WISeKey International Holding AG — FY2022 Form 20-F
Reporting period: Year ended December 31, 2022; this is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under U.S. GAAP in U.S. dollars. WISeKey designs and sells secure IoT semiconductors and provides managed PKI services. The filing reports continuing operations in IoT and mPKI; the arago AI business is presented as discontinued operations.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $23.8 million | $17.6 million |
| Gross profit / margin | $10.1 million / 42% | $7.5 million / 42% |
| Operating loss | $10.4 million | $21.2 million |
| Continuing-operations net loss | $9.8 million | $23.5 million |
| Total net loss | $29.3 million | $24.1 million |
| Adjusted EBITDA (non-GAAP) | $(6.9) million | $(15.7) million |
| Operating cash flow | $(17.1) million | $(21.8) million |
| Cash and restricted cash at year-end | $20.8 million | $34.4 million |
- Revenue grew 35%, led by IoT sales, which rose 38% to $23.2 million. mPKI revenue fell 21% to $0.6 million.
- Cost reduction and higher sales improved the operating loss; gross margin was unchanged. Adjusted EBITDA is a company-defined non-GAAP measure and should be considered alongside GAAP results.
- Total net loss widened largely because discontinued operations recorded a $19.4 million loss, including a $15.0 million loss on disposal of arago. Continuing-operations results also included a $3.2 million income-tax benefit and $1.9 million of one-off income from a payable write-off.
- Year-end working capital was positive at $14.3 million. Current assets were $33.2 million and current liabilities $18.8 million. Cash fell by $13.5 million during the year; financing cash inflow was $4.2 million.
- Reported balance-sheet debt included $4.2 million of current notes payable, $1.9 million of long-term debt, and $1.3 million of noncurrent convertible notes. Lease liabilities were about $2.3 million. The $4.0 million ExWorks loan is past due, bears 10% interest, and management expected repayment in connection with a potential Tarmin investment sale. ExWorks had not begun formal recovery proceedings as of the report date.
Material changes and unusual items
- WISeKey sold its 51% interest in arago in June 2022 to refocus on core operations. The agreed purchase price was €25.5 million, but payment had not been received by year-end. The company recorded credit losses against the full purchase-price receivable, contributing to the $15.0 million disposal loss.
- Inventory increased to $7.5 million from $2.7 million, including $4.5 million of raw materials. Management linked inventory and order timing to semiconductor supply constraints.
- Cash and cash equivalents declined from $34.2 million to $20.7 million; the reported $20.8 million total includes $0.1 million of restricted cash.
- Class B shares outstanding increased to 99.8 million from 80.9 million. Convertible-note conversions issued 29.2 million shares to L1 and 14.4 million to Anson during 2022, contributing to dilution.
Outlook, commentary and risks
- Management said cash projections indicated sufficient liquidity to fund operations and financial commitments for the 12 months through April 30, 2024. This assessment depends on forecasts and available financing; the company has a history of losses and negative operating cash flow.
- No specific numerical revenue or earnings guidance is provided. Management described a five-year capacity investment plan and ongoing supplier discussions, while noting that supply constraints delayed some orders into 2023 and limited potential sales.
- Management expects higher payroll costs in 2023 to recruit and retain engineers; it believes exchange-rate movements may offset those costs, but gives no assurance. The company does not hedge foreign-currency exposure.
- R&D priorities include post-quantum cryptography and a new secure-chip platform, with production ramp-up targeted for the second half of 2025. These programs require investment and their commercial returns are uncertain.
- Major risks include customer concentration and dependence on large customer programs; reliance on third-party foundries and suppliers without guaranteed capacity; semiconductor cyclicality and price pressure; cybersecurity, privacy and cryptographic obsolescence risks; and competition for skilled employees. A multinational electronics contract manufacturer represented 14% of 2022 revenue and 30% of year-end receivables.
- WISeKey disclosed it may have been a PFIC for U.S. tax purposes in 2022 and could be one in future years. It also disclosed material potential share dilution from convertible facilities, warrants and the Yorkville equity facility.
- A proposed distribution of 20% of SEALSQ’s ordinary shares was approved by shareholders in April 2023 and was expected around May 25, 2023, subject to listing and other conditions. WISeKey expected to retain control and consolidate SEALSQ.
Investor verification priorities
- Confirm collection status and subsequent events relating to the €25.5 million arago sale consideration and the associated credit-loss treatment.
- Verify the status, accrued interest, security and repayment plan for the past-due ExWorks loan, including the proposed Tarmin investment sale.
- Track cash burn, liquidity projections, supplier capacity, inventory quality and order conversion as semiconductor supply conditions change.
- Assess actual and potential dilution from L1 and Anson conversions, warrants, and the Yorkville facility; compare facility terms with current share prices and authorized share capital.
- Check whether the SEALSQ distribution and listing were completed as planned, and review the company’s subsequent filings for updated guidance, financing and PFIC disclosures.
Other filing notes
The independent auditor issued an unqualified opinion on the consolidated financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022; the auditor did not provide an internal-control attestation. The filing reports no legal proceedings or defaults, dividend arrearages or delinquencies.