Sierra Wireless narrows losses in first quarter as “M2M pure-play”

M2M module maker Sierra Wireless has reported a narrowing of its net loss from continuing operations in its first quarter as a “pure-play” M2M company on the back of strong growth in revenues.

In GAAP terms, the company’s net loss from continuing operations was $6.74 million for the three months ending June 2013, compared with a loss of $8.87 million for the same period last year.

Revenues, meanwhile, grew by an impressive 14.9% over the same period, to $109.6 million.

M2M module maker Sierra Wireless has reported a narrowing of its net loss from continuing operations in its first quarter as a “pure-play” M2M company on the back of strong growth in revenues.

In GAAP terms, the company’s net loss from continuing operations was $6.74 million for the three months ending June 2013, compared with a loss of $8.87 million for the same period last year.

Revenues, meanwhile, grew by an impressive 14.9% over the same period, to $109.6 million.

On a non-GAAP basis, Sierra Wireless (Richmond, Canada) claimed to have swung to a profit of $1.5 million from a loss of $0.4 million in the year-earlier quarter.

“In our first quarter as an M2M pure-play, we delivered record quarterly revenue with nearly 15% year-over-year growth,” said Jason Cohenour, chief executive of Sierra Wireless.

“Our record revenue, combined with solid gross margin and good cost control, led to a significant improvement in non-GAAP earnings, demonstrating the leverage in our operating model as we grow the business,” he added.

Sierra Wireless completed the $120 million sale to Netgear (San Jose, CA, USA) of AirCard, its mobile broadband devices business, on April 2 – a move it made it order to focus exclusively on the M2M industry.

“The AirCard transaction gives us strong financial capacity to continue to drive our leadership position in M2M,” said Dave McLennan, the chief financial officer of Sierra Wireless.

The company has also benefited from its €44.9 million ($59.56 million) acquisition of M2M operations from French technology group Sagemcom (Rueil-Malmaison, France) in August 2012.

Speaking on a conference call with analysts, Cohenour said that revenue contribution from both the enterprise solutions and OEM solutions products lines was solid, including “another strong quarter from the acquired Sagemcom M2M business”.

Sierra Wireless has recently reported a number of important contract wins, including a high-profile deal to provide automotive modules for use on the LTE network of Verizon Wireless (New York City, NY, USA).

Cohenour said the module was already sampling with prospective customers and claimed that Sierra Wireless had taken a leading position in 4G LTE, “with shipments now exceeding two million devices, many times more than any other player in the M2M industry”.

Besides its module-making activities, Sierra Wireless continues to push AirVantage, a suite of cloud-based services that takes the company into other parts of the M2M value chain.

Cohenour said that AirVantage was giving Sierra Wireless “differentiation, stickiness and margin protection on the hardware” but that it would take time for the business to become a meaningful revenue generator.

On a non-GAAP basis, Sierra Wireless expects to generate revenues of between $111 million and $115 million in the third quarter, and earnings from operations of between $2.2 million and $3.3 million.

Cohenour blamed economic headwinds in Europe for constraining growth but said business in the Americas region was flourishing.

“We’re sailing through some choppy waters in Europe and that’s holding us back,” said Cohenour. “I think European strength coming back would be a big help.”