Sonim to Take Financial Hit Because of Delays in Carriers' Phone Rollouts
SAN MATEO -- Sonim Technologies, Inc. (Nasdaq: SONM), a leading U.S. provider of ultra-rugged mobility solutions designed specifically for task workers physically engaged in their work environments, has provided a corporate update, including revised financial guidance for fiscal 2019. The company has also appointed technology and financial veteran Bob Tirva as interim CFO. Sonim management will hold a conference call today, September 10, 2019, at 11:00 a.m. Eastern time (8:00 a.m. Pacific time) to provide more details related to these updates.
Fiscal 2019 Financial Outlook
Based on current expectations, Sonim management has updated its financial guidance for the fiscal year ending December 31, 2019:
- Net revenues are expected to be flat or slightly below 2018 net revenues of $135.7 million reported in fiscal 2018;
- GAAP net loss, defined as net revenues less cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes and other expenses, is expected to be up to $15 million;
- Adjusted EBITDA, a non-GAAP metric, is expected to be a loss of up to $5 million.
Several factors have collectively contributed to the company’s revised financial outlook for fiscal 2019, primarily stemming from changes in U.S. wireless carrier forecasts for the launch of Sonim’s new products as well as launch delays due to software issues related to these new introductions.
Sonim bases its forecasts on its wireless carrier’s forecasts of their purchase of Sonim’s products. Over the past few weeks, these carriers lowered those forecasts for Sonim’s new product introductions. This summer Sonim had expected, based on customer input, carriers to subsidize Sonim phones post-launch, to place new releases in retail locations, and to sign up push-to-talk customers to Sonim’s new generation of phones. In each of these cases, there have been significant delays and changes in the rollout of these efforts, resulting in a reduction of Sonim’s expected net revenues in the second half of the year. The company believes, however, that the carriers are moving forward with their plans, and Sonim expects it will see sell-through momentum occur near the end of 2019 leading to a positive start to 2020.
Further, the company has experienced technical challenges related to its XP8 smartphone and other general non-systemic, accessory-related issues in its feature phones, which cumulatively resulted in lost sales momentum. These challenges have diverted resources away from launching smaller Tier 2 carrier customers and, as such, delayed the launch of Sonim devices to their customer base. The company believes that these issues are being remediated, and Sonim expects the bulk of the Tier 2 carriers to launch Sonim products in the latter part of 2019.
Sonim has been working diligently over the last year to address the risks of the escalating trade war between the U.S. and China. Last week, Sonim shipped its first phones manufactured outside of China. While there is more work to do to ensure all Sonim phones are manufactured to be tariff-free, this is a positive operational step for Sonim.
“We encountered a number of recent, near-term delays, which have collectively required us to revise our financial expectations for this fiscal year,” said Bob Plaschke, CEO of Sonim Technologies. “We do not believe that these events will have long-term structural impacts on our business. In response, we have worked diligently to address the problems that are within our control and are working to implement processes to mitigate the impact of such events in the future. Despite the setback related to our 2019 expectations, we remain confident in Sonim’s prospects and are focused on delivering the results and metrics that will drive long-term growth and profitability for our company.”
Executive Management Update
Jim Walker has stepped down as Chief Financial Officer (CFO) of Sonim. “Jim has contributed a great deal to our company in his tenure as CFO, and we are grateful to him for his service,” commented Plaschke. “We wish him all the best in his future endeavors.”
Sonim has appointed Bob Tirva, an experienced financial and technology executive, to serve as interim Chief Financial Officer. Previously, Tirva served as CFO of Intermedia, a leading cloud UCaaS and business application provider. Prior to Intermedia, Tirva was Corporate Controller at Dropbox, where he was responsible for developing the company’s accounting organization. Before Dropbox, Tirva spent nearly 14 years at Broadcom Corporation, where he held a range of finance roles of increasing responsibility, including Senior Vice President, Principal Accounting Officer and Vice President of Finance. Tirva also has career experience with IBM Corporation, Navistar Financial Corporation and Ernst & Young. He currently serves on the board of directors of Resonant, a leader in transforming the way radio frequency front-ends are being designed and delivered for wireless devices.
Tirva holds an MBA from the Yale School of Management and a Bachelor of Business Administration degree in Accounting from the University of Notre Dame.