Earnings call transcript: KORE Group Holdings Q2 2025 shows revenue growth

KORE Group Holdings (market cap: $40.5 million) reported its second-quarter earnings for 2025, revealing a 5% year-over-year increase in total revenue to $71.3 million. The company’s stock closed at $2.38, marking a 2.1% increase in regular trading. Despite a net loss of $16.9 million, the company showcased significant improvement from the previous year’s loss of $83.6 million. According to InvestingPro analysis, KORE appears undervalued at current levels. The company’s focus on expanding IoT solutions and AI initiatives appears to be driving its positive trajectory.

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Key Takeaways

• Total revenue increased by 5% year-over-year to $71.3 million.
• IoT Solutions Revenue surged by 25% year-over-year.
• Adjusted EBITDA improved by 46% year-over-year to $16.7 million.
• Positive free cash flow for the third consecutive quarter.
• Stock price increased by 2.1% in regular trading.

Company Performance

KORE Group Holdings demonstrated a strong performance in Q2 2025, with total revenue reaching $71.3 million, a 5% increase compared to the same period last year. This growth was primarily driven by a 25% rise in IoT Solutions Revenue, which reached $15.2 million. The company’s strategic focus on IoT and AI initiatives appears to be paying off, as evidenced by its improved financial metrics and operational achievements. Analysts maintain a consensus recommendation of 2.5 (between Buy and Hold), with price targets ranging from $3 to $9.

Financial Highlights

• Total revenue: $71.3 million (+5% YoY)
• IoT Connectivity Revenue: $56.1 million (+1% YoY)
• IoT Solutions Revenue: $15.2 million (+25% YoY)
• Non-GAAP Gross Margin: 56.9%
• Adjusted EBITDA: $16.7 million (+46% YoY)
• Net Loss: $16.9 million (improved from $83.6 million prior year)
• Free Cash Flow: Positive $1.6 million

Outlook & Guidance

KORE Group Holdings provided revenue guidance for 2025, projecting between $288 million and $298 million. The company also anticipates adjusted EBITDA between $62 million and $67 million, alongside a free cash flow projection of $10 million to $14 million. InvestingPro data shows the company maintains a Fair overall financial health score, with particularly strong performance in relative value metrics. The focus remains on AI adoption and workforce innovation, with strategic investments in learning and development programs.

Executive Commentary

CEO Ron Totten emphasized the company’s consistent revenue growth and profitability improvements. "We are delivering consistent revenue growth, improvements in profitability, and generating sustainable free cash flow," Totten stated. He also highlighted the strategic expertise and superior technology that set KORE apart in the IoT market.

Risks and Challenges

• Supply Chain Issues: Potential disruptions could impact product delivery and costs.
• Market Saturation: Growing competition in the IoT sector may affect market share.
• Macroeconomic Pressures: Global economic uncertainties could influence demand and investment.
• Tariff Impacts: Although currently minimal, future tariff changes could affect costs.
• Technological Advancements: Rapid tech changes require continuous innovation to stay competitive.

KORE Group Holdings continues to focus on expanding its IoT solutions and AI capabilities, positioning itself for long-term growth despite potential challenges.

Full transcript - KORE Group Holdings Inc (KORE) Q2 2025:

Conference Operator: Greetings, and welcome to the Core Group Holdings Second Quarter twenty twenty five Earnings Call. Please note that this conference is being recorded. I will now turn the conference over to your host, Vic Vijayvargiya, Vice President, Investor Relations and Corporate Development. Thank you. You may begin.

Vic Vijayvargiya, Vice President, Investor Relations and Corporate Development, Core Group Holdings: Thank you, operator. On today’s call, we will refer to the second quarter twenty twenty five earnings presentation, which will be helpful to follow along with as well as the press release filed this afternoon that details the company’s second quarter twenty twenty five results. Both of these can be found on our Investor Relations page at ir.corewireless.com. Finally, a recording of the call will be available in the Investors section of the company’s website later today. The company encourages you to review the safe harbor statements, risk factors, and other disclaimers contained on this slide and today’s press release as well as in the company’s filings with the Securities and Exchange Commission, which identify specific risk factors that may cause actual results or events to differ materially from those described in our forward looking statements.

The company does not undertake to publicly update or revise any forward looking statements after this webcast. The company also notes that it will be discussing non GAAP financial information on this call. The company is providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in The United States or US GAAP. You can find a reconciliation of these metrics to the company’s reported GAAP results in the reconciliation tables provided in today’s earnings release and presentation. I’ll now turn the call over to Ron Totten, the company’s President and Chief Executive Officer.

Ron Totten, President and Chief Executive Officer, Core Group Holdings: Thank you, Vic, and good afternoon, everyone. Before we begin, I’d like to take a moment to introduce our new chief financial officer, Anthony Bellomo. He is a seasoned financial leader with an understanding of our industry and a successful track record of finance operations, strategic financial planning, and capital allocation. We are confident that his expertise will be invaluable as we continue to execute on our growth strategy and deliver long term value for our shareholders. I’m excited to have him as part of our leadership team as he has hit the ground running, and I look forward to the contributions he will make.

For today’s call, I’ll provide an update on the company’s business highlights for the second quarter and then turn the call over to Anthony to go through the financial results. After which, I will share our current view on the financial guidance for 2025 before turning over the call to the operator for Q and A. I’m excited to share our results for the second quarter. First, we delivered steadily improving operating performance with solid growth in both revenue and profitability. This is the result of our relentless focus on execution and our commitment to driving profitable growth.

Our total revenue for the quarter grew to $71,300,000 an increase of $3,400,000 over the same period last year. This upward trend is a direct result of our growing number of connections and key customer wins. Next and just as important is our profitability. And while we had a substantial improvement in net profit, more importantly, our adjusted EBITDA rose by 5,300,000.0 to reach 16,700,000.0. This demonstrates that we are not just growing, but we are growing profitably, and our focus on operational excellence is paying off.

Next, I wanna highlight what I believe is one of the most important indicators of our company’s health, our improvement in cash flow and in particular, our free cash flow. This quarter, we generated 1,600,000.0 in positive free cash flow, marking our third consecutive quarter of doing so. This sustained cash generation strengthens our balance sheet, reduces our reliance on external capital, and gives us the financial flexibility to strategically reinvest in our business to accelerate our leadership position. In summary, the financial narrative of this quarter is clear. We are delivering consistent revenue growth, improvements in profitability, and generating sustainable free cash flow.

As I mentioned previously, our execution is guided by our five pillar value creation plan. This is our blueprint for building a world class company. And on this slide, you can see tangible proof of the progress we’re making across every pillar. Let’s start with profitable growth. We’ve delivered three straight quarters of positive cash flow, crossed the 20,000,000 connection milestone while improving our IoT solutions gross margin.

This is the core of our strategy, to grow in a smart, sustainable, and profitable way. That growth is fueled by product innovation. In a fast moving industry like ours, standing still is not an option. We’re leading the way with our super SIM offerings and preparing our customers for the future with s g p.32 readiness. Our wins in the highly regulated connected health space are a direct result of this forward thinking approach, proving that our innovation is solving real world challenges for our customers.

And this all comes together in service of our most important pillar, customer intimacy. Our goal is to be loved by our customers and to be the easiest company to work within the IoT industry. We’re unifying the customer experience on our core one platform and have introduced Corey, an AI powered live assistant to provide instant customer support. We’re constantly listening to our customers and launching enhancements to make managing their IoT deployment simpler and more intuitive. In our pillar of operational excellence, we’re continuously strengthening our core operations to support our scale.

This quarter, we’ve made key infrastructure and technology upgrades and launched an enhanced customer support process to serve our customers better and faster. Furthermore, we are embracing the future by deploying eight distinct AI initiatives across the company aimed at enhancing everything from customer experience, revenue growth, as well as our own internal efficiency. Of course, none of this would be possible without a winning team. We’re making strategic investments in our people, the heart of CORE. Through initiatives like our values relaunch and new learning and development and recognition programs, we’re building a culture of excellence and empowering our team to do their best work.

As you can see, our progress is balanced and comprehensive. This is the core value creation plan in action, and it is the engine that will continue to drive our success. Diving a bit deeper into our core business, this slide clearly illustrates steady foundational growth in our IoT connectivity segment. The key metric here is our total connections, which grew by a robust 8% year over year to surpass 20,100,000. This is the engine of our recurring revenue model, and its growth is a testament to our ability to both win new customers and expand the share of wallet within our existing customer base.

Naturally, this healthy growth in connections translates directly to our top line, driving the steady increase in our IoT connectivity revenue. While our results are strong, our sales momentum is what gives us such confidence in our future. It shows the health of our sales engine, which we measure in estimated annual recurring revenue or eARR. This is our forward looking metric for new expected recurring revenue. There are two key stories here.

First, our total pipeline of opportunities grew to 84,600,000 this quarter. This is the fuel for our future growth. And critically, this increase is being driven by new logos, which tells us that our value proposition is resonating in the market, and we are successfully capturing new demand. Second, we converted 10,200,000 of that pipeline into closed one EARR. This is brand new committed annual recurring revenue that will layer into our financials over the coming year.

What’s more, this success is balanced. We’re winning new logos while also successfully expanding our relationships with existing customers, which validates our account penetration strategy. This gives us visibility and a growing degree of confidence in our ability to deliver sustained, predictable revenue growth well into the future. The numbers in graphs we just reviewed are important, but this slide shows how we’re achieving them. This is the story behind the numbers.

These four recent wins are excellent examples of our strategy in action and why customers are choosing Core. First, with an leading AI driven security provider. We won by acting as a true strategic partner and leveraged our deep OEM relationship and technical expertise to help them navigate a complex competitive environment and accelerate their time to market. This is a perfect example of how we provide value far beyond our connectivity. Next, a win with a major telematics hardware provider.

This is a story of technological leadership. We solved their critical coverage challenges with our multi carrier SuperSIM, provided advanced VPN capabilities to secure their data, and position them for the future with our s g p dot 32 solutions. According to this customer, we won because our technology is simply more powerful and more flexible than the competition. The win with a global virtual fence provider came down to product reliability. Our Omnisim Reach delivered performance so reliable that the customer described it as it just works under all circumstances, which is the highest praise you can get in the world of IoT.

It demonstrates the power of our global roaming capabilities and strong carrier partnerships. And finally, I wanna highlight another win in the connected health space for remote patient monitoring customer. For this customer, we helped eliminate the complexity of managing multiple carriers through our single SIM, multi carrier solution. Our unified approach was critical given the work requirements with major health care systems. Customers aren’t just buying connectivity.

They’re choosing CORE for our strategic expertise, our superior technology, our global reliability, and our IoT managed services. This is how we are winning, and this is why our pipeline continues to grow. And now I will turn the call over to Anthony to cover the financials in more detail.

Anthony Bellomo, Chief Financial Officer, Core Group Holdings: Thanks, Ron, and thanks to those joining us this evening for our second quarter results. Total revenue for the second quarter increased $3,400,000 or approximately 5% year over year to 71,300,000.0 Breaking revenue down by business lines, IoT connectivity revenue increased 1% to 56,100,000.0 due to our increased number of connections. IoT solutions revenue increased 25% to 15,200,000.0, driven by strong sales of connectivity enabling hardware and services. Overall, non GAAP gross margin in Q2 twenty twenty five was 56.9% for the second quarter of the prior year. By business line, non GAAP IoT connectivity gross margin was down slightly to 60% from 60.9% in the prior year due to the mix of revenue.

Non GAAP IoT Solutions gross margin was up six eighty two basis points year over year to 45.3%, primarily due to certain high margin sales in the 2025. We expect non GAAP IoT Solutions gross margin percentage to return to historical averages in the future. Total connections at the end of the second quarter were $20,100,000 an increase of $1,500,000 year over year. Average revenue per user per month, or ARPU, for the current quarter was $0.94 compared to $1 in Q2 twenty twenty four. The decrease in ARPU year over year was due to the recent additions to connections coming from lower ARPU use cases.

DBNER for the twelve months ended 06/30/2025 was 99% compared with 92% in the prior year. The increase in DBNER was mainly due to the stabilization of revenue over the past twelve months versus the previous year. As a reminder, DBNER is similar to same source sales as it measures the growth of existing customers in the trailing twelve months compared to the same customer cohort in the year ago period. Operating expenses in the second quarter were $44,600,000 a decrease of $70,800,000 compared to Q2 twenty twenty four. Included in the 2024 is a noncash goodwill impairment charge of $65,900,000 Excluding this charge, operating expenses decreased by $4,900,000 largely due to a foreign exchange gain of $3,500,000 in the 2025 and savings from restructuring actions taken in the last twelve months.

This was partially offset by a 2,000,000 decrease in the capitalization of internal labor. Net loss in the second quarter was $16,900,000 compared to $83,600,000 in the prior year. The decrease in our net loss of 66,700,000.0 year over year was primarily attributable to the 65,900,000.0 goodwill impairment in q two twenty twenty four along with the other factors previously discussed. In addition, we recorded other income of 3,800,000.0 in q two twenty twenty five, primarily due to other income from an employer tax credit related to prior years. Adjusted EBITDA in the second quarter was $16,700,000 an increase of $5,300,000 or 46% compared to the prior year.

The $5,300,000 increase in adjusted EBITDA was primarily attributable to lower operating expenses due to stronger expense management, increase in other income as well as stronger gross profit due to higher revenue levels as discussed above. Finally, moving to cash flows. Cash provided by operations in the second quarter was $4,100,000 This compared to cash provided by operations of $4,000,000 in Q2 twenty twenty four. Free cash flow, measured by cash provided by operations less cash used in investing activities, was positive $1,600,000 in Q2 twenty twenty five compared to negative $100,000 in the prior year quarter. Free cash flow was positive for the third consecutive quarter and is expected to continue to be positive for the rest of 2025.

As of 06/30/2025, cash and restricted cash was 21,300,000.0 compared to 22,600,000.0 as of 06/30/2024. And with that, I’ll pass it back to you, Ron.

Ron Totten, President and Chief Executive Officer, Core Group Holdings: Thank you, Anthony. Let’s now look forward. On this slide, you’ll see we are reiterating our full year guidance for 2025. Before I walk through the numbers, I wanna frame them within the context of the broader market environment. The macro landscape is indeed complex.

We’re seeing some economic uncertainty globally, and new tariffs are impacting the supply chains of some of our customers. However, Core’s business model is resilient, and we have very limited direct impact from these tariffs. Our focus remains on helping our clients navigate this environment with robust mission critical connectivity, and in some cases, the ability to source devices or components from alternative suppliers, helping them navigate several supply chain constraints. More broadly, the outlook for our industry remains incredibly strong. Independent analysts are consistently forecasting strong growth for the IoT market with CAGRs ranging from nine to over 10.5% for the foreseeable future.

It is a powerful secular growth trend, and Core is perfectly positioned to capture this demand. Finally, we recognize the significant shift happening in the tech landscape around AI adoption and workforce changes. Our approach is strategic and deliberate. As you saw on our value creation plan, we are proactively implementing AI to drive efficiency for our teams and accelerate business growth while simultaneously investing in our winning team pillar. We are building a company for the long term with a strong culture that embraces innovation.

So it is with this full understanding of the opportunities and challenges that we reiterate our 2025 guidance. We expect revenue in the range of $288,000,000 to $298,000,000 We expect adjusted EBITDA between 62,000,000 and $67,000,000 representing a powerful 19% year over year growth at the midpoint. And underscoring our commitment to financial discipline, we project free cash flow between 10,000,000 and $14,000,000 Our guidance is a direct reflection of the momentum you’ve seen today, the strength of our pipeline, and the disciplined execution of our value creation plan. We are confident in our ability to deliver on these commitments and create significant value for our shareholders. Before we open the line for questions, I want to build on a point I made last quarter about our team’s determination.

It’s been very rewarding to see that same focus translate directly into the strong, consistent results we’ve shared with you today. The progress we’re making is a direct reflection of our employees’ hard work and their clear commitment to serving our customers. So to the entire core team, thank you. Your contributions are the foundation of our success, and they are genuinely appreciated. With that, we will now open the line for questions.

Conference Operator: Thank you. And at this time, we’ll conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone would indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. And our first question comes from Jonathan Navarreta with TD Cowen. Please state your question.

Jonathan Navarreta, Analyst, TD Cowen: Thank you. Good job in the quarter, guys. You mentioned that while you’re not facing any tariff related or very limited tariff related headwinds that some of your clients are, and I’m just wondering, are you guys gauging the possibility of some of your clients potentially pushing back some of some of the the projects they’re working on with you guys into, 2026?

Ron Totten, President and Chief Executive Officer, Core Group Holdings: Yeah. Thanks, Jonathan. Yeah. The the tear I mean, I guess I would say that, you know, that it’s not a perfect science here. I think what we’re finding is the demand from the customers isn’t changing.

In fact, I think if we look at where we were the same time last year, we’re up,

Jonathan Navarreta, Analyst, TD Cowen: you

Ron Totten, President and Chief Executive Officer, Core Group Holdings: know, definitely double digits in terms of, you know, SIM demand, for example. I think what we’re seeing is they’re coming to us with our expertise in the solutions business on helping them source, you know, alternative suppliers or, again, just looking into the supply chain, some of the challenges they’re having. At this point, we’re not seeing any projects, you know, canceled. And I think that, you know, in terms of our customers, the, you know, the the orders of new connections are are strong. So, we’re really not seeing any customers or certainly any kind of trend that’s evolving, whereby, you know, projects are being canceled or certain verticals, there’s softness.

We haven’t seen that as of yet, but, again, it’s still early days. I think our larger global customers are the ones that, you know, that are that it’s impacting most, which would be very obvious to everybody. Right? And we’re seeing products being canceled or, project delays and so forth. But thanks for the question.

Conference Operator: Got it.

Jonathan Navarreta, Analyst, TD Cowen: Sure. And just one more on my end is, any particular milestones that you you guys are working in the 2025 that are most critical for to set up a stronger growth trajectory in into 2026? Thank you.

Ron Totten, President and Chief Executive Officer, Core Group Holdings: Yeah. Sure. Yeah. I I think for us, we we talk in our value creation plan sort of our five pillars. And so I would say that, you know, our milestones and priorities are sort of directly kinda laid out there.

To me, maybe just in terms of the ones that are top of mind for me, you know, growth is, you know, I would say number one priority in in this case. So pipeline growth, growth in closed one EAR. We’d like to see connections pushing up past, 21,000,000 before the end of the year. And, you know, I I say that would probably be primary sort of, primary where the focus is. I think we also have three fairly significant, you know, what I’ll call tech related, projects that we wanna conclude in the second half of the year, both in terms of product, but also infrastructure that are really important to to to support our growth.

So those would probably be the ones that are top of mind.

Conference Operator: Thank you.

Jonathan Navarreta, Analyst, TD Cowen: Thank you.

Conference Operator: And that’s the end of the question and answer session. I’ll now hand it back to Ron Totten for closing remarks.

Ron Totten, President and Chief Executive Officer, Core Group Holdings: Well, thank you everyone for joining today’s earnings call. We look forward to updating you next quarter on our progress, in the 2025. Have a great night, and thank you for your time. Good night.

Conference Operator: Thank you. And this concludes today’s conference. All parties may disconnect. Have a good evening.

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