Ladies and gentlemen thank you for standing by. Welcome to the Sequans Fourth Quarter and Full Year 2016 Results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this conference call 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 in behalf of Sequans. This call contains projections and other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions discussed in this call, including any statements regarding our future results of operations and financial positions, business strategy and plans, sources of funding, 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 our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk 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 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. Please go ahead, sir.

Thanks. Good morning, ladies and gentlemen. This is Georges speaking. I am with Deborah Choate, our Chief Financial Officer. And both of us welcome you to our fourth quarter and full year 2016 results conference call. The fourth quarter was a strong finish to the year. Total revenue of $14 million was at the midpoint of our guidance. We were particularly pleased with the growth in our product revenue, which reached $12 million in the fourth quarter, up 25% sequentially and 82% higher than the fourth quarter of 2015. For the full year, we reported a 40% increase in total revenue to $45.6 million. We have excellent momentum heading into 2017 and we expect our year-over-year revenue growth rate to be higher than the 40% growth this year, and to accelerate even more in 2018. Before giving a detailed status report for each market segment, I’d like to give you some highlights of our accomplishments during the past year. Unit shipments grew 50% in 2016, as you see, it’s even faster growth than revenue. By the fourth quarter, we were shipping close to 1 million units per quarter; this was a combination of chips and modules. Even more significant is the diversification of our customer base during the past year. In 2015, our broadband device revenue came primarily from only a few customers, although one of them Gemtek sold through to several different operators. We also had two customers in the public safety space and kicked off a handful of new IoT projects. Our customer base grew from this concentrated base to more than 40 active customers by the end of 2016, about half of them related to Internet of Things. Bear in mind that this group of customers does not take into account the number of end customers that…

Thank you, Georges, and hello everyone. I’ll go over some details about our Q4 and annual financial results and discuss the outlook, including our guidance for Q1 of 2017. Revenue grew 40.1% to $45.6 million for the full year in 2016. This was the third consecutive year of revenue growth of 40% or more. Gross margin in 2016 increased to 43.8% from 40.2% in 2015. We reduced our net loss to $24.8 million, or $0.39 per diluted share per ADS, compared to a net loss of $27.4 million, or $0.46 per diluted share in 2015. 2016 was also the third consecutive year in which we reduced our net loss. On a non-IFRS basis, our net loss for 2016 was $19.9 million, or $0.31 per diluted share, compared to a full year non-IFRS net loss of $23.3 million or $0.39 per diluted share in 2015. Our non-IFRS net loss, excludes non-cash items related to stock-based compensation expense, the non-cash fair-value and effective interest adjustments related to convertible debt and other financings, and in 2015, a provision for WiMAX inventory. Revenue in the fourth quarter of 2016 was $14 million, a 12% sequential increase from Q3, and a 28.4% increase compared to the fourth quarter of 2015. The sequential improvement represented across-the-board strength on all platforms. We had three 10% customers in the quarter, two were distributors serving a total of nine Asian OEMs and ODMs, each representing themselves multiple operators, and the third one is related to a strategic agreement. Non-IFRS gross margin was 38.4% in Q4. Our gross margin was affected by the revenue mix in the quarter, specifically licenses that were scheduled to be signed in Q4 were delayed until Q1, which caused high-margin other revenue to be lower than expected. One of the licenses has already been signed,…

Thanks, Deborah. So to conclude this with few words from me, just to recall, and I wanted to go with the three bullets, if I have to mention them. One, which is obviously we are very pleased with our accomplishments last year, and this is across the board. If I look to the future, it’s very promising and as we have created a very strong position in each of our market segment. We have now very solid broadband business and very exciting and a promising IoT business. And last but not least, when you think about LTE for IoT, Sequans is now a thought leader in this space. We see in this segment a duopoly developing as it’s very difficult to new entrant to come in. This creates a scarcity factor that will have a huge value for our shareholders. Thanks for taking the time and let’s move now to questions.

[Operator Instructions] First question is from the line of Quinn Bolton, Needham. Please go ahead.

Hey, Georges and Deborah. I apologize, Georges, I missed some of your prepared comments but I wanted to start just with the comments that were made about the acceleration of revenue into the second half of the year and targets for achieving breakeven. If I run some rough math with roughly $10 million of quarterly OpEx and a greater than 40% gross margin, it sounds like your revenue breakeven is still probably in the low $20 million range. And so, I just want to make sure thinking about that revenue ramp as we look into second half of the year that it probably would envision getting into the low $20 million range to hit your operating breakeven target?

Hi, Quinn. Yes. Those -- what you just said is pretty accurate representation, yes.

Okay. And then, the mix, sounds like -- and again apologize, if Georges, you addressed this. It sounds like in 2017, the ramp of revenue sort of through the year was driven both by broadband and the Cat 1 business. Just wondering if you can kind of give us where do you see the mix between sort of the broadband home routers, portable routers versus Cat 1 devices but exiting 2017?

Quinn this was actually in part of George’s prepared remarks. On the broadband business, we’re seeing this to go to at least $10 million and could go as high as $12 million, and we see the IoT business approaching the $10 million as we exit the year.

Okay, great. Thank you.

Thank you. Our next question is from the line of Mike Walkley, Canaccord Genuity. Please go ahead.

Thank you. Georges, I was at the IoT Evolution conference last week in Florida, and it was great to see Verizon’s live Cat M demonstration with Nimble, Inc.’s module, which had your solution inside of it, clearly a growing excitement for the industry about Cat M1 and the opportunity. And my question’s really building off your last point about the market becoming duopoly. Can you update us on the competitive dynamics you’re seeing in the market for Cat M1?

Hi, Mike. Yes, sure. I mean, we’re really seeing -- today, if you need something real in your hand, you have only two solutions, whether it’s Sequans or Big Brother. [Ph] As I said, as I mentioned, their product is kind of using an known silicon with the new software to run on the Cat M, and this put us in a good leading position. All the other guys, I see them really still coming later 2017 at best with something serious in one and they still have to execute, go through the certification phase and so on. So, very frankly, from the level of the pipe we have, the engagement with the customer, we’re always feeling ourselves like really the debate is between us and another solution. So, it’s choose one between two. And with our solution fully optimized for Cat M and power in cost, really it’s a kind of next generation technology, it’s not an old technology. We see even a leadership in this. And as we are speaking in terms of certification, we remain the guy who has this certification already on Verizon and quite ahead -- few months ahead of the other guys in terms of software.

And then, just building on that, as you look at the leading module suppliers, you are with Gemalto and then you bought a company, SIMComm that you’re working with. How do you see kind of the major module competitors in the market, given the two solutions, how do you see your chances maybe cracking in some other module suppliers over time?

Yes. I believe, I mean, if it’s -- the module partners, OEM, I would say, are key the part of our go-to-market strategy and key element for our success. And on this business, as you mentioned we have today Gemalto, we have SIMComm, we’ll see how this will develop with u-blox, but I’m positive about it. And we have Fibocom that we named. And we have a fourth one that I indicated without name, hopefully we’ll be announcing this in the near future, and other major one. So, we have OEM, we have four today in hand. For whatever reason, some of the other yards or whatever, maybe we’ll not win them all, and each one has its own strategy and some people, they have some historical, some legacies, some stuff pushing them to stay with other solution, which is fine. But I believe with four guys I named, three I named and the other one, which is another big name as well, we are in very, very good position from OEM point of view. But you should not neglect as well the ODM angle, because all this IoT application is not only about M2M segmented small market, you have huge projects. And for those projects, people will not afford to pay to an OEM module, and they would like to go straight forward to an ODM to get the solution completely optimizing task and maybe put part for their products with ODM. And this is I believe, we are well-ahead here on all the competition, because as I mentioned we have three tier 1 ODM I named, which is Foxconn, Wistron and USI, and we have few others that I didn’t name, but in Asia they are preparing the solution to move with us. So, we feel good on all those fronts. And we still have, as I said, few guys discussing with us to engage.

One more on the industry just with the Telefonica announcing here today and some other news out of Europe. It seems like Europe is going to be little more, and more than maybe we first imagined. How do you see that market shaping up and how do you see some more carrier partnerships potentially for Sequans?

No, this is -- for the first time, I start feeling a little bit more optimistic about Europe in the 4G, because so far they were little bit lagging in the Cat 4, Cat 6 4G to enable single model-mode LTE. But moving to the IoT space, they I think have changed completely. And we are seeing today Telefonica obviously I mentioned, but you can see Orange, you see Vodafone, you see even T-Mobile in Europe and so on, many other guys active, even some Nordic carriers. All of them are really would like to move and initiating trials. This year is going to be about trials and positioning and get their network ready. I see as early as maybe some of them launching something Q4 this year, but definitely this is 2018 business the network will be there. So, this is in terms of timing. It remains the timing today more aggressive in the U.S. for many reasons. Obviously, on one side, there is no more 2G, so they want to move fast and also because the coverage of the 4G is large and there is some competitive dynamic there playing in this favor. So, we have Verizon, AT&T and T-Mobile, I see them moving fast in the U.S., followed by the Korean and then Japanese and European, if you want. This is all I see a little bit the dynamic, and maybe some development in Australia and China.

Thanks. Last question for me and I’ll pass it on. Deborah, just as we think about as you invest for growth of all the different opportunities that Georges is highlighting on the call, how should we think about kind of operating expense levels throughout 2017 and then cash management, how should we think about that as you get to kind of cash flow breakeven, exiting the year?

So, this year, we -- I mean, our objective is to get to operating cash flow breakeven as soon as possible. So, we will continue to try to control our operating expenses and not let those grow much over the course of the year. We have added a little bit in terms of headcount because we are addressing an increasing number of operators and customers. But I don’t -- we’re not expecting to see OpEx go up that much over the course of the year, so having that just in check a little bit. And we’re still working in terms of the biggest challenge, as we get to cash flow breakeven, will be continuing to fund the working capital needs as we continue to grow. We have -- and we are very pleased with how the factoring line that we have in place is working and that’s been helping us a lot in terms of managing that and recent terms of -- in the short-term, I expect that that will we be our main short-term financing facility.

Thank you.

Next question is from the line of Craig Ellis, B. Riley Financial. Please go ahead.

Thanks for taking the question, and congratulations on the third year of very strong revenue growth. Georges, I wanted to follow up on one of your prepared comments. You noted that inbound inquiries have been coming in much more frequently, almost daily. Can you profile a little bit, where you are seeing those; is that predominantly from a particular region or regions or a particular customer type?

The fact, very frankly, if I think a little bit about it, I see it worldwide. So, we have orders coming obviously from the U.S., Europe, Asia in general, specifically Korea, Japan. Obviously, we are talking here about devices. We are in a global economy and most of the customers, they want to address different region of the world. And this is one of the beauty by the way about 4G, when you compare this to technology like Laura or CFOX, [ph] which is a little bit limited generation or some places. So the beauty about 4G and one angle of this Sequans technology by the way is that we offer a single SKU worldwide. Most of the products, they we want to go in different regions. But still, the main focus really to start to the U.S. carrier because all of them, they know that the market is big in the U.S. and obviously they carriers are going to move fast. So, the project remains focusing on the U.S. first but interesting enough that we are seeing the guys as well at the same time preferring the second wave after the U.S., so they are going to Europe or some other regions in Asia.

That’s helpful. And then, the follow-up is related to the point that the Company will be adding some other functions around its core technology, acknowledging that for now and maybe over the intermediate term, this is more of a duopolistic market. Do you see your competitor doing the same thing or does this just further extend your competitive mode with your technology leadership relative to that competitor?

Well, this is a very important element and part of our roadmap and how we take it further because our leadership in the LTE is here today. Obviously one of the angle of executing during 2017 is to maintain this leadership and continuing to improving this technology. But on the other angle is well expanded for other function that you need on the device to make the global device efficient and cost competitive and so on. So, part of those technologies were developing them ourselves, and this is part of our roadmap that we’ll be talking about in the future. And part of this is through partnership. Some of them that as we mentioned, for example when we go to the frontend, we’re playing with Skyworks. But we work as well with other partners on other function, I’d say digital function to make complete solution. For example, if you need a GPS, we have a partner on GPS. And we manage to integrate the software and the solution, and this is what matters for the customer to give them something fully integrated. And the beauty about this is the partners in the IoT space are -- we have many partners in the IoT space that you can play with them to get some complementary technology going with LTE if we needed and we have many choices I tend to say. And the reverse [ph] is not too. In other words, for them, there is not too much for them as they need the Cat M, they need to work with Sequans while Sequans has a choice to play with few of them.

That’s very helpful. And then the final question is to Deborah. Deborah, there’s been some helpful color provided around operating expenses as we go through the year. I’m wondering if you could just identify some of the major gives and takes with respect to gross margin as we look through 2017. Thank you.

The biggest impact on our gross margin is really the revenue mix. And in 2017 we, expect we’ll continue to sell modules. So, this obviously has an impact on the overall gross margin. And we continue to have the other revenue line. I think Georges mentioned in his prepared remarks that in the past, a lot of these sort of vertical markets, applications, opportunities were taken really on that basis, as an opportunity. And we’re now seeing this develop as more of an ongoing business where we’re the preferred partner for this kind of activity. And we tend to have good margins on this kind of revenue. The problem is that that can be a little bit lumpy in terms of -- from one quarter to the next. So, I’d say when we look at the individual elements, we continue to see the target gross margins on chips to be very healthy in a 45% to 50% range and a nice margin on the services, and the biggest I’d say, volatility factor is the contribution of module revenue in any particular quarter.

That’s very helpful. Thank you.

[Operator Instructions] Okay. With no further questions in queue, back to Mr. Karam for closing remarks.

Thanks, Mike. Thanks, everybody for taking the time, and looking forward to have you on the call, our first quarter next time. Thank you very much.