Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported third quarter 2012 results. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (GAAP), except as otherwise indicated below.
Revenue for the third quarter of 2012 was $162.6 million, compared to $146.8 million in the third quarter of 2011, and $167.4 million in the second quarter of 2012. The year-over-year revenue increase of 10.8 percent was driven by exceptional growth in Machine-to-Machine (“M2M”) sales, including a $4.6 million contribution from the recently acquired Sagemcom M2M business, and solid growth in Mobile Computing, driven by higher sales to PC OEMs. M2M revenue was $86.1 million, an increase of 14.3 percent compared to $75.3 million in the third quarter of 2011. Mobile Computing revenue was $76.5 million, an increase of 7.0 percent compared to $71.5 million in the third quarter of 2011.
“Our Machine-to-Machine business had an exceptional quarter, with revenue up 14 percent year-over-year driven by strong organic growth and contribution from the recently acquired Sagemcom M2M business,” said Jason Cohenour, President and Chief Executive Officer. “Our success in M2M, combined with solid year-over-year revenue growth in Mobile Computing and tight cost control, resulted in profitability that exceeded our expectations.”
On a GAAP basis, gross margin was $47.9 million, or 29.4 percent of revenue, in the third quarter of 2012, compared to $43.3 million, or 29.5 percent of revenue, in the third quarter of 2011. Operating expenses were $46.8 million and earnings from operations were $1.1 million in the third quarter of 2012, compared to operating expenses of $45.1 million and a loss from operations of $1.8 million in the third quarter of 2011. Net earnings were $3.7 million, or $0.12 per diluted share, in the third quarter of 2012, compared to a net loss of $1.0 million, or $0.03 per diluted share, in the third quarter of 2011. A favorable income tax recovery contributed to the stronger than expected net earnings. The third quarter results also included $2.7 million in acquisition and restructuring costs, compared to $1.0 million in restructuring and integration costs in the third quarter of 2011.