With close to 130M fully diluted shares outstanding, this money-losing enterprise is proving that it will never be able to make any money. Some highlights from yesterday’s earnings release.
CEO resigns, like, immediately. He will stay on as executive chairman, but there was no transition. He is working on ways to “maximize shareholder value” after his stock has declined by 80% from recent highs.
Hardware gross margins briefly hit their fabled 25% level one year ago, but have fallen to 21.7% in Q4 and are on their way back to 15%.
Hardware gross margins declined despite those supposedly high-margin 5G revenues increasing 132% from 21% to 58% of overall revenues.
$11M net loss for the quarter, $52M for the year.
Operations burned through $25M in cash, but cash balances higher due to sale of CTrack assets.
Verizon revenues declined by $56M year over year, back to pre-pandemic levels, and below levels seen in 2016. T-Mobile’s increase to 26.4% of revenues helped to save their year.
To hit their 25% revenue growth target for 2022, they will need to find another T-Mobile while keeping revenues at least flat in the rest of their business.
The decline in Q4 margins was blamed on a rise in LTE revenues and the lack of their CTrack South Africa revenues. Regardless, year over year, 5G revenues increased from 21% to 56% of revenues and margins declined. As they attempt to expand their business into other territories and parts of the world (rest of world revenues increased about $4M in all of 2021), they will be met by an increasing number of participants in what is rapidly becoming a mature market. Phone companies are releasing their 3rd generation of 5G phones while coverage continues to rapidly expand. The idea of increased margins into a maturing technology market sounds a bit like wishful thinking.