Looking Beyond 4Q, Novatel Wireless Looks To Be A Buy
Novatel Wireless: The Bottom Is In And Plenty Of Gains Ahead
Mon, May 9, 4:25 PM
Fri, Feb. 19, 1:13 PM
- 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.
- Novatel's Q4 results, earnings release
Thu, Feb. 18, 4:12 PM
Nov. 6, 2015, 2:58 PM
- Novatel (NASDAQ:MIFI) is up sharply after posting Q3 results in-line with the revised guidance provided by the company on Oct. 28. Q4 guidance is for revenue of $66M-$72M and EPS of -$0.05 to -$0.08. That's officially below a 2-analyst consensus of $76.4M and $0.00, but the high estimate in the consensus ($80M and $0.03) might not take last week's revision into account.
- M2M product/service revenue rose 82.7% Y/Y in Q3 to $17.4M, thanks in part to the Feeney Wireless acquisition. Mobile computing revenue (inc. 4G routers) rose 6.8% to $34.8M.
- Gross margin rose 360 bps Y/Y to 27.5%; Novatel expects the Digicore acquisition (brings with it high-margin SaaS telematics/vehicle-tracking subscriptions) to boost its M2M/IoT gross margin (30.2% in Q3) to more than 45% in Q4. Operating expenses fell 15% Y/Y to $16.3M thanks to job cuts. Novatel ended the quarter with $10.2M in cash, and no debt.
- Peer Sierra Wireless is plunging in response to a Q3 miss and soft Q4 guidance.
- Q3 results, PR
Nov. 5, 2015, 4:56 PM
- Novatel Wireless (NASDAQ:MIFI): Q3 EPS of -$0.04 beats by $0.01.
- Revenue of $54.58M (+23.1% Y/Y) misses by $1.7M.
Oct. 28, 2015, 5:19 PM
- Novatel (NASDAQ:MIFI) chairman and former T-Mobile COO Sue Swenson is the company's new CEO. She replaces Alex Mashinsky, whose employment has been "terminated," Mashinsky has also been required to leave the board.
- Novatel now expects Q3 revenue of $54M-$55M vs. prior guidance of $52M-$60M and a $56.3M consensus. Adjusted EBITDA guidance has been narrowed to -$0.2M to -$0.6M from -$1.6M to $0.1M. Q3 results arrive on Nov. 5.
- Shares haven't yet moved after hours.
Aug. 6, 2015, 6:13 PM
- In addition to missing Q2 estimates, Novatel (NASDAQ:MIFI) is guiding for Q3 revenue of $52M-$60M and EPS of -$0.05 to -$0.08, below a consensus of $69.7M and $0.02. No explanation is provided in the earnings release for the Q2 miss or the guidance.
- Along with its numbers, Novatel has announced it's cutting 34 jobs (9% of its workforce) and eliminating another 21 contracted/outsourced positions, as part of a restructuring expected to yield $10M/year in cost savings. A $600K Q3 charge is expected.
- Q2 figures: M2M product revenue rose 102.8% Y/Y to $19.8M, thanks to the Feeney Wireless acquisition. Mobile computing product (4G modem/hotspot) revenue rose 27.3% to $35M (below Novatel's expectations). Gross margin was 29.1%, and operating expenses rose 26.7% to $19.3M. Novatel ended Q2 with $17.9M in cash, and $78.2M in convertible debt.
- Shares have tumbled to $1.91 in AH trading. Peer Sierra Wireless is also selling off post-earnings.
- Q2 results, PR
Aug. 6, 2015, 4:18 PM
- Novatel Wireless (NASDAQ:MIFI): Q2 EPS of -$0.08 misses by $0.08.
- Revenue of $54.8M (+47.0% Y/Y) misses by $9.98M.
May 6, 2015, 2:52 PM
- In addition to beating Q1 revenue estimates, Novatel (NASDAQ:MIFI) is guiding for Q2 revenue of $62M-$70M, favorable to a $63.4M consensus at the midpoint. EPS guidance of -$0.01 to $0.02 is in-line with a $0.01 consensus.
- Q1 EPS was hurt by $5.5M in charges related to an all-employee retention bonus plan, as well as $0.2M in intangibles charges and $0.9M in charges related to the Feeney Wireless deal.
- Feeney contributed $300K to Q1 sales, and will have a bigger Q2 impact (might not be fully factored into analyst estimates). During the CC (transcript), management reiterated Feeney is expected to produce 2015 revenue of $38M, and stated Novatel (with the help of 2H15 IoT product growth) expects to end the year on a $400M/year run rate (compares with a current $292M market cap) and with a 30% gross margin.
- Q1 mobile computing revenue totaled $44.6M, and M2M revenue $8.9M. Gross margin rose to 24.8% from 21% a year ago, and costs/expenses fell 19.7% to $13.8M.
- With shares having fallen 6% yesterday ahead of earnings, they're now down 12% over the last two days.
- Q1 results, PR
May 5, 2015, 4:14 PM
- Novatel Wireless (NASDAQ:MIFI): Q1 EPS of -$0.01 in-line.
- Revenue of $54.5M (+12.9% Y/Y) beats by $0.87M.
Feb. 20, 2015, 11:45 AM
- In addition to beating Q4 estimates, Novatel (MIFI +2.2%) is guiding for Q1 revenue of $50M-$55M and EPS of -$0.03 to $0.00, favorable to a 3-analyst consensus of $48.8M and -$0.03.
- Also: CEO Alex Mashinsky states Novatel expects to grow its MiFi 4G hotspot revenue by "more than 20%" in 2015, and "achieve double-digit organic growth in IoT revenue in 2015, with acquisition activity also anticipated to increase our IoT business into volumes more closely aligned with our MiFi business volumes by year-end." The pre-earnings 2015 revenue growth consensus was 14.7%.
- Mobile product revenue (4G hotspots) rose 35% Q/Q in seasonally strong Q4 to $47M; M2M product revenue fell 12% to $8.4M. Gross margin fell 10 bps Q/Q to 23.8%, and operating expenses fell by $100K to $12.7M.
- The fact shares had already risen 63% since the time of Novatel's Q3 report is likely limiting today's gains.
- Q4 results, PR
Feb. 19, 2015, 4:12 PM
- Novatel Wireless (NASDAQ:MIFI): Q4 EPS of $0.01 beats by $0.02.
- Revenue of $55.36M (-15.3% Y/Y) beats by $3.23M.
Feb. 6, 2015, 2:33 PM
- Down only moderately yesterday afternoon after providing mixed Q1 guidance to go with a Q4 beat, Sierra Wireless (NASDAQ:SWIR) is seeing much steeper losses today. Shares are at their lowest levels since the company's market-pleasing Q3 report.
- On the CC (transcript), CFO Dave McLennan mentioned gross margin is expected to fall Q/Q in Q1 (impacting EPS), thanks to both a seasonal drop in higher-margin Enterprise sales and (notably) "the cost impact of managing current supply issues related to RF components." The supply issues are causing Sierra to "purchase more expensive parts from the distribution channel, as well as incur additional product cost in the quarter."
- During the Q&A, CEO Jason Cohenour suggested the problem will ease in Q2, but could remain an issue. "[T]here are certain parts we’ll have to design out and qualify, qualify new part simply because the supply chain capacity is not going to meet our needs."
- Top-line commentary was more upbeat. McLennan mentioned OEM Solutions revenue (87% of total revenue, +27% in Q4) saw "solid contributions [in Q4] from the automotive, enterprise, networking, transportation, sales and payment, energy, field service and mobile computing segments." Cohenour disclosed Sierra saw "several new customer wins during the quarter in the public safety, utility, power systems and retail segments," and that the company's HL M2M modules are driving design win share gains.
- Rival Novatel (NASDAQ:MIFI) appears to be getting a lift from Sierra's sales figures/guidance. Its Q4 report arrives on Feb. 19.
Jan. 27, 2015, 2:14 PM
- Novatel Wireless (MIFI +3.6%) will report Q4 and full-year results after the close on Thursday, February 19th. The conference call will begin at 5.00pm ET.
- Consensus views for Q4 and 2014 are for EPS of -$0.01 and -$0.58 and revenue of $52.13M (-20.2% Y/Y) and $181.99M (-45.7%), respectively.
Nov. 7, 2014, 8:23 AM
- Along with its Q3 results, Novatel (NASDAQ:MIFI) has announced Alex Mashinsky is now the company's permanent CEO. Mashinsky has been serving as interim CEO since June, following Peter Leparulo's departure.
- The company also discloses it has taken out a $25M, 5-year credit facility. The facility carrier a base interest rate "determined by using the daily three month LIBOR rate, plus an applicable margin of 2.50% to 3.00% depending on the Company's liquidity." Novatel had $26.3M in cash/marketable securities at the end of Q3, and a $9.7M warrant liability.
- Q4 guidance is for revenue of $50M-$55M and EPS of -$0.03 to $0.00, soundly above a consensus of $46.1M and -$0.13.
- Mobile computing revenue fell 59% Y/Y n Q3 to $34.8M, as Novatel narrowed its product focus. M2M revenue rose 10% to $9.5M.
- Shares rose 6.6% yesterday in response to rival Sierra Wireless' Q3 beat and strong Q4 guidance.
- Q3 results, PR
Novatel Wireless, Inc. provides intelligent wireless solutions for the worldwide mobile communications market. Its broad range of products principally includes intelligent mobile hotspots, USB modems, embedded modules for machine-to-machine and mobile computing OEMs, integrated asset-management... More
Industry: Diversified Communication Services
Country: United States
Other News & PR