• Revenue: $5.2 million for the first half of 2024, down from $15.1 million in the first half of 2023.
• Semiconductor Revenue: $4.8 million in H1 2024, compared to $14.8 million in H1 2023.
• Gross Profit Margin: Decreased to 21.5% in H1 2024 from 53.6% in H1 2023.
• R&D Expenses: $2.9 million in H1 2024, representing 19% of total operating expenses.
• G&A Expenses: $8.3 million in H1 2024, an increase of $0.4 million from H1 2023.
• Net Loss: $15.5 million in H1 2024, compared to a net loss of $7.1 million in H1 2023.
• Cash and Cash Equivalents: $26.3 million as of June 30, 2024, up from $15.3 million at December 31, 2023.
• Funding: $20 million from share purchase agreements with L1 Capital and Anson Investor Fund.
• North America Sales: 60% of net sales in H1 2024.
• EMEA Sales: 23% of net sales in H1 2024.
• Asia Pacific Sales: 17% of net sales in H1 2024.

• Warning! GuruFocus has detected 6 Warning Signs with WKEY.

Release Date: October 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WISeKey International Holding Ltd (NASDAQ:WKEY) is undergoing a strategic restructuring to become a compute infrastructure company, focusing on cybersecurity, digital identity, blockchain, IoT solutions, and post-quantum semiconductors.
• The company has diversified its operations into specialized subsidiaries, such as CLSQ for semiconductor technologies and WISeSat.Space for space technology, enhancing its focus and potential for growth.
• WISeKey is investing in high-growth potential ventures like WISeSat.Space, which is expected to become a significant revenue generator by 2025.
• The company secured $20 million in additional funding for its semiconductor business, CLSQ, to expand production facilities and develop post-quantum semiconductors.
• WISeKey maintains a strong cash position with $26.3 million in cash and cash equivalents as of June 30, 2024, indicating financial stability and the ability to fund strategic initiatives.

Negative Points

• WISeKey's revenue for the first half of 2024 was $5.2 million, a significant decrease from $15.1 million in the same period in 2023, primarily due to a decline in semiconductor demand.
• The company's gross profit margin decreased from 53.6% in H1 2023 to 21.5% in H1 2024, attributed to high inventory costs and fixed expenses.
• WISeKey reported a net loss of $15.5 million for the first half of 2024, compared to a net loss of $7.1 million in H1 2023.
• The semiconductor vertical, CLSQ, experienced a revenue decline from $14.8 million in H1 2023 to $4.8 million in H1 2024, due to decreased demand and high customer inventory levels.
• The company is facing delays in satellite launches with SpaceX, impacting the timeline for its WISeSat.Space projects.

Q & A Highlights

Q: Could you provide more details on the restructuring efforts at WISeKey? A: Carlos Moreira, CEO, explained that the restructuring involves giving autonomy to various verticals within WISeKey, such as WISeSat.Space and CLCOin, allowing them to raise funds independently. This approach reduces the need for WISeKey to dilute its shares and positions these verticals for potential IPOs in the future.

Q: Does the funding for these verticals still impact WISeKey's balance sheet? A: Yes, Carlos Moreira confirmed that while WISeKey remains the majority shareholder, the funding for these verticals is consolidated into WISeKey's financials. However, the restructuring allows for external investments, as seen with WISe.ART and CLSQ.

Q: Can you elaborate on the satellite launch schedule and customer interest for WISeSat.Space? A: Carlos Moreira noted that the next satellite launch is dependent on SpaceX's schedule, with some delays pushing the launch to January. WISeSat.Space has partnerships with entities like the Swiss Army and port authorities for tracking and tracing solutions, and they are exploring additional launch options with European and other international partners.

Q: What is the outlook for CLSQ's return to growth, and how does the backlog affect this? A: Carlos Moreira highlighted that CLSQ's growth is expected to resume as customers deplete their existing stock and transition to the new Quasar chip. The market for TPM chips is significant, and WISeKey aims to capture 10% of this market, driven by the need for post-quantum security solutions.

Q: How does WISeKey plan to leverage its diverse portfolio for future growth? A: Carlos Moreira emphasized that WISeKey's strategy involves blending stable revenue from its semiconductor business with high-growth potential ventures like WISeSat.Space and CLCOin. This approach ensures financial resilience and positions the company for long-term success in cybersecurity, IoT, and blockchain sectors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.