SEALSQ Provides Business Update During Its H1 2024 Earnings Call

Geneva, Switzerland – September 26, 2024 – SEALSQ Corp (NASDAQ: LAES) ("SEALSQ" or "Company"), a company that focuses on developing and selling Semiconductors, PKI and Post-Quantum technology hardware and software products, today held its first half (H1) 2024 financial results conference call, during which Founder and CEO Carlos Moreira, along with CFO John O’Hara, provided key updates on the Company's financial performance, strategic initiatives, and future outlook.

The full version of the H1 2024 Unaudited Financial Results news release issued on September 25, 2024 can be found at https://www.sealsq.com/investors/news-releases/sealsq-announces-unaudited-first-half-2024-financial-results-and-updates-on-strategic-business-initiatives.

Also investors can access the archived audio webcast by visiting https://www.sealsq.com/investors/events/sealsq-h1-2024-financial-results-conference-call.

Highlights from the Earnings Call: 

2024: A Transitional Year 

Mr. Moreira opened the call by discussing SEALSQ's performance during H1 2024, describing it as a transitional period marked by the slowdown in traditional semiconductor demand, due to excess component inventories from legacy customers and a decrease in orders for legacy semiconductor products as customers await the company’s next-generation post-quantum chips.  

Despite these challenges, Mr. Moreira emphasized that SEALSQ has a competitive edge in the market, and offers a unique integration of post-quantum cryptography (PQC) hardware and software solutions. SEALSQ's expertise in PQC, combined with the 25 years of experience of its parent company, WISeKey, in Public Key Infrastructure (PKI), position the Company to meet the upcoming challenges of "Q-Day."

Key Financial Metrics for H1 2024 

Mr. O’Hara reported that revenue for H1 2024 was $4.8 million, reflecting the anticipated market slowdown. The company continued to invest in research and development (R&D) initiatives, with a total R&D expenditure of $2.4 million aimed at developing SEALSQ’s next-generation post-quantum chips.

Mr. O’Hara also noted SEALSQ’s strong pipeline of current and new business opportunities, which stood at $71 million as of September 20, 2024 driven primarily by demand for the upcoming release of SEALSQ's post-quantum semiconductors in 2025. Additionally, SEALSQ ended the first half of the year with a solid cash position of $18.9 million, reinforcing its ability to support ongoing growth initiatives.

Progress on Strategic Initiatives

Mr. Moreira provided updates on the Company’s strategic initiatives, highlighting significant operational progress during H1 2024. SEALSQ expanded its U.S.-based sales team, made significant progress for the establishment of multiple OSAT cybersecurity chip design and customization centers, and forged new global partnerships. These initiatives are expected to strengthen SEALSQ's position in the markets it serves worldwide.

Mr. Moreira emphasized that SEALSQ is on track to launch its Quantum-Resistant Secure Chips, including the QS7001 and QVault TPM, by Q4 2024. Engineering samples of the QS7001 will be available for order in Q4 2024, with the TPM version ready by the end of the year. Some of SEALSQ's clients are already participating in testing the new chip’s performance.

Global Expansion Initiatives

During thecall, Mr. Moreira discussed SEALSQ's global expansion efforts, including ongoing negotiations with the Spanish government to establish a Semiconductor Design and Personalization Center in Murcia. This center is expected to open up new customer segments through Quantix Edges, a joint venture in Spain, targeting key industries such as solar energy, automotive manufacturing, and smart cities.

In addition, SEALSQ has incorporated SEALSQ USA Ltd in the United States as part of its strategy to develop a U.S.-based Outsourced Semiconductor Assembly and Test (OSAT) facility. This facility will focus on advanced testing and assembly services with an emphasis on post-quantum cryptography and artificial intelligence. Furthermore, SEALSQ is in negotiations for two significant projects in the Middle East and Far East to establish additional Semiconductor Personalization Centers, which are expected to drive growth and recurring revenue streams in 2025 and beyond.

Outlook for 2025 and Beyond

Mr. Moreira discussed SEALSQ's future opportunities, stating that the Company is well-positioned to capitalize on evolving global cybersecurity requirements. He stressed the urgency for companies to upgrade their technology infrastructure in anticipation of "Q-Day," the moment when quantum computing becomes capable of breaking traditional cryptographic keys. SEALSQ aims to provide comprehensive hardware and software solutions to help mitigate these risks.

SEALSQ also identified four key growth areas for SEALSQ: VaultIC chip sales, PKI and Root of Trust (RoT) services, quantum-resistant semiconductor sales, and opportunities for ASICs and custom solutions.

Another potential avenue for revenue growth in 2025 is the upcoming launch of SEALCOIN by WISeKey. Although WISeKey owns and operates the SEALCOIN project through a Special Purpose Vehicle (SPV) named SEALCOIN AG, the tokenomics and business model have been designed to embed SEALCOIN into SEALSQ semiconductors. The plan for 2025 is to gradually deploy up to 10 billion SEALCOIN tokens, which is expected to have a substantial impact on the initial sales of our current semiconductors and, even more significantly, on the future sales of our post-quantum semiconductors.

Q&A and Final Remarks

During the Q&A session, the company fielded questions about its strategic direction, partnerships, and expansion plans. Mr. Moreira ended the call by emphasizing SEALSQ's commitment to driving innovation and remaining at the forefront of post-quantum cybersecurity. While acknowledging shareholders' eagerness for revenue growth, he underlined the challenges and opportunities of scaling post-quantum technology in its infancy.

SEALSQ remains dedicated to developing groundbreaking post-quantum solutions, preparing for a return to growth in 2025 as customers recommence orders and the Company launches its new generation of semiconductors.

"We understand that some shareholders are eager to see this technology translate into revenue, growth, and profitability. However, it is important to note that, at this stage, revenue is challenging to acquire due to the technology's infancy. Nevertheless, it is expected to scale rapidly once fully deployed, positioning SEALSQ to become a significant player in the market. This trajectory mirrors that of other European semiconductor companies, which became industry giants once they reached maturity and gained a foothold in the U.S. market."

About SEALSQ

SEALSQ focuses on selling integrated solutions based on Semiconductors, PKI and Provisioning services, while developing Post-Quantum technology hardware and software products. Our solutions can be used in a variety of applications, from Multi-Factor Authentication tokens, Smart Energy, Smart Home Appliances, Medical and Healthcare and IT Network Infrastructure, to Automotive, Industrial Automation and Control Systems.

Post-Quantum Cryptography (PQC) refers to cryptographic methods that are secure against an attack by a quantum computer. As quantum computers become more powerful, they may be able to break many of the cryptographic methods that are currently used to protect sensitive information, such as RSA and Elliptic Curve Cryptography (ECC). PQC aims to develop new cryptographic methods that are secure against quantum attacks. For more information, please visit www.sealsq.com.

Forward-Looking Statements

This communication expressly or implicitly contains certain forward-looking statements concerning SEALSQ Corp and its businesses. Forward-looking statements include statements regarding our business strategy, financial performance, results of operations, market data, events or developments that we expect or anticipates will occur in the future, as well as any other statements which are not historical facts. Although we believe that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the expected success of our technology strategy and solutions for IoMT Security for Medical and Healthcare sectors, SEALSQ's ability to implement its growth strategies, SEALSQ's ability to continue beneficial transactions with material parties, including a limited number of significant customers; market demand and semiconductor industry conditions; and the risks discussed in SEALSQ's filings with the SEC. Risks and uncertainties are further described in reports filed by SEALSQ with the SEC.

SEALSQ Corp is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

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