Greetings, ladies and gentlemen, and welcome to the SEALSQ First Half 2025 Financial Results Earnings Conference Call. This call includes forward-looking statements that involve various known and unknown risks, uncertainties, and other factors that could result in significant differences between actual outcomes and those anticipated. SEALSQ provides this communication as of today and does not commit to updating any forward-looking statements due to new information or future events. These risks are further outlined in our filings with the Securities and Exchange Commission. Our first half 2025 earnings release was issued on Tuesday, September 9, 2025, and our Form 6-K for the six-month period ending June 30, 2025, which was filed with the SEC on that same day, is available in the Investors section of the SEALSQ website at investor.sealsq.com. This conference is being recorded. It's now my pleasure to introduce Carlos Moreira, Founder and Chief Executive Officer of SEALSQ. Mr. Moreira, you may begin.

Thank you very much, Kevin. Good afternoon to those joining us from Europe and good morning to those in the United States. I will start today's call by discussing our business milestone for the first half of 2025. Then, I will outline our growth initiatives and outlook for the second half of 2025 and beyond before handing over to John to discuss our financial performance for the year. 2025 has been a transformative year for SEALSQ as we have advanced our mission to provide quantum-resistant semiconductor solutions and secure digital infrastructure for our fast-evolving global market. The first half of the year affirmed the strength of our strategy, the resilience of our operations, and the scale of opportunities ahead. As a fabless semiconductor innovator, SEALSQ designs secure microcontrollers, both standardized and custom-made, integrated within a vertical trust service ecosystem featuring a post-quantum root of trust managed by public infrastructure services and secure chip personalization. Our solutions protect various industries such as IoT, energy, automotive, and smart homes, as well as sensitive sectors like healthcare, government, and defense. With the global embedded security chip market expected to approach nearly $10 billion by 2028, the number of suppliers offering certified secure products remains limited. This presents a significant opportunity for SEALSQ, which is uniquely positioned to provide both regulatory compliance and resilience against upcoming threats such as quantum computing. Our market strength and recognition, along with the growing demand for secure microcontrollers, have garnered significant investor confidence. Since November 2024, we have raised over $140 million in additional capital to accelerate our product roadmap, execute strategic investments, and expand our growth pipeline. In terms of product and technology milestones, we made significant progress in the first half of 2025. Notably, the QUASAR Program delivered engineering samples of the QS7001 post-quantum microcontroller to initial partners for testing in Q2 2025. Production samples and development kits are set for Q3 2025, with expected initial revenue in 2026. We are among the first companies globally to have such an ambitious roadmap, which could transform into substantial business opportunities and revenue generation in 2026. Additionally, we expect pilot-customer sampling for the QVault TPM V183 in Q4 2025, followed by V185 in Q1 2026, with projected initial revenues for 2026. The VaultIC408 secure microcontroller, which has achieved advancement to FIPS 140-3 level 3 validation, has been confirmed by independent lab tests, with NIST review currently in progress. The MS6003 Secure Element was launched with FIDO2 passwordless authentication to meet demand in the rapidly growing authentication market. Also, the INeS Box has been deployed for factory IoT identification injection in larger-scale projects, ensuring compliance with Matter, the Homeland Certification for Home Appliances in the U.S., and the U.S. Cyber Trust Mark. Furthermore, the Quantum RootCA, an important development achieved this year, was introduced by the OISTE Foundation as the first PQC integrated PKI system to protect IoT, financial, and defense infrastructure against quantum encryption. Our commercial momentum reflects our technological progress. Revenue is projected to increase by 59% to 82% in 2025 compared to 2024, driven by strong demand for PKI services, secure hardware, and custom ASICs. Our TPM engagement has more than doubled from 35 customers at the end of 2024 to 82 customers by mid-2025, reinforcing the relevance of our roadmap. We have also secured a multiyear supply agreement with major companies like Hager Group, Dyson, MIWA, and Delta Dore. Our collaboration with Landis+Gyr, a leading smart meter provider, includes PKI deployment for 30 million utility users in Asia and development for the U.S. market. Smart meters could face significant challenges if they are not post-quantum ready, and this partnership is taking vital steps to ensure resilience at the product level with our technology. We have also made advancements in our Card Reader business in Asia, with new customers committing to several hundred thousand annual units, expanding our global footprint with a new sales office in India and distribution partnerships in Asia, Europe, and Turkey. 2025 has marked a transformative phase in our growth strategy, highlighted by the acquisition of IC'ALPS, which has added 100 engineers to our team. In August 2025, we finalized the acquisition of 100% of IC'ALPS, a French ASIC design specialist based in Grenoble. This enhancement strengthens our post-quantum ASIC capabilities for the medical, automotive, and IoT industries, as this company has been supplying technology to leading health and automotive firms in Europe, all requiring a new generation of specialized chips. Additionally, the Quantix Edge Security facility executed a EUR 40 million investment in Murcia, Spain, with EUR 20 million coming from the Spanish government, part of an $18 billion investment in semiconductors in Spain. We were one of the first projects authorized, pooling a EUR 10 million investment from WISeKey and SEALSQ and EUR 10 million from local partners like OdinS and TProtege. This facility aligns with the EU Chips Act and will focus on post-quantum RISC-V chip design and secure semiconductor personalization, with revenue expected as early as 2026. We launched the Quantum Investment Fund initially at $20 million in late 2024, which was expanded to $35 million in March 2025. The first investment was in ColibriTD, a French Quantum-as-a-Service company, with whom we are collaborating on a quantum simulation approach to enhance semiconductor wafer yields, potentially increasing yields from 50% to 80% and reducing per-chip costs by up to 50%. This Quantum Investment Fund is now exploring additional investments, as we foresee a merger of quantum technologies and capabilities in the sector. Our investment strategy encompasses space technologies, and in collaboration with WISeSat, we have been deploying a constellation currently consisting of 22 satellites. SEALSQ has committed $10 million to expand our secure quantum-ready satellite constellation. The next satellite launch in November this year will enable secure post-quantum connections from space to objects on Earth, marking one of the first secure post-quantum communications, linking mobile phones with our satellites. After two launches completed in 2025, SEALSQ has established one of the largest constellations in Europe, with plans to expand to 102 satellites by 2027. We have signed a strategic project with the Swiss Army and are in full deployment to meet their satellite usage requirements. We have also made considerable advancements in research and development to maintain our leading position, investing $4.7 million in the first half of 2025 as part of a $7.2 million full-year budget. This highlights our commitment to pioneering post-quantum innovation and commercializing next-generation chips. Concerning financial strength, we hold a robust cash reserve of $121 million as of June 30, 2025, increasing to $150 million by September 9, 2025. These funds, combined with a solid balance sheet, position SEALSQ to capitalize on the growing demand for post-quantum resilient technology, including potential acquisitions and strategic investments as part of our post-quantum roadmap. In August 2025, SEALSQ introduced Convergence, a forward-looking initiative that integrates AI, quantum technology, and next-generation solutions. The market is converging, with technologies creating exponential synergies and significant business opportunities. Convergence encompasses PQC aligned with NIST standard tokenization, advanced encryption, the WISeSat 22 satellite constellation, decentralized physical infrastructure networks, and machine-to-machine end-to-end communication. Its goal is to establish a strong digital trust architecture for the group, safeguarding over 1.6 billion devices currently in the market across healthcare, IoT, financial services, smart cities, and space infrastructure. Looking ahead to 2025, we project revenue to be between $17.5 million and $20 million, reflecting a growth of 59% to 82% year-on-year. Revenue from quantum computers is still limited, as the market is not fully prepared, and investments in quantum technology are being considered. Nevertheless, the immediate focus is on post-quantum resilience at enterprise, government, hospital, and airport levels to be ready for the quantum computing era in 3 to 5 years. This projection includes contributions from IC'ALPS following the August acquisition, the Quantix Edge Security project, and renewed demand for traditional products. In 2026, growth is expected to be spurred by a full year of IC'ALPS revenue, new personalization center project revenue, including Quantix Edge Security, and importantly, the visibility of our quantum-resistant TPM. Initial estimates suggest revenue growth of 50% to 100% year-on-year, which is unprecedented in this sector at present. Our business pipeline currently stands at $170 million in opportunities for 2026 to 2028, indicating a surge in demand for quantum-resistant security solutions and sovereign semiconductor expertise. I will now turn the call over to John O'Hara, our CFO, who will provide detailed insight into the financial results for the first half of 2025 and our guidance for the second half of the year, complementing the information I have shared so far. Please, John, go ahead.

Good morning, good afternoon, everyone. For the first half of 2025, our revenue reached $4.8 million, consistent with the same period in 2024 and aligned with our expectations. This reflects our ongoing strategic transition as we approach the launch of our new post-quantum technologies. We anticipate growth in the second half of the year, which we will discuss shortly. The gross profit was $1.6 million, and the gross profit margin improved by 15 percentage points, increasing from 19% last year to 34% this year. We expect that as revenues stabilize and grow, margins will settle around 45% to 50% for our legacy chip products, with IC'ALPS likely having higher margins due to the nature of their revenues and services. Our cash reserves amounted to $121 million as of June 30, 2025, an increase from $19 million at the same time last year and up from $85 million at the end of 2024. Our current cash burn indicates that we have enough cash flow for a considerable time. Thus, we believe we have a strong position to pursue any investment opportunities or M&A activities that may arise. We allocated $4.7 million to research and development in the first half of the year, with over $7 million budgeted for this area in 2025, up from $5 million the previous year. This figure does not include the research and development activities of IC'ALPS, which will also be part of our second-half results. For the full year 2025, we project our revenue will be between $17.5 million and $20 million, reflecting a year-on-year growth of 59% to 82%. This indicates a resurgence in demand for our semiconductor products and accounts for the revenue from IC'ALPS since its acquisition. We are also optimistic about a robust 2026, as previously highlighted, supported by a business pipeline of $170 million in identified opportunities for 2026 to 2028 in the PQC, ASIC, and sovereign semiconductor markets. With that, I will turn it back to Carlos to open the call for Q&A. Thank you for your attention.

So thank you, John. Just as an end of the call remarks before we move into Q&A, just to mention that 2026 is going to be a very important year for the quantum industry and particularly post-quantum as the regulatory and technology landscape is moving in our favor with frameworks such as the European Union Cyber Resilience Act, the U.S. government Cyber Trust Mark and the UK PSTI Act mandating secure identities, encryption and life cycle management. So governments and strategic institutions worldwide have published roadmaps requiring PQC adoption within the decade. So as I mentioned before, this industry is an emerging industry. We are in quantum, what we were on the web in the year 2000. Major players, and they have developed technologies and positions such as SEALSQ will become automatically high-demand companies as they bring a concrete solution for a concrete problem. Insurance companies are already announcing that they will increase their insurance premium if you are not yet PQC-compliant. Government regulations are putting regulations bringing companies and other government institutions to be PQC-compliant. And that will be reflected, obviously, on valuations of companies as the entry level to become a PQC-compliant and quantum company is still very high and requires hundreds of millions of dollars of investment. So with the strong financial resources, then we have the proven innovation and a strategic investment in place, SEALSQ enters the second half of 2025 with a very strong momentum and confidence. Our vision is clear: to lead the world in quantum resilience, cybersecurity and semiconductor innovation while we have a very proven quantum roadmap in place. So we thank our shareholders and employee partners and customers for their continued trust and support as we scale SEALSQ into the next phase of growth. So with that, we are finalizing the remarks. I would like to open now the call for Q&A. Thank you very much for your attention.

Our first question today is coming from Matthew Galinko from Maxim.

Firstly, just if we could clarify a little bit on the full year R&D budget. I think you mentioned it was around $7 million. And I think for the first half, reported $4.7 million, would seem that you're tracking ahead of that. So was there anything unusual in the first half spending that would not repeat in the second half? Just kind of ignoring the impact of the consolidation of the acquisition that we might expect?

Yes, Matt, hope you're well. In the first half of the year, there was a one-off expense for some stock-based compensation that is categorized under R&D. That was the main issue.

Got it. Okay. And could you venture a guess for what kind of the annual R&D run rate, taking that out would be when you layer in the acquisition?

Matthew, go ahead. Please go ahead.

Okay. So Matthew, sorry, we were disconnected. So did you get the answer from John?

I'm not sure if you got my second question or not?

No, I didn't.

No, no, we didn't. I'm sorry.

Did you get the answer to the first one on the research and development though, Matt, did you get that answer?

Yes, I appreciate the follow-up. The question is about the run rate for the revenue on the R&D line. If we exclude the one-time stock-based compensation from the R&D expenses in the first half and take into account the R&D consolidation in the second half, what would the annual rate for R&D be?

So on the underlying business down in Provence, we would probably put that around about sort of $500,000, $550,000 per month.

Got it. Okay. All right. And then I also wanted to ask about the pipeline. I think you shared $170 million. As far as the prospective customers and prospective-type numbers in that pipeline, how do you build the pipeline estimate, I guess? Can you provide a little bit more of the process for how you include stuff in the pipeline?

Yes, sure. So essentially, my understanding is it's a relatively standard process where we go from certainly in the industry, I believe, where we go from kind of identifying an opportunity and evaluating that to the best of our ability, but then applying a relatively low success percentage to that. Because obviously, when we've just identified it, we haven't really gone very far, and then we go through the phase of identified, then qualified when we've kind of ratified the opportunity, and we've made at least first contact with the potential client. Then comes into design in, which is usually when we've signed up to provide them with a kind of a test kit and actually spec out and create a potential solution for a set of clients. And then design win at the end, which is the point where we believe that where we've been mandated to go ahead and produce the product and are in the final stage with that client. So obviously, by the time we get to design win, we apply a much heavier percentage because at that point, we're the only people in the game, so we generally expect at that point to get an order unless there is a technical limitation to the product or the client cancels their own internal project. So yes, so we put all that together, apply the weightings and then we tend to look 3 years into the future. So that $170 million will include revenues over '26, '27 and '28. What it does not include is the revenues for the clients that we've already won. So once we actually have received our first major purchase order of a significant volume and therefore, we've gone into production, we move that out of the pipeline, and then we're kind of operating on a backlog based on them sending and giving us orders.

Yes, to add to that, the sales cycle is lengthy. For hardware, it typically takes about six months. There are many complexities involved in integrating new generation chips into existing hardware, as the electronics are being redesigned to accommodate the chip, which requires engineering. It’s essential to first understand the specific application, such as a smart meter, connected car, or drone, which entails comprehending the electronics and redesigning certain components to fit the chip. After that, ensuring the connectivity of the chip with the electronics to establish a post-quantum capability is necessary. This entire process is time-consuming. Companies often approach this cautiously; many customers are not yet aware of the urgency to adopt post-quantum cryptography (PQC). Some believe that quantum computers are still 30 years away, leading them to question the need for immediate action. Gradually, market education has improved, even among those who previously held this perspective, creating a sense of urgency among clients. They tend to start with one generation of products instead of enabling PQC across all their offerings at once. They test one type of product and then move to the next phase of internal expansion. Modifying a product's security requires both hardware and software adjustments, which need to be integrated into their backend systems. As we progress, this process will become more automated, and AI is significantly enhancing efficiencies within the sales cycle, helping to reduce the time and increase order volumes. Currently, we believe that the revenue these companies generate is not of paramount importance, as we are addressing a much larger future issue — the imposition of regulations requiring PQC enablement for products to be sold, or they will not be authorized to enter certain markets. This represents a crucial inflection point and a significant opportunity for us.

We have reached the end of our question-and-answer session. I would like to turn it back to Carlos for any final comments.

To recap, we have a significant opportunity ahead of us. The year 2026 is expected to be critical, particularly when the post-quantum chip becomes available in the market. I understand some investors may be disappointed with the current share price, but I believe that 2026 is the year to focus on, not 2025, which was more of a transitional period. Regardless, we finished the first half of the year with a strong position and solid cash reserves, which are crucial in this industry. We are open to further discussions, and documentation is available on our website. Our investor relations team in New York is ready to arrange individual meetings. John and I will be participating in a non-deal roadshow starting the second week of October, culminating in New York at the Quantum + AI event, where we will deliver keynote speeches and present further results. We will also discuss our U.S. strategy, which, as we've mentioned before, includes personalizing semiconductors within the U.S., prioritizing locations like Arizona. We plan to provide a comprehensive update on this in a few weeks, and I believe everyone will be pleased to see the advancements in this area. Thank you to our shareholders, employee partners, customers, and all participants for your support as we elevate SEALSQ into the next growth phase. Thank you for your attention, and have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.