KORE(KORE)2024-04-15 20:07Revenue Performance - IoT Connectivity revenue increased by approximately $26.5 million, primarily driven by the acquisition of Twilio's IoT business, along with organic growth and increased connectivity consumption [307]. - IoT Solutions revenue declined by approximately $18.3 million due to reduced demand from major customers and the completion of a significant LTE transition project [308]. - Total revenue for the year ended December 31, 2023, was $276.61 million, an increase of 3% from $268.45 million in 2022 [417]. - Service revenue increased to $212.65 million, up 12.5% from $188.99 million in the previous year [417]. - Product revenue decreased to $63.97 million, down 19.5% from $79.46 million in 2022 [417]. - The estimated potential Total Contract Value (TCV) in the sales funnel increased to over $545 million as of December 31, 2023, compared to $434 million in 2022, reflecting a growth of approximately 25.6% [354]. Financial Metrics - Adjusted EBITDA for the year ended December 31, 2023, was $55.6 million, down from $62.8 million in 2022 [321]. - The net loss for the year was $167.04 million, compared to a net loss of $106.20 million in 2022, representing a 57% increase in losses [417]. - Basic and diluted loss per share for 2023 was $1.99, compared to $1.40 in 2022 [417]. - Total operating expenses for 2023 were $266.81 million, compared to $224.67 million in 2022, reflecting a 19% increase [417]. - The Company recorded a goodwill impairment loss of $78.3 million in Q3 2023, following a loss of $58.1 million in Q4 2022 [368]. Cost Management - Total cost of revenue for the year ended December 31, 2023, was $128.6 million, a slight decrease of $0.6 million compared to $129.2 million in 2022 [311]. - Selling, general, and administrative expenses decreased due to the termination of certain agreements, resulting in reduced costs for technical assistance and office lease [318]. - Selling, general, and administrative expenses incurred with affiliates decreased by 86% year-over-year, from $2.6 million in 2022 to $372,000 in 2023 [345]. - The cost of services as a percentage of revenue decreased from 64.4% in 2022 to 61.2% in 2023, attributed to the lower margin services from the Twilio acquisition [311]. Debt and Equity - The Company's total long-term debt and other borrowings, net, decreased to $296.1 million in 2023 from $413.9 million in 2022, a reduction of approximately 28.4% [357]. - The company entered into a stock purchase agreement to repurchase 5,000,000 shares of common stock for approximately $2.9 million, completed on December 13, 2023 [303]. - The maturity date of the Credit Facilities is November 15, 2028, with principal payments of approximately $0.5 million due quarterly [333]. - Cash provided by financing activities was $18.9 million in 2023, compared to cash used of $4.7 million in 2022 [364]. Asset and Liability Changes - Total assets decreased to $586.98 million in 2023 from $688.68 million in 2022, a decline of approximately 15% [415]. - Total liabilities increased to $550.01 million in 2023, up from $508.01 million in 2022, indicating a rise of about 8.3% [415]. - Stockholders' equity significantly decreased to $36.97 million in 2023 from $180.67 million in 2022, a drop of approximately 79.6% [415]. Cash Flow - For the year ended December 31, 2023, cash used in operating activities was $6.4 million, a decrease from $16.4 million in 2022 [342]. - Net cash used in operating activities was $(6,419,000) in 2023, a decrease from $16,356,000 provided in 2022 [420]. - Net cash used in investing activities decreased to $(20,230,000) in 2023 from $(62,547,000) in 2022 [420]. - The company reported a net decrease in cash and restricted cash of $(7,570,000) for the year, compared to $(51,336,000) in 2022 [420]. Goodwill and Impairment - The company reported a goodwill impairment of $78.26 million in 2023, compared to $58.07 million in 2022 [417]. - Goodwill is tested for impairment annually on October 1 or when circumstances indicate that the carrying amount may not be recoverable [465]. - Goodwill impairment was recorded at $78,257,000 in 2023, up from $58,074,000 in the previous year [420]. Operational Insights - The total number of connections increased by approximately 3.3 million as of December 31, 2023, largely due to the acquisition of Twilio's IoT business [326]. - The total number of connections at period end increased to 18.5 million in 2023 from 15.0 million in 2022, representing a growth of approximately 23.3% [352]. - The average connections count for the period rose to 17.3 million in 2023, up from 15.2 million in 2022, indicating a year-over-year increase of about 13.8% [352]. - The Company has determined it operates in one operating segment, with financial information reviewed on a consolidated basis [467]. Revenue Recognition - Revenue from IoT Connectivity consists of monthly recurring charges (MRCs) and overage/usage charges, with contracts generally being short-term in nature [469]. - The Company recognizes revenue for MRCs and overage/usage charges over time as performance obligations are satisfied, typically starting when an enrolled device is activated [469]. - Contract liabilities, or deferred revenue, are recorded when the Company receives consideration in advance of performing a service, primarily related to connectivity monthly recurring charges [499]. - The Company estimates the transaction price based on expected amounts to be received, which may include fixed or variable consideration [497]. - Product sales to IoT Connectivity customers are recognized when control is transferred, typically upon shipment of the product [495]. Accounting Policies - The Company applies ASC 606, which includes costs of connectivity, hardware products, materials, and direct labor in the cost of revenue [523]. - The Company capitalizes certain costs of platform and software applications developed for internal use as intangible assets, amortized over their useful lives [485]. - The Company does not accrue for contingent losses that are considered reasonably possible but not probable, disclosing the range of such losses if estimable [491]. - The Company plans to change its method of depreciation for long-lived assets to the straight-line method effective January 1, 2024 [426].