced Sequans' technological leadership, enabling it to continue innovating and developing new 4G/5G IoT products. This strategic move likely enhanced the company's competitive edge and attracted new business opportunities. 6. **Design Win Pipeline**: Sequans has a robust design win pipeline, representing approximately $250 million in future revenue. This pipeline is a testament to the company's successful business strategy and its ability to convert leads into revenue. In conclusion, Sequans' outperformance in Q4 2024 can be attributed to its strategic deal with Qualcomm, product diversification, gross margin improvement, operational profitability, and a strong design win pipeline. These factors collectively contributed to the company's robust financial performance, exceeding market forecasts.