Inseego Q1 2025 Earnings Report

Inseego EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.07
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Inseego Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $32.06 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Inseego Announcement Details

• Quarter: Q1 2025
• Date: 5/8/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 5:00PM ET

Inseego (NASDAQ:INSG) Corp. engages in the design and development of cloud-managed wireless wide area network (WAN) and intelligent edge solutions for businesses, consumers, and governments worldwide. The company provides 5G and 4G mobile broadband solutions, such as mobile hotspots under the MiFi brand; and 4G VoLTE products and 4G USB modems. It also offers fixed wireless access solutions, including indoor, outdoor, and industrial routers and gateways. In addition, the company provides Inseego Connect solution for device management; and 5G SD EDGE solution for secure networking enabling corporate managed mobile remote workforce. Further, it offers SaaS solutions, including telematic and asset tracking solution that provides live maps and data to improve driver safety and performance; Inseego Subscribe, a wireless subscriber management solution for carrier's management of their government and complex enterprise customer subscriptions. The company was founded in 1996 and is based in San Diego, California.

Inseego Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1, Inseego delivered revenue within guidance and adjusted EBITDA above expectations, achieving a record non-GAAP gross margin of 47.5% despite softer hardware volumes.
• Revenue was impacted by delayed carrier mobile broadband promotions and temporarily lower FWA orders as customers managed inventory ahead of next-generation product transitions.
• The company executed the world’s first 5G-Advanced Release 18 data call using Qualcomm’s DragonWings Gen 4 Elite FWA platform, showcasing its engineering leadership and generating significant carrier interest.
• Management is scaling the FWA and MiFi business with Tier-one carriers and MSOs while overhauling its supply chain to reduce costs and mitigate tariff risks.
• Inseego is accelerating its software and services push, with Inseego Connect APIs in partner testing and expanded investment in the Inseego Subscribe platform to drive annual recurring revenue.

Presentation

[Operator]

Hello, and welcome to Inseego Corp's First Quarter twenty twenty five Financial Results Conference Call. Please note that today's event is being recorded. All participants today will be in a listen only mode. After today's presentation, there will be an opportunity for Q and A. On the call today are Yuho Sarvikas, Chief Executive of Inseego and Stephen Gathoff, Chief Financial Officer.

[Operator]

During this call, certain non GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the Investor Relations section of the company's website. An audio replay of this call will also be archived there. Please also be advised that today's discussion will contain forward looking statements. These forward looking statements are not historical facts, but rather are based on the company's current expectations and beliefs.

[Operator]

For a discussion on factors that could cause actual results to differ materially from those expectations, please refer to the risk factors described in the company's Form 10 ks, 10 Q and other SEC filings, which are available on the company's website. Please also refer to the cautionary note regarding forward looking statements section contained in today's press release. With that, I'd like to turn the call over to Juho Savickas, Chief Executive Officer. Please go ahead.

[Juho Sarvikas, CEO at Inseego]

Thank you, operator, and thank you all for joining. This is my second earnings call as the CEO of and I'm even more excited to be here today than the last time we spoke in February. I'm proud of the progress we've made executing the strategy I set in motion when I joined Inseego in January. We have a lot of work ahead of us, but we're getting it done. I want to thank the awesome Inseego team for their focus, energy and commitment.

[Juho Sarvikas, CEO at Inseego]

Today, I will focus on two topics. First, I'll give you an overview of our Q1 results. Second, I'd like to share what I'm seeing in the business today and update you on the strategy that's underway and how it's laying the foundation for long term growth. Let me start with a quick overview of our Q1 financial results that Stephen will take you through in more detail. We delivered revenue within guidance and adjusted EBITDA came in above expectations even with softer hardware volumes.

[Juho Sarvikas, CEO at Inseego]

While revenue was impacted by some delayed carrier mobile broadband promotions and FWA orders, gross margin held strong on the favorable revenue mix. And importantly, we invested in key product and growth initiatives without compromising cost discipline as evidenced in the strong adjusted EBITDA results. Before I move on to strategy and execution, I want to share one of my key initiatives that we successfully executed in Q1. Inseego has a legacy of leading in wireless innovation and an exceptional team of industry leading engineers in cellular modem and antenna technology. At Mobile World Congress in Barcelona this past March, we were the first OEM in the world to make a five gs advanced three gs PP Release 18 data call with the new Qualcomm DragonWin Gen four Elite FWA platform in our next generation cellular router.

[Juho Sarvikas, CEO at Inseego]

This accomplishment is a testament to Inseego's superior engineering capability, our strong partnership with Qualcomm and our commitment to pioneer the latest and greatest in wireless. I am incredibly proud of the team and their unwavering dedication to make this happen. Our announcement has generated significant interest with carriers who are exploring new monetization opportunities for their network and positioning Inseego well for the future. With that, let me pivot to the second topic. Over the course of my first four months with the company, my focus has been on laying the groundwork to implement our new strategy.

[Juho Sarvikas, CEO at Inseego]

I'm positioning Inseego to power the next generation of enterprise connectivity through software defined, high performance wireless networking solutions. We will position our solution portfolio to support a broad range of use cases across residential, SMB, enterprise, industrial and IoT and deliver performance, security and flexibility at scale. These strategies anchored in wireless broadband combining our MiFi and fixed wireless access hardware with cloud managed software solutions to deliver the features and capabilities that our end customers need to operate and grow their businesses. To deliver on this mission, I'm driving execution against two strategic vectors that I outlined on our first call in February. First, the execution and scaling of our FWA and MiFi business and second, accelerating our software and services roadmap to create a full stack solution offering and transform Inseego into a true solutions company.

[Juho Sarvikas, CEO at Inseego]

Let's focus on the first strategic vector, execution and scaling FWA and MiFi. My immediate priority is to expand our footprint with large Tier one carriers and multiple system operators, or MSOs. This is the single largest and most immediate new and large TAM for us to capture. Today, our customer base for MiFi and FWA isn't where it needs to be. We are too concentrated, and that's something that I'm actively working to diversify.

[Juho Sarvikas, CEO at Inseego]

I've realigned our FWA and MiFi product roadmaps to go after new customers and markets. In the last ninety days, we've introduced several new product plans to existing and new customers to accomplish this goal. I spent a lot of time on the road meeting these large customers to share our products and strategy, align business objectives and prioritize opportunities. There's meaningful opportunity in front of us. Inseego's value proposition of enterprise grade wireless broadband solutions and Inseego as a company that will partner with organizations to help them reach their business goals is resonating very well.

[Juho Sarvikas, CEO at Inseego]

The combination of our best in class hardware, our internally developed edge router OS, which is our on device software, and Inseego Connect SaaS cloud management platform, delivered to a dual go to market motion is a compelling and differentiated offering. In SWA specifically, there is a strong demand for enterprise grade solutions for carriers to sell to their SMB and enterprise customers. Additionally, with the MSOs, there is significant opportunity in residential failover, SMB and enterprise solutions. As we engaging large carriers with our new MiFi portfolio, I'm getting great feedback on our solutions that can cater to both consumer and enterprise markets. There is a great opportunity to drive consolidation here with a purpose built product that meets

[Juho Sarvikas, CEO at Inseego]

We've done a lot of great work this past quarter and have a compelling set of new opportunities that we're working on. Our target continues to be to deliver year over year growth in 2025, and we're focused on closing these deals with an engaged set of new carrier customer expansion and MSO opportunities that we have visibility of today. I've also overhauled our supply chain and engineering strategy in the past ninety days, identifying significant opportunities to reduce costs, improve operational efficiency and enable scale. This also involves ensuring that we have the right ODM and Centimeters partnerships to support our ambition. I spent time with key component vendors, ODMs and manufacturing partners sharing our strategy, aligning on requirements and evaluating long term strategic fit.

[Juho Sarvikas, CEO at Inseego]

It has been great to see the excitement from the supplier base to be part of our growth journey. These efforts have already enabled us to expand our MiFi product portfolio from premium tier down to mid tier. As I'm talking about supply chain, it makes sense to pause for a moment to discuss the global tariff and macroeconomic environment, which remains very fluid. We've taken deliberate steps to mitigate impacts and develop manufacturing optionality to safeguard as best as we can for potential disruptions and unfavorable economic outcomes. Our primary manufacturing sites are based in Taiwan and Vietnam, which reduces our direct exposure to potential U.

[Juho Sarvikas, CEO at Inseego]

S.-China tariffs. Additionally, our product HTS code is currently exempt from tariffs. This situation is evolving constantly and we are monitoring it very closely. Inseego is an American company with critical intellectual property designed and developed in The United States. With that, I'd like to discuss my second strategic vector, accelerating our software and services roadmap to create a full stack solution offering.

[Juho Sarvikas, CEO at Inseego]

Beyond scaling our FWA and MiFi business, my focus is on evolving Inseego from what has historically been a fairly hardware centric business to becoming a full solution provider. There are two components to this. First, Inseego Connect, our device management SaaS platform. At the beginning of twenty twenty five, we embarked on a mission to enable APIs for our partners to integrate Inseego Connect into their management platforms. Today, these APIs are already at our partners for testing.

[Juho Sarvikas, CEO at Inseego]

This is a huge TAM unlock that is applicable for large carrier MSOs and MSPs, both in the channel and direct. In parallel, we have a resource roadmap to graduate Inseego Connect to large enterprise IoT and industrial environments. Inseego Connect sits on top of our router OS and our Inseego designed modules, making it a full stack solution that will deliver extraordinary value to an expanded set of customers and markets later this year and beyond. Second, Inseego Subscribe, our subscriber management platform, is a great solution and a strategic contributor to our broader solution centric strategy. We have undertaken a new investment and expansion plan on this platform and look forward to updating you more as this moves forward over the coming few quarters.

[Juho Sarvikas, CEO at Inseego]

Driving and building on these two SaaS offerings, I look forward to expanding Asiago's annual reoccurring revenue opportunity, growing top line revenue and delivering extraordinary value to our customers and partners. To support our strategy, we have been enhancing our team with exceptional talent and expertise across various functions and disciplines. Most recently, we welcomed George Mulhern, former CEO of Cradlepoint to our Board of Directors. George's extensive background and leadership experience in shaping the enterprise wireless networking industry will provide tremendous value as we scale and accelerate our transformation into an enterprise solution provider. The dynamics of engineering and manufacturing broadband devices are both cyclical and long term by nature.

[Juho Sarvikas, CEO at Inseego]

Product development and customer purchasing cycles typically span nine to twelve months. While we've implemented quick and significant adjustments in the last ninety days, the larger impact from them is further out. The key to success lies in the precise execution of aligning our roadmap, strengthening customer engagement and maintaining disciplined focus. This approach ensures we position ourselves to excel both in the current cycle and those to come. With that, I'd like to hand it over to Stephen.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Thank you, Hope. Hi, everyone. Thanks for joining us. I'm going to cover three topics today. First, I'll take you through the Q1 twenty twenty five financial results.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Second, I'd like to share a quick update on our debt paydown that closed last week. And third, I'll provide some financial color on what we're seeing in the business and set out guidance for Q2 twenty twenty five. As we always do, we'll, of course, wrap up by opening the call to your questions. Let's start with the Q1 twenty twenty five financial details. Overall, while Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non GAAP profitability and a strong balance sheet as we're implementing our new strategy and setting out the foundation for growth.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

The three combined dynamics were: '1, Q3 and Q4 twenty twenty four had record revenue that was driven by unprecedented mobile hotspot promotions by a key carrier customer that drove volumes that were double and nearly triple historical norms. Second, twenty twenty four was the end of a special national mobile hotspot program at one of our North American carrier customers that had generated meaningful volume in 2024, but that was not continuing at historical levels. And third, Q1 twenty twenty five was impacted by temporarily lower FWA purchases from a carrier customer that is managing their inventory levels as they transition to our next generation FWA product, a very good thing on a number of fronts, but admittedly, sometimes disruptive in the quarter of transition. We remain bullish on FWA over the long term and, as we'll talk about more when we get to guidance, in the short term as well. We expect FWA revenue to come up meaningfully in Q2.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

On the mobile hotspot product, while a larger carrier customers' promotion started later than anticipated in Q1 twenty twenty five, we were encouraged to deliver mobile revenue that grew more than 16% year over year. Finishing our revenue with services, they grew nearly 50% year over year on the strength of our subscribed SaaS platform as we've discussed. Moving on to gross margin. Q1 twenty twenty five non GAAP gross margin percentage increased to a record 47.5%. This was anticipated and was driven by a combination of sequential margin expansion in Q1 in both product and services and by a revenue mix of greater services revenue in the quarter.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Looking at non GAAP operating expenses, Q1 twenty twenty five was another quarter in which we managed the business to lower sequential dollar spend on both a P and L and cash spend basis. Going forward, we expect continued efficiencies in G and A, some modest increase in sales and marketing as we're expanding our TAM and engaging with new customers and marginally more spend in R and D as we come to the larger investment periods and building out the new products that are rolling out in the second half of twenty twenty five and early twenty twenty six. Pulling this all together, Q1 revenue performance, buttressed by focused expense management and investment, delivered adjusted EBITDA dollars that came in for the fourth quarter in a row and more than doubled the prior year quarter at $3,700,000 Adjusted EBITDA margin came in at the third highest level in a decade at 11.6% for Q1 twenty twenty five. Wrapping up Q1 twenty twenty five results with the balance sheet. We closed the quarter with more than $35,000,000 in cash and strong DSOs, working capital management and inventory positions.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

That's probably the right point to turn to my second and brief topic on our materially improved capital structure and reduction of debt. On this front, we've been sharing the progress we've made over the past year. We're pleased that we completed a meaningful reduction of the company's total debt with a pay down of the $15,000,000 outstanding stub on the convertible notes that matured on May 1. We paid those off last week, thereby reducing total debt to $41,000,000 and further supporting the value of common stockholders. With that, let's finish with the third topic around what we're seeing in the business and provide guidance for Q2 twenty twenty five.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

As we've been discussing, while there was the expected revenue challenges as we started the year, we remain bullish on the prospects for the business as we move through 2025. We continue to execute on our initiatives to introduce new products and diversify the customer base to drive growth. And as we've discussed previously, we expect to deliver sequential quarterly revenue growth beginning with Q2 twenty twenty five and specifically on the heels of improving FWA revenue traction. As we work to deliver this, we're growing our TAM and our customer base. And as we work towards scale, we continue to be influenced by large transactions in the near term.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

As such, we see the magnitude of the growth in Q2 being impacted by the timing of a large channel deal. It's something that we have good visibility into and confidence in closing. For services and other revenue, we expect Q2 levels to be consistent with Q1 on a dollar basis, thanks to the good work we've done with the Inseego Subscribe SaaS platform. And so far as gross margin percentage, with a higher anticipated proportion of product revenue in Q2 twenty twenty five versus Q1, we expect gross margin percentage to be in the high 30s percentage area in Q2 twenty twenty five. Like we've called out in the past, the final revenue mix between mobile broadband, FWA and services will be the ultimate determinant of where margins shake out.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

And so pulling this all together, we're providing the following guidance for Q2 twenty twenty five: total revenue in a range of $37,000,000 to $40,000,000 and adjusted EBITDA in a range of $2,500,000,000 to $3,500,000,000 With that, we appreciate your time and support, and we're glad to open the call for questions.

[Operator]

And our first question comes from Jonathan Nevreth of TD Cowen.

[Analyst]

Just want to start off with the broader macro environment. Just given the uncertainty in all markets right now, are you concerned that some pipeline opportunities may slip into 2026?

[Juho Sarvikas, CEO at Inseego]

We're not seeing that from our customer base. And again, today, most of our customers are the large carriers in North America, and we're not seeing any movement of the pipeline.

[Analyst]

Okay. Next is just on the T Mobile Partner Plus program. Can you quantify the potential revenue upside from this?

[Juho Sarvikas, CEO at Inseego]

Okay. So we have a large carrier FWA customer here in North America that's bulk of our FWA revenue today. And we have good growth trajectory with that partnership. The broader T Mobile partner program, significance of that is that we can get T Mobile investment in form of subsidy to our channel portfolio. So what that will do is create pull on our channel program products.

[Analyst]

Okay. And just my last one is just, can you talk about the cadence of free cash flow for this year? Should we expect it to be positive for 2025? And if so, what are the levers to achieve that?

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Yes, sure. Good question. Yes, the short answer is yes. We are have messaged and are targeting free cash flow generation for the year still, and we see that improving. I think the message is consistent with what we said kind of going into the year, even last year, call it, the end of Q4, which is there's some investments that we're making in the first part of the year in product new products.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

And so that's a bit of a use of cash and product investment as well as we had some bonus payouts for the first time in the company's history in a decade at least. So that was a bit of a negative in the first half, but we see the second half being positive and then outweighing the first half to produce positive for the year.

[Operator]

Thank you. And our next question comes from Tore Svanberg of Stifel Nicolaus.

[Analyst]

Yes. Good afternoon. This is Jeremy calling on behalf of Tore. Just would like to dig a little deeper into the channel strategy. It sounds like you have you talked about a large potential deal for the channel business.

[Analyst]

Can you just give us an idea of maybe where this might be coming from? What any kind of additional color on that opportunity would be very helpful, including the timing.

[Juho Sarvikas, CEO at Inseego]

Yes. So like Stephen said, we have good confidence in the large general opportunity closing within the quarter. If you look at our channel strategy in broader sense, we have, of course, significant opportunity in the large carrier and MSO space, but at the same time, we continue to invest in broadening our assortment solution portfolio when it comes to our two tier distribution. And you'll see a lot of this play out between now and the end of the year.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Yes. Jeremy, to your point and to U. S. Good point, as we've talked about, the channel program is something relatively new for Inseego with the new team in the past year. And so it takes a while to build pipeline.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

They're doing that. That's a good thing. There are still large deals, though, that when they happen, there's not seven huge deals in a quarter, there's fewer. And so they matter more now. Very well said.

[Analyst]

Got it. That's very helpful. And I guess, if we look at can you give us maybe an update on the competitive landscape in light of you have competitors in Asia and with given the current geopolitical environment, what that does to your own positioning? Any update on the competitive landscape would be very helpful.

[Juho Sarvikas, CEO at Inseego]

Look, I think we have a really good combination of assets. So we're an American company. All of our critical IP is created here in San Diego. Like I mentioned, we've done a significant work on our supply chain and operational efficiency, which has been significant in terms of our improving our competitiveness, and we've already engaged the large customer base on the back of this renewed capability. So I think we're suited well to continue to drive growth.

[Analyst]

Great. And one last question, if I could, in terms of the gross margin. It sounds like as product revenue continues to recover, margins will probably moderate a bit, but gross profit dollars will be up. Is it do you have a kind of a new target model that we can look out to over the longer term? And also on the OpEx side, if the March run rate is kind of where we should expect? Yes,

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

sure. So yes, we haven't given a target model yet. Think it's our first year, if you will, new strategy CEO. So we'll get to that. We'll dare I say even have an Analyst Day to do that.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

So we look forward to doing that at some point soon. But the crux of what we're saying that you're looking at in the high 30s would be a good place to be. That number doesn't exist in nature. It's really the high margin SaaS and the kind of 20s margin for the product business. And so it really depends upon the mix shift, how quickly the software business continues to grow, where the product distribution business goes, what the ultimate mix will be, Jeremy.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

But under the current relationship and proportions, it's a high 30s margin contribution. And then what we talked about on the operating expense cadence and guidance, we expect some of the numbers overall on a GAAP on a non GAAP basis to come up a bit as we're starting to invest a little bit more in Q2 into that new product portfolio. And as well, we're seeing a lot of traction from all the good stuff that Steve Harman is doing on the go to market and bringing in a lot of talented folks with some great relationships and deal flow.

[Analyst]

Great. Thank you very much.

[Steven Gatoff, CFO & Principal Accounting Officer at Inseego]

Yes, sure.

[Operator]

This concludes our question and answer session. I'd like to turn the call back to Yuhos Zavikas for closing remarks.

[Juho Sarvikas, CEO at Inseego]

Thank you, operator. Usiko is at an inflection point. The progress we've made in just a few months gives me confidence that we're building something scalable, durable and highly relevant to the market. Strategy, execution and innovation are coming together to unlock a new phase of growth for the company. We have strengthened our leadership team with talent that brings deep experience across wireless, enterprise and go to market.

[Juho Sarvikas, CEO at Inseego]

I've outlined a plan for sequential growth. The strategy and initiatives that we're now executing on, including refreshing our portfolio, strengthening our go to market, improving operational efficiency and accelerating our software and services roadmap are setting the stage for compelling growth. We're transforming Inseego from a broad company into a solutions company, and I will share more detail with you in the months ahead. Thank you again for joining us and for your continued support as we execute this important evolution for Acyna.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Juho Sarvikas, CEO
• Steven Gatoff, CFO & Principal Accounting Officer

Analysts

• Analyst