Sonim Technologies Inc. (SONM) is a leading U.S. provider of ultra-rugged mobility solutions designed specifically for task workers physically engaged in their work environments, often in mission-critical roles.
The Sonim solution includes ultra-rugged mobile phones, a suite of industrial-grade accessories, and data and workflow applications designed to increase worker productivity, communication and safety on the job site.
According to VDC Research, there is a $4B global market for Push-to-Talk over Cellular (PoC). It is expected that in time it will further disrupt the $17B Land Mobile Radio (LMR) market. However, investors should keep in mind:
1) VDC estimates that in 2018 the installed base of PTT users in the US was 13 million, and is expected to
reach 20 million by 2023 at a CAGR of 8.5%.
2) Some of the primary factors driving organizations to augment their existing LMR solutions with PoC
solutions include the high costs of maintain LMR systems, access to mobile broadband data applications,
and extending coverage of an LMR network beyond its traditional reach.
And most importantly....
3) The transition to widespread use of LTE-based MCPTT is expected to be a long, slow one, with LMR systems continuing to be the go-to technology for public safety voice communications for the foreseeable future.
Source: VDC Research (2019) PTT Over Cellular and its Impact on LMR Augmentation or Displacement?
News Releases
Oct. 30 - Reports Third Quarter Financial Results and Appoints Industry Veteran Tom Wilkinson as CEO: Mr. Wilkinson served as CEO of Xplore Technologies (Nasdaq: XPLR) a maker of rugged tablet and handheld devices until it was sold to Zebra Technologies in August 2018.
Jan. 21 - Appoints Experienced Rugged Mobility Sales and Marketing Leadership: Randy Denny as executive vice president of sales, and John Graff as chief marketing officer.
"Randy and John are two key additions to our executive team. Having worked together at Xplore, I saw firsthand their contribution to the successful business turnaround. I expect they will be instrumental in our efforts to support our carrier partners and further deepen our relationships with important public safety customers, as well as broaden our product scope and enhance our go-to-market strategy at Sonim." - CEO, Tom Wilkinson
Mar. 11 -Reports 2019 Financial Results, Restructuring Update.
Mar. 20 - Provides Business Update: After having to shut down our manufacturing operations due to the COVID-19 disruptions in Asia early this year, Sonim is now back to full operations," said Tom Wilkinson, Chief Executive Officer.
Mar. 31 - Partner with Turtleback to Launch Ultra-Rugged Holsters for XP8, XP5s and XP3
Apr. 7 - Supports XP8 Deployments to First Responders and Emergency Management Teams: Provided an update on some recent deployments to support first responder with the COVID-19 crisis.
Recent deployments include two states where Sonim rugged Android XP8 smartphones were rapidly configured and provisioned for the state's emergency management personnel.
Another state's Health Department placed two orders for Sonim rugged Android XP8 smartphones in an effort to coordinate communications with a large number of ambulances that are transporting patients between various healthcare facilities to address potential capacity constraints.
Apr. 22 - Team Up with IASUS Concepts to Launch Wireless and Wired Throat Microphones for XP8 and XP5s: With the SNIPER PRO II Heavy Duty Wired Throat Microphones, first responders can communicate handsfree with integrated Push-to-Talk (PTT) support on the XP8 and XP5s, while wearing personal protective equipment (PPE).
May 6 - Team Up with Savox; Launch TRICS Remote Speaker Microphone for Both LMR and LTE Handset: Partnered with Savox to launch the Tactical Radio and Intercom Controller System (TRICS®) for enhanced situational awareness, compatible with Sonim's XP8, XP5s and XP3 handsets. TRICS is compatible with up to four devices, including radios, smartphones/LTE devices, intercoms and Sonim handsets. "TRICS is designed for military special forces, tactical teams and first responders working in mission critical operations. "Interoperability between land mobile radios (LMR) and LTE cellular handsets is a key need for mission critical communications," said John Graff, CMO, Sonim Technologies.
May 14 -Reports First Quarter Financial Results: "Like most businesses, the COVID-19 pandemic caused some disruption to our operations in the first quarter, including a three-week closure of our factory in Shenzhen, and will continue to have an impact on our supply chain. Despite these challenges, we are expecting an increase in demand in the second quarter and can now focus on quarterly sales to a broader range of carrier and enterprise customers." -SONM's CEO.
May 21 -Launches Ultra-Rugged Rapid Deployment Kit for Portable Communication Systems: Provides quick connectivity to cellular, Wi-Fi, GPS, LMR, and Satellite systems. partnered with leading providers, Cradlepoint, Inmarsat Government, JPS Interoperability Solutions and Rajant, to launch the Rapid Deployment Kit (RDK-3).
The RDK-3 is an all-in-one, portable communication solution designed to provide emergency and public safety teams with reliable access and connectivity, in even the most dangerous and remote mission-critical situations.
Housed in a rugged carrying case, the RDK-3 contains four Sonim XP8 Android smartphones, Cradlepoint wireless router, 15.6 Ah battery and a Bluetooth enabled battery monitoring system to maintain power in emergency situations.
"Wildfires, hurricanes and other natural disasters pose communication challenges for first responders ranging from limited or no access to a network to lack of expertise required to set up network connectivity," said John Graff, CMO, SONM.
June 2 - Announces Launch of Public Offering: Commenced an underwritten public offering of $20,000,000 of shares of its common stock. All of the shares of common stock to be sold in the offering will be offered by Sonim.
In addition, Sonim expects to grant the underwriters a 30-day option to purchase up to an additional $3,000,000 of shares of Sonim's common stock on the same terms and conditions.
June 5 - Announces Pricing of Upsized $24 Million Public Offering.Pricing of its underwritten public offering of 32,000,000 shares of its common stock at a price to the public of $0.75 per share.
The aggregate gross proceeds to Sonim from the offering are expected to be approximately $24 million, before deducting underwriting discounts and commissions and offering expenses and is expected to close on June 9, 2020.
June 9 - Closing of $27.6 Million Public Offering, Including Full Exercise of Underwriters' Overallotment Option: announced the closing of 36,800,000 shares of its common stock, which includes the full exercise of the underwriters' option to purchase 4,800,000 additional shares of common stock, at a price to the public of $0.75 per share.
The aggregate gross proceeds from the offering were approximately $27.6 million, before deducting underwriting discounts and commissions and offering expenses. All of the shares of common stock were sold by Sonim.
Sonim intends to use a portion of the net proceeds from the offering to repay $4.0 million of the outstanding principal amount and accrued interest under the subordinated secured convertible promissory note issued to B. Riley Principal Investments, LLC, (the "BRPI Indebtedness"), and the remaining amount of the BRPI Indebtedness shall be converted into shares of Sonim's common stock at $0.75 per share.
Oppenheimer & Co. Inc. and Lake Street Capital Markets LLC acted as joint book-running managers for the offering.
June 11 - Provides Business Update Following $27.6 Million Public Offering: Continues to execute its turnaround strategy and reiterates its prior statement anticipating revenue growth in Q2 2020, ending June 30 vs. Q1 2020.
"This offering marks a turning point for Sonim, providing a reinvigorated and debt free balance sheet at a time when we are finalizing our restructuring and turning our focus towards developing the next generation of rugged 5G enabled products," - Tom Wilkinson, Chief Executive Officer.
June 23 - RAM Mounts Launches Powered and Keyed Locking Cradles for Sonim XP5s and XP8 Rugged Handsets: Teamed up with RAM® Mounts to launch spring-loaded powered and locking cradles compatible with the XP8 and XP5s ultra-rugged handsets. "The Sonim RAM Mounts solution helps facilitate compliance to Electronic Logging Device (ELD) regulation, which requires every commercial truck operating on U.S. highways and roads to have an electronic logging device to record hours of service," said John Graff, CMO, Sonim Technologies.
July 28 - Reports Preliminary Second Quarter 2020 Results: On a preliminary, unaudited basis, the company expects to report, for the second quarter of 2020, net revenues of $21.1 million, an increase of approximately 66% from $12.7 million in the first quarter of 2020, and gross margin of 23.4%, up from 17.0% in the first quarter of 2020.
"We expect to report that we ended the quarter with cash and cash equivalents of more than $38 million and no debt, providing a strong platform on which to continue investing in both organic and strategic growth ahead." SONM CEO.
Aug. 11 - SonimWare Enterprise Mobility Software Enables Seamless Deployment, Management and Support for Sonim Ultra-Rugged Devices: Launches SonimWare Enterprise Mobility Software to help customers more easily deploy, manage and support mobile devices in the field.
SonimWare is made up of several components to seamlessly enable enterprise mobility: Sonim SCOUT, a free, intelligent software solution for device configuration, management and support; Sonim Scan, a 1D/2D barcode scanning application that turns Sonim smartphones into flexible scanning devices; and Sonim CLOUD, a web-based console.
Aug. 12 - Reports 66% Sequential Revenue Increase in Second Quarter Net Revenues $21.1 Million.
Aug. 25 - Introduces OTTO Remote Speaker Microphone with Noise Cancellation for PTT-over-Cellular Solution: launched the OTTO REVO NC2 Remote Speaker Microphone, compatible with the XP8 and XP5s rugged devices.
OTTO REVO NC2 Remote Speaker Microphone (RSM) features an innovative patent-pending design that provides revolutionary noise cancellation and optimum voice reception. The top-mounted microphone allows users to grip and engage the RSM without compromising audio transmission.
The OTTO REVO NC2 RSM, when combined with Sonim devices and ESChat PTT service, provides a rugged, reliable, cellular-based PTT solution, designed for first responders and industrial workers who have to deal with extreme environments on a daily basis.
Sep. 2 - Announce Partnership with Cross Over Distribution: Expand Crossover Distribution solution offerings from core network to end point user devices, offering channel partners an even more expansive product portfolio.
"Sonim is excited to announce our strategic partnership with Crossover Distribution," said Michael Harlas, Global Channel Manager, Sonim Technologies. "Crossover has been a distributor for Sonim in Canada and now has crossed the border to bring their brand value into North America. ."
Sep. 9 -Introduces Compatibility with GPSLockbox Modular Charging Solution for XP3, XP5s and XP8 Devices: Supports up to five phones and five spare batteries at the same time. The modular charging dock from GPSLockbox is compatible with the Sonim XP3, XP5s, and XP8 ultra-rugged mobile devices and functions as a five unit phone charger and five unit spare battery charger or as five standalone, single phone and battery desktop chargers.
Sep. 16 - Announces Partnership with Push to Talk International: Partnership with Push to Talk International (PTTI), a leading supplier of Push-to-Talk-over-Cellular (PTToC) services in the UK and Ireland. This partnership will enable PTTI to provide its wide range of customers with Sonim's ultra-rugged XP8 Android smartphone.
Sep. 23 -Supports goTenna Pro Mesh Networking Radio Devices for Situational Awareness, Off-Grid Connectivity: Partnered with goTenna to enhance reliability and connectivity for the Sonim XP8 in off-network situations.
goTenna's mesh networking protocol is embedded into lightweight, low-cost radio devices and paired with easy-to-use mobile devices and applications enabling mobile, long-range connectivity even without cell, WIFI, or satellite.
"Sonim field engineers trialed goTenna Pro across North America, and the feedback is overwhelmingly positive. The application is intuitive, off-grid messaging and location sharing is quick and easy, and most importantly, the solution is affordable," said John Graff, CMO, Sonim Technologies.
Sep. 28 - Announces Departure of Directors, Filing of Updated Proxy Materials:
Oct. 1 - Partner to Bring Sonim's Ultra-Rugged Devices to Europe: Capestone, a leading distributor of explosion-proof devices based in the Netherlands, Germany and expand the distribution of Sonim's devices throughout Europe.
Oct. 13 -New Sonim SOS App Delivers Powerful Safety-First Capabilities to Ultra-Rugged Devices: Free App for Sonim Devices Offers Simple Yet Powerful Safety Features for First Responders and Industrial Workers.
The launch of Sonim SOS is part of its SonimWare Enterprise Mobility Software. Compatible with the XP3, XP5s and XP8, Sonim SOS is a powerful app connected to an easy-to-use alarm key that offers an array of customizable safety-first options to keep workers safe and secure.
From first responders to school bus drivers to construction workers and more, the app allows users to easily set up customized groups and phone numbers to notify in case of an emergency.
Sonim SOS capabilities allow users to: a) Automatically place a call to 911 or a pre-set custom emergency phone number b) Send repeated text messages to up to five emergency contacts with location and emergency information; c) Send audible emergency distress alerts with location information to an unlimited number of Sonim SOS users that will sound until reviewed by the recipient d) Pre-configure start and end emergency message templates to provide situational context e) Set all Sonim SOS settings from the Sonim CLOUD platform.
Oct. 15 - Sonim XP8 Ultra-rugged Smartphone Supported by New Verizon MCPTT Offering: XP8 is among the initial devices that are approved for Verizon's new Push-to-Talk Responder mission-critical, interoperable-ready solution.
Verizon Push-to-Talk Responder is built to 3GPP MCPTT standards, complements the capabilities provided by Land Mobile Radio (LMR) networks, and is designed to empower first responders to quickly assess a situation and communicate through text, data and, in the future, live video streaming.
Nov 11 - Report Third Quarter Results: Gross Margin Increases to 30.6%, Advances Expanded Device Offering.
Nov. 11 - Efficient SmartScanner Devices Join Sonim's Rugged Mobility Solutions in Early 2021. These new devices can lower the total cost of ownership (TCO) as a result of their proven durability while improving the barcode scanning experience for front-line workers who must rapidly capture large amounts of data.
The RS60 and RS80 will be available through a distribution and reseller network in North America, the United Kingdom, Europe and Australia starting in early 2021.
Summary
Management
October 2019, Tom Wilkinson was appointed as CEO of Sonim. His background at Xplore Technologies (Nasdaq: XPLR) a maker of rugged tablet and handheld devices which was acquired by Zebra Technologies is worth highlighting. Shortly after, Randy Denny (EVP Sales) and John Graff (CMO), both Xplore alumni, were also appointed.
Products & Services
The company is well known in the field for its ultra-rugged devices especially it XP8, XP5s and XP3 ultra rugged handsets, as well as, SonimWare, Accessories, and a Rapid Development Kit (RDK-3).
SonimWare Enterprise Mobility Software entails several components enabling all around enterprise mobility:
a) Sonim SCOUT, a free, intelligent software solution for device configuration, management and support; b) Sonim Scan, a 1D/2D barcode scanning application; and c) Sonim CLOUD, a web-based console.
Rapid Development Kit (RDK-3) (Cradlepoint, Inmarsat Government, JPS Interoperability Solutions and Rajant)
Provides connectivity to cellular, Wi-Fi, GPS, LMR, and Satellite systems for Sonim XP5s and XP8 .
In addition, within the past 12 months SONM made other alliances and launched a number new products and services.
These include Ultra Rugged Holsters (Turtleback), Wired and Wireless Throat Microphones (IASUS), Modular Charging Solution for XP3, XP5s and XP8 Devices (GPSLockbox), and TRIC Remote Speaker Microphones (Savox),
TRICS is designed for military special forces, tactical teams and first responders working in mission critical operations. "Interoperability between land mobile radios (LMR) and LTE cellular handsets is a key need for mission critical communications," said John Graff, CMO, Sonim Technologies.
Others include, OTTO REVO NC2 Remote Speaker Microphone, Pro Mesh Networking Radio Devices for Situational Awareness, Off-Grid Connectivity (goTenna) enhancing reliability, connectivity for the XP8 in off-network situations.
goTenna's mesh networking protocol is embedded into lightweight, low-cost radio devices and paired with easy-to-use mobile devices and applications enabling mobile, long-range connectivity even without cell, WIFI, or satellite.
Finally, a mobile App (S0nim SOS), integration in Verizon's MCPTT Offering, and upcoming Smart Scanner Devices.
Sonim SOS App Sonim SOS capabilities allow users to: a) Automatically place a call to 911 or a pre-set custom emergency phone number b) Send repeated text messages to up to five emergency contacts with location and emergency information; c) Send audible emergency distress alerts with location information to an unlimited number of Sonim SOS users that will sound until reviewed by the recipient d) Pre-configure start and end emergency message templates to provide situational context, and e) Set all Sonim SOS settings from the Sonim CLOUD platform.
MCPTT Offering (Verizon) Verizon Push-to-Talk Responder is built to 3GPP MCPTT standards, complements the capabilities provided by Land Mobile Radio (LMR) networks, and is designed to empower first responders to quickly assess a situation and communicate through text, data and, in the future, live video streaming.
SmartScanner Devices The RS60 and RS80 will be available through a distribution and reseller network in North America, the United Kingdom, Europe and Australia starting in early 2021.
In the last 12 months, it is evident that SONM's products and services initiatives have transformed the company from a simple device manufacturer to an integrated communication technology solution which enables worker productivity.
Financing
In early June 2020, SONM initiated a $20M Public Offering. Three days later, the offer was upsized to $24M at $0.75 cents. On June 9, with a week of the offer, SONM closed $27.6M or 36M shares at $0.75 cent.
Earnings
As depicted below, Q1-Q3 2020 earnings are far from FY2018 and FY2019 levels. Not a growth story by any means.
However, comprehensive loss in Q1, Q2, and Q3 2020 suggests that the company is improving its cost management.
In Short
Being more than 10 year old, SONM IPO on the Nasdaq (May 2019). In September 2019, the company revised FY 2019 guidance down based on "changes in U.S. wireless carrier forecasts" and reported software issues with its XP8 devices.
Further, the company has experienced technical challenges related to its XP8 smartphone and other general non-systemic, accessory-related issues in its feature phones, which cumulatively resulted in lost sales momentum. These challenges have diverted resources away from launching smaller Tier 2 carrier customers.
On the day of the announcement the stock price went from opening at $5.76 to closing $3.98. This is certainly a far cry from the IPO price of $11.70. However, the XP8 software issues have been long been resolved since.
The next major price decline occurred in the on March 11, 2020 the day of the FY 2019 Earnings Report. A reduction in FY2018 revenue were expected but comprehensive losses were substantively higher than were forecasted. SONM declined from $1.86 to $0.92 cents. However, Q1 to Q3 2020 earnings have shown a reduction in comprehensive loss.
In June 2020, SONM closed an upsized Public Offering from $27.6M (36M shares) at $0.75 cents. Noted here was the participation of 180 Degree Capital Corp (NASDAQ: TURN) which reportedly invested $6.9M.
“We are excited to have the opportunity to act as the anchor investor in SONM’s public offering and to be a large shareholder of the company,” said Kevin M. Rendino, Chief Executive Officer of 180. “We are especially pleased to be invested in SONM’s management team led by its CEO, Tom Wilkinson.
My prior fund, RGJ Capital, was a significant shareholder in Tom’s prior company, Xplore Technologies Corporation (“XPLR”). Under his leadership, XPLR’s business was dramatically improved and the company was ultimately acquired. We have confidence in his abilities as an executive to engineer a similar turnaround at SONM.
However, at the last AGM (Oct. 1, 2020), SONM approved a possible reverse stock split ranging from (1 to 2) to (1 to 12).
This explains the current softness in the price since then but the chart is also indicating a resurgence of late (Yesterday, SONM closed at $0.5882 USD). Indeed, the timing of a possible consolidation certainly is an added risk factor for investors. However, will this likely to occur below the levels of the last public offering ($0.75 cents)?
Nonetheless, the hiring of a new senior management team in 2020 is considered a turning point. Specifically, previous tenure of the team with Xplore (sold to Zebra) is notable. Zebra builds tracking technology and solutions that generate actionable insight, giving companies visibility into their businesses by giving physical things a digital voice.
In terms of PTT, Zebra current offer Workforce Connect PTT Pro, (a subscription-based enterprise grade PTT service) is considered to be analogous to SonimWare Enterprise Mobility Software in a different vertical.
As a reminder, SonimWare capabilities include:
Device Provisioning and Deployment: enables IT administrators to customize and deploy large numbers of devices from office workers to field workers who have different needs.
Application Management: allows enterprises to customize and optimize device screens, keeping things simple for users and allowing access to only those apps which are work or productivity related.
Enterprise Security: as part of Google's Android Enterprise Recommended program, Sonim meets a set of strict requirements, including regular security updates. Additional SonimWare utilities can be used to secure and/or lock down devices, and limit access to apps and device features.
Productivity and Safety Tools: built on the enterprise-grade Android operating system, Sonim devices deliver ease-of-use and have access to a global ecosystem of support for many applications. SonimWare productivity utilities include contact transfer, BLE connect, call screening and stealth mode.
Remote Diagnostics and Support: enables field workers to self-diagnose and troubleshoot issues and get the most out of their rugged device.
Hence, despite weaker financials, FY 2020 is considered a strong pivot for SONM as it continues to expand its beyond device manufacturing into providing solutions that enhance corporate and end users productivity.
This dovetails well with VDC Research drivers for selecting a communication tool. It is not difficult to see that the "ability to enhance worker productivity" beyond communication will be a key feature driving PTT future demand.
The timing of a possible consolidation (and whether it is below the levels of the last financing $0.75 cents) is an added risk factor for investors but the fact that SONM is funded with $30M of cash and no debt makes it one to watch.
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