How Sierra Wireless Inc. Remains at the Top of its Industry

Sierra Wireless Inc (TSX:SW)(NASDAQ:SWIR) just posted its Q2 results and investors need to know what’s inside.

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The Motley Fool

Sierra Wireless Inc. (TSX: SW)(NASDAQ: SWIR) is a Canadian tech company, which specializes in machine-to-machine devices and cloud services. In simple terms it helps machines communicate with each other, creating what some have called the ‘internet of things’. This technology is vital in automated manufacturing, monitoring of energy infrastructure and managing city lighting.

This technology offers a near-unlimited scope of applications and new potential uses that continue to materialize every day. Sierra Wireless has managed to navigate the waves of the industry and has been recognized as the top revenue generator for the third straight year. Now with the release of its second-quarter earnings did the company earn the same praise from investors as it received from its own industry?

Q2 results have been accessed from the cloud

Sierra Wireless set a new quarterly revenue record of US$135 million, up sharply from the US$109 million it posted in Q2 2013. It also managed to bump up its gross margin to $43 million from US$36 million during the same period. However, these record revenues are not reaching the bottom line as the company posted a net loss of $8.2 million ($0.26 per share) in the quarter, which is down from a net income of US$61 million ($0.22 per share) it saw last year. This brings the year-to-date net loss to US$12.2 million.

A portion of these losses might be explained by the company’s US$21 million purchase of Motion Technology back in March. However, there is still good news as its non-GAAP earnings from operations did increase by 149% to US$3.7 million in the quarter. Another promising gain comes in the form of the 23% boost in revenues from its OEM Solutions division.

Q3 guidance has been adjusted

Sierra Wireless president and CEO Jason Cohenour commented recently that, “in the second half, we expect to deliver continued revenue and profitability growth, while also pursuing additional strategic acquisitions to expand our leadership position in the machine-to-machine (M2M) market.”

In terms of hard numbers Q3 is expected to look like this: revenues between US$ 137 million and US$140 million and net earnings projected to be between US$3.8 million ($0.12 per share) to US$4.7 million ($0.15 per share).

A bright future ahead

Outside of the Q2 report Sierra Wireless has announced that it had been selected by Philips CityTouch to provide wireless modules for its CityTouch LightWave remote lighting system. This is an outdoor lighting system designed for cities looking to upgrade infrastructure with more efficient LED fixtures. The components from Sierra Wireless will act as the main means of communication between the lights and the central control system.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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