Sierra Wireless (SWIR) 24 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Sierra Wireless Incorporated's Fourth Quarter 2020 Conference Call and Webcast. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to our speaker today David Climie, Vice President of Investor Relations. you. Thank sir. ahead, go Please

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

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

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

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

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

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

from my comments the some start year as remarks fourth quarter, today full prepared well highlights some brief with as on David. Thanks I'll XXXX.

the today's on We discontinued will continuing with be business discussing under line operations call automotive our operations.

completed review aware, November, we our will has are strengthened. and in and fourth significantly his balance in Sam result, results of detail the been more you the balance automotive As line this sale sheet the as in summary product a quarter sheet. of

the let's consensus. some million Street So sequentially highlights to QX turn was the from QX. fourth XXX.X in Revenue in Total X.X% quarter ahead of and up of

of in the million, of to solutions XX.X Our business supply component growth. I'm situation transformation other service on is tight quarters as three proceeding with the continued revenue our recurring results. improving showing is pandemic sequentially, improvement this and sequential industry year-over-year, and the was well focus up despite X.X% pleased revenue globally. see IoT impact QX XX.X% and COVID-XX up the

by as service totaling at measured XX% wins wins LTARR Looking revenue. record QX term sequentially. long LTARR XX.X up or annual achieved recurring in We million

market with For This the XXXX, full XX% recurring to wins of efforts LTARR bundled an we XXXX. solutions to of secured solutions, the high compared to time our new faster secure wins, to win team transformation sales success million revenue existing in sticky result with delivering XXX our and market global continued IoT increase Wireless. and customers, shows customers. year our Sierra QX, margin In for for in

from QX. So I'd share to like a examples few

required modules their do and access cellular audio remote support both and us of be embedded commercial expected to manufacturer monitoring approximately one bundled to to the systems device be buildings They leader used first connectivity them gate design apartment services XXX,XXX. an entry providing commercial our We're global in with cloud and and to that services is them communications the campuses. IoT is for and ready-to-connect this this is value with They with hardware win residential to markets. with package. based exit a The control solution for is expected million, of video doors enabled designer that gateway The X.X solution properties. the a leading on points and needed LTARR openers, on the overhead also using and

end-to-end that an single signed monitor Another energy time and new provide the vendor equipment, customer with market. motors preventative power gathering improve their real QX customer a machines system required systems global This of we the on data up from is in their focused This industrial electrical efficiencies is improving they a solution. so could performance, maintenance. solution company, XXxX for

with global software a project IoT cloud QX So Microsoft to of maintenance to of with its of our this is through that value includes Azure. industrial sector solution, industrial signed we with approximately design partnership example Initial for partner up with and assets and our predictive pleased win design XXxX and design both deployment to are and really on the our revenue XX,XXX the industrial more And in service. We about looking with Microsoft to be team that to customer strong example is this the million. good expected recurring together. and work and time. company is Azure when win global picking platform The pipeline Octave a see million Microsoft securing help monitor working scaling connectivity and our devices hardware IoT X.X the who us gateway, IoT assets services. came last is LXXX significantly we're a data in and orchestration the providing to industrial we The LTARR associated X.X

with XXXX. in ANZ recurring selling connected recurring revenue been has growing Now focus markets. Australia and revenue strongly made on the the and year-over-year company is I'm services on well the year Globally, in progress than successful, in more year, that year. in was we are in the competitive our in we our And as up targets and and winning with let's run recurring in on XX% XXXX. great XXXX. the sets we and solution other LTARR XXXX our other increased million of devices. company QX very X of services LTARR remain revenue previous achieving XXX last by ended has growing highlights generated other by quickly the QX of rate million of acquisition million XXX million pleased XXX from the the end service MXM of at This Recurring The of top million look XX focused some the end market. very

terms product In successfully in launched we modules XG embedded XXXX, new our during QX. offerings of

will US and XG our routers We launching and are router certified network was be gateways soon. and our MG-XX recently globally certifying on XG T-Mobile

Sam so on Cochran, Communications experience James Senior Americas Senior we're Engineering wireless now recently Armstrong, secured have applications modules XG glad I'm with Business Vice our transit, is for our executive that year Electrical have and our we management Harmon, public long-term areas teams enterprise networking, Steve sales with design the healthcare hiring PhD Solutions experience President. Vice Enterprise as team and a James by numerous who in as I'm Purdue, President public him running from low strengthened latency XXXX well. Spirent also of key from pleased very in team global about for wins asset the strong monitoring, XG including in a to path great Our excited safety. growth last customers. most enterprise and has

over out to starting we'll new call moving Sam, I turn quarter the of like in that to reporting to be first the I two segments. point Before XXXX, would

on enterprise through are portfolio million XXXX pillars sale strong for embedded and of our IoT as broadband November our modules growth. and AirLink, will of positioned attractive With in our and Together to growing segment this generated our XXX us speed and high two on This revenue Solutions, Solutions. last solutions reporting and this The well Enterprise and in will Solutions cellular focused services solutions, line XG enterprise connectivity market. include from in the segment of opportune differentiated include in IoT in segment for an LPWA cloud Solutions offering. Enterprise growth business the our applications margins software. our to product with and as Solutions and and for IoT XX.X%. modules, connect and reporting industrial routers and market IoT asset to to have industrial We complete cellular assets. XX is to generated with machines XXX and gateways, other time software. success we The automotive device pipeline IoT well XX billion The total focused are tracking, our mid XXXX XXXX year, IoT for gross the as addressable monitoring it's start market segment billion doubled of One we leaders we connectivity with our million highly are their digitize seeing

services will for that, we over margin end are generating focused and our quarter for positioned that customers solutions I as innovated on deploy modules IoT cellular year bundled connectivity delivering well his solutions. results. are for remain our now solid We With subscription pass with scalable growth recurring higher it very fourth to and on device-to-cloud based Overall, the comments review simple and Sam revenue.

Kent. you, Thank everyone. Good afternoon,

our results US GAAP basis. in financial quarter and reminder, dollars a fourth As reported on US are a

full understanding also operating IR We performance. page on is results provide our of GAAP a results of our reconciliation better available to non-GAAP our A and website. non-GAAP present the between

have XXXX discontinued. are that with our based continuing point of as XX, statements a review And out our business November we quarterly on I'd sale the the segregated automotive with completing I begin results, operations. Before like quarter to fourth financial on

provide to statements information the automotive will we GAAP in our basis have additional business. QX our notes the MD&A. And information in We regarding financial a included on

me focus fourth and compared same sizing period up million, XX.X% last compared business of QX we QX last right was Total decrease to quarter from let operations year operations a XX.X% XXX.X the was gross in in year. margin OpEx. So turn continued continuing quarter and our reducing the Non-GAAP comment on fourth XXXX. the Revenue the full our to in year. now continuing X.X% to on and quarter In the fourth

in our result, operating expense a quarter. XX.X were As million non-GAAP the

rate X.X to QX million year. run the adjusted EBITDA XXXX. X.X OpEx in prior million to compared negative decrease continue into to negative Non-GAAP this expect We was

years ago. mobile X.X million negative of total full tight the million. to in continuing environment, XXXX EBITDA is components Dell and lower revenue loss the the The supply XX.X from pandemic, Adjusted XXXX compared in wins impact computing was compared was the XXX.X attributable of year design COVID-XX the revenue primarily to two million revenues XXX.X operations For XXXX, and XXXX. decline Lenovo to with million in in the

revenue X.X% was more million, let's connected computing forward. at margins XX.X% in is This the services look services and growth customer margin XX.X% and year-over-year, represented mobile partially in other years losses. Revenue lower computing margin broadband embedded or our margins and and sequential gross XX.X% or segment that lower we increase improved broadband and of related of increased and was to by XX.X% revenue the enterprise was in compared up other primarily last the XX.X wins XX.X X.X% design million as number quarter. in total revenue million Taking usage in from Recurring XX.X% recurring QX some our QX was in Dell Now by million Lenovo the increased by impact by to down a the gross driven IoT to so The the basis, XX.X routers The gateway was design our segment take the lower due devices. revenue the solutions in at to Revenue the there revenues year. segment, going global discussed of to embedded year-over-year, offset XX.X% quarter, prior revenue the pandemic on revenue to of slightly converting a mobile hardware due increased Solutions Within to of primarily showing loss gross XXXX previously quarter on mix look IoT recurring ago. million impact is from declining with prior Solutions year-over-year. pipeline IoT of XX.X% X.X a XX.X supply QX. networking by improvement with offset design to basis. X.X% growth compared the due the in segment of the in quick and related at no was due loss and year-over-year decline the two last impact, IoT Dell quarter. to solutions a year-over-year Lenovo QX Total due constraints are

X.X sequentially decreased solutions other Expenses was negative Additionally, an increased compared and X.X% in QX. in improvement declined due was in Total broadband X.X% the X.X XX.X to IoT in QX. both X.X mobile X.X% was segment to QX. mix sequentially due embedded sequentially, gross X.X EBITDA computing increase sequential and revenue recurring services to revenue. broadband. margin lower and million adjusted Revenue or to million million Operating QX million improvements in embedded negative up million in The primarily

position, was due to XG Moving X.X proceeds development CapEx down during million. in Asia of cash X.X and The to following higher the million the than XXX.X facility was QX our was the operations in QX CapEx required cash quarterly of quarter credit our the flow was automotive was we Net equipment from automotive that in replacement for million. XX.X normal and divestiture sale from paid the business. of million business

services X.X spent that business also our million acquiring New new extending MXM into market. is We in Zealand, IoT the based business that

million quarter of these cash had XXX.X the increase of an million we the with on activities, sheet. balance the As end cash XX.X of of year a in the at finishing result

components. you XX sale have we in cash the three outflows working main quarter Two, associated we auto first the combat will to the first capital of to in consuming this the in in to inventory increase we three million shortage we occurring some As to One, factors. our operating XXXX, And we are efficiency. quarter look adjustments improve we due incurring approximately current capacity one-time be have year. also restructuring with as need

XXX.X software IoT revenue The have enterprise that gross the release on of at a our IoT a segmentation this revenue IoT would routers, includes tracking, and services and that are services, gross and segments. quarter, asset it margin modules as router platform, had table solutions The reporting includes first embedded software modules in XXXX, guidance margin in I and XX.X%. gross enterprise revenue security and of XX.X%. the and are IoT for will our well broadband business shows revenue as cloud to the as all a our services related a at as to million segments about today's for million Before segment connectivity quarter. few the gross just such in XX.X%. QX, two In to IoT offender be services, and gross connectivity million generated applications of be module XXX.X this business. information gateways cloud In business. in management well words our In like monitoring, on all move gateway We'll on end a In new platform, margin revenue In as it first say we XXXX, business our to of and providing million management new we related QX. margin of included in generated XX.X XX.X%. the that cellular at XX.X QX segment had margin I solutions and the more each

our it tight chain of to Now for the on global current remain especially our supply impact COVID-XX environment. as business uncertain the pandemic to the outlook, continues relates

XXXX of COVID-XX results on adverse the While operating business, and duration this for our evaluate financial we which condition, and and beyond, will impact estimated the time. cannot business, on cannot related COVID-XX impacts ultimate quarter our size effects severity pandemic the of reasonably continue the overall flows currently of of on at depend cash of predicted. The to first on business developments, feature our COVID-XX the be to be

XXX.X of demand consensus in current be Street have XXXX. services XXXX, we we Regarding quarter quarter revenue approximately for of first expect our line products and million. consensus recurring secured QX and that's above to with in our for hardware strong is and the revenue Street XX% orders first There the

demand. ends and remarks the manufacturing closely to staff, to facing supply our being for the now continue who We we environment to constraining suppliers done working call across our all manufacturing with application. all are are However, tirelessly level open deliver which our support close global critical suppliers and work hard would my I supply orders, source to questions. our Kent That to like us our with this prepared from components chain Operator, tight the I partners service and today. fully of partners chain working customers' and a ability very that's appreciate gap.

Certainly. [Operator B. Nichols from question first Instructions] of the line Your Riley. from comes Josh

open. Your line is

question. any on a or for savings talk the the improvement the continued ask, XX kind Yeah, kind first wanted and of thanks and initiatives, my the the bottom-line burn cost sequential stand XX as to the far we're the cash I but improvement more outlook paid at we for a could like profitability And of little about that you well you taking looking top here. seeing EBITDA to provide million to talk as as interest see to line you from as bit the sustainable where turn about million good quarter, perspective? could OpEx

Sure, the growing talk cost levels. Sam to for our we're progress Josh. But here. Thanks overall sure line question. then making top Thexton both lined is Kent model It's the about structures I'll the ask yes, up. OpEx And the and good. - making business

want cost you to So the million $XX to talk Sam, to $XX do million reductions?

thank for question. Yes, you your

down about is made for is progress those X,XXX. X,XXX And XX% where from levels so we're into That's headcount - so there. down on So good targets. we track the being to year, very came around

Thanks.

bit a targets timing potential I there. on and XG on you're doing as - little do if a seems margin know up the and ramps making little then but provide far could you front are it has color that accretion as far of a more that progress getting as bit? could you shipments as as type of How any what of kind So been you bit ramp the good like little difficult, it

here. it's Kent Yeah,

early that where about We're comments. customers wins done certain. in I be So in XG. securing We've in early stage looking with well the very fully in we design my are levels as not are very demand said to XG excited

that and We is and We've multiple a the with really to customers ramp. to you and to slots with win deployments. ship you start - for will customers. be very And And XG expect in are feedback What other it with market, And seen I'll design similarly we've highly volumes starting starts to those technology. of to from both mature, XG happen the the early lot start positive to many been iterations, carriers. in XG. speak you're get got When customers slot, to from years. a valuable. design see product then XG as the you we those We've

don't So is a to going be significant be not but in on yet into for to early of long-term XG. volume XXXX, the we XXXX. step expect XXXX stages clarity of going to move as accelerate that It's volume will ramp important great and so an XG of the we us, value continue

it'll are that that fair last in shortage kind anticipating take thought, or there's obviously, me, looks over maybe you question then those? to if baton to resolve imply Clearly, and like stronger then I assume the those to coming XQ than two, do may today? able materially the near-term had demand some issues. And half is Thanks long the and Street how get you for the But Street resolved quarter pass next is it here. what stronger numbers think of second component a

most going Well, think year. have The And for challenges us to the with that shortages the you I are those of the challenging. seen are think I silicone across supply will be board.

the one deal to going be I we elements So with. that that's of think

pertain at overall signals increasing We wins, our in existing design looking those rates, are see last win demand some to customers some strong, year of same pleased is to increasing work from time, of our and they're our about and through. talked increase our And increasing to the us. to what flow starting get our we orders, are

So we're guidance. not providing

I wouldn't with pleased that we and the of we're so above hardware work in revenue levels And But point that that for the yes, presented side XX% for this business. change demand the recurring with seeing, we're our both orders those of to view at time shows uncertainties. consensus

guys. thanks, Great,

Thank you.

Thank you.

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

Your line open. is

demand on Hi, seeing, good of that strengthening terms we close macro or Kent that the any it So verticals recovery environment? specific more you the can a there are demand a especially look primarily afternoon. or standout you're recovery? in at as the segments is demand bit driven

Hi, Good Thanos. Yeah. you. speak with to

talked few about we've So a things.

talk two So a now. about segments our we've had I'll - and

So in the we're we've what had enterprise big on focus a market. doing

in so our software. And business, sales of progress good we're our gateway inclusive enterprise seeing our overall

have And been been part so continue. that we've is growing investing will that And of partnerships. something that we that will we in, market expected we -

to there areas is suiting of that are high-end that economy, are this industrial or the of just gateways but that we're requiring public related in think the ruggedized of connectivity as that elements safety not and needs that I areas market. are

the side I I solutions of is one think Microsoft the example big IoT to digitize an increasing. $XX a talked The that's of in the there working of large trend IoT macro about marketplace. on Secondly, their market, example company is very industrial is billion assets with out a

sort of So to see as those those, are growth we trends. long-term start

as On products. not recovery of seeing everything be driven customers to of from many and to or spaces metering And able some increased overall. part deployments smart have are have to automate in touch the humans of be by like impacts side recovering economic look can that our COVID,

move has to been when progress been on we with as this demand communicate up But and what we deliver. maximum so and team to of see a market as shortages, suppliers can committed parts we those visibility environment. matter making fact, have are But ramp to hard get our our great current exceptionally hang that can on So working just requirements we environment to forward. a it's the of our are in customers products good in to even work further hard, with good challenging continue

for would moving revenue the thinking parts for so of but a restructuring that supply an say you Street's function what how And revenues a and relative quarter, forth? lot helpful. far of as outlook. the earnings you to Is earnings constraints that's with upcoming Or about and not as outlook different fact Great, a quarters? the provided there's

basically not provide I'll because uncertainty Sam comment in supply Yeah, minute. to the we chain guidance a ask But great the to in decided of side.

wanted get to profitability how our exceeds, that through factory in in with and affect will the we're our the then comfortable, much directly levels. we we number product demand So there, line share we're consensus can ship

As we Sam track on we're - talked have that OpEx said, the for we savings about.

so parts together. on can profitably about ship we're be be volume able constraints. the the going Sam do due pieced And It's But to side the really to that to you comment that? want to

Kent sight and mix. We big which the on uncertainty modules. products Yeah, there's correct. still big that's difference enterprise The as got between and in a line is and come margin you in number. into margin gross know OpEx great of uncertainty then about parts revenue, There's some

our visibility chain, more to give it's granular we get until better honestly, supply guidance. into quite So hard

been about, Okay, the and I you up how bring you found sense. I guess, speak deal the finally, as you interesting. for with that's the makes broadly, mentioned pipeline a And table? - More went a channel, to which to can channel through shaping Microsoft that

next in Yeah, back, a up Partnerships. proof because good it some Microsoft I with to drive talking for we catalyst more reviewed was of a good we this Head engagement. as the a organizations, work more as I is business together. get we the time point recently And important tier it's takes And Microsoft This to announced and while customer. deal partnership, think, big a strongly.

the the with become So And to the get the has familiar force our ability been more that. data see growing. opportunity as has Microsoft Azure, continued sales edge more product progress into we'll pipeline and with with and

So more it and was to a good step come. forward

line. pass I'll the Great, Thanks.

Thanks Thanos.

Scott from from line question Roth Searle next the Your Capital. of comes

Your line open. is

taking I wanted quarter congratulations out off, publicly for retirement. I and that. wish from I Thanks But afternoon. good know on wanted Kent Hey questions. out. luck Hey throw of a we're just that to First to best you my your

Thank you.

component on the in entire upside demand we're to environment constrained. Hey for is of So where and normalized a that XX%, not correct? just business, the is that clarify,

segments million that XXX excluded at there being versus that looking business upside XXX number? XXX correct? million, or are business You're of of a Or is from that one million, two the the segment is

that have you No, correct.

we while exceptionally on many have In terms we there. side that we of order - in into is large we our just we share business. fit seen, that of - would going view constraints might saying this with have wanted small from the the volume quarter. supply to in But consensus, It's that reflect amounts with to the what's sales want progress we're we're demand that so quarters, line

tied IoT business. an Got reporting enterprise some IoT the you and think that applications it But within well. just like the in in sounds because sounds realignment as I terms solutions to businesses, of is it gateway category solutions, the clear everything tracking in mentioned router? segments wasn't me of now to like asset enterprise or It you some industrial modules are

of how along of more basically point component goes this to a in that's recurring type segment of going is with to and want router of look that being the clarify reported, gateway like terms I kind terms cradle it. So in

Scott. question Yeah, good

segment, support business. goes and along majority includes also prisoner of And our with maintenance our the We've that our So is were businesses asset revenue, that monitoring Numerex. we applications gateways, recurring we It tracking, enterprise IoT in the home them. and security. from included what software, enterprise originally and our those segment acquired call

dimensions our them. similar those business, And and businesses similar margin dimensions to strong recurring to have strong revenue profile enterprise so many gross

our So gateways attach IoT applications it's our enterprise. plus That's business. software and majority

those X you there color there's were could said are segments. about units. revenue now with don't you're And is larger two and recurring that along in that I it many terms routers. that of you class put with there number talking gateways because think How spread of million solutions? business helpful. any that very additional Okay, But across of are that's units the a the suppose overall, of what under I to tied goes component enterprise management? enterprise

We in are time. not rates at providing by our a this segment attachment breakout of point

cloud, gateways. our the and device majority and IoT maintenance in business our software, is is for connectivity side of more However, solutions of of attachment enterprise support our management the

total Got strictly you kind then now you revenue those we're those your continue or going two with two report go to away forward. spread of just to that's and going does that across Are recurring segments? segments

No, we'll on a recurring whole the services be total basis. continued of right reporting the a business as revenues other and total

an that's think important metric. I

or get lastly, seen a uptick wondering in sort that of thoughts maybe pick could, but front? it's America. of life of if in if going on Wondering enterprise you're any what's any we couples, probably XG you couple and as of on sort of solutions, you networks I front? CBRS related I Thanks. Okay. the any in And thoughts that business North still sort early any that across end on you're Have And think, well, seeing front. to get if that well, that just commentary as pretty up seeing to color on

delayed So let think me I a few that answer there's for in so question false the deadlines been been - dawns there's XG on delays.

And that a XG happen will dates think and in to that the happened. there's forward. some haven't quite Europe, upgrade American Europe. I So on just announced of devices In continue a going still has bit going they upgrade migration lot path that's have And of We later. XG in will market. sunset activity

that Scott, was - customers look think will about upgrading I'm the And XG be as we're to to year. looking that to the happening the proof will going question? themselves start sorry by that what it's to technology your now and XG trend future to start be I So second and customers predominant through more is are

Enterprise CBRS, sort from to seeing in Solutions Thanks. early interest if you're Related demand on that particularly the of a front?

very we're on Yeah, CBRS. networks keen private CBRS. Yeah,

demand We for have seen increased that.

frequencies. operate CBRS frequencies Our and network public on gateways

municipalities, customers other talked we and about product areas. to we've very are Motorola, active so with provide those We've our interested CBRS they're seen partnership them in CBRS. help with utilities, gateways in And

And so of lot we're we network private and frequencies the of innings think addition early in CBRS to acquired capability in that of rollouts. interest public. still adding have in been lots A

to to the public device, allow private or have of benefit user platform a domain. devices Our it's the single a whether that track in management

take to of. a we're so that and And positioned well well it's we're trend advantage positioned

much. so thanks Great,

Scott. Thanks

Mike of Genuity. line next Your Canaccord Walkley from the from question comes

line Your open. is

and of next Kent wishes your journey. thanks my in Great, the step you best to also

Thank you.

we most to the industry. back of million, Questions XX that higher it revenue tight a as call future quarter, that to it's think XX% But alternate you're be Or me going to across supply just not those for and are this the ship know quarters? out just to you whole potential lost of find sales think pushed able do supply? is maybe you customers

Good good Mike you. with speak question to and

It's very good that think to when it's need. we're of instances demand. expect the I few hard roll customers. But for you perishable supply forward. they to we can't that that very So working timelines our never There's where most

of market So especially for of we're with active that. just get great a public our some prioritizing them wide to to have to able had safety and us components suppliers with range success work be products

to day. we're roll short forward to answer every it but So expecting question, your at that working is the hard

Great Thanks. Sam, And a for that's follow then question helpful. up you.

for you expenses any it? think customers? the and think second, margins, help March run shorter maybe had you modeling on forma to given us running to for full you supply. it's without quarter, one you And said a about more are the good the line just basis? operating pass on can rate relative What I environment with components can you term first the this then automotive pro You're into quarter sight in gross tight of a Or impacts through to those have pay tight for

Yeah, good question.

be So a margin impact. first one, there'll

as and are use materials servicing prices. critical and very they go it are market, a used You open around in in We're demand. The our customers applications. grey paying to parts market, buy focused out raw higher can percent. But Kent we on products think about said as having the

the to we're the what over. get those we most so to next ones short-term. those to to in and up get to tight in your products so parts be customers. doing and Kent, small can first new since there'll expect impact we there'll But margin in our will be forth. that of that the to quarter our question gross And But And supply continue come environment roll XXXX, a

sense. be catch constraints as that that sort be makes there'll if up recovery there'll QX, in backlog, while So new on we of

the sense. area level direct prepared said XX.X there. million, make in X In I from in the want would But to I again, be OpEx, and terms give don't of down that would remarks, believe guidance it X I any million

is maybe in this trend And divisions. that data last get LTARR grows That's new and it we gross margin business? helpful. or the longer level, a good as and great. more think gross recurring me, on. more margins for historical Yeah, place could for as Where to term, be question you the thinking revenue? about pass I'll Okay, Thanks solutions on IoT about

question. Mike Yeah, that thanks for

so just little a And I'll bit. recap

gateway IoT software higher enterprise that I make line, product we're hardware then margin revenues. it's that So recurring gross the would the higher a lower then our of margin, think recurring a competitive and modules the is solutions, gross and dynamics, gross margin business margin, high it gross global In part but business. that in attaching

as grow, in overall mix the continues revenue, revenue increase in to recurring as that our of So drag ratio our business. margins revenue along hardware gross that continues to to recurring - will direction move that

The second we to connectivity we've is the expect in improve. we thing that as previously scale gross our business, business that to continue about talked see margins

have and side. mix we'll improvement then in hardware improvement the on So

customers. more that good to for That and as cost that on of elasticity the cloud lower solution for of side the continue position afford the move low On in revenue connection data lower global area a out for units continue our relatively look then margins. for towards to good enjoy device strong overall the with and that that's we're good LPWA is have will gross lower full demand to module But points IoT be ASPs market. those profitability and product providing

for my thanks Well, you. questions. Got taking

Okay. Thanks Mike.

from Derek line comes Securities. Soderberg question from next Your of the ‎Colliers

Your line is open.

my with Thanks was LTARR. supply there I start the everyone. Hi, any if taking from to I'm issues. want for questions. there impact I guess wondering

But these forward. of think be issue you an could roll the of said of year. some sort will throughout sort this I

this signed LTARR these the all? of to you to at that the these deals impact may any in up. curious supply LTARR would assumptions cumulative as number I and supply quarter follow issues impacted getting be make a past how have that then So guys issues bookings for I just your guess I'm

the for the Thanks right. Derek and question good to on All call. have Okay. you

effect instead say of revenue. think in I recurring for LTARR, our So I'll of terms answering supply the issues

I signed their So year that we contracts saw working was what this revenue. future in it think of impacts for to QX that recurring business ability with people COVID remote, and get

we of here. we So is very a with into next QX, in were highlighted in slowing The rebounded They And the wins environment those wins step had get production. then as projects strong getting And QX QX. those COVID been our to lower. just some LTARR production. design has into

marginally as the to those to able revenue hands-on going on making those - of working, to where revenue that think continue globally, delay to this have services challenges are new get there's at will hardware progress all Where drive we're getting the is supply of gateways it's of being remote been a some shortages there a look regard. recurring customers, that customers bringing our I the be implementations. we that consuming examples the today, in and recurring If of ongoing revenue. connectivity or customers we we're delay in with of three better both on. and the along business. part like that that our hardware but the base at but won gave getting have revenue I growth that going side, I building mean, lot that But that elements number we're service to modules our

you're if it's hardware to a going on or late a month trend, quarter not So in difference. make a the the

then feel that? great? your that environment acquiring XXX something? good on balance, this cash mean have guess And on then the I for comfortable quickly on and automotive just cash how guys divested. I be of it would anything use going Got year your million now you focus on just that is piece generally would you Thanks.

question. Good Yeah. Sure.

two announced same focus So we're we're strengthened sale on I a have the balance but said, that sort these business, Selling strong both that the happy just to against. our us automotive sheet, to of allowed our of when is have at I've to wish really sheet and we segments this auto now and reporting point. balance position

- of driver are And us But perspective to time. capital. sheet strong be plans us just that that. the an But We to to on any to from present out been don't what's sheet balance big to for so we'll missing need balance feel this with deploy our M&A marketplace. have a enables a acquire. stay opportunistic. go we that's going the keep no we'll to tight parts opportunities that big part The afforded we at strength in We'll that

Great, thank so much. you

line from next Capital RBC the of Markets. from Your question Instructions] [Operator comes Treiber Paul

open. is line Your

Thanks good very much, and afternoon.

of applications? connectivity. is on Just enterprise strong the business, want that - to the Is in that IoT I this I focus the growth quarter. services you And also growth obviously, versus I or speak is guess enterprise rates - services connectivity relative the could the the case? imagine this bulk managed quite of maybe is IoT the industrial connectivity? sorry, guess about IoT And growth the

Paul. question. Thanks the Yeah. for Thanks

We number both conductivity, connected good a in growth our continued new across of saw we of saw in growth here. services in devices. So segments growth

as enterprise driving into - forward. a then driving - we gateways And the and to driving services market software so that side. the those was And driving connect had our can the more devices

the solutions. as connectivity said our we'll a to focus majority us, continue a connected wins I solutions IoT as and to our for gateways, of sales is be where our in of continue in to that's of And able we attach lot really So is strong drive our occur. device more progress which LTARR very and of

focus growing and that's for So forward us. a are both

growth I long-term about - growth? the on you're but think like the that and And accelerate? translate snowball the but XX% into how that we to reiterate outlook would XXXX how me be sustained, an LTAAR do the outlook, outlook services, your you expect services, revenue not outlook, on we growth the appreciate giving should how do in You

their that of of they start as Yeah, I is revenue so recurring we've on. new to and more come selling more deploy generally, accelerate production, continue models, as and additive. that add have its about talk the we as into design to mean, continue When about and wins, get we that and be those continues devices, customers devices, something it they as talked to those into accumulation our we won will model

reiterated we're that million middle revenue XXXX, rate XXXX. middle by run and our I So for on hitting million of of the the track recurring XXX by XXX

customers can you deploy. So see with the the there to is new And we those continue of win more deployment customers side. to continue acceleration

math sold gateways that. will on of is device-to-cloud continue those gateway because module revenue the the the get see of plus a as attach, conductivity, of we the off effect side the into Whereas our of get linear more to marketplace, an deployed just connectivity recurring we to attach with So of faster growth enterprise additive revenue. the

pursue a we the segment is Then, in just design how it about the You the wins me, called past. in Is actively something you strategic? is one see going just one Are that last that win that forward computing here? mobile do you not out or think want for losses design it to competing segment? for you segment

Yeah, question, good Paul. and

the those - be with with recall not some won't said with element numbers. going because forward wins not do Lenovo have think are other deals Sam those there and it. before RFP quite large-scale years differentiation was as don't and we the to and previously, moving segment comps a comparing and we're forward and volume And reporting a with that that's a it's not rapid large So in cycle losses OEM focused business, I on in PC we're Dell

where that type connectivity into application overall at continue We to to PC in enterprise But companies. continue longtime support. customers been have speed some is smaller have that other rugged high excel customers we we

design very the where there. didn't The historically done slots they company areas product elements. some all of of well, had have some because we've So

- brought we in XG significant previous As forgone that had one company cycles. in, the slot, really one box we we design slots

modules highly - we're we're do the R&D modules businesses. in continue so work And to broadband in other our we'll same work, embedded doing What be we same for the for is engaged.

on drive makes less a own connectivity, very those The the to embedded an applications type like able provider to likely nature say, their broadband sells are it's enterprise decisions. because Cisco be connectivity by and of So synergistic. of Cisco enterprise sold Most enterprise. to then it's

that's customers So to work our focus we'll of bundle And we're design that to in continue on or we've it. as to I into wins support glad able well XG said, space. attach in distribution with and and arrangements. sort those we're very that less But very done why area

Thanks to my questions.

Thank you.

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

open. Your line is

I'll And that or evening, How million had nature? out. QX, I XX requirement in much couple less time run more questions. cash would If Good just everyone. in be think about them of roughly Yeah. of a through is we here. what the you called one

do Sam, do yeah, want to you you want to to - talk that?

Yeah, good question.

through So our roughly site. in forward, in capacity about we one half supply our of going the manufacturing we've issues, as increasing invested nature, be constraint would the in work way time that

happy later may so report At and become the However, to of still some for us. us, sure adjustments we costs But that. behind auto vast parts get are restructuring sale sort we available. of related in that year to are as to need stock as majority behind the the the and least add the buffer

or just million and say would I'm million you did in the over like million X down course go QX your XX on Perfect or number statement, X XXXX. clear that OpEx of

new rework million X is little supply costs. QX. of heading million to down X the the bit to leading we problems X only expect on solve the The into do engineering mentioned. go I again, again, I and do that us we're and to is additional rework some would down, on like that That's one having into products said But parts it go. XX.X to offset chain to causing related a to tightness X to come -

of more then that or Okay. after QX? business less rhythm and the And is then restructuring - it'll the OpEx is be for absorb regular the than

OpEx quarter. rate. in areas. forward, run to and smaller But work those After right of towards we majority the see that decreases. QX, we're still done little restructuring the investing the very vast be going a our we're as diligent bit work some should dollars is in with we happening still There's But going ensure

So question. I your hope that answers

very see million does. that? XX% didn't the I And must number I I it. recurring the much. called piece, was missed up revenue might is and said you in it XX-month XX.X then have deck Yeah, What on is the I Thank think looking out. you think it - for what for it, you I trailing I it.

that have Sam, to hand? do you

that repeat you the XX months? trailing Can question Sorry.

revenue I curious was recurring was? what number just the XXXX

whole the for - the Over year?

Yeah, for year. full the

XXX. second. Above a XXX Todd, don't it's I me have it. Give Yeah,

XXX related the number, for XXX the about auto small X the there, business. the million includes So number to sorry delay

Ops, continuing XXX. from So it's

and make It's goals, tracking with that that that's XXX, the it the so And when rate, suggests you're you compares statement, stated guys growth nicely. XXX XXX the XXX to the right? the

stated the rate basis. run goals Well, are

I So month. XXX say wouldn't But relates their XX to necessarily that. directly the yeah, that that's trailing

Yeah. right. Yeah,

- way I the okay, that. So accept

to way the and think to run the towards So quarter, of goals. then how about two those it progresses is more rate that fourth

Correct.

all few examples that sort And minus of or noteworthy because at are getting rates of on and beginning a earlier Yeah. any COVID? call. the I plus depending the cited other worth of beyond you mean, through of here close to COVID dynamics question, sort the this, there of is XX% and

some know we expectations? say the if commentary if you to you But don't progressing how suppose. qualitative to is third versus do, - So hard let's increase is versus around this strip I were guess you think can million COVID, quarter? XX% If XX.X away in I it takeaway were expectations, get that's about that your I to if the point. like, your But the think can

we connectivity We now and complete side, actually the market time design to started some about high the Many part market for simplify I LTAAR those that IoT countries, Yeah, quickly a strategy them, those been good driving of think customers so or general preventative trend. aspect and projects new looking to be at anything the return, that shipping wins million get LTAAR faster simplify solution XX I we're our the from million And They to give and if customers. with multiple and are to to able the into that But industrial and The products maintenance been of the working as think there. that talking how mean, to trend we we've to and has helped this deliver been in more coming solution I whole of their other then doing. playing XXX playing is industrial is focused a time on the are expecting out. and on XXXX reported COVID of in their so assets. strategy of level of LTAAR benefits and year approved our out There's want the implemented. impacts that. companies general COVIDs get were digitize

they're the so One a sharing a the getting data one large machines not serve hooked another here, customers that increase follow of they and XX% us as XX% that reduction in all their from get deploy. mentioned they was sales up via IoT, cost industrial to the see the sensor IoT with on in they devices company,

be IoT strategy have the compete. So industrial to business trend companies. is big that have come. industrial think see to an be And will all I case macro for And years to to companies able going that's strong the going to we're to over a

So human that's of forward. things market touch we're not that And very with as wanting serve and COVID, to have we the grows. to as impacts We're a people well need required of that to have industrial positioned. much highly accelerate that going as I move to differentiated and automated think IoT things

and So way. want we're companies that just increasing And, expecting industrial assets. this connect their market to for is aptitude be significant. It's to to playing COVID out the

that's retention, retention, No, going qualitatively land an is a there any retention, color you provide I churn, once of the project. know you gross but okay. around can you're into actually if comment that's don't on how expansion net Yeah, this, helpful. to base sort

once a are, we asset. project there of the deploy Yeah, we life for generally the are we

IoT they IoT that Once so And no be that seeing longer only out or want the win the life. then is well low. the the positioned customer of we're very is it. shipping from getting churn end device, not of we're next data, there that And generation goes if design that asset is to a that assets they'll in the for replace churn

once deployed providing customers So device-to-cloud. it and with is that we are that

device the managing our have management. connectivity we edge So we're it through

to interfaces management Our SIM customer. the

are that's very We and managing making global always those devices air mock and have our on that data. reporting the It's sure sticky.

we that strategy? obviously Last any know And the I CEO, of commentary anticipate planned comments of question sort made would Any relative be CEO helpful. be adjustments or Thanks - for appreciate Is transition. we're comments what can the me can very that to much. I there transition? might sort with existing be made of aware it. on to that

Yeah. Sure. to talk that. strategy. our up the overall to mean, Glad really Board's I lined with

to we're the to we a and path build in forward. business solution this looking ability marketplace. is the continue so for move winning And success proving further very important as for device-to-cloud complete company on The offer

We solutions. are and our enterprise business, well sides solutions scale we of differentiated both to and look IoT

last do on what pretty the continued side. our about transformation execution. really been from rebuilding products go-to-market a to focus the our it's over in It's through two we So big years

been large has on into mostly market. heavy this focus execution continued And complete. lifting so And that growing and

lot can Kent. color. appreciate a the I Thanks

Yeah, thanks Todd.

further remarks. no I'll questions. management for the are call back closing There turn to

forward of Well, Glad to everyone great the look times. to today. in challenging and continued questions very engagement. of results thank share annual set best health much, with our wish you We these you

good we'll to what's especially and back our normal. hard things forward think But work back for results. our having to with of to with is normal and declining supply that end happening I customers the rates. and at to light We the tunnel there more getting continue getting some product look for vaccinations

thank So rest everybody. Cheers. good very your much a of you Have day.

call. conference today's concludes That

disconnect. now may You