Sierra Wireless (NASDAQ: SWIR) announced second-quarter 2018 results on Thursday after the market closed, including increasing contributions from its two most profitable businesses, a hefty share repurchase authorization, and encouraging forward guidance.
Let's dig in, then, to see how Sierra Wireless finished the first half of the year, and what investors should expect in the coming months.
Sierra Wireless' results: The raw numbers
|Metric||Q2 2018||Q2 2017||Year-Over-Year Growth|
|Revenue||$201.9 million||$173.4 million||16.4%|
|GAAP net income (loss)||($11.4 million)||$6.8 million||N/A|
|GAAP earnings (loss) per share||($0.32)||$0.21||N/A|
DATA SOURCE: SIERRA WIRELESS.
What happened with Sierra Wireless this quarter?
- On an adjusted (non- GAAP ) basis -- which excludes stock-based compensation and acquisition costs -- net income was $9.7 million, or $0.27 per share.
- By comparison, Sierra Wireless' guidance provided in May called for revenue of $195 million to $203 million, and adjusted earnings per share of $0.17 to $0.25.
- Product revenue grew 9.4% year over year to $178.8 million, while services and other revenue jumped 130.4% to $23.1 million.
- By segment:
- OEM Solutions revenue grew 4.5% to $150.9 million.
- Enterprise Solutions revenue increased 31.1% to $28.4 million.
- Internet of Things (IoT) services revenue more than tripled to $22.6 million, driven by both contributions from Sierra Wireless' acquisition of Numerex and organic subscriber growth.
- Adjusted EBITDA grew 4.7% to $15.6 million.
- In late May, the company announced the retirement of CEO Jason Cohenour. Board chairman Kent Thexton will serve as interim CEO as the company searches for a permanent replacement.
- Sierra Wireless also announced a Normal Course Issuer Bid -- essentially a repurchase program in the Canadian stock market -- for up to 3.58 million shares, or 10% of the company's public float .
What management had to say
"In the second quarter of 2018, we delivered solid revenue and adjusted EBITDA growth on a year-over-year and sequential basis," Thexton said, adding:
Our two fastest growing and highest margin businesses -- namely Enterprise Solutions and IoT Services -- represented 25% of total revenue in Q2 and we continued to strengthen our position as a leader in device-to-cloud IoT solutions.
For the third quarter of 2018, Sierra Wireless expects revenue of $198 million to $207 million, and adjusted earnings per share of $0.22 to $0.30. Once again, the midpoint of both ranges stands above consensus predictions for third-quarter earnings of $0.25 per share on revenue of $199 million.
In the end, this was a straightforward quarterly beat as Sierra Wireless continues to grow where it counts, and the prospect of reducing its float by 10% serves as a massive vote of confidence in its future. With shares up 18.5% in response, it's apparent the market agrees.
10 stocks we like better than Sierra Wireless
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Sierra Wireless wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 4, 2018