Kore Wireless, a long-established IoT company, went public on the NYSE on Friday.
Kore debuted at $7/share after completing a combination with Cerberus Telecom Acquisition Corp., led by wireless industry veteran Tim Donahue. Kore announced the merger in March in a deal that valued the combined entity at more than $1 billion.
Kore President and CEO Romil Bahl, who, per tradition, celebrated with the ringing of the opening bell on Friday, acknowledged that going public was a long time in the works. Kore was founded in 2002 and boasts more than 3,000 customers worldwide.
Bahl joined the company a few years ago, and conversations started back then about going public. The topic would come up periodically over the years, but “we weren’t really doing anything about it,” he said.
That changed when Cerberus showed up with its team of industry veterans, including Donahue, who was instrumental in starting Nextel Communications and briefly headed Sprint post-merger. (Donahue will serve as chairman of the Kore Board of Directors.)
“That’s what got us interested,” Bahl said, adding he's not entirely certain that Kore would have gone through a business combination approach if the Cerberus team hadn’t shown up. “Being part of Cerberus makes a lot of sense,” he said.
“To me, the world will forget that we came up as a SPAC [special purpose acquisition company],” he said. “What will matter is what are we doing and how well are we doing and how are we performing.”
IoT : Not that easy
A lot of IoT companies have come and gone in the time that Kore has been operating, but Kore's platform makes it particularly valuable to an enterprise or other entity seeking to deploy IoT.
“We make the IoT solution work,” orchestrating across the entire ecosystem, Bahl said. “I actually don’t make any hardware or any radios. I don’t make my own network. I use other people’s network. My IoT platform and all of the various technologies … they basically connect all these devices to whatever technology you want. We’re a trusted advisor.”
Several years ago, cellular carriers talked up IoT solutions like Narrowband IoT (NB-IoT) and LTE-M, but activity there seemed to stagnate. Has that changed? “I think there’s more work to be done,” he said, referring to the need for more module choices and roaming arrangements across countries.
Asked about the impact of 3G network shutdowns, he said Kore has been communicating to customers about old technology sunset dates for quite a while now since operators started to announce them for 2G and 3G.
“We have done our darndest to convince customers to start to move, to start to migrate” and to give Kore the green light to create their migration plans, he said. A few customers who kicked the can down the road are struggling due to supply chain and other issues and they’re not getting new devices in as timely a fashion.
However, “the good news is many of our customers listened," he said.
“I don’t think this is a debate about a 3G sunset. There’s never been any question in anybody’s mind,” that AT&T, for example, was going to shut down 3G and use the spectrum for 5G. “We’ve known that was coming. It’s now up to us to do something about it.”
5G & Massive IoT
In its press materials, Kore cites one very big data point: The IoT market is expected to grow from 12 billion IoT devices at the end of 2020 to a whopping 75 billion devices by 2030.
Bahl is well acquainted with those figures. Compared with the amount of innovation that came with 4G LTE – by way of Uber, Airbnb, Snapchat and more – “we will see 10 times that” with 5G, he said. “We will see an order of magnitude more innovation and use cases coming with 5G than we saw with 4G. It will be a major accelerant for the connected planet and for us.”
Rather than taking a big hit from the pandemic, Kore was one of the fortunate ones to rise above the early slowdown in business. Its role in remote healthcare has helped provide some of the upside. The company reported $60.7 million in revenue for the second quarter of 2021.
Analysts at LightShed Partners initiated coverage of Kore with a “Buy” rating and $14 price target. They originally expected Kore’s revenue growth to accelerate to 13% in 2021, but now they’re expecting the growth rate to more than double, to 16%, this year.
“KORE sits in the middle of the IoT ecosystem with an enablement platform that appeals to large enterprise customers implementing end-to-end solutions or IoT solutions providers themselves, attempting to bring their specialized services to a global market,” wrote LightShed analysts Walter Piecyk and Joe Galone. “Its recurring revenue model already generates free cash flow and it has M&A opportunities that can further leverage growth.”
The analysts noted that the IoT ecosystem may be broad and growing, but it’s also very complex with multiple, fragmented layers. Kore’s strength is rooted in its IoT platform that simplifies global connectivity, they said. That’s an advantage over telco competitors that largely attempt to sell applications on their own network. Kore’s platform enables a customer to manage multiple terrestrial wireless, satellite and unlicensed connectivity options like low-power wide area (LPWA) with one simple interface; the alternative is to negotiate and manage multiple carrier relationships.
No doubt, Kore’s management sees the value of that expansiveness.
“The beauty of making a bet on Kore is you’re really just making a bet on the fact that there will be more intelligent things on a more connected planet,” Bahl told Fierce. “You’re not making a bet on any one technology or whether this [single] network win or lose.”