Sonim Technologies Revises Financial Guidance for 2019
Tuesday, September 10, 2019 | Comments

Sonim Technologies revised its financial guidance for fiscal 2019 and appointed Bob Tirva as interim chief financial officer (CFO).

For the fiscal year ending Dec. 31, net revenues are expected to be flat or slightly below 2018 net revenues of $135.7 million. GAAP net loss, defined as net revenues less cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes and other expenses, is expected to be up to $15 million.

Several factors contributed to the revised financial outlook for fiscal 2019, primarily stemming from changes in U.S. wireless carrier forecasts for the launch of Sonim's new products, as well as software issues related to the new introductions.

During the past few weeks, carriers lowered forecasts for Sonim's new product introductions. This summer Sonim had expected, based on customer input, carriers to subsidize Sonim phones post-launch, to place new releases in retail locations and to sign up push-to-talk (PTT) customers to Sonim's new generation of phones. In each of these cases, there have been significant delays and changes in the rollout of these efforts, resulting in a reduction of Sonim's expected net revenues in the second half of the year.

However, Sonim said the carriers are moving forward with their plans, and the company expects it will see sell-through momentum occur near the end of 2019, leading to a positive start to 2020.

Further, the company experienced technical challenges related to its XP8 smartphone and other general nonsystemic, accessory-related issues in its feature phones, which cumulatively resulted in lost sales momentum. The challenges diverted resources away from launching Tier 2 carrier customers and, as such, delayed the launch of Sonim devices to Tier 2 customer bases. The company expects the bulk of the Tier 2 carriers to launch Sonim products in the latter part of 2019.

The XP8 is certified to operate on the First Responder Network Authority (FirstNet) and Verizon networks.

Sonim has been working during the past year to address the risks of the escalating trade war between the U.S. and China. The company manufactures most of its mobile phones at its facility in Shenzhen, China. Last week, Sonim said it shipped its first phones manufactured outside of China, although it didn’t say where the phones were manufactured.

"We encountered a number of recent, near-term delays, which have collectively required us to revise our financial expectations for this fiscal year," said Bob Plaschke, CEO of Sonim Technologies. "We do not believe that these events will have long-term structural impacts on our business. In response, we have worked diligently to address the problems that are within our control and are working to implement processes to mitigate the impact of such events in the future. Despite the setback related to our 2019 expectations, we remain confident in Sonim's prospects and are focused on delivering the results and metrics that will drive long-term growth and profitability for our company."

Jim Walker stepped down as CFO. Tirva previously served as CFO of Intermedia, a cloud UCaaS and business application provider. Prior to Intermedia, Tirva was corporate controller at Dropbox and spent nearly 14 years at Broadcom.

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