KORE(US:KORE)2025-11-12 21:12Revenue Performance - Total revenue for the three months ended September 30, 2025, was $68.692 million, a slight decrease of $228 thousand or less than 1% compared to $68.920 million in the same period of 2024[113] - Services revenue decreased by approximately $1.136 million for the three months ended September 30, 2025, primarily due to the sale of certain intangible assets[113] - Products revenue increased by approximately $0.908 million for the three months ended September 30, 2025, driven by additional volume from key customers and SIM shipments[114] - For the nine months ended September 30, 2025, total revenue was $212.084 million, a decrease of $679 thousand or less than 1% compared to $212.763 million in 2024[110] - Services revenue for the nine months ended September 30, 2025, decreased by approximately $6.315 million, primarily due to the sale of certain intangible assets and a decrease in revenue from CEaaS[115] - Products revenue increased by approximately $5.636 million for the nine months ended September 30, 2025, primarily driven by additional volume from key customers[116] - IoT Connectivity revenue for the three months ended September 30, 2025, was $56.747 million, relatively flat compared to $56.721 million in 2024[116] - IoT Solutions revenue decreased by approximately $0.254 million for the three months ended September 30, 2025, primarily due to the sale of certain intangible assets[119] Cost and Expenses - For the three months ended September 30, 2025, the total cost of revenue was $30,743, a slight increase of $24 compared to $30,719 in 2024, with a year-over-year change of 0%[123] - The cost of services decreased by approximately $0.4 million (2%) for the three months ended September 30, 2025, primarily due to reduced labor costs[124] - The cost of products increased by approximately $0.4 million (5%) for the three months ended September 30, 2025, driven by increased hardware sales to key customers[124] - Selling, general, and administrative (SG&A) expenses for the three months ended September 30, 2025, were $28,457, a decrease of $1,001 (3%) compared to $29,458 in 2024[131] Profitability Metrics - EBITDA for the three months ended September 30, 2025, was $9,786, an increase from $7,453 in 2024[143] - Adjusted EBITDA for the three months ended September 30, 2025, was $14,530, compared to $12,986 in 2024, reflecting an increase of $1,544[143] - Overall gross profit margin for the nine months ended September 30, 2025, was 36.3%, a decrease from 37.5% in 2024, while Non-GAAP profit margin was 55.5%, slightly down from 56.2%[148] - Services revenue for the three months ended September 30, 2025, was $57,068,000, a decrease from $58,204,000 in 2024, with a gross profit margin of 41.8% compared to 39.2% in the previous year[148] - Products revenue increased to $11,624,000 in the three months ended September 30, 2025, from $10,716,000 in 2024, with a gross profit margin of 18.2%, up from 15.0%[148] - IoT Connectivity revenue for the three months ended September 30, 2025, was $56,747,000, slightly up from $56,721,000 in 2024, with a gross profit margin of 40.9% compared to 39.0%[152] - IoT Solutions revenue decreased to $11,945,000 in the three months ended September 30, 2025, from $12,199,000 in 2024, but gross profit margin improved to 22.9% from 18.8%[152] - Non-GAAP profit for services was $34,467,000 with a Non-GAAP margin of 60.4% for the three months ended September 30, 2025, compared to $35,253,000 and 60.6% in 2024[148] Tax and Income - The company recorded an income tax recovery of $3.6 million due to the impact of the One Big Beautiful Bill Act signed into law on July 4, 2025[105] - The income tax benefit for the three months ended September 30, 2025, was $(4,589), an increase of $4,177 (1,014%) compared to $(412) in 2024[136] - The effective tax rate for the three months ended September 30, 2025, was 26.5%, an increase of approximately 24% compared to 2.1% in 2024[136] - The company recorded a decrease in the valuation allowance of $3.6 million during the three months ended September 30, 2025, due to the enactment of the OBBBA[139] Cash Flow and Liquidity - Net cash provided by operating activities increased to $8,038,000 in 2025 from $7,066,000 in 2024, resulting in a free cash flow of $1,053,000 compared to a negative $5,111,000 in the previous year[145] - Cash provided by operating activities for the nine months ended September 30, 2025, increased to $8.038 million from $7.066 million in 2024, primarily due to a lower net loss and improved timing of receipts and payments[195] - Cash used in investing activities decreased to $6.985 million in 2025 from $12.177 million in 2024, mainly due to lower additions to intangible assets[196] - Cash used in financing activities decreased to $1.608 million in 2025 from $3.386 million in 2024, primarily due to lower scheduled principal payments on the Term Loan and reduced share repurchases[197] - As of September 30, 2025, the company had approximately $19.3 million in cash on hand and $25.0 million available on the revolving credit facility[200] - KORE's liquidity requirements are primarily met through non-operational sources, with uncertainty regarding long-term liquidity needs beyond one year[175] Debt and Financing - Total long-term debt as of September 30, 2025, was $295.325 million, slightly down from $295.661 million as of December 31, 2024[176] - The Company has a senior secured term loan of $185 million and a revolving credit facility of $25 million, with a maturity date of November 15, 2028[177] - The Series A-1 preferred stock has a liquidation preference of $1,000 per share and accrues dividends at a rate of 13% per year, compounded and payable quarterly[187] - The Total Net Leverage Ratio is set at 6.25:1.00 for quarterly periods ended March 31, 2024, and June 30, 2024, reducing to 5.25:1.00 for periods ending December 31, 2025, and thereafter[182] - The Backstop Notes, totaling $120 million, bear interest at a rate of 5.50% per annum and are due September 30, 2028[183] Operational Changes and Future Outlook - The company plans to exit two facilities in Q4 2025 as part of its restructuring efforts to focus on core service offerings[106] - The company has discontinued the use of Total Contract Value (TCV) as a key operational metric effective beginning in fiscal year 2025[169] - As of September 30, 2025, the sales funnel included 1,047 opportunities with an estimated Annual Recurring Revenue (eARR) of approximately $80 million[168] - Average Revenue per User (ARPU) was $0.94 for the three months ended September 30, 2025, down from $1.01 for the same period in 2024[172] - The company does not plan to issue any Inducement Awards in the future[193] - The company’s critical accounting policies and estimates have not materially changed since December 31, 2024[201] - The company expects quarter-to-quarter GAAP earnings volatility due to various factors, including changes in impairment assessments regarding goodwill[202] Customer Metrics - Total Number of Connections reached 20.5 million as of September 30, 2025, up from 19.7 million at the end of 2024, with Average Connections Count for the three months ended September 30, 2025, at 20.4 million compared to 18.6 million in 2024[160] - KORE's DBNER was 98% for the twelve months ended September 30, 2025, compared to 95% for the twelve months ended September 30, 2024[166] - Dollar-Based Net Expansion Rate (DBNER) reflects the growth from existing customers, indicating effective cross-sales and retention strategies[161]