Module maker Sierra Wireless has reported a halving of its net loss for the first quarter of the year as it targets future M2M acquisitions to consolidate its position in the fast-developing industry.
Reporting in non-GAAP terms – which, it claims, gives a better sense of underlying operational performance – the company said that its net loss from continuing operations shrank to $1.4 million from approximately $2.8 million in the year-earlier quarter.
In GAAP terms, the net loss from continuing operations came in at $7.9 million, compared with $7.2 million in the first quarter of 2012.
Sierra Wireless (Richmond, Canada) also saw revenues increase by 9.8%, to $101.4 million, thanks largely to the strong performance of Sagemcom, the M2M networking business it acquired in a $56.7 million deal last year.
Last month, Sierra Wireless completed the $144.5 million sale of its AirCard USB modem and hotspot division to Netgear and it appears keen on using the proceeds to finance additional M2M takeover activity.
“We are now an M2M pure play, with leading global market share, the industry’s broadest product line, and blue-chip customers,” said Jason Cohenour, the president and chief executive officer of Sierra Wireless. “Moreover, we now have significant financial capacity to accelerate growth and value creation through acquisitions, as we capitalize on the secular growth opportunity in M2M.”
Acquisitions have features prominently in the Sierra Wireless story, with takeovers of AirLink Communications, Junxion and Wavecom all preceding the purchase of Sagemcom last year.
Speaking to analysts during the company’s earnings conference call, Cohenour said that annual revenues from the M2M business had risen from $158 million in 2008 to nearly $400 million today, fuelled by a mixture of organic and inorganic growth.
Dave McLennan, the chief financial officer, said the company’s pro forma cash balance was more than $160 million, boosted by the completion of the AirCard sale and putting Sierra Wireless in a strong position to embark on further acquisitions.
On 1 January 2013, the company reorganized its segments and product lines on a reporting basis and now classifies all sales under OEM Solutions (including embedded wireless modules and tools for OEM customers) or Enterprise Solutions (which includes intelligent gateways, routers and tools for enterprise customers, as well as an M2M cloud offering).
Revenues from OEM Solutions grew by 11.4%, to $89.2 million, between the first quarters of 2012 and 2013, while those from Enterprise Solutions remained relatively flat, at $12.2 million.