Sierra Wireless (SWIR) 13 Nov 202020 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. thank you for standing by and welcome to the Sierra Wireless Third Quarter Conference Call. I would now turn the call over to David Climie, VP of Investor Relations and you may begin.

Thanks and good afternoon, everybody. Thank you for joining today’s conference call and webcast.

are CFO. President today Sam CEO; call our Cochrane, the Kent and Thexton, and On

reminder, presentation call. Q&A. followed a corporate review on as As of today’s Kent update our be and follows. quarter provide website available and will our Sam following a provide third by the will Today’s will is is agenda his being detailed webcast results, XXXX

expectations can cautionary displayed. of is get we started, note certain forward-looking found commentary Before for outlook our not business. statements regarding statements based regarding laws. summary statements. A are meaning our now constitute contains reference X the company’s I Page forward-looking objectives, and securities note the of and facts our cautionary and and of within Today’s include that be on webcast These the on will information statements historical the presentation goals, being strategy,

a listed could of material are statements of assumptions, number forward-looking be to prove webcast those including the incorrect. significantly based Our X Page presentation, on on which

and uncertainties are Additionally, actual differ turn time, investors conjunction over and quarterly management I filings. that material and or our caution for expectations, be forward-looking analysis, we corporate your call particularly and release. attention statements, from to substantial with forward-looking in significantly and EDGAR, and AIF regulatory as a longer will risk cause expressed that, results discussion well update. that statements. I earnings to should draw This on forward-looking Kent to other our known subject discussion of by those can longer our risks also now our periods relate With on on based are as that the be our viewed his management’s of to which presentation found SEDAR implied could current statements to unknown events those or factors

by divestiture line, our Thanks, my an automotive update David. the with followed prepared some highlights third from start today our comments on of quarter. I will and product remarks

which the we remain and requires purchaser coming the automotive Regarding customers have regulatory in of the the provided it July, and to with ahead to our we received automotive sale in moving track to the proceed announced for transition. $XXX Tier has their expect close approvals, it weeks. The also things million, Wireless Rolling and continued product X approval line are on

also Given in our business expecting progress, automotive accelerate any embedded focus the It programs, R&D enterprise to on mobile The for to including enabled IoT not we to are impediment our completing customers. our new broadband XG efforts XG revenue. transaction. our of recurring allows divestiture teams us gateways generate to device-to-cloud value networking market-leading this new higher modules for solutions the and

with in detail business the quarter, automotive product and more combined providing non-GAAP summary With basis, our operations are line on income will the in discontinued quarter. reporting discontinued in GAAP webcast continuing automotive we transaction in on will as the third we operations standalone financial the product well as earnings the during of third Sam release that his review be continuing on with today, And under line. and statement. a information a in track, our

excluding the second turning continuing from in sequentially of in some business QX. $XXX.X revenue to So highlights now, million up the Total was QX, quarter. auto

continues QX, QX, growth to results. XX% million two Recurring sequential revenue and in are positive with of IoT quarters and QX expecting again, sequentially growth fourth transformation generate $XX.X business Our is and other was here up on quarter. in the we and focus sequential XX% as year-over-year services in proceeding our well solutions

year, this the measured the XXXX. months win as we’ve first $XX.X secured and And we long-term million of million higher recurring nine wins totaling achieved wins in LTARR In sequentially LTARR than this of higher wins, pandemic. annual service which XX% year’s or is the QX $XX was at year-over-year. rate during first Looking by nine in revenue, months achieved

on sales achievement. goes that credit team our So, to global

revenue If wins see from automotive hardware up operations, over following year. the combine And the design result the year-to-date, discontinued related operations to also in to earnings some notes up this of as more million, from been in strong commentary was compared have will our a as expectations. ramped QX quickly then you of QX ahead revenue exceptionally from XX% total had business last release $XXX.X QX QX, review. his we provide revenue on continuing as strong Our pandemic. automotive shutdowns in the in operations discontinued our Sam can the with the an industry

I $XX.X previously, XXXX. third LTARR XX% the quarter As versus XX% was up sequentially year-to-date million, and mentioned in

We share IoT quarter. third examples continue to wins, secure solutions strong I’d like and the from to three

charging new They stations. is our would Solutions that solution IoT customers efficiency, of to deploy electrical global power, quickly focused allow an One required their an globally. on Energy Company them mobile solution connectivity and distributed

Europe our this stations with Smart that’s where The immediately first them hardware vehicle them with provide our we with and SIM be and end-to-end to LTARR reliable. their and on LPWA enabling win solutions, services project Our differentiator a this $X.X module, is cloud so in the our million. expected source platform, about America. in they scalable and North electric single Sierra is have focused design charging has million deployment The value $X.X associated was solution

provider This is a that XXxX. solutions. diagnostic IoT an global remote Another solution could new customer data, medical needed gather real-time customer of

solutions. win IoT $X.X management connectivity LTARR fleet million both third edge video were them primarily is able their manufacturer links. solution hardware in We data example leading video surveillance with solution platform and So, for a about is to and secure of and Europe component physicians leading to XXX,XXX. be This North and America. a can management provide services a a to expected provide of a and required small with A XG continuous provide The patients medical gateways connectivity with for reliable care.

their and not and transit key different school is and have where with get are to they end deal providing management, four of Difficulty] markets [Technical cloud vendors. buses, where three hardware or they can One connectivity

for single three is $X.X met solution expected win LTARR million wins the devices customers is examples subscription-based $X.X our services to about the of bundle IoT driving design increase These case how and associated million. Sierra services to while we journey shareholder be The win requirements. with Wireless. with are their our our simplifying value the Our recurring against hardware use this for competition, solid and value revenue

our embedded into because technically about is excited millimeter next gateways I’m introduction we market our modules opportunities routers. XG most XG evolution and in the of ahead and As wireless wave the with challenging the year, micro new look XG of technology. history,

them sharing. market on connectivity, they get secure to trust us on radio rely and time and us to navigate dynamic customers new XG XG to with of spectrum the Our complexities

application either. the for availability XG enterprise safety, transit, of markets key public end recently Some public announced monitoring. of networking, asset the includes, and networking, this enterprise we In

XG multi needs transit service network gateway field first solution responders, for First, and applications.

rolled to XG allows networks Our are new gateway existing MGXX they connect as to infrastructure XG region. and automatically, XG over customers leverage

year-over-year. low are distributor, a North and us multi-network cellular America hard fine-tuning ecosystem we our latency recently networks who roll North expand to Motorola Harmon, accelerate has are of Americas, for in We He algorithm working to added different Synnex in partnering his routing ultra may, joined Europe. working to between the new in team, carriers traffic successful high-speed XX% out, efforts, been Solutions go-to-market our Vice provide instantly Xg been has we’ve programs a partnership sales switching coming the drive with vehicles. and new in out moves and with certifications bookings with we launch strengthen our seeing our Xg To on build coverage to in North President them to improving held patented America. for Steve pipeline moving and Our also of positive America. Senior

pleased with going management of devices, do our on a strategy for progress are are our this connectivity as we remain our big solutions, see as growth overall, We delivering we forward. cloud part and partners we customers. making with the focused

We scalable cost and have ownership. more of and total customers solutions, our and have time a IoT adopting faster enterprise are easily industrial they to lower a globally, are because They seeing IoT end-to-end market.

We generate innovative review at just quarter our very a higher revenue, on as focused of that, Sierra recurring connectivity our that we’re pass to results. for solutions integrated over continue third I working early subscription-based margin to as customers our delivering now I the network with starting with with to XXxX advantage up cycle, to Globally, design hardware support devices of our differentiator and and your will Sam is programs mentioned. in when competition. solutions XG team IoT bundle With well leverage his key the operating remains our ability a against delivering

you, afternoon, Good Kent. Thank everyone.

report in quarter a third our dollars website. full IR results a our GAAP page U.S. and we our GAAP report reminder, on a available also of of and our to U.S. reconciliation better non-GAAP non-GAAP a understanding operating performance. As is results between on provide the results financial basis.

are the Before are the in operations. is comments. I’d point I held Kent in third begin prepared liabilities with line next and compliance expected like the The automotive associated product automotive weeks, of few sheet. GAAP statements described we results, our segregated the have as the the given sale sale completion for with and continuing transaction on automotive to a near of his review balance U.S. from with quarterly out financial close that to is business our in quarter line the assets product

excluding last to improvements our we saw was as in environment to providing the in business discontinued the financial operations business XX.X% down last was challenging in quarter some business some product grew information today. Total XX.X%, to million, continuing We due some the compared OpEx the and begin in with which of in QX statements compared automotive the result, our was third a also was third year. sequentially, as the business XX.X% in which the quarter, to quarter to the from sequentially. to decrease million GAAP continuing the we initiated year. QX, for regarding or $XXX.X compared In Non-GAAP pandemic. $X.X automotive revenue non-GAAP third was presentation in QX, webcast line gross operations are same right-sizing margin notes QX, a a and the expectations automotive X.X% and actions line period excluding revenue

an and adjusted fourth IoT million and million million million. within pandemic-related $XXX.X business, EBITDA quarter, services experienced XX.X% EBITDA operationally, X.X% other it quarter of revenue XXX,XXX. the decline the in was segment QX factoring of and manufacturing EBITDA government the safety Our QX. by the third the the unwinding year-over-year, XX% The the XX.X% lowered increase by the total This pandemic quarter, lower tight number is segment by then quarter. up have million issues revenue the line prior combined QX. higher in our $XX.X connected services supply of from These tight hardware impact recurring due primarily loan of and compared supply our recurring were some which $X.X prior automotive offset Solutions year-over-year the in $XX margin. the unit program. was constraints, million, our the XX% in quarter. would recurring our discontinued here continued $X.X represented our was with result our in was in supply increase of Canadian year-over-year to automotive to this Revenue in in was from minus to end other the margin the and million component chain capital our $XX.X million lower quickly non-GAAP remain adjusted financing primarily would in resulted adjusted volumes divesture. up the improved in approximately million growth by in compared was QX completion $X.X the revenue our growth being prior competitors due operations activities due in to agreement million oil by $X.X Solutions related year. revenue of have total situation mobile the year. the revenue, automotive $XX.X price QX to margin was and receivables of combined to year-over-year, combined industry-wide $XX to of negative of to in close we negative was and cash revenue total that transportation, win activity operations and was slower public primarily had receivables QX low during continuing basis pre-closing by during basis of of gas due devices. $XX.X was due design QX, in IoT driven QX additional in to gross to only was of compared step, $XX XXXX. revenue, from as existing we we year. and of XX.X% basis lower the to design at $X.X prior in specifically on program At we the business in and QX primarily on of million, mobile computing in QX primarily at in increased significantly compared million operations quarter, of also in factoring gross with this balance If cash from result result margin shutdowns. Revenue The If and year-over-year our our XX.X% some referred gross losses QX, the CIBC negatively impacted was was XX% the gateway million. expenditures a second XX.X%, XXXX. impacted been had we a with with to broadband program a flow computing automotive total business which XXXX million or positive embedded $X.X by following then excluding by revenue of flow not related to the in gross the XX.X% cash. XX.X% cash segment. sectors, the was $X.X million losses our credit flow third referred cash in breakeven broadband a embedded primarily business automotive generated gross segment approximately borrowing on we at undertaken hardware combined backed a term the margin from in margins. in the lower to continuing look lowered or decline to prior pressure

uncertain. the the Regarding pandemic full-year XXXX, impact remain our business global on of continues to

provide conditions, guidance. continuing are not to we these Given

divestiture Although we to business focus grow program recently million approximately actions our the Shenzhen-based operating do remarks to reduce Kong the company, initiate $XX taken business that our in automotive today. of announced would the questions. even the annualized well in underway including ends the and expenses operations $XX as restructuring there with of across basis. the That some see on continuing to team additional reduction conjunction by other as our operator, now R&D includes team already million resources place. automotive continued divesture to of The prepared our improvements located I Hong an the open in broad initiatives for my has like and the profitably, cost call

Our line Canaccord. Instructions] comes question from first Mike the of [Operator from Walkley

for business everybody’s are my seen on of on year-over-year in Great. Kent; maybe that staying to have wanting business. healthy the as get competitors trends. question. Thanks There in or poorly taking certain Hope doing verticals the end for your just thoughts that I some on question your weakness just gateway first better markets well some the doing guess call. is sales, enterprise me and

curious of new into that thoughts just maybe, products. clients on to How of yours the some be weakness your that can area, where your is I’m it show for some change Thank you. may undervalued, that seeing be what this more locked sale price? then areas And environment that So, and are and might CradlePoint the XG within lastly, also competitive the maybe waiting just business how might Ericsson? stock you’re

Thanks Yes. question. Mike. that Thanks, for

other is where and Public kept be markets in ruggedized lot oil whole COVID, transport there. and areas the more large So, We’ve and In like and for that side, by in there disrupted gateway involvement other we couple for seen installations. human have that commercial needs mobile gas public to being impacted. us weak areas, safety enterprise is have slowness oil pretty that well we in along a areas in of been like sector has markets like traditionally some commercial a safety been gas market, lead the have environments.

they’re our implementations either are doing buses quite enterprise businesses. now. So, plans where they’re our and slowing bullish about not But or going trains right markets, and in their with installed, gateways things other where get I’m

a this rebuilt in working of this XX% mentioned that remarks, my on by deals grown quite that I so focus year. our team. As pipeline we’re we on We’ve put far

where things see we seeing expect partners, more our a a safety such and distribution body I so that progress is And strongly as enable distributor. cameras important some challenges to working safety are we their with that number to they as working I see through everyone large in worn of businesses large, public through mentioned leader other strong work that end gets of and without aspects we’re picking an relationships through public Synnex up. a Motorola. And They’re COVID, even but do their the and to also new and

things So, where part flight us is I we’ve slowed regards second and think CradlePoint, deal seen strength and encouraging. that pipeline space. think in have tracking we’ve of a areas, the And I with forward-looking have had activity some for transactions we the few question there as to this in your the

revenue. been about other Now, and times acquisition at was the six three transactions CradlePoint have around times revenue

overall in it’s overly don’t So in that highly for about I waiting think well growth an We their the are market and enterprise growth. being going what to at I talked sector. is their well important sector. products clearly, XG. in we multiples part our valued is within business enterprise that is of that be acquisition as Ericsson think valued, compete – space, We our We those driving the think was not strong believe

in only highest products, fastest LTE coming product more but they QX, with XG not gateways Cat-XX. XG speed to XG, high-end the our called connect our launched support have We XG

that good but start coming cycle, during think that’s companies as and I we’re well. a to cloud new And so management stack upgrade launching entirely is future-proof, XXXX as

that in in us on growth enterprise. good think our that position area enterprise in for the have going strong yet price lots the XXXX be So, and we’re we expect in we getting a certainly, recognized share I not sector to and

Thanks. very That’s Great. helpful.

Second question guys maybe help savings. or you in the right non-GAAP for the million, line, help can in in could build away a more of and then comes to the the $XX million of models? over us give $XX our out maybe, me, take us that with to million I’ll $XX just time. terms $XX much and cost out to us trying how run so on just that Any comes Is rate divestiture, you pass divestiture, course $XX with million it the a QX maybe, out Thanks. that how for much of post business the year of out help million $XX to million, or just

Mike, a some me let ask to sure. more few comments data as Yes, make I’ll and well. provide Sam

really at operation we’re our continuing auto. – So, we’ve looking without

So in a they – to close few for the balance transaction expect weeks, we very us. obviously next the auto creates strong that sheet

in operations out accounting the put results get that are rules of the auto the any and between the current – sort to allocated we business. that there, split see, You’ll continuing main shared resources

flattering number profitability making is would We’ve the I it’s flatters less equally, the from business ongoing a say to profitability. it already. changes So, of and auto been

R&D we’ve produced center. an So,

other We we’re auto will entire work. doing R&D of the part going have and an both transaction, as center and

over that So, will and those are activities QX. happening the of are occur some

that have well. I could you so of as occurred, have cleaner to I year the you see Sam, rate comment we if a but a ask will So, can run in XXXX, think lot

Yes. for Kent Thank thanks question. the and you,

up business, automotive from the QX the will into look revenue, XXXX. in decrease the of closing you majority of for as So, divesture that most show right-sizing and the

half XXXX. it start first of earlier see You’ll the in to

year, that not So, be QX, the helps. some chunk going if a spend to of late big Also in on in certification. we have it’s in lumpiness

is to the sort quarter bit help OpEx think the down to probably model you a way about the is So, to thinking right on from building, it. flattish QX of of

Great. healthy. Thanks questions. everybody my stays hope for taking I

Mike. Thanks,

comes question BMO the Capital. Moschopoulos line from next Our Thanos of from

a quarter, June in may prior, Any the dynamic Looking at nice up the that – other some backlog was of uptick at was there or was that the we for a quarter. things from the just of their it then preceding quarters drove kind $X three June be million of nice dynamics range the lockdowns that had services kind we’re $XX revenue, if looked had in a that quarters, during there the there with deploying sequentially. uptick bump million

Thanos. to Thanks, hear you. Good from

our we’re about expecting with services So, design talked the leading just in a We’ve our indicators wins. growth continued revenue.

see starting more We’re through. of play to those

back, much sort pay that’s think because think of customers I hurt QX. the a were QX of per just ongoing so had in was trend. an of revenue that I curve our held activity use just And that number in lower

QX, So, the while it sequential as as we wasn’t strong still underlying it showed in has trends. growth

LTARR was we some that all value revenue already this year. is we’re had in now. And right $XX so That’s working catch up XXXX, We’ve did QX. there – in of future million through of the million $XX system at

will design continue production, into that basis. So, as wins tick those up a on quarterly to go

excited just is and to continued and new The just the IoT in almost – about for been what what years, with XXXX, talking resources Thanos started full of this from about business drive terms seeing connectivity. now we in with corner a able I’m growth you’re So, to both two both QX be to business. our turning our vector of of is solutions devices winning is I’ve

increase so there, received, our are so and drive up overall design on the market have wins So, being some offers will while and out services ticked that we’ve to on nicely cost seen well and it’s been where winning low our out competitors both more competitive through. our win there we’re and business, a market rates hardware year-to-date

things have are hardware ASPs. LPWA, which the you lower side, like On some

think on design the here reflective that predictable they come then wins I when overall talked recurring but see about are growth, – examples in. can activity with revenue And that they those three service kicks So, them, that what see don’t carry revenue help the in of going when and our the margin market. more we I you in the higher

delivering solution for it It’s from value us. lots their And So, by that getting that they IoT complete customers their positive a need customers, edge of speed for solutions certainly get data. helping the business and it’s to good created market. with being a model value helps

quarter a to and good more come. yes, So

Great.

I embedded the in the of gross broadband at QX. year, look There volatility quarters, margins, been know down in spike some of mobile last if they’re Looking versus because But was last couple at a margins I there’s computing. there.

to clarify Just gross what as being think QX trajectory drove there that about mix? the representative as the what looks run QX far spike. more then current as for And margin you could rate, the with like

to Sure. Sam, think auto, that just up over you. I I’ll see more one. was auto was but low; say; stripping I you’d in key got out – Sam to QX, for some only high, auto QX, stability, will

take right, some also advantage we Exactly high, because the able of in And automotive at Yes. pricing Kent. lower the QX, to low were better volumes; margins of our volumes. were particularly

in better at automotive plus So, was lower margins QX.

margins since embedded there only forward. of broadband QX Now, more remaining in autos carved and that’s indicative business has out, going the

XX% we looking and was – ex-auto broadband I at Sorry, in embedded QX. so the segmented, the margin

Yes.

just question, So, the QX. embedded to you’re you’re saying, without auto looking margin broadband clarify the in at

there spike has number, in been restated the Yes. Exactly, QX? a

Yes. Understood. Yes.

better going one that just if blend – you’re two in forward. be number, of a a would two blend that at margins looking a the think case, of will be I those

Okay.

yes, QX but can But good more looking it be forward. chat and we going be way a would of QX indicative and of that and model later, them, at more would blend that it. to Sort about

progressing you you last some And the improvement question great. I on the any on, constraints. this guess, me around to way quantify are from – impact quarter? just Okay, seeing comment is time’s Can as the supply and

working with ball, the a we’re get that new you of them. lot crystal we’ve not of come all no our Well, solves problems, of very suppliers suppliers some then And points so and well that up. with pinch our worked

of current of work, the in affected the today. the environment, are So, ongoing would disruption, impacts QX, in it’s clearly, big it’s system, say – a some you whenever as a where still case components some activity. those a in I less more there’s cause But some constant shutdown areas

working our get to still to our with we’re we’re we’re that well increase that as lead with the So, are times customers components suppliers through working ensure we working and it, required. can

the it solving ways, we’re many tight. problems So, in but remains

pass I’ll All the right. line. Thanks.

Treiber next the of question Capital Paul comes RBC Our Markets. from line from

watching. Thanks for Good evening.

rate Have been your and how previous meaningful services’ this win has you win mentioned seen change has year? favorable. You rate rate versus or years? strong attach trending your any Can elaborate you on services been

you. hear Thanks, from to Good Paul.

our So, yes, – that. trend our I think XX% of up, think up we of is rate, of in I on terms tax are are we we reflective seeing wins – that design services,

brought in now talent solutions full So, we’ve XXXX, we we’re services – – had is in more had involved the the existing are think we solutions. I on a our we’ve time to salespeople force. piece embed other we sell. capability to sell built that sales basis the really That’s – building to to out in in our able side

and So, solutions. full to hardware both sales have full global our force, offer able we

so And win overall rate. definitely helping our that’s

our in very COVID. happy I’m with wins We yes, So, had LTARR that. with QX

at back expect think $XX we’ve year year-to-date, the I COVID of wind to strong. million positive end our and ahead down, and very despite entire We’re is of bounced from being design XXXX, I

so or services hardware further top the into hardware? business, is, is it – on of maybe, integrated for provider, fact bit at competitive your look that services? or without or your successful competitive one coming attach end-to-end you’re third-party looking a when at how delve an from or how’s way rate another the your business you the or you competitor leads dynamics the advantages win the rate is biggest Could Like

Sure. Yes. insightful question.

my markets talked of get looking my for I So and big all, about it’s examples out competitive a in of into that’s first global some customer advantage a script. to

We’re provide complete that solution. able to

countries, with as our – we’re to a worry devices countries, in call, all of issues, having through solutions embedded means they or per the it issues medical able offer that SIM they’re different So, our proactively connectivity different about connectivity our in and to people our different logistics overall have country, multiple their partners, to handle carriers global if stations We different to manage charging not globally. through they’re multiple knock shipping their better cards we with service. of that quality

So, carriers for you’re coverage, environment industrial can into big a signal going great strongest in you’re we factory when in we’re you’re when or customers. selling advantage IoT a when multiple a to constraint the not and have that’s an have that’s choose an indoors and because

I think And their to that’s connectivity. advantage most they’re is hardware for question from because – to just they So, – to hardware a big leading on advantage. come around thinking customers that. about Well, going attach about before start it’s then us, the your our how designing get having competitive of it

working our ability in connectivity the when there we on hardware gives us and cycle, site. the do on services, So, build we’re in can to customer’s design earlier it what them for in design the we can share

us to services, winning a can out hardware. number leads examples often so able also from we that we XXX going positive to from to hardware, their we take have our to global looking seamlessly smart connectivity, our have just the are globally, with countries SIM able hardware on works are and customers to quite them come to deals However, of then multiple where also then carrier of access. services And across working but advantage win that being that have

solve good we’re solutions able in salespeople for to directions progress both seeing on it’s both those and our fronts. So, to

the a number you the me, mentioned remarks, low in time the think – Last impact this one as from price away had you being a of I were he case or competitors Huawei, the seeing any in prepared for long have years has at that any tariff the impact has impact, space but environment had don’t global from would move all? industry, in module from

I is on first So, a I yet, countries And and becomes it a We’ve is very that impact of customers their wouldn’t and strength when at that important, connectivity, a I where we to with the although prevalent, both awareness network solutions want a ensure product quality on comes are more hardware It a European activity XG a both think modules whole now drive And that’s seen and U.S. quite when I starting number but that great and have because that it’s factor what built brand think have. having what security. couple into our more are the do this been the – of very issue, of substantive security tariffs from degree has there, to sell it tariff becoming is are moved it complete basis. trust Huawei they’re we those major built say a examples, not think infrastructure point position module then high based where really not they’re and high a we a provide and are that from. high there – entity, on product, we solution.

more So, business customers. it’s not for tariff it’s impact business, part but the of decision a

assets. you to history much in you industry? our to other I’ve think becoming companies, all us Huawei We digitize in – are pressure the Chief seeing big and think now, position that And and life of of want think from and industrial move do some and pretty away multi-billion they’re alleviate a strong of their the they advantage. that of the do assets you increasing number And security XX-year dollar them think digitize least strategic dependability market those vendors. pricing Officers, that a give marginally, with at on a you I think this fact the maybe it’s do X in China-based this Product our or with do cases, their CEOs talked marketplace. companies for strategic alignment in that is tier trying where IoT

year. the but we that of that was of on that about cases bundle some think and and worth million million to margin industrial hardware-only per lighting use of of first quarters pressure IOT low revenue I $X.X and $X I price recurring to an a think as gave be and can we hardware, customer. growing came out when so relatively moved that example of be can design it I a wave lot So, LPWA, but couple ago, and there of business, a

majority recurring from the design versus from our margin gross from the margin the so from And win, produced hardware. revenue comes the of a vast

recurring as And healthy. as competitive need is be business overall revenue we offering So, to our to allows be the us total solution upfront the whole very to package. win

also recurring gross we at value So, customers, provide get – we think but our higher revenue that great to get to margin.

So, the market. IoT low will need price a total LPWA of demand those devices to be drive market, the elasticity lot growth connected. greater All in

in good seeing that LPWA there part value the this out significant growth so And right chain of we’re projects now. in for a we’re

my Okay. taking Thanks questions. for

of comes question line from CIBC. next Our from Todd the Coupland

couple I evening, questions. had then afternoon, Good cleanup questions the forma everyone. will cash and a some fee sale? business post Yes. a What pro Good everyone. of

to that? want Sam, do you take

or cash what So, asking what year-end like are the…. the be of balance will you

more Yes, Yes. less. or

so in of and the on burn some fees, amount QX balance and I of a that Yes. CapEx cash forward, be we’ll expect we will have sale, don’t small upgrade be but in vast going to taxes our to mean, sheet majority there’ll the QX we close networks. and of a the lot moving

maybe, QX, cash million remain the on burn $X to about sheet. approximately we expect rest in balance So to but our of

And what X%, like taxes, you XX%. say when minimal Okay.

So is it like….

$X $X million million? to

Okay.

cash – to basically you’ll $XXX million adding million. the $XX over million be the post – sale $XX So, in

Yes.

the the with $XX You of staying have deal. to read cash the on million that buyer is

the of out million $XX $XXX million?

Yes.

Yes. and working capital…

good rest QX, in minus in it. burn $XX CapEx then of any million balance or approximation the fees so million get or tax for then and of million, of cash, – and a minus the quarter $XXX – the $X we’ll some your about So minus the – bank you’ll

Okay.

that. your of for right, the the terms in basic range my sort or without And that, you if like QX items, math like of in OpEx, non-recurring saying… then I $XX something Thank in it’s in Okay. million did around

It’s around $XX think. million, I

$XX million.

Okay.

and trend to XXXX in you’re that QX, of because down up flat go is going So, sort restructuring making million that sort modestly, to-date. that’ll $XX to and that’s saying over down or you’re of with basically then that, other investments?

definitely in to the on basis down No, go in no. majority those annualized it and $XX $XX the QX, we’re XXXX. them. of million vast That’s actions taking million will an

moving you’ll much a and rate of see lower forward, QX run in OpEx. So,

– me $X-ish often fine. a point this on Wireless has mean, in correct near which the the you’re savings you Okay. the reinvested and been had million can just million. I is off to as restructurings well. going $XX million, I But get number you’re have business, $X Sierra of basically saying

you’ll over very little the in below course the that mid-XXs down of then So, and at it a Is messaging? QX that bit it bring year. the bring the least into the

the that’s it. think think about I way right to

You’re Kent $X and committed we’re million close, continue do or right. high, I said business we’re at time, to bit not mean, the and million $XX it’s profitably. we’ve and quarters sequentially Like reinvesting those over going to we been growing this million the we it growing so a business. million, grow we’re $XX said, to the last $X to few

OpEx we we’ll levels down key But and need ROI lower that have case. a run strong see have rate So, in our come we areas investments in overall, see to where XXXX. growth to strong that you’ll

just comment a Hey, bit that. Todd. if can further on I

to we on company the network some So, it, the investing leaner, in selling first reduction expense to moves on to side. services move when made were our we get

that And before a XX,XXX. focusing average Taiwan, year some was Taipei, example where that per on we’ve at staff circa of over that So, but out XXX mentioned like we’re cost. name, operating an based I Paris R&D just been there cost there we R&D new was at about centers, head XXX,XXX our into in reduced is were

are there doing out a of in again, our in also announced this big fairly – major of business, large reinforcing savings we’ve and that’s we centers moving And and to center out some R&D lower With so in Kong Taipei. Richmond getting we our in move, So, cost of with auto sell selling Shenzhen. Hong was based centers. we that

That we here. no our need as side. services complete to is any outlined longer So, strategy further I the results reinvestment make in and of part producing

So being selling big – and of a parts focus on key business a was part our the to of able get business. real also auto our

R&D that from we produced our IoT business driving look and an our going for business the So, see forward, in OpEx number in up show that driving and focus, industrial that with XXXX. I centers be you’ll of enterprise efficient us perspective, our more much to and and

then the One cleanup, perfect. ask sort of business. Okay, I want last you to about and

I way some sales out of but modest it’s margin? more reasonable talked a to you about or is right XX%. think the less mean, and margin gross the the sort takes before, I of So, that with mean, says like, growth? about it base puts like is gross Is

to Sam, there? do want you jump in

do you on. that winning, XX% good to have a we that Kent just think are future I there. think been the those get as these ramp a way good Yes, to in the are mentioned business. Well, wins sure. indicating is turn going to LTARR will the we design – up about

start to of XXXX. real You a that in see improvement

And connected in as and a way XX% up that XXXX, business kind improvements on devices. the to number. is small you looking think some QX improvements I of even about into you you’re good more to ramp as with So, think see XXXX start

near-term, consolidated but continues grow, pricing about way better think get scale margins to business. for from and business that’s to You in the the the good a

Okay.

on follow-up Sorry, that. one

of XX%? XX%, might the So, have is margin sort XXXX or gross mean, like? you recurring I look post XX%, about like guys talked that typical margins, revenue what LTARR SaaS

talked not Todd that We margin. that is like overall our previously revenue services gross around and It’s not software. about XX% SaaS was all it’s

the our associated costs modeling COGS in more as the get direct can we we and of we do more our services. have with total think on I carriers on overall. margin get But carriers. that’s MVNO have wholesale with leverage advantage own point with that deals We on scale, get part network that better the We a on scale gross we

enterprise higher the of yet. aspects that gross part the a good but cloud margin, is services but not in industry, our levels management have SaaS some products, be to for could software We particularly very

Okay.

on people sometimes programs just on you’re it starting churn? about So, and them? talk win Is That’s point? good. out the Okay. that will to Is break What certainly see. whether recurring to you’re on about to that XXX%? like, group then Very which certainly they actually move just thinking at above look And is details the fair. good retention that? on Is something this you enterprises it wanting your and that, of what’s at forward wonder piece,

Yes.

lighting I complicated big let couple I the try out new into very terms break low. to makers, it’s not on we’re for compressors, We business think formula, the that get that global product, a so very you, life And product global of a the network for we’re there, me win, we shifting HVAC, change think a We low blocks a the machine of pumps, on bit go a connecting but as and almost roll provide in network our support positive to and operating churn that’s customers, metric. scale. is to that. to never get of acquired truck data. a settings There businesses we

the And so sort of attached some to machine global less were those activity.

them. our acquisition those that businesses in Numerex of some and some of Scandinavia do Maingate in the with attrition So, U.S. had parts have

businesses. acquired growing some those despite overall attrition been have we So, on legacy

growth assets continue and were part grow to – move we at to team’s it’s would portfolio I forward XXXX doing the healthy going we’ve returned those the that our customers job Numerex, Now, and into good very margins. growing note what as from that of the a very to managing of been

is turned that far So, in to well. growth devices running connected there legacy, around that as areas churn is we’ve legacy growth our also some some that of to turn from overall new programs, back but of and

taken for in on overall plans, we about machine revenue retention. talked view of connected to to our – service. out strong devices the be So those recurring we’ve unless a customer is we’re growth All continue have need

worked customers. we’ve that our to continuously for so provide And

good. Okay,

places much. question or getting many that talk and about was impression millimeter last I sports too stadiums, the airports and wasn’t really in in U.S. My you XG. wave. it’s My sound hear was Okay. aren’t on in interested to pandemic used which is available

millimeter and the for material like growth path of company? at it you lot. Is significant to is a So, technology out? of wave the this this called point Thanks decent a driver sort chunk that the that LTARR how a what’s is

Sure.

to about revenue thinking of always XG, be early equipment most going is all from our revenue. So, XG

main. higher-end that partners We’re in yet that of not with – of sale we’re modules. not our working carrier we’re to on connect devices XG XG We What higher a connectivity is seeing bandwidth. work sort the many

So, XG. the we’ve design previous in I our of mentioned quarter, we wins had that have, number

we’ve very winning a equipment. strong module network of job XG business providers’ connect done to So, other

that side working get the XG our certified MGXX that We’re of and both network gateway lower world carriers is to our products or business. product. and the do ship latency, around low with where other that. And wave, varieties starting high-end in providing launched you’d to first then in speed both, sub-six, our call gateway We XG the the capacity, and millimeter higher

I think to future-proof acquiring of want times it. the when that you’re a equipment lot you

you So, exactly capacity are to but gives of those frequencies the true that bring has nature and It’s six get much a cells means millimeter be the how capacity low split for that of to between wave years a you high-frequency know goes will the need we cells, benefits going latency. be before smaller it new capacity, industry the sub massive increase. more wave, and millimeter smaller I it that also more think

same. are on will in that invention XG still speed, high many rely of products. applications have worked lot the a advent of wouldn’t without brought XG. XG the latency, the like are think going It low I to of So, the But process. do speed

XG significantly QX, variability out XXXX, product going terms is make gateways. than proof-of-concepts they There’s some XG for product as XG still get expensive how a now, right a of of there’s to small. devices of or to working on. roll-outs, sure in So there. customers lot rapid XXXX more the In revenue still are be – is going for equivalent

fall need for price think premium I will the that and benefit increase. speed time will over that to

XG. forward. in move the is XG also This increasing higher, of is a but is just move A bigger higher. and cycle one price we of from the So, the ever is XG performance to saw we’ll see potential time terms to significantly gap similar adoption XG

Very good.

that agree that the lot. appreciate you And I on I Okay. with with a color. XG. Thanks

questions? Operator, more any you. Thank

line last Our the from comes Richard Bank. National of from Tse question

calling this win the on Congrats Amir guys. for Richard. in Hi this is quarter,

regarding for question quick Europe rolling a North starting lockdowns coming and they’re in the not America. possibly, Just you, in

Just impact XXXX? you an on business that guys wondering the you’re are if seeing how going thinking into about and

and would selling more you. to gotten Yes. calls Thank to to to through like offices required sit practice to to engineers and to aspects. when pretty able we and Well, protocols able but sure. Good help with are We normal we face-to-face customers’ used be video back safety our field get time, have dealer dialogue, in able question. all be spend

Europe; that business saw figured been come not degree impact how in lockdowns we’ve more. have same the and that an as to the out So, seen we in it’s do to across QX people

not of not it’s sales overall. – I have that job. So, – think ideal, of it’s nature it’s our We a done but not it’s that, teams, great not

product overall, have able been world that that get marketing people Our more the we for with information I digitization to now. in live think out. need new And is becoming impairment the

to on. that by somewhat get So, the we to constrained without have assets to humans going being information that to of lots as needing have progress happens but lots strong of the COVID, have go digitize, to is people want their machines which able at speed out

wins of for our reiterate we’ve strong sort key of a very just I’d in the design So, services. some points. seen growth

enterprise XX% done design the business projects this this We’ve over and activity hardware we’re by over XX%. So, grown the by we’ve being on on world. grown And I think in COVID pipeline been all our non-face-to-face up selling XX%. for in on working that despite enterprise wins our has

those a velocity and launched, the but been slower through deals, maybe, we’re increasing this papered in coming and So, nicely. has to little working very get what’s all of

the that line. for I’ll pass Thanks color. Okay.

questions are line. There more no you. the Thank phone on

great. Wireless their sharing we’ll and as on to and Sierra very business attention. people I’m with Okay, speaking to thank pleased what’s share for follow-up going Well, many be I activity. everybody the too

with as will the our we progress. and close will wish in out we be of and well an announcement putting and best these health business, we’ll everyone we auto times, As about back on come that updates safety the challenging

many So, thanks.

conference participating. Thank for call. today’s this gentlemen, and concludes you Ladies

disconnect. now may You