Sequans Communications S.A.
Q4 2020 Earnings Call Transcript

Published: 9 Feb 2021

[Operator:]

Welcome to the Sequans Fourth Quarter 2020 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 is 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 contains projections and other forward-looking statements regarding future events, or our future financial performance and potential financing sources.

[Georges Karam:]

Thank you, operator. Good morning, ladies and gentlemen. This is Georges speaking. I am with Deborah Choate, our Chief Financial Officer. Welcome to our fourth quarter and full year 2020 results conference call. We hope everyone is remaining healthy. Our global organization continues to take the necessary steps according to local conditions to ensure the safety of all our people and we continue to function very well. As you have seen by our press release, we exceeded our revenue targets in Q4, even as demand related to portable routers had begun to return to pre-COVID levels, leading to full year revenue growth of 65% compared to 2019. This is a very good start toward our goal of an average of 50% annual growth for the 2020-2024 period. As we indicated during our investor event a month ago, we're expecting our served market to grow a little above 40% a year on average through 2025.

[Deborah Choate:]

Thank you, Georges and hello everyone. I would like to add some details about our Q4 and full year 2020 results and early developments. Our revenue for the full year was $50.9 million, an increase of 65% versus 2019, substantially exceeding our goal is over 50% year-over-year growth. Revenue increased in all categories in 2020, compared to 2019. Broadband IoT accounted for the 50% of total revenue in 2020, primarily due to the surge in demand related to portable routers. Both Cat 1 and Cat M revenue increased in 2020 and Massive IoT accounted for about 30% of total revenue. The vertical category, which includes service revenue generated by our major 5G strategic deal increased in 2020 compared to 2019 as well. Gross margin in 2020, increased to 46.1% from 40.1% in 2019. Product gross margin was 32.4%, compared to 23.9% in 2019, even with a high proportion of modules in the revenue mix. The increase in operating expenses occurred mainly in R&D, and resulted primarily from an increase in headcount and related recruiting fees. Financial expenses were higher than 2019 due to higher interest expense mainly the result of nearly a full year of interest on the convertible debt issued in 2019, the change in the fair value of the embedded derivative and convertible debt, which alone represented a non-cash loss of $13.1 million plus a less favorable foreign exchange rate, causing foreign exchange losses. As a result, our IFRS net loss, increased to $54.5 million or $1.94 per diluted ADS compared to $36.7 million or $1.54 per ADS in 2019. On a non-IFRS basis, our net loss for 2020 increased from $33 million, or $1.17 per ADS compared to $31. 6 million or $1.31 per ADS in 2019. Our non-IFRS net loss excludes non-cash items related to stock based compensation expense, and the non-cash impact of the fair value and affected interest adjustments related to the convertible debt with the embedded derivatives and other financings, and the non-cash impact of convertible debt amendments, and the non-cash deferred tax benefit or expense related to the convertible debt and other financing. Adjusting for the foreign exchange loss in 2020 and a foreign exchange gain in 2019, our non-IFRS loss in 2020 declined year-to-year, and was a better result than most analysts' expectations. Either we, nor the analysts, attempt to forecast changes in foreign exchange rates. Turning to the results of Q4, our revenue was $15.8 million, a sequential increase of 11.8% from the third quarter, which was above our target of at least 10% growth. Revenue in Q4 increased 58.4% compared to the same quarter a year ago. In the quarter, we again had three greater than 10% customers. One is an OEM and to two are ODMs. Gross margin in Q4 was 45.1%, compared to 42% in the third quarter and compared to 51.2% in the fourth quarter of 2019, when there was a higher proportion of license and service revenue in the mix. The Q4 2020 gross margin reflects a high proportion of chips in the product mix than Q3, as well as a high proportion of service revenue. IFRS operating expenses were $12.5 million in Q4, up from $11.8 million in Q3, primarily due to higher non-cash stock compensation expense, fees related to the convertible debt conversion in December and an unfavorable euro-dollar exchange rate compared to Q3. Non-IFRS operating expenses were $11.4 million, basically flat compared with $11.3 million in Q3. Our fourth quarter operating loss was $5.4 million, compared to an operating loss of $5.9 million in the third quarter and a $4.6 million loss in the fourth quarter of 2019. Our net loss in Q4 was $11.3 million or $0.36 per diluted ADS and included a non-cash gain of $111,000 from the revaluation of the embedded derivative, arising from the March 2020 amendments to the convertible debt agreements. This compares to a net loss of $9 million or $0.30 per diluted ADS in the third quarter, which included a non-cash gain on the revaluation of the embedded derivative of $1.5 million. The net loss in the fourth quarter of last year was $8.1 million, or $0.34 per ADS. On a non-IFRS basis, our net loss for Q4 was $8.5 million, or $0.28 per diluted ADS compared to a non-IFRS net loss of $8.4 million or $0.28 per diluted ADS in the third quarter, and net loss of $6.8 million, $0.29 per diluted ADS in the fourth quarter of 2019. In Q4 we had a foreign exchange loss of almost $1.9 million or $0.06 per ADS, most of which was unrealized and non-cash related to the revaluation of euro denominated liabilities on the balance sheet. Adjusting for the foreign exchange loss, our non-IFRS net loss was lower than expected. Investors should be aware that possible changes in foreign exchange rates related to balance sheet items and the marking-to-market as embedded derivatives from the convertible debt amendments can cause significant differences in net income or loss from quarter-to-quarter. While the impact of swings in the value of the embedded derivative is excluded from our non-IFRS presentation, foreign exchange gains and losses whether realized or unrealized are not. Cash flow used in operations during Q4 was $1.4 million, compared to $7.9 million in the third quarter. Our cash in short term deposits at December 31, 2020 totaled $18.5 million compared to $25.3 million at the end of Q3. As noted during our investor event, we expect to receive a substantial portion of the $5 million strategic deal with Renesas as an upfront payment in Q1. Also if the final decision is reached on the vertical deal the satellite project and is made soon, we could also expect to receive a substantial upfront payment during Q1 or early Q2. The cash related to the grant from the French Government will be paid over three milestones, with the first one upfront also expected late Q1 or early Q2. Considering that we also have more strategic deals that would likely have some upfront payment as part of the terms and more vertical deals that could provide additional cushion, we are feeling good about our cash situation. Turning to some other balance sheet items, accounts receivable at December 31, 2020 increased to $17.3 million from $14.2 million at the end of Q3, primarily reflecting invoices related to the new strategic project with Renesas. DSOs were 73 days compared to 91 days at the end of Q3 after excluding the impact of this new strategic project, which distorts the picture. Inventories increased to $6.2 million compared to $5.8 million at the end of Q3 due to product revenue growth. Current trade payables decreased to $15.7 million versus $17.2 million at the end of Q3 and short term debt from financing receivables also decreased slightly to $14.2 million from $14.4 million at the end of Q3. Our convertible debt which is all classified as long-term decreased to $26.1 million reflecting the conversion of $12.4 million in principle and accrued paid in kind interest in Q4. In January this year, Nokomis converted an additional $5.5 million in principal and accrued interest related to the notes issued in 2015. As Georges explained, we ended this year with our highest ever level of orders on hand and we're expecting strong overall demand to continue. Q1 tends to be seasonally lower than Q4, even in a normal year, and we would expect to see the same pattern this year. However, we are not giving specific quarterly revenue guidance or revenue target for 2021 at this time, due to the lack of visibility regarding the impact of various bottlenecks in the supply chain, which could delay some shipments and related revenue. Excluding the potential for some ongoing impact of the industry wide sourcing challenges, we would expect to grow revenue sequentially in Q2 and throughout the remainder of the year. For those of you developing financial models, you can make your own top line assumptions. But to help you with your modeling, we'll share some margin and OpEx assumptions based on assumed revenue level, similar to the average analysis current revenue estimates, which is $71 million for 2021. On this basis, we see non-IFRS gross margin in 2021 will average about 48% for the year, based on our assumed mix. Non-IFRS operating expenses are expected to average $11 million to $11.5 million per quarter in 2021 as we begin to capitalize 5G R&D expense in Q1, and this assumes a stable euro-dollar exchange rate. We expect non-IFRS financial expenses to be around $1.3 million per quarter in 2021, excluding any foreign exchange gain or loss. And we expect about $600,000 per quarter of that interest expense to be in cash payments. Finally, for modeling purposes, the exact number of ADS on January 31, 2021, was $34,352,005 . Before I turn the call back to Georges, I'd just like to remind you that at the conclusion of this call, we will post a written version of our formal remarks in the Investor Relations section of our website, on the webcasts and presentations page, the same location where you will find the audio replay. Also Georges and I will be participating in the Virtual Roth Conference in mid March. We look forward to speaking with you if you plan to participate. And now I'll turn the call back to Georges.

[Georges Karam:]

Thank you, Deborah. So to wrap up, I would like really to stress a key point, I mean a few key points here. The first one, which is really to keep in mind that we are really entering 2021 with very, very positive momentum and very confident about our future, and our ability to grow this company at 50% CAGR I will say for the coming five years period, at least. This is really based on two remarks there were, the two drivers of this growth is coming from one, which is Massive IoT is now ramping and as I said, we see very strong demand. The company of the company is very, very strong with the technology, from technology point of view, second generation of product on LTM and Cat 1 and strong acceptance by the market. Our design wins accelerating. And I don't know if you realized, but when we spoke in January, I spoke, I announced almost all what we had in hand already as a design win for Q4 and since then just in four weeks time had more five, six new deals that we landed in January period and I mentioned this in my, on the call previously. So all this to say the pipe of Massive IoT is building with marquee customers and in the diversified markets. You know, I mentioned at least five strong markets where we are strong there. All this really make the Massive IoT a major engine of growth for many years with a sticky business. And the other angle on which our assumption of growth is coming is really the driver of the 5G and our 5G position, our position in the 5G market is very unique. We are attracting many partners. And you see many of them are helping us, financing our R&D investment. And with this, also those partners are going to be potential customers for us in the future. So, this really accelerates the time to market of this product line Taurus that we are building. So again, second engine of growth and will help the company to reach the scale and extend beyond the scale in 2024. So this is really on the long term on the average picture. If we show, if we focus on the short term, as we said, we're entering 2021 with very strong demand, really a record versus the previous years we've seen in the past, all this coming from lot of demand in the Massive IoT, by the way despite the weak Jetpack I would say level versus last year, we feel very good about the year in terms of demand. But at the same time, we are facing this supply constraints issue, many issues are there in the market, but we are handling this as we are progressing. But in any case, any supply issue, the way we see it, it will be slippage of revenue, and not loss of business. So, this will not impact I would say the potential of the company and the business we can generate even if from quarter-to-quarter, we could see some slippage related to this. And at the same time we're working very hard not to get impacted as we are speaking. So this is really my concluding remark. I will turn it now to questions. Many thanks for listening.

[Operator:]

Thank you Sir. We will now take our first question from Scott Searle from ROTH Capital. Please go ahead.

[Scott Searle:]

Hey, good morning, good afternoon. Thanks for taking my questions. Georges, Deborah, really nice job in a very difficult operating environment. And I hope you, your family, and your teams are doing well in the current COVID environment. Hey, Georges, just for a quick clarification to make sure I heard everything correctly, you're still looking for the 50% compound annual growth of the next five-year period, you've got comfort with the current existing Street expectations and the pipeline has grown from when you hosted the analyst event in early January. Is that correct?

[Georges Karam:]

Absolutely. Yes, hi Scott. All right.

[Scott Searle:]

Good. And quickly, just a clarification on the interest commentary, Deborah, did you say $1.3 million in interest average over the course of this year? I just want to make sure I heard that correctly. And on the vertical market deal, Georges, it sounds like you're very close, your confidence levels continue to increase, that is very close. Are there any numbers you'd put around it at this point in time? And then I had a couple of quick follow-ups.

[Deborah Choate:]

On the interest, that's the expected interest in Q1 yes $1.3 million on a non-IFRS basis and that would obviously go down later in the year if rest of the convertible debt is converted.

[Scott Searle:]

Perfect.

[Georges Karam:]

And on the vertical question, yes indeed, the satellite deal we are -- we remain very bullish and I could say things are accelerating every day and we feel like 99.9% deal done. Obviously, nothing is done before official award, so we're waiting for official award. And amount of this project remains, as I said, it's a project where it has a service component that will go over almost two years, with more than $12 million, with some upfront, obviously strong upfront and every quarter we'll have some cash and if you look to the cash, but revenue wise, we'll be recognizing this over around two years. And in addition, after those two years, we enter into the production phase, we'll have product revenue for almost 10 years, after this that could go up to $1 million per year. So it's a big deal.

[Scott Searle:]

Great, perfect. 99.9% percentage is a nice one. Hey, Georges, looking back to the Massive IoT pipeline then in later in this year, it sounds like you're seeing demand kind of across the board from a product standpoint, right? It sounds like Monarch 1 is ramping up, you're seeing a recovery in Cat 1, but also Monarch 2 has had a lot of design traction. I was wondering if you could kind of provide a little bit more color on that front, particularly around Monarch 2? It sounds like that's a game changing next generation leap forward for you guys ahead of the competition. So what are you seeing in terms of the design opportunity there? When that starts to contribute? And lastly, just to throw in as well, CBRS it sounds like the tone and the outlook from an industry standpoint continues to improve pretty dramatically. You've talked about a million per quarter over the course of this year. I was wondering if you're starting to see that creep up now in terms of the orders that are starting to filter in? Thanks.

[Georges Karam:]

Yes, I mean, on the Massive IoT, absolutely. What we are seeing is really strong demand on existing platforms. So I mean, somehow the ramp is happening. We waited very, very long to see, to start feeling this and it's happening. I don't know if it was the COVID was delaying this a little bit last year and finally, post-COVID even if we cannot talk about post-COVID but let's say the new normal, but we're seeing demand. But the good news there as well is, what you mentioned, our Monarch 2 platform is getting very, very strong reception in the market. If you remember, we spoke like in Q4, about more than dozen of projects engaged with this and if you look to those projects, 90% of them are design wins today and we have a new project engagement. So I have two feelings if you want, on one side, I'm feeling like the customer making decision quicker and moving to their project faster, which is if I compare it to last year, I don't know if them moving faster or just only because we have a greater product and they jump on it quicker, but the two are contributing to make things to move faster. And in terms of timeline of the revenue for this, obviously, some of them will remain longer run, which is more revenue next year, all those big projects, they tend to take more than 12 months to get the product ready, because big customers, big company and they want to go through all the qualification process. However, we have some of them generating revenue already. We mentioned that we have order already for shipments in Q2 on Monarch 2. So Monarch 2 will be shipping to one customer at least in Q2, and others will follow in Q3, Q4. So we'll see revenue from Monarch 2 this year definitely, in addition, obviously to the Monarch 1. And on CBRS, really the traction and demand remained the same. I could not give more. I cannot say more than, we mentioned a $1 million per quarter. I have the feeling that this, we could have some upside there. Give me one more quarter, I will say more about it if really it’s in hand or not. But for the time being, I would like to stay a little bit conservative, saying it's developing and developing great and we're seeing a lot of opportunity every day. By the way it's developing with the new demand, but I need a little bit more time to see if this will convert to the size. The order of magnitude of customer will be the same.

[Scott Searle:]

Great, thanks so much. Nice quarter.

[Georges Karam:]

Thanks, Scott.

[Deborah Choate:]

Thanks, Scott.

[Operator:]

We will now take our next question from Mike Walkley from Canaccord Genuity. Please go ahead.

[Michael Walkley:]

Great, thanks for taking my question. And great quarter and hope everybody's healthy also. Just want to touch a little bit, you shared so much good detail on all the design wins, just on the short term, I guess Georges and Deborah, given the well known supply constraints in the industry, did it impact at all your shipments in Q4? And how much do you think it could impact maybe your first half of the year? Sounds like it would just be a slippage, but any thoughts on the supply constraints impact in the intermediate term?

[Georges Karam:]

Hi, Mike. I mean, in Q4 we had some impact already integrated somehow. So I could not say that we had real surprises in Q4 from supply, I mean point of view, they were integrated if you want. If you remember we had a lot of demand on the COVID and we factored this in and we were fine. However, for -- we start seeing this really for all the order of Q1 really starting end of December, and it was more for Q1 timeframe. And we are seeing two angles, on one side TSMC obviously everyone knows that they are really receiving more than 25% of the capacity. We have our allocation. So I'm not nervous in a sense, like saying, okay, that's - TSMC played the partnership very well, they are very long partner with Sequans. And I have my allocation if you want there. Obviously, it's an allocation that I don't like. I would like to have more and more flexibility and so on, but I'm working this daily and every month with them to get my capacity. But what we had on top of this and then that's the old set, all the substrate, the PCB, you have a lot of factory as you heard they get under fire and created another stress in the market other than the extra demand or the reduction of CapEx that we saw last year now impacting the industry. So all this to say is very complicated situation, because not only one angle, one component, many, many components really impacting the module level, not the chip. We had some impact on the chip, but we have as well an impact on the module and we have a lot of demand. Very honestly, even we went to our customer by saying you need to place order for the full year to get -- so Sequans can secure. So we entered into a with our customer and one-by-one securing as well a location for them in the year, which gives us on the other side more visibility if you want and it's nice to have. But on the other, we're still struggling with the capacity. So if you tell me now, how much this will impact first half or I believe that hopefully in Q3 this will be will have less problem and it's going to be a problem indeed in the first half of the year. I didn't look yet for Q2, but if I focus on Q1, I'm having constraints where I'm working around $2 million maybe $2.5 million if you want to what I consider on challenge. Does it mean that we will not be able to serve it, but like in revenue, I have booking if you want, I have $2.5 million that I'm working on to see how to minimize the impact on this.

[Michael Walkley:]

Okay, that's last one, just my follow up question, I'll pass the line, just on the 5G development, you talk about…

[Georges Karam:]

And also, just to say we're working as well, we're working sometimes with customer to give them other flavor of products. So it's not only capacity, but I give you the example of Cat 1, for example, Cat 1 we have many operators, so we could be better on one line versus the other one for whatever reason, and we are working as well as with some customers to change order, so they can still get what they need despite the shortage. So that's why it's a little bit complex answer, if you want to address.

[Michael Walkley:]

Okay, good, thanks. And just a follow up question I'll pass the line just on your 5G development, given how important that is, for the 50% CAGR over this next several years, can you just share with us the milestones you've hit to date that you've highlighted in your script the key milestones and anything you should look out for in 2021 in terms of key milestones, just to track the progress?

[Georges Karam:]

So, I mean, to share a little bit, obviously when we entered into this strategic deal, we entered into with a blank sheet of paper at the beginning. So you could imagine, the first year has a lot of milestones, which is confirming that Sequans is able to scale and get this product up and running. So obviously, today we're approaching the design is very advanced, and we are approaching the milestone of tap out, so tap out will be this year. So when you look to the detail to reach tap out is obviously all the specification or the readiness and so on. So these were the milestones where our partner was looking to check if we are really progressing on time if you want. But, in general is all the development reach tap out towards the end of this year as we planned and we are on track for it. And for 2021, we don't expect if you want risky milestone. If the question, in 2020 we had more risky milestone than in 2021. In a sense, milestone you need to hit at the beginning of the project, otherwise the relationship could be challenged. But now we're entering this, obviously we need to continue executing and if we execute, we can recognize the revenue within few percent versus our target. We know what -- how much we are going to do on this need this year.

[Michael Walkley:]

Great, thanks for taking my questions and best wishes for success with the big pipeline this year.

[Georges Karam:]

Thank you.

[Deborah Choate:]

Thank you.

[Georges Karam:]

Operator?

[Operator:]

We will now take our next question from Craig Ellis from B. Riley Securities. Please go ahead.

[Craig Ellis:]

Hey, congratulations on the momentum and funnel and the momentum with various partners as you start the year. Georges, I wanted to start just by getting some insight on Monarch 2 and Calliope 2, because it sounds like the customer interest in both of those products is very strong. The question is this, how do you envision the ramp of those products kind of picking up as we exit 2021 and move into 2022? And Deborah, is there a meaningful gross margin differential between Monarch 1 and 2 and Calliope 1 and 2 that we would want to be aware of?

[Georges Karam:]

Well, I mean, hi Craig. In terms of ramp of revenue, obviously Monarch 2 as I mentioned, will start this year and has started. I could say that even in Q1 we shipped some like two I mean, obviously small quantity, in 1000s. But at the beginning for initial projects they are launching will accelerate little bit to the Q2 because they know that we have one project will be moving and we have a lot of pressure to supply the demand there. And in Q3/Q4 we will have more than one projects coming. And as you saw as well, even Gemalto will be adopting Monarch 2, so we could have more demand. So, we should, I believe we should exit on Monarch 2 this year, where almost all the new design becomes Monarch 2 and Monarch 1 will be just only on the older product if you want. It will be like phasing out, not from revenue because you could have still customers going with Monarch 1 for a while, but all new designs will be all going with Monarch 2. That's how we are seeing today, because it's a great product and optimized and so on. Calliope 2, we'll get the product to market in Q2 and sampling in Q2 and we have existing customers waiting for it. So even we have one customer want to have a launch in Q4, I don't know very honestly if we'll be ready with the customer to launch in Q4, otherwise it will be Q1. But any high level, I don't believe Calliope 2 will generate revenue this year, but will start ramping next year in terms of revenue. So for this year, if you want in other words will be, Calliope 2 will, in 2022 will be like Monarch 1 this year if you want and we'll start ramping from there. And all this obviously continue to add up on the existing platform of Calliope 1 as one, that's how it is.

[Deborah Choate:]

And in terms of margin, we're expecting similar margins on both chipsets.

[Operator:]

We will now take our next question from Tristan Gerra from Baird. Please go ahead.

[Tristan Gerra:]

Hi, good afternoon. Just looking back at the commentary about supply shortages, is there the potential for wafer price increases later this year that could have some impact on your gross margin?

[Georges Karam:]

Hi Tristan, you should not say this loud. I mean, so far I'm not expecting this, at least with my contracts with TSMC, I'm not expecting this, to be to be honest, from the at least the wafers pricing, I don't know if TSMC. In the past, I had similar phases, similar situation with TSMC and I didn't see an increase. So this is what I'm hoping. But your question still valid for other stuff, like when you go on the module, when you go on other components like the substrate and so on, when you start having very long lead time, if you want to accelerate lead time for a period of time, for a short period just to get to serve. We could have, some money to pay a little bit more to get some hot run to some acceleration and secure our customers and could impact a little bit the gross margin, but we're not expecting major impact. It will be in the noise. That's at least from today feeling.

[Operator:]

We will now take our last question from Rajvi Gill from Needham & Company.

[Rajvindra Gill:]

Yes, thanks and congrats on good momentum. Georges just talking about the CBRS opportunity for you, I was wondering if you could talk a little bit about what are some of the end markets that you expect to kind of move to this technology? And secondly, how do you think about your modules? I know you're -- you've been talking about that, your modules are based on Cat 4 LTR technology, you've been developing that for a decade. Wondering how you are positioning your technology to kind of benefit from the strength?

[Georges Karam:]

Hi Rajvi. While you're on the obviously from on the CBRS, you have in general three ways where you can see CBRS people talk about CBRS and it gets a little bit, big picture. The first one which is, I don't believe it's a new business, is like Verizon getting the CBRS bandwidth and just on the extra batteries for Verizon. The business of Verizon remains, the market of Verizon is the same, but those guys obviously they use CBRS to offload their capacity they have on the regular network when CBRS is available. So having the CBRS with Verizon is like a nice feature that can help you win a design win, but it's not like a new market, not at all a new market for us or for anyone. The other markets where really there is a new market, you go to the second category, which is the cable operator like big guys, where they have access technology. They provide MVNO typically wireless as MVNO, now having CBRS allows them to expand more their access last mile over wireless in a cheap way by using their own network, when they develop it. Now those networks are developing. They are not there yet, when you talk to Charter and Comcast and so on. I don't have the good feeling about the timing to get those available, even if they spend a lot of money to acquire the CBRS, but this is definitely a new market. The third one which is we are seeing really development now, is what we call the private network, which is essentially really beyond -- private network independent of the carriers to provide last mile access. We saw a lot of activity in the schools, where the schools, they put a small access point in the school, connect it to the cable they have and then suddenly all the school district can get connected with CBRS. And the students, when they are in a school they are connected on CBRS or Wi-Fi, but when they are at home, they can stay connected on their VPN School Network and they don't have to pay anything to MVNO, because they are on the school network, it's for free. And so we see a lot of lot of business there and this is where we saw lot of deployments if you want. We saw, for example, as well, as some private application in the stadium, the Football League, the National Football League has a business with us today and they start this, which is in the -- on the stadium you have like, private network between all the training and so on, to communicate between themselves using CBRS. We saw a lot of business as well there with the like, JLP to connect the JLV , to connect enterprises. So these are the kind of businesses, that's why by the way, it is very complicated to look to the -- complete the size of this opportunity very, very hard. So many study there, none of them is really clear to go and say there is 3 million units per year, or 1 million unit per year or more. So it is a little bit complication. We're seeing this a little bit bottom up. We have a lot of demand with customers coming to us, where they talk maybe about 50,000 units a year. But some of them they talk about 300,000 units a year end. And it's too early to assess the credibility of each number, to factor it in. And that's why I came by saying this year we should be doing $4 million minimum because I feel good about it. But hopefully, we'll get some upsides, because I see some opportunity much bigger, that they can drive much bigger revenue for us. So this is, about the market and about our technology that you know the Cat 4, Cat 6, what we have unique there Rajvi is that the CBRS, our biggest competitor, when they add this frequency band, they add it on the high end platform. So if you want CBRS using Qualcomm solution, you're going to get it on Cat 12, Cat 16, Cat 18 product, which is expensive, you are getting a module which is in the $80 plus module, while at Sequans we had, we had the CBRS frequency since ever, not to address the CBRS because the 3.5 gigahertz is a frequency used in the emerging market that Sequans used to have in the WiMAX base and we maintain this in our product. So obviously, we're able to provide a low cost Cat 4, Cat 6 product that can have big difference between a module at $80 or a module at $20. You could see the gap a little bit, attracted many customers where they don't care about high end speed on CBRS, because you don't have a lot of bandwidth and you're happy with the Cat 4, Cat 6 and that's how we capture a lot of customers.

[Operator:]

That concludes today's question-and-answer session. I'd now like to turn the conference back to the management team for any closing or additional remarks.

[Georges Karam:]

Thank you all for all the questions and for listening for the time and looking to see you in the near future, hopefully face-to-face maybe. It will happen in three, six months with all those vaccines. Thank you very much guys, and thanks operator for handling the call.

[Operator:]

This concludes today's call. Thank you for your participation. You may now disconnect.