Sequans Communications Q1 FY2026 Earnings Call

Good day, ladies and gentlemen, and welcome to the First Quarter 2026 Sequans Earnings Conference Call. My name is Howard, and I will be your operator for today's call. Operator instructions were provided to participants. Please note that this conference is being recorded. I will now turn the conference over to Mr. David Hanover, Investor Relations. David, you may begin.

Thank you, operator, and thank you to everyone participating in today's call. Joining me on the call from Sequans Communications are Georges Karam, CEO and Chairman; and Deborah Choate, CFO. Before turning the call over to Georges, I would like to remind our participants of the following important information on behalf of Sequans. First, Sequans issued an earnings press release this morning, and you'll find a copy of the release on the company's website at www.sequans.com under the Newsroom section. Second, this conference call contains projections and other forward-looking statements regarding future events or 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 our business strategy, cost optimization plans, strategic options, the ability to enter into new strategic agreements, expectations for sales, 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 current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. 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. More information on factors that could affect our business and financial results are included in our public filings made with the Securities and Exchange Commission. And now I'd like to hand the call over to Georges Karam. Please go ahead, Georges.

Thank you, David, and good morning, everyone. I'd like to begin with a brief update on our capital allocation strategy, including how we are approaching the management of our digital asset holdings alongside the continued execution of our IoT semiconductor business. Our priority remains clear. We are focused first and foremost on executing our IoT strategy, scaling our product business and advancing our 5G roadmap in a disciplined way to create long-term shareholder value. In parallel, we have continued to manage our Bitcoin holdings with a pragmatic and opportunistic approach. In light of current market conditions, we made the decision earlier this year to eliminate all debt-related risk by negotiating an early redemption agreement with our debt holders. This allows us to fully redeem the $94.5 million of convertible debt by June 1, 2026, funded through the sale of Bitcoin that had been held as collateral. As of today, we have already redeemed approximately 62% of this debt, and the remaining balance will be redeemed in the coming weeks. By June 1, we expect to have a near debt-free balance sheet with at least 600 Bitcoin held as an unencumbered asset. Looking ahead, we do not intend to further pursue our treasury strategy. Instead, our objective will be to monetize these holdings over time in a disciplined manner, balancing market conditions with our broader capital needs. Importantly, we remain focused on maintaining a strong cash position to support operations, invest in our 5G IoT roadmap and provide stability as we scale the business. Turning now to the operational side of the business. Our IoT semiconductor business continues to demonstrate solid underlying momentum. For the first quarter, we generated $6.1 million revenue. This performance is broadly in line with our expectations and reflects continued strength in product revenue despite supply challenges, partially offset by variability in the timing of services revenue. Looking ahead, we continue to benefit from a strong backlog, which provides good near-term visibility. Our order backlog continues to build with approximately $22 million in revenue, primarily product-related, already secured for the year, along with early indications of orders extending into the first quarter of next year. This provides us with increasing confidence in the trajectory of the business as we move through 2026 and confirms the healthy nature of our design-win pipeline and related KPIs we track. Our full year outlook continues to be supported by an increasing number of design-win projects transitioning to production. We entered the year with more than $300 million in potential 3-year product revenue from design-win projects. Of these, 44% had already reached the production phase and are generating revenue. During the first quarter, three additional design-win projects transitioned into production, and we expect additional projects to follow in the second quarter. As a result, we continue to anticipate that more than half of our current design-win pipeline will be in production by the end of June, representing approximately $150 million in potential 3-year revenue. We are also seeing strong momentum with new customer engagements. In the first quarter, we engaged more than a dozen new customer projects with six already confirmed as design wins. These programs are expected to contribute to growth, beginning in 2027 and beyond. Our product pipeline remains primarily driven by our 4G, Cat-M and Cat-1bis technologies. It also includes our RF transceiver product, which supports a wide range of software-defined radio applications, including defense and drone use cases. In addition, we have initiated early engagements around 5G eRedCap, which will be the future successor to 4G and cellular IoT deployments. Smart metering, telematics and asset tracking continue to represent our strongest verticals, followed by security, e-health and medical and other industrial applications. Turning now to product ramps and key drivers. Cat-M continues to be a meaningful growth driver in 2026, led primarily by asset tracking and smart metering deployments. This business is scaling in line with expectations, supported by strong visibility and steady ordering patterns as many Cat-M design-win projects are now in production with key customers' deployments underway. Cat-1bis is positioned for a breakout year, supported by multiple customer ramps across telematics, security and some metering use cases. We are already seeing revenue contribution from several design wins with additional projects expected to enter production in the second half of the year. We're also seeing incremental opportunities driven by current market dynamics, which are creating openings for Sequans to gain share. In our RF transceiver business, we continue to see stable demand from existing customers, supported by committed backlog, and we expect additional contribution in the second half of the year. At the same time, we are engaging with a number of new prospective customers, particularly in defense and drone applications, and we expect to begin securing some of these opportunities in the near term. We are also advancing discussions around licensing and collaboration opportunities, which could further expand the reach of our RF portfolio. More broadly, our product pipeline continues to mature with several design-win programs progressing towards production. We are also seeing new generation product opportunities with existing customers, which provide incremental upside with our installed base. At the same time, we are actively preparing for the next major transition in IoT connectivity, which is the migration from 4G to 5G. Market demand for our 5G eRedCap solution continues to strengthen, particularly as mobile network operators look to refarm 4G spectrum and accelerate broader 5G deployment. Importantly, IoT applications represent the final phase of this 4G to 5G transition. These applications require long device lifecycles, often 10 years or more, making a seamless and future-proof migration path essential. Unlike the 4G era, where the market became fragmented across multiple cellular technology categories, we expect the 5G IoT landscape to be more streamlined, centered around eRedCap as the primary standard. This creates a more efficient and scalable ecosystem for both customers and suppliers. Sequans is well positioned in this transition. We already have an established customer base across our 4G portfolio, and we expect to leverage these relationships as we introduce our 5G solutions. In many cases, customers will be able to transition using solutions designed to be compatible with existing deployments, enabling a smoother upgrade path. We continue to make strong progress on our 5G eRedCap program. During the quarter, we received our first engineering test chips, which are now in-house and under evaluation. This represents an important milestone as we advance toward customer sampling, which we continue to target for the second half of 2027. Looking ahead, we believe 5G IoT will represent a significant long-term growth opportunity, both in terms of market size and value per device, supporting improved pricing dynamics relative to 4G. Now turning to services and licensing. Our services and licensing business continues to represent an important source of high-margin revenue, although timing of revenue recognition can vary from quarter-to-quarter. On this front, we have several ongoing discussions that could contribute to revenue over the course of 2026. These include engagements with large global partners, licensing and collaboration opportunities, leveraging our RF and 5G IP portfolio as well as a range of smaller service agreements. These opportunities provide potential upside to our product-driven revenue base while also expanding our reach into new markets and applications. We remain focused on converting these discussions into revenue while managing expectations around timing. On the supply chain side, we continue to operate in a dynamic cost and supply environment. We are seeing significant increases in memory pricing, which are impacting the cost of both our chips and modules. We are actively working to address these cost pressures while ensuring we can meet customer demand. At the same time, we have taken proactive steps to secure supply, including multi-sourcing across key components such as memory and packaging. Based on our current plan, we believe supply for our 2027 baseline demand is secure, although we continue to monitor potential upside scenarios. Overall, while cost pressures and supply challenges are real, they are manageable and consistent with broader industry trends. As we move through 2026, we remain focused on disciplined cost management and reducing cash burn. Our objective continues to be reaching a breakeven run rate by the end of the year as revenue scales. We implemented the cost reduction plan at the end of last year. While the full benefits will not be realized until midyear, we are confident in achieving our expense targets in the second half. Working capital dynamics will continue to evolve alongside growth, particularly as we support production ramps and manage supply chain requirements. These dynamics may create short-term variability, but they are aligned with long-term revenue growth. Overall, our performance underscores the progress we are making in strengthening our core IoT business, improving financial discipline and maintaining flexibility in our capital strategy. Regarding our outlook for the second quarter, we currently expect revenue to be in the range of $6.8 million to $7.4 million, driven predominantly by product revenue, with potential upside if new licensing deals are closed. Based on our backlog and continued momentum across our design-win pipeline, we expect revenue to build sequentially throughout the remainder of the year. We also remain focused on reducing cash burn and continue to believe we can approach cash flow breakeven by the end of the year as the business scales. Looking ahead, we continue to evaluate strategic alternatives that could accelerate profitability and unlock additional value for shareholders. What's clear to us is that we are operating from a position of strength. We have a solid balance sheet, a growing and increasingly productive IoT business and a differentiated 5G and RF IP portfolio that we believe will be a key driver of long-term value. As we discussed earlier, the transition from 4G to 5G in IoT represents a fundamental shift in the market. With eRedCap expected to become the primary standard, we believe this will create a larger, more unified and more scalable market than what we saw in the 4G cycle. Sequans is uniquely positioned to benefit from this evolution. We expect to leverage our existing 4G customer base as a natural entry point into 5G, enabling a more efficient transition for our customers while accelerating our own time to market. Combined with the expected premium pricing and expanded market opportunity, we believe this positions us to drive meaningful long-term growth and improved profitability. In parallel, we will complete the redemption of our debt by June 1 and continue to manage our capital allocation with discipline, maintaining a strong cash position while preserving flexibility to act opportunistically as conditions evolve. Overall, we remain focused on scaling our IoT business, advancing our 5G roadmap, developing our new RF transceiver business and executing against the key drivers that we believe will unlock the full value of Sequans over time. With that, I will now turn the call over to Deborah to review our financial results in greater detail. Deborah?

Thank you, Georges. Hello, everyone. I'll begin by reviewing our first quarter financial results and then provide an update on our balance sheet and digital asset holdings. During the first quarter, our financial results continued to reflect the underlying momentum in the IoT business, along with the impact of actions taken earlier this year to strengthen our balance sheet and simplify our capital structure. For Q1 2026, total revenue was $6.1 million compared to $6.9 million in the fourth quarter. As Georges mentioned, revenue in the quarter was primarily driven by product sales with ongoing variability in licensing and service revenue timing. Gross margin for the quarter was 37.7% compared to 41.4% in the fourth quarter and reflects the ongoing impact of supply chain dynamics and especially revenue and product mix. Operating expenses in the quarter, including R&D and SG&A expenses, were $11.8 million compared to $12.3 million in the fourth quarter. We continue to make progress on our cost reduction plan and remain on track to achieve lower operating expense levels in the second half of the year. During the quarter, we recorded $29.3 million of noncash charges related to the mark-to-market valuation of our Bitcoin holdings compared to a loss of $56.3 million in the fourth quarter. As a reminder, these charges are driven by market price movements and do not reflect underlying operating performance. We also recorded $11.7 million of realized losses on the sale of Bitcoin during the quarter compared to $6.1 million of losses in the fourth quarter, primarily associated with the ongoing redemption of our convertible debt. As discussed previously, the convertible debt and associated embedded derivatives continue to be remeasured each reporting period, resulting in noncash impacts to the P&L. In addition, IFRS accounting requires us to recognize noncash interest expense associated with the 0% coupon instrument. Reflecting these factors, we reported an IFRS net loss of $54.3 million for the quarter compared to an IFRS net loss of $76.4 million in the fourth quarter. On a non-IFRS basis, excluding significant noncash items, we reported a net loss of $20.7 million or $1.42 per ADS compared with a non-IFRS net loss of $16.2 million or $1.04 per ADS in Q4. The comparative numbers for Q4 and Q1 2025 have been adjusted from the unaudited figures published in February 2026 and May 2025. In finalizing the 2025 audit, we made adjustments related to the timing and amount of revenue recognized, the accounting for the compound financial instruments issued in July 2025 and related embedded derivatives, finalization of the ACP purchase accounting and other adjustments attributable to normal year-end closing procedures, audit adjustments and the completion of management review. We are currently still finalizing with our auditors the documentation and disclosure of the impairment test for ACP, goodwill and other acquired intangibles on the balance sheet. The ongoing discussions regarding determination of the cash-generating units to be evaluated and the most appropriate valuation models resulted in delays in issuance of the audit report, and therefore, we filed a statement indicating we would need to extend our filing deadline. We expect to file our Form 20-F this week. Turning to cash flow. Normalized cash burn for the quarter was just under $10 million compared to approximately $7.7 million in the fourth quarter, including working capital movements. As Georges mentioned, working capital can fluctuate as we support production ramps and secure supply. During the quarter, we continued to execute on our balance sheet strategy. As of March 31, 2026, we had redeemed $28.3 million of the $94.5 million face value debt that was outstanding on December 31, 2025. As of April 30, we had redeemed approximately 62% of this convertible debt, funded through the sale of 800 Bitcoin, leaving a balance of approximately $35.9 million due, which we expect to redeem in full by June 1, 2026. At the end of Q1, we held cash and cash equivalents of approximately $10.6 million compared to $13.4 million at the end of 2025. As of the end of Q1, we held 1,514 Bitcoin compared to 2,139 Bitcoin at year-end 2025. As of April 30, we held 1,114 Bitcoin and expect that we will hold at least 600 Bitcoin after full redemption of the debt, all of which will be fully available for sale. Following completion of the debt redemption, we expect to have a near debt-free balance sheet with a simplified capital structure and increased financial flexibility. Overall, our financial results for the quarter reflect continued progress in scaling the IoT business, improving cost discipline and strengthening the balance sheet. Before turning the call back to Georges to conclude, I'd like to cover a few housekeeping matters. We expect to conclude the final audit procedures with our auditors this week and be in a position to file our annual report on Form 20-F. Since we filed an extension notification last week, as long as we file by May 15, we will still be considered a timely filer. We are currently preparing for our Annual Shareholders Meeting on June 30, 2026. You should expect to see voting materials by early June. Most of the resolutions will be our normal recurring resolutions that you see each year. One of these resolutions is to ask for authorization for a capital increase. This year, we will ask for authorization to issue up to 7.5 million ADS, including up to $15 million in the form of convertible debt. We would like to clarify that we are asking for this authorization only to provide flexibility in the event that we have a strategic opportunity that would require issuance of convertible debt or equity. We currently have no plans to do any equity raise to finance operations. In fact, the shelf registration statement and ATM program that we filed in August 2025 were filed when we had the market cap to be an accelerated filer and were automatically effective. Upon the filing of the 2025 annual report on Form 20-F, we will no longer satisfy the requirements for using an automatic shelf, and therefore, we can no longer issue equity under that August shelf registration or the ATM program. With that, I'll turn the call back to Georges.

As we close, I want to reiterate that our primary focus remains on executing and scaling our IoT business and expanding to software-defined markets such as drones and defense. We are seeing solid momentum across the portfolio, supported by a growing backlog, a maturing design-win pipeline, an increasing number of projects transitioning into production and several advanced licensing and services deals. With continued strength across Cat-M, Cat-1bis and RF transceivers, and with early engagement around 5G eRedCap, we believe the business is well positioned to drive sequential growth while maintaining a clear path towards cash flow breakeven. At the same time, we have taken decisive steps to simplify and strengthen our balance sheet. By eliminating our convertible debt and transitioning away from the treasury strategy, we are increasing financial flexibility and sharpening our focus on the core business. Going forward, our priority is to monetize our remaining Bitcoin holding in a disciplined way while ensuring we maintain the liquidity needed to support operations and invest in our 5G roadmap. Overall, we believe we are entering an important phase for the company with a stronger financial foundation, improving operational visibility and a clear path to long-term value creation. Thank you for listening. We can move now, operator, to the questions, if you don't mind.

Operator instructions were provided. Our first question or comment comes from the line of Luke Horton from Northland.

This is Luke on for Mike Grondahl. I wanted to touch on the 5G roadmap and pipeline you have there, and specifically with eRedCap, how large do you expect this opportunity to be relative to the existing Cat-M and Cat-1 business?

Yes, Luke. eRedCap is really the standard that's going to replace essentially all those Cat-M, NB-IoT, Cat-1 and Cat-1bis segments. In the 4G era we had multiple technologies: NB-IoT, mainly in China; Cat-M, mainly in the U.S., Japan and parts of Europe; Cat-1 and Cat-1bis as well. That fragmentation occurred as cellular entered IoT. Now carriers, starting in the U.S. and followed by other regions, want to refarm 4G spectrum for 5G and eventually switch off 4G. For phones that's straightforward, but for IoT we need a 5G IoT solution, which is eRedCap. eRedCap will support both low-speed and medium-speed use cases with a single technology and, because it supports 5G, it will have a somewhat higher ASP. It supports a broader range of applications and should expand the market over time while improving pricing. So the size of the eRedCap opportunity should be at least the sum of today’s Cat-1, Cat-1bis, Cat-M and NB-IoT opportunities, plus a premium — perhaps 10% to 15% — driven by higher ASPs related to 5G.

Got it. I appreciate the color. On the $300 million pipeline you called out with about 50% expected in the next three years and the sequential growth acceleration throughout this year, where does that confidence come from? Any additional color around those assumptions?

Sure. The $300 million number reflects what we had in hand as design wins at the beginning of the year. About 44% were already in production at that time and generating revenue. We expect to have 50% of that pipeline in production by the end of June, representing roughly $150 million of potential 3-year revenue. If you average that over three years, it suggests roughly $50 million per year, with ramp profiles that vary by project. Our backlog provides additional confidence: we have about $22 million in secured product revenue for the year and even $2 million to $3 million already indicated for Q1 of next year. That backlog comes from design wins in production and validates our pipeline analysis. Cat-M is particularly secure — a large portion of Cat-M projects are already in production and we feel very confident about those revenues. Cat-1bis projects are less mature and represent the area where more conversion to mass production is still required. We expect those ramps to happen in the second half of the year, which is where some of our sequential growth will come from.

Lastly for me on the digital asset strategy: after the June 1 redemption, how do you think about Bitcoin holdings on the balance sheet and capital allocation under different crypto market scenarios, such as another bull run versus pricing pullbacks?

We originally pursued a digital asset strategy believing we could grow that business alongside IoT and potentially separate the two at the right time. However, the digital asset approach did not work out as we had anticipated for many reasons, including pressure from the Bitcoin price and the risks associated with having debt. We decided to eliminate that debt-related risk by redeeming the convertible debt. After June 1 we will have a clean balance sheet with at least 600 Bitcoin. We do not plan to repurchase Bitcoin today. We also will not sell all remaining Bitcoin immediately on June 2. We intend to monetize those holdings over a disciplined timeframe — likely over the coming quarters — balancing market conditions and our cash needs. We will not sacrifice the IoT business to chase digital asset outcomes, and we will ensure the company has sufficient liquidity to operate independently of Bitcoin price variability.

Our next question or comment comes from the line of Scott Searle from ROTH Capital Partners.

Maybe just to dive in, Georges, on the RF business, it sounds like there's a lot of momentum building. Could you calibrate us in terms of where that is from a current revenue standpoint, what the backlog and opportunity looks like as you think about 2026 and 2027? And then as it relates to the eRedCap licensing opportunity, it sounds like there are a number of opportunities in the pipeline. Could you provide more color in terms of the magnitude and timeline that you could see some of these deals materializing, and how you're thinking about different vertical markets on that licensing front?

Thanks, Scott. Acquiring ACP accelerated our RF and 5G roadmap. We received engineering test chips during the quarter, and the RF analog and related IP are working well in-house. Beyond supporting our 5G eRedCap modem roadmap, ACP brought an RF transceiver product that can be sold standalone to existing customers, and it fits very well for drones and defense markets where ASPs and margins are high and demand is strong. From a current revenue standpoint, we have roughly $4 million to $5 million that could be considered secured for the year from RF-related activities, including some royalties tied to our Chinese eRedCap arrangements. That number could grow in the second half depending on backlog confirmation. Since announcing the Iris family, we've received about a dozen leads globally for drone and defense applications; several of those engagements are advanced and could become design wins. The RF transceiver market opportunity could be on the order of $100 million-plus per year for the type of products we address. Margins are very attractive and the incremental investment to pursue this market is limited because the R&D is largely complete; the main incremental spending is in sales and marketing and program support. On licensing, this remains important to achieve cash flow breakeven. While product revenue growth is our primary driver, we have multiple advanced discussions around RF, eRedCap modem licensing and protocol technology for satellite communication. We hope to close at least one deal this quarter and possibly another one or two in the second half. These licensing and services deals vary in size: some are smaller, a few hundred thousand dollars, and some could be larger, in the single-digit millions up to potentially $15 million. They are binary by nature, but several are in advanced stages, so we are optimistic they will contribute to 2026 results.

Looking to the second half of this year, you're talking about getting to cash flow breakeven. That implies product revenue ramps considerably in the second half. Could you expand on your confidence level there? The $300 million pipeline helps, but new wins are starting to ramp as well. Could you give an idea about where you expect product to ramp by the end of the year? The backlog supports some visibility, but help us with end markets and the competitive landscape as well. Cat-1bis seems very hot right now — where do you stand on win rate there?

The confidence in the second-half ramp comes from the maturity of our design wins and the number already in production. For projects that are in production, I am more than 90% confident they will ship according to plan because we have backlog and customer forecasts. Those are primarily in metering and tracking verticals, which are mature for us. Cat-M is largely secure this year; I would say roughly 90% of our Cat-M plan is already in hand. Cat-1bis is less mature — perhaps around 30% of that plan is in production today — because those design wins came later. Many Cat-1bis projects are moving toward mass production and we expect more to enter production in the second half of the year. The RF business also has secured positions that should contribute in the second half based on customer forecasts. So the product ramp is driven by existing production projects scaling, Cat-1bis projects entering production, and contribution from RF transceivers. The competitive landscape for Cat-1bis hasn't changed materially; in North America it's largely between Qualcomm and us, and Cat-1bis certification in the U.S. is effectively closed for new modules. The longer-term competitive dynamic will depend on who has 5G technology as the market moves to eRedCap, and we believe our 5G investments position us well for that transition.

On operating expenses, we expect those to continue coming down. We're targeting cash operating expenses below $10 million and are targeting $9 million by the end of the year.

Our next question or comment comes from the line of Jacob Stephan from Lake Street Capital Markets.

First, I want to touch on the balance sheet post June 1. You reported $10.6 million in cash. Can you walk us through the Bitcoin collateralized numbers? You cited 817 as a collateralized number in the press release; if you subtract current holdings from that number you get roughly 300. Can you walk through that?

Yes, Jacob. It's a bit tricky. We have some Bitcoin already free — about 300 Bitcoin — that are not part of the 800 referenced in the collateral. The 800 figure referenced the portion tied to collateral for the debt. Under the agreement with the debt holders, we keep that collateral until we redeem the debt. Once we redeem the debt, the remaining collateral is released to us. So after full redemption, when you combine the Bitcoin already free with what is released from collateral, we should end up above 600 Bitcoin. On June 1 we'll pay off the debt, and the company will be nearly debt-free, with perhaps only minor short-term government-related or R&D funding liabilities remaining.

The only remaining debt after that will be related to government R&D funding, which is low or zero interest.

More short-term debt may remain, but the significant convertible debt will be redeemed.

So the actual collateral, the roughly $62 million number, is security for the approximately $36 million of debt. Once you pay the $36 million principal off, the remaining Bitcoin is returned to you.

Yes.

Our next question or comment comes from the line of Fedor Shabalin from B. Riley.

Georges, once the convertible debt is fully redeemed, how should we think about the preferred use of proceeds from the sale of remaining Bitcoin? How would you rank funding operational expenses versus share buybacks?

Fedor, we still have an existing share buyback authorization, and we executed some buybacks in Q1. We don't need to hold excessive cash for operations — our cash burn should be reduced — so the Board will consider opportunistic buybacks. Execution will depend on business evolution in the second half, including any licensing deals that deliver upfront payments. If we secure significant licensing or other cash-generating deals and the stock is trading favorably, we could use available funds to support share repurchases. The Board will evaluate this opportunistically based on market conditions and the company's needs.

That's helpful. My follow-up is on operating expenses. You mentioned you expect a decrease in OpEx for the year and targeted $9 million by the end of 2026. Where will most of the savings come from on the OpEx side?

We are operating more efficiently. Last year we had many one-time items related to transactions, acquisitions and the digital asset strategy, which increased costs. We've cleaned up many of those items and implemented a cost reduction plan. In R&D, our 4G product portfolio is maturing, so ongoing spending for 4G support is significantly lower and R&D investment is focused on 5G where timing is aligned to go-to-market. That gives us flexibility to pace R&D investment. On the G&A side, we've taken planned headcount reductions, avoided replacing departing employees in some roles, reduced contractor usage as projects finish, and optimized rent and other overhead. These across-the-board reductions will drive lower operating expenses.

There is not one single item; savings are across the board. We have planned headcount reductions and are not replacing some roles, we are reducing contractor expenditures as projects complete, and we are reducing general G&A expenses including rent and other overhead. These measures together will help us achieve the targeted expense levels.

I'm showing no additional questions or comments in the queue at this time. I'd like to turn the conference back over to Mr. Georges Karam for any closing remarks.

Thank you all for joining the call and for your questions. Looking forward to seeing you in the near future. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.