Greetings, ladies and gentlemen, and welcome to the SEALSQ First Half 2025 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 could 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 first half 2025 earnings release was issued on Tuesday, September 9, 2025. Also, our Form 6-K for the 6-month period ended June 30, 2025, which was filed with the SEC on Tuesday, September 9, 2025, can be found by visiting the Investors section of the SEALSQ website at investor.sealsq.com. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce Carlos Moreira, Founder and Chief Executive Officer of SEALSQ. Mr. Moreira, you may begin.

Thank you very much, Kevin. Good afternoon to those joining us from Europe and good morning to those joining us from the United States. I will begin today, the call by discussing our business milestone for the first half of 2025, then I will provide our growth initiatives and outlook for the second half of '25 and beyond and hand over to John to provide our financial performances of the year -- for the half year. So 2025 was a transformative year. It has been a pivotal year for SEALSQ as we accelerated our mission to deliver quantum-resistant semiconductor solutions and secure digital infrastructure for our rapidly evolving global market. The first half of the year confirmed the strength of our strategy, the resilience of our operations and the scale of opportunities ahead. As a fabless semiconductor innovator, SEALSQ designs market secure microcontrollers, both off the shelf and custom designed, integrated within a vertical trust service ecosystem featuring a post-quantum root of trust managed by public infrastructure services and secure chip personalization. Our solutions protect industries such as IoT, energy, automobile and smart homes, as well as sensitive applications in health care, government and defense. While the global embedded security chip market is projected to reach nearly $10 billion by 2028, suppliers offering certified secure products remain scarce. This creates a significant opportunity for SEALSQ, uniquely positioned to deliver both regulatory compliance and resilience against emerging threats such as quantum computers. Our strength market recognition, bolstered by the urgent need for secure microcontrollers to defend against post-quantum threat, has attracted a strong investors' confidence. Since November 2024, we have raised over $140 million in additional capital to accelerate our product road map, execute strategic investments and expand our growth pipeline. So in terms of the product and technology milestones, in…

Good morning, good afternoon, everybody. For the half 1 2025 revenue, our revenue of $4.8 million, which was consistent with the first half of 2024, was entirely in line with our expectations. It reflects the anticipated continued strategic transition period ahead of the launch of our new post-quantum technologies, and we expect the second half of the year to start to grow, as we'll come on to shortly. The gross profit was $1.6 million, and the gross profit margin increased by 15 percentage points from 19% last year to 34% this year. We do expect when the revenues return to a more steady state level and we grow further that, that will settle somewhere around the 45% to 50% margin on our legacy [indiscernible] chip products and with the [ rep ] margin from IC'ALPS is expected to be somewhat higher due to the nature of their revenue and their services. We had cash reserves of $121 million as at June 30, 2025, which was up from $19 million at the same point last year and up from $85 million at the end of 2024. Our current estimate is that this -- our cash burn, this gives us sufficient cash flow for a long time now on our cash burn rate. And we therefore believe we've got a strong war chest to also take advantage of any investment opportunities, any M&A activity that might come our way. We invested $4.7 million in research and development in the first half of the year, and we continue to have over $7 million allocated in the budget for this area for 2025, which is up from $5 million in the prior year. And that's before we take into account the research and development activities of IC'ALPS, which will also be consolidated in our second half results. As Carlos has already mentioned, for the full year 2025, we expect our revenue to be between $17.5 million and $20 million, representing between 59% and 82% growth year-on-year, which is, therefore, noting a return to growth in demand for our current semiconductor products as well as consolidating the revenue of IC'ALPS since acquisition. We also look forward for a strong 2026, as Carlos has also highlighted with some very early guidance, which will be supported by a new business pipeline of $170 million of identified opportunities for 2026 to 2028 across PQC, ASIC and sovereign semiconductor markets. With that, we have finalized the prepared remarks. And I will pass back to Carlos, so we can open up the call for Q&A. Thank you for your attention.

So thank you, John. Just as an end of the call remarks before we move into Q&A, just to mention that 2026 is going to be a very important year for the quantum industry and particularly post-quantum as the regulatory and technology landscape is moving in our favor with frameworks such as the European Union Cyber Resilience Act, the U.S. government Cyber Trust Mark and the UK PSTI Act mandating secure identities, encryption and life cycle management. So governments and strategic institutions worldwide have published road map requiring PQC adoption within the decade. So as I mentioned before, this industry is a emerging industry. We are in quantum, what we were on the web in the year 2000. Major players, and they have developed technologies and positions such as SEALSQ will become automatically high demanded companies as they bring a concrete solution for a concrete problem. Insurance companies are already announcing that they will increase their insurance premium if you are not yet PQC-compliant. Government regulations are putting regulations bringing companies and other government institutions to be PQC-compliant. And that will be reflected, obviously, on valuations of companies as the entry level to become a PQC-compliant and quantum company is still very high and requires hundreds of millions of dollars of investment. So with the strong financial resources, then we have the proven innovation and a strategic investment in place, SEALSQ enters the second half of 2025 with a very strong momentum and confidence. Our vision is clear: To lead the world in quantum resilience, cybersecurity and semiconductor innovation while we have a very proven quantum road map in place. So we thank our shareholders and employee partners and customers for their continued trust and support as we scale SEALSQ into the next phase of growth. So with that, we are finalizing the remarks. I would like to open now the call for Q&A. Thank you very much for your attention.

[Operator Instructions] Our first question today is coming from Matthew Galinko from Maxim.

Firstly, just if we could clarify a little bit on the full year R&D budget. I think you mentioned it was around $7 million. And I think for the first half, reported $4.7 million, would seem that you're tracking ahead of that. So was there anything unusual in the first half spending that would not repeat in the second half? Just kind of ignoring the impact of the consolidation of the acquisition that we might expect?

Yes. Matt, hope you're well. So yes, so within the first half of the year, there was a bit of an expense of -- one-off expense for some stock-based compensation that falls under R&D. So that was the main...

Got it. Okay. And could you venture a guess for what kind of the annual R&D run rate, taking that out would be when you layer in the acquisition? [Technical Difficulty]

Matthew, go ahead. Please go ahead.

Okay. So Matthew, sorry, we were disconnected. So did you got the answer from John?

I'm not sure if you got my second question or not?

No, I didn't.

No, no, we didn't. I'm sorry.

Did you get the answer to the first one on the research and development though, Matt, did you get that answer?

Yes. Yes. So I want to -- I appreciate the follow-up. So the -- I guess the question is what the run rate or if you could offer a run rate on the revenue -- on the R&D line, if you kind of back out that onetime stock-based comp piece under R&D in the first half and later on, the R&D consolidation in the second half, what would kind of the annual rate of R&D be?

So on the underlying business down in Provence, we would probably put that around about sort of $500,000, $550,000 per month.

Got it. Okay. All right. And then I also wanted to ask about the pipeline. I think you shared $170 million. As far as the prospective customers and perspective-type numbers in that pipeline, is that -- how do you build the pipeline estimate, I guess? Can you provide a little bit more of the process for how you include stuff in the pipeline?

Yes, sure. So essentially, my understanding is it's a relatively standard process where we go from certainly in the industry, I believe, where we go from kind of identifying an opportunity and evaluating that to the best of our ability, but then applying a relatively low success percentage to that. Because obviously, when we've just identified it, we haven't really gone very far, and then we go through the phase of identified, then qualified when we've kind of ratified the opportunity, and we've made at least first contact with the potential client. Then comes into design in, which is usually when we've signed up to provide them with a kind of a test kit and actually spec out and create a potential solution for a set of clients. And then design win at the end, which is the point where we believe that where we've been mandated to go ahead and produce the product and are in the final stage with that client. So obviously, by the time we get to design win, we apply a much heavier percentage because at that point, we're the only people in the game, so we generally expect at that point to get an order unless there is a technical limitation to the product or the client cancels their own internal project. So yes, so we put all that together, apply the weightings and then we tend to look 3 years into the future. So that $170 million will include revenues over '26, '27 and '28. What it does not include is the revenues for the clients that we've already won. So once we actually have received our first major purchase order of a significant volume and therefore, we've gone into production, we move that out the pipeline, and then we're kind of operating on a backlog where it's based on them sending and giving us orders.

Yes. Just to add on that, the sales cycle is long. On the hardware part, it's around 6 months. And the reason -- I mean, there's a lot of complexities to introduce those new generation chips into existing hardware that their electronics are now being designed to introduce the chip, and that requires engineering. So that means that you have to first understanding the problem, let's say, a smart meter or let's say, a connected car or a drone. So you have to understand the electronics, you have to redesign some of those components, so you insert the chip, then you have to check the connectivity, the chip in with electronics in order to create a post-quantum capability. So all that takes a long time, right? And normally, companies, the way they act on that is, as I mentioned in my presentation, post-quantum technology is emerging technology in terms of many customers don't realize the need of moving PQC yet. There are some that say quantum computers will be in 30 years, so why we should bother now. So this has been slowly, gradually, the education in the market has been improved by even companies that they have this type of thinking before. So that creates some kind of urgency in our clients. And now they are saying, okay, let's just start with 1 generation of products. So they don't immediately want to PQC-enable all their products. So they start with 1 type of products, they test and then they go to the next cycle of expansion internally in the company as you not only need to modify the security of the product, which is the hardware component, but also the software part. So that needs to be integrated into their back end, right? So that process as we move forward, will be more -- a more automated process. Actually, AI is helping a lot to create more efficiencies on that cycle so we can reduce the time and we can increase the numbers. So this is the present situation. That's why we believe that the revenue of these type of companies make now is not that important because what we are addressing is a much bigger problem in the future, which is when regulation arrives and regulations says, company, you need to have PQC enablement in your products, otherwise, you cannot sell them anymore because your products will not be authorized to enter into a specific territory. So there is the inflection point. We believe the big opportunity is for us.

[Operator Instructions] We reached the end of our question-and-answer session. I'd like to turn the floor back to the call to Carlos for any further or closing comments.

So just to, again, to recap it too later on what we say, a huge opportunity ahead of us. 2026 is going to be a critical year, especially once this post-quantum chip will be available in the market. I know that some investors have been disappointed by the latest price of the share. I always say that '26 is the year where you -- everybody needs to be betting on and not '25. '25 was a transitional year. Despite that, we managed to end the first quarter -- the first semester of the year with a very strong position and very strong cash position, which is essential in this industry. And we are available for any further discussions, website, documentation is available. And our investment relation contacts in New York are available to set up one-to-one meetings. John and I, we're going to be doing a non-deal road show starting the third week of -- sorry, the second week of October. And it will culminate in New York in an event, the Quantum + AI event, where we are providing the keynotes, and where we're going to be bringing more results, and we will also be discussing, which we didn't discuss on this call, our U.S. strategy. As we have been informing in the past, SEALSQ is looking to personalize semiconductors in U.S. territory, and this is something that is top priority. We were looking into different locations such as Arizona and others. So we will be giving in a few weeks, a full update on that. And I'm sure everybody will be very satisfied to see the progress also in that area. So we'd like to thank our shareholders, employee partners and customers and all the participants on this call for their support as we scale SEALSQ into the next phase of growth. Thank you very much for your attention. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.