So what: Quarterly revenue declined 5.1% year over year, to $142.8 million, including an expected 9.1% decline in OEM solutions revenue, to $120.9 million, given continued softness from a small number of automotive customers. There was also a 9% increase in enterprise solutions revenue, to $15 million, thanks to new customer wins and continued traction for the company's new AirLink RV50 LTE gateway. Finally, a 92% increase in revenue from the recently formed cloud and connectivity segment, driven by new customer wins and successful product launches during the quarter. For perspective, this revenue came in slightly above the midpoint of Sierra Wireless' guidance, which called for $135 million to $145 million.
That translated to adjusted net income of $2.6 million, or $0.08 per diluted share, which also handily beat the company's outlook for adjusted earnings to be "slightly positive to slightly negative." That said, Sierra Wireless' bottom line benefited from a $2.3 million legal settlement with a supplier related to a component-quality issue. But even excluding that item, adjusted earnings would have been $0.03 per share and still beaten expectations.
"Revenue and non-GAAP earnings in the first quarter were slightly better than expected," added Sierra Wireless CEO Jason Cohenour, "and we continue to expect our business to gain strength over the course of the year as new customer programs move into production and we introduce new leading-edge IoT products and solutions."
Now what: For the current quarter, Sierra Wireless expects revenue of $150 million to $160 million, and adjusted earnings per share of $0.09 to $0.17 -- both roughly in line with analysts' consensus estimates.
For the full-year 2016, Sierra Wireless reiterated its previous guidance, which called for revenue of $630 million to $670 million, and adjusted earnings per share of $0.60 to $0.90. But if Wall Street's opinion headed into the report was any indication, analysts were fearing another downside surprise similar to last quarter; consensus estimates were modeling full-year 2016 revenue of $638.6 million, and earnings of just $0.69 per share -- both well below the midpoints of Sierra Wireless' outlook.
In the end, though Sierra Wireless' performance was only "slightly" better than anticipated, I think investors are rightly pleased the company was able to deliver on its promises today. So with the business poised to gain strength as the year progresses, I remain convinced shares have plenty of room to run higher from here.
Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Sierra Wireless. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.