SONM - Earnings call transcript Q3 2019 | Sonim Technologies, Inc.

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Operator

Good afternoon. Welcome to Sonim Technologies Third Quarter 2019 Earnings Conference Call. My name is Laura, and I will be your operator today.

Joining us for today’s call are Sonim’s CEO, Tom Wilkinson; Interim CFO, Bob Tirva; and Investor Relations Consultant, Tom Colton.

Following their remarks, we will open the call for questions.

the remind available this available for Investor section to recorded will in like www.sonimtech.com. Relations made at and replay of would everyone call that be the I website company’s via link

Now, I call Tom Sir, Colton. turn proceed. over to please like would to the

Tom Colton

the financial plans. future Thank business events, Please on strategy certain and include and will and information that Operator. today forward-looking future operating Sonim’s goals you, discussed its note call statements about

are and may subject risks, These quarter on report results filings, forward-looking statements. predictions statements these and difficult for stated and XX-Q only assumptions Form Certain and predict to those risks SEC are XXXX. including those assumptions cause to its June that implied from are ended the XX, uncertainties actual by are quarterly or of filings differ discussed to materially the in

undertakes live or of reflect of These circumstances date XX, this XXXX, management’s the law. forward-looking statements after required except events reflect conference Sonim by date obligation estimate and of statements as broadcast, the to October any as forward-looking no protections to this or belief, call, and update revise

just release the X-K Commission. non-GAAP reconciliations. and the a Sonim Form historical Exchange distributed press Information Securities and filed and release that GAAP to Additionally, with from includes has results press financial

Some of which this will also be discussed on call. in the company’s remarks

the to Tirva. Bob over call Bob? to Now, I turn like would

Bob Tirva

today. for available issued Relations a This XXXX, months Thanks, Tom. our the which September nine we Welcome and our website. of thank of our is everyone quarter ended morning and copy us press joining section Investor third release for a you announcing in results XX,

which take but like will of we the we announced details earnings address this team, our to our morning. through to financial to first, results, release In moment change management the a in our few moments, I’d a go

to joining know Chief you me last Directors Officer. Tom, the sure Board Sonim’s is new has has who will I’m moment call replaced whom, turn just today Executive Wilkinson and Tom now call as a many I Bob of in on over CEO. of the As appointed year the

been Bob has CEO he Sonim served since since as company’s XXXX. and has the with XXXX

Over course years instrumental growing has guide development He the and led in its business. the this he here, years company through serving Board. longer though strategic as been many the of to he Sonim year. Bob of of as a to traded a continue And will will to in company’s in be the his May early leadership helped publicly this advisor CEO, play a no team part transition

the years of like entire of service behalf management future Board endeavors. for team, On our Directors of his Bob would thank commitment his many to Sonim’s for our organization, and and to I

We Tom. reins leadership he are a passes the transition looking to forward as to successful

Sonim. successful leadership positions years to level Amherst experience many and Tom highly of his brings relevant CEO NASDAQ including held corporation. a career held company a of and and Throughout he listed has privately CFO is which Holdings, of management C multiple CFO

on traded relevant Zebra formerly in CEO handheld maker Xplore Technologies August and XXXX. rugged NASDAQ. was of organization, Tom the tablet directly the which most was of scale Technologies, our to Tom of Perhaps to sold successfully Xplore and which a devices,

but retain of were eager and Interim time and fortunate After CEO join Corporation. this of a only in appointed XXth available find team. Xplore, the Sonim CEO Tom place successful the to was right Cipherloc Cipherloc we time, On permanent year, to sale the right Chairman October of the CFO not to at -- move

public emerging consulting companies, as pre-IPO For background, his a and growth firm focused as those who to well of CPA. professional are Tom’s you about as curious experience his full on learn including

Investor the his so do our reading bio, Relations which is in can now section You website. by of

he of and we technology prior record to strategy track Sonim our long sectors. business companies both take a expertise a to is government sell developed the experience and has into are that His relevant the career Tom new say, will successfully confident integral the commercial develop directly to leading it suffice business be to that and over implement next our his has growth course level. to helping of But

And with a to that, I’d to turn words. the briefly over call to few Tom? like say Tom

Tom Wilkinson

was variety I in speed relatively device that this getting of on for rugged premier to will the you a business. Thank Sonim, kind driving the intricacies I up that are is the in believe because trends position as growth capitalize robust the on introduction, I I’m a keep attracted brief to of company Bob. to market.

the juncture much to stage the history while I’m a critical shareholder its drive as full as company in potential in provider development solutions mobility its navigate forward We are helping it’s leading of company, and a looking long-term very unique ultra public company’s to rugged value. realizing

plan for XXXX the management formulate beyond. will days, Over I next XX and refresh team the a and

geographic product as strategy. our as our be markets, considering go-to-market will offerings, well users, overall We our our target

We will in emerge as to as the its leader a on position solidify device company rugged path process that from a a market.

deliver guiding was on by a result market. running Sonim in flexible My that While to a belief that and the hard Xplore We principles organization. it’s were expectation I development those will -- demanding capacity, of manufacturing lean equally at favorable create and focused cost-efficient application while products results. worked the and and at I

at point. strong have customers have us this to commitment We a the gotten who

don’t have by in we regard. change first Our the current and optimized use been community devices responder that plan any for

any we Additionally, of the growth been crucial changes. don’t our support has plan partners carrier and our to

competency However, bottomline to in to is profits. that need infrastructure more. topline even beyond most important is we and and lean growth delivers organization core we do expertise community, effective technical Overall, and providing have responder the what first be that our devices for our

With that, over Bob? now will back it I Bob. to turn

Bob Tirva

Thank you, Tom.

certain metrics brevity, of results for providing of still sake for the my months focus year. discussion the our first XXXX, the to of nine on quarter going while For third I’m the financial

were first earnings XXXX we of the section available this the release website. results our in Relations nine included which Investor months financial morning, the of issued in is complete Our for

to third was turning the the in The results XPX and decreased financial phone third revenues quarter. last mind, in that with primarily sold the of to QX decrease to quarter million in net XXXX $XX.X to attributable the revenues of for smartphone from XPX XX% Net volumes year. for million $XX.X Now lower carriers. for U.S. feature

approximately quarter QX increased sales unit sold in XX,XXX to the in X% XXXX Total to of units compared XXXX. third units, approximately XX,XXX of

smartphones, With accounting in for unit approximately XXXX, to both sales, the the the the QX XX% in of of represented XX% XPX primarily periods. about XPX volume remainder introduction compared QX higher of with phones XXXX feature of in

to related XX% aging XXXX. million first and or finished for of $X.X attributable mix XX% XXXX goods, a of last quarter nine revenues to reserve as net of of million or was one-time The for in adjustment months QX QX $XX.X a the to Gross materials of profit the in XX% revenues of third of as Gross net well primarily product profit to the inventory net $XX.X increased of decrease gross or million revenues. percentage XXXX million of from to year. compared decreased profit XX% different $X.X X%

The operating expenses, $XX.X QX compared we of all total year. operating departmental were QX XXXX expenses million in $XX.X over $XX.X XX% million, third to our expenses non-GAAP operating of increase as year. with areas million, commensurate were employee last during Looking On our was spread at across for our revenue of the basis, last a expanded growth period. increase our the quarter a base

a common or attributable share $X.X net $X.XX common metrics, now basic net to the attributable basic XXXX to and of loss This QX loss of to of and quarter third loss share. per million our or profitability million $X.X diluted to Turning compares year. for per of the last shareholders diluted in $X.XX shareholders the totaled

shares EPS and calculations QX XX.X QX XXXX. on XXXX based million for shares for of of million are X

attributable period, common which nine-month shareholders totaled XX.X per million $X.XX million For $XX.X the shares. or basic share, diluted to loss on based and is net

$X.X primarily a quarter the non-GAAP $X.X million quarter compares restructuring EBITDA EBITDA, third was $X.X XXXX. to of loss and third attributable of nine the in $X was $X.X loss the totaled for for in in increase million to common to of XXXX EBITDA one-time million, loss million. Adjusted due of net adjusted decrease of of an metric charges a which million. months XXXX The Adjusted gain shareholders a of

balance for million end $XX.X As sheet, the of we hand. on had at the equivalents cash quarter, the cash of and

million, our Our is accounts quarter receivable averages. historical was at for line the in $XX.X which with

decided earlier today, release press has providing company of suspend the guidance. our forward-looking its in financial practice to indicated we As

mentioned, XXXX the days, management As the formulating attention Board to team the will our new devote XX Directors the plan. next operating of over of a Tom and course

the of along the subsidization in an are Sonim locations the and ability efforts previously issues. retail we progressing, to and planning provide accurate leadership impacted and with These changes to our near-term continuing financial senior disclosed placement of issues results. are other carrier drive forecast address team to our technical our our have in of phones phones recent While

your line are today. Operator? we to for time all for And questions. ready you Thank the now open

Operator

Thank first from B. FBR. will our you. Riley from question [Operator Instructions] Well, come Silver Zack

now live. is line Your

Zack Silver

taking all, One, first Tom, the congrats for new for of the question. Okay. role. Great. Thanks on

share. for of was the around they ultimate when it Zebra versus Looking you the a Xplore at assumed price company role, the $X.XX share acquisition share CEO trading bought a $X

opportunity here, Thanks. similar Just wondering if similar you upside? see

Tom Wilkinson

predictions approaches worked and or is stock you for I and -- value. specifically the excellent promises operate are course, that know wants never do products, price a things to shareholder certain deliver Of do, products organization. any prices. creating always those there at me about value that have reasonable lean in a speak creating to I in And develop deliver there market value is have What should

best the me that’s guess, to I for that So, question. way answer

Zack Silver

which the devices. if Okay. buckets placement, carrier with store on, one of of to more break these guys you retail take a are little which think, think might been down the the term then I us, immediate longer technical for these of which these any I do of some have issues and permanent Can business? then, headwinds subsidy, issues major already you three have for fixed, just the of if could, fixable in or be headwinds, And and bit going also, are

Tom Wilkinson

I any the of end are think timing. sort permanent headwinds, headwind. just, that the are anything answer really little with of to So and that way is I’m want I to best answer don’t me whether not these answer to think it there the regard is, of to it’s anything game don’t I for too early a in permanent a -- very as

we are confident you listed. things to assure have of in solutions I you But the that that all

I to detail I and settled to will speak. be I think, be I answer next in think time, with able I time -- we more will more able question once spend that

Zack Silver

Sprint more, one announced, if the comment, I I deepening you around the carrier and But some they T-Mobile, on their yours. there comments of think of I wondering were T-Mobile-Sprint just just safety Got recognize they into then, around week it. you is can T-Mobile? customer a that make And already exposure any think, public last recently can noise with and sort opportunity merger

Tom Wilkinson

Yeah. really our speak to especially where our name I of for offering typically space only the truly and prohibited we not so this interactions public from with that. customers in Obviously, safety. by is discussing, can’t are our device them, optimize. mean, It’s strongest any I

for be our seriously anybody safety to natural taking who be would it phones. public is on focused So

Zack Silver

you it. much. Thank very Got

Operator

Street. Your the Please Thank Lake will come you. next line question [Operator from from Jason of proceed. Instructions] Smith

Jason Smith

my taking to Hey, issue subsidy up of I questions one replacement you on regarding guys. the and retail Thanks previous just technical store issues. issue, for questions. the follow want the

improvement when Just need ago or was progress addressed? be need there been any to has believe if seven they on any those light all if still and or weeks issues, first of these came to clarification,

Tom Wilkinson

leave great has I There great regarding really leave progress been can’t in I all there been has areas. can a of timing. -- of and it deal at it of a But I express that. anything No. deal kind progress

Jason Smith

of comment, helpful. the competitive challenges seen if just here significant could you if the you faced with changes That’s the near-term? wondering in some in have landscape Okay. any then, you And No.

Tom Wilkinson

of market the makers entering market… which in people devices their the other existing terms change or aspect mean of You or

Jason Smith

of Both comment you can on?

Tom Wilkinson

…or all of that.

the it working we than first seems that achieve been I -- are, Okay. in are entries I on are not would devices lower market I’d mean, say, focused at at a level particularly has some the there to community. and what ruggedness that certainly Well, responder all

and to see ruggedness There was up-sell range more into focused environments that broad to comes that effort a of consumer happen. then try I if tougher entrants the rugged new and to when on an a make seem and it they guess be can

that of don’t lot Band-XX for into some when also of The nature they with some to them higher. they them coming them prices market But feature example, have device. entering are are do our the FirstNet, astoundingly of comparable people Most a reach push-to-talk, do. for in bringing a of are prices our our do

I on therefore, them on really to where the market, working us, we don’t the carriers so, focused consider competition of part And don’t reach them which plane. They a are structure. competitive to be different to the make seem also through different operating

So then... -- and

Jason Smith

Okay.

Tom Wilkinson

The here one little thing more is it. I on me I a -- would -- thing one color put let

is. whether It’s because it’s the rugged market. tremendous regardless it’s that think I truly important indication as large how can, device word using much an of they of a up, everyone’s hold sector as their this is

when or the people work that trying computerization to around It’s that’s first ago their necessitates time work. again. environment talking proven And a running which paper we better about before it create work are of do out and attempt that to rugged. And pad time wasn’t yellow a as long now something

think, there is verifies So people market and to the us. more how opportunity just is it’s are what this for important and further rugged, coming I more

Jason Smith

in and And for into with solutions portfolio. has I broader know last That’s coming previously about opportunity Okay. just in, how into incorporating the that and I curious me helpful. the software the jump company market? view from one you you the will product talked queue. Tom, that opportunity back

Tom Wilkinson

as up that catching on far got definitely Yeah. as do I opportunity. lot to a have

So to we to defer opinion successful what really I’m be on just point, got I that -- and this in because I can it I think my at what see into will have do area. there that get is, optionality

Jason Smith

Okay. Thanks a lot guys.

Operator

you. Thank

Galinko Securities. from question next Please National Your come from proceed. will Matthew

Matthew Galinko

results. the for remarks, any update can on expanding taking I did and Mainland your Thanks. question. but on progress of Good prepared have impact QX afternoon And was thanks in any you I material also didn’t tariffs -- Hey. my hear on outside manufacturing us China?

Bob Tirva

Bob. will the to is been impact tariffs comment an So, I There on this hasn’t side. us.

it produced initiation to products has date tariffs the before QX. QX enough and through Sonim make

on to tariffs and year. really comment relates will And no to the so there’s impact I Tom? next let manufacturing the more Tom

Tom Wilkinson

need I But can to the another go. a we come be into to big that Yeah. things figure always mean of yet is the I this are out, one now that want the It’s and options tariffs, things big about come there. very to have which I making company. and related out world careful long-term decisions like

chain, we that build in a manner, and products need get to think we supply place our can I a labor. that in quality -- we support consistently quality need overall to

best like good if think producing the start then we I we out job get devices, way we to in our do with going so a in that, can layer things So forward. that done to can this figure tariffs

Matthew Galinko

but impression your did time Xplore you life? just And did have you. your company or of in Tom, know Thank of general Sonim kind come you up at against prior ever question, head-to-head an maybe it. Got the then, in

Tom Wilkinson

in the We Xplore never that which for was made introduced time all was United kind at competed. all mean, was device that a wasn’t at our company. something Europe. and carrier had foremost competitor Sonim. competitor certified not exactly States not Wi-Fi X-inch against, first and a of was it it tablet was I at and the in We It going a against use possibly device,

but relationships bid company. we I of of all we Sonim. And never the no aware had So -- against was it.

particular in guess, kind did any opinions, deal form I companies said, of device have I just existed. that really interest great any and I of rugged -- a So I didn’t

to that worldwide XXXX phone market. I mean, was working in I we cell At time $X.X at was that business. what Sonim billion a was I clearly, aware able million $XXX in business a rugged in that were wasn’t participate -- Xplore in and worldwide

intriguing get always was an into space. So opportunity it to that to me

your So answers question. hopefully that

Matthew Galinko

you. Thank

Operator

time question-and-answer concludes Thank this you. the At session. this

to Sonim’s call sonm@gatewayir.com. the question Wilkinson over If now closing at taken, I for his turn to like not back may was your would team Investor remarks. you contact Relations Mr.

Tom Wilkinson

call. investors thank partners and joining Operator? on We for to this our employees, today’s for you transition. Thank our our our us supporting want us through customers,

Operator

for joining third for us XXXX you quarter earnings today Thank Technologies call. Sonim conference

now may disconnect. You

Sonim (SONM) 3 Nov 192019 Q3 Earnings call transcript