Ladies and gentlemen, welcome to the Sequans Fourth Quarter and Full Year 2013 Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference is being recorded. Before I turn the conference over to our host, Mr. Georges Karam, I would like to remind you of the following important information on behalf of Sequans. This call may contain projections and other forward-looking statements regarding future events and our future financial performance. All statements other than the present and historical facts and conditions discussed in this call, including any statements regarding our future results of operations and financial positions, business strategies, business -- plans 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 the Security -- 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 risks and uncertainties and are 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 place undue reliance on these forward-looking statements. Actual events or results may differ material from those contained in the projections 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. With that being said, I’ll now turn the conference over to your host, Mr. Georges Karam. Please go ahead.

Thank you, Sir. Good morning, ladies and gentlemen. This is Georges speaking. I am with Deborah Choate, our Chief Financial Officer, and we are pleased to welcome you to our fourth quarter 2013 results conference call. Our team continues to execute well and we are pleased to report Q4 results that are consistent with our guidance. Shipment during the quarter went mainly to designs to whom we started shipping in the third quarter. I mean, to our customers addressing, one, the Greenfield emerging operators segment, two, the triple-mode router launched by KDDI in October, and three, the initial shipment for machine-to-machine application in the United States. In terms of design wins we have a closed some important wins during the quarter and we are entering 2014 with the strong momentum. Looking back on the past year, it’s clear that 2013 was the year in which the single-mode LTE market completed the transition from vision to reality. As you noted for the year, it was a period of important accomplishment and I would like to recap three elements before going through more detail business update. First, we participated in an important testing evaluation programs in several countries including the United States, Japan, South Korea, India and China, and our second-generation platform received certification by carriers in these countries. This has positioned us for broad base design wins and for a wide variety of devices starting with home and portable routers then moving to mobile computing devices such as tablets and notebooks, and finally, expanding to machine-to-machine devices and various consumer electronic products toward the internet of everything quad. Also in 2013, we implemented a very successful strategy to offer pre-integrated, pre-tested and pre-certified EZLinkLTE modules was significantly accelerated time to market for our customers and helped us to secure multiple design…

Thank you, Georges. Hello everyone. I would like to add some details about our Q4 financial results and the financial outlook. Revenues in the fourth quarter of 2013 were $5 million, a 23% increase from Q3 and a 60% increase compared to the fourth quarter of 2012. We shipped nearly 4,000 units in the quarter. We had three 10% customers in the quarter, which shares ranging from 11% to 37%. Our largest customer was again Huawei, our long-standing customer primarily for WiMAX products. The others included [Gentek] and one other customer who has not yet given us permission to disclose their identity. We realized an overall IFRS gross margin of 43.8%, a significant improvement from the third quarter, reflecting a higher proportion of license and other revenue in the mix as well as higher product gross margin despite the product mix staying roughly the same in the two quarters. Operating expenses were $10.7 million in Q4, higher than the $9.8 million in Q3, primarily due to $500,000 of G&A expenses related to our decision to relocate the headquarters office to another site at the end of the current lease in May. And we will be locating a short distance from our current headquarters to the same number of square feet of space. This move will reduce our rent by 40%, beginning in the second half of 2014 with an improvement in the quality of the space. Operating expenses were $10.1 million in the fourth quarter of 2012. Our fourth quarter operating loss, which includes stock-based compensation expense, was $8.5 million, compared to an operating loss of $8.8 million in the third quarter and operating loss of $9.8 million in the fourth quarter of 2012. Net loss was $8.3 million in the fourth quarter compared to a net loss of $8.8…

Thanks, Deborah. Just to conclude and before turning this to questions, I would like to really to take just few point to give as a summary of my message here. The first one is really our market, the markets, a lot of focusing is happening. This is the single-mode LTE, which was a vision as we said maybe two years ago. Now, this in hand and received everywhere. The second point is really, we are getting the success we are looking for and we have successes in all our market engagement. With design wins in hand, some of them are already shipping and growing across 2014 and some will be shipping during the year. More important as well, it’s not done. We continue work on new design win. Few of them will be closing maybe in the coming months and months and still some of them can influence our revenue in 2014. The third point is really interesting to look to the diversified applications we are playing. This is from device point of view with all the three segments between traditional home router, portable routers, towards mobile computing with tablet and notebooks, towards machine-to-machine and consume electronics with a vision often to run everything there, but also the diversification in terms of operators that we are seeing, engagement already with the diversified operator in many regions and making all our business healthier from this point of view. As a last point, we keep seeing interests coming from new carriers and this interest is growing for this single-mode LTE and this is very promising to see a strong growth for our future, specifically 2015. So I would like to thank you for listening and maybe I can turn it now to questions. Thank you very much. Operator?

(Operator Instructions) First question today comes from the line of Anthony Stoss representing Craig-Hallum. Please go ahead.

Georges, it might be helpful if you can lay out in terms of when these design wins will start converting to revenue by second half of ’14 or how many of them will go online until 2015? Also secondly, if you -- could you talk about means on the headcount side, you have enough employees right now and kind of your plans on OpEx for the second half of this year? Thanks.

Thanks, Anthony. In terms of design win, specifically I would like to say most of the design win we already announced I believe before this call ended you have in hand if I’m not mistaken maybe all. We have a plan that we will see revenue from them in 2014. So on reality, it’s more now with the new design win that will be closing this quarter. As I mentioned few of them, for example that they are imminent, maybe they will happen maybe this quarter or beginning of the next quarter. Those, we could see maybe not too much revenue happening in 2014 in some of them and could be crossing for 2015. But in general all that we have said in the past whether the design wins, whether in the US or other regions, we expect them to see happening in 2014, the latest could be last quarter, I mean some can go to the last quarter this year. Regarding headcounts and OpEx, Deborah?

Yes, overall, our expectation is that we will need to scale OpEx significantly as we start bringing on new projects with new operators. We will likely need to add some support and perhaps, some sales and business headcount but not on incidental basis. So at least for the next quarter or two, we expect OpEx to remain pretty flat. We could see that come up a little bit towards the end of the year based on how the revenues are ramping the designs wins that are coming in.

Okay. And then lastly, Georges, on the M2M side, you talked about a lot of additional carriers in the certification process for your modules. Is that being driven by the carriers or is it being driven by the customer side?

While you know the M2M opportunity, it depends, I mean, all our business by the way independent of the M2M. It’s really we have this push and pull, so we have engagement with the carriers and as well with the customer side. The one I mentioned for example in Korea, I tend to say it’s more customer driven. In the US it’s both ways, where you have obviously some interest, also the carrier to push, M2M application ands leveraging the low-cost LTE to penetrate many of those applications such as metering and others.

Okay. Thank you.

Question today comes from the line of Quinn Bolton with Needham. Please go ahead.

Hi George. Hi Deborah. First question just you’ve got another quarter under your belt, which one of you can give us any update on sort of the expected timing and potential unit opportunity with some of the design wins you’ve discussed previously. I think the one of the risks you mentioned was just, once you have design win, do those design wins potentially swipe out time and its hard to quantify unit. So with another quarter under your belt, have there been any major changes to your expectations on some of the previously announced design wins?

Well, hi Quinn. Our -- obviously this is what I wanted to -- when we are talking about those design wins and some of them are really in hand and there is some engagement as well with -- I tend to say with the customers. So we don’t find opportunity, we know its coming. The execution, this is what you don’t control sometime and it says global launch, if you want. This can -- you can have shift and this can have an impact for us quarter-to-quarter. But in general versus what we have announced already in hand, we don’t have any major, if you want, information saying something is going bad on many things there. It’s small, you know, obviously we have launch date which is sometimes you could be between within one or two months between expectation and what, the risk on the (inaudible) on but there is nothing major here to mention.

Okay, great. And just a couple of technical question, you have mentioned Category 6 40 megahertz, modems and some trial activity going on. Can you give us a sense of where you are in those trials and when you think you might see that ship for production revenue?

Yeah. I mean, we are having event. As you know, we are unique by offering 20 megahertz in all which is -- by the way we got this last year, I would say mid last year and since then we were developing the software and on top of this engaging with the carriers to show this category, it’s capability and so on. So this is going fine. I mean we have two engagements. I don’t have to mention the carrier with whom we are doing it to the world but you can guess, I mean all the carriers that they have larger than 10 megahertz band is, they have an interest in those kind of application. And currently this product will be moving to something for design and something to engage this year. And we should -- we're not planning but honestly in our plan, big revenue on 2014 coming from this product. I mean because with design win with customer, we believe this will be revenue in 2015 but design win definitely yes, this year.

Okay, great. And then you had mentioned the opportunity in China, specifically China telecom product set for some single-mode devices. Can you give us a rough sense, how large is that bit and you did opportunity on the single-mode side at China Tel?

While I do not have much of this information, it’s public. I’m just questioning, thinking about how much is public versus China Telecom. But this is really sizeable bit, I mean a few hundred K, I can say. And I can say around close to 25% of this bit is coming single-mode. And reality to be more specific, they ask for the portable device because China Telecom, they support CDMA as they have EV-DO and the CDMA technology. So this is what matters for them in terms of multimode. So for the portable devices, they requested to have the CDMA enabled on this because their coverage is not there yet in terms of LTE coverage. But for everything which is home routers, they requested single-mode only. And this is what’s we’re participating in.

Got it. Okay, great. And then just you mentioned, sort of machine-to-machine apps and two design wins that you’re getting close to finalizing. Can you give us some sense on these mostly metering applications, is it home security or there are particular applications that you’re seeing moving first in machine-to-machine?

We’re seeing, but obviously the two hot applications, I mean you can as well have some kind of routers I will say, but in terms of what the people think, its metering, it’s really an application where there is a lot of interest around it. And as I said this is related to the fact not only because we need 4G but it’s more because we need to provide future approved networks that sustain 10 years longevity and as you know, in the U.S, 2G, AT&T is switching off. Verizon is challenging the 3G to maintain it further. Some time they will take it off. So this is making kind of push to have 4G adopted by metering. And we’re seeing it as well, I mean, other application which is straight forward for 4G application, just what you call the home security, because obviously there we have on the video application in addition to voice. So these are, I would say the two applications that they are taking importance these days in the discussion.

Great. And just my last question, I think you mentioned, you’re still the only certified model at Verizon that supports band for in ‘13. If I heard you correctly, what do you expect competition, I mean, I know Verizon is in the process of rolling out band 4. It sounds like band 4 might be important to their LTE multi-cap service as they roll that out later this year. So its sounds like that which you are in a pretty good position as I would imagine as modules have to be qualified rolling advance of the rollout of that service?

I mean, I don’t talk. I mean, obviously this is an important advantage for Sequans because its time to market when you have a design win decision. Someone who wants a module as they want to have something support the two band because this is about the future and so on. But honestly if they are in a hurry and they want to move now with their projects, they don’t have too many options. I’m not saying this is how we win the customer, I mean, we will provide all advanced other cost and performance which they have as well. But this is time to market advantage obviously overtime I tend to say, I mean, maybe during the first half of this year, when we see other guys qualifying the second band. I don't believe the -- it's not the kind of technology barrier, in itself versus the other competitor they have frequency band, it's more time to market advantage by getting the modules designed to support the two band from scratch and ready to go, certified and so on.

Okay, thank you.

Our next question comes from the line of Tristan Gerra with Baird. (Operator Instructions) Go ahead, Mr. Gerra.

Hi. Good afternoon. Could we talk about the opportunities in [VoLTE] (inaudible) and how big it could become as percent of the $500 million $600 million cumulative revenue for single-mode LTE that you talked about for the next two years?

Oh, the eMBMS? I'm sorry, Tristan, I didn't catch the beginning of the question, so I was asking help from Deborah. Okay, so the opportunity obviously -- it's very complicated to -- obviously you see the interest growing everywhere by the way you suffered in the U.S. We're seeing interest in China or seeing interest in India, because providing video, depending on the carriers and depending on their position it's really big value on the service level to provide it to their users, and the LTE really has this eMBMS feature facilitating this. In the U.S. specifically, you saw for example AT&T, they come with a plan, Verizon they are coming with this show and they're announcing plan there. So the way I see it, it's more about the operator pushing the eMBMS services on their devices to improve their -- whether to get more customers or to increase their revenue because they can charge more services on this, that's how we see it. For us, we don't see this like, okay, we have additional markets, so it's a same -- if you take for example tablet market obviously if tomorrow Verizon will launch eMBMS, and they want to have eMBMS on tablet, Sequans being one of the two guys that they have the eMBMS, gives us an advantage, compared to that advantage because it's not an easy technology, it took us close to one year that we are working on this, end-to-end, all the middleware, all the software, integrating with the networks and carrier and the infrastructure. So I don't want to say this is really, I don't have an idea this really the percentage enabling the eMBMS because it all depends on the launch of the carrier when they enable it, and if they enable it, on which devices, because eMBMS can go obviously on phone, so all the guys that have smartphone they get benefit by getting video on their smartphone. Second device where you can push this to it, is tablet, and obviously from this angle, we could see some advantage from competitive positioning to win more slots, more designs, thanks to our eMBMS.

Okay, that's useful. And then it sounds like China Telecom is making perhaps a more aggressive push and even China Mobile, in single-LTE mode, if you could talk about the opportunities revenue-wise in China, is it, should we assume that China Telecom, could be initially larger and timing wise it is perhaps a next year ramp started the type of opportunity.

I believe, in terms I mean, the two of them obviously, if you look to it, I mean by the way you see that in China, we're not getting much -- the frequency has been granted, the TD-LTE frequency, to the three carriers, China Mobile, China Telecom, and China Unicom. And where you're seeing really the big push is from China Mobile and China Telecom and obviously because their 3G, I mean don't have the best 3G technology. On one side, you TD-SCDMA, on the other side you have the CDMA, so both of them -- they are really, getting challenged with the 3G, and they want to move to the 4G. So definitely the two of them they have real interest of pushing this aggressively. Today, their strategy on China Mobile, China Mobile they have already their network, so the networks is, I mean it's not complete but they did a lot before competitors and moving there. And their focus, we see, currently when you talk about China Mobile, we have some single-mode application there quite vertical application, but the main focus on the mainstream market in China Mobile is on the handset and this handset is multi-mode. However, we have started seeing traction for single-mode to come in the second phase for other devices, obviously a home router, but tablet as well on a lot of those kind of devices, for which we are preparing ourselves and then we are welcome with partners. China telecom they came a little bit more aggressive, because they need really to start choosing LTE now. They talk on some nice number, I mean it depends really for this year, it depends how fast they will execute on this, if there is some slippage and the interesting portion about this, they came from…

Great. Thank you.

Our next question comes from the line of Alex Gauna with JMP Securities. Please go ahead.

Yeah, thanks very much for taking my question. Your guidance seems a little bit better for the March quarter than typical seasonality. I wonder if there are some specific programs you can give color to that are offsetting this and/or, if there are some programs that are experiencing some seasonality that’s baked into this current guidance. Thank you.

Yes, Alex, you are right. I mean, Q1 typically, there is seasonality and there is the Chinese New Year. So there is a kind of one, two weeks where nothing happened in general. So this has factor then and obviously in our guidance, we are taking into account this. Obviously, it impacts all the existing business going there. So we are factoring this in and I could say maybe, nothing more to say, it’s factored in. But obviously looking to the level of -- because those are new design, all of them, they are starting since six months if you will. So maybe you could expect to see more impact, but the reality, it’s less than, if we could have maybe 10 program going on.

Okay. And I was wondering if you could update us on your view of the voice over LTE market, its progress and your opportunity there?

Well, voice over LTE, as you know -- I mean and this is very, very important. First of all, we are working on voice over LTE. We did lot of work last year and we keep working, but obviously we see this as our first application voice over LTE, is for the home security, machine-to-machine where we would like to provide the solution for home security with voice. This is received. And I don’t want to call it short-term but near term. The longer, what I am assuming people would like to see on VoLTE, is really the phone application with voice over LTE. And this really depends on the speed of the carrier introducing VoLTE and launching pure LTE phone with VoLTE. And let me be more specific here a little bit. If you look, for example to Verizon, obviously they speak publicly about aggressive program to enable VoLTE on their network with their dream behind is to switch off their CDMA network, safe cut from the network and have a pure play 4G network, fully IP, very low cost which is very-very smart. And in this case, they would have only VoLTE, all their voice would run on VoLTE. However, even in this situation, we really not to forget that for a phone or smartphone where the people are looking for roaming, so Verizon will be selling phone that those phones can -- people can travel whether to Europe or to Asia or any other places. And for this reason, they will keep on this phone, 3G, 2G, 3G and this will be SSP, not CDMA obviously. So it will be regular phone like you can get on AT&T, sold on Verizon. However, once this has really established any carrier like Verizon and so on, they could have the opportunity to enable the pure VoLTE phone with 4G only. And this will be really -- I’m trying to say, it should be small percentage at the beginning of the phone, addressing entry level phone, may be phone for kids or prepaid phone and today in our plan, we don’t see this, any business of this in 2014. We see it more in 2015 to come.

That’s great. Thank you.

Our next question comes from the line of Hanna Wakim with UBS Investment Bank. Please go ahead.

Good morning, Georges. Hi, Deborah. Any feedback you can share with us, please on the Super Bowl Verizon event?

Hi, Hanna.

Hi.

So obviously with Verizon, I can -- now it’s behind us, so I can talk about it a little bit more openly because for Verizon, it was really an important event to show to the people all this. So you have seen the Sequans, we manage to come really with the full tablet with partners by the way and get 7-inch tablet while the other tablet next to it was 5-inch and running all eMBMS end to end with all the technology controlled by Sequans, with software and everything there. So, I want to be sure that people understand that this is really -- you need to see its demonstration and so it was not a design win, otherwise we announced a design win. Definitely, we have few hundred tablets going to the show and all powered by Sequans and you can imagine that all this work can be leveraged for other design win in the future to get there. The leverage on this in terms of design win need to come, first of all, from the Verizon making the decision on the launch, when they will enable eMBMS and obviously not only Verizon by the way AT&T, they have the plan and definitely will take benefit from any launch coming there, because we will be the first to have this other than the other company that showed us at Super Bowl. And also the type of device that we will enable on this, so don’t forget this. When you see the announcement, you need to understand two things from Verizon. First of all, the launch date and second, what kind of devices because they may decide to have this only on the phone, not on the tablet at the beginning so. And obviously as you know, we are not playing in the phone, so we cannot take benefit of it. Sequans can start taking benefit of this, is obviously and hopefully, if they will enable tablets supporting eMBMS, giving us advantage in terms of design win process against the competition. Is this okay, Hanna?

Absolutely. Thank you so much, Georges.

There are no further questions at this time, Mr. Karam.

Okay. Thank you very much. Thanks all of you for listening and the questions and thanks Operator.

Ladies and gentlemen, that does conclude our conference for today. We thank you for your participation and using the AT&T Executive Teleconference. You may now disconnect.