Novatel (MIFI +0.8%) soundly missed Q4 sales estimates, slightly beat EPS estimates, and guided for Q1 revenue of $59M-$64M and EPS of -$0.06 to -$0.09, below a sole estimate of $68.7M and -$0.05.
The company also announced it's selling its telematics hardware unit to rugged computing device maker Micronet(MICT +10.6%) for $24M - $12M in cash up-front plus $6M payments on the first and second anniversaries of the deal's closing.
The deal is expected to close by the end of Q1; Novatel will buy products from Micronet afterwards. CEO Sue Swenson: "The disposition of the telematics hardware business will accelerate our Company's transformation from a hardware-centric manufacturer to a true provider of IoT SaaS and Solutions."
On the earnings call (transcript), Novatel stated Q1 sales will be hurt by a weak South African rand, which affects sales for Novatel's recently-acquired Ctrack unit. Ctrack is expected to deliver Q1 revenue of $12M-$16M vs. $16.6M in Q4.
Sales of Novatel's MiFi 4G/Wi-Fi hotspots were pressured in Q4 by inventory-reduction efforts at the company's "large carrier customer" (presumably Verizon). MiFi sales are expected to rise slightly Q/Q in Q1.
Total subscribers rose by 10.2K Q/Q in Q4 to 520,220, and fleet subscribers by 2,850 to 157,850. Hardware revenue fell 17% Y/Y to $45.5M. Thanks to the Digicore/Ctrack and Feeney Wireless acquisitions, SaaS/services revenue rose to $12.6M from $0.3M a year ago.