Sierra Wireless Reports First Quarter 2010 Results
- Exceeded revenue and profitability guidance for the quarter on higher than expected M2M revenue and lower Non-GAAP operating expenses
- Revenue of $151.3 million, an increase of 36% compared to the first quarter of 2009 and better than guidance of $150.0 million
- GAAP loss from operations of $4.5 million and loss per share of $0.24
- Non-GAAP earnings from operations of $4.1 million and non-GAAP diluted earnings per share of $0.13, compared to guidance of $3.3 million and $0.11 per share respectively
Sierra Wireless, Inc. (NASDAQ: SWIR, TSX: SW) today reported first quarter 2010 results. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles ("GAAP"), except as otherwise indicated below.
Revenue for the first quarter of 2010 was $151.3 million, an increase of 36% compared to $111.4 million in the first quarter of 2009 and an increase of 5% compared to $144.0 million in the fourth quarter of 2009. Growth was driven by an increase in Machine-to-Machine ("M2M") revenue to $88.7 million, up 187% compared to $30.9 million in first quarter of 2009 and up 15% compared to $77.2 million in the fourth quarter of 2009. M2M growth was partially offset by a decline in Mobile Computing revenue to $62.6 million, down 22% compared to $80.5 million in the first quarter of 2009 and down 6% compared to $66.8 million in the fourth quarter of 2009.
"We are pleased with our first quarter results, including higher than expected revenue and improving profitability," said Jason Cohenour, President and Chief Executive Officer. "We also made significant progress during the quarter building on our leadership position in M2M, while also revitalizing momentum in our Mobile Computing business.
Revenue from M2M in the first quarter was nearly triple what it was a year ago and now represents 59% of total sales. We are also expanding our position in the M2M value chain and seeing good momentum in our AirLink(TM) gateways and AirVantage(TM) services platform business lines. Furthermore, I am very pleased with the progress we have made in our integration of Wavecom and in capturing tangible synergies. On a year over year basis, revenue from the sale of former Wavecom products was up 49%, gross margin expanded and operating expenses were down 28%, driving non-GAAP break-even results compared to a loss of $12.3M just one year ago.
In Mobile Computing, our key network operator customers continue to rely on us for innovative, first-to-market products. So far this year, we have launched the Overdrive(TM), the world's first 3G/4G mobile hotspot, with Sprint and the AirCard 890 with AT&T. We also announced and demonstrated our dual-carrier HSPA+ USB device, supporting speeds of up to 42Mbps, with Telstra at Mobile World Congress. Our activity and revenue with PC OEMs also continues to grow, helped by launches with key customers such as Panasonic and Fujitsu. We believe that our recent and expected AirCard launches, improving sell through trends and new design wins with leading PC OEMs have our Mobile Computing business well positioned for sequential growth."
On a GAAP basis, gross margin was 30.6% in the first quarter of 2010, compared to 28.3% in the same period of 2009. Operating expenses were $50.8 million and loss from operations was $4.5 million in the first quarter of 2010, compared to $41.8 million and a loss from operations of $10.3 million in the same period of 2009. Our net loss was $7.5 million, or loss per share of $0.24, compared to a net loss of $23.7 million, or loss per share of $0.76, in the first quarter of 2009.
On a non-GAAP basis, gross margin in the first quarter of 2010 was 30.7%, compared to 28.4% in the first quarter of 2009. Operating expenses and earnings from operations were $42.3 million and $4.1 million, respectively, compared to $29.4 million and $2.2 million, respectively, in the first quarter of 2009. Net earnings were $4.1 million, or $0.13 per diluted share, compared to net earnings of $2.5 million, or $0.08 per diluted share, in the first quarter of 2009.
Non-GAAP results exclude transaction costs related the Wavecom acquisition, restructuring costs, acquisition related integration costs, stock based compensation expense, acquisition related amortization, foreign exchange gains or losses, tax adjustments and non-controlling interest related to non-GAAP adjustments. The reconciliation between GAAP and non-GAAP results of operations is provided in the accompanying schedules.
The following guidance for the second quarter of 2010 reflects current business indicators and expectations. Relative to Q1, we expect a higher proportion of our revenue to come from sales of AirCard products, driven by improving demand and new product launches. Our guidance also reflects the uncertain macroeconomic environment. Inherent in this guidance are risk factors that are described in greater detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management's current beliefs and assumptions.
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