Greetings, ladies and gentlemen, and welcome to the SealSQ Full Year 2024 Financial Results Earnings Conference Call. As a reminder, this conference call contains forward-looking statements. Such statements involve certain known and unknown risks, uncertainties and other factors, which can cause the actual results, financial condition, performance or achievements of SealSQ to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. SealSQ 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. These risks are also discussed in our filings made with the Securities and Exchange Commission. Please be advised that our full year 2024 earnings release was issued on Thursday, March 20, 2025, also our Form 10-K for the full year ended December 31, 2024, which was filed with the SEC on Thursday, March 20, 2025, can be found by visiting the Investors section of the SealSQ website at investor.sealsq.com. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Carlos Moreira, Founder and Chief Executive Officer of SealSQ. Mr. Moreira, you may begin.

Thank you very much, and good afternoon to all of you joining us from both Europe and good morning for everybody joining from the United States. So I will start this call by discussing the business highlights of the full year 2024, then John O'Hara, our CFO, will provide an overview of our financial performance then I will close the prepared remarks by discussing our growth initiatives and also the outlook for 2025 and going forward. So we had a financial year 2024 with revenue of $11 million. It's a bit disappointed about this reduction of revenue from the $30 million we had in 2023. But actually reflects the company transition from traditional semiconductors, the legacy semiconductors than we were selling for many years to now the next-generation quantum resistant chips, which is the next generation that we started to develop two years ago, and we are reaching maturity now. So we are still early stage on the post-quantum market potential alongside the impact of market normalization. Following the semiconductor supply chain disruption that was caused by the COVID-19 pandemic. Also, the excess inventory accumulation by customers in 2023 result in lower orders volume as clients utilize existing stock before making new purchases commitment, basically, they are waiting to finalize the use of those stocks before we are able to deploy the next-generation ship with them. Let's say, as we are preparing to take advantage of numerous growth opportunity we scale Post Quantum's security technology by investing $5 million during 2024 with another $7.2 million plans for 2025. So 2024, as previously discussed, was a transformational year for SealSQ. As we scale post Quantum security technology, started the process to execute strategic acquisitions raised over $80 million in funding and expanded into high growth markets, with a strong cash position,…

Thanks, Carlos. As Carlos just mentioned, I will now go into a bit more detail on our FY '24 financial results. Firstly to highlight, we finished the year with an unprecedented balance sheet that was far stronger and bank debt free relative to previous years. Our cash reserves peaked at over $90 million on January 6, 2025, which was up from the approximately $85 million at the end of '24, providing a solid foundation for investments, acquisitions and scaling production. We had a clean balance sheet at December 31, '24, showing no bank debt or convertible loans along with no overhanging warrants following the elimination of the convertible debt and associated warrants in late 2024 and the first days of 2025. This significantly enhanced our ability to fund growth without dilution risks. We raised over $80 million of capital during 2024 being strengthen capital resources to support our expansion into post-quantum cybersecurity markets. Carlos has already mentioned, FY '24 revenue was approximately $11 million, down from $30 million in 2023, and this reflects the company transition from traditional semiconductor to next-generation quantum-resistant chips and the still early stage of the post-quantum market potential alongside the impact of market normalization following the semiconductor supply chain disruptions caused by the COVID-19 pandemic. The excess inventory accumulation by customers in 2024 resulted in lower 2024 order volumes as clients utilize existing stock before making new purchasing commitments. As a final highlight point, we would like -- I'd like to highlight the research development and strategic investments in post-quantum security. We increased our research and development expenditure by $1 million year-on-year, so a 26% increase against 2023, despite the reducing revenue year-on-year. This demonstrates the strategic importance of the development of our next-generation cutting-edge quantum-resistant technology. Our investments in research and development included the high costs associated with certifications, which are treated as R&D expenses, emphasizing SealSQ's commitment to staying at the forefront of post-quantum innovation. The $7.2 million we are planning for 2025 demonstrate our commitment to staying at the forefront of this post-quantum innovation. All of this resulted in a net loss of $21 million for the year, which is primarily due to the migration from traditional semiconductor products, the post-quantum semiconductor technologies and the associated reduction in demand for our products during the year. I'll now turn it back to Carlos, who will provide additional details on our outlook and growth strategy. Carlos, please go ahead.

So thank you, John. So as I mentioned before, we really expect the full impact of our growth to arrive in 2026, although we will see an improvement in our revenue in 2025 already. One of the reason of the 2026 timetable is that these new chips require certifications. So the SealSQ Post-Quantum TPM are aimed to achieve the highest potential level of security in the market with NIST FIPS 140-3 on the TCG 2.0 compliance which positioning the company as a leading supplier for post-quantum cybersecurity infrastructure at that level of security and certification. Also the providing appliance solutions to The European Union Cyber Resilience Act and the U.S. [Harbor Trustmark] (ph) for device manufacturing supporting the implementation of the next-generation security mandates. Also, the renew ISO [27001] (ph) and the ISO 9001 certification across chip fabrication and PKI operation, and lastly, the consolidation of revenue from strategic acquisitions. So let me provide a few additional details on those initiatives. So as was announced at the beginning of the year, we have allocated a fund of $20 million focused on investing in a startups engaged in quantum computing and AI initiatives that could be integrated into all Quantum roadmap. So Quantum is a very complex market. It requires many small components to fully integrated Quantum platform. And what we are doing is investing in companies that can accelerate this deployment. So one of them is Colibri, a French company, which provides a state-of-the-art quantum cloud computing services for industrial and scientific research application. So with this company now, we are able, for instance, to simulate a quantum attack on a cybersecurity infrastructure and see how we can with the TPM chips being able to mitigate an attack in real time. It also provides for organizations that they want to…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Matthew Galinko with Maxim Group. Please proceed with your questions.

Thank you. And I have a question and a follow-up. Carlos, you mentioned 2025 revenue growth will come from new sources of chip revenue and chip personalization services. Should we understand that to mean that we're not going to see a lot of 2023 customers coming back into 2025 revenue? Or are we going to see some level of normalization? Or what do you expect in terms of normalization in 2025?

Yes. So basically, there is not really normalization per se because what is happening is, as John said, some of this customer, which will be on the TPM as well, customers will continue to be customers are sitting on a very strong inventory on the previous generation chips, right? During COVID times companies because they were concerned about the supply chain, acquire a lot of chips, and that's one of the reasons we have a $30 million revenue only our chips during that time. And this has actually been normalized now. We never know what is going to happen. As you know, it's just the situation in Taiwan and the Asian region is uncertain, and that could be at any time, become again a very high growth on revenue because the company will start to buy chips. But this is one area where 2025, we will still start to see normalization because those clients are coming back and new customers are coming back through the personalization center. The personalization center advantages is that they localize the technology at national level. So some clients that normally don't buy chips if they are not being personalized at national level, they have now an option to become customers. And that implies, for instance, in Spain, we have now companies and they are putting chips on solar panels, the new technology because they want to use the chip to secure the sonar panel, but also to collect [tuck-ins] (ph) than they are being able to exchange energy tuck-ins between the solar panel and the smart meter. So those are new usage that they emerge at a national level. The other aspects than companies and keep buying more chips for the future, they are waiting for the new post-quantum chip to be available. And we…

Got it. I appreciate that color. My follow-up question is on the 2025 R&D spending that's incrementally up from 2024, is the meaningful portion of that in additional certification costs? And is that hitting 2025. Or are you adding engineers? Or what is the -- can you explain a little bit more behind the ramp-up in R&D spending?

Yes. As you rightly say, it's actually -- the certification process is very expensive, just for instance, certification might be $2 million. And you have to do it per country, right? So you have to go market by market. The other element is what we call SEALQUANTUM.com, which is a platform, that we are building with the IP that is being integrated into the platform, which is our platform from other companies. So our model has been that -- and that's why we allocated a $20 million investment fund to acquire and invest in start-ups that could integrate their technology into our Quantum platform. So the first one was Colibri, as I mentioned, is a quantum cloud play, very niche. They are French also. This is -- a lot of this technology, by the way, is available in France. Reason why other companies like Sandbox, AQ and others, they started to acquire French companies, right? It's very fragmented, but this is -- if you are able to put them integrating into the Quantum platform, you advance very fast. So this is part of the R&D as well. So once we make the investment, then you obviously bring need to recruit people, and this is a very high level expertise area, so expensive people that will help you to integrate that specific platform into the Sandbox platform. Another example is IC’ALPS . IC’ALPS is a $10 million revenue company. They have a very good client of ASIC. This company, as I mentioned, we have signed an exclusivity agreement to acquire them. Everything is being agreed to be acquired just waiting now for the French government to give us the go ahead. And then we'll integrate 100 people around 80 engineers, very specialized on ASIC basically is designed for new chips around the customer specifications and because we are integrating that into the Quantum and post-quantum back end, it will be basically the first ASIC first quantum ASIC developed and integrate it into an existing company. Those are companies like a car company, then they want to develop their own chip. And before we might not necessarily have everything they wanted to have and now we can design a chip for them some, as you say, in French, right? So those are the new areas where obviously will require investment of R&D investment to keep growing and keep adapting to the quantum requirements.

Great. Thank you.

[Operator Instructions]. Our next questions come from the line of Nehal Chokshi with Northland Capital Markets. Please go ahead.

Thank you. Carlos, the [$93] (ph) million pipeline, typical duration of that contracts are being discussed is 3 years. Is that correct?

Yes, correct, 3 years.

Okay. And so what's historically SealSQ's win rate of pipeline. I realize that historically, the competitive landscape was probably a lot more intense than what the current post-quantum cryptography market landscape looks up right now, but at least for some sort of anchor point, that would be helpful.

Maybe I'll let John to go into the first part. On the competition, as you rightly say, the fact that we very early enter into the post-quantum play, and we also integrated not only the new Quantum and crypto, but also some of the other components brought by [whisky ] (ph) like Quantum Rootkey that has developed. A unique quarter [Rootkey] (ph) is now being used to digitally sign quantum CAs, then they are able to issue Quantum certificates and they can be embedded into the object basically like a unique quantity identifier. So all that has put SealSQ in a very interesting strategic position because we don't have a competitor yet that integrates all those elements. And I'll let John to cover the second part.

So just quickly, Nehal -- just quickly -- so on the pipeline, as you might point out as the pipeline valued over 3 years. But of course, there are some prospects in there where we believe that the project is going to take maybe until year two or even into year 3 before comes online. So in that instance, the valuation attributed to it will only be for the final year. It's a pretty operational pipeline for us. When we win clients in this domain, we tend to find that they become very sticky, so we keep them for a long period of time. So although we're working on a 3-year pipeline there, we believe that once clients are on, they will become clients that 10 years depending on long products. And the way it works actually on post-quantum chips is that a client will not necessarily take immediately a decision to put the chips everywhere in their ecosystem. They might start with one product and -- or hardware -- and then they scale like the case of Cisco, right? Cisco has acquired 175 million microchips from us historically. Cisco is actually one of the leading company testing the post-quantum chip. Obviously, once the chip is certified and they are happy, they will expand the usage of that chip into their entire ecosystem, right? So this projection as I say, revenue can ramp up very fast here as Post-Quantum is going to be compulsory. I mean, in September this year, there's going to be regulatory moves by forcing companies to be quantum resilient compliance. Otherwise, their insurance premium will be increased, and there might be, in some cases, not even able to sell their object anymore. So this is becoming like the airbag in the car. You have it. If not, you don't sell the car. So we are moving towards that scenario.

And then sorry, just to then come back and answer your actual question following the extra back information. So the pipeline, obviously, we -- that includes clients at various stages. So it goes everything from where we have kind of identified an opportunity through to having the conversation, so sort of identified, qualified, design in and design win. And we apply different percentages to the likelihood of design win being where we've already received a purchase order to develop the initial product, at which point we apply around about, say, 50% success rate because once we've started developing the proof of concept, then generally, we find that means we've been selected as the preferred supplier and then that reduces down to sort of, I think, 20% to 30% on design-ins and so on, and then we obviously weight the pipeline accordingly.

That’s very helpful. Thank you John.

[Operator Instructions]. I'm showing no further questions at this time. I would like to hand the call back over to Carlos Moreira for any closing comments.

So thank you very much, and thank you, everybody, for joining the call and your interest in SEALSQ . So please feel free to contact us any time you need more information. You have an investor side on sealsq.com with all the information, including the annual report, and we are available for any one-to-one call when investors or shareholders or anybody that will like to learn more about or develop them and company. Thank you very much for the moderation and organizing and Lina and Jen for organizing this call.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.