SEALSQ (LAES) FY 2026 earnings call transcript

Thank you very much, and good morning in the United States, and good afternoon in Europe. So welcome to SEALSQ First Half 2026 Earning Call. I am joining today by our Chief Financial Officer, John O'Hara. I will begin with our first half financial and operational highlights, followed by an update on the progress we are making in transforming SEALSQ into a global leader in post-quantum and quantum security. John will then review our financial results in greater detail, after which we will discuss our outlook on priorities for the remaining of 2026 and beyond. The first half of 2026 was an important inflection point for SEALSQ. We delivered strong revenue growth, significantly improved gross margins, and advanced our post-quantum semiconductor roadmap, We have achieved important certification milestones and integrated acquired businesses and expanded our capability across secure semiconductors, trusted digital infrastructure, and quantum technology.

Revenue increased by 131% to $11.2 million, compared to $4.8 million in the first half of 2025. Gross profit increased by 233% to 5.4 million from 1.6 million, while gross margin expanded to approximately 48%. This growth was driven by renewed demand for our vault IC secure element, expansion in PKI, subscription, and digital identity services, Initial revenue from Quantix Ed Security in Murcia, Spain, and six months of contribution from IC Alps. IC Alps contributed approximately $2.5 million of first-half revenue.

More importantly, the acquisition substantially strengthened our capabilities and capacities in custom ASIC design, secure semiconductor architecture, and advanced engineering services. These capabilities are increasingly important as customers seek integrated hardware-rooted security solution rather than just standalone cryptographic software. North America generated $5.6 million in revenue, representing 50% of the total. Europe and the Middle East and Africa generated 3.7 million or 33%, while Asia Pacific contributed to 1.9 million or 17%. We believe this is the right moment to invest decisively in building a global leadership position in post-quantum and quantum security. The quantum transition is no longer a distant research topic. Governments, defense organization, critical infrastructure operators, financial institution, and technology companies increasingly recognize that migration to post-quantum security requires much more than a software update.

It requires secure semiconductor, hardware root of trust, quantum resistant algorithms, trusted identities, security provisioning, certified manufacturing, sovereign infrastructure, and control over the complete technology supply chain. CLSQ is building capability across all these layers. As June 30, 2026, we have more than $486 million in cash, cash equivalent and restricted cash. This is from liquidity position, give us the flexibility to fund research and development, certification, product industrialization, acquisitions, infrastructure, manufacturing, personalization, and other selected strategic opportunity. Our strategy is to convert CLSQ from a secure semiconductor and digital trust company into a major quantum security platform, developing a sovereign vertical stack, what we call from root to qubit, and increasingly from root to space. At the center of this transformation is what we call the quantum highway.

So the quantum highways are architecture for security connecting the different layers of the emerging quantum economy. It is designed to combine post-quantum semiconductors, quantum computer, quantum photonics, interconnects, quantum secure communications, satellite, PKI, digital identity, trusted provisioning, artificial intelligence, and compliance. The objective is not simply to invest in separate quantum technology. It's to integrate them into a commercially deployable, sovereign, and interoperable infrastructure. The silicon hardware root of trust layer, or QS7001 secure element and QVOLT TPM remain central to our post-quantum commercialization strategy. During the first half, QS7001 achieved NIST SP890B entropy secure source validation under ESV certificate E333. Validated entropy is fundamental to secure key generation and cryptographic protection, particularly for systems operating in regulated defense and critical infrastructure environments.

QS7001 also completed important common criteria of false injection and side-channel resistant testing. This matters from bringing us closer to the formal certification required by government agencies and major industrial customers before high-volume deployments. We also continue advancing QVOLT TPM. Customer sampling progress and engineering samples of the post-quantum QVOLT TPM 1A5 become available. Our objective is to support the next generation of computers, servers, industrial systems, edge device, and critical infrastructure with hardware-based protection against both classical and quantum-enabled threat. As of June 30, more than 150 customers and prospects were engaging with our post-quantum technologies, with over 30 actively evaluating or integrating QS701 and QVOL TPN. We expect initial QS701 and QVOL TPN revenue late in the second half of 2026, with more meaningful contributions beginning in 2027 as customers complete integration, qualification, and product planning.

The precise timing remains subject to certification, customer validation, and procurement cycle. Since the end of the first half, we have continued to make significant progress. Or Voltaic 408 secure element achieved the FIPS 143 validation under the NIS certificate number 5463. This is a major commercial on technology milestone. FIPS 140-3 validation is widely required for cryptographic product used by government, defense organizations, financial institutions, and operators of critical infrastructure. The certification is strengthened our ability to address highly regulated market and confirms that SEALSQ is building its quantum security platform on an already validated and trusted foundation.

We also achieve ISO 27001 recertification reinforcing the security and government framework supporting or semiconductors PKI digital identity and post operations Our active commercial pipeline exceeded $225 million in potential revenue opportunities through 2029 and as of September 9, 2026, including more than $100 million associated with post-quantum projects already. This pipeline expands secure element, custom ASIC, PKI, digital identity, trusted provision, post-quantum semiconductor, and critical infrastructure security. It is a management estimate rather than revenue guidance and remains subject to certification, customer validation, commercial negotiation, procurement decision, and execution risk, but nevertheless, it demonstrates the scale and breadth of the opportunity we are pursuing. We are also developing a strategic relation with major semiconductors and technology companies, or work with global fundraisers, supports the migration of future secure and post-quantum design to advanced manufacturing platforms.

Our collaboration with LATSE semiconductor supports post-quantum security for FPGA-based systems, while our work with PIROT provides access to important drone, robotics, and sovereign technology applications for defense. We are also advancing major commercial opportunities for QVOLT, DPN, VOLTIC 409, and our broader post-quantum roadmap, including potential applications in computing, industrial systems, connected devices, and critical infrastructure. Beyond our core semiconductor roadmap, we have accelerated the development of CL Quantum, sovereign vertical stat, and its quantum highway architecture. At the semiconductor design layer, ICAL provides secure ASIC design and engineering capabilities.

At the quantum computing layer, our investment in Kubli and EROC provides two different differentiated semiconductor-based quantum computer architectures. At the quantum interconnect layer, we completed the acquisition of MiroX. MiroX brings quantum photonics interconnect technology that can help connect quantum processors, sensors, data centers, and communication systems. This is an essential component of the quantum highway because quantum system must eventually be interconnected, not operated as an isolated machine. As the trusted data and compliance layer, we have increased ownership in WECAN Group to 55.5%, gaining control of the company.

WECAN strengthens our capability in power compliance, secure data exchange, trusted digital identity, and post-quantum-ready financial infrastructure. At the sovereign design, personalization, and provision layer, Quantix 8 Security in MUSIA generated initial first half-year revenue. This is approximately $40 million initiative is intended to support Europe-based semiconductor design, personalization, and security provision in one centralized location. We are now evaluating an expanded QQuantix 2.0 vision that could bring together additional semiconductor, quantum AI, and satellite capability in Mursia.

In India, we advanced the negotiations to build SEAL-KNS initiative, which is intended to create localized post-quantum semiconductor capability And I will now turn the call over to management for the SEALSQ Corp. Together, this capability formed the basis of our quantum highway, secure ASIC design and engineering through IC-ALP, hardware root of trust through both IC, QS7001, and QVOLT TPM, both quantum PKI, digital identity and secure provisioning, quantum computer technology through Kubli and EROC, quantum photonics interconnect through MIRA-X, A-Power compliance and trusted data through YCAN, Sovereign semiconductor infrastructure through Quantix-H and CLK-NSQ, and post-quantum satellite communication through YSAT. This is what we mean by sovereign vertical quantum stack, control over the essential layers required to generate, protect, process, transmit, and authenticate sensitive data in the quantum era.

During 2026, we increased the capital allocation to the SEAL quantum server in vertical stack to $200 million. More than $60 million has already been committed across ICL, MiraX, Kubli, Quantix Edge, Colibri, EROG, YSAT, and WICAN. We are applying this discipline investment strategy, focus on technology that complement our semiconductor and security roadmap, create commercial synergies, and can ultimately become integrated component on the quantum highway. Our participation as a lead investor in Kubli with $150 million, Series A financing, and our increased commitment to Iraq reflected our conviction that secure semiconductor post-quantum cryptography and quantum computing and quantum communications will increasingly converge among themselves. Our ambition is not to become a passive financial investor in a quantum company, obviously.

Our objective is to assemble, integrate, and control a strategic technology that can generate products, intellectual property, customer, and require revenue for SEALSQ. We also continue to expand the commercial visibility of this strategy or collaboration with the BWT Alpine Formula 1 team has progressed beyond cybersecurity into quantum and multiphysics simulation. Formula 1 offers an exceptional environment for demonstrating how quantum technologies can address highly complex industrial challenges involving aerodynamics, materials, energy optimization, and real-time decision-making. These applications are relevant for beyond motor stop sport. The same capabilities can ultimately be applied to aerospace, defense, mobility, advanced manufacturing, energy, and defense.

Looking ahead, our priorities are clear. First, we complete the required certification and customer qualification for QS7001 and QVOLT TPN and begin their commercial ramp. Second, we convert a growing post-quantum pipeline into production contracts and long-term customer relationship.

Third, we integrate ICL, MIRA-X, and WICAN into a unified product and technology roadmap for expand sovereign semiconductor design, personalization, and provisioning capabilities in Europe, the United States, India, and the rest of Asia. Fifth, connect or investment in quantum computer, photonics, AI, trusted data, and satellite communications through the quantum highway. And finally, continue deploying or capital selectively and strategically with the objective of creating a vertically integrated quantum security company with defensible technology, sovereign infrastructure, and global commercial reach. CLSQ Enter 2026 primarily recognized as a secure semiconductor and post-quantum company.

We intend to exit this transformation year as a broader quantum security leader, one capable of protecting the entire digital life cycle from the semiconductor root of trust to quantum computer and space-based communication. We believe our financial strength, technology portfolio, certification, partnership, revenue, and strategic investment give us a differentiated position in this rapidly developing quantum market. The first half of 2026 established the foundation. The next phase is focused on integration, certification, commercialization, and scale. I will now turn the call over to John for a detailed review of our first half financial results. Thank you very much.

Thank you Carlos and hello to everybody joining us today. So on the financials, CLSQ reported first half revenue of 11.2 million, an increase of 131% from 4.8 million in the first half of 2025. As Carlos has already explained, this growth was driven by renewed demand for our Voltaisea Secure Element products, continued expansion in PKI subscriptions and digital identity services, Initial revenue from the Quantix Edge Security joint venture and approximately 2.5 million of revenue from IC Alps in six months consolidation versus nothing in last year. It was pre-acquisition. From a geographic perspective, North America generated 5.6 million of revenue, representing 50% of the total.

Europe, the Middle East and Africa generated 3.7 million and Asia Pacific contributed 1.9 million or 17%. Our gross profit increased by 233 to 5 million compared with 1 million in the prior year and gross margin expanded to approximately 48 This improvement reflects a more favorable revenue mix including ASIC design and engineering services as well as continued contributions from secure elements, PKI and digital identity. Margins in the ASIC sector in particular are higher than our traditional semiconductor margins, and so these have had a positive impact on our margin, and this should continue as this revenue stream continues to grow. Over operating income was 1.4 million And compared with 1.7 million in the first half of 2025, remaining relatively consistent year on year.

Turning to expenses, R&D expense was 8.7 million, compared with 4.7 million in the prior year period. The increase reflects the consolidation of ICALPS, post-quantum product development, certification activities, acquisition-related amortization, and continued investment in our technology roadmap. We continue to expect this to be an area of heavy investment in the future as we look to widen our product range and continue on the roadmap that Carlos set out above before.

Selling and marketing expense increased to $7.2 million from $6.0 million, reflecting expanded commercialization efforts, customer engagement, and market development. General administration expense was $23.1 million compared with $13.8 million, and this was primarily due to acquired business consolidation, expanded corporate infrastructure, intangible asset amortization, and legal audit advisory and transaction-related costs due to the activities undertaken in the first half of the year. In particular, the acquisition of ICALS, MiraX, and WeCan contributed almost $3 million of additional G&A expenditure, alongside $1.3 million of intangible asset amortization relating to these transactions.

As a result, operating loss was $32.2 million compared with $21.2 million in the first half of 2025, while the net loss was $27.8 million compared with $20 million in the prior year. Higher operating expenses were partly offset by the $3.8 million increase in gross profit and also higher interest income under our liquidity reserves. Our EBITDA loss was $29.5 million compared with $20.9 million in the prior year period. The reconciliation included approximately $0.4 million of depreciation expense and $2.3 million of amortization expense added back.

We end June 30th with $486 million in cash, cash equivalents and restricted cash, including short-term investments. Total liquidity was approximately $488.5 million. This strong liquidity position remains a significant advantage. It enables us to continue investing in R&D, certifications, infrastructure, manufacturing, secure personalization, integration, and selected strategic opportunities, while reducing our near-term dependence on external financing. We will continue to allocate capital carefully toward commercialization, recurring revenue, strategic control, and long-term value creation.

Turning to our outlook, we are reaffirming our previously announced fiscal 2026 revenue guidance of $27 to $36 million. This This represents expected growth of approximately 50 to 100% over the audited 2025 revenue of 18.3 million. Our outlook is supported by the full year consolidation of IC Alps, continued demand for our Vault IC products, growth in recurring PKI and certificate management revenue, the initial commercialization of QS7001 and QVault TPM, contributions from the Quantix Edge Security Project, and potential custom post-quantum ASIC design programs. As always, this outlook reflects our current expectations and remains subject to customer demand, qualification, and certification timing, supply chain conditions, commercial execution, order timing, and other risks described in our SEC findings.

I will now turn back to Carlos to discuss our growth opportunities and strategic priorities.

Thank you, John. So looking ahead, our priorities for the remain of 2026 and into 2027 are clear. First, we are focused on commercializing QS7001 and QVOLT TPN, as previously mentioned. The market is moving from awareness to implementation, from defense, critical infrastructure, industrial system, identity devices, secure communication, IoT, and autonomous technology. Post-quantum security often requires a hardware-based root of trust. SEALSQ is well positioned through our secure element, post-quantum cryptography PKI, and secure provisioning, ASIC design capability through IC ops, and growing international infrastructure.

Second, we remain focused on certification. For regulated customer certification, it's a critical convention point. Our QS7001 Entropy Validation and Common Criteria Testing process are important steps, and we will continue working towards additional cluster qualifications and certification milestones.

Third, we are focusing on converting our pipeline into customer deployment and production commitments. Our active pipeline exceeded $2,025 million as September 9, including more than $100 million in post-quantum opportunities, which are going to be increased even farther next year as there is an executive order by President Trump requiring PQC deployment and implementation in critical infrastructure in the United States. So this is not only a revenue guidance, but it also reflects the growing interest across our portfolio and the increase needed for trusted post-quantum rating infrastructure and to follow the guidelines from the U. S. government.

Fourth, we will execute a sovereign vertical stack strategy with discipline. We have allocated $200 million because we believe critically in technology, secure semiconductor design, trusted personalization, quantum capabilities, and a strategic supply chain will become increasingly valuable. So, every investment must strengthen our roadmap, technology, position for commercial opportunities, or time to market. So, finally, or approximately $495 million liquidity position gives us time and flexibility to execute. We can continue developing products, advancing certification, recruiting staff, integrating businesses, supporting partnerships, and building the infrastructure needed to secure global customers. So SEALSQ is building a platform for the intersection of semiconductor secure post-quantum cryptography, trusted digital identity, and quantum technology. We made meaningful progress in the first half. Revenue grew, gross margin expanded, product advanced through technical and certification milestone, and customer engagement increased, and strategic capabilities broadened.

The next phase is execution, converting technology investment into revenue, production, commitments, recurring services, and long-term shareholder value. So thank you very much for your continued support and interest in SEALSQ. Operator, we are now ready to take questions.

Hey, Matt, thank you very much for your question. And yeah, I mean, the Quantum ecosystem that we are building, companies like MiraX, they are generating initial revenue. As you know, the quantum industry is not really revenue-rich because these companies are not yet able to generate enough qubits that will justify anyone to pay the price to buy a quantum computer. So this is still very much science work and R&D work, but it's essential, right? Because as soon as these quantum companies start to generate a number of qubits, you can start to do multiple applications, like what we announced on Formula One with bringing quantum to a sport, you know, a stream sport, and redesign the penetration of the car into the air.

So all these things are new things, and you can start to do with a limited number of qubits, developing new medical products, new materials. So the industry is around there, right? I mean, as you know, even a lot of very large quantum listed companies do not have revenue or very little revenue, or if they have revenue, it's not actually from quantum but from, you know, fabs and another expanded facility. But what is very interesting in this industry is that because we have a quantum security technology and post semiconductors very well established with amazing technology this is allowing us to fully understand what is going to be the vertical on these technologies and they going to start to accelerate revenue And this is why we invested in Kubli.

Kubli, as you know, is a co-investment between HUS and ST Microelectronics. They are developing qubits at the silicon level. With CMOS technology, we also invested in EROC with a similar design. So this company is advancing exponentially, right? And this is something that will diversify your revenue. While QS7001, PQC revenue, PKI revenue, identity revenue is well established and will continue growing as soon as those certifications are finalized, you will see a new class of revenue adding to the company through what we call the SEAL Quantum ecosystem. Asic is another one. Asic, you can see already that an important amount of revenue is coming out from the Asic. There are not many Asic companies in the world, actually, that they have a trust model and cryptographic root key capability as we have.

And this is new applications that they are coming, for instance, design AC for the automobile industry or the medical industry. Those are wins that they have done and been ordered by IC Alps. So it is a hard-to-understand sector for the reason that we all know, because it's a very fragmented sector. They are companies doing quantum sensing. They are companies doing quantum networking.

They are quantum number generators. And those are kind of pieces, spare parts of the future vertical stack that we are building, right? Some of them belong to HUS, IP-wise. In others, we have technology investment, but as it was in the case of Kubli, right, we invested on them. But they also acquired $5 million technology from HUS because they understood that quantum security and verticalization was critical for them to sell the first quantum computers. Similar situations are happening in the United States with GROC, and this is going to be more and more the case where quantum security will be generating revenue for quantum companies, and quantum companies will be acquiring more and more revenue from us.

Absolutely. So as you know, one of the big issues in quantum is sovereign vertical technology because quantum computers, the day that they are fully developed will be $100 or $200 million a piece. So it's a very expensive hardware which requires PhDs and very specialized staff. So obviously not every company will have the resources to acquire their own quantum computer. So what is happening is that the industry is coming with a quantum-as-a-service type of model where you have one quantum computer or several quantum computers in one specific territory, and this quantum computer will be acting as a vertical stack in a sobering way. Obviously, the United States is a huge market, so a lot of companies will afford to buy a $100 million quantum computer, but in some countries, they will need to only have one or two hubs on where those quantum computers will operate.

And this is a bit the case of the project in Quantix. So Quantix is a joint venture between us and the Spanish government. It is a very interesting project because it's expanding very fast. We started with a semiconductor post-quantum, but we are also adding other elements. Actually, in the technology roadmap, we'll be adding the possibility of developing new nail clouds. You know, this is a very big subject now that they are secure by the cryptographic root key capabilities of OYSKey and using secure hardware, PQC secure hardware enabled for CLSQ. So we are a bit expanding those centers into what you call deep tech centers, right? So we have one very, very successful deployment. There was a 40 million euro deployment.

This is going to be expanded in the future. SET has invested already $2 billion in Spain, the Spanish government, in creating sovereign infrastructure. And Amurcia is the preferred hub for the entire country, right? So you will see a huge progression there, which will also contribute very substantially in our revenue generation and diversification. But the beauty of that model is that we have the footprint on replicating that model anywhere in the world. And the good news is that countries, we go to the Middle East, we go to Asia, we go to South Korea, we go to India. All of them, they are telling us, this is actually the model we want. We want a vertical stack, which is sovereign, that allows our country to be totally independent in the quantum computer era.

Because a quantum computer is the one that will, due to the enormous compute capability, will accelerate AI. AI will become much more powerful with quantum computers. Quantum computers will be able to completely revolutionize the medical sector. So they don't want to have this technology outside the country. They want to have it in the country. And those centers, which are started to be, I think the angle which is very unique on House, we started from the quantum security, because that's where it's a concern now, you know, with the new executive order in the United States, with President Trump saying, you guys need to be, by 29, post-quantum ready. Otherwise, you will not be able to participate in the future critical infrastructure in the United States because you can be hacked, right?

The harvest and the crit now issue that everybody knows about it could happen as early as 29, 30. So that means that countries need to be ready. In the United States, obviously, there's a lot of things that are going to happen in the following months because this executive order is accelerating the demand from big players on post-quantum technology, And there is not available post-quantum technology secure elements like the one we produce. There's no competition yet there, so we will be able to accelerate our revenue generation in the United States. And as you know, we signed a partnership agreement with Global Fundry. The Global Fundry is number three funder in the world, which is now very interesting.

They receive, I think, $350 million from the U. S. government on quantum investments, And they are very interested to convert their fundery into quantum funderies as well, so they can also develop the next generation quantum chips. So very close relation with them, and this is helping us to slowly enter into the United States in a way that we will very likely replicate this personalization center in the U. S. soil.

Okay, so thank you very much, everybody, for joining us today. As I mentioned before, the first half of 26 demonstrated the progress SEALSQ is making across our core business and our long-term strategy. We increase revenue by 131%. We are one of the quantum companies that generate revenue. The others are not. We are expanding our cross-margin, advancing our post-quantum product and certification roadmap and continue building our strategic ecosystem and maintain, at the same time, a very strong liquidity position. So, we conclude that quantum security is no longer a distant theoretical issue. Governments, enterprises, critical infrastructure, operators are increasingly preparing from the transition to post-quantum cryptography and trusted hardware-rooted services. So, SEALSQ has the product, the engineering capability, with over 200 engineers, the certification roadmap, the customer pipeline, the strategic partnership, and capital position to participate meanfully in this transition.

To our employees, partner, customer, and shareholder, thank you for your continued commitment and support. We look forward to updating you on your progress through the remaining of 26, and this concludes our today call. Thank you very much for your attention. Thank you very much for the operator to organize this call.