"Internet of Things" pure play Sierra Wireless (NASDAQ:SWIR) reports first-quarter results this Thursday after the market close. And with shares currently down around 20% so far this year after more than doubling in 2014, you can bet the market will be listening closely to what the company has to say.
Analysts expect quarterly revenue to climb 21.5% year over year to $147.2 million, which should translate to adjusted earnings of $0.17 per share. By comparison, both figures stand above the mid-points of Sierra Wireless' own guidance, which calls for revenue of $145 million to $149 million, and earnings per share of $0.15 to $0.18.
But Sierra Wireless' business is about more than just revenue and earnings. Here are a few more specific items investors should be watching to get a better idea of what's driving those results.
On organic growth, acquisition activity
First, one of management's stated goals is to invest in its business to pursue "profitable organic growth" -- that is, revenue growth achieved over the past year without the help of acquisitions.
Last quarter, that meant excluding the contributions of its In Motion Technology subsidiary, which Sierra Wireless acquired for $21 million in January 2014, and its AnyData embedded module and modem products, which were purchased for an undisclosed sum in October 2013.
All told, last quarter's organic growth came in at 20.7%, which was well above the 10% to 15% range Sierra Wireless management has previously suggested as a realistic, sustainable goal. Given Sierra Wireless' aforementioned first-quarter guidance, it seems safe to expect organic growth to be slightly above that targeted range.
At the same time, look for Sierra Wireless to offer not only hints at future acquisitions, but also updates on other more recent purchases. That notably includes Maingate, another machine-to-machine solutions specialist Sierra Wireless acquired for $90 million this past January.
During last quarter's call, management described the promise of Maingate's complementary wireless connectivity technology as a "significant step forward for our company," and said it should ultimately enable Sierra Wireless to offer more comprehensive device-to-cloud solutions for "many" Internet of Things applications. Sierra Wireless also stated Maingate's integration with its enterprise business was "well under way," including merging SWIR's AirVantage Cloud with Maingate's connectivity platform. Ideally, investors would like to hear management report no hiccups as this integration continues to progress.
Finally, keep in mind that Sierra Wireless does not provide full-year guidance. But we should expect management to provide a peek at the current quarter's revenue and earnings on a consolidated basis. That also often comes with a few select general statements about trends affecting its various sub-segments. Typical seasonality, for example, is expected to hold back first quarter enterprise segment revenue.
For perspective when that guidance arrives, analysts' models currently call for Sierra Wireless' second-quarter revenue to grow 16.5% year over year to $157 million, with adjusted earnings of $0.25 per share. In the end, even if Sierra Wireless beats expectations with its Q1 results, chances are our short-term-oriented market will place more emphasis on where Sierra Wireless believes its business is headed in future quarters.