KORE(KORE) - 2024 Q4 - Annual Report

Revenue Performance - Total revenue for the year ended December 31, 2024, was $286.1 million, representing a 3$276.6 million in 2023[170] - Revenue from IoT Connectivity services increased by approximately $24.5 million, or 12$226.9 million in 2024, driven by the acquisition of Twilio's IoT business[173] - Revenue from IoT Solutions decreased by approximately $15.0 million, or 20$59.2 million in 2024, primarily due to reduced demand from major customers[174] - Services revenue increased by approximately $21.6 million, or 10$234.2 million in 2024, largely attributed to new customer business and increased connectivity utilization[171] - Revenue from IoT Connectivity for 2024 was $226,853 thousand, up from$202,393 thousand in 2023, with a gross margin of 41.0%[199] - Revenue from IoT Solutions for 2024 was $59,234 thousand, down from$74,217 thousand in 2023, with a gross margin of 31.4%[199] Cost and Expenses - Cost of revenue decreased by 2% to $126.2 million in 2024, with a notable decrease in the cost of products by approximately$13.5 million, or 29%[176] - Selling, general, and administrative (SG&A) expenses increased by approximately $10.8 million, or 8$140.0 million in 2024, driven by higher personnel-related costs[180] Profitability Metrics - Net loss for the year ended December 31, 2024, was $146,076 thousand, an improvement from a net loss of$167,042 thousand in 2023[190] - Adjusted EBITDA for 2024 was $53,138 thousand, slightly down from$55,550 thousand in 2023[190] - Non-GAAP Profit for 2024 was $161,089 thousand, representing a Non-GAAP Margin of 56.3$148,150 thousand and 53.6% in 2023[199] Cash Flow and Liquidity - Free cash flow for 2024 was $(3,549) thousand, an improvement from$(26,649) thousand in 2023[193] - For the year ended December 31, 2024, net cash provided by operating activities was approximately $9.9 million, a significant improvement from a net cash used of$6.4 million in 2023[236] - Cash used in investing activities for 2024 was $13.5 million, compared to$20.2 million in 2023, primarily for investments in property, equipment, and internally developed software[238] - As of December 31, 2024, the company had approximately $19.4 million in cash on hand, reflecting its liquidity position[242] - The company plans to defer cash payments of dividends on the Series A-1 preferred stock to preserve cash for other purposes[240] Debt and Financing - Total long-term debt and other borrowings, net, was$295.661 million as of December 31, 2024, compared to $296.109 million as of December 31, 2023[219] - The Company has a senior secured term loan of$183.150 million and backstop notes of $120 million as of December 31, 2024[219] - The Credit Facilities have a maturity date of November 15, 2028, with principal payments of approximately$0.5 million due quarterly[221] - The Series A-1 preferred stock has a liquidation preference of $1,000 per share, with a total carrying amount of$142.776 million as of December 31, 2024[231] - The Company issued the Backstop Notes at a rate of 5.50% per annum, due September 30, 2028[226] - The Total Net Leverage Ratio must not exceed 5.75:1.00 for the quarterly periods ended September 30, 2024, and December 31, 2024[224] - The Company has identified sources of financing that are believed to be adequate for meeting both short-term and long-term liquidity needs[218] Operational Insights - The company anticipates stable revenue from Connectivity verticals, while IoT Managed Services may experience volatility due to macroeconomic conditions[166] - The company has contracted with a new third-party administrator for 2025, expected to reduce administration costs on a per-employee basis[184] - KORE's DBNER was 95% for the twelve months ended December 31, 2024, down from 96% for the same period in 2023, indicating slightly more revenue from new customer wins[212] - The sales funnel included over 1,062 opportunities with an estimated potential TCV of over $312 million as of December 31, 2024, compared to over 1,600 opportunities with a TCV of over$545 million as of December 31, 2023[214] - The company plans to focus on strategic acquisitions and operational improvements to enhance liquidity and growth[192] Accounting and Valuation - EBITDA and Adjusted EBITDA metrics are utilized to evaluate ongoing operations, with adjustments made for unusual and significant items[187][189] - The company expects quarter-to-quarter GAAP earnings volatility due to various accounting estimates and assumptions, which may impact reported earnings[244] - The company recorded a goodwill impairment loss of $65.9 million in the second quarter of 2024 and$78.3 million in the third quarter of 2023, indicating ongoing challenges in asset valuation[250] Connection Metrics - Total Number of Connections increased to 19.7 million as of December 31, 2024, up from 18.5 million in 2023[206] - Average Connections Count for 2024 was 18.7 million, compared to 17.3 million in 2023[206] - ARPU was $0.97 for the three months ended December 31, 2024, down from$0.99 for the same period in 2023[216] Purchase Commitments - The total purchase commitments payable as of December 31, 2024, amounted to $58.0 million, with a significant reduction in the Google Cloud Platform commitment from$22.0 million to $10.9 million, or approximately 50.5%[241]