What happened
Shares of Sierra Wireless (SWIR) were up 17.8% as of 12:46 p.m. ET on Wednesday after the company posted its first non-GAAP (adjusted) profit in more than two years.
"We worked closely with our customers, partners and suppliers to deliver strong sequential and year-over-year revenue growth in the fourth quarter," CEO Phil Brace said.
So what
Sierra Wireless is a leading supplier of chips and components for the Internet of Things market. Total revenue increased by 24% year over year, driven by strong demand and investments to expand manufacturing. Management added capacity to an existing factory and started new production at a site in Mexico to help meet demand.
Sierra's factories are operating at full capacity to meet booming demand for 4G and 5G enterprise routers and modules. It now has three factories, which contributed to strong revenue growth in the quarter. This means revenue could further accelerate as the supply situation improves, but this might not happen until next year.
Image source: Getty Images.
Now what
Management cited "long lead times for chips and components" and expects the tight supply chain to remain through 2022. But it is also seeing strong demand for 5G modules across a number of markets. Analysts currently expect total revenue to increase by 20% in 2022, but it's possible those estimates might be revised higher after the better-than-expected quarter.
Sierra's revenue hasn't grown all that much over the last several years, and neither has the stock price. But demand appears to be coming on strong entering 2022. Management said it has the strongest backlog in company history, so this quarter could be the start of a wave of demand as more companies begin adopting 5G applications.
