Orbcomm Sells Off On Quarterly Report As It Pushes Subscription Service

Orbcomm, Inc. (NASDAQ: ORBC), a provider of machine-to-machine and Internet of Things (IoT) solutions, reported a $4 million loss in the third quarter of 2019. This was a penny worse than the prior year period and consensus estimates of a $0.04 per share loss.  

The telematics and asset monitoring/tracking provider reported total revenue of $69.2 million, 2.6% lower year-over-year. The larger than expected downturn in the transportation market and prior year comparisons that included new product deployments were the reasons for the decline. Service revenue improved 5.4% year-over-year as the company grew its subscriber base to 2.6 million, 12% higher than the prior year period.  

On their earnings conference call the company's management team provided an update on several new product and service initiatives.

"We have several high-profile opportunities across our markets that are starting to fall in line, and I'm confident that we'll be able to build on this momentum, setting the stage for a strong start to 2020," said Orbcomm's CEO Marc Eisenberg.

The bulk of the call centered on Orbcomm's transition from hardware to a subscription service model for the transportation industry. Management believes that offering a subscription model will allow the company to grow total revenue because the subscription service reduces up-front capital expenditures for the user. However, the company will see a bit of a revenue delay as the contract extends over the life of the device and revenue wil....

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