Q2 2024 revenue of $59.1 million
Q2 2024 GAAP Net Income of $0.6 million and
positive Adjusted EBITDA of $8.4 million
Executed convertible debt reduction and
material improvement of capital structure
Inseego Corp. (Nasdaq: INSG) (the “Company”), a technology
leader in 5G mobile and fixed wireless solutions for mobile network
operators, Fortune 500 enterprises and SMBs, today reported its
results for the second quarter of 2024 ended June 30, 2024. The
Company reported second quarter revenue of $59.1 million, GAAP
operating income of $2.3 million, GAAP net income of $0.6 million,
GAAP net loss of $(0.02) per common share after non-cash preferred
dividends, and Adjusted EBITDA of positive $8.4 million.
Unrestricted cash and cash equivalents at June 30, 2024 were $49.0
million.
“The Company delivered strong results during the second quarter
and I am excited about the momentum the team has built the past few
quarters,” said Phil Brace, Executive Chairman of Inseego. “The
full Inseego team continues to focus on growing the business,
evolving the product portfolio, and delivering strong operating
results. We meaningfully improved our capital structure,
significantly reduced our debt and strengthened the Company’s
financial position. While we still have some work to do, I believe
Inseego is well-positioned for continued success."
“We’re focused on driving stockholder value and pleased to have
restructured 88% of our outstanding convertible notes to-date, by
executing arrangements to repurchase, convert into equity or
exchange for long-term debt of approximately $142 million of the
$162 million in outstanding convertible notes,” Steven Gatoff,
Chief Financial Officer of Inseego, commented. “Q2 was a pivotal
quarter in which we continued to generate positive Adjusted EBITDA
and Operating Cash Flow, and also delivered positive GAAP Operating
and Net Income. We continue to focus on delivering revenue growth,
adjusted EBITDA profitability, and cash generation.”
Financial Highlights
- Revenue for Q2 2024 was $59.1 million.
- Adjusted EBITDA for Q2 2024 was $8.4 million.
- GAAP gross margin for Q2 2024 was 39.0%. Non-GAAP gross margin
for Q2 2024 increased year-over-year from 35.7% to 39.0% as the
revenue mix shifted to higher-margin products and services.
- As of August 7, 2024, repurchased or entered into binding
agreements to repurchase and/or exchange approximately $141.9
million, or 87.7%, of face value of the Company’s outstanding 3.25%
convertible notes due 2025. The June 30, 2024 Balance Sheet
included $16.5 million in cash from a short-term loan that was used
in the Company’s repurchase of $45.9 million in face value
convertible notes in the first week of July 2024.
Business Highlights
- Announced appointments of David Markland as Chief Product
Officer; Dean Antonilli as SVP Sales, Service Providers; and Sal
Aroon as Vice President and Head of Operations. These additions to
the leadership team bring a strong combination of deep wireless
operational experience, technical expertise, and change management
acumen.
- Launched new Inseego Ignite Channel Program; signed new partner
agreements with one new distributor and 27 value added
resellers.
- Increased MiFi® X PRO sales sequentially across all carriers,
including one who doubled demand with an emphasis on public
sector.
- Notable transaction closed with a multinational medical
equipment manufacturer who uses Inseego devices to enable
lifesaving critical communications with heart defibrillators.
- Large FWA channel deal closed with industrial Fortune 500
company.
- Our latest generation Inseego Wavemaker 5G indoor router that
is designed specifically for the channel, has now completed the
required certification process for AT&T, T-Mobile, and
Verizon.
Q3 2024 Guidance
- Total revenue in the range of $54.0 million to $58.0
million.
- Adjusted EBITDA in the range of $6.5 million to $7.5
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/10190477/fcf723f0a5
- 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 August 22, 2024. To hear the replay,
parties in the United States may call 1-877-344-7529 and enter
access code 6857790 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
©2024. Inseego Corp. All rights reserved. MiFi and 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 Company’s ability
to negotiate, execute and complete exchange transactions with
respect to its convertible notes, (2) the Company’s ability to make
payments on or to refinance its indebtedness; (3) the Company’s
dependence on a small number of customers for a substantial portion
of our revenues; (4) the future demand for wireless broadband
access to data and asset management software and services and our
ability to accurately forecast; (5) the growth of wireless
wide-area networking and asset management software and services;
(6) 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; (7) our ability to
develop sales channels and to onboard channel partners; (8)
increased competition and pricing pressure from participants in the
markets in which the Company is engaged; (9) dependence on
third-party manufacturers and key component suppliers worldwide;
(10) the impact of fluctuations of foreign currency exchange rates;
(11) the impact of supply chain challenges on our ability to source
components and manufacture our products; (12) unexpected
liabilities or expenses; (13) 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; (14) litigation, regulatory and IP
developments related to our products or components of our products;
(15) the Company’s ability to raise additional financing when the
Company requires capital for operations or to satisfy corporate
obligations; (16) 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; (17) the global
semiconductor shortage and any related price increases or supply
chain disruptions, (18) the potential impact of COVID-19 or other
global public health emergencies on the business, (19) the impact
of high rates of inflation and rising interest rates, and (20) 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 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, and other non-recurring
expenses. Adjusted EBITDA excludes interest, taxes, depreciation,
amortization, impairment of capitalized software, impairment of
long-lived assets, certain other non-recurring expenses and foreign
exchange gains and losses.
Adjusted EBITDA, non-GAAP cost of revenues, 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 cost of revenues, 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.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except share and
per share data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenues:
Mobile solutions
$
25,879
$
18,895
$
41,149
$
41,935
Fixed wireless access solutions
13,317
19,505
27,499
31,375
Product
39,196
38,400
68,648
73,310
Services and other
19,953
15,157
35,510
31,041
Total revenues
59,149
53,557
104,158
104,351
Cost of revenues:
Product
30,507
30,620
53,220
58,587
Services and other
5,602
4,041
10,506
8,681
Total cost of revenues
36,109
34,661
63,726
67,268
Gross profit
23,040
18,896
40,432
37,083
Operating costs and expenses:
Research and development
5,486
6,266
10,529
10,041
Sales and marketing
5,391
5,787
10,386
12,253
General and administrative
5,805
5,431
10,788
11,155
Depreciation and amortization
4,009
4,688
7,644
9,997
Impairment of capitalized software
—
—
420
504
Total operating costs and expenses
20,691
22,172
39,767
43,950
Operating income (loss)
2,349
(3,276
)
665
(6,867
)
Other (expense) income:
Interest expense, net
(1,774
)
(2,014
)
(3,948
)
(4,011
)
Other income (expense), net
355
658
(5
)
1,453
Income (Loss) before income taxes
930
(4,632
)
(3,288
)
(9,425
)
Income tax provision
306
304
543
616
Net income (loss)
624
(4,936
)
(3,831
)
(10,041
)
Preferred stock dividends
(808
)
(739
)
(1,598
)
(1,462
)
Net loss attributable to common
stockholders
$
(184
)
$
(5,675
)
$
(5,429
)
$
(11,503
)
Per share data:
Net loss per common share
Basic and diluted (*)
$
(0.02
)
$
(0.51
)
$
(0.46
)
$
(1.05
)
Weighted-average shares used in
computation of net loss per common share:
Basic and diluted (*)
11,894,746
11,108,029
11,887,233
10,984,794
(*) Adjusted retroactively for reverse
stock split that occurred on January 24, 2024
INSEEGO CORP.
CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
June 30, 2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
48,993
$
7,519
Accounts receivable, net
20,727
22,616
Inventories
18,006
22,880
Prepaid expenses and other
5,400
5,211
Total current assets
93,126
58,226
Property, plant and equipment, net
1,925
2,758
Rental assets, net
4,863
5,083
Intangible assets, net
22,644
27,140
Goodwill
21,922
21,922
Operating lease right-of-use assets
4,701
5,412
Other assets
382
1,256
Total assets
$
149,563
$
121,797
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
30,739
$
24,795
Accrued expenses and other current
liabilities
37,019
27,022
Short-term loan
13,664
—
2025 Convertible Notes, net
157,679
—
Revolving credit facility
—
4,094
Total current liabilities
239,101
55,911
Long-term liabilities:
2025 Convertible Notes, net
—
159,912
Operating lease liabilities
4,394
5,039
Deferred tax liabilities, net
697
680
Other long-term liabilities
7,134
2,360
Total liabilities
251,326
223,902
Commitments and contingencies
Stockholders’ deficit:
Preferred stock (aggregate liquidation
preference of $36.7 million)
—
—
Common stock
12
12
Additional paid-in capital
816,002
810,138
Accumulated other comprehensive loss
(5,420
)
(5,327
)
Accumulated deficit
(912,357
)
(906,928
)
Total stockholders’ deficit
(101,763
)
(102,105
)
Total liabilities and stockholders’
deficit
$
149,563
$
121,797
INSEEGO CORP.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2024
2023
Cash flows from operating activities:
Net income (loss)
$
(3,831
)
$
(10,041
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
9,069
10,819
Provision for expected credit losses
(101
)
244
Impairment of capitalized software
420
504
Provision for excess and obsolete
inventory
31
310
Impairment of operating lease right-of-use
assets
—
469
Share-based compensation expense
1,586
3,762
Amortization of debt discount and debt
issuance costs
857
977
Gain on debt repurchases
(1,324
)
—
Deferred income taxes
12
95
Non-cash operating lease expense
816
(255
)
Changes in assets and liabilities:
Accounts receivable
1,990
233
Inventories
3,501
6,172
Prepaid expenses and other assets
568
470
Accounts payable
5,952
5,106
Accrued expenses and other liabilities
14,643
(6,384
)
Operating lease liabilities
(888
)
198
Net cash provided by operating
activities
33,301
12,679
Cash flows from investing activities:
Purchases of property, plant and
equipment
(28
)
(161
)
Additions to capitalized software
development costs and purchases of intangible assets
(2,348
)
(4,441
)
Net cash used in investing activities
(2,376
)
(4,602
)
Cash flows from financing activities:
Payments related to repurchases of 2025
Convertible Notes
(1,650
)
—
Proceeds from issuance of short-term loan
and warrants, net of issuance costs
16,500
—
Proceeds from a public offering of equity,
net of issuance costs
—
6,059
Principal payments on financed assets
—
(360
)
Net repayments on revolving credit
facility
(4,094
)
(4,598
)
Other investing activities
2
126
Net cash provided by financing
activities
10,758
1,227
Effect of exchange rates on cash
(209
)
(1,282
)
Net increase in cash and cash
equivalents
41,474
8,022
Cash and cash equivalents, beginning of
period
7,519
7,143
Cash and cash equivalents, end of
period
$
48,993
$
15,165
INSEEGO CORP.
Reconciliation of GAAP Gross
Margin and Operating Costs and Expenses to Non-GAAP Gross Margin
and Operating Costs and Expenses
Three Months Ended June 30,
2024
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Debt restructuring
costs
Purchased intangibles
amortization
Non-GAAP
Revenues
$
59,149
$
59,149
Cost of revenues
36,109
$
31
$
—
$
—
36,078
Gross Margin
$
23,040
$
23,071
Gross Margin %
39.0
%
39.0
%
Total operating costs and expenses
$
20,691
$
838
$
452
$
424
$
18,977
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
INSEEGO CORP.
Reconciliation of GAAP Gross
Margin and Operating Costs and Expenses to Non-GAAP Gross Margin
and Operating Costs and Expenses
Six Months Ended June 30,
2024
(In thousands)
(Unaudited)
GAAP
Share-based compensation
expense
Impairment of capitalized
software
Debt restructuring
costs
Purchased intangibles
amortization
Non-GAAP
Revenues
$
104,158
$
104,158
Cost of revenues
63,726
$
65
$
—
$
—
$
—
63,661
Gross Margin
$
40,432
$
40,497
Gross Margin %
38.8
%
38.9
%
Total operating costs and expenses
$
39,767
$
1,521
$
420
$
452
$
847
$
36,527
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
INSEEGO CORP.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months
Ended June 30,
2024
Six Months
Ended June 30,
2024
Net income (loss)
$
624
$
(3,831
)
Income tax provision (benefit)
306
543
Interest expense, net
1,774
3,948
Other (income) expense, net
(355
)
5
Depreciation and amortization
4,694
9,069
Share-based compensation expense
869
1,586
Debt restructuring costs
452
452
Impairment of capitalized software
—
420
Adjusted EBITDA
$
8,364
$
12,192
See “Non-GAAP Financial Measures”
for information regarding our use of Non-GAAP financial
measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807829452/en/
Investor Relations Contact: IR@inseego.com
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