Sonim Appoints New CEO, Announces Third-Quarter Financials
Thursday, October 31, 2019 | Comments

Sonim Technologies appointed Tom Wilkinson as CEO and announced that previous CEO Bob Plaschke will assume a new role as strategy advisor to the board.

Wilkinson served as CEO of Xplore Technologies until it was sold to Zebra Technologies in August 2018. He most recently served as chairman and interim CEO of Cipherloc, which announced that it was working to retain a permanent CEO. Wilkinson’s experience includes chief financial officer (CFO) and other business leadership roles.

“Tom brings strong leadership experiences as a public technology company executive, as both a CFO and CEO, with responsibility for technology development, go-to-market strategy and sales to the government and commercial sectors,” said Sonim Board Chair Maurice Hochschild.

Plaschke started with Sonim in 2002 and became CEO and chairman of the board in 2005. In his new role, he will focus on developing strategic opportunities for the company.

“Sonim Technologies has developed a strong presence within a growing first responder market and is expanding its portfolio of solutions and customers it serves,” said Hochschild. “Bringing Tom in as CEO at this time, with his deep operational experience will help Sonim execute on its growth strategies, leverage our first responder market presence and accelerate the deployment of our solutions to our customers across multiple vertical markets we are targeting.”

The company also released its financial results for the third quarter of 2019. In that period, Sonim saw a 27 percent decrease in net revenues from $39.5 million to $28.9 million. Much of that decrease was attributable to lower volumes of sales for the XP8 smartphone and XP5 feature phones sold to U.S. carriers.

The company said the number of smartphone units sold during the three months ended Sept. 30 decreased by 57% from the same period of the previous year, primarily because of decreased demand for the older XP6 and XP7 models and the introduction of the XP8.

Sales of the company’s feature phones, which include the XP3, XP5 and XP5s, in the three months ending Sept. 30 increased by 63% from the same period in the previous year, primarily because of increased demand for the XP5s from several carriers and the introduction of the XP3. With the introduction of the XP3, feature phones represented about 79% of third-quarter unit sales compared with about 49% in the same quarter last year.

Gross profit in the third quarter was $7.2 million, a 48% decrease from the $14.1 million the company took in during the third quarter of 2018. The decrease was primarily attributable to a one-time reserve adjustment of $2.8 million related to the aging of materials and finished good and a different product mix in the three months ended Sept. 30 this year compared with last year.

During an earnings call Oct. 30, Sonim Interim CFO Bob Tirva said that the ongoing trade war between China and the U.S. did not affect the company's third-quarter earnings. The company manufactured and shipped enough product from its production facilities in China to cover the third and fourth quarters before the tariffs went into effect, he said.

When asked about changing the supply line to combat the tariffs, Wilkinson said the company is looking into the issue but cautioned against making long-term decisions based on potentially temporary conditions, such as tariffs. 

Net loss attributable to common stockholders for the quarter was $6.8 million compared with $900,000 in the same quarter of last year. The $10.5 million decrease in net revenues for the quarter was one of the key drivers for the increase in net loss, along with higher operating expenses of $2.7 million.

For the first nine months of 2019, net revenues were $99.1 million, a 11% increase from the $89.1 million the company took in the same time period the previous year. The company attributed much of that increase to sales of the XP3.

Gross profit for those nine months was $31.4 million in 2019, compared with $29.9 million in the first nine months of 2018, a 5% increase. That increase was mostly attributable to the 11 percent increase in net revenue from mobile phone sales in that time period.

Net loss attributable to common stockholders for the first nine months was $19.1 million compared with net loss to common stockholders of $12.1 million for the same period the previous year. Much of that increase in loss was due to an $18 million increase in operating expenses, which was partially offset by a $10 million increase in net revenue.

For 2020, the executive management team plans to expand both the company’s product lines and the markets it serves, as well as improve Sonim’s ability to make estimates and therefore plan its costs and operations appropriately.

While that planning occurs, Sonim continues to drive carrier subsidization of Sonim phones and placement of those phones in retail locations and to address technical issues with the XP smartphone. These and other issues, along with recent changes in senior leadership, have impacted management’s ability to provide an accurate forecast of its near-term financial results. As a result of these conditions, the company elected to suspend its practice of providing forward-looking financial guidance.

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