Sonim Reports First Quarter Financial Results
Sonim Technologies, Inc. (Nasdaq: SONM), a leading U.S. provider of ultra-rugged mobile devices, accessories and solutions designed specifically for task workers physically engaged in their work environments, reported financial results for the first quarter ended March 31, 2022.
First Quarter 2022 and Recent Highlights
- Net revenues in the first quarter of 2022 were $13.3 million, an increase of 8.3% compared with $12.2 million in the first quarter 2021.
- Net loss in the first quarter of 2022 was $7.2 million, compared with a net loss of $9.3 million in the first quarter of 2021.
- Ended the quarter with cash and cash equivalents of $10.6 million
- Announced a proposed $17.5 million strategic equity transaction with AJP Holding Company, LLC to purchase 20.8 million shares at $0.84 per share, subject to stockholder approval
- Secured $9.5 million in orders for the XP5 Plus feature phone and XP10 5G smartphone scheduled to launch later this year
- Announced plans to use the AJP capital to enter larger growth markets by leveraging Sonim's expanded ODM partnerships to offer a wider range of 5G smartphones, feature phones, mobile hot spots and other industrial communications equipment
Said Peter Liu, who was appointed Sonim's Chief Executive Officer effective April 14, 2022: "We remain on track to launch our new feature phone this summer and new 5G smartphone this fall, having secured our first Tier One U.S. carrier stocking order for both products. These new devices will complete the eagerly anticipated update of Sonim's existing rugged product line and provide increased sales opportunities to our current rugged user base.
"With the proposed strategic investment from AJP, we have embarked on a transformation process at Sonim to leverage our deep relationships with Tier One carriers and rugged engineering heritage to become the top middle market provider of rugged and industrial communication devices in North America. We intend to deploy our expanded ODM relationships to accelerate the development of a wider range of complementary 5G smartphones, feature phones, mobile hot spots and other industrial communications equipment at lower development and manufacturing cost. In doing so, we believe we can expand our addressable market and meet underserved needs at both existing and prospective Sonim customers."
2022 Financial Results
Revenue for the first quarter 2022 was $13.3 million, compared with $12.2 million in the first quarter 2021. The increase in revenue reflected changes in product mix, driven by the launch of Sonim's new XP3plus device, partially offset by the decline of certain legacy products in Sonim's product refresh cycle as they approach end of life.
Gross profit for the quarter ended March 31, 2022, was $1.5 million, or 11.5% of revenues, versus 20.1% of revenues for prior year quarter. The decrease in gross profit margin was primarily attributable to product sales mix as Sonim transitions to its next generation devices and higher product costs due to supply chain issues and higher shipping costs. The launch of an updated smartphone in the third quarter of 2022 is expected to increase unit sales of our higher margin smartphones in the second half of 2022.
Operating expenses for the first quarter 2022 were $8.6 million, a 25.2% decline from $11.5 million in 2021. Net loss for the quarter ended March 31, 2022 was $7.2 million, compared with $9.3 million in the prior year quarter.
Balance Sheet and Cash Flow
Sonim ended the first quarter with $10.6 million in cash and equivalents and remained essentially debt free. Accounts receivable were $10.4 million, and inventory was $5.2 million.
Sonim announced on April 14, 2022, that it entered into a subscription agreement with U.S.-based AJP Holding Company, LLC ("AJP") whereby, subject to the terms thereof, AJP will purchase a total of 20.8 million shares of Sonim common stock at a price of $0.84 per share for an aggregate purchase price of $17.5 million. Upon completion of the transaction, which is subject to stockholder approval and other customary closing conditions, AJP will own approximately 52% of Sonim's post-transaction outstanding common stock based on an estimated 19.3 million shares outstanding prior to the transaction.