KORE Group Holdings is celebrating its agreement to acquire the IoT business of Twilio, but a deal it reached with Ericsson last year is not as cut and dried.
During KORE’s earnings call on Monday, President and CEO Romil Bahl said they can’t wait to work with Twilio and that it’s “sort of a marriage made in heaven.”
He declined to elaborate on the process of how Twilio and KORE came together.
“They have been careful in how they’ve made this selection,” he said. “Any more words on that should likely come from them, to be honest, as opposed to from me, in terms of what they might be willing to share in terms of the numbers of parties that were involved in the process… We are just delighted that at the end of it all, they chose to pick us.”
KORE announced early Monday that it signed a definitive agreement to acquire Twilio’s IoT business unit as part of its mission to build the world’s first “IoT hyperscaler.”
KORE’s net loss in the fourth quarter of 2022 increased to $68.8 million compared to $12.2 million in the year-ago quarter. IoT connectivity revenue of $43.7 million increased by 1%, compared to $43.3 million in the fourth quarter of 2021.
For the full year 2023, KORE said it’s expecting revenue in the range of $300 million to $310 million and adjusted EBITDA in the range of $60 million to $62 million, implying an adjusted EBITDA margin of about 20%.
The Twilio IoT acquisition is expected to close by June 1.
The Ericsson deal
Last September, KORE announced that it had joined the Ericsson IoT Accelerator ecosystem, providing KORE with the opportunity to provide more than 8,500 enterprise customers with connectivity when they want to deploy IoT assets in the U.S. Ericsson’s other 35 IoT Accelerator network partners are primarily in Europe and Asia.
But in December, Ericsson said it was selling its IoT business to San Jose, California-based Aeris Communications, a competitor to KORE.
During Monday’s earnings call, Bahl said in September, they were really bullish on that partnership with Ericsson.
However, “as you might imagine, between the gun jumping rules and everything else, there's not exactly a lot of conversation going on with either side right now about their plans and so forth,” he said. “I suspect post close we’ll start to get more insight into their plans.”
He did say he would “show my hand a little bit” in the sense that they’re definitely more cautious about the situation. “I mean, we were deliriously happy to take IoT accelerators inbound traffic, if you will, from their international customers on their international MNOs, right? When it was part of Ericsson.”
Now, “when it's part of arguably a competitor or sort of wannabe competitor, we're going to be cautious. We have lots of opportunities in kind of how we develop our indirect sales channel,” he said.
Between the Amazon Web Services and the Google Clouds of the world, “are we going to put more of our effort on some of those as opposed to an Ericsson? It all depends on what we hear and what their proposition comes back with, and we're certainly going to be looking hard at what, if anything, may change,” he said.
At the time the Ericsson partnership was announced, it was going to contribute minimal revenue to KORE's bottom line in 2023, and the guidance provided there is zero dollars, he said. “So there’s no risk to the numbers because of what may end up on that partnership front.”
A spokesperson at Aeris said today it has not closed on the Ericsson transaction yet, and the company did not have any further details to share at this time.