SONM - Earnings call transcript Q3 2020 | Sonim Technologies, Inc.

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Operator

Good afternoon, and welcome to the Sonim Technologies Incorporated Third Quarter 2020 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please now Matt Kreps, would like to to over conference the Investor turn I Relations. Please go ahead.

Matt Kreps

XX, third Thank to you, ended the today's everyone September quarter Sonim Technologies' Gary, results call and XXXX. welcome for

or revise may management's will predictions results remarks Sonim to some information has projections after discussed report in statements. its and or Form broadcast, XX-Q date the on of on update by including November be cause uncertainties, Those risks, except risks law. future These forward-looking with most Form are Certain press belief, assumptions also today forward-looking that this circumstances estimate difficult those statements as X-K operating this forward-looking obligation conference as call, that Information and any the statements Commission. to includes events, report the to most live assumptions Form call. press undertakes of sonimtech.com Securities annual Please date financial Sonim Exchange XX, the reflect and are recent and release only and filed of plans. events from reflect no the required the on of our the XXXX, financial about recent of Investors by this and future discussed materially predict and statements will to link. the and are from SEC note certain stated implied and in actual the on subject and these documents statements and or those XX-K. call on quarterly company's differ filings, forward-looking distributed just a goals which release the to available strategy, are and results, website historical discussed under Sonim's business These include are that

turn like the to over would I to Now, call Tom Wilkinson.

Tom Wilkinson

and the to joining us online. hello and Matt, on everyone call Thanks,

Sonim your Day Veterans on to veterans a calls. to On has quarterly say Sonim, their at addressable would growth expenses families. of I to sheet control This communicated Happy with operations. behalf leaner, period operating business more more revenue transformations position and for our continued all balance First, we've changes our and continue that prior We to We've like broader reduced we market, service. efficient. you visibility will our year improved of rapid for and believe and thank of implement cash efficient made be our we

to off while improvements net low resources. gross and cash productive to us a respond quarterly into our enabling to transformation cost lumpy delivering more revenue, of and preservation pay margin, Our has period-over-period loss reduce team begun our in

in had We number second have quarter orders. the forecast, then lumpy these frequently a in had adjusted forefront and delivery and business taken which quarter, good third can accelerated the how a the into in rugged pointed quarter, example. they additional out as already Carriers be the third in orders of came is the above timing well

our operating size cutting and cut future have costs to of another changes $X to In by undertaken down have getting top been for hardware the run level managed of has appropriate a OpEx additional annual operating fourth efficiencies. quarter, XX% we OpEx rate million with year-over-year. expenses ideas we an As streamline for previously, business a our discussed We priority. to also reduce

not are on OpEx efficiency. focusing We just

cash the costs diligence same as development and operating efficiency on product efforts performance. reflect Our our

differentiation. lies strength plan will sheet allows our future strength strong expand within market our well documented build transformation. that product Our the business business on and in focus balance upon to and us The our

functionality. selling XPX and and talk leading Both also our push feature rugged have phones, products been year. best differentiated our design, industry to our this exemplify First, XPX the our

these our supported our of through also generation markets third present that a various next these during role experience. believe, products XPX can market rugged geographies design in phones announce a Our feature win to additional we've result expand received with distributor expansive management our new billion We XPX move enter and These outside cellphone robust of nearly are range has phone quickly team play valuable the particularly North our where also next carrier wins design believe we We generation in quarter. Europe. of differentiated already a key these and capabilities. relationships, major direct America, to excited of for devices prior carrier and We're our growth awards demand. bands with will $X

new We development mid-XXXX. current in with feature timeline a phones these of have prioritized for delivery

subs. expect we tend us allow sales in $X and handheld market smart a access to the first another to of and launch scanner to product also to quarter approximately device billion computer to our addressable our devices margins rugged basket. Second, to favorable add with total gross to more These begin tablet sell

first hand well. they're in and the development have units performing We

life is rugged, offerings LTE-based we proud what deployed is life. announce to that from reliable been download important our faster technology customers, rugged they about beyond. moment, XPX the which XG what speeds. These speeds useful product effectively tell XX, smartphone and current XPX, understand they that they and XXXX advantage not are extends the world. the importance they is value less most and want we of a We our is what connectivity But When that to battery Third, faster devices is customers around the far yet. is are been long at have into primary our Android the is deployed the the beyond upgraded has to -- tell being our support us rugged ask

overall we becomes our XG better a it will more proposition. a from and customers By We value generally becomes XG invest that more more will we believe this can the available specifically thoughtfully technologies, and to customers. use as carriers in feature align important products our for dominant approach, as ultimately create our taking

plan. given to strong by operations these our All our are cash sheet. believe made that have we improved and launch position, build as we We capital to XXXX of initiatives possible sufficient our products execute balance these strong

and stop about a ask of for minutes strategy our Then cover financial results. few here share Sonim. to transformation our continued Let me the ahead more and I'll Bob

Bob Tirva

Thanks, Tom.

the million. into including third decrease decreased press were quarter the Investor XXXX. of customer section Our quarter was our $XX.X for ended September results issued for net second in orders, the sequential of to to some of the Relations the quarter. attributable earlier third website. sales copy XX, revenues primarily accelerated is XXXX that Net release in million today of A the revenues announced $XX.X release timing The available our

from can of for to quarter and about reason to the mentioned, quarter two quarters revenue be million. this Tom combined $XX As lumpy an average

inventory have which customers. third for our up efforts along customer net in primarily which to The third for inventory XX.X% margin year's of We XXXX, will last is the quarter while sell products from expected Gross and made maintaining gross occurred quarter lower $X.X net balance was readiness approximately increase of quarter. the of rebates, out XX.X% changing of efficiency million, to our in progress our to attributable from working capital third XXXX in with in revenues than XXXX. or one-time adjustments, discounts profit in patterns which require response was our to ship good in revenues, order the of to

well of are to XXXX. from anticipates benefit margins with margin increased as cost as beginning improve that scanner future, in of sold corporate plans that undertaken the first higher scale, Sonim products of in goods launch the gross will the quarter

cost the came third in total our sales, to and a while improvement quarter. year new expenses OpEx expenses more operating product expenses, operating from quarter development $X.X operating million, anticipate million loss effective the $XX.X a expenses the reflects Looking also operating ago in compared decline in million forward. of operating the $XX.X for in year-over-year generation third declined We we quarter This from next The in Sonim's in a products million an maintaining lean The model loss our to represents third $X.X marketing quarter of decline implemented the million sequential portion XXXX reflects operating net of has improved XXXX. at our $XX.X invest million. at and second the the to for million commitment to loss the of loss cost XXXX Sonim a of into to-date. net net a sequentially and quarter. manner. model that continuing R&D operating experienced in savings of in of $X.X in totaled going efficiencies quarter reinvesting Net for $X.X second of compared

sheet, to operations we used have year-to-date. for cash balance the in $XXX,XXX Turning

September balance effectively and of cash $XX.X free. at was end we are Our debt million the

we to our execute we develop our we As operations next improved of given XXXX products generation as believe sufficient Tom and have plan. mentioned, launch and capital strong balance our sheet, that

guidance As previous providing not in will be we specific quarters, today.

year. on progress we are strategic turn However, back to continued business Tom long-term we of through goals now focus to sufficiently the additional the it the I'll our And for our capitalized shift initiatives. comments. anticipate for over to growth now end

Tom Wilkinson

Bob. you, Thank

right made perform take we our markets and as strategic mobile devices mobile in Sonim smartphone important Sonim do the on We for positioning such both revenue handheld business as devices the goals. As looking entering well our progress feature market, both scanners. have the to see, new always We're maintaining new steps we're market. rugged to quarters long-term the ability as you down most well and in offers addressable core can to up model, while the our better. categories, bringing But to believe in phones

smart of scanner Our devices roll in out year. this to are set QX new

two at They will will to bringing platform. Android released and upgraded are later date. a same XX. on built chip Android We to XX initially devices be market the be software It with

inch including screen an will scanners. multiple with required These tablet two a both those Our X X devices handheld, support devices bands be and barcode integrated for inch screen Europe.

better larger Introduction North SmartScanners will addressable with America market in our new open and devices and both increase channels, pricing better deliver features expect these compared and of our will We Europe. both competitors.

also American design the expansion phones. wins or In devices, feature these received provide written carriers our North for of addition we've for all exciting an new verbal which market to platform, major

facilitate hardware smartphones, demand And just many phones verticals on we our market way meet workforce. often feature their need that to While smartphones, good, our consistently Sonim’s with communications just well. that target outsell and extremely reliable demonstrating durable a focus

that updates the exciting and user markets and customer design our are refresh XPX requests, include opening responsive XPX offerings of features new products. while end Our for our to will and

as SonimWare designs, Sonim and offerings. very our also we're focused our Care As on hardware important rugged

SonimWare proprietary cannot to on use download our phones are device the apps important particularly customers have devices which the feature We which for up-to-date is software deployed that their or This Store own software. ensure allows update Play and manage secure. centrally, and devices Google every to their

to continue we'll delivered We based upon number from improve in our a SonimWare and end have solutions feedback users. the these of offerings package on

support our for long is to superior service. installation deployment commitment Sonim and warranty been user personnel and to our unique From its Care critical ability recognized to Sonim end comprehensive industry connected. three has year organizations keep training,

will each cost and approach new work our a development of to we open products bring As a product, more markets. and efficiently multiple leverage platform multiple as instead we out

looking in next taking share exciting, the devices Sonim’s users. current the our curve steps also While at generation of is we're ahead for remain

technology, will most portfolio be the on enable just beginning the soon our not differentiate advanced located the of both for what z-axis mission-critical in enterprise markets. to with devices technology current and This We're advanced in our products a investment and on from XPX seeking push-to-talk which products Sonim building. products. be but and Further, the XPX Our release we're out in on enhanced actively floor work further opportunities building, core of will competition. industrial help expertise will also our

solutions. of technology existing analysis very LMR than and the improved year example value of our versus devices, to Their of affords brings two ability savings Sonim Recently, and their more the over evaluation an large and Sonim’s with LMR that current XX% Sonim showed functionality the Sonim to construction and against performed units finish cost me period. performance a terms a has of performance company's capability provide a customers company that savings. in Let cost cost rented

progress are our improve to we and Sonim's of identifying We turnaround our We revenues. through markets use story to addressable as actively similar XXXX. become expand will cases increasingly believe visibility the apparent

facilitate heads channel our are products the existing expanding new to our and with products, growth for and We preparing down sales markets. release new new

it our our a voice for my being today their and addition well. a on talking one smart new is note of quality as capabilities, to With excitement and As turn which I'm Q&A scanner products operator the in communication you I final now device back to prototypes, our session. that, a from RSXX will high to

Operator

We will Instructions]. for now begin the covering analysts. question-and-answer [Operator session

go with comes Please question first Schmidt The from Street. ahead. Jaeson Lake

Jaeson Schmidt

just on at that your want we they How just the end? to levels manage sort always think towards of it inventory should how thoughts QX? your tightly year carriers, visibility into here get Tom, about for given

Tom Wilkinson

It's a question. great

great they're in responding levels. their We visibility We showing sheet. into investors that to their -- partners the a believe balance are of current our have deal to environment responsibility inventory carrier derisked own a the and

So, expectation try and that. they hit to amount end as the our possible, with pile-up being of is the and then start that minimal will the after able of year inventory

Jaeson Schmidt

scanner going from Okay, there this it be with just for, that's was your just your portfolio, especially products, if is helpful. outstanding feature? Xplore? natural if at any you with along component, be sale? this new product something just recurring customers And thought the guess, And is hardware were a looking Or I at curious the revenue a history extension would to that relatedly, asking

Tom Wilkinson

Sure.

in team with about Sonim the is both deliverables, is as unique our can as and market layer that SonimWare an into it So a extension in off operates our thing identified the of Android. anything an brought we experience in the a unfilled Care Sonam well The to technology. company, need that natural that management need

And So this to know whether I'm just to with whether that reach scanners way. these -- device or hardware. able we devices, the getting your and we'll market. in is capabilities that But the devices of to play, opportunity. across very they hardware definitely moment, of abilities bring out. focused looking ways phones need expand the at market, we'll a of we thing to we market, But similar within our be our I on off are at same and really question to beyond our The a service, our to see commitment be be all

Jaeson Schmidt

back Okay, margin, then the is sort And in one queue. was norm some into Should we sense. level of on of rebates. year-over-year that the this just plus conclude jump makes Bob, discounts less the then for XX% here a to gross me sort noted increase last of due near-term? and I'll you new and that

Bob Tirva

call really a I it's it question. norm, wouldn't good good a

could reflects carrier. be this both particularly and experience one that's for us, rebate think, is funded have through various programs by I funded they that Sonim, growing with carrier a been but our program the also other within

So the wouldn't unrelated use to dip to an that discount into carrier the would that customer we give. rebates could have then

of our And so we the send lack assuming an high for that and forecast. we little bit of below visibility, then so do be we rebate come that in are forecasting, percentage does conservative sale, carrier it's invoice the the us done what the sales and when earned would they in the rebates with a applied,

continue sure. there's to I what So, for will it forecast that come but that believe have know below way in we to no

Operator

[Operator next Instructions] B. The Silver from is Riley. with question Zack

Zack Silver

have the the how typical the led thoughts what channels, is in any distribution just differs and relatedly SmartScanner sales the about The mobile whether And international model the into carrier XXXX? from distribution now? doing you U.S. then you're here of distribution one first product around changing

Tom Wilkinson

So, think go. for I and the different the the answer right is think wherever this right is channels of you right the way products geographies, to the in

distribution in and they in enabled, It's They're certified. they'll through not carriers to as But they our would away be carriers to in carriers naturally well work for cell in on available actually selling North activity America. going phones seeing Our rugged we're that through we're We're from sell North making going America. there. rugged LTE not America. cellphones sense North our something some We're be will move and also not SmartScanners sell.

not carriers, quite product. stock they're with they're well So functioned the but a

of distribution products other that to when of It's are that is in world. value-added working the of United all forward together. And the model imagine the part say, States the other in going distributors look working an in solution. bring together a about kind of that on. what Now, of are I to our us. more car, of a ambulance. distributors, you through or just other aspects not delivered voice even bringing bringing often on turn distributors that's like are Europe, we're their kind devices. them, dominance communication all inside geographies, quite on But that in of same who that increasingly is of we the resellers, distributors flips. They're with let's really solution There of inside the the police not to Therefore, working But with players carrier be sale technology they're to of footing parts of

Zack Silver

The next newer sort cash around devices, burn aging devices. the just sort into of the upgrade time the some and in and older with and of the is investment one with of

wondering and Just that you about point liquidity gives the burn adequate? can you runway think help if us cash really is what at the this confidence

Tom Wilkinson

Bob, that territory sounds numbers. about fact take? forward don't that But to your talk talk to do want about the cash we and burn forward like you

Bob Tirva

Sure. I'll the certainly But modeled just our portfolio existing giving reiterate that, of in we guidance. we're have of sunset products. not

Tom XTX XX We've life As of to devices. an for also mentioned, the getting upgrade. several we're of life Android the through end extended

So of beyond. And our the scanners are ramping and XXXX. and through feature first sell phones into year that next should half we new potentially well the

reduced We've our I products at to cash cost So have. judiciously And lean order have through where we our at balance company looked transition the the gap savings between rate and in we that especially the looked the and at we've carefully operations inventory the we levels. that adjusted think having bridge new, burn old just can. the with sheet

the and generating start cash can weather period a then as possible. products, which we believe burn will to we move payables And as have as much we to of forward. get that new We managed receivables

Operator

This question-and-answer the to I concludes over Wilkinson turn remarks. Tom would session. for like closing back our to conference any

Tom Wilkinson

I And us the releases they joining you appreciate We'll all I year-end for call. be participating announce the really you events conference by today's questions. have in of occur. as Thank really and to the a investor number interest those our press in on appreciate company. will

a our out happy like Kreps is if please Darrow with to be call we'll on His information management, a contact would listed and Matt you arrange Associates. reach to If press to releases, arrange with needed. call

Operator

for you now has today's presentation. conference Thank concluded. The attending

disconnect. now may You

Sonim (SONM) 11 Nov 202020 Q3 Earnings call transcript