KORE(US:KORE)2023-11-12 16:17Financial Data and Key Metrics Changes - Third quarter revenue increased by 4% year-over-year to $68.6 million compared to $66.1 million in Q3 2022 [12] - Adjusted EBITDA for Q3 2023 was $14.2 million, a decline of approximately 6% year-over-year [30] - Adjusted EBITDA margin decreased by 220 basis points to 20.6% from 22.8% in the prior year [10][30] - The company revised its 2023 revenue guidance down to a range of $280 million to $290 million from the previous range of $300 million to $310 million [24][59] Business Line Data and Key Metrics Changes - IoT Connectivity revenue increased by 27% year-over-year to $55.2 million, including the first full quarter of revenue from the Twilio IoT acquisition [12][22] - IoT Solutions revenue declined by 41% year-over-year to $13.4 million due to customer order deferrals [26] - Gross margin for IoT Solutions decreased by 174 basis points year-over-year to 26.9% [27] Market Data and Key Metrics Changes - Total connections at the end of Q3 2023 reached 18.9 million, an increase of over 300,000 from Q2 2023 [54] - The dollar-based net expansion rate (DBNER) for the 12 months ended September 30, 2023, was 96%, down from 100% in the prior year [14] Company Strategy and Development Direction - The company announced a refinancing of approximately $300 million term loan, reducing the first lien leverage ratio from roughly 5x to 3x estimated adjusted EBITDA [6][31] - KORE is focusing on driving organic top-line and adjusted EBITDA growth while removing debt overhang concerns [7] - The company is reallocating costs based on current priorities, expecting approximately $10 million in operating expense savings in 2024 [34][67] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment is impacting deployments, particularly among larger Connected Health customers [44][97] - Despite order deferrals, the company expects year-over-year revenue growth in Q4 2023 [50] - Management expressed confidence in achieving double-digit revenue growth in 2024, supported by an increasing global sales pipeline [61] Other Important Information - KORE received a 2023 IoT Evolution LPWAN Excellence Award for its innovative LoRaWAN solution, KORE LPHub [21] - The company is collaborating with GrandPad to support seniors with IoT connectivity solutions [8] Q&A Session Summary Question: How is the macro environment affecting business deployments? - Management acknowledged that while the macro environment is slowing some deployments, new business bookings remain strong, particularly among larger Connected Health customers [44] Question: Can you elaborate on the order deferrals? - Management indicated that the order deferrals primarily involve the same larger Connected Health customers, with some pushing deployments into 2024 due to various operational challenges [74] Question: What is the status of the refinancing? - Management confirmed that the refinancing is fully committed and expected to close shortly, with no anticipated conditions remaining [101] Question: How is the Twilio IoT business performing? - Management reported that the Twilio IoT business is performing below initial expectations but is expected to regain momentum as the integration progresses [112]