Loss-making IoT services firm KORE Wireless is slashing its headcount by a quarter after reporting its second quarter results.
For the period ended 30 June, 2024, revenue was $67.9m, a 2% decrease from $69.5m in the same period last year.
IoT connectivity revenue of $55.8m, a 16% increase from $48.3m last year, was driven by investments and organic growth. Organically, IoT connectivity grew about 2% year-over-year.
But IoT solutions revenue only came in at $12.1m, a 43% decrease from $21.3 million in the same period last year. That was due to the timing of orders from certain customers, and a strategic decision to reduce lower margin hardware deals, said KORE.
There was an overall net loss of $64.3m for the quarter - a 230% increase from the net loss of $19.5m last year. This latest loss included a non-cash goodwill impairment charge of $45.4m, related primarily to the company's share price decline in the second quarter of 2024.
Adjusted EBITDA was $11.4m, a 20% decrease from $14.2 million for the same period a year ago, due to increases in operating expenses and a decline in revenue.
The company has now appointed Ron Totton to the role of president and CEO, after a period of leading KORE on an interim basis.
"While IoT connectivity revenue continues to grow, looking at the business wholistically, our costs have risen disproportionately to overall revenue growth, and this has weighed on margins and cash flow,” said Totton. “Following a comprehensive review during my first few months on the job, we are acting decisively to optimise operations and reduce expenses, while re-investing a portion of the savings in the higher growth and higher margin areas of the business."
KORE is now initiating a restructuring plan that is expected to result in gross cash savings of $5m to $6m in 2024, and $20m to $22m annually thereafter, prior to any reinvestment in higher-growth and higher-margin areas of our business.
The plan will be funded with a one-time restructuring cost of $4m to $5m. The plan includes implementing measures to reduce operating expenses by streamlining processes and reducing discretionary spending, and reducing the workforce “to better align with current business needs”, said the firm, resulting in a full-time headcount reduction of approximately 25%, including both employees and individual contractor staff.
