SEALSQ Announces Substantially
Improved H1 2023 Financial
Results as Compared to H1 2022: Reports
38% Growth in Revenue
and 63%
Higher Gross Profit
Schedules Conference Call for Wednesday,
September 13 at 9:00am ET
- Improved results for H1 2023
were due to the higher demand for
semiconductors across all geographic
regions, following
semiconductor shortages triggered by the
Covid pandemic
- Expects H2 2023
revenue growth to remain
strong, with FY 2023 revenue to increase
by 20% as compared to FY 2022
- 2024 to be a transitional
year; introduction of several next generation
products to set the stage for continued growth
in 2025/2026
Tortola, British Virgin Islands – September 11, 2023: SEALSQ
Corp (Nasdaq: LAES) (“SEALSQ” or “Company”), a company that focuses
on developing and selling Semiconductors, PKI and Post-Quantum
technology hardware and software products, today announced its
financial and operational results for the first half (H1) 2023
period ended June 30, 2023, expectations for the second half (H2)
of the year, and growth initiatives for 2024-2026. Carlos Moreira,
CEO of SEALSQ noted, “We delivered strong H1 2023 financial and
operational performance with 38% increase in revenue, 63% higher
gross profit and expanded operations across all regions. These
improved results can be primarily attributed to the successful
implementation of our business strategy aiming to take advantage of
higher demand for semiconductors due to supply chain disruption and
inventory shortages related to Covid-19 pandemic. While supply
chains have somewhat stabilized and are expected to return to
pre-pandemic levels, we're observing a resurgence in the industry's
competitive spirit as customers have the freedom to diversify their
semiconductor sources without being hampered by supply shortages.
That said, we remain confident and optimistic about our growth
trajectory. We anticipate strong growth in revenue to continue and
project our FY 2023 revenue to increase by over 20% as compared to
FY 2022, but we see growth rates in H2 2023 to be somewhat slower
than the first half of the year.”
Mr. Moreira continued, “We remain committed to innovation and
meeting the needs of our customers in this rapidly evolving
landscape. Due to our continued investments in R&D and the
introduction of the next generation of products, we see that many
of our customers are already looking into the future and are moving
towards our latest generation of products. We believe that our
focus on the development of QUASARS project, post-quantum resistant
technologies, launch of the WISeSat picosatellites constellation
and Matter compliant smart home products/services, will provide new
high revenue streams for SEALSQ.”
H1 2023 Key Financial
Milestones
- 38%
increase in revenue to
$14.8 million as compared to $10.7 million reported in H1
2022.
-
63% higher gross profit
and improved gross margin which reached
52.8% in H1 2023 as compared to 44.7% in H1 2022.
- Improved
profitability with operating loss decreasing from
0.4 million in H1 2022 down to $0.3 million and breakeven
EBITDA in H1 2023, despite G&A expenses increasing by more than
$2 million due to the spin-off and Nasdaq listing.
- Continued
investments in R&D to
support the development of post-quantum chip and
next generations with $1.5 million invested during H1
2023.
Key Financial MetricsA summary
of the key performance metrics of SEALSQ is set out in the table
below:
US GAAP (Million US$) |
H1 2023 |
|
H1 2022 |
Net sales |
14.8 |
|
|
10.7 |
|
Gross profit |
7.8 |
|
|
4.8 |
|
Operating income / (loss) as
reported |
(0.3 |
) |
|
(0.4 |
) |
Net income / (loss) as
reported |
(0.9 |
) |
|
(0.2 |
) |
|
|
|
|
Non-GAAP (Million US$) |
|
|
|
EBITDA |
- |
|
|
(0.2 |
) |
Adjusted net income /
(loss) |
(0.2 |
) |
|
(0.2 |
) |
RevenueSEALSQ revenue for H1
2023 was $14.8 million, compared to $10.7 million
in H1 2022, which represents a staggering 38% increase year
over year. This 38% increase in revenue is due to the higher demand
for semiconductors following the shortages in the industry
triggered by the Covid pandemic over the last few years.
With the supply chain returning to normal, we expect
competitiveness to increase in the semiconductors industry as
customers are no longer limited by supply shortages and can
diversify their product sources.
While we anticipate our revenue growth to continue in the second
half of the year, and FY 2023 to increase by over 20% as compared
to FY 2022, we have seen our customers focus on our new
next-generation products which might temporarily slow our growth in
2024.
Revenue by regionOur operations
are global in scope, and we generate revenue from selling our
products and services across various regions. Our operations in
North America now contribute the largest part of our revenues
(57%), whilst our European market remains a strong contributor with
EMEA accounting for 30% of our revenue. Our focus remains on these
two regions, and we continue building our sales and marketing team
in these areas.
Our revenue by geographic region for the six months ended June
30, 2023 and 2022 is set forth in the following table:
Revenue
by region |
6 months ended June 30, |
USD'000 |
2023 (unaudited) |
|
|
2022 (unaudited) |
|
North America |
8,374 |
57 |
% |
|
6,937 |
65 |
% |
Europe, Middle East and
Africa |
4,421 |
30 |
% |
|
2,053 |
19 |
% |
Asia Pacific |
1,956 |
13 |
% |
|
1,616 |
15 |
% |
Latin America |
- |
0 |
% |
|
50 |
0 |
% |
Total revenue |
14,751 |
|
|
10,656 |
|
Strong demand for our IoT products in
2023In 2022, SEALSQ started the implementation of a
significant investment plan to increase its production capacity in
response to customers’ expectations. We anticipate a year-on-year
increase in revenue by over 20%.
Beyond 2023SEALSQ’s parent
company, WISeKey started the launch of the WISeSat picosatellites
constellation which will enable the direct connection of satellites
to IoT devices for authentication, completing the connection cycle
from space to device through secure telecommunication means.
Management expects that this will lead to a new revenue stream for
SEALSQ. This technology allows for identification in remote, low
connectivity areas, and will rely on our semiconductors’
technology.
SEALSQ’s R&D investment in post-quantum resistant technology
is also expected to generate new revenue from next-generation
semiconductors starting in 2025/2026.
However, management expects 2024 to be a transition year where
the focus of customer demand will shift to the next generation of
products, which is likely to impair SEALSQ’s growth temporarily in
2024 before full production of the next generation products starts
in 2025/2026.
Gross ProfitOur gross margin
increased by 8 percentage points from 45% in H1 2022 to 53% in H1
2023, whilst growth profit increased by 63% to $7.8 million in
H1 2023, in comparison with a gross profit of $4.8 million in H1
2022. These improved results are closely linked to the 38%
year-on-year increase in revenue from H1 2022 and H1 2023, and our
ability to update our pricing strategy to absorb the higher raw
material purchase costs caused by the shortage in semiconductors
that impacted our inventory in 2022.
However, with the semiconductors supply chain back to full
capacity, we expect competitiveness to increase and our gross
margin to stabilize to pre-Covid levels as customers will no longer
be willing to pay a premium to secure their order and circumvent
any shortages.
Operating Results and
EBITDASEALSQ’s operating loss decreased from
$0.4 million in H1 2022 to $0.3 million in H1 2023
despite one-off listing-related expenses of $0.4 million
incurred in H1 2023 and expenses associated with the newly created
Board and management services following its Nasdaq listing in May
2023.
SEALSQ reported a breakeven EBITDA in H1 2023 compared with a
negative EBITDA of $0.2 million in H1 2022.
We expect that our operating expenses to increase in future
periods as our strategy includes:
- the strengthening of our sales and
marketing team to expand our customer base both in new industries
and geographic regions,
- a capital expenditure investment
plan over five years started in 2022, aiming to increase our
production capacity, and
- higher R&D investments in
relation to the QUASARS project for the next generation,
post-quantum semiconductors.
Net Results Net loss of
$0.9 million for H1 2023 is largely related to non-cash and/or
one-off factors including listing-related expenses of
$0.4 million, deferred tax utilization of $0.3 million
and a depreciation expense of $0.3 million.
Excluding some of these factors, SEALSQ has maintained an
adjusted net loss of $0.2 million for H1 2023 and
H1 2022, close to breakeven.
Liquidity and Capital
ResourcesCash and cash equivalents at June 30, 2023 was
$1.9 million, compared to $4.1 million at
December 31, 2022. The most significant sources of
funding for SEALSQ were cash generated by operating activities,
research tax credits provided by the French government and loans
extended by WISeKey. We anticipate that the listing of SEALSQ on
the Nasdaq will allow the Company to access additional sources of
capital finance its growth strategy.
Consolidated Income Statement of SEALSQ
Corp.
|
Unaudited 6 months ended June 30, |
Year-on-YearVariance |
USD'000 |
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net sales |
14,751 |
|
|
10,656 |
|
|
4,095 |
|
Cost of sales |
(6,760 |
) |
|
(6,130 |
) |
|
(630 |
) |
Depreciation of production
assets |
(201 |
) |
|
240 |
|
|
(441 |
) |
Gross
profit |
7,790 |
|
|
4,766 |
|
|
3,024 |
|
|
|
|
|
|
|
Other operating income |
9 |
|
|
4 |
|
|
5 |
|
Research & development
expenses |
(1,492 |
) |
|
(1,161 |
) |
|
(331 |
) |
Selling & marketing
expenses |
(2,441 |
) |
|
(1,970 |
) |
|
(471 |
) |
General & administrative
expenses |
(4,145 |
) |
|
(2,022 |
) |
|
(2,123 |
) |
Total operating
expenses |
(8,069 |
) |
|
(5,149 |
) |
|
(2,920 |
) |
Operating
loss |
(279 |
) |
|
(383 |
) |
|
104 |
|
|
|
|
|
|
|
Non-operating income |
180 |
|
|
469 |
|
|
(289 |
) |
Interest and amortization of
debt discount |
(143 |
) |
|
(155 |
) |
|
12 |
|
Non-operating expenses |
(313 |
) |
|
(113 |
) |
|
(200 |
) |
Loss before income tax
expense |
(555 |
) |
|
(182 |
) |
|
(373 |
) |
|
|
|
|
|
|
Income tax income
(expense) |
(320 |
) |
|
(1 |
) |
|
(319 |
) |
Net loss |
(875 |
) |
|
(183 |
) |
|
(692 |
) |
Outlook for the full year 2023 and
beyondIn the second half of 2023, management expects
revenue to remain at a similar level as H1 2023, with full year
2023 revenue to increase by over 20% as compared to full year
2022.
SEALSQ has taken several initiatives to continue growing revenue
and strengthen net results.
These initiatives include:
- Enabling clients to quickly and
easily get access to Device Attestation Certificates
(DACs). The service is provided by INeS, our managed “PKI
as a Service” platform without the necessity to invest and to
deploy any hardware infrastructure. Each manufacturer using the
platform can manage the security lifecycle of certificates and
devices in their own dedicated, cloud-based application. We will
also be offering our complete range of FIPS Certified Secure
Elements with pre-provisioning of keys and DACs ready for
authentication under Matter Protocol. This strong
value proposition will enable smart home device manufacturers to
achieve faster time to market through cost effective and simplified
design processes when designing Matter compliant smart home
products.
- The development of the
QUASARS project.
- Planned investment in new equipment
to increase the production volume of
semiconductors.
- The use of our technology for the
deployment of WISeSaT PocketQube
Satellite constellation.
- The strengthening of our Sales
and Marketing team through new distribution
partnerships.
However, management expects 2024 to be a transition year where
the focus of customer demand will shift to the next generation of
products, which is likely to temporarily impair SEALSQ’s growth in
2024 before full production of the next generation products starts
in 2025/2026.
Non-GAAP Financial MeasuresIn
managing the business on a consolidated basis, management develops
an annual operating plan, which is approved by our Board of
Directors, using non-GAAP financial measures including EBITDA and
adjusted net income. In measuring performance against this plan,
management considers the actual or potential impacts on these
non-GAAP financial measures from actions taken to reduce costs with
the goal of increasing our gross margin and operating margin and
when assessing appropriate levels of research and development
efforts. In addition, management relies upon these non-GAAP
financial measures when making decisions about product spending,
administrative budgets, and other operating expenses. We believe
that these non-GAAP financial measures, when coupled with the GAAP
results and the reconciliations to corresponding GAAP financial
measures, provide a more complete understanding of the Company’s
results of operations and the factors and trends affecting
business. We believe that they enable investors to perform
additional comparisons of our operating results, to assess our
liquidity and capital position and to analyze financial performance
excluding the effect of expenses unrelated to operations, certain
non-cash expenses related to acquisitions and share-based
compensation expense, which may obscure trends in the Company’s
underlying performance. This information also enables investors to
compare financial results between periods where certain items may
vary independent of business performance and allows for greater
transparency with respect to key metrics used by management.
These non-GAAP financial measures are provided in addition to,
and not as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. The presentation of
these and other similar items in non-GAAP financial results should
not be interpreted as implying that these items are non-recurring,
infrequent, or unusual. Reconciliations of these non-GAAP measures
to the most comparable measures calculated in accordance with GAAP
are provided in the financial statements portion of this release in
a schedule entitled “Financial Reconciliation of GAAP to non-GAAP
Results (unaudited).”
EBITDA is defined as Operating income/(loss) for the reporting
period before depreciation and amortization for the same reporting
period.
Non-GAAP to GAAP
Reconciliations - SEALSQ
Corp.
Financial
Reconciliation of GAAP to non-GAAP Results
(unaudited) |
6 months to June 30, |
6 months to June 30, |
(Million US$) |
2023 |
|
2022 |
|
Operating income/(loss) as
reported |
(0.3 |
) |
(0.4 |
) |
Non-GAAP adjustments |
|
|
Depreciation expense |
0.3 |
|
0.2 |
|
EBITDA |
- |
|
(0.2 |
) |
|
|
|
Net income/(loss) attributable
to SEALSQ as reported |
(0.9 |
) |
(0.2 |
) |
Non-GAAP adjustments: |
|
|
Depreciation expense |
0.3 |
|
- |
|
Listing-related professional fees |
0.4 |
|
- |
|
Adjusted net income/(loss) attributable to
SEALSQ |
(0.2 |
) |
(0.2 |
) |
Key Growth
Drivers:
- Scalability: A robust enhancement in production capacity,
ensuring supply chain excellence.
- Innovation: The avant-garde MS600X secure platform created
significant business avenues.
- Consistency: The Trust Services business has transformed into a
consistent revenue source.
- Expansion: Strategic US market expansion, strengthening our
sales force and partnerships.
- Futurism: Investments in Post-Quantum semiconductors and CSA’s
approval for our Matter device attestation.
With the global boom in IoT, Post Quantum and AI sectors,
SEALSQ’s specialization becomes increasingly vital. "Our unique
positioning in the secure semiconductor sector ensures that as more
devices connect securely online, SEALSQ’s prowess serves as a
cornerstone," said Mr. Moreira.
As SEALSQ looks to the future, our commitment to pushing
boundaries is evident. Our Quantum-Resistant USB Token demonstrator
underscores the ambition to be frontrunners in Post-Quantum
Hardware Security and Root-of-Trust domains.Further enriching the
portfolio is the GSMA Root-of-Trust CI provisioning services,
emphasizing eSIM standard adoption. This aligns with SEALSQ
commitment to underpin foundational technologies including AI,
Post-Quantum, IoT, cloud computing, and 5G.Support from global
entities like the EU and US, along with landmark initiatives like
the e-Chip Act, confirms a fertile macro environment, attracting
burgeoning investor interest.The company’s diversified offerings
range from Multi-Factor Authentication tokens to Automotive
solutions. "In this quantum era, our focus on Post-Quantum
Cryptography (PQC) sets us apart, providing a shield against
quantum threats," emphasized Mr. Moreira.Conference
Call
The company will host a conference call to
review its results on Wednesday, September 13, at 9:00 am ET (3:00
pm CET). If you wish to join the conference call, please use the
dial-in information below:
Conference ID #: 5306656
- Toll-Free Dial-In Number: (800)
715-9871
- International Dial-In Number: (646)
307-1963
A simultaneous webcast of the call may be
accessed online via the Investors section of the company’s website,
https://investors.sealsq.com/.
The archived call will also be available on the
Investors section of the company's website,
https://investors.sealsq.com/.
About SEALSQ:SEALSQ focuses on selling
integrated solutions based on Semiconductors, PKI and Provisioning
services, while developing Post-Quantum technology hardware and
software products. Our solutions can be used in a variety of
applications, from Multi-Factor Authentication tokens, Smart
Energy, Smart Home Appliances, and IT Network Infrastructure, to
Automotive, Industrial Automation and Control Systems.
Post-Quantum Cryptography (PQC) refers to cryptographic methods
that are secure against an attack by a quantum computer. As quantum
computers become more powerful, they may be able to break many of
the cryptographic methods that are currently used to protect
sensitive information, such as RSA and Elliptic Curve Cryptography
(ECC). PQC aims to develop new cryptographic methods that are
secure against quantum attacks.For more information please
visit www.sealsq.com.
SEALSQ
Corp.Company Contact: Carlos MoreiraChairman & CEOTel:
+41 22 594 3000info@sealsq.com |
SEALSQ Investor Relations
(US)Contact: Lena CatiThe Equity Group Inc.Tel: +1 212
836-9611lcati@equityny.com |
Forward-Looking StatementsThis communication
expressly or implicitly contains certain forward-looking statements
concerning SEALSQ Corp and its businesses. Forward-looking
statements include statements regarding our business strategy,
financial performance, results of operations, market data, events
or developments that we expect or anticipates will occur in the
future, as well as any other statements which are not historical
facts. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct. These
statements involve known and unknown risks and are based upon a
number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are
beyond our control. Actual results may differ materially from those
expressed or implied by such forward-looking statements. Important
factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements
include the expected benefits and costs of the intended spin-off
transaction, the expected timing of the completion of the spin-off
transaction and the transaction terms, SEALSQ’s ability to
implement its growth strategies, SEALSQ’s ability to continue
beneficial transactions with material parties, including a limited
number of significant customers; market demand and semiconductor
industry conditions; and the risks discussed in SEALSQ’s filings
with the SEC. Risks and uncertainties are further described in
reports filed by SEALSQ with the SEC.SEALSQ Corp is providing this
communication as of this date and does not undertake to update any
forward-looking statements contained herein as a result of new
information, future events or otherwise.
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