SONM - Earnings call transcript Q1 2020 | Sonim Technologies, Inc.

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Operator

Good afternoon. Welcome to Sonim Technologies First Quarter 2020 Results Conference Call. My name is Denial, and I will be your operator today.

Joining us for today’s call are Sonim’s CEO, Tom Wilkinson; CFO, Bob Tirva; and Investor Relations Adviser, Matt Kreps.

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 Matt Please Kreps. turn proceed. over to sir, like would to the

Matt Kreps

call XXXX. Thank and results to quarter first today's everyone Denial, the ended you, Sonim welcome for March XX,

website and available release distributed filed the sonimtech.com Securities a on with are documents press and Investors. Exchange has Those Sonim X-K Commission. under the Form

Information remarks its from statements and operating includes forward-looking plans. call release future financial certain historically financial will also the results, which and include that press call. about that some future discussed on note on and will of in goals Please events, discussed company's Sonim’s information today strategy this business

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

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

the Tom now that, call to I over with would to turn And like Wilkinson.

Tom Wilkinson

work related Part two that I parts, been a turnaround, pandemic. online. hello has fall of our responding months unanticipated joining what Bob an joining always last It's moving interesting and an call of and has part the the to COVID-XX process as of everyone team global and Sonim Matt, but you, clearly to lot a that Thank and three weeks. expected been from

the pandemic has extent not has many same been and not disruptive, for the the to way it but in been Sonim, COVID For companies. other

first and have immediately data and ours. connectivity devices In fact, spotlight government and and wide rugged industries such ranging that changes particular a put as in devices healthcare, mobile responder, education, on have the and decided remote mobile work, commercial

These design, responder quickly resources situations, to need clean often to or our instantly to where deploy home. wants to too do back and bring disinfected push-to-turn SCOUT industries Sonim last an the are new this function communicate and having and management and and In configurability and advantage virus ability ultra essential, the our in rugged The their people a mobile their station by the conditions, applications. integrated there's first as is critical thing devices. these our is to aggressively provided deployment

thorough clear ramping previously to the quarter the was well review It we a we use declining a Company. of December are and due complete as that other year disclosed, November carrier as with an trajectory major inventory on through first to customers. buildup this a delays As in we of revenue

cost reduction cost the of lean prepare due additional first would of ramping the to begin believe what could was benefit time and for The is second from move series impact awaited of revenue trend. favorable reversal we in to major begin to a customer. of period to show the that benefits with to when which believed of able a quarter implement actions we're again, we in Importantly, quarter, operating would that revenue the upward with that a expectation use to be

towards as process devices. we more our begin changes, locations. are a we tied made Looking R&D the we moving and distributed next forward, third increase changes expect we product XG headcount physical develop office variable or Sonim generation our workforce, to in in the spending have to which on offices leaner, The new to less of quarter, already

The in and pandemic our weeks notably during gross approximately facility forward. margin for impacted manufacturing has quarter. plan slightly our all resulted the to three improvements opportunity to going down first the timeline for shut being that delayed shown with Asia and in The how cost we work operations our COVID-XX on us responding for pandemic differently quarter. This lean

as Bob in will be arrived, model toward more market-driven from timing. and to measures, model the was forward. additional We not that mainly prior hopeful margin well and place quarter to business reflected and the quarter, have currently We're the the due continued as anticipate sequential results first growth as diversified second shifted a benefit in compared in proactive company fully quarter quarter the and gross going first away as from trough saving better in when the that first cost we I

on Having out as numbers some good come our Bob? quarter forward. first the detail this in I'll laid to review that is comments back with a framework, path point Bob then more more

Bob Tirva

press the Relations issued first XX, Thanks copy for announcing a our our March website. Investor release we on the Tom. available of a ended is This results quarter which XXXX, section of afternoon

with boarder attributable in XX-Q the than revenues of a expected Net of activity quarter ended first was revenues contract, $XX.X for carriers. to additional products minimum the and SEC Our quarter QX which net the slower first the will also to in ramp the of at be volume of on XXXX primarily road XXXX, our decrease million, filed shortly. decreased absence

ramps customer as these end from carriers previously, to their we've try discussed be inventory As anticipate unpredictable while quarter-to-quarter keeping low. demand, can product

an was QX. XX% of and well attributable of XXXX of upward inventory profit forward, our reserve the we driven a quarter adjustment. factory, for $X.X margins our unpredictability negatively that will first the to volume to additional million cost Going percentage shutdown decrease while or in decreased are which net this impacted revenues. in The few as feel primarily Gross we continue, trend COVID-XX gross sales as lower dynamics seeing

as QX for million expenses total gains of partial effect first year. we quarter and further the the ahead of cost last anticipate $XX.X focus we included continue were The XXXX quarter in operating lean operating to on operations. $XX.X our reduction cost activities Looking million of expenses, at efficiency compared

$XX we do anticipate be forward. partly million of per for of $X.XX going into mentioned, reduction operating loss loss totaled revenue quarter products partially or for net common share. basic by reinvested the will Net generation first expenses. next diluted gross the Tom lower XXXX shareholders margin, and of operating the savings reflected to loss increase profit The cost As R&D and offset

in the efficiency management on balance in of This our end funds as available have at we worked As reflects working in our positive sheet, to cash uncertainty. quarter, $X.X March cash million we bringing increased for period of capital economic in the $XX.X million. balance gain first generated the this cash preserve to

its to practice guidance of providing of decided Company of third as quarter forward-looking the last year. The suspend

sequential While presently we will the are anticipating second are show mentioned, not we the providing formal today, in and as that over gross quarter guidance margin revenue growth Tom quarter. first

T-Mobile changes requirement devices impact certified, will the we good as products been be to Finally, not. merger to Sprint note we in between of for of be T-Mobile Sonim Sprint, and a a has how do sold to our which unfortunately all quick are the because but stock recent anticipate our sold, on customer us,

basis. sale in us product T-Mobile engage available on year, headwind our with devices. to a a we sprint non-stock intend the our new be with offerings We next customers to expect do the generation cycle traditional current the later for in will to this for Although, be of next

I'll for now turn it Q&A. comments some back Tom it open additional Tom? for up over to before we

Tom Wilkinson

them him call investors a Thanks cost with quarter Bob. more doing third cutting. the of with we'll not have had but We've our simply presentation than since results,

During particular half XXXX. customer impact resolved a products to and this had time, a adoption our of have were technical our issues the key we plaguing the in delayed These of number last products. of that carrier

with and our being After resolution of ratings growing the those the improving quarter issues of and to restart from increase carrier we force customers. first devices, demonstrate XXXX, seeing the in quality acceptance of sell-through, and out sales able our are roll

for enterprise carrier shipments and beyond. QX in support North have larger increased engagement this largest to We our America's resulting in promotional an negotiated carrier, expectation of and

plan team expertise to bring with next Our rugged mobility, unique intend costs our and to lower our provide development be going to engage scale forward will platform our as develop We broader XG partners as well research the rugged by and production larger well end sought for as to to enabling as microprocessors, on voice maintaining on performance generation based purchasing. durability communications, ODM while data customers. and

LTE radio combine to we lower a with lower phone, believe common be path as as upgrade product costs communications current communications. costs such and compelling devices allowing This hybrid very accessory satellite production also mobile much well The facilitates ultra-rugged devices, products. alternative our for the derivative as marginal smartphone technology exciting that development should of rugged and or platform functionality

and creating and on phone to devices in on handheld cellular rugged by a and data current capabilities collection larger further we by single of features a devices devices operate costs of future traditional cell our will market. networks. reduce yet We devices By currently These rugged barcode a delivering as devices on multitude expand product R&D product plan to to we're platform markets. multiple costs leverage over rugged beyond to focused platform, those fulfilled offered what but compete such scanners, market is built believe Wi-Fi this demanded, not able in

with on midst the our the for in work and financial year very partners, opportunity center for progress the the future for We're years and trends, pandemic, on ahead. as but are the work made benefits In our current the working for customers changes all time come. the how than of in closing, a developments long-term exciting not hard business we doing for rugged and we the turnaround, exciting mobility capitalize and aspects are for more have next and we the to ever, front of to just these the

We're building potential, ahead. forward to We rugged full driving long-term look is a believe start value. is to on mobility progress good solutions, a of that leading on track realizing and its shareholder key Sonim off which to to I the that provider as

it to our will With turn that, I session. now operator for back the Q&A

Operator

question-and-answer of First now Riley B. Zack FBR. [Operator Instructions] Silver session. will We question from Please comes ahead. begin go the

Zack Silver

great. for the taking question. Thank you Okay,

expect first quarter. driven should over to quantify to the one The how help how on first Can impacting the we is And of gross that? trend just the the the you balance around, then margins impacted year? the goods cost factory shutdown much just of COVID

Bob Tirva

Hey, it's Bob. Zach,

the X quarters. So I XX% have margins our around traditionally last think, been over

the I the think were where indicator drop factory the we that's And, due to Shenzhen. of primarily in was good of historically. a shutdown

see, our margins that shutdown. but lower, maybe to So, bit was general majority going back the think little the I range, a you'd that

Zack Silver

to And just That's of T-Mobile clarify Okay. to kind that. the helpful. Sprint then just on

those T-Mobile towards of You devices, for are going working work the getting certified. for round next the towards you're to --

on year? that have then we I balance you mean, T-Mobile give individual merger impact much don't that Sprint that over customer So, I the right, of how and the know Sprint the produce the should but impact, breakouts,

Bob Tirva

Yes, breakouts, not don't give say networks dramatic. round I going products next communication to definitely our and that, a said, as will functional you such. we the on of T-Mobile modest on Like the mostly in the is impact have changes on be year, going would there specific but this

Zack Silver

Okay.

go Sorry, ahead.

Bob Tirva

change. Sorry, It's a of rapidly merging Sprint and as Zach. can. T-Mobile as are they kind

We who there's and down our depend products at customers no have on slow all.

addition issue. get you've absolutely deployed want our Sprint, Sprint an have you your can you XPX, a a team you're one not you and new through customer XPX, and then an As to

are current think half use sales upgrades to products. our or I Sprint to that over line our customers either additions

not be focus to the on impacted be devices Eventually, future. near by the led going in so, will And T-Mobile. that's new

a year in of the kind later thing. it's So,

Zack Silver

more different provide just Okay, that's helpful. then environment that expanding for solutions markets you one was competitive then the the last into broadly, intriguing. around rugged And the and

barcode you you talk So, of competitive maybe helpful. be some the examples like environment scanners that the if for would could through referenced

Bob Tirva

to mean, several not that scanners other They changed small for products that much. tend screens, architecture that, clearly, built but is the I barcode haven't they have we've years. Sure. for don't rugged been around arisen, to and tend what that's we're on example, be as traditional describing mobile observed exist, has optionality

that devices. the newer form and devices, fit think by have we alternative So, attractive bringing by providing for out the an customers to will that

Zack Silver

Got front? on the for environment it. rugged year mobile then any changes last competitive in And from that just devices,

Tom Wilkinson

really really don't coming else one one dabbling into producers. any larger market new guess for rugged. don't device from see really. and the Not I we of But see except the We anyone players.

important going will everyone what be is to embarking figuring out to for be like be and that I think we just their on going that is future. timeline the to are XG

Zack Silver

both. you thank Great,

Operator

Smith Jason from Lake The Please next question of comes Street. go ahead.

Jason Smith

Thanks for taking guys. my Hey questions.

pattern here comment you if comments in curious, from May? of Just saw linearity and helpful. on any order be April sort you through would And on now standpoint an what

Tom Wilkinson

and these guidance so careful many any the I products careful. to rarely there's They're to Everything projects everyone I of opportunities many since when very told deliveries deployment. Well, think we've we're and be got you'll -- linearity. me so have be got would else products, told because you Bob actually But being say, enterprise not providing as there's -- is large delivered. large about

patterning. So, when are have, really our the products a of We that think quarter, operate over let's like don't of that pattern see between observable way. you X that a kind about repeatable devices say, kind months, differences that don't

solid bit projections. We move help projections. are the little them bring a with as We quarter. the well. out works those all different. upside carrier our work get through figure them Those We We So, partners.

can in QX of or why we those month-to-month it, not express we're when total, quarter. That's versus not terms. QX think So, I it's really about something any in really particular thinking

Jason Smith

project Okay, or have you then concerns any budgets? understood. on products impact trickle from but constraints critical, obviously sort seen are And of down future your

Tom Wilkinson

-- uses, in past I the seems moved that beginning pauses, have some for have we really. the but saw seemed non-governmental that. to Not to mean, we've

Jason Smith

back the then I'll into for and jump just And last Okay. me, one queue.

On OpEx just clarify. the to

cost of bleed will of So be QX some first of measures all sort QX. still quarter or the reflective the into that cutting

Bob Tirva

that that and probably there possible, we everyone So, drift as that face the QX, we're was will as but into things towards quickly else certain because intent are shutdown pandemic just does. moving our as

on So is in to move basically our here, offices because June Xst on down. is hold headquarters while can't for shut San example, former we we anybody intended start the subleasing California, in space Mateo, that

lease the can the on costs in completing sublease. so, we until, continue And will succeed

fully in certain eventually but like QX, shape things So be not that will take overtime. reflected will

Jason Smith

Okay, that's helpful. Thanks a lot guys.

Tom Wilkinson

Yes.

Operator

session. turn back closing the Instructions] for question-and-answer I would Mr. to over [Operator now like Wilkinson concludes This to the call remarks.

Tom Wilkinson

information Matt reach to Krebs arrange management, employees, Thank arrange of We our you on associates. listed is our be with like partners us us follow-up a needed. to today's press our please call. on their if call out through for for If transition. customers, thank We'd happy contact to this and investors release. any a our our His you call, joining to would supporting want and

Operator

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

may disconnect. You now

Sonim (SONM) 15 May 202020 Q1 Earnings call transcript