M2M vendor Numerex has reported impressive gains in third-quarter earnings and revenues due to rising demand for its subscription-based security, asset tracking and monitoring services.
The company claimed a 32% year-on-year increase in net profit, before the inclusion of income-tax benefits, to $987,000, while overall revenues grew 17% to about $17.7 million.
Sales of embedded devices and hardware came in at $6.4 million for the quarter, compared with $5.2 million a year earlier, with subscription-based recurring revenues up from $9.9 million in the year-earlier quarter to $11.3 million.
That growth was driven by the acquisition of 121,000 new subscriptions in the quarter, compared with just 80,000 in the third quarter last year.
The only real black spot on an otherwise pristine set of results was a decline in the gross margin, which fell to 41.6% from 45.4% in the third quarter of 2011.
Numerex (Atlanta, USA) blamed the drop on the increase in revenues from embedded devices and hardware, which carry significantly lower margins than recurring revenues.
“The Company experienced strong broad-based demand for its M2M products and services posting a significant improvement in several key performance metrics,” said Stratton Nicolaides, the chairperson and chief executive of Numerex, in a statement. “Activity surrounding our on-demand subscription-based services, particularly in security, asset tracking and monitoring, and supply chain management continues to drive results.”
Numerex says it continues to invest in its cloud-based M2M service delivery systems and now serves customers in more than 50 vertical markets.
It also reported cash and restricted cash of $7 million and long-term debt of $3.6 million, with cash flow of $1.5 million over the first nine months of the year.
Numerex expects cash balances to improve over the balance of the year as it reduces capital expenditure.