KORE Group Holdings, Inc. Q1 FY2025 earnings call

Key Points:

• Operating performance improved with two consecutive quarters of positive free cash flow. Connections near 20 million at end of Q1.
• IoT Solutions non-GAAP margin improved. Operating expenses decreased $7.6 million vs same period 2024 due to restructuring.
• Q1 revenue $72 million, adjusted EBITDA $14.5 million, adjusted EBITDA margin 20% (up 60 basis points).
• Shifted to estimated annual recurring revenue (eARR) to better illustrate recurring revenue model. Pipeline had new opportunities eARR ~$52M and existing customers eARR ~$30M, closed won eARR over $6M.
• Value creation plan with five pillars: customer intimacy (strengthening relationships), product innovation (developing next-gen products), profitable growth (increasing revenue without compromising profitability), operational excellence (intensifying efforts for scale and efficiency), and culture/winning team (cultivating high-performance inclusive environment).

Total revenue for the first quarter decreased 5% year-over-year to $72.1 million. IoT Connectivity revenue was $53.9 million, a 7% decrease year-over-year, representing 75% of first quarter revenue. IoT Solutions revenue increased 1% year-over-year to $18.2 million, or 25% of first quarter revenue. Total connections have increased by 8%, nearing the 20 million mark.

Guidance:

• Maintained 2025 guidance: revenue $288M-$298M (2% y-o-y growth), adjusted EBITDA $62M-$67M (19% y-o-y increase), free cash flow $10M-$14M (443% y-o-y improvement).

Q: Scott Searle asked about eARR historic numbers, sales cycles, OpEx normalization, product gross margin, ARPU, and 2026 growth.

A: Ron Totton and Paul Holtz responded: eARR comps not available, sales cycles not elongated despite macro, OpEx net ~$25M going forward, solutions margin target 40%, ARPU ~$0.91 with balanced pipeline, optimistic on 2026 growth but early to forecast.

Q: Lance Vitanza asked about Winnebago win details, demand in healthcare, and new vs existing customers.

A: Ron Totton responded: Winnebago win was competitive, sales cycle ~9 months, healthcare demand growing with good retention, wins include 3 new and 1 existing customer projects, with 75% new vs 25% existing customer growth expected from new divisions within existing customers.