Shares of Sierra Wireless Inc. (NASDAQ:SWIR) were up 14.3% as of 1:00 p.m. Friday after the Internet of Things specialist announced stronger-than-expected third-quarter 2016 results.
Quarterly revenue fell 0.7% year over year, to $153.6 million, as a 2.2% decline from the OEM solutions segment, to $127.8 million, more than offset growth of 6.8% from enterprise solutions, to $18.9 million, and a 10.7% increase from cloud and connectivity services, to $6.9 million.
On the bottom line, that translated to adjusted net income of $4.1 million, or $0.13 per share, down from net income of $7.4 million, or $0.23 per share in last year's third quarter. Adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) declined 19.8% year over year, to $9.7 million.
This might not sound impressive, but keep in mind these results arrived near the high end of Sierra Wireless' admittedly cautious guidance ranges provided last quarter. That guidance called for third-quarter revenue of $145 million to $155 million and adjusted earnings per share of $0.06 to $0.13.
"In the third quarter of 2016, we delivered financial results that were in line with our expectations, while also strengthening our strategic position with new product launches, new design wins and the acquisition of Bluetooth innovator, Blue Creation," added Sierra Wireless CEO, Jason Cohenour. "Looking forward, we expect stronger financial results in the fourth quarter, including sequential and year-over-year revenue growth."
Sierra Wireless formally completed its $6.5 million acquisition (or $3.0 million, net of cash acquired) of Blue Creation only two days ago, expanding its short-term wireless portfolio in Bluetooth and Wi-Fi. And for the fourth quarter, Sierra Wireless anticipates revenue of $157 million to $166 million (the midpoint of which represents 11.5% year-over-year growth) and adjusted earnings per share of $0.13 to $0.19, up from $0.08 per share in the same year-ago period.
In the end, while it's hardly surprising, it's encouraging to see that last quarter's guidance proved too conservative. As Sierra Wireless looks forward to a return to growth in the coming quarter, I think investors are right to celebrate today's results.