5G and SaaS revenues up 120% year-over-year on
a combined basis
T-Mobile certifies three Inseego Wavemaker™
enterprise 5G fixed wireless access products
Generated first enterprise 5G product revenue
in North America, Europe, and Australia
Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G and
intelligent IoT device-to-cloud solutions, today reported its
results for the first quarter ended March 31, 2021. The Company
reported first quarter net revenue of $57.6 million, GAAP operating
loss of $16.2 million, GAAP net loss of $17.0 million, GAAP net
loss of $0.18 per share, negative adjusted EBITDA of $0.9 million,
and non-GAAP net loss of $0.08 per share. Cash and cash equivalents
at quarter end was $59.6 million including cash and cash
equivalents classified as held-for-sale.
“Inseego’s transformation into a pure-play 5G solution company
continues at a rapid pace, as evidenced by both significant
year-over-year growth in our 5G and SaaS revenue and the improving
gross margin as a result of this growth. We launched multiple new
enterprise 5G products in North America, EMEA and Asia-Pacific, and
we achieved a major milestone with T-Mobile certifications of these
new indoor and outdoor 5G fixed wireless products,” said Inseego
Chairman and CEO Dan Mondor. “We are seeing tremendous traction
with our industry-leading 5G product portfolio and Inseego Manage
SaaS solutions across global markets. Inseego has made a remarkable
transformation over the last couple of years and the company is
better positioned than ever on almost every possible measure.”
Corporate Highlights
- Q1 revenue $57.6 million, up 1.3% year-over-year
- Cash balance of $59.6 million, including cash classified as
held for sale, with zero bank debt
- Non-GAAP Q1 gross margin was 35.7%, up 4.2% year-over-year
- Appointed new interim Chief Financial Officer Bob Barbieri
IoT & Mobile
Solutions
- Q1 revenue of $43.0 million, up 1.3% year-over-year
- Non-GAAP gross margins up 5.6% year-over-year
- Combined 5G and SaaS revenue now 44% of overall revenue, double
the level of Q1 2020
- Launched enterprise 5G solutions in multiple regions with
leading distributors: Ingram Micro, Scansource, and Synnex in North
America; Solid State Supplies and Sphinx in Europe; and Powertec in
Australia
- Launched MiFi® 8000 in Canada with Rogers and Fido
- Achieved certification for three Wavemaker 5G fixed wireless
access products for sale to T-Mobile enterprise customers
- Inseego Connect cloud solution now available to AT&T MiFi
8000 enterprise customers
- Secured a new 5G operator customer, Sunrise Switzerland;
commercial launch planned for early June 2021
- Achieved 11.5% quarter-over-quarter growth of Inseego Manage
cloud subscriptions
Enterprise SaaS
Solutions
- Q1 revenue of $14.6 million, up 1.5% year-over-year
- On track to divest Ctrack South Africa operations by the end of
the second quarter 2021, subject to regulatory approval and other
closing conditions
“The improvement in our margins during the first quarter
reflects our focus on driving 5G growth coupled with an increase in
our software business,” said Inseego interim CFO Bob Barbieri. “The
investments we’ve made in our 5G portfolio continue to expand and
diversify our customer base as well as further improve our
margins.”
Conference Call Information
Inseego will host a conference call and live webcast for
analysts and investors today at 5:00 p.m. ET. A Q&A session
with analysts will be held live directly after the prepared
remarks. To access the conference call:
- Online, visit http://investor.inseego.com
- Phone-only participants can pre-register by navigating
https://dpregister.com/sreg/10152934/e3c52d3226
- Those without internet access or unable to pre-register may
dial-in by calling:
- In the United States, call 1-844-763-8274
- International parties can access the call at
1-412-717-9224
An audio replay of the conference call will be available
beginning one hour after the call through May 19, 2021. To hear the
replay, parties in the United States may call 1-877-344-7529 and
enter access code 10152934 followed by the # key. International
parties may call 1-412-317-0088. In addition, the Inseego Corp.
press release will be accessible from the Company's website before
the conference call begins.
About Inseego Corp.
Inseego Corp. (Nasdaq: INSG) is an industry leader in smart
device-to-cloud solutions that extend the 5G network edge, enabling
broader 5G coverage, multi-gigabit data speeds, low latency and
strong security to deliver highly reliable internet access. Our
innovative mobile broadband, fixed wireless access (FWA) solutions,
and software platform incorporate the most advanced technologies
(including 5G, 4G LTE, Wi-Fi 6 and others) into a wide range of
products that provide robust connectivity indoors, outdoors and in
the harshest industrial environments. Designed and developed in the
USA, Inseego products and SaaS solutions build on the company’s
patented technologies to provide the highest quality wireless
connectivity for service providers, enterprises, and government
entities worldwide. www.inseego.com #Putting5GtoWork
©2021. Inseego Corp. All rights reserved. The Inseego name and
logo, MiFi and Inseego Wavemaker are registered trademarks and
trademarks of Inseego Corp. Other Company, product or service names
mentioned herein are the trademarks of their respective owners.
Cautionary Note Regarding Forward-Looking Statements
Some of the information presented in this news release may
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. In this context,
forward-looking statements often address expected future business
and financial performance and often contain words such as “may,”
“estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,”
“project,” “will” and similar words and phrases indicating future
results. The information presented in this news release related to
our future business outlook, the timing of and our ability to
complete the divestiture of our Ctrack South Africa business
operations and the future demand for our products, as well as other
statements that are not purely statements of historical fact, are
forward-looking in nature. These forward-looking statements are
made on the basis of management’s current expectations,
assumptions, estimates and projections and are subject to
significant risks and uncertainties that could cause actual results
to differ materially from those anticipated in such forward-looking
statements. We therefore cannot guarantee future results,
performance or achievements. Actual results could differ materially
from our expectations.
Factors that could cause actual results to differ materially
from the Company’s expectations include: (1) the future demand for
wireless broadband access to data and asset management software and
services; (2) the growth of wireless wide-area networking and asset
management software and services; (3) customer and end-user
acceptance of the Company’s current product and service offerings
and market demand for the Company’s anticipated new product and
service offerings; (4) increased competition and pricing pressure
from participants in the markets in which the Company is engaged;
(5) dependence on third-party manufacturers and key component
suppliers worldwide; (6) the impact that new or adjusted tariffs
may have on the cost of components or our products, and our ability
to sell products internationally; (7) the impact of fluctuations of
foreign currency exchange rates; (8) the impact of geopolitical
instability on our ability to source components and manufacture our
products; (9) unexpected liabilities or expenses; (10) the
Company’s ability to introduce new products and services in a
timely manner, including the ability to develop and launch 5G
products at the speed and functionality required by our customers;
(11) litigation, regulatory and IP developments related to our
products or components of our products; (12) dependence on a small
number of customers for a significant portion of the Company’s
revenues; (13) the Company’s ability to raise additional financing
when the Company requires capital for operations or to satisfy
corporate obligations; (14) the Company’s plans and expectations
relating to acquisitions, divestitures (including the expected
divestiture of Inseego’s Ctrack business operations in South
Africa), strategic relationships, international expansion, software
and hardware developments, personnel matters and cost containment
initiatives, including restructuring activities and the timing of
their implementation; and (15) the global semiconductor shortage
and any related price increases or supply chain disruptions, and
(16) the potential impact of COVID-19 on the business.
These factors, as well as other factors set forth as risk
factors or otherwise described in the reports filed by the Company
with the SEC (available at www.sec.gov), could cause actual results
to differ materially from those expressed in the Company’s
forward-looking statements. The Company assumes no obligation to
update publicly any forward-looking statements for any reason, even
if new information becomes available or other events occur in the
future, except as otherwise required pursuant to applicable law and
our on-going reporting obligations under the Securities Exchange
Act of 1934, as amended.
Non-GAAP Financial Measures
Inseego Corp. has provided financial information in this news
release that has not been prepared in accordance with GAAP.
Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and
non-GAAP operating costs and expenses exclude share-based
compensation expense, amortization of intangible assets purchased
through acquisitions, amortization of discount and issuance costs
related to the Company’s convertible senior notes, loss on debt
conversion and extinguishment relating to convertible senior notes,
and fair value adjustments on derivative instruments. Adjusted
EBITDA also excludes interest, taxes, depreciation and amortization
(unrelated to acquisitions, the convertible senior notes),
transaction costs incurred in connection with Ctrack South Africa
divestiture, and foreign currency transaction gains and losses.
Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share
and non-GAAP operating costs and expenses are supplemental measures
of our performance that are not required by, or presented in
accordance with, GAAP. These non-GAAP financial measures have
limitations as an analytical tool and are not intended to be used
in isolation or as a substitute for operating expenses, net loss,
net loss per share or any other performance measure determined in
accordance with GAAP. We present these non-GAAP financial measures
because we consider each to be an important supplemental measure of
our performance.
Management uses these non-GAAP financial measures to make
operational decisions, evaluate the Company’s performance, prepare
forecasts and determine compensation. Further, management believes
that both management and investors benefit from referring to these
non-GAAP financial measures in assessing the Company’s performance
when planning, forecasting and analyzing future periods.
Share-based compensation expenses are expected to vary depending on
the number of new incentive award grants issued to both current and
new employees, the number of such grants forfeited by former
employees, and changes in the Company’s stock price, stock market
volatility, expected option term and risk-free interest rates, all
of which are difficult to estimate. In calculating non-GAAP
financial measures, management excludes certain non-cash and
one-time items in order to facilitate comparability of the
Company’s operating performance on a period-to-period basis because
such expenses are not, in management’s view, related to the
Company’s ongoing operating performance. Management uses this view
of the Company’s operating performance for purposes of comparison
with its business plan and individual operating budgets and in the
allocation of resources.
The Company further believes that these non-GAAP financial
measures are useful to investors in providing greater transparency
to the information used by management in its operational
decision-making. The Company believes that the use of these
non-GAAP financial measures also facilitates a comparison of our
underlying operating performance with that of other companies in
our industry, which use similar non-GAAP financial measures to
supplement their GAAP results. In the future, the Company expects
to continue to incur expenses similar to the non-GAAP adjustments
described above, and exclusion of these items in the presentation
of our non-GAAP financial measures should not be construed as an
inference that these costs are unusual, infrequent or
non-recurring. Investors and potential investors are cautioned that
there are material limitations associated with the use of non-GAAP
financial measures as an analytical tool. The limitations of
relying on non-GAAP financial measures include, but are not limited
to, the fact that other companies, including other companies in our
industry, may calculate non-GAAP financial measures differently
than we do, limiting their usefulness as a comparative tool.
Investors and potential investors are encouraged to review the
reconciliation of our non-GAAP financial measures contained within
this news release with our GAAP financial results.
INSEEGO CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share and
per share data)
(Unaudited)
Three Months Ended
March 31,
2021
2020
Net revenues:
IoT & Mobile Solutions
$
42,959
$
42,415
Enterprise SaaS Solutions
14,638
14,425
Total net revenues
57,597
56,840
Cost of net revenues:
IoT & Mobile Solutions
33,442
34,039
Enterprise SaaS Solutions
5,682
5,574
Total cost of net revenues
39,124
39,613
Gross profit
18,473
17,227
Operating costs and expenses:
Research and development
14,555
8,224
Sales and marketing
11,004
8,755
General and administrative
8,644
7,162
Amortization of purchased intangible
assets
466
826
Total operating costs and expenses
34,669
24,967
Operating loss
(16,196
)
(7,740
)
Other income (expense):
Loss on debt conversion and
extinguishment, net
(432
)
—
Interest expense, net
(1,845
)
(3,380
)
Other income, net
1,735
978
Loss before income taxes
(16,738
)
(10,142
)
Income tax provision (benefit)
221
91
Net loss
(16,959
)
(10,233
)
Less: Net income attributable to
noncontrolling interests
(214
)
(32
)
Net loss attributable to Inseego Corp.
(17,173
)
(18,198
)
Series E preferred stock dividends
(867
)
(392
)
Net loss attributable to common
stockholders
$
(18,040
)
$
(18,590
)
Per share data:
Net loss per common share:
Basic and diluted
$
(0.18
)
$
(0.20
)
Weighted-average shares used in
computation of net loss per common share:
Basic and diluted
101,370,433
90,874,347
INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
March 31,
2021
December 31,
2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
54,030
$
40,015
Accounts receivable, net
22,822
29,940
Inventories
35,535
33,952
Assets held for sale1
41,696
—
Prepaid expenses and other
8,333
10,201
Total current assets
162,416
114,108
Property, plant and equipment, net
9,417
13,699
Rental assets, net
4,245
6,109
Intangible assets, net
44,967
51,487
Goodwill
21,441
32,511
Right-of-use assets, net
8,517
9,092
Other assets
386
388
Total assets
$
251,389
$
227,394
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
45,906
$
52,339
Accrued expenses and other current
liabilities
28,744
23,373
Liabilities related to assets held for
sale1
10,062
—
Total current liabilities
84,712
75,712
Long-term liabilities:
2025 Notes, net
158,620
165,147
Deferred tax liabilities, net
823
4,505
Other long-term liabilities
8,697
9,929
Total liabilities
252,852
255,293
Stockholders’ deficit:
Preferred stock
—
—
Common stock
103
99
Additional paid-in capital
757,352
711,487
Accumulated other comprehensive loss
(8,704
)
(6,972
)
Accumulated deficit
(750,221
)
(732,422
)
Total stockholders’ deficit attributable
to Inseego Corp.
(1,470
)
(27,808
)
Noncontrolling interests
7
(91
)
Total stockholders’ deficit
(1,463
)
(27,899
)
Total liabilities and stockholders’
deficit
$
251,389
$
227,394
_______________
1 Assets and liabilities held for sale
relate to the expected sale of our Ctrack South Africa
operations.
INSEEGO CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2021
2020
Cash flows from operating activities:
Net loss
$
(16,959
)
$
(18,166
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
6,230
4,500
Provision for bad debts, net of
recoveries
101
15
Provision for excess and obsolete
inventory
(173
)
33
Share-based compensation expense
9,098
1,553
Amortization of debt discount and debt
issuance costs
374
1,697
Fair value adjustment on derivative
instrument
(1,951
)
—
Loss on debt conversion and
extinguishment, net
432
7,933
Deferred income taxes
326
2
Other
619
(514
)
Changes in assets and liabilities:
Accounts receivable
2,668
(8,590
)
Inventories
(5,414
)
8,876
Prepaid expenses and other assets
1,198
(983
)
Accounts payable
(1,937
)
1,921
Accrued expenses, income taxes, and
other
6,361
2,051
Net cash provided by operating
activities
973
328
Cash flows from investing activities:
Acquisition of noncontrolling interest
(116
)
—
Purchases of property, plant and
equipment
(1,324
)
(567
)
Proceeds from the sale of property, plant
and equipment
21
163
Additions to capitalized software
development costs and purchases of intangible assets
(7,977
)
(4,453
)
Net cash used in investing activities
(9,396
)
(4,857
)
Cash flows from financing activities:
Gross proceeds received from issuance of
Series E preferred stock
—
25,000
Proceeds from the exercise of warrants to
purchase common stock
—
1,861
Net borrowing of bank and overdraft
facilities
263
134
Principal payments under finance lease
obligations
(1,237
)
(657
)
Proceeds from a public offering, net of
issuance costs
29,428
—
Proceeds from stock option exercises and
employee stock purchase plan, net of taxes paid on vested
restricted stock units
1,093
(24
)
Net cash provided by financing
activities
29,547
26,314
Effect of exchange rates on cash
(1,589
)
(3,318
)
Net increase in cash, cash equivalents and
restricted cash
19,535
18,467
Cash, cash equivalents and restricted
cash, beginning of period
40,015
12,074
Cash, and cash equivalents, end of
period
$
59,550
$
30,541
INSEEGO CORP.
Reconciliation of GAAP Net
Loss to Non-GAAP Net Loss
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
March 31, 2021
Net Loss
Net Loss Per
Share
GAAP net loss
$
(16,959
)
$
(0.17
)
Adjustments:
Share-based compensation expense(a)
9,098
0.07
Purchased intangibles amortization(b)
952
0.01
Debt discount and issuance costs
amortization (c)
374
0.01
Fair value adjustment on derivative
instrument (d)
(1,951
)
(0.02
)
Loss on debt conversion and extinguishment
(e)
432
0.01
Transaction costs relating to Ctrack South
Africa divestiture (f)
366
0.01
Non-GAAP net loss
$
(7,688
)
$
(0.08
)
(a)
Includes share-based compensation expense
recorded under ASC Topic 718.
(b)
Includes amortization of intangible assets
purchased through acquisitions.
(c)
Includes the debt discount and issuance
costs amortization related to the 2025 Notes.
(d)
Includes the fair value adjustment related
to the Company’s interest make-whole derivative instrument.
(e)
Includes the loss on debt conversion and
extinguishment of the 2025 Notes.
(f)
Includes transaction costs incurred in
connection with Ctrack South Africa divestiture.
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
INSEEGO CORP.
Reconciliation of GAAP
Operating Costs and Expenses to Non-GAAP Operating Costs and
Expenses
Three Months Ended March 31,
2021
(In thousands)
(Unaudited)
GAAP
Share-based
compensation
expense
(a)
Purchased
intangibles
amortization
(b)
Non-
GAAP
Cost of net revenues
$
39,124
$
1,578
$
486
$
37,060
Operating costs and expenses:
Research and development
14,555
3,227
—
11,328
Sales and marketing
11,004
1,988
—
9,016
General and administrative
8,644
2,304
—
6,340
Amortization of purchased intangible
assets
466
—
466
—
Total operating costs and expenses
$
34,669
$
7,519
$
466
$
26,684
Total
$
9,097
$
952
(a)
Includes share-based compensation expense
recorded under ASC Topic 718.
(b)
Includes amortization of intangible assets
purchased through acquisitions.
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
INSEEGO CORP.
Reconciliation of GAAP Loss
before Income Taxes to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2021
Loss before income taxes
$
(16,738
)
Depreciation and amortization(a)
6,230
Share-based compensation expense(b)
9,098
Loss on debt conversion and extinguishment
(c)
432
Interest expense, net(d)
1,845
Other income, net(e)
(1,735
)
Adjusted EBITDA
$
(868
)
(a)
Includes depreciation and amortization
charges, including amortization of intangible assets purchased
through acquisitions.
(b)
Includes share-based compensation expense
recorded under ASC Topic 718.
(c)
Includes the loss on debt conversion of
the 2025 Notes.
(d)
Includes debt discount and issuance costs
amortization related to the 2025 Notes.
(e)
Includes the fair value adjustment related
to the Company’s interest make-whole derivative instrument, as well
as transaction costs incurred in connection with the Ctrack South
Africa divestiture, and foreign currency transaction gains and
losses.
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
INSEEGO CORP.
Quarterly Net Revenues by
Product Grouping
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2021
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
IoT & Mobile Solutions (a)
$
42,959
$
72,098
$
77,342
$
69,314
$
42,415
Enterprise SaaS Solutions
14,638
13,965
12,898
11,375
14,425
Total net revenues
$
57,597
$
86,063
$
90,240
$
80,689
$
56,840
(a)
Effective in the third quarter ended on
September 30, 2020, IoT & Mobile Solutions now includes the
Company’s Device Management System revenue stream, rebranded as
Inseego Subscribe™, and all prior period balances have been
reclassified from Enterprise SaaS Solutions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210505006081/en/
Inseego Corp. Media Contact: Anette Gaven +1 (619)
993-3058 Anette.Gaven@inseego.com or Investor Relations
Contact: Joo-Hun Kim MKR Group +1 (212) 868-6760
joohunkim@mkrir.com
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