KORE suspends FY2025 guidance amid strategic review as connectivity revenue grows 1.7% sequentially

Earnings Call Insights: KORE Group Holdings, Inc. (KORE) Q3 2025

MANAGEMENT VIEW

* President and CEO Ronald Totton stated that "we delivered steadily improving operating performance with solid growth and profitability, while revenue held steady. Our revenue for the quarter was $68.7 million. Notably, our connectivity revenue increased 1.7% over Q2 2025, our second consecutive quarter of strong connectivity sequential growth."
* Totton highlighted that adjusted EBITDA rose by 12% to $14.5 million from Q3 2024 and net loss improved by $6.7 million, driven by improved adjusted EBITDA and a tax benefit from recent U.S. legislation. He emphasized "our disciplined execution and our commitment to building a resilient and profitable business."
* The company reported generating $1.1 million in cash from operations and improving free cash flow by $1.1 million over the prior year. Totton described this as "a direct result of our disciplined execution and our commitment to building a resilient and profitable business."
* Totton announced the launch of the KORE One unified customer platform, a limited release of a new connectivity offering with proprietary automated switching and enhanced network resilience, and the rollout of an AI assistant that contributed to a greater than 50% reduction in support tickets.
* The company secured $11.3 million in new and expansion eARR and grew total connections to over 20.5 million, attributed to "our commitment to both product innovation and customer intimacy."
* Totton revealed that KORE received a letter from Searchlight Capital Partners and Abry Partners expressing interest in acquiring all common stock not already held by them. The Board formed a special committee to review potential strategic transactions.
* CFO Anthony Bellomo stated, "total revenue for the third quarter was approximately flat year-over-year to $68.7 million. Breaking revenue down by business lines, IoT Connectivity revenue was flat at $56.7 million. Most notably, IoT Connectivity revenue showed sequential quarter-over-quarter growth of 1.7%, which followed the second quarter sequential growth of 3.2%."

OUTLOOK

* Due to the ongoing strategic review, Totton stated, "the potential range and timing of outcomes from the strategic review process make it difficult to continue to provide an outlook that would meaningfully represent the range of expected outcomes. As a result, the company is suspending guidance for the remainder of fiscal year 2025."
* Management reiterated a focus on "business as usual with full attention on delivering innovation and service to our customers and working closely with our partners."

FINANCIAL RESULTS

* Total revenue for Q3 2025 was $68.7 million, flat year-over-year.
* IoT Connectivity revenue was $56.7 million, showing 1.7% sequential growth.
* IoT Solutions revenue was $11.9 million, down from the prior year driven by timing of orders.
* Non-GAAP gross margin for Q3 2025 was 55.2%, down 147 basis points from the prior year.
* IoT Connectivity non-GAAP gross margin was 59.6%, and IoT Solutions was 34.3%.
* Average revenue per user per month (ARPU) was $0.94, unchanged from Q2 2025 but lower than $1.01 in Q3 2024.
* Operating expenses were $42.2 million, a decrease of $1.7 million year-over-year due to cost savings from restructuring.
* Adjusted EBITDA increased by $1.5 million or 12% compared to the prior year, reaching $14.5 million.
* Net loss was $12.7 million, improved from $19.4 million in the prior year, aided by a tax recovery.
* Cash provided by operations was $1.1 million, and as of September 30, 2025, cash and restricted cash stood at $19.6 million.

Q&A

* NOT_APPLICABLE: The transcript provided contains only prepared remarks and no Q&A session with analysts or management.

SENTIMENT ANALYSIS

* Analyst sentiment is not available due to the absence of a Q&A session in the transcript.
* Management tone in prepared remarks was confident, with Totton stating, "our strategy is centered on our 5-pillar value creation plan, and this quarter's results demonstrate that plan in action," and highlighting "solid growth and profitability."
* Compared to the previous quarter, the current tone is slightly more cautious due to the suspension of guidance following the strategic review, but management continues to emphasize operational improvement and discipline.

QUARTER-OVER-QUARTER COMPARISON

* The company suspended guidance for the remainder of fiscal 2025 due to a potential strategic transaction, whereas in Q2 2025, management reiterated full-year guidance.
* Q3 2025 revenue held steady at $68.7 million, compared to $71.3 million in Q2 2025.
* IoT Connectivity revenue grew sequentially by 1.7% in Q3, following 3.2% sequential growth in Q2.
* Adjusted EBITDA in Q3 was $14.5 million, down from $16.7 million in Q2.
* Free cash flow improved by $1.1 million year-over-year, but cash provided by operations decreased compared to $4.1 million in Q2.
* Management's confidence in operational improvements remains, but there is an added note of uncertainty due to the ongoing strategic review and suspended guidance, marking a shift from the more optimistic tone in Q2.
* Analysts' tone in the previous quarter was constructive, with questions on tariffs and milestones; current analyst sentiment cannot be assessed due to the absence of a Q&A.

RISKS AND CONCERNS

* The company cited uncertainty regarding the outcome and timing of the strategic review process as a reason for suspending forward guidance.
* Management indicated that ongoing execution of operational initiatives and customer focus would continue during the review period.
* No additional specific risks or mitigation strategies were highlighted in the prepared remarks.

FINAL TAKEAWAY

Management reported steady results for Q3 2025, with sequential growth in IoT Connectivity and improved profitability, but suspended the fiscal year guidance due to a potential acquisition as the Board evaluates strategic alternatives. Operational improvements, product launches, and customer wins were emphasized, while the company signaled continued focus on disciplined execution and innovation during the review process.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/kore/earnings/transcripts]

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* KORE Group Holdings, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4842752-kore-group-holdings-inc-2025-q3-results-earnings-call-presentation]
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