MINM - Earnings call transcript Q3 2021

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Operator

Good day and thank you for standing by. Welcome to Minim's Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. hand over to today, your like Mr. now the to conference speaker I'd Hayden Carbonara IR. James from you. Thank go Please ahead.

James Carbonara

the Chynoweth, Thank Minim's President Chief Earnings on Financial Third And and Quarter are you. once and XXXX Call. again, Chief Marketing Officer. With Sean Nicole Executive Officer; Chief welcome Officer; to call Zheng, Gray Doherty, me

As all materials ir.minim.com. available Investor company's the site a for at are reminder, Relations on today's live Web presentation

forward-looking today's Before we to want call statements. begin, contain remind everyone conference may that I

statements or include including those revenue, materially statements statements. future, Forward-looking regarding business expected forward-looking from operating the future and outlook. differ contemplated these margins, trends expenses by Actual results could

with utilizes comparable time-to-time use in that to such most Exchange numbers numbers too, For in is note measures press contained company's in non-GAAP of include our results as other statements, report Please the discussion could forward-looking management call well XX-K, such from the which on non-GAAP see in Commission. may the filings Form our in with analyze implied uncertainties, A cause today's most periodic reconciliation the the to the company Factors performance. Risk Form as company's in a of please actual on Securities XX-Q, as annual files that from detailed available risks those of subsequent recent and release GAAP differ to expressed the and well reports filed the reports or SEC.

Gray, Now, proceed. over Gray I to Chynoweth, CEO would like please of Minim. turn to call the

Gray Chynoweth

Minim's Good conference morning, XXXX James. welcome to QX Thanks, and call.

right in. jump Let's

plan. million, in challenging XXXX. This from decrease of competitive electronic million XX% our by analyst Group. sales, the to pleased growth illustrated outpaced amidst in a most landscape X% headwinds according firm year-over-year growth, the revenue of QX performance $XX NPD sales we're to for the was representing XXXX quarter with consumer Given leading net what execution in significantly business against our generated QX, We up $XX all in

Amazon sales of revenue our is in our We've with substantial QX. our Prime Day more percentage following a as increase mix. revenue QX Our bump a to increase consistent software services first quarter, continued

of revenue a ration in net quarter, compared four carry X% and We income $X.X software recurring under quarter. brought compared In prior to that to X%, to million of income in software increased $X revenue recognized one X% year, $XXX,XXX Our the of a sale the deferred products just trademark, to QX intelligent loss revenue the the first to subscription posted just networking includes of XXXX. which net million, approximately of Zoom in of market. one-time related to we've

We're of these top points, pricing. expectations growth. replacement XXX below on margins could performance pressures QX. gross transportation basis accelerate due on FY'XX effects end-of-life XXXX, targets, focus QX on to taking on impact portfolio of persistent Further inflationary product driving which effects would in component we cycles, sustainable this COVID-follow-on and the as line mitigate to component actions point, dipped Our impacts and which to compared to by and inflation was XX.X%,

transparent impact peers. work our we I'm their our will on As with considerations, performance. to industry outcome through be pleased these compared revenue we in financial

consumer achievement excites outsized share This for our QX. domestic indicated growth for products, market reasons. that reflects performance and Our data soft market given network a me home two

sales NPD, in consumer electronics expects QX. year-over-year group, in analyst leading positive First, growth

growing products revenue software. higher by per are surface strategies and seize. and from ours prior online the long-term Wi-Fi our ASP optimizing quarters only are for performance, networking with intelligent delivered the scratching international discussed have opportunities Two significant the system primarily we're of responsible inventory the for benefit in higher-growth and These to that segment. Second, our X we short market value customer sales,

particularly share optimization, by have an quarter, cable X% inventory our been fruitful. brand the in versus estimated as product market our increased in prior for sales growing the category. to efforts our the In category, Amazon two number sales XX%, we DOCSIS Our strengthening the position and

the Buy, with Best we to [indiscernible], quarter-over-quarter. saw strong Amazon sales addition In in X%

ASPs netting We Our and next-generation QX, a efforts To reflected we from in QX. our completed closed in net stock, against transactions the two proceeds a trademark in of increase financing execution support in driving sale were intelligent both year-over-year connectivity by XX% million. strategies, common driven and Zoom-related for products. $X offering raised assets, of $XX.X cash secondary proceeds of these million

our $XX end million to revolving ended the credit of million, XXXX. maturity to November to of we increasing Silicon addition, the have the with Bank, and $XX In agreement the Valley quarter, subsequent from line extending

We this in FY'XX. that with an discipline selectively profitability adjusted achieving will in opportunities to in result are using basis and liquidity material on invest EBITDA

results. including strategies, have We this pricing Looking to QX now that respond evidenced will addressing industry, pressures ahead, are with we're felt that price Nicole and discuss been shortly. in our inflation component across margin and gross changes the

sales of any headwinds in upticks potential create price from course, terms both Of distributors. the for top new and revenue, line de-stocking in to retailers and

of We on closely, make our and utilization with rates decisions investment sell-through return growth. are focus will reserves sustainable consistent monitoring and

and adding marked launching Vietnam, Turning customer, office as MultiChoice representative for and the establishing leading major expansion in and first and about our company, to build milestones; press Amazon to for momentum time. revenue products three that our India, quarter in in networking the ability influence global in We're Africa's with efforts, pleased Flipkart.in remain trial entertainment local Motorola a excited market. third coverage a India the

we're I times, and both ultimately Lastly, and agile, that a resilient, emphasize is self-sustaining. to building during dynamic operationally financially these focused business wanted on

to minimized impact logistical operations. chain the of supply and Our to-date our on efforts challenges this have

towards for current to We support strategies have to these products, that confidence strategy, glimpse that deeper that sales the to suggest and will progress in FY'XX. give software have meet pricing development our these will a ability no success on product not next, product and intelligent continue ahead our strategies Up mitigation basis. demand support into you performance, information the on a look market a go-forward continue our will Nicole and

Nicole Zheng

bundle three our app. ASP parental fees, products, This mobile across high-speed channels, both device performance sellers XX% a our ad our consumers which revenue and highest top upon homes expand the powerful of all-in-one-package per came for sophisticated with save is also DOCSIS with to and on $XXX sales small a new rental our MGXXXX, our to To motosync gaining security, more. app, X.X Gray. up Motorola enhanced block, an impressive Wi-Fi controls apartments modem were and the year while from Thanks,

high sellers Motorola MBXXXX MBXXXX. number and two DOCSIS speed number and the Our three were modems, X.X our

as closer lower we run prices Motorola address -- us in situated position amongst increases. one and mid-range our pricing price and line flexibility strategy, line seen the address each price have gives also component position increases of pricing time networking broader at we've home increase are pricing employed elected it us analysis, a flexibility margin competitive would our channel just to across higher that consumer to provides increases considerable we competitors. promotions. their has distribution to to to as electronics us strategy are the margin approximately After note our pricing an of went maintained new category price products to This and portfolio. XX% effect for X% product year, today well X%. to the of of skews, we've entire interest, across making profitability. Turning October and average I changes granted buyer analysis, at like the in At into the This product competitors. cycles taking is life The product product tool portfolio product's Optimizing opportunities to look replacements. for in across greater mid-range across our

MHXXXX X Amazon. introductions, unveil mesh system the product pleased Motorola new to WiFi in now were on Moving to we available

I intelligent feature Tracker. will we pleased motosync proactively app intelligently but Minim to the of inflation to than go price not With the this coverage square maximum that pricing. at network Amazon's point. climate, our can more share a speed motosync solution the believe believe performance solutions. seek and competitive value this called X.X feature in that toe alert gig going I launch consumers we [indiscernible] operating to theoretical to current that with more system, X,XXX foot customer In affordable month packed end, unique toe throughput am and a are up feature improve app value guide pricing, and Issue will this to To rather the

open As software plumbing. WiFi. efforts for a The Minim part telecom of of inventing WiFi for innovation tips to in rather than connectivity our to ongoing R&D the everyone, open commitment vendors support service project focus on in innovation WiFi like enables system or join we and

on available WiFi to WiFi open a We more element If more excited service approved manufacturers creating Minim Minim be platforms, ISPs. a the are and will also offer considered to software be standard for router firmware. device hardware our as opportunity to in

quarter, season, impactful peripheral Notably our giving. year-over-year combination XXXX for products, as we see well preparing products. for As in connectivity electronic the elevated NPD intelligent gift good predictions survey interest uplift these consumer was we sales hardware look software are to the to impressive holiday consumer also of NPD an expects a season. computer and as Both are singles forecast in X% holiday groups, fourth

Motorola which diligently Motorola low mesh gateway X market We for around brings of fulfilled anticipated WiFi report is we gateways our working to MTXXXX the and of time a to Motorola rest in the are gamers just and Friday device. family, have speed for high the and that wider X for right I'm system Black The homes. launching bringing and this happy latency highly highly distribution MHXXXX WiFi to connected corner pre-orders powerful

and our we products As XXXX, paid results. set modem a outlook that we mesh design. app I'll turn now growth next upgrades, financial motosync positive Sean? systems, with products and ambitious to industrial attractive segment enter a with feature premium include a of review generation have specs for Sean of upgraded an

Sean Doherty

A the financials in the ir.minm.com. earning has will I Thanks, reminder on depicted that presentation posted Nicole. are cover been friendly that

quarter, towards net quarter $XXX our increased on products, increasing our as quarter. into year-to-date to the million, just as $XX.X up and sales a of total price over under in Third the XX% networking discussed, with up period, XX% in shift million Nicole third to is over $XX fourth to XXXX. which mix compares to the the quarter intelligent which of approximately sales tread continue year third notably a in sales our $XX.X volumes head we prior continued basis, just average year-over-year On net

XX.X%, XX.X% to single by in quarter. the ago the and in was high prior which XX.X% margin impacted component by quarter. in was digits year pricing, the third Gross margin gross rose quarter compares Our which increased

fairly increases quarters. closely of expect sticky are for cost the to be pricing and sales monitoring We component next several the

while pricing products. aligning we this our higher new with Nicole strategy margin are discussed, As reality also developing

our XX% expect bookings we long-term, margin despite third of the strategy, quarter-to-quarter XX.X gross Over in we driven execute quarter fluctuation. our software deferred term for net from Revenue revenue increase includes $XXX,XXX near to or million, as which prior the our the quarter. $ expand product any the were

As sales million of the to end quarter, as increase the business, as months. in our over a XX% drivers that expect bookings that we revenue metric we ratably revenue $X.X a Deferred figure recognize quarter-over-quarter. of we subscription manage our our with is represents a non-GAAP understanding ending software and deferred balance service business. next believe the XX This QX revenue is third increasing on representing of sheet helpful mix reminder, the towards software

compares for to second trademark in combined of which $X.X million, $X.X to income negative Turning profitability, XXXX. to an driving XXXX, end-of-life and led and this share million our of products the net the write-down million XXXX. well to which in both sale or adjusted nuisance the a of XXXX quarter interest the the related of development third line compares $X.X of with This our quarter negative when an quarter Below and and net of $X.X the or $X.X operating result in by two settlement operating third for with of approximately results quarter offset basic profit million programs million, QX. in operating basis, third operating loss posted of the million XXXX. a loss loss basic with India, quarter of in-house, negative Sequentially, $X.X and one-time other costs which was of R&D diluted share of we've income million to net to lawsuits in $X.X $X.X quarter. third investments $X.XX million, $X.XX diluted per the compares at was of was compares $X negative as bring On which XXXX, an EBITDA third quarter for the within testing quarter-over-quarter the certification launch in marketing the million, value resources Zoom with this for partially firmware as the look

forward Inventories third inventory hedge the of against channel. and at end mitigate for prior we $X trademark. million, to quarter quarter, that look raised to we to $X.X public the have of of in the at million the shortages, the Amazon from of meet as million for with a representing both Amazon inventory a Cash in approximately of and chipset equivalents and available growth the third deployed the was consistent ensure on to million prior that season $XX.X sale quarter to cash demand our an cash and the $XX.X of $XX.X stored to and through QX, look in primarily approximately quarter, in levels The appropriate continued proceeds as which capital had that the sales persist. Now capital, why increase inventory well of million rationale around industry-wide to Zoom end netted the we projected secondary to $X.X sheet, end. shopping risk of to raised balance sales at holiday the offering, in compared million the to were investment of shortages we compared the and in continue as million increase to namely we invest as cash hand to $XX.X optimize an was in the due the due at period increase

to we drawn XX, on $XX,XXX we lines. September of Bank the XXXX, million was debt debt $X.X drawn XXXX, credit million from the had $XX to line loan comprised PPP limit the amended $XX,XXX related outstanding and million, the to Subsequent $X.X $X Silicon credit. of compares in line million PPP company's of related company's which Valley This to with the comprised $X.X June our of to the credit million outstanding $XX a of loan As million on increase was XX, end, which lenders as $XX million. of and quarter credit of primary

open the questions. us financial consistent EBITDA in have on With and reach achieving material beyond. call that quarter third profitability. results adjusted path to These EBITDA we we taken the steps adjusted XXXX and Our reflect a profitability steps for have to can operator,

Operator

Nichols. [Operator line from question comes Instructions] Your the first Josh of

Josh Nichols

to think up you ahead there holiday of do for taking Yes, and the think any of expect need and more potential at, hope generation we XQ should is see this we inventory is we and that work-down brought you move you thanks a my that build a levels, on question. strong as flow level good where front? confident what you've And pretty XQ kind to Is some about cash shopping through pretty or inventory season. feel

Gray Chynoweth

And that say of of just actually of One inventory I'm Yes, about kind think thanks, is in we we them strategy actually which for the kind first chain towards general shortages. the directly, just as point as product past. is chips around and time, QX to out, And of the mitigation in inventory. there's talked -- Josh. chipset types morning. voice is couple things. One Good kind second I brought our of to would to this purchase we you is, which about. one hold kind part inventory, two hear your did, of starting supply

we to the that stay those expect continue forward, that will we have. and pretty burn going even as through inventory through We manage

very if be hedge kind that inventory. Although is coming risks And it kind against. of of environment I pike, we the have foresee it will there's that that we thing the dynamic we say could a down bigger for

we in, -- the the position very we're think that year. in I with been think that's I of were we're in because were we've starting January fact and it, pleased very inventory about last we proactive

we're so, forward. environment, but be say continue I think that going can And it's it's a going -- to we to steady pretty dynamic

Josh Nichols

-- heard but a Street, for the margin I you on expecting we the talked everyone went seems that gross pressure higher-margin, said is a XQ? it and clearly products. and good then more of higher given you think broadly, about commentary ASP this quarter, gross from potentially I some Yes. Is And transitioning to bit was mean, to to impact a somewhat it rebound line on margin expected How you're -- more like sequentially? in -- the lot doing going that job

Gray Chynoweth

I'll pass that to Sean.

Sean Doherty

Sure, Good thanks, morning Josh. thanks, Gray, to and you.

we've which that some So, going we're managed to price feeling increases. planning for gross QX, steady on of through Nicole from those as downward fairly mentioned, pressures increases the margin. offset are to a we're component lot Obviously, price push maintaining

it going higher-margin through And sure skews XX% we're it to we're a around pushing, have we're sales right So, our is, to our making certainly, QX. manage margin going through higher channels. focus around marketing right to with efforts, for conservatively, that look our where on

Josh Nichols

to generate next good year. to significant then, And hear you expect EBITDA profitability

to you'd previously of year. that think positive I kind said kind you're be slightly this breakeven EBITDA or of targeting

that what's still timeline that transition? the is case or for So, the

Gray Chynoweth

we are year. got I a FY about fair for XXXX. for Yes, you've estimate million, put believe at report material us targeting $X in seems which certainly like EBITDA next profitability out you've a

that EBITDA year. close part we're that be of margin the intelligent bookings of for adjusted market, that I is these are the Clearly, going what think revenue. deferred bring as more products going our to adjusted -- to more and to we EBITDA revenue to going profitability is to

in our I'm obviously So, for see you did revenue, we're expecting with answer so. in help products EBITDA is going pop a that? QX, to more nice Nicole, deferred QX, adjusted sorry, intelligent two which coming on to

Nicole Zheng

be of a throes pure just in that developing would next outlook, I that play are features long-term the app. mobile software upgrade we add and be will the that year, in Sure, launched to will like

those XXXX. of expect in second-half the So,

Sean Doherty

pressure margins. obviously, positive on have those some And will,

Josh Nichols

last Thanks. Black from system launch gateways product I I coming would Wi-Fi be Friday And on mentioned other that color? think for to least Amazon. out of or the one two releases. the the think available Mesh X to Good timing see then Wi-Fi available question additional Any you be going the me. as at part for two were

Gray Chynoweth

Nicole, about to you talk want that?

Nicole Zheng

Sure.

scaling that's to we efforts that, about so very the the up excited yes, MHXXXX for markets system. launched holidays, and our in have the Mesh time So, market,

high-performance customers. the -- Black we far that's the as Wi-Fi. to gateway for in with gateway be year, a It and the still is before powerful X, as Friday, also the the go, will telephone gateways And of that then MTXXXX line has far Comcast Wi-Fi we're so is also As as expect incredibly it MGXXXX. hitting, hit the by second that targeting, end Motorola

Gray Chynoweth

are the those with ones certification, the that And is low-latency Nicole? right,

Nicole Zheng

was by CableLabs. first, MGXXXX the low-latency the certification The

Josh Nichols

Okay, thanks. the I'll hope queue. back in

Gray Chynoweth

Thanks, Josh.

Operator

next Instructions] Savago] comes Your [Ph]. from [Operator question [Tim

Unidentified Analyst

saw we Hi, product of kind in launch good follow-up. current see or the slower And expect did contributing on deferred it have growth a maybe a might've revenue, of think you XXXX the and quarter. of like year? you that but what described what what here QX, it Mesh in given which just touch might I'll again, was earlier in you the in quarter. in if on might any sales the the morning. hit bit, increase the a the of you sort of on driven of that something upcoming, you we touched one kind market, And that I And to maybe I'll don't want be the I deferred last revenue magnitude that pace comments on little know

Gray Chynoweth

Sure. Morning, Tim.

deferred XX% kind think impacting two over for there's things in QX. I the So, revenue growth QX of

actually orders, believe, couple in drove and QX, I in there load-in activity series, for increase over was large sales both so obviously that, had really strong EMGXXXX those you were really $XXX,XXX the which it MHXXXX recall, a As we QX the of QX.

come planning now. was we that it's to in that we available, impacting happy on sale available the we QX October. were just Originally, in thing the QX, second delayed of having on for mentioned launch on now Mesh as and onboard but the out call, systems that celebrate was The Amazon is XXXX are

growth moment other Yes, experienced what would me revenue in QX out revenue we I increase in deferred see would and QX for saw and the I am saw over to a QX, in products two expecting what is would on we QX. for that backs think expecting I mentioned coming here than over And eclipse Nicole QX and in QX certainly So, growth just here it be let that of the in we here. with in that that the are -- say going deferred one QX QX. we that more certainly bigger to QX, in over line

Unidentified Analyst

maybe October, Great, any ISP couple coming hardware to in software into also incremental wireless anything or thanks ISP very to you've your wonder of much. provider space, thoughts in I third-party think I hardware. And the a software-only have with solutions I or mentioned the a and But opportunities further wanted look show, regard times with out follow-up, or next either paired if year? you as as you of

Gray Chynoweth

little bit want there? mix do a talk Nicole, to about the you product

Nicole Zheng

midst and we the using evaluating package base so, we're Minim with excited full we from giving a that a new set up ISPs actually for the more solutions. full their subscriber tools to quite the are to a motivate and fashion, finding by Essentially, solution, purchase about. to way in hardware the to Yes, are ISPs lower-touch a in signup functionality software, Minim so, lot grow faster, them and whole of

And expected excited lower about pretty we're be ISPs sort rolled choose the to up, year. savings also is to end-to-end for them that when some setting buy So, give that in they Minim out of this and solution. to friction

Gray Chynoweth

think, we the which opportunities has into talked two part a year, We to sell Yes, that purchase from to going have think been those great strategy great exciting next to deliver software. that, about for the to always the to that be as those piece go platform having to Nicole us, able wanted for ISPs addition would only I to to addition be And to of is I to we're it's beginning. able add our us able value-added of a in wanted solutions; services sell with software-only about. we be hardware to from

our is us, accounts under can we how them deliver how So North for to many incrementally. management services Star are and

you're you So gives color the for. that looking hopefully

Unidentified Analyst

had for you the recent me, let me then ISP are follow-up at Well, ISP. when kind rural as where traction new that, we about the the particular, there some assume side to or broadband you've you at on last areas internationally on question know kind you're where I U.S. in talk this that market of other market? focused of targeted that's package Should you're looking to bring look

Gray Chynoweth

built in to that, of be in by say some in of Africa, Yes. relationship say about the comes definitely we out our change a out really us excited we're ability in tip see are U.S., very for those way, Africa. game also because place different wireless. over to have When of hardware I would Facebook. of them thinking of globally rural think fantastic in we lot the to that built kind Asia, and all at kind could to that of it standard really deployments, terms software some wide the in get really fixed nature. gate in platform for with the I we really us of going It's to would about of models. And we've be the a a opportunities great happening We're multitask opportunities what's developed excited

allow to to just a so going think going our We're be in deployments to lot a between to manure one interested and networks great and they're have to earn into be to by home. to complicated consumer we to of trends to going going products don't generally advantage and different -- all for us satellite that want a different learn, get to experience. safety because of to they lease be of of and we fiber There's are horse expect that from all only deploy WiFi to our those the the really things add home network and you great and drive systems use the and people XG is ability have app the that's become improves having app they're those architectures, WiFi that to as us, able these home bunch to mesh support Some the to actually great why get to be important visibility take software did Nicole, to our and that? live attached different in.

Nicole Zheng

like I'd specific to it when international. going some our Yes. to on add color differentiation comes competitive

CSR towards WiFi what look to So solution. which with a consumer Minim is take against call the internationally? the that approach, go organization course, CSR, more with a great. great avoid, by takes starts the providers is a and Of you do empowering that offering It Customer different phone Rep on the the Plume's Service marketing Plume team having a we managed within to WiFi up and at really make having geared the high-end tool. solutions focus the experience and the providing to consumer

part markets us get allows costs to onto routers. our and the on we routers, story. to that such In is platform It which distributed enter very low within and that work addition, routers TIP our TIP played currently in of we as But why solution is are our us architected -- cannot. high competitors that are a able allows serve well low cost emerging to really way cost

So as see strategy a we growth that Minim. do for long-term

Unidentified Analyst

very much. Okay. Thanks

Operator

there time, it back over would turn management. this additional to are questions. to At like I no

Gray Chynoweth

you speaking your forward and I to look appreciate in everyone. much very We quarters. coming Thanks time, with

Operator

today's concludes This call. you. Thank conference

disconnect. You Speakers line. please may the now hold

Minim (MINM) 2 Nov 212021 Q3 Earnings call transcript