WISeKey International Holding AG (WIHN) Earnings Call Transcript & Summary

Greetings, ladies and gentlemen, and welcome to the WISeKey International Holdings First Half 2026 Financial 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 actual results financial condition, performance or achievements of WISeKey International Holdings LTD to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. WISeKey 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. [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 WISeKey. Mr. Moreira, please go ahead.

Thank you very much, and thank you all for joining us this morning. I am joined today by our group CFO, John O'Hara. With that, the first half of 2026 was a period of meaningful progress for WISeKey. We continue to improve our financial performance while advancing key strategic priorities, including the commercialization of our post-quantum semiconductor technology, the expansion of our Quantum technology strategy under development of our secure space infrastructure platform. We also continue to refine our corporate structure to provide investors with greater visibility into the value and growth potential of our technology businesses. For the first 6 months of 2026, preliminary [ united ] revenue increased approximately by 116% to approximately $11.4 million compared to $5.3 million in the first half of 2025. Gross profit increased 192% to $5.5 million and gross margin expected to approximately 48% compared with 35% in the prior year period. This result reflected improved product mix as well as the increasing contribution of our semiconductor, engineering and related technology capabilities. At June 30, we had approximately $495 million in cash and restricted cash with minimal debt. This gives WISeKey an unusually strong financial foundation from which to execute our long-term strategy, commercializing post Quantum technology, building severing semiconductors on our security capabilities, developing quantum platform, expanding trusted digital identities and advancing in secure space infrastructure. We have built this technology and investment over many years in 2026, they are increasingly coming together as one commercial ecosystem. Our priorities are clear and measurable which are [indiscernible] the CLC commercial pipeline into recognized revenue, move post quantum semiconductor products from qualification and certification towards volume production, complete our planned corporation -- corporate structure initiatives, including the WISeKey redomicilation and the proposed WISeSaT and Quantismo transactions, continue expanding serving semiconductor, cybersecurity and trust and infrastructure capability in key jurisdictions, build value across our technology platforms while maintaining a common route of trust. We will provide more details on each of these areas shortly. Before doing that, I will ask John to provide an overview of our first half financial performance. I will then return to discuss the strategic progress and outlook. John, please go ahead.

Thank you, Carlos, and good morning, everybody. As Carlos noted, preliminary unaudited revenue for the first half of 2026 was $11.4 million an increase of 116% from $5.3 million in the first half of 2025. This stems from the revenue increase of our core semiconductor and PKI product lines, the first revenues relating to the Quantix Edge project, and the consolidation of 6 months revenue by [indiscernible] and 1 month revenue of [ Mirox ] and [ WeCan ] Group SA, both acquired on first June 2026. Gross profit increased 192% to $5.5 million compared with $1.9 million in the prior year period. Gross margin expanded to approximately 48% from approximately 35% in the first half of 2025. The gross margin improvement reflects changes in revenue mix and the growing contribution from higher-value technology, semiconductor and engineering activities. We will continue to focus on the opportunities that can support revenue growth while improving the quality and scalability of the group's revenue base over time. Operating loss for the first half was $40.9 million compared to $27.3 million in the first half of 2025. Net loss was GBP 36.4 million compared with $22.3 million in the prior year period. Of note, in H1 2026, the group recorded R&D expenses of $9.1 million net of stock-based compensation showing an increase by $5.1 million in comparison with the $4 million net of stock-based compensation for the 6 months ended June 30, 2025. The increase was primarily attributable to the consolidation of the results of ICAP acquired in August 2025 with $4 million R&D expenses. Additionally, approximately $1 million of R&D expenses related to group-wide intangible asset amortization, substantially all of which relates to intangible assets recognized in the [indiscernible] and ICR transactions. The increase in operating and net losses principally reflects the investments we are making across the group's strategic platforms, including post-quantum semiconductors, quantum technologies, secure infrastructure, satellite initiatives, product development, certification, engineering and planned corporate transactions. At June 30, 2026, WISeKey had approximately $495 million in cash and restricted cash and minimal debt. This liquidity position gives us the flexibility to continue investing with a long-term perspective while also pursuing strategic opportunities across the group. It supports our ability to fund commercialization, product development, certification, infrastructure initiatives and selective acquisitions without relying on short-term financing needs. Turning to our guidance. WISeKey reaffirms its expectation for full year 2026 revenue growth of 50% to 100% compared with 2025. This outlook reflects our current expectations regarding the timing and execution of existing programs, semiconductor and ASIC design activity, digital identity and PKI services, sovereign infrastructure initiatives and the initial commercialization of our post-quantum product portfolio. As always, this guidance is subject to risks and uncertainties described in our public filings, including customer timing, certification, production schedules, market conditions and the conversion of commercial opportunities into recognized revenue. I will now turn the call back to Carlos. Thank you, Carlos.

Thank you, John. I would like to spend the remainder of my prepared remarks discussing the 4 strategic areas that define our next phase of development. Number one, the post-quantum Semiconductor commercialization for SEALSQ. Number two, [indiscernible] Quantum, sovereign vertical stack and the planned Quantisimon platform. Number three, WISeSaT and the [indiscernible] Orbital cloud; number four, our corporate structure and Capital market initiatives, including the expected WISeKey direct listing. Starting with post-quantum commercialization, SEALSQ remains the technology foundation of the WISeKey Group during 2026. SEALSQ continue advancing the QS7001 post-quantum secure element and the QoL TPM product line through important validation, security testing and customer engagement stage. The QS7001 achieved NIST SP890B and tropisource validation, an important step towards the [ FIP140Slat3 ] and common criteria EAL5+certification. We also completed common criteria, fault injection and side channel resistant testing, engineering samples of the Qvalt-TPM are now available to customers. Separately, SEALSQ received 640 minus 3 Level 3 validation for its [ VolTAC408 ] secure element. These achievements matter because the transition towards quantum-resistant cryptography is no longer a distant theoretical issue, government enterprises and critical infrastructure operators are beginning to prepare for migration to post-quantum security architecture. This is creating what we believe will be a multiyear commercial opportunity for secure Semiconductor, trusted identity, hardware security model PKI and related infrastructure. As of June 30, more than 150 customers and prospects we're engaging with SEALSQ post-quantum technology more than 30, we're actively evaluating or integrating QS7001 and Qvalt-TPM. As of September 22, SEALSQ commercial pipeline exceeded $225 million through 2029, more than $100 million of that pipeline is associated with post-quantum projects, including QS7001 and Qvalt-TPM opportunities. We want to be clear that this pipeline represents our estimate of potential commercial opportunity. It's not revenue and its conversion will depend on customer qualification, product validation, certification, production schedules, integration and other commercial factors. However, the pipeline provides an important indication of the level of customer engagement and the market opportunity that we are pursuing. We expect initial production revenue from QS7001 and Qvalt-TPM in the fourth quarter of 2026, with larger contribution expected to begin in 2027, subject to the normal risks associated with production ramp-up and customer deployment. Moving on to SEAL Quantum and Quantisimom. We also continue building the SEAL Quantum sovereign vertical stack, which is designed to create an integrated technology architecture spanning from cryptographic route of trust and post-quantum semiconductor through photonics, quantum computer, computing and secure infrastructure. The strategy is to support by a targeted allocation of $200 million of SEALSQ internal capital resources. During the year, SEALSQ completed its acquisition of [indiscernible] in Switzerland adding Quantum Photonics interconnect technology to the stack. SEALSQ also made a lead investment of approximately $50 million in [indiscernible] under the $150 million Series A financing and subsequently entered into a 5 million commercial agreement with [indiscernible]. In addition, SEALSQ has invested a total of $7 million in Iraq, a U.S.-based quantum computing company, a media majority investment in [indiscernible] Group through weekend, we are working to advance the next generation of the copilot compliance solution and explore the integration of post-quantum financial secure capabilities. Together, these assets complement WISeKey and SEALSQ on semiconductor, PKI, digital identity and trusted infrastructure capabilities. The WISeKey Quantum route is a central element of this strategy. It extends the route of trust that WISeKey has operated under the [indiscernible] Foundation governance model since 1999 into the post-quantum and quantum computer era. We are integrating this common quantum-resistant trust layer across the SEAL quantum ecosystem from chips to qubits. In June WISeKey and SEALSQ established Quantico group and signed a nonbinding letter of intent with GigCapital aid regarding a potential business combination intended to create a NASDA-listed Quantum technology company Quantisimo is designed to combine selected technology and investment developed through the SEAL Quantum ecosystem into a focused platform covering quantum computing, Photonics, Quantum Secure infrastructure, Quantum pure-play and related technology. The proposed transaction remains subject to definitive agreements, regulatory review, shareholder approval and customary closing conditions. We currently target completion of the first quarter of 2027, subject to the satisfaction of those conditions. Now let's discuss WISeSaT and [indiscernible] our secure space strategy also continues to advance. WISeSaT is progressing towards becoming an independent listed space technology company through its proposed business combination with Columbus Acquisition Corporation. The transaction is expected to result in a NASDAQ listed company subject to completion of the transaction and all requirements approval and closing. At the international Space [indiscernible] in Paris early this month, WISeKey, SEALSQ and WISeSaT [indiscernible] combined commercial quantum Special Orbit Cloud or [indiscernible] initiative. [indiscernible] is intended to combine the WISeSaT satellite constellation with SEALSQ post-quantum semiconductors, PKI and Quantum runned a number generation and digital identity technology. The objective is to create a secure and sovereign orbital infrastructure serving governments, defense organization, financial institution, critical infrastructure and enterprises. The current road map contemplates a progressive deployment of up to 100 satellites through 2033. The platform is designed to support secure communication, Quantum generated trust and post-quantum identity services. The initiatives demonstrate how our technology platforms can reinforce one another WISeSaT provides the satellite infrastructure. SEALSQ provides the quantum resistant security hardware. WISeKey contributes digital identity, PKI and route of trust, Together, they support a different shaded secure space architecture. We are focusing on building a sovereign infrastructure. As we have announced via our news releases we have made substantial progress in building sovereign post-quantum semiconductors and cybersecurity capabilities in Europe and the United States. Just a couple of weeks WISeKey, SEALSQ and the Republic of Canton of Jura in Switzerland, signed a memorandum of understanding to work to get it to a proposed both Quantum Semiconductor and cybersecurity center in the Canton of Jura, Switzerland. The initiative has an indicated investment of approximately $40 million to $60 million over 6 years. It is intended to provide Switzerland capabilities to design, personalize, test and securely provision next-generation post-quantum semiconductors, beginning with the QS7001 [indiscernible] The project is designed to create a skill employment, support Swiss technologies Sovereignty and strengthen their regional ecosystem around secure semiconductor and cybersecurity practices. The [indiscernible] initiative builds on our Quantix a project in Musa, Spain announced in several locations where WISeKey and SEALSQ are developing sovereign semiconductor, design personalization and cybersecurity capabilities. We view Murcia and Jura an important hub for the WISeKey and SEALSQ quantum highway linking trusted infrastructure capability across regions. We are also establishing the quantum -- Geneva Quantum Center of Excellence at our headquarters in Pon Rouge in Geneva. The center is intended to provide an end-to-end demonstration environment for customers, government, technology partners, regulators and investments. It will bring together our quantum computer post-quantum server security, semiconductors, digital identity satellite, robotics and artificial intelligence technology in one physical environment. This will help demonstrate how the components of our ecosystem work together in practical use cases. Moving on to our corporate structure. Finally, we have made important progress, though we're simplifying our corporate structure and strengthening access to the U.S. and international capital market. On September 9, shareholders approved the redomiciliation of WISeKey holding company from Switzerland to the bridging British Virgin Islands, along with the related merch agreement, the new parting company has been renamed WISeKey, with QE corporation Westgate, as the news release issued this morning, there is redomiciliation become legally effective today. WISeKey ordinary shares are expected to become trading directly on the NASDAQ global market under 6 Swiss exchange on or about October 5, under the ticket WKEY, which with 6 expected to remain the primary listing. This structure is intended to streamline our U.S. capital market presence by replacing the existing ADS structure with ordinary shares trading directly on the NASDAQ. While maintaining our Swiss operational headquarters, management presses and international footprint. Over time, the group intends to provide greater visibility, accountability and a strategic focus for each of its major technology platforms. WISeKey as the parting company overseen route of trust, PKI, a digital identity business SEALSQ as the post-quantum semiconductor and secure hardware platform, WISeSaT as the secure satellite and space technology platform subject to completion of its proposed transaction [indiscernible] as the potential quantum technology platform, subject to completion of its proposed transaction. The goal is to enable each business to proceed in specific market opportunities while maintaining the technology integration that differentiates the broader group. Before opening the floor to questions, I would like to emphasize that WISeKey is building on a strong first half as we execute through the remaining of 2026 with solid revenue growth, a substantial liquidity position increasing engagement with our post-quantum product and meaningful strategic progress across semiconductor, Quantum technology, security space and sovereign infrastructure. We are now focusing on execution -- that means converting commercial opportunities into revenue, bringing post-quantum products into production, completing or transaction and corporate structure initiatives and continuing to demonstrate the value of the integrated trust infrastructure ecosystem we have built. From silicon to cubits from digital identity to artificial intelligence, from earth to space our objective remains unchanged to provide the root of trials for the next generation of the digital economy. Thank you for your time and interest in WISeKey. Operator, we are now ready to open the call for questions.

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

First one is on the pipeline for repeating what you've done with Quantix Edge is signing and progressing on that agreement, a helpful validation point as you negotiate in other regions to bring additional of those types of programs to fruition?

Yes. Matt, nice to talk to you. Yes, absolutely. I mean the concept of creating those personalization center, it was a very early concept that actually started even before all the current discussion about sovereign technology and the fact that countries want to control the entire supply chain process of basically manufacturing and, in some cases, personalizing semiconductors at national level, especially now with the post-quantum requirements, and they are coming. So the first project in Murcia was -- it is a joint venture where we invested the Spanish government invested EUR 20 million and a local startup invest EUR 10 million. So this project is already generating revenue for us as they buy our technology, they our chips, they buy or machines we actually designed the clean room and all the process required to personalize the chips. So this experiment that we didn't know how that will play is actually playing very well. And it's becoming inspirational for many other countries. And Jura is the next one. that they want to move into semiconductor. I mean what is happening many of these hubs like Jura Switzerland is very well known for being one of the watch manufacturing job hubs in the country. And obviously, watch manufacturing technology, it needs to be projected to the future. And the skill sets are there, but they need to enter into the digital era. And semiconductor is the normal extension of that. So that's why we signed with them. Similar projects are in preparation in the United States, we will be able to give more information in Q4 for the same reason, right, the United States wants to be also self-sustainable and independent in what concerns the next-generation secure semiconductors with post-quantum capability. Because this is now a requirement by the U.S. government on the PQC is an executive order on President Trump that says that critical infrastructure in the United States needs to be PQC-compliant and resilient by the year 2030. So this is actually tomorrow. So we will very soon be able to announce progress in the United States on that initiative, which will be obviously much bigger than what [indiscernible] on [indiscernible] because the country is much bigger and the economy is much bigger. So yes, I mean investment in one side, creating a local infrastructure then becomes sovereign and that reinforces our trust model and allow us to sell more chips and more technology on a national level, which otherwise will be impossible to reach out because they will prefer to have a local player.