Executive Summary

Q3 2024 revenue was $68.9M (+0.4% YoY) with IoT Connectivity up 3% to $56.7M and IoT Solutions down 9% to $12.2M as management continues to wind down lower-margin hardware .
Adjusted EBITDA was $13.0M (-8% YoY), reflecting tougher comps from a prior-year performance comp reversal; non-GAAP margin was 56.7% in Q3 .
FY2024 guidance tightened to revenue $280–$285M and adjusted EBITDA $54–$55M; this is a modest raise vs Q2’s revenue range ($275–$285M) and a narrowing of EBITDA ($54–$56M) as restructuring concludes and Connectivity momentum builds .
Restructuring plan completed (25% headcount reduction), targeting ~$20M gross annual run-rate cash savings; near-term severance costs impacted cash, but year-to-date FCF improved by $6M with Q3 FCF at -$5.1M due to $1.5M severance .
Catalysts: completion of restructuring, tightened FY guide, accelerating connection growth (>300K sequential adds), and strong TCV ($32M) concentrated in Connectivity; potential overhangs include interest expense and leverage until rates decline and cash generation improves .

What Went Well and What Went Wrong

What Went Well

Connectivity revenue grew 3% YoY to $56.7M; ARPU rose to $1.01 (from $0.98) on higher data consumption and pruning low-ARPU subs, supporting recurring revenue quality .
Restructuring completed, delivering operational streamlining and positioning for sustainable, profitable growth; management targets ~$20M gross annual run-rate savings and sees improved customer experience and margins from scale in Connectivity .
Sales momentum: closed-won TCV $32M in Q3 (+19% YoY), $128M YTD vs $87M in 2023; wins spanned industrial asset monitoring, healthcare failover, smart agriculture, and remote patient monitoring, mostly Connectivity-led .

What Went Wrong

Adjusted EBITDA declined 8% YoY to $13.0M, partly due to prior-year comp reversal and timing of headcount-related expenses; broader cost increases weighed vs revenue mix .
IoT Solutions revenue fell 9% YoY to $12.2M; hardware revenue down by >$1M as the company intentionally turned away low-margin deals to improve margins and working capital .
Interest expense rose to ~$13.3M vs $10.5M YoY on higher borrowing costs post refinancing/preferreds, keeping net loss at $(19.4)M despite no goodwill impairment this year; management expects cash interest to decline with rate cuts in 2025 .

Financial Results

Consolidated Performance (USD Millions unless noted)

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($)	$76.0	$67.9	$68.9
Net Loss ($)	$(17.6)	$(64.3)	$(19.4)
Adjusted EBITDA ($)	$14.8	$11.4	$13.0
Non-GAAP Margin %	—	—	56.7%

Segment Revenue Breakdown ($USD Millions)

Segment	Q3 2023	Q2 2024	Q3 2024
IoT Connectivity	$55.169	$55.772	$56.721
IoT Solutions	$13.464	$12.096	$12.199
Total Revenue	$68.633	$67.868	$68.920

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Average Connections (Millions)	18.1	18.5	18.6
Period-End Connections (Millions)	18.3	18.6	18.8
ARPU ($ per month)	—	$1.00	$1.01
DBNER (%)	94%	92%	95%

Margin Details (Q3 2024)

Non-GAAP Connectivity margin: 60.9% (-80 bps YoY) .
Non-GAAP Solutions margin: 37% (+940 bps YoY) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2024 (Q1→Q2)	$300–$305M	$275–$285M	Lowered
Adjusted EBITDA	FY2024 (Q1→Q2)	$64–$66M	$54–$56M	Lowered
Revenue	FY2024 (Q2→Q3)	$275–$285M	$280–$285M	Raised/Narrowed
Adjusted EBITDA	FY2024 (Q2→Q3)	$54–$56M	$54–$55M	Narrowed

Management rationale: tighter FY ranges reflect completed restructuring, stronger Connectivity momentum, and continued discipline in Solutions/hardware; Q2 lowered guidance cited cost-conscious customers and a delayed Connected Health program now slated for 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q1 2024)	Current Period (Q3 2024)	Trend
Connectivity focus	Shift toward core Connectivity; Solutions hardware deemphasized	Reacceleration in Connectivity; revenue/EBITDA guide reaffirmed	Connectivity grew 3% YoY; >300K sequential connections; ARPU up	Strengthening
Solutions strategy	Reduced low-margin hardware; cyclical Solutions	Solutions down on timing and hardware discipline	Solutions down 9% YoY; hardware down >$1M; Solutions supports Connectivity differentiation	Controlled contraction, strategic linkage
Restructuring & costs	Announced plan; $20–$22M annual gross savings; ~25% headcount cut	Dual focus on growth and efficiency	Plan completed; ~$20M run-rate savings; $4M one-time costs in 2024	Completed, benefits to accrue
TCV & pipeline	Strong TCV $44M; YTD $96M vs $60M	TCV $52M, incl. $26M Connected Health	TCV $32M Q3; YTD $128M vs $87M; 91% Connectivity	Healthy momentum
Connected Health	Leadership additions; delayed large contract to 2025	$26M Connected Health TCV win	Wins in healthcare failover and remote monitoring	Mixed near-term; improving wins
Liquidity & leverage	Not detailed in PR	Not detailed in PR	Cash $18.6M; expects positive FCF in 2025; rates cuts to reduce cash interest	Improving outlook
Macro/customer behavior	Cost-conscious customers; delayed launches	Broad growth opportunities	More RFPs; consolidation interest; robust pipeline	Cautious but constructive

Management Commentary

“With an installed base of close to 19 million connections generating an ARPU of about $1 per month we already have a solid foundation of CaaS business to build on… We have successfully completed our restructuring plan… positioning KORE for sustainable, profitable growth.” — Ron Totton, President & CEO .
“Overall, non-GAAP margin percentage in Q3 2024 was 56.7%… Connectivity margin % down 80 bps YoY to 60.9%; Solutions margin % up 940 bps YoY to 37%… hardware revenue was down over $1 million.” — Paul Holtz, CFO .
“The net results of these actions will lead to a $20 million in gross annual run rate cash savings… We had no operational impact with our customers and our operational metrics, in fact, improved during this period.” — Ron Totton .
“We found a calculation error in our goodwill impairment calculation from the prior quarter… revenue, adjusted EBITDA, and cash flows for all periods were unaffected by this restatement.” — Paul Holtz .

Q&A Highlights

Strategy mix: Management clarified they are not deemphasizing Solutions broadly, but are exiting low-margin hardware lacking Connectivity contribution; Solutions remains a driver of Connectivity upsell and differentiation (e.g., Connected Health) .
Balance sheet and liquidity: Cash $18.6M as of 9/30; management expects positive FCF next year, exploring refinancing options amid rate declines to reduce cash interest burden; acknowledges leverage is high relative to EBITDA today .
Macro demand: More RFPs, customer consolidation discussions, robust opportunity pipeline; vertical demand healthy with sequential connection growth and orders .

Estimates Context

Consensus (S&P Global Capital IQ): Attempted retrieval for EPS, revenue, and EBITDA for Q3 2024 and next quarter; values were unavailable due to S&P Global access limits at the time of analysis. As a result, explicit beat/miss vs consensus cannot be determined for Q3 2024 [SPGI access error].
Implication: In absence of consensus, focus on internal guide trajectory—Q3 delivery consistent with tightened FY guide and improving Connectivity KPIs; estimates may adjust to reflect tightened FY ranges and Connectivity mix shift .

Key Takeaways for Investors

Connectivity-led model is gaining traction: ARPU up, connections >19M, TCV concentrated in Connectivity; expect scale benefits to support margins over time .
Completed restructuring is a near-term overhang (severance, transition) but a medium-term margin and cash flow tailwind (+$20M run-rate savings); Q4 should reflect more benefits .
Solutions drag is intentional and should improve quality of revenue mix; watch Connected Health execution as leadership changes and wins build toward 2025 implementation .
Interest expense and leverage remain key risks; management targets FCF improvement and potential financing relief as rates decline—monitor cash generation and any refinancing moves in 2025 .
Guidance narrowing signals improved visibility; revenue range modestly raised vs Q2 and EBITDA narrowed, consistent with execution and cost discipline .
Sales momentum is broad-based with multi-vertical wins (industrial, healthcare, agriculture), supporting diversified demand and recurring Connectivity growth .
Near-term trading: stock likely sensitive to confirmation of Q4 margin uplift and cash generation; medium-term thesis hinges on Connectivity scale, eSIM leadership, and disciplined Solutions that pull-through higher-margin services .

KORE Group Holdings, Inc. (KORE)·Q3 2024 Earnings Summary