Continued ramp in enterprise FWA revenue; now
represents over 13% revenue
Next generation 5G hotspot launches with
Verizon and Telstra
Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G
edge cloud solutions, today reported its results for the third
quarter ended September 30, 2022. The Company reported third
quarter net revenue of $69.2 million, GAAP operating loss of $11.9
million, GAAP net loss of $15.7 million, GAAP net loss of $0.15 per
share, adjusted EBITDA of negative $2.5 million, and non-GAAP net
loss of $0.11 per share. Unrestricted cash and cash equivalents at
quarter end was $18.1 million.
“We're pleased to report strong revenue results for the third
quarter,” said Ashish Sharma, CEO of Inseego. “The driver for
Inseego's future growth is the enterprise FWA business, which now
represents 13% of our revenue. This year, we signed up hundreds of
new customers for our 5G FWA solutions, and we’ve added a lot of
new enterprise customers to the list of ongoing pilots of both 5G
FWA and our new enterprise networking solution, 5G SD EDGE, which
was released earlier in the quarter. Thanks to the breadth of our
5G portfolio, we are seeing a trend of more and more customers
choosing Inseego over the competition.”
Business Highlights
– 5G revenue up 22% year-over-year on a
quarterly basis
– Software solutions represented 21% of total
revenue in the quarter
– Sold 5G products to over 600 enterprises by
quarter-end
– Enterprise base now exceeds 1,000
customers
– Introduced Inseego 5G SD EDGE™ cloud
enterprise WAN networking solution with zero trust networking
access (ZTNA)
– Provides corporate IT teams the ability to
extend IT policies to the edge
– Pilots with Fortune 500 companies
underway
– Launch of Inseego Wavemaker™ 5G indoor CPE
FG2000 with Drei Austria in September, the second member of the 3
Group to launch Inseego 5G fixed wireless access products
– Next generation 5G mobile hotspot launches
with Verizon and Telstra
“We exceeded our sales expectations for the quarter due in large
part to the successful launch of our next-generation 5G mobile
hotspot and continued ramp in 5G FWA enterprise deployments,” said
Bob Barbieri, CFO of Inseego. “This quarter’s gross margin was
impacted by the higher volume of carrier hotspot sales as well as
elevated supply chain costs. We expect gross margin to improve in
Q4 and with it our quarterly cash usage will trend lower. This will
allow us to achieve our goal of cash flow breakeven during Q1
2023.”
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
https://investor.inseego.com/events-presentations
- Phone-only participants can pre-register by navigating to
https://dpregister.com/sreg/10163627/f141da2f15
- Those without internet access or unable to pre-register may
dial-in by calling:
- In the United States, call 1-844-282-4463
- International parties can access the call at
1-412-317-5613
An audio replay of the conference call will be available
beginning one hour after the call through November 16, 2022. To
hear the replay, parties in the United States may call
1-877-344-7529 and enter access code 5671868 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. is the industry leader in 5G Enterprise cloud WAN
solutions with millions of end customers and thousands of
enterprise and SMB customers on its 4G, 5G and cloud platforms.
Inseego’s 5G Edge Cloud combines industry’s best 5G technology,
rich cloud networking features and intelligent edge applications.
Inseego powers new business experiences by connecting distributed
sites and workforces, securing enterprise data and improving
business outcomes with intelligent operational visibility—all over
a 5G network. For more information on Inseego, visit
www.inseego.com #Putting5GtoWork
©2022. Inseego Corp. All rights reserved. The Inseego name and
logo, MiFi, Inseego Wavemaker, and Inseego 5G SD EDGE 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 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 and supply chain challenges 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 and accounts receivable; (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, strategic relationships, international
expansion, software and hardware developments, personnel matters,
and cost containment initiatives, including restructuring
activities and the timing of their implementations; (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 preferred stock
dividends, share-based compensation expense, amortization of
intangible assets purchased through acquisitions, amortization of
discount and issuance costs related to the Company’s 2025 Notes and
the revolving credit facility, fair value adjustments on derivative
instruments, a one-time prior period adjustment related to
unamortized debt discount and loss on debt extinguishment relating
to the Company’s 2022 Notes, and other non-recurring legal
expenses. Adjusted EBITDA also excludes interest, taxes,
depreciation and amortization, foreign exchange gains and losses,
and other.
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
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net revenues:
IoT & Mobile Solutions
$
62,633
$
56,975
$
172,129
$
151,770
Enterprise SaaS Solutions
6,534
9,242
20,279
37,737
Total net revenues
69,167
66,217
192,408
189,507
Cost of net revenues:
IoT & Mobile Solutions
48,209
43,595
131,805
116,777
Enterprise SaaS Solutions
3,002
3,679
9,505
14,965
Total cost of net revenues
51,211
47,274
141,310
131,742
Gross profit
17,956
18,943
51,098
57,765
Operating costs and expenses:
Research and development
15,417
12,626
47,597
38,954
Sales and marketing
8,295
9,172
25,789
29,997
General and administrative
5,720
6,599
20,101
22,657
Amortization of purchased intangible
assets
433
519
1,319
1,649
Impairment of capitalized software
—
—
—
1,197
Total operating costs and expenses
29,865
28,916
94,806
94,454
Operating loss
(11,909
)
(9,973
)
(43,708
)
(36,689
)
Other (expense) income:
Gain on sale of Ctrack South Africa
—
5,262
—
5,262
Loss on debt conversion and
extinguishment, net
—
—
(450
)
(432
)
Interest expense, net
(2,034
)
(1,655
)
(6,621
)
(5,178
)
Other (expense) income, net
(1,758
)
(828
)
(3,145
)
291
Total other (expense) income
(3,792
)
2,779
(10,216
)
(57
)
Loss before income taxes
(15,701
)
(7,194
)
(53,924
)
(36,746
)
Income tax provision (benefit)
42
(4
)
(582
)
445
Net loss
(15,743
)
(7,190
)
(53,342
)
(37,191
)
Less: Net income attributable to
noncontrolling interests
—
—
—
(214
)
Net loss attributable to Inseego Corp.
(15,743
)
(7,190
)
(53,342
)
(37,405
)
Series E preferred stock dividends
(691
)
(1,843
)
(2,029
)
(3,596
)
Net loss attributable to common
stockholders
$
(16,434
)
$
(9,033
)
$
(55,371
)
$
(41,001
)
Per share data:
Net loss per common share:
Basic and diluted
$
(0.15
)
$
(0.09
)
$
(0.52
)
$
(0.40
)
Weighted-average shares used in
computation of net loss per common share:
Basic and diluted
107,747,468
103,430,083
106,977,201
102,586,121
INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except par value
and share data)
September 30,
2022
December 31,
2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
18,063
$
46,474
Restricted cash
—
3,338
Accounts receivable, net of allowance for
doubtful accounts of $371 and $408, respectively
28,668
26,781
Inventories
42,406
37,402
Prepaid expenses and other
10,902
13,624
Total current assets
100,039
127,619
Property, plant and equipment, net of
accumulated depreciation of $25,240 and $26,692, respectively
6,157
8,102
Rental assets, net of accumulated
depreciation of $5,919 and $5,392, respectively
4,411
4,575
Intangible assets, net of accumulated
amortization of $63,425 and $48,404, respectively
44,406
46,995
Goodwill
21,922
20,336
Right-of-use assets, net
6,902
7,839
Other assets
563
377
Total assets
$
184,400
$
215,843
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
39,537
$
48,577
Accrued expenses and other current
liabilities
31,476
26,253
Total current liabilities
71,013
74,830
Long-term liabilities:
2025 Notes, net
158,079
157,866
Revolving credit facility, net
3,451
—
Deferred tax liabilities, net
816
852
Other long-term liabilities
6,841
7,149
Total liabilities
240,200
240,697
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, par value $0.001;
2,000,000 shares authorized:
Series E Preferred stock, par value
$0.001; 39,500 shares designated, 25,000 shares issued and
outstanding, liquidation preference of $1,000 per share (plus any
accrued but unpaid dividends)
—
—
Common stock, par value $0.001;
150,000,000 shares authorized, 107,846,082 and 105,380,533 shares
issued and outstanding, respectively
108
105
Additional paid-in capital
790,460
770,619
Accumulated other comprehensive loss
(3,950
)
(8,531
)
Accumulated deficit
(842,418
)
(787,047
)
Total stockholders’ deficit
(55,800
)
(24,854
)
Total liabilities and stockholders’
deficit
$
184,400
$
215,843
INSEEGO CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Cash flows from operating activities:
Net loss
$
(15,743
)
$
(7,190
)
$
(53,342
)
$
(37,191
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
6,981
6,080
20,936
19,131
Fair value adjustment on derivative
instrument
—
(1,612
)
(902
)
(3,435
)
Provision for bad debts
44
80
29
346
Impairment of capitalized software
—
—
—
1,197
Provision for excess and obsolete
inventory
434
91
1,330
587
Share-based compensation expense
2,406
3,062
15,892
14,467
Amortization of debt discount and debt
issuance costs
450
371
2,472
1,117
Loss on debt conversion and
extinguishment, net
—
—
450
432
Gain on sale of Ctrack South Africa
—
(5,262
)
—
(5,262
)
Deferred income taxes
(127
)
137
(223
)
175
Right-of-use assets
(13
)
481
1,057
1,364
Other
—
19
—
572
Changes in assets and liabilities, net of
effects of divestiture:
Accounts receivable
(5,800
)
(3,649
)
(561
)
2,834
Inventories
4,222
(7,055
)
(5,926
)
(7,889
)
Prepaid expenses and other assets
(377
)
271
2,723
1,429
Accounts payable
(7,341
)
8,809
(13,548
)
(7,206
)
Accrued expenses, income taxes, and
other
8,016
3,500
6,276
4,797
Operating lease liabilities
(257
)
(860
)
(1,366
)
(2,222
)
Net cash used in operating activities
(7,105
)
(2,727
)
(24,703
)
(14,757
)
Cash flows from investing activities:
Acquisition of noncontrolling interest
—
—
—
(116
)
Purchases of property, plant and
equipment
(144
)
(1,844
)
(1,203
)
(4,299
)
Proceeds from the sale of property, plant
and equipment
—
637
—
1,143
Proceeds from sale of Ctrack South Africa,
net of cash divested
—
31,526
—
31,526
Additions to capitalized software
development costs
(3,020
)
(5,220
)
(9,242
)
(20,589
)
Net cash (used in) provided by investing
activities
(3,164
)
25,099
(10,445
)
7,665
Cash flows from financing activities:
Net (repayment) borrowing of bank and
overdraft facilities
(317
)
20
(458
)
315
Principal payments under finance lease
obligations
—
(965
)
(62
)
(3,138
)
Proceeds from a public offering, net of
issuance costs
—
1
—
29,370
Principal payments on financed assets
(337
)
—
(1,567
)
—
Borrowings on revolving credit
facility
9,000
—
9,000
—
Repayments on revolving credit
facility
(4,500
)
—
(4,500
)
—
Payment of debt issuance costs on
revolving credit facility
(1,126
)
—
(1,126
)
—
Proceeds from stock option exercises and
employee stock purchase plan, net of taxes paid on vested
restricted stock units
80
412
196
2,432
Net cash provided by (used in) financing
activities
2,800
(532
)
1,483
28,979
Effect of exchange rates on cash
1,172
(614
)
1,916
(293
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(6,297
)
21,226
(31,749
)
21,594
Cash, cash equivalents and restricted
cash, beginning of period
24,360
40,383
49,812
40,015
Cash, cash equivalents and restricted
cash, end of period
$
18,063
$
61,609
$
18,063
$
61,609
INSEEGO CORP.
Reconciliation of GAAP Net
Loss Attributable to Common Shareholders to Non-GAAP Net
Loss
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
September 30, 2022
Nine Months Ended
September 30, 2022
Net Loss
Net Loss Per Share
Net Loss
Net Loss Per Share
GAAP net loss attributable to common
shareholders
$
(16,434
)
$
(0.15
)
$
(55,371
)
$
(0.52
)
Adjustments:
Preferred stock dividends(a)
691
0.01
2,029
0.02
Share-based compensation expense
2,406
0.02
15,892
0.16
Purchased intangibles amortization
517
—
1,610
0.02
Debt discount and issuance costs
amortization(b)
450
—
2,472
0.02
Fair value adjustment on derivative
instrument(c)
—
—
(902
)
(0.01
)
Loss on debt conversion and
extinguishment, net (d)
—
—
450
—
Other
—
—
(109
)
—
Non-GAAP net loss
$
(12,370
)
$
(0.11
)
$
(33,929
)
$
(0.31
)
Note: Amounts may not foot due to
rounding.
(a) Includes accrued dividends on Series E Preferred Stock. (b)
Includes the debt discount and issuance costs amortization related
to the 2025 Notes, and the issuance costs related to the revolving
credit facility. (c) Includes the fair value adjustment related to
the Company’s interest make-whole derivative instrument. (d)
Includes the loss on debt conversion and extinguishment of the 2025
Notes.
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 September 30,
2022
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Purchased intangibles
amortization
Non-GAAP
Cost of net revenues
$
51,211
$
199
$
84
$
50,928
Operating costs and expenses:
Research and development
15,417
513
—
14,904
Sales and marketing
8,295
489
—
7,806
General and administrative
5,720
1,205
—
4,515
Amortization of purchased intangible
assets
433
—
433
—
Total operating costs and expenses
$
29,865
$
2,207
$
433
$
27,225
Total
$
2,406
$
517
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
Nine Months Ended September 30,
2022
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Purchased intangibles
amortization
Non-GAAP
Cost of net revenues
$
141,310
$
1,873
$
290
$
139,147
Operating costs and expenses:
Research and development
47,597
5,011
—
42,586
Sales and marketing
25,789
3,087
—
22,702
General and administrative
20,101
5,921
—
14,180
Amortization of purchased intangible
assets
1,319
—
1,319
—
Total operating costs and expenses
$
94,806
$
14,019
$
1,319
$
79,468
Total
$
15,892
$
1,609
See “Non-GAAP Financial Measures” for information regarding our
use of Non-GAAP financial measures
INSEEGO CORP.
Reconciliation of GAAP Net
Loss Attributable to Common Shareholders to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months Ended
September 30, 2022
Nine Months Ended September
30, 2022
GAAP net loss attributable to common
shareholders
(16,434
)
$
(55,371
)
Preferred stock dividends(a)
691
2,029
Income tax provision (benefit)
42
(582
)
Depreciation and amortization
6,981
20,936
Share-based compensation expense
2,406
15,892
Fair value adjustment of derivative(b)
—
(902
)
Interest expense, net(c)
2,034
6,621
Loss on debt conversion and
extinguishment(d)
—
450
Other(e)
1,759
4,093
Adjusted EBITDA
$
(2,521
)
$
(6,834
)
(a) Includes accrued dividends on Series E Preferred Stock. (b)
Includes the fair value adjustment related to the Company’s
interest make-whole derivative instrument. (c) Includes the debt
discount and issuance costs amortization related to the 2025 Notes,
and the issuance costs related to the revolving credit facility.
(d) Includes the loss on debt conversion and extinguishment of the
2025 Notes. (e) Primarily includes a benefit recorded related to
non-recurring legal settlements and foreign exchange 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
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
IoT & Mobile Solutions
$
62,633
$
54,990
$
54,505
$
66,214
$
56,975
Enterprise SaaS Solutions
6,534
6,866
6,879
6,678
9,242
Total net revenues
$
69,167
$
61,856
$
61,384
$
72,892
$
66,217
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221102005621/en/
Inseego Corp. Media Contact: Anette Gaven +1 (619)
993-3058 Anette.Gaven@inseego.com
Investor Relations Contact: Kevin Liu (626) 657-0013
Investor.Relations@inseego.com
Inseego (NASDAQ:INSG)
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From May 2023 to Jun 2023
Inseego (NASDAQ:INSG)
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From Jun 2022 to Jun 2023
