WISeKey International Holding AG — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone 2023 Q4 filing. Financial statements are prepared under U.S. GAAP and reported in U.S. dollars.
Business context
WISeKey is a Swiss cybersecurity group focused on secure semiconductors and IoT, managed PKI and digital identity services, with newer satellite-connectivity and digital-art initiatives. Its semiconductor business is conducted through SEALSQ, which WISeKey continued to consolidate at year-end after distributing 20% of SEALSQ shares to WISeKey shareholders in May 2023.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $30.918 million | $23.814 million |
| Gross profit / margin | $14.744 million / 48% | $10.094 million / 42% |
| Operating loss | $13.300 million | $10.436 million |
| Net loss | $15.449 million | $29.255 million |
| Adjusted EBITDA (non-GAAP) | $(12.4) million | $(9.8) million |
| Net cash used in operating activities | $14.206 million | $17.144 million |
| Cash and cash equivalents | $15.311 million | $20.706 million |
| Working capital | $11.2 million | Not clearly stated in the provided filing text |
| Total liabilities | $26.717 million | $25.471 million |
| Accumulated deficit | $280.961 million | $265.635 million |
Revenue grew 30%, primarily from IoT semiconductor demand: IoT revenue rose to $30.058 million from $23.198 million; mPKI revenue increased to $0.860 million from $0.616 million. North America contributed 54% of revenue, EMEA 35%, and Asia Pacific 11%. The ten largest customers accounted for 90% of revenue.
Operating cash outflow improved from $17.144 million to $14.206 million, while investing cash outflow increased to $3.021 million from $0.484 million, mainly reflecting property and equipment investment. Financing provided $11.850 million, versus $4.185 million in 2022; cash declined by $5.503 million during 2023.
At year-end, current assets were $30.091 million and current liabilities $18.908 million. Short-term notes payable were $4.164 million, including a $4.030 million ExWorks loan that is past due. Debt and convertible-note obligations were reported at $6.398 million in contractual obligations, with $4.100 million due within one year.
Material changes versus FY2022
- Revenue increased 30%, but operating loss widened by $2.864 million as operating expenses rose 37% to $28.044 million. General and administrative expense increased to $17.290 million, including costs associated with SEALSQ’s listing and investment in new business verticals.
- Gross margin improved to 48%; management cautioned that the increase was likely temporary, reflecting the timing of lower semiconductor purchasing costs and inventory-cost pass-through.
- Net loss narrowed by $13.806 million, largely because 2022 included a $19.448 million loss from discontinued arago operations, including a $15.026 million disposal loss. Continuing-operations loss increased to $15.449 million from $9.807 million.
- Other operating income fell to $0.167 million from $2.073 million; 2022 included a one-off $1.899 million payable write-off. 2023 non-operating income included $0.900 million from the sale of arago intellectual property.
- Class B shares outstanding increased to 2,954,097 from 1,996,745, in part through conversion of financing notes. The filing also reports a 2023 reverse split: 1-for-50 for Class B shares and 1-for-25 for Class A shares.
Outlook, risks and unusual items
- Management describes 2024 as a transition year. It expects customer inventory built during prior supply constraints and customer transition to next-generation products to temporarily reduce core IoT volumes; it says comparable near-term growth to 2023 is not expected to be sustainable. No quantified revenue or earnings guidance is provided.
- Management states that projected liquidity is sufficient to fund operations and financial commitments for the 12 months to May 31, 2025. The group has a history of losses and has relied on financing to supplement operating cash flow; the filing says future equity financing could dilute shareholders.
- The ExWorks loan is past due, bears 10% interest, and is secured by material assets and a pledge over 90% of WISeCoin. Management links repayment to a potential sale of the group’s Tarmin investment. After year-end, the group was contacted by ExWorks’ receiver.
- SEALSQ’s convertible-note financing created substantial dilution. Subsequent to year-end, L1 and Anson funded additional SEALSQ tranches; as of May 15, 2024, WISeKey reported its SEALSQ ordinary-share ownership had fallen from 80% at the May 2023 distribution to 28.67%.
- A French customs investigation concerns errors in export forms for dual-use goods at WISeKey Semiconductors SAS. The company holds export licenses, but says a fine may result; the possible loss could not be estimated.
- Other material risks include dependence on a concentrated customer base, semiconductor cyclicality and supplier capacity, product-transition execution, cybersecurity and cryptography threats (including quantum computing), foreign-exchange exposure (the company does not hedge), and possible dilution from convertible securities and authorized share issuance.
- Planned or developing initiatives include a $3.4 million supply-chain capacity project, a roughly $3.0 million next-generation secure-element R&D project, QUASARS post-quantum products, WISeSat satellite IoT services, and SEALCOIN, which remains at proof-of-concept stage. These plans are forward-looking, not assured results.
- The 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, 2023; the auditor did not attest to internal-control effectiveness.
Most important facts for investors to verify
- Whether 2024 IoT customer orders recover after inventory digestion and the transition to new products, and how margins evolve as temporary cost benefits unwind.
- Cash burn, available liquidity and financing needs, including the status and resolution of the past-due ExWorks loan and Tarmin investment sale.
- Actual and potential dilution from WISeKey and SEALSQ convertible notes, warrants, share authorizations and subsequent financing; confirm the latest WISeKey ownership of SEALSQ.
- Customer and receivables concentration, especially the exposure to the largest customers and the collectability of the increased accounts receivable balance.
- Outcome of the French customs investigation, any resulting fine, and any other material litigation or contingencies.
- Commercial progress and funding for the production-capacity, post-quantum, satellite, digital-art and SEALCOIN initiatives; compare reported milestones with the stated plans.