IoT For All
IoT For All
In this episode of the IoT For All Podcast, KORE Wireless CEO Romil Bahl joins us to talk KORE’s upcoming IPO and what that means as we enter the decade of IoT. Romil shares the story of KORE’s transformation, from the company when he took the helm in 2017 to its vision and story today. He gives some insight into what the experience has been like as KORE prepares to go public and answers the question - why now? Romil also speaks to the future of IoT as he sees it and what it means as we enter what he calls “the decade of IoT.”
Romil Bahl is CEO of KORE, a global IoT leader that empowers organizations to improve operational and business results by simplifying the complexity of IoT. Bahl has 30 years of technology, SaaS and IoT experience. Prior to joining KORE in 2017, he served in a number of leadership positions, including as CEO of Lochbridge, a solutions provider in the IoT, connected car and digital enablement space and as the EVP of Global Industries for CSC, where he ran a ~$9B business. Bahl’s MBA is from The University of Texas at Austin while his bachelor’s in engineering is from DMET, India.
Interested in connecting with Romil? Reach out to him on Linkedin!
About KORE: KORE, the global leader in IoT, helps simplify the complexity of IoT with streamlined, comprehensive solutions to empower organizations to deploy, manage, and scale IoT.
(01:03) Intro to Romil Bahl
(03:05) Why was it time for KORE to venture down the IPO route?
(10:05) What is a special purpose acquisition company? What’re the benefits?
(18:42) Can you speak to KORE’s journey since you’ve taken over as CEO?
(23:32) Could you speak to what it’s like guiding companies through their IoT journey from beginning to end?
(30:02) What does the future of IoT look like?
(39:53) How was KORE involved in the COVID vaccine trials?
- You are listening to the IoT For All Media Network.
- [Ryan] Hello everyone and welcome to another episode of the IoT for All podcast on the IoT For All Media Network. I'm your host, Ryan Chacon, one of the Co-Creators of IoT For All. Now, before we jump into this episode, please don't forget to subscribe on your favorite podcast platform or join our newsletter at IoTforall.com/newsletter to catch all the newest episodes as soon as they come out. Before we get started, if any of you out there are looking to enter the fast-growing and profitable IoT market, but don't know where to start, check out our sponsor, Leverage's IoT solutions development platform, which provides everything you need to create turnkey IoT products that you can white label and resell under your own brand. To learn more, go to itTchangeseverything.com, that's IoTchangeseverything.com. So without further ado, please enjoy this episode of the IoT For All podcast. Welcome Romil to the IoT For All show. How's your week going so far?
- [Romil] Well, thanks. Well, and thanks for having me on.
- [Ryan] Absolutely, it's great to have you. Some exciting stuff has been going on at KORE from everything I've been reading, so I wanna get into that in a second, but I wanted to start off by just having you introduce yourself to our audience. KORE is a very well-known name in the IoT space, so I'm pretty sure most of our listeners have heard of the company, which we can dive into also in a second, but for you being, you know, the CEO of KORE, I'd love if you could just kinda give some background about yourself, you know, anything you think would be relevant, interesting for our audience to understand who they're listening to.
- [Romil] Well, no, I appreciate that Ryan, and yes. You know, look, this is my third CEO gig, so hopefully I'm making sorta less mistakes as I go along or at least not making the same ones over and over. But, you know, the first company I had the opportunity to run back when I was 40 years old, the board of directors was gracious enough, maybe brave enough, to give a young Romil Bahl a chance to run a company, run a public company. That's what brought the family here to Atlanta. We've been able to stay relatively stable here for about a dozen years now, which is kind of nice. And our two daughters have sorta grown up in Atlanta. In between, I ran a private equity company headquartered in Detroit, but I was able to do that sorta commuting, so that helped. And that was actually my first introduction to the internet of things, right? So, you know, you could argue that the first real Applications of IoT was sort of that whole fleet and connected cars, sort of that telematic phase. In fact, there was a time when KORE was called KORE Telematics. The name was KORE Telematics 'cause that's what the entire industry sort of into IoT was about. But anyway, we ended up pivoting that company, Lochbridge, towards the connected car space. We showed that to a strategic buyer in the middle of '17, and then a few months later, ABRY called and said, "Hey, there's a IoT company in your backyard in Atlanta, and would you like to come?" And so, yeah. So almost four years ago when I first started that conversation, I didn't think four years later you and I'd be having this chat after having announced a SPAC, but it's been a fun run.
- [Ryan] Yeah, fantastic. So speaking about the SPAC and kind of everything that's going on, obviously some big news came out today. Our listeners may be hearing this a few weeks after this news, but you guys had fantastic quarter one revenue numbers, 55 million plus, 3,600 customers, talks about going public in Q3, a SPAC merger. Dive into that a little bit and talk to our audience about kind of why now is the time for not just KORE, but, you know, a well-known IoT company to kind of venture down that IPO route.
- [Romil] Yeah. That's a great lead and great set of questions, and appreciate the kind words, Ryan, on the press release we put out today. It really is a lot of momentum, right? Let's just talk about that first, and then we'll switch to the go public, if you will. But I mean, you know, it feels to me like sort of somewhere in the second half of last year we hit an inflection point. Since I've been here, we've had a couple of headwinds to deal with. Now, when people talk about the internet of things, we mostly talk about the massive tailwinds that this market has, right? Going from roughly 12 billion IoT devices in 2020 to roughly 75 billion IoT devices in 2030. We're in this decade of IoT, as I call it, and what we've been getting ready for at KORE with our transformation effort these last three years is exactly this, is getting ready to really participate in this tidal wave of devices coming at us, right? And so there is sort of an inflection point, despite the headwinds. So I said headwinds. So what are those headwinds? Well, we had some customer churn from back in the 2014, 2015, 2016 timeframe when we did some acquisitions. We've had to deal with some ARPU declines as we are helping migrate our customers into LTE, the long-term evolution of telecommunications and cellular connectivity. So some of that average revenue per unit, the ARPU, has been going down, you know, somewhat dramatically as a one-time type shift as we go from the old, expensive 2G, 3G networks to the new LTE. But despite that, you know, we started to feel like we had hit an inflection point in the second half of last year. And I think what you see in the first quarter is the proof point of that, right? So if we can grow 10.8%, I think it was revenue growth Q1'21 over Q1'20, in the face of those headwinds, then certainly without those headwinds, as things settle down here over the next couple of years, as those go away, this should be well north a 20% top-line growth company, which, by the way, is more than what we've, you know, promised, if you will, right? Our final forecast that we've put out there as part of our go-public process, you know, I would say only gets us to a little over $400 million by 2025. We internally would like to be a billion-dollar company-
- Of course.
- [Romil] Right around then. You know, if not much, much later, so. Anyway, so that's kinda just my commentary on the momentum. Does that makes sense?
- Mm-hmm. Yes.
- [Romil] All right. So now let's go into the why public now conversation, and perhaps the why SPAC KORE conversation, you know, which I think is relevant as well. So let me say that, first of all, this is not something new for us at KORE to consider going public. In fact, all the way back about three years ago in our May 2018 board meeting, we, for the first time, actually talked about potentially an IPO being a great alternative, great strategic alternative or outcome for KORE. And why did we think that? We thought that primarily because the characteristics of our business are very sort of public company-like, if you will. So recurring revenue off the chart, 91% plus over 91% recurring revenue last year. So that should mean to your listener, to the average investor is, you know, we're not gonna surprise on the downside, we're not gonna have a lot of volatility, right? So you say, "Okay, so, you know, fantastic revenue visibility, fantastic recurring revenue, fantastic tailwinds for the next 10 years." Probably the next 15 to 20 years, really, because, you know, 5G for IoT probably doesn't become real until the second half of this coming decade. And so I think 5G growth will continue to power all the way through 2035. So you say, "Wow, you got all of that going for you as a public company." Add to that the fact that many of us on the leadership team have public company expertise, public company experience. That's not typical for a small-cap, you know, medium-cap private equity company to have that kind of public company experience on their team. And so, yeah. And by the way, that's CFO, that's CHRO, that's myself, right? So several of us have been in public company roles. With out CIO, our CTO was a CIO of a public company. So you really take all of that, and you say, "This is something we've been considering for a while." Now, we'd had a couple of other SPAC conversations that weren't as interesting to us, but when Cerberus, as the sponsor, a very credible sponsor, obviously, you know, they run a $50 billion, highly-successful Wall Street Capital business, you know, when they said, "Hey, we're gonna launch a SPAC franchise and here's our first one, CTAC one." And when CTAC one said, "Hey, we're looking at over 100 companies, but we really like your portfolio company, ABRY." They called our private equity shop, ABRY, and said, "We really like your portfolio company, KORE. Could we have a conversation with them?" You know, we collectively felt like, "Hey, this is worthy of a conversation," right?
- Sure.
- [Romil] And so here's what I'll say to you, right? We didn't do this to tap into some kind of SPAC craze or what have you, and the volatility and the ups and the downs here don't really bother us. To us, the purpose of the conversation was to go hand in hand with a very credible sponsor into becoming a public company where we believe we are very well suited to be for the long term, right?
- Sure. And frankly, I'll say one last thing, Ryan, which is, look, I mean, we welcome additional scrutiny. We welcome the SCC looking closer because we're a real company with real revenue, real EBITA, real plan, and real diligence done by CTAC. And so we're very confident in the future here and this isn't some sort of speculative play, so.
- [Ryan] That's fantastic. So just two quick follow-up questions. for our audience's sake, can you talk a little bit more about what a special purpose acquisition company is? So SPAC, which is what we've been saying. Can you talk a little bit about what that is and the decision behind using kind of that approach to go public as opposed to just going straight into an IPO yourself? And then also the benefits that you all view as being public versus staying private, and kind of, just for our audience's sake, to understand kind of the value you're seeing it as, that why that's the right decision.
- [Romil] Absolutely. And let me actually start with that, the second of the two questions, which I really should've hit, but my answer was getting so long I just stopped talking. Let me get that second one first 'cause it really sets up the premise, right? So I talked about the fact that we have very good characteristics of being a public company. I didn't talk enough about the benefits of being public and why we would wanna be public, so let's talk about that. First and foremost, just the brand visibility and positioning, you know, that it gives us is fantastic, right? I mean, just, you know, you and I, we're probably not having this conversation had we not been going through this process. But equally, and you started Ryan by saying many of your audience might know KORE, I'll just say that if you knew KORE at all, right, before this conversation, you probably thought of us as a IoT connectivity shop.
- 100%.
- [Romil] Right? And you wouldn't have been wrong. That's what you would have known us as. The fact though is that if you've blinked over the last couple of years, you would've missed sort of the breathtaking transformation the KORE team's been executing on, I'm so proud of this team, you know, despite the COVID pandemic and this and that, and everything else. If anything, we've accelerated the scale and speed at which we're transforming to become a connectivity solutions analytics player, right? So more to come on that as we talk about the business and the strategy, and the positioning, but the fact is that we are getting the ability to tell the story as investors and strategic investors are hearing our story, they're actually introducing us to their own portfolio companies and others. And so I think just that brand and positioning will do us a world of good. So that's reason number one to go public. Reason number two to go public is financial flexibility. I mean, I think everybody understands kind of the private equity sort of LBO game, right? The leveraged buyout game, high, high levels of debt which mean that EBITA is very, very important to keep high. But equally, you know, we had eight or nine terms of debt, you know, before which limited our ability to do M&A activity greatly. The amount of cash we could spend needed to be delevering at all times. The private equity stock is not exactly a liquid currency to use for our acquisitions. So a number of things were stacked against us. We are using every single dollar from this go-public effort to pay down debt. Every dollar that is not going to an expense, right, a banker or an auditor, or a lawyer, is going to pay down debt from roughly eight or nine times. Actually, the pro forma says about 1.7 times the debt, which is fantastic. And that's just with 130 plus million dollars of cash on the balance sheet. So it is a fantastic delevering moment, gives us the flexibility, gives us the public currency to really accelerate our M&A, our inorganic part of this journey towards that billion dollar upside case, if you will. And I'll say the third of the big three reasons to go public was indeed that Cerberus, and more specifically the CTAC team, the server's telecom acquisition company, which is the SPAC that we're merging with, the advisor group on that team. From Tim Donahue who was the exec chair of Sprint Nextel, actually sold Nextel to them, he was a CEO there, you know, he grew up at McCaw after an AT&T career, I mean, you know, just you start with the quality, a guy like that, a quality guy like Shaygan Kheradpir, who's been a CIO, CTO at Verizon, and others up and down that list. Just fantastic group of people who are themselves connected very well, as is the service operating group. So I think that the network effect of those individuals across the kinds of companies we wanna do business with, we wanna partner with is the third big reason to go public. Okay?
- Okay.
- [Romil] Now let's go back to the question sort of what is a SPAC? You know, why a SPAC? So, look, I mean, first of all, SPACs have been around, you know, 30 years. people are surprised about that because they've only heard about it, most of us, in the last year or two. But really, you know, SPACS have been around forever. You know, they've had ups and downs like most any financial instrument does in terms of how much volume of them are coming through. They've had a recent spike that obviously then raises questions, et cetera. But the fundamental purpose of a SPAC is to actually, you know, accelerate shareholder value creation, right? It is to go find a company of very high quality, which I would argue CTAG did, right?
- Yeah.
- [Romil] They talked to over a hundred companies. They shortlisted down to six and did diligence on six. Somehow we were the last ones standing at the end of last year. And they signed an exclusive agreement with us at that point. And then through January and February, they did even more diligence. And then we went out and, together, sort of raised a PIPE investment, right?
- Right.
- [Romil] We went out looking for $150 million. A couple of weeks into that process, we were almost 2x oversubscribed, right?
- Fantastic.
- [Romil] So we up-sized the PIPE to 225 million from 150. And obviously that PIPE was led by the likes of COKE and BlackRock, and other very, you know, very, very interesting names. Anyway, so that process has gone on, and I would argue, again, that, you know, that CTAC has done exactly what they were supposed to do, which was to bring this, you know, we think, largely unknown, largely hidden, you know, gem to market and make it available to investors. So when used correctly, appropriately with the right diligence, et cetera, I think the SPAC is a tremendous weapon. It can bring you to a public listing in nine months, 10 months as opposed to 18 to 24 months.
- Right. Right.
- [Romil] So for a management team like ours here at KORE that's heads down, busy executing on a massive transformation, not being tied up for 18 to 24 months is hugely valuable, hugely efficient, and valuable for our shareholders 'cause-
- 100%.
- we're distracted for less amount of the time. So there you go.
- Absolutely.
- So, yeah.
- [Ryan] Yeah, that's fantastic and I appreciate all those insights. So it sounds like a very strategic decision as opposed to necessarily like going public just because you need the money. The money is obviously a bonus there, but it's more of just everything timed up well, and it sounds like it's the prime opportunity for KORE to kind of make that push into public. And, you know, there's a lot of strategic reasons, relationships you guys are gathering to help you guys reach that billion-dollar valuation which you're going for.
- [Romil] Yeah, now, look, and that's very well said, and I think it's a very fair summary. Again, our shareholders, starting with ABRY, that owns the majority of our shares today, the private equity company, are not taking $1 off the table in this transaction, right?
- Sure.
- They're just converting their original equity dollars into public company stock which, again, goes to show you confidence they have-
- 100%.
- in the future, the return on the investment they've made. They've allowed us to invest $50 million into this investment, into this transformation these last three years. And they know the return on that investment is to come. I mean, it's funny, like, you know, one of the ABRY guys was recently joking with me that maybe they're still shareholders 10 years from now. You know, we're that interesting. Yeah, so it really is a strategic move. I think that's what we summarized. Yeah.
- [Ryan] Yeah, that's a huge testament to just kind of the path you've been on and where you guys are going, you know? If they're trying to keep their investment in the same stake they've had, transferring over, obviously, to public shares makes total sense in this situation, but, you know, they're not trying to get out and, you know, cash in. So that's fantastic. It's very exciting to kind of see where you guys are headed. And speaking of kind of the direction, you took over in 2017, I believe, correct?
- [Romil] That's correct. Late 17', fourth quarter. Yep.
- [Ryan] Fantastic. So talk a little bit, I know we're kind of going backwards here for a second, but it's gonna lead into kind of our future discussion that follows, but 2017, where was KORE, you know, and now where is KORE in your mind? Kind of what does it look like today, what is that journey that you've been on? And, you know, that ties in really well to what we just talked about as far as why now is the time to go public. So just talk to me a little bit, you know, briefly here about kind of that journey, and how you've seen the evolution of the market, and how you kind of timed KORE to be where it is now.
- [Romil] Yeah. So look, so KORE, and at the end of '17, here's the good news, right? The good news was sort of the board handed all of us the new leadership team that came together largely about three years ago. You know, a very nice IoT connectivity asset, right? An asset that was built with the thesis of the multi-multi-multi-connectivity proposition. Now, what does that mean? It means multiple regions or multiple countries of the world, multiple technologies, multiple devices, multiple networks, right? Whatever the customer needs, whatever the Applications needs, wherever they need it, multiple protocols and connectivity bearers, we could connect you anywhere in the world. Now, it was very, very difficult to execute on that thesis. Almost impossible to execute on that thesis organically, right?
- Right.
- [Romil] Because just getting one integration done with one key MNO, should they even allow it. And I'm talking of course carriers currently that we have today, right? The Telstras and the Telephonicas, and the Vodafones and AT&Ts, and Verizons. And so, you know, just of those can be a one to two year timeline, a one to $2 million worth of cost, and, and, and, and, and. And certainly, you know, 20 years ago when KORE first started as a little M2M IoT front-end kind of connectivity platform, first for Rogers in Canada, and then for AT&T in the US, you know, in those days we were the channel to market for these MNOs because they didn't have IoT groups of their own. Now, you know, a decade later by around the 2010 timeframe, carriers started to kind of jump in there themselves and get a little bit, right-
- Right.
- [Romil] IoT, you know, practice and direct to market kind of sales teams in them. So that changed the dynamic. So they were now less likely to give companies like us these deep integrations into their OSS/BSS stacks to build these businesses. And so the way ABRY and the KORE founders partnered up and went after this thesis of connectivity was to do it inorganically. We did three, four acquisitions after ABRY got here. And two or three of them had been done even before ABRY arrived. And so there was a period of time where there was a transformational set of acquisitions between, I'll call it, 2012 and 2016, okay? But again, the good news from all of that and all of that investment, and equity was that a very nice asset was handed to us. But it was connectivity. And there was work to be done to deliver the proposition. So we went to work from sort of a transformation type standpoint on on a five-year transformation plan. The first phase of that transformation was really to double down into connectivity and build our own core network, but also then to expand into solutions and analytics. And so if I was to just take the quick version of the transformation story 'cause there's an entire question right there about the transformation, but let me do the quick version of it to answer your questions. If you fast forward about to where we are today, you know, KORE has changed from being a company that was connectivity focused, that a customer would call us when they got towards the end of deploying their solution, and said, "Oh, we need somebody to help with connectivity now. Let's call somebody," to a company that does connectivity solutions analytics who's sort of mission statement is to actually help our customers deploy successfully, to actually, right, design and deploy successfully, to manage seamlessly, to scale confidently and securely. So a much broader set of capabilities, and as I like to say, a journey from three to 30, right? So from 3% of the IoT market that we used to address as connectivity only, we now aspire to hit 30% of the IoT market with our broader capabilities across connectivity solutions and analytics.
- [Ryan] Fantastic. And are you handling most of the deployments and solutions that are coming to market with your customers within the walls of KORE or are you partnering with organizations to help bring these to market? And the reason I mentioned this is I watched the video that came out recently that you were talking about how to bring a solution to market, it takes a high number of companies to put these together, which is why we don't get out of the pilot phase very often, why IoT is very complex at least to the end user, right, or to the company looking to bring IoT into their business or for their business of their clients, is they just don't know where to begin. It's much easier if one company kind of come in, systems integrators usually play this role, come in to be able to help them get from the beginning of their IoT journey all the way to scale. And so I'm just kind of curious if you could touch on that for a second.
- [Romil] Yeah, and also what a fabulous set of questions really, and I appreciate the research you've clearly done to prepare for this conversation and to watch the... I mean, the video just went out today with the press release, so that's pretty cool that you've seen it already. But yeah, look, you know, I think the video is a nice, you know, relatively short watch that I think makes it sort of, you know, more accessible for people to understand what we do, right?
- Right. And so I hope your audience takes a minute to go see it. I certainly would say that that's a better video to watch rather than our 60-minute investor presentation. The other one is a little longer and more complex. But yeah, so let me answer the question. The two key statistics that support what you just said, the complexity, the number of partners one needs to launch an IoT solution, and, by the way, your point about stalling POCs and pilots, right? So Cisco had a study back when I was joining KORE. I remember reading where they said almost 2/3 of all POCs and pilots actually stall or fail, which is shocking, right?
- Right. Now, of course, those were results from largely from the first half of last decade, right? But still, you know? And even while we've learned since then, that was a shocking statistic. And then the other statistic that the Venerable Consulting firm had out there was 18 partners on average to launch one end-to-end solution. Now look, that may have gone down over the last few years, maybe it's even trending down towards 10 or 12, but look, it's still too many. Having 10 to 12 partners is still too many. And so to have a solution integrator, right, of a sort, and you mentioned the size, sure, I mean, you know, if you can afford to spend many millions of dollars on an Accenture, right? You know, maybe you'll maybe you'll hire them to help you with you're IoT. But for the rest of the enterprises and companies out there, and certainly our smaller solution provider companies, we think it's tremendously useful to, as the video says, start with one, start with KORE, right? And let us bring that ecosystem to you. Let us bring the power of the IoT ecosystem to you. Now, we have worked hard to take a number of services and capabilities that we had for ourselves. And we had order management, Ryan, for ourselves. We had configuration management for ourselves 'cause we used to order SIMs and other things, and then ship them from our warehouses, right. So we used to do all of this ourselves and have done for 20 years. And so expanding that capability to include devices to go with SIMs was relatively easy, right? And then we've flipped those services around, sort of armor-pla