Sierra Wireless (SWIR, Financial) posted better than expected results for the third quarter. The company saw an impressive increase in the top line and earnings. The main reason behind its robust growth is the combination of strong contribution from its acquisitions and the organic business. Management expects to deliver continued growth in revenue and profitability. Let us have a look at the underlying business of Sierra Wireless and its prospects.
The quarterly performance
In the third quarter, Sierra’s revenue grew by 27.6% to $143.3 million, compared to $112.3 million in the same quarter last year. The organic segment was a major contributor to Sierra’s outstanding performance. The organic segment saw a good 19% growth. On the earnings front, Sierra posted non-GAAP EPS of $0.24 per share as compared to $0.11 per share which it posted in the same quarter last year.
Sierra Wireless is walking the right path. As its results reveal, the company is in good shape and is poised for better financial stability in the near future. The company aims at achieving a leadership position in M2M, driving better revenue and strong profitability in the future. Sierra is planning to stick to its strategy of acquisitions, which has helped it in the recently reported quarter.
Positive momentum across the board
Sierra’s OEM business is showing positive growth momentum. The segment has seen strong revenue growth in the past. Sierra is further expecting it to grow in coming quarters, driving the growth of the 3G and 4G embedded modules. Besides OEM, Sierra is also experiencing strong contribution from other key market segments such as automotive, transportation, energy, sales, payment and mobile computing, and it thinks with the improving market conditions in these segment will contribute majorly to enhance its market position.
Products to power growth
The mobile segment is also going through a revolution with 3G and 4G services in action. Sierra is pleased with its position in 3G and 4G technologies. In addition, Sierra’s new HL line of central products is gaining good traction in the market. These HL line of products will be an added advantage and will help the company to further capture market share. This is also expected to help Sierra gain revenue growth in the coming quarters.
Sierra has also announced the availability of unique bundled solutions called AirLink Enterprise connect. This solution will be a useful growth driver for Sierra as this will help it deploy primary 4G connectivity directly to the branch location router. This is gaining traction in the market and will help it accelerate the adoption of AirVantage Cloud. This will help Sierra to grow its revenue and strengthen its position in the connectivity and cloud services.
Conclusion
Sierra Wireless is well-positioned for impressive growth in the future due to growth in its end market. So, investors can consider this technology stock for the long run.
