Executive Summary

Revenue rose to $44.9M, up 63.2% year over year, driven primarily by hardware sales in Connected Solutions; management stated the quarter “Exceeded Internal Quarterly Targets for Revenue and also for Non-GAAP Adjusted Net Income.”
GAAP net loss was $11.6M due to $14.5M non-cash, non-recurring merger-related charges; non-GAAP adjusted net income was $3.1M versus a -$2.1M loss in Q3 2016.
MVNO gross margin materially improved to 33.2% from -0.7% a year ago, aided by scale and removal of a stringent minimum charge by China Unicom since October 2016.
Management expects “a similar strong trend in the Connected Solutions sales” and “moderate growth in the MVNO mobile services” in the coming quarter. Potential near-term catalysts include sustained hardware momentum and MVNO margin durability.

What Went Well and What Went Wrong

Exceeded internal targets for revenue and non-GAAP adjusted net income in Q3 2017. “Exceeded Internal Quarterly Targets for Revenue and also for Non-GAAP Adjusted Net Income.”
MVNO margin turnaround to 33.2% (from -0.7% YoY) on scale benefits and China Unicom removing a stringent minimum charge, with nine-month MVNO gross margin of 29.9% vs. 2.9% in 2016.
Connected Solutions revenue growth, particularly hardware ($34.7M vs. $15.1M YoY), reflecting strong mobile phone product sales to various customers.

GAAP net loss of $11.6M driven by $14.5M non-cash, non-recurring merger-related expenses (historical option charges $5.7M and stock-based compensation $8.8M) plus warrant-related charges.
Connected Solutions gross margin compressed to 16.6% from 19.8% YoY due to competitive pricing in hardware.
Software revenue within Connected Solutions fell to $1.9M from $3.5M, tied to a chipset client’s exit from the mobile business; MVNO nine-month revenue declined YoY due to tightened SIM-card security policies (though Q3 rebounded with new activation system).

Metric	Q3 2016	Q3 2017	YoY Change	Q2 2017	Vs Estimates	Surprise
Revenue ($USD Millions)	$27.5	$44.9	+63.2%	N/A	N/A*	N/A
GAAP Net Income ($USD Millions)	-$2.050	-$11.565	-$9.515	N/A	N/A*	N/A
Non-GAAP Adjusted Net Income ($USD Millions)	-$2.050	$3.073	+$5.123	N/A	N/A*	N/A
Adjusted EBITDA ($USD Millions)	N/A	$4.6	N/A	N/A	N/A*	N/A
Connected Solutions Gross Margin (%)	19.8%	16.6%	-320 bps	N/A	N/A*	N/A
MVNO Gross Margin (%)	-0.7%	33.2%	+3,390 bps	N/A	N/A*	N/A

Note: Estimates unavailable (S&P Global request limit reached). Values retrieved from S&P Global where applicable.*

Segment Breakdown

Segment Revenue ($USD Millions)	Q3 2016	Q3 2017	YoY Change
Connected Solutions (Total)	$18.6	$36.6	+$18.0
- Hardware	$15.1	$34.7	+$19.6
- Software	$3.5	$1.9	-$1.6
MVNO	$7.2	$7.8	+$0.6
Others (Traditional Telephony)	$1.7	$0.5	-$1.2
Total Revenue	$27.5	$44.9	+$17.4

KPIs

KPI	Q3 2016	Q3 2017	Commentary
Adjusted EBITDA ($USD Millions)	N/A	$4.6	Excludes non-recurring transaction expenses, FX, non-recurring grants, MVNO license depreciation.
Non-GAAP Adjusted Net Income ($USD Millions)	-$2.050	$3.073	Reflects add-back of merger-related and warrant charges.
GAAP Net Loss ($USD Millions)	-$2.050	-$11.565	Driven by $14.5M non-cash merger-related charges.

Metric	Period	Previous Guidance	Current Guidance	Change
Connected Solutions sales trend	Next quarter	None disclosed	“We expect a similar strong trend in the Connected Solutions sales”	Maintained qualitative positive outlook
MVNO mobile services	Next quarter	None disclosed	“Anticipate moderate growth in the MVNO mobile services”	Initiated qualitative moderate growth outlook

No quantitative ranges for revenue, margins, OpEx, tax, or other metrics were provided in the press release.

No Q3 2017 earnings call transcript was available in the document set; therefore trend tracking relies on press release disclosures.

Topic	Previous Mentions (Q2 and Q1 2017)	Current Period (Q3 2017)	Trend
Hardware momentum	Not available	Strong hardware revenue growth; competitive pricing compressing Connected Solutions gross margin to 16.6%.	Growth with margin pressure
MVNO regulatory environment	Not available	New activation system mitigated tightened SIM security; margin improved to 33.2%.	Improving
Customer/chipset partner dynamics	Not available	Software revenue down due to chipset client exiting mobile business.	Mixed (partner exit headwind)
Merger-related accounting impact	Not available	$14.5M non-cash, non-recurring charges impacted GAAP results.	One-time impact

“Exceeded Internal Quarterly Targets for Revenue and also for Non-GAAP Adjusted Net Income.”
“We expect a similar strong trend in the Connected Solutions sales and anticipate moderate growth in the MVNO mobile services in the coming quarter.”
MVNO margin recovery drivers: “achieved economics of scale and also that our incumbent operator, China Unicom, has removed a stringent minimum charge since October 2016.”
Software revenue decline explanation: “reflecting an exit from the mobile business for one of our chipset clients this year.”

No Q3 2017 earnings call transcript was found; Q&A highlights and tone changes versus prior quarters are unavailable.

We attempted to fetch S&P Global consensus for Q3 2017 EPS and revenue; estimates were unavailable due to a data request limit error. As a result, comparisons vs. Wall Street consensus and calculated surprises cannot be provided for this quarter. (SPGI request error)*
Given the lack of available consensus in our dataset, any estimate adjustments would depend on third-party data access; the company’s reported results show strong revenue growth and non-GAAP profitability in Q3, which could influence future estimate revisions.

Hardware-led growth drove a 63.2% YoY revenue increase to $44.9M; watch for sustainability of mobile phone product sales into next quarter.
MVNO economics improved markedly (33.2% gross margin vs. -0.7% YoY), with operational and carrier policy changes underpinning the turnaround; margin durability is a key near-term driver.
GAAP loss was driven by $14.5M non-cash, non-recurring merger-related charges; underlying non-GAAP profitability ($3.1M) and adjusted EBITDA ($4.6M) suggest improved core performance.
Connected Solutions margin compression (16.6% vs. 19.8% YoY) reflects competitive pricing in hardware; margin mix depends on hardware vs. software composition and pricing environment.
Software revenue softness tied to a chipset partner’s mobile exit introduces mix risk; diversification of software revenue streams could mitigate partner concentration.
Management’s qualitative outlook calls for continued strength in Connected Solutions and moderate MVNO growth next quarter; absence of numeric guidance implies execution and mix will be the key variables.
No call transcript or consensus estimates available through our sources limits precision on sentiment and surprise analysis; focus on operational metrics and subsequent filings for additional clarity.