Q3 2023 total revenue of $48.6 million
Recorded net loss of $21.8 million; delivered
positive adjusted EBITDA of $4.0 million for Q3 2023
5G Fixed Wireless Access (FWA) revenue
represented 23.0% of total revenue and grew 29.0%
year-over-year
Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G
edge cloud solutions, today reported its results for the third
quarter of 2023 ending September 30, 2023. The Company reported
third quarter total revenue of $48.6 million, GAAP operating loss
of $18.4 million, GAAP net loss of $21.8 million, GAAP net loss of
$0.19 per share, adjusted EBITDA of $4.0 million, and non-GAAP net
loss of $0.16 per share. Cash and cash equivalents at quarter end
was $18.9 million.
“We remain focused on maintaining profitability as we transition
from 4G to 5G. While supply chain challenges are impacting our
business in the near term, we are well positioned to capitalize on
the newly developing 5G FWA market,” said Ashish Sharma, CEO of
Inseego. “During the last year, our enterprise and SMB customer
base has grown by almost 56,000 customers, all driven by our 5G FWA
and cloud portfolio. While the FWA market is taking a bit of time
to develop, we remain focused on driving success with the early
customer base we have established.”
Recent Business
Highlights
– Total revenue for Q3 2023 was $48.6 million
– 5G revenue accounted for 54.0% of Q3 2023 total revenue – Cloud
software revenue was 30.0% of Q3 2023 revenue – 5G FWA revenue grew
29.0% YoY driven by over 56,000 new enterprise and SMB customers
signed up during the last year – GAAP margin was 3.9%; Non-GAAP
gross margin increased year-over-year from 26.4% to 33.0% as the
revenue mix continued to shift to higher-margin products –
Operating expenses dropped to lowest in over two years – Delivered
3rd straight quarter of positive cash flow and adjusted EBITDA –
Steven Gatoff joined as Chief Financial Officer in September –
Philip Brace joined our Board of Directors in September – Steve
Harmon joined as Chief Revenue Officer in October
“We continue to optimize and align our spend with near-term
customer demand and our revenue trajectory,” said Steven Gatoff,
Chief Financial Officer of Inseego. “We’re focused on managing the
decline of legacy 4G revenue as we look to drive growth in 5G. In
the current quarter, we see our recent cost savings actions helping
to alleviate some of the revenue pressures and we are focused on
delivering profitability as we manage through the transition."
Q4 2023 Guidance
– 4G mobile hotspot revenue to decline as the
product category goes end-of-life – Total revenue is anticipated to
be in the range of $40.0 million to $42.0 million for Q4 2023 –
Adjusted EBITDA for Q4 2023 expected to be in the range of positive
$1.5 million to $2.0 million
Conference Call Information
Inseego will host a conference call and live webcast today at
5:00 p.m. ET. A Q&A session 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/10183330/faad83f75e
- 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 one
hour after the call through November 16, 2023. To hear the replay,
parties in the United States may call 1-877-344-7529 and enter
access code 3005255 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 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 the 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
©2023. Inseego Corp. All rights reserved. The Inseego name and
logo are registered 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,
and other statements that are not purely historical facts are
forward-looking. These forward-looking statements are based on
management’s current expectations, assumptions, estimates, and
projections. They are subject to significant risks and
uncertainties that could cause 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 and our ability to accurately forecast; (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)
dependence on a small number of customers for a significant portion
of the Company’s revenues and accounts receivable; (5) increased
competition and pricing pressure from participants in the markets
in which the Company is engaged; (6) dependence on third-party
manufacturers and key component suppliers worldwide; (7) the impact
that new or adjusted tariffs may have on the cost of components or
our products, and our ability to sell products internationally; (8)
the impact of fluctuations of foreign currency exchange rates; (9)
the impact of supply chain challenges on our ability to source
components and manufacture our products; (10) unexpected
liabilities or expenses; (11) 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; (12) litigation, regulatory and IP
developments related to our products or components of our products;
(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, (16) the potential impact of COVID-19 or other
global public health emergencies on the business, (17) the impact
of high rates of inflation and rising interest rates, and (18) the
impact of geopolitical instability on our 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 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, even if new
information becomes available or other events occur in the future,
except as otherwise required under applicable law and our ongoing
reporting obligations under the Securities Exchange Act of 1934, as
amended.
Non-GAAP Financial Measures
Inseego Corp. has provided financial information in this press
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, for example, exclude
preferred stock dividends, share-based compensation expense,
amortization of intangible assets purchased through acquisitions,
amortization of discount and issuance costs related to our 2025
Notes and 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
pertaining to our 2025 Notes, and other non-recurring expenses.
Adjusted EBITDA excludes interest, taxes, depreciation,
amortization (unrelated to acquisitions and the 2025 Notes),
impairment of capitalized software, impairment of long-lived
assets, and foreign exchange 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. They 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 them to be an important supplemental
performance measure.
We use these non-GAAP financial measures to make operational
decisions, evaluate our performance, prepare forecasts and
determine compensation. Further, management and investors benefit
from referring to these non-GAAP financial measures in assessing
our 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 our 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, we exclude certain non-cash and one-time items
to facilitate comparability of our operating performance on a
period-to-period basis because such expenses are not, in our view,
related to our ongoing operational performance. We use this view of
our operating performance to compare it with the business plan and
individual operating budgets and in the allocation of
resources.
We believe that these non-GAAP financial measures are helpful to
investors in providing greater transparency to the information used
by management in its operational decision-making. The Company
believes that using these non-GAAP financial measures also
facilitates comparing our underlying operating performance with
other companies in our industry, which use similar non-GAAP
financial measures to supplement their GAAP results.
In the future, we expect to continue to incur expenses similar
to the non-GAAP adjustments described above, and the 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 material limitations are associated
with using 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 in this press
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,
2023
2022
2023
2022
Net revenues:
IoT & Mobile Solutions
$
41,357
$
62,633
$
131,367
$
172,129
Enterprise SaaS Solutions
7,226
6,534
21,567
20,279
Total net revenues
48,583
69,167
152,934
192,408
Cost of net revenues:
IoT & Mobile Solutions
43,560
48,209
105,011
131,805
Enterprise SaaS Solutions
3,128
3,002
8,945
9,505
Total cost of net revenues
46,688
51,211
113,956
141,310
Gross profit
1,895
17,956
38,978
51,098
Operating costs and expenses:
Research and development
8,951
15,417
27,127
47,597
Sales and marketing
5,355
8,295
17,975
25,789
General and administrative
4,906
5,720
16,703
20,101
Amortization of purchased intangible
assets
424
433
1,277
1,319
Write-down of capitalized software
611
—
1,115
—
Total operating costs and expenses
20,247
29,865
64,197
94,806
Operating loss
(18,352
)
(11,909
)
(25,219
)
(43,708
)
Other (expense) income:
Loss on debt conversion and
extinguishment, net
—
—
—
(450
)
Interest expense, net
(2,891
)
(2,034
)
(6,902
)
(6,621
)
Other (expense) income, net
(578
)
(1,758
)
875
(3,145
)
Total other expense
(3,469
)
(3,792
)
(6,027
)
(10,216
)
Loss before income taxes
(21,821
)
(15,701
)
(31,246
)
(53,924
)
Income tax (benefit) provision
(16
)
42
600
(582
)
Net loss
(21,805
)
(15,743
)
(31,846
)
(53,342
)
Series E preferred stock dividends
(756
)
(691
)
(2,218
)
(2,029
)
Net loss attributable to common
stockholders
$
(22,561
)
$
(16,434
)
$
(34,064
)
$
(55,371
)
Per share data:
Net loss per common share:
Basic and diluted
$
(0.19
)
$
(0.15
)
$
(0.30
)
$
(0.52
)
Weighted-average shares used in
computation of net loss per common share:
Basic and diluted
116,967,545
107,747,468
112,247,219
106,977,201
INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except par value
and share data)
(Unaudited)
September 30,
2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
18,946
$
7,143
Accounts receivable, net of provision for
credit losses of $1,101 and $541, respectively
17,435
25,259
Inventories
21,916
37,976
Prepaid expenses and other
5,562
7,978
Total current assets
63,859
78,356
Property, plant and equipment, net of
accumulated depreciation of $28,240 and $26,049, respectively
3,597
5,390
Rental assets, net of accumulated
depreciation of $5,037 and $5,484, respectively
5,037
4,816
Intangible assets, net of accumulated
amortization of $42,138 and $31,629, respectively
35,057
41,383
Goodwill
21,922
21,922
Right-of-use assets
5,819
6,662
Other assets
1,464
488
Total assets
$
136,755
$
159,017
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
30,980
$
29,018
Accrued expenses and other current
liabilities
28,917
27,945
Total current liabilities
59,897
56,963
Long-term liabilities:
2025 Notes, net
159,541
158,427
Revolving credit facility, net
—
6,919
Deferred tax liabilities, net
278
323
Other long-term liabilities
7,822
6,503
Total liabilities
227,538
229,135
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, 117,024,709 and 108,468,150 shares
issued and outstanding, respectively
117
108
Additional paid-in capital
808,203
793,855
Accumulated other comprehensive loss
(7,288
)
(6,329
)
Accumulated deficit
(891,815
)
(857,752
)
Total stockholders’ deficit
(90,783
)
(70,118
)
Total liabilities and stockholders’
deficit
$
136,755
$
159,017
INSEEGO CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Cash flows from operating activities:
Net loss
$
(21,805
)
$
(15,743
)
$
(31,846
)
$
(53,342
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
5,451
6,981
16,270
20,936
Provision for credit losses
368
44
612
29
Write-down of capitalized software
611
—
1,115
—
Provision for excess and obsolete
inventory
6,701
434
7,011
1,330
Share-based compensation expense
2,267
2,406
6,030
15,892
Amortization of debt discount and debt
issuance costs
1,071
450
2,048
2,472
Fair value adjustment on derivative
instrument
—
—
—
(902
)
Loss on debt conversion and
extinguishment, net
—
—
—
450
Deferred income taxes
82
(127
)
177
(223
)
Right-of-use assets
223
(13
)
437
1,057
Changes in assets and liabilities:
Accounts receivable
7,470
(5,800
)
7,703
(561
)
Inventories
1,512
4,222
7,685
(5,926
)
Prepaid expenses and other assets
1,009
(377
)
1,479
2,723
Accounts payable
(3,944
)
(7,341
)
1,162
(13,548
)
Accrued expenses, income taxes, and
other
8,945
8,016
2,561
6,276
Operating lease liabilities
(239
)
(257
)
(41
)
(1,366
)
Net cash provided by (used in) operating
activities
9,722
(7,105
)
22,403
(24,703
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(242
)
(144
)
(403
)
(1,203
)
Additions to capitalized software
development costs
(1,673
)
(3,020
)
(6,114
)
(9,242
)
Net cash used in investing activities
(1,915
)
(3,164
)
(6,517
)
(10,445
)
Cash flows from financing activities:
Net borrowing (repayment) of bank and
overdraft facilities
—
(317
)
79
(458
)
Principal payments under finance lease
obligations
—
—
—
(62
)
Proceeds from a public offering
—
—
6,057
—
Principal payments on financed assets
—
(337
)
(360
)
(1,567
)
Borrowings on revolving credit
facility
—
—
Borrowings (Repayments) on revolving
credit facility
(3,253
)
4,500
(7,851
)
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
2
80
49
196
Net cash (used in) provided by financing
activities
(3,251
)
2,800
(2,026
)
1,483
Effect of exchange rates on cash
(775
)
1,172
(2,057
)
1,916
Net increase (decrease) in cash, cash
equivalents and restricted cash
3,781
(6,297
)
11,803
(31,749
)
Cash, cash equivalents and restricted
cash, beginning of period
15,165
24,360
7,143
49,812
Cash, cash equivalents and restricted
cash, end of period
$
18,946
$
18,063
$
18,946
$
18,063
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, 2023
Nine Months Ended
September 30, 2023
Net Loss
Net Loss Per Share
Net Loss
Net Loss Per Share
GAAP net loss attributable to common
shareholders
$
(22,561
)
$
(0.19
)
$
(34,064
)
$
(0.30
)
Adjustments:
Preferred stock dividends(a)
756
0.01
2,218
0.02
Share-based compensation expense
2,267.4
0.02
6,030
0.05
Purchased intangibles amortization
424
—
1,277
0.01
Debt discount and issuance costs
amortization(b)
881
0.01
1,819
0.02
Non-GAAP net loss
$
(18,233
)
$
(0.16
)
$
(22,720
)
$
(0.20
)
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.
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,
2023
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Purchased intangibles
amortization
Non-GAAP
Cost of net revenues
$
46,688
$
251
$
—
$
46,437
Operating costs and expenses:
Research and development
8,951
599
—
8,352
Sales and marketing
5,355
373
—
4,982
General and administrative
4,906
1,044
—
3,862
Amortization of purchased intangible
assets
424
—
424
—
Write-down of purchased intangible
assets
611
—
—
611
Total operating costs and expenses
$
20,247
$
2,016
$
424
$
17,807
Total
$
2,266
$
424
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,
2023
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Purchased intangibles
amortization
Non-GAAP
Cost of net revenues
$
113,956
$
657
$
—
$
113,299
Operating costs and expenses:
Research and development
27,127
1,291
—
25,836
Sales and marketing
17,975
1,093
—
16,882
General and administrative
16,703
2,989
—
13,714
Amortization of purchased intangible
assets
1,277
—
1,277
—
Write-down of purchased intangible
assets
1,115
—
—
1,115
Total operating costs and expenses
$
64,197
$
5,373
$
1,277
$
57,547
Total
$
6,030
$
1,277
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, 2023
Nine Months Ended September
30, 2023
GAAP net loss attributable to common
shareholders
(22,561
)
$
(34,064
)
Preferred stock dividends(a)
756
2,218
Income tax provision (benefit)
(16
)
600
Depreciation and amortization
5,451
16,270
Share-based compensation expense
2,267
6,030
Write-down of capitalized software
611
1,115
Right-of-use asset impairment
469
Interest expense, net(b)
2,891
6,902
Inventory adjustment - E&O and
contract manufacturer liability
13,058
13,058
Write-off of capitalized inventory order
fees
924
924
Other(c)
578
(875
)
Adjusted EBITDA
$
3,959
$
12,647
(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)
Primarily relates to 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, 2023
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
IoT & Mobile Solutions
$
41,357
$
46,383
$
43,627
$
46,272
$
62,633
Enterprise SaaS Solutions
7,226
7,174
7,167
6,643
6,534
Total net revenues
$
48,583
$
53,557
$
50,794
$
52,915
$
69,167
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102546798/en/
Investor Relations Contact: IR@inseego.com
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