SONM - Earnings call transcript Q1 2021 | Sonim Technologies, Inc.

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Operator

Good afternoon. Welcome to the Sonim Technologies First Quarter 2021 Results Conference Call. My name is Gary and I will be your operator today.

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

Following the remarks we'll open the call for questions. of everyone made call link now available the Relations remind and being available like to at Investor be website call will for section Matt to like turn that I over is this recorded in www.sonimtech.com the I'd Now, Company's to would Kreps. the replay via please proceed. Sir,

Matt Kreps

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

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

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

Tom Wilkinson

Thanks, Matt, call the RSXX and with handhelds good to and us on to We're rugged market gear available as RSXX. smart everyone including the joining our hello the platform and on Sonim our newly scanner products a online. transformed in in XXXX start entered tablet and off

quarter. report to feature the release with our We year tablet second that at pleased in North also RSXX this the America. on our expect track we're to of in end QX next We're the carriers for phones of generation the major of launch

poised our and we attractive products. expand scanner to large are In market phones, our in addition, the and with international presence tablet

rugged tablets to on commit XXXX are We better including We growth projects smart developing on revenue in in focus both future and believe benefit our products that our scanner spending a RSXX overall of of show prioritizing their that enable will upside sales margins. we R&D revenue to mid-February. will number

product And initial we've and revenue very $X meaningful resulting into all the opportunities so for seen average distribution future quarter. been good feedback of partners. quantities for in our has our Customer million first this channel of with

consumer functionality an to features production its high-capacity job. many other rugged dollars on first maximize resistance lower devices, prior an devices in screen, solutions touch result other capture while We that and features features These many customers cost specifically up large the we this integrated The also data. and found buying X-inch with of tablets rugged scanner a to well-designed truly place. these and in scale tailored as water last costing up amounts consumer of specifically matter of multi-shift experience improving dust proven have battery, the rapidly durability and cases trials barcode continue as RSXX the ending The to tablet orders take is android devices. workers and to can fully to as and work in simply RSXX ownership of for compared do frontline both the must more not total who built just of that barcode is productivity to scanning glove-friendly

workers batteries has as full too announced consume portable this been is RSXX And rapidly class data and earlier handheld the who of which response and availability of longest also provides We on largest amounts just has exciting. one capture rugged market The month. of a the lasting friendly carefully frontline large must for RSXX highly screens It experience in the user commercial a its device. job to software meet leading found scanners the device day compatible extensive RSXX to security, the added a XXXX The also usually accessories of large tailored is and LTE our line twice customers. capacity handheld suite our by increase of milliamp features including it battery connectivity SonimWare an for The rugged management flexibility. also enterprise ensure device efficiency, performance. to mobility in includes with all

for building for expect great we the and is this RSXX product. things Our now pipeline

services rugged rugged distributor across a Fortune the of SYNNEX for the RSXX we of they sell. for is America. XP and distribution RSXX and range of recent North In smartphone that sales handheld specifically incurring has who our providers sales and is technology without at addition the systems Sonim scanners integration example direct most these worked growth A of in partners products. and know large design XXX our we take comprehensive the corporation, to one in management cost rugged closer in-house smart wide high they and ultra to great are the of to distribution, a XPX expanding agreement hires. want entering with market, we effect before look distributors we at good customers the been industry our revenue have team network large diligently the a margin broader announced the short SYNNEX enterprises, The and serve with devices

Electronics per with in been XX% biggest year added business previously also devices to We of is Sonim in the served the our Which Energy about addition business. distributor. looking at tapping while communication markets that great manufacturers growing has corporate for been the a as also around has not at has continued expansion sold especially business. We're is North America new a And into great Europe. some

mobility phones we'll our provide start. addressable adding moment. early smart would these as next scanners rugged where a market about our pre-pandemic. a Europe, XXXX solutions expanding By the smart professional opportunities for in generation announced well phones by partnership scanner Our increase January, access video throughout United talk In distribution markets Xx drone Sonim's early and by and Syndico we the with end to of we where I'll Kingdom. distributor the our versus into of specialist more started body-worn devices mobile as solutions ultra-rugged but XXXX communications,

up end can stand the are absolute the that markets, conditions products For an to necessity. harshest

our is increase roles. Sonim's U.K. accessories a are need. cellular-based in demand devices communication notable and critical systems for engineered opportunity, that to Syndico mission-critical to supporting meet Specific serving

phone complexity focus Feature simple are about and growth launching voice highest in of deliver full phones Now, that Sonim's capabilities ultra-rugged this some I products would alongside key volume is to our push-to-talk a Sonim's later other durability communication and without affective which like and customers smartphone. the the handheld our year value future of products devices. our new rugged to the talk exciting

network the and world. for first expanded phones next feedback from support the performance in and new as additional Europe increased new features the it'll form U.S. this rest Then include also expect in well These our customers. usability we and based ship for support factors the carriers to as generation of QX processors We our year current requirements provide in and on and follow. of of new devices additional of that feature utilize

to tip who is customer including devices are example the phone of million in good already new competitive customers sell $XX this even devices. devices. the areas For American customers iceberg is early North more leaving we're particularly next like with our users our certain of the to features number these These can North seeing responded using The for example, that a traction into to be who new and with devices. well to differentiated projected carrier of with our cellular We're that number believe new capabilities highly a excited But customer-driven deployments. strong devices a our as our cellular industrial LMR PTT This Europe. America incorporating can from move radios at has transportation, both network incorporate towards of address we feature the of for are market. we push-to-talk at over pre-order only security We well serves very a to used growth and generation commercial our push-to-talk market market with that opportunity and into design over years a has include a phones.

for Let to me our financial stop a here cover Bob minutes ask few results. and

Bob Tirva

Thank, Tom.

net XXXX issued of release million net shipment certain sales and increase today million release for website. the and higher from Net were in press the in prices and increased during first million shutdown for decline RSXX inefficiencies A March supply for first that cost they the expected is from the XX.X% included in this late legacy profit quarter period. Our earlier benefit XX, the quarter of or product of as of XXXX the revenues COVID-XX both of of the margin our XXXX. by chain sales the in results XXXX. by the our XX.X% scanner gross factory to products QX in $X first Gross component and XX% of margin quarter of in available reflected first of first first the pandemic. over legacy quarter to Relation impacted relatively $X.X of of compared quarter addition to partially our XXXX. $X.X global the the negatively the revenues of first quarter copy a ended recovery of introduction profit the offset revenue by in extent change section The in end-of-life. our the gross million The Investor the rising the announced XXXX the quarter a of with $XX.X products net for or due in $XX.X the gross million revenues were Offsetting approach unit caused

aside levels as corporate Sonim policy by market declined share. the be next by of second with our to once in generation and $X.XX sales Sonim advantage portion diluted continue handset which covered to likely first million Setting for expenses first general XXXX million in bring or and The certain XX% anticipates the expenses mix compared elevated the development the XXXX until to a devices quarter XXXX. were effective XXXX may million take our shifts and of administrative legal our of or compared previously $X.X products Meanwhile, was share year level in $X.XX in A for to for to the loss of of resolved. are software that deductible first A in $XX.X cost Net these driven marketing an declined basic outsourcing new by development. will and and spending matter quarter a year-over-year. investigation. costs, $XX.X both increased later manufacturing additional improve quarter a in of XX% partnerships million Operating $XX this margins diluted legal ongoing per to as disclosed net the increase half loss is million per $X.X our operating quarter year-over-year somewhat to SEC insurance invest basic expenses expenses and XX% future first legal continue in research pertaining totaled by and legal of of expenses is the met.

Turning balance to the sheet.

net debt Our was our balance quarter end in well margins the the the on previously which driven legacy primarily was remain million $XX.X loss higher-than-anticipated decline of we cash to by March our attributable as as mentioned. expenses lower free. effectively was legal The products cash at for and balance I

we term, makes generation debt winding as products our next markets the expenses or well that the sense in the legal Given products ramping uncertainty legacy the and term. equity down our feel between in accessing around to the explore near capital it near gap

against uncertainties is goal company to next the the further our Our balance few quarters. to strengthen sheet in better protect

With important that, carrier we customer as look to initial successful million a of comments. in we market. for need rugged The enthusiasm it the as of be move continuing for an we back $XX we today. to hit next received preorder As the in half I the additional strong products these good our is We previous and see indication the mobile guidance partners our opportunities so XXXX have turn providing believe devices quarters, through will the not generation will our products launches in which second now specific some forward market. Tom

Tom Wilkinson

to pleased needs, Bob. Thanks, as B. as conjunction doing those retained we're to well our buy with including our Riley as and our capital to that for financing In sale bank alternatives ideas announce market strategic the investment bridge work we've opportunities. we explore side are company capital

expects team bankers to that, now to session. chart work back with for a operator the forward. path will and Q&A board Our the management I turn closely it to our With

Operator

Oppenheimer. [Operator comes Please question Instructions] with first go ahead. Martin Our from Yang

Martin Yang

Hi, my question taking for thank you on.

product or feedbacks change you see the I So when your to of first products, then, with on the your road regarding for can you is, company the art wanted what question long-term you us in the to are tablet overall your tablets? follow-up cycle for those portfolio you reasons years. good view the get when the at next the question share sense that life typical And does a rugged at two on what look tablet map

Tom Wilkinson

question. Good

more that reality of for at we a the it the like this expanding that plan think we bringing question? mobility instead part way and that already going It to our have, feedback It certainly a selling of line. what when good the the phones -- expectations for add I more your of in to products yes down And it future. these demand some becomes products So our we reinforces becomes sort will products is had in us focus second was the more actually projection on the is starts future out same by point. of help rugged the

Martin Yang

those The life products. rugged on cycle

Tom Wilkinson

these Well, think are I rugged products.

years that customers I to before and customers for So -- them cycling think before to should use three recycling we expect them new them. two our

Martin Yang

have training program you like upgrade? to the a And do facilitate

Tom Wilkinson

products. So our first in using barcode would case, time our they're scanner be this the first

marketing we used. the and generation at hands certainly of get the partners So distribution do in time. would materials of We these and out some get our type have and other put to materials in point to that help the products materials training kind gets products. in them next being Really of

Martin Yang

And question what will really preorders be market. are my rationales next like think phones well other in the feature the It particular is plays from coming pre-orders do feature phones, looks the for And on similar phones. coming is and you typical there like rugged feature carriers more large that?

Tom Wilkinson

got Well, and to every a amount carrier works differently. In this deliver case RPO's we've us upfront. large on

these motivation to supply make us them new get though The I our and have think would should I that's the in it's they first-to-market with one. this are make PO's far sure businesses RPO if customer, don’t be see on for they logical they're for flock their typically like to we've product. risks resist needs. think to each as that products. in and of into get able particularly share to for been that this pursue that their And as working to out We or they going -- it

Martin Yang

will makes much Yes, of you for Can fully pre-order take give sense sense. how it to a us be that executed? time

Tom Wilkinson

Those PO's received that for and the are QX. -- QX we

Martin Yang

Got it, back queue. in thanks. jump the I'll

Operator

from Next Crawford Riley question Securities. Mike with Please ahead. go is B.

Mike Crawford

across line? capital of level what Bob, desired get transition finish ODM be to Tom,

Tom Wilkinson

expressing moment. quite it really not We We're don’t. at the

that a cost for but we'll balance but short most to for we've been think period communicate not insurance. there is legal There's up near large a point-in-time what Bob's of we're spend really be amount well. a to continuing sheet I a here having where admitting not able unlimited showing future on this the covered would that part, be that thoughts just the cost And in be few on that of would unexpected to We're focused cover to legal lately. by we in the time. incur as got yet. our

Bob Tirva

Yes.

unforeseen day align generation the making an level we past risk have get that the is is the at in legal ramping the the there to and which is this don’t there the off products of and the the tail sure unforeseen for we are little the perfectly end, at look there products, products Tom the next what of to that expenses the coming at which products. in at in are a way products end quarter. the we've and But profit think the is terms those new bit risk definitely mentioned, legacy of as an experienced I least generation ground of terms legacy on

make and that impact of so, short-term. sure It's might healthy precautionary And view still our our to our balances. just a is that we cash eventualities with are more in covered measure we want this the pretty

Mike Crawford

only Delaware talking the are you how you was one XX-K, and are your and derivate have what in suite And do mentioned you and that D&O really insurance get about but there? of more new deductibles until much

Tom Wilkinson

shareholder That talking matter the is settled. specifically have insurance the SEC and law but about not law what suites suites, we're the D&O it's been

that are So on. of that sense SEC give those doesn’t in work. the goes the us. when conclude will their SEC It's they behind work estimates as And more to

just so are And to feedback. their we really see waiting

Mike Crawford

everyone limit And that get you deductible D&O did until there? or

Tom Wilkinson

had on finger don’t where towards I deductible amounts have my that that. $X.X incurred mean, We significant the million. tips a -- at Yes. threshold on But we exactly number. to-date I we've cross

Mike Crawford

switching just one. Okay. And one then last gears,

upon channel sell your where to with where and you Just strategy. like in are they Is distribution recognizing opposed new will be case we when were, that the shipment through the revenue as it on partners channel SYNNEX this process? into

Bob Tirva

based that developing with experience we million getting distributor started don’t amount we've a on revenue guidance going process amount returns. And forward. shipping the obviously and So But a really have but and under that reserve for an returns accounting booked just plus, yet recognize shipped we've be estimated the $X a modest -- to would would we're new we the that.

Mike Crawford

okay, And thank you much. very

Bob Tirva

Okay.

Operator

Schmidt The last from Lake is with Street. Jaeson Please ahead. question go

Jaeson Schmidt

taking Hi guys, questions. thanks for my

supply seen or if curious chain supply Just constraints you've challenges? any

Bob Tirva

been the So legacy end-of-life. some and with we really older are our challenges they're reaching components only have products that the have, of

Those suppliers as a new phased that more next using drop So little type quantities that components the those have and on certain have products. for out products into devices. generation go our expensive bit our [EOL'ing] we're are of become

seen. all COVID So I not if that to a today. that's we've really that ago an but is year seen we talking had you're related, about mean, be issue

Jaeson Schmidt

Thanks.

Tom Wilkinson

all We'll to to have cycle Yes. very Bob good demand [handheld] we is. But total mentioned, our be available. build have shift over able of as and cost start to the life not that time, on a what

Jaeson Schmidt

Okay. Then cusp on over a feature all of legacy order we're assume these I sort of based products? cycle of your carriers regards to new levels a in for the on replenishment do mean like phones. I you the but next have inventory sense gen

Bob Tirva

and still on Yes. There inventory of But partners agency. amounts are don’t by-and-large, inventory that bit large other little carry smart phone our with the carrier than AT&T. smartphone

Jaeson Schmidt

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

Just a to clarify on that that or $XX million multiple skews order. for skew? single Is

Bob Tirva

phone. camera of two carrier. a is that It's feature version it's and for all there But one actually skews; non-camera a

Jaeson Schmidt

Okay. Thanks a lot guys.

Bob Tirva

Okay.

Operator

concludes remarks. this At his closing the turn now you. I answer would session. this call the back question Wilkinson over to for Mr. time, to like and Thank

Tom Wilkinson

to Thank We a press conference is and arrange participating happy joining We'll with phone Associates, call needed. on be Matt tomorrow. you his would today's our call a on Kreps like would to for please you. call in arrange Darrow reach information releases. management, be out call. listed you any If contact Thank Oppenheimer if of to us

Operator

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

You may disconnect. now

Sonim (SONM) 12 May 212021 Q1 Earnings call transcript