Sierra Wireless recently began shipping AR Series modules to a new connected car solutions customer in China. Image source: Sierra Wireless.

Sierra Wireless Inc. (NASDAQ:SWIR) is poised to release second-quarter 2016 results this Thursday after the market close. With shares of the Internet of Things pure play up around 9% year to date on the heels of last quarter's encouraging beat -- but still down nearly 30% over the past year -- you can bet the company would love another solid performance to sustain its momentum.

So, what should investors be watching when Sierra Wireless' report hits the wires?

First, note Sierra Wireless' guidance calls for Q2 revenue in the range of $150 million to $160 million (compared to $158 million in the same year-ago period), and adjusted earnings per share of $0.09 to $0.17 (compared to $0.12 per share in last year's second quarter).

Within that, Sierra Wireless should also break down the performance of its three reportable segments, including OEM solutions, enterprise solutions, and the newer cloud and connectivity services business.

OEM solutions revenue fell 9.1% year over year last quarter, to $120.9 million, as new programs were only able to partially offset expected softness from certain automotive customers. However, during the subsequent conference call, Sierra Wireless management told investors to expect OEM Solutions revenue to rebound beginning in the second quarter, and to gain strength through the remainder of the year as demand from existing customers normalizes and new programs continue to ramp up. In one notable recent example of the latter, Sierra Wireless revealed earlier this month that it began shipping automotive-grade AirPrime AR series modules in the first quarter under a new agreement with Chinese connected car solutions company PATEO.

Meanwhile, enterprise solutions sales rose 9%, to $15 million in Q1, thanks to new customer wins across a variety of sectors and traction for its new AirLink RV50 LTE gateway. That appeared to lay the foundation for additional gateway launches to round out its gateway offerings for the remainder of this year. In particular, though, keep an eye on the enterprise segment's gross margin, which came in last quarter at an exceedingly high 65.1%, but would have been a still-healthy 52.5% had it not been for the positive impact of a legal settlement during the quarter related to a supplier's component-quality issue. Sierra Wireless' consolidated gross margin was 31.5% excluding that settlement in Q1, so investors should hope to see it sustain solid profitability as enterprise revenue continues to grow.

Next, Sierra Wireless' younger cloud and connectivity business was previously rolled into the enterprise segment up through October 1, 2015, primarily because its revenue was immaterial before then. However, cloud and connectivity solutions revenue climbed 92% year over year in Q1, albeit to just $6.9 million, driven by new customers in the payment, energy, and industrial sectors across multiple geographies. But perhaps most intriguing is that Sierra Wireless says its cloud and connectivity team is seeing success winning new customers through close collaboration with the OEM and enterprise teams to integrate devices with services. In fact, Sierra Wireless CEO Jason Cohenour estimated 60% of cloud and connectivity leads come from the company's other two business segments. Looking forward, I would love to see more of this successful collaboration to ensure cloud and connectivity continues to thrive.

Finally, listen for any updates to Sierra Wireless' full-year guidance, which it reiterated three months ago in calling for 2016 revenue of $630 million to $670 million, and adjusted earnings per share of $0.60 to $0.90. For perspective -- and with the caveat that we don't typically pay much attention to Wall Street's short-term demands -- analysts appear to be more pessimistic, with consensus estimates modeling 2016 revenue and earnings per share near the low end of both ranges at $643.7 million and $0.69 per share, respectively. If Sierra Wireless is correct in its assertion that its business should gain momentum as 2016 progresses, it might well be poised to extend its rebound this week.

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