KORE(US:KORE)2021-11-16 03:10Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $67.9 million, a growth of 22.8% compared to $55.3 million in Q3 2020 [18] - IoT connectivity revenue was $41.5 million, representing 61% of total revenue, growing 4.9% from $39.6 million a year ago [18] - IoT solutions revenue was $26.3 million, accounting for 39% of total revenue, with a significant growth of 68.2% from $15.7 million a year ago [18] - Gross margin percentage decreased to 48% from 54% year-over-year, primarily due to accelerated growth in IoT solutions which have lower margins [23] - Adjusted EBITDA for Q3 was $15.9 million, slightly up from $15.4 million in the previous year [23] Business Line Data and Key Metrics Changes - IoT connectivity services, primarily CaaS, continue to be the largest revenue contributor, while IoT solutions are trending towards 32% of overall revenue in 2021 [7][18] - Total connections reached 13.6 million, up 23.6% year-over-year, indicating strong growth in IoT connectivity services [19] - The dollar-based net expansion rate (DBNER) was 114%, up from 103% a year ago, indicating successful customer retention and growth [20] Market Data and Key Metrics Changes - The IoT market is projected to grow from less than $400 billion in 2020 to $7 trillion by 2030, and further to approximately $15 trillion by 2035 [8] - The number of IoT devices is expected to increase from roughly 12 billion in 2020 to approximately 75 billion by 2030 [8] Company Strategy and Development Direction - The company is focused on becoming a leader in the IoT market, with a five-year transformation plan that includes strengthening its core IoT connectivity business and launching new services [26][27] - The strategy includes launching industry practices, with connected health and fleet management already initiated, and plans to expand into three additional sectors [27] - The company aims to leverage eSIM technology as a key enabler for IoT growth [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exceeding combined revenue projections for 2021 and 2022, despite challenges from supply chain issues and technology transitions [21][25] - The company anticipates that the shutdown of 2G and 3G networks will lead to improved growth rates post-2022 [25] - Management highlighted the importance of addressing supply chain constraints to meet pent-up demand in the market [32] Other Important Information - The company reported a net loss of $4.5 million for Q3 2021, an improvement from a loss of $5.6 million a year ago [23] - Cash and restricted cash increased to $73.1 million as of September 30, 2021, compared to $11.9 million a year ago, primarily due to proceeds from a business combination [24] Q&A Session Summary Question: What is driving the confidence to beat guidance for 2021 and 2022? - Management indicated that confidence stems from solid business execution, ARPU stabilization, and overall business momentum, despite supply chain issues impacting growth [30] Question: Can you elaborate on the ARPU headwind and its implications for 2023? - Management acknowledged that while there may be minor headwinds due to delayed transitions, they expect to largely overcome these challenges by the end of next year [32] Question: How has the customer case study impacted revenue growth? - Management noted that they benefit from operating leverage, but agreed to a price reduction with their largest customer, which has affected margins [38] Question: What is the outlook for gross margins going forward? - Management indicated that while they expect to invest for growth, this may impact profitability in the near term due to increased public company costs and other factors [48] Question: Are there specific verticals moving faster than others in the pipeline? - Management highlighted that connected health is currently the most promising vertical, with ongoing efforts to launch additional industry practices [55]