Sivers Semiconductors AB (publ), Interim Report Q3, July-September 2022

Third quarter 2022

• Net sales amounted to SEK 28.212 M (26.511), equivalent to an increase of 6%. Net sales decreased by 2% at constant currency.
• Profit/loss before depreciation and amortization (EBITDA) amounted to SEK -26.606 M (-45.911).
• Adjusted EBITDA totaled SEK -23.079 M (-8.495).
• Operating profit/loss (EBIT) was SEK -51.887 M (-53.906).
• Profit/loss after tax amounted to SEK -45.156 M (-53.467).
• Earnings per share before and after dilution was SEK -0.19 (-0.34).
• Equity per share amounted to SEK 5.86 (2.75).

January-September 2022

• Net sales amounted to SEK 82.836 M (67.261), equivalent to an increase of 23%. Net sales increased by 12% at constant currency.
• Profit/loss before depreciation and amortization (EBITDA) amounted to SEK -57.580 M (-83.762).
• Adjusted EBITDA totaled SEK -58.333 M (-46.019).
• Operating profit/loss (EBIT) was SEK -143.253 M (-107.717).
• Profit/loss after tax amounted to SEK -124.537 M (-108.596).
• Earnings per share before and after dilution was SEK -0.35 (-0.70).
• Equity per share amounted to SEK 5.86 (2.75).

Significant events in the third quarter:

• On September 12, Sivers Semiconductors announced that its subsidiary, Sivers Photonics, had received a new order worth USD 0.955 M from its first established US Fortune 100 customer.
• On September 27, Sivers Semiconductors announced that its Sivers Wireless business area had received orders for development activities (USD 0.750 M) and a so-called acceleration fee (USD 0.150 M) to speed up the production time for its beamformer ICs. The total value of these orders is USD 0.9 M.
• On September 29, Sivers Semiconductors announced that it had entered into a loan facility agreement of up to SEK 100 M, of which SEK 50 M was paid out in October 2022. The loan facility shall be used to strengthen the Company's liquidity reserve and for general corporate purposes, which may include working capital and investments to promote continued organic growth in existing growth areas. Loans arranged under the loan facility will fall due for payment on September 29, 2023 and are subject to a monthly interest rate of one percent. The Company has the right to repay the loan early at any time.

Significant events after the end of the period:

• The business unit, Sivers Wireless, has received an additional purchase order of 1.4 MUSD (approximately 15.8 MSEK) from a European satellite communications company.
• Harish Krishnaswamy, co-founder of and former CTO at MixComm, has been appointed as Managing Director (MD) of Sivers Wireless. Harish Krishnaswamy will also join the management team of Sivers.

Key performance indicators

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Register for the webinar via: https://register.gotowebinar.com/register/1333999401593774608 

CEO's Statement

During the third quarter, we continued to prove how Sivers Semiconductors is instrumental in supplying the building- blocks that is laying the foundation for many of the megatrends of the future. We did that among others by our customers during the Capital Market Day told about how they address the megatrends of Silicon Photonics and Satellite Communications. Growth in the third quarter was slightly stronger than in the second quarter, with an increase of 6 percent compared with the third quarter of 2021. Net sales in the third quarter amounted to SEK 28 million, a slight increase compared to net sales in the second quarter 2022. During the first nine months of the year, net sales increased by 23 percent to a total of SEK 82 million.

Wireless grew by over 100 percent compared with the third quarter of 2021, while at the same time Photonics decreased by approximately 20 percent. Photonics' challenge was a combination of delayed customer approvals of some deliveries and delays due to some factory equipment that has now been remedied, which pushed back revenue to the current and next quarters.

We saw an improvement in profit, and profit/loss after tax amounted to SEK -45 million, an improvement of SEK 8 million. EBITDA was SEK -26 million, an improvement therefore of SEK 9 million year-on-year. Adjusted EBITDA of SEK -23 million (-8) was SEK 15 million lower than for the same period last year, mainly due to higher costs for raw materials and consumables of SEK 8 million and higher personnel costs of SEK 9 million, mainly related to the acquisition of MixComm.

During the quarter, the company raised a loan facility of up to SEK 100 million. I see it as positive that we have secured this loan and we will have a strengthened liquidity. This gives us increased room to continue to invest in prioritized growth areas.

During the quarter we held a Capital Market day to provide our investors with greater insight into the Group and our future prospects. The event was broadcasted live and is available on our website. I am particularly delighted that two of our customers, Ayar Labs and ALL:SPACE, participated in the event and painted a clear picture of their collaborations with Sivers. These companies address Silicon Photonics and satellite communications, which are two of six megatrends Sivers currently focuses on. Both of these markets have very large addressable markets over the next 10 years, where we will already see volume revenue in 2023.. It is therefore very enouriging to see these customers talk about how our chips are fundamentally important to their future.

In September, we demonstrated our unique laser chips together with Ayar Labs’ ground- breaking technology at the European Conference on Optical Communication in Basel, Switzerland. Our shared technology is paving the way for applications in fields such as high-performance computing and AI. The laser chips are based on our indium phosphide platform InP100 and have been manufactured at our own factory in the UK. The demonstration is the first step in getting this shared solution onto the market on a large scale.

Thanks to the merger with MixComm, we are now in a very strong position, not only within 5G, but also within satellite communication. During the quarter we were able to see the first tangible benefits materialize when we won our first major order from a customer within satellite communication that used to be a customer of MixComm. The order for approximately SEK 10 million includes development activities and a so-called acceleration fee to speed up the production time for second-generation integrated circuits (beamformer ICs). First-generation beamformer ICs have been developed over the past two years, and the order is the first concrete step towards volume production.

In September, we could announce a new order for Photonics worth approximately SEK 10 million from the Fortune 100 customer – one of three – who has been a customer of ours the longest. Altogether, we have received orders from the customer worth in the region of SEK 34 million in 2022, and since the project began three years ago we have received orders from the customer totalling some SEK 130 million. We enjoy a close relationship with the customer and look forward to supporting them in their future volume production.

This great collaboration is firm proof that our indium phosphide platform InP100 truly is well positioned and timely, as also shared by Microwave Journal – following a report from Yole Intelligence – stated that “Consumer electronics are the holy grail for indium phosphide (InP)”. This strengthens our belief and we have never been more positive about our platform than at present. It will have tremendous potential in a couple of years’ time when our customers ramp up volumes once their respective prototype phases are complete.

It is very pleasing to see that despite the challenging macroeconomic environment, including the Ukrainian war, an energy crisis and a shortage of components, we are continuing to grow. The entire ecosystem is behind schedule, but the underlying demand is still there and our investments in several megatrends are right on time. Naturally due to the current macroeconomic environment, we are cautious about the immediate future, but at the same time we believe that the megatrends we are working in will also continue to develop positively in the short run.

All in all, we still believe that the conditions during the rest of the year will be better for us as a Company than they have been earlier on in 2022. We are positive about being able to sign new development agreements and the mood within the Company is optimistic and enthusiastic. Our competitive products and strong global network ensure that we are well equipped for the future. Through the combination of Photonics and Wireless, and the integration of MixComm, we have created a unique technology company with an excellent position. Even though global economic conditions are uncertain, we are looking to the future with great confidence.

Anders Storm
President and CEO

For more information please contact:
Anders Storm, President and CEO
Tel: +46(0) 702 62 63 90
Email: anders.storm@sivers-semiconductors.com

This disclosure contains information that Sivers Semiconductors is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the contact person set out above on 27 October, 2022 at 08:00 CET.

Sivers Semiconductors AB is a leading and internationally recognized technology company that supplies ICs and integrated modules through its two business areas Wireless and Photonics. Wireless develops mmWave products for advanced 5G systems for data and telecommunications networks and satellite communication. The portfolio includes RF transceivers, beamforming front end ICs, integrated mmWave antennas, repeaters, and software algorithms for optimum mmWave RF performance. Photonics develops and manufactures semiconductor based optical products for optical fiber networks, sensors and optical fiber communications (Li-Fi). The company is listed on Nasdaq Stockholm under SIVE. The head office is located in Kista, Sweden. For more information: http://www.sivers-semiconductors.com