KORE(US:KORE)2023-03-28 01:12Financial Data and Key Metrics Changes - Fourth quarter revenue was $62.4 million, a decline of 3% year-over-year, primarily due to significant revenue from the LTE transition project in the previous year and the impact of 2G/3G sunsets in the U.S. [5][10][12] - Adjusted EBITDA for the fourth quarter was $15.7 million, an increase of approximately 20% compared to the same period last year, with an adjusted EBITDA margin of 25.1% [9][101]. - Full year 2022 net loss was $105.4 million, which includes a goodwill impairment charge of $56.9 million [10][119]. Business Line Data and Key Metrics Changes - IoT connectivity revenue for the full year increased 4% to $175.9 million, while IoT solutions revenue increased 16.5% to $92.5 million [12][103]. - In the fourth quarter, IoT solutions revenue declined 11% year-over-year to $18.7 million, largely due to the previous year's LTE transition project revenue [103]. - Dollar-based net expansion rate (DBNER) for the 12 months ended December 31, 2022, was 92%, down from 122% in the prior year [8]. Market Data and Key Metrics Changes - The company noted that approximately 60% of total revenue is derived from connected health, which is the largest industry vertical [15]. - The company expects to expand its presence in other targeted industry verticals to increase total addressable market (TAM) and drive further growth [15]. Company Strategy and Development Direction - The acquisition of Twilio's IoT business is expected to enhance KORE's eSIM leadership position and expand its deploy, manage, and scale value proposition [97][112]. - The company aims to be one of the few large IoT hyperscalers following market consolidation, leveraging Twilio's capabilities to optimize customer acquisition costs [112][114]. - KORE is focusing on building preconfigured solutions and expanding its offerings in analytics and massive IoT edge computing [86][112]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the revenue and adjusted EBITDA guidance for 2023, projecting revenue in the range of $300 million to $310 million despite headwinds from 2G/3G sunsets and the LTE transition project [116]. - The company anticipates that the worst is behind them and expects organic growth in the mid to high single digits for 2023 [48][116]. - Management acknowledged the impact of macroeconomic conditions on sales cycles, noting a shift towards cost optimization and efficiency-oriented opportunities [18]. Other Important Information - The company reported a significant increase in operating expenses due to a non-cash goodwill impairment charge and other operational costs associated with being a public company [10][104]. - Cash and cash equivalents at the end of Q4 2022 were $35 million, down from $86.3 million at the end of Q4 2021, primarily due to slower collections [105]. Q&A Session Summary Question: Could you give some color on the sales cycle? - Management noted a shift in customer focus from top-line growth to cost optimization and efficiency due to macroeconomic concerns, but expressed confidence in their business model's resilience [18]. Question: How could the supply chain loosening help gross margin and revenue growth this year? - Management indicated that while there are signs of supply chain improvement, challenges remain, and they expect gradual recovery over the next 12 to 18 months [19]. Question: Are there metrics to discuss regarding gross margins and customer installations within the Twilio base? - Management highlighted the strategic fit of the Twilio acquisition and its potential to enhance KORE's offerings, but refrained from disclosing specific metrics until the deal closes [22]. Question: What is the outlook for 2023 revenue guidance? - Management provided guidance of $300 million to $310 million for 2023, factoring in the expected contributions from the Twilio acquisition [116]. Question: How do you feel about the overall trajectory in the pace of IoT deployment? - Management expressed optimism about normalized growth rates and the potential for market share gains, despite the challenges faced [52].