Borqs Technologies Reports Strong Second Quarter; Stock Soars After-hours
Borqs Technologies Inc. (Nasdaq: BRQS) reported sharply higher revenue and strong earnings for the second quarter, sending shares in the company up more than 12 percent in after-hours trading Tuesday.
The Beijing-based company, which develops software and products for the Internet of Things (IoT), announced after the markets closed that revenue for the period more than doubled to $56.3 million compared with revenue of $22.1 a year ago.
Earnings for the three months were $2 million in contrast to a loss of $970,000 in the year-ago period. No per share figures were provided by the company.
Shares in the company, which closed flat at $4.45 per share Tuesday, climbed 55 cents, or more than 12 percent, after the earnings report.
"We are pleased to report another strong quarter following the first quarter of 2018, both in revenue and net income," said Pat Chan, chairman and chief executive of the company. "We are estimating aggregate revenues for the full year of 2018 to come within a range from $195 million to $215 million, and net income (after taxes but excluding one-off expenditures, if any) to be in the range of $4 million to $6 million. We anticipate continued robust growth in 2019 as well."
Accounting for the improved results, the company said its Connected Solutions Business Unit, which engaged in the design and manufacturing of IoT products, represented $48.6 million, or 86 percent, of overall revenue. Sales in this unit grew 233 percent compared with a year earlier, the company said, primarily thanks to orders from an unnamed customer in Asia. the remainder of the revenue stemmed from the company&`#`39;s MVNO Business Unit, which operates a mobile virtual network and traditional telephony services. Revenue in that segment amounted to $7.7 million in the period, up a modest 2.5 percent.
Muting some of the company&`#`39;s growth in earnings, the company said, was the fact that gross margins in both units declined in the current period. The Connected Solutions unit saw its margin shrink to 11.2 percent compared with 20.5 percent a year ago becuase of competition on larger orders and a supply shortage that resulted in higher component prices.
The gross margin for the MVNO unit was hurt by increased security checks in the sales process, the company said, as well as a lack of so-called "beauty" phone numbers, which, for example, include multiple digits of the numeral 8. The shortage of beauty numbers is not expected to recur, the company said.
Chan said that the company expected the component shortage for Connected Solutions would be resolved in the second half of this year, while the gross margin for the MVNO business would remain stable.