Why Sequans Communications Shares Plunged Today

What happened

Shares of Sequans Communications (NYSE: SQNS) have plunged today, down by 14% as of 12:15 p.m. EDT, after the company reported second-quarter earnings.

So what

Revenue in the second quarter came in at $13.2 million, and was negatively affected by a product return from an early 2016 sale related to the tablet business that hit the top line by $740,000. Gross margin also took a hit, falling to 42.1%, in part due to the product mix shifting more toward module sales.

Sequans posted a net loss of $6 million, or $0.08 per share. On a non-IFRS basis, the net loss was $4.9 million, or $0.06 per share.

Now what

CEO Georges Karam said that the quarter was "in line" with internal expectations, although acknowledged that it was "unfortunate that the optics were affected by an adjustment related to a sale made over a year ago in the discontinued tablet business." Karam also added that Sequans is being cautious with approaching its broadband segment, noting some "temporary softness."

In terms of outlook, third-quarter revenue is expected in the range of $15 million to $17 million with an adjusted gross margin of over 40%. The non-IFRS net loss in the third quarter is expected in the range of $0.05 per share to $0.07 per share.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.