INSEEGO CORP. Q3 FY2024 earnings call

Financial Results: - Q3 2024 financial results were ahead of expectations. Total revenue was $61.9 million, 27% growth vs same quarter last year and above guidance. Adjusted EBITDA was $9.3 million, the highest adjusted EBITDA margin in years. ### Debt Restructuring: - Substantially reduced debt. Closed the restructuring of convertible notes, repurchased or converted over 91% of outstanding notes. Total debt reduced to $62 million. - Paid down the $20 million short-term loan, with only $6 million remaining balance. Once $15 million stub of convertibles and $6 million short-term loan are repaid, long-term senior debt will be $41 million. ### Asset Sale: - Signed an agreement to divest non-core international telematics business for $52 million in cash, expected to close this quarter. This provides increased liquidity and allows focus on U.S. 5G wireless connectivity business. ### Product Roadmap: - Continues to invest in product roadmap. Focus on diversifying revenue base with multi carrier products for broader channel ecosystem and expanding business with major U.S. carriers. ### CEO Search: - Board actively engaged with executive search firm, current expectation is to have someone in place by end of Q1 2025.

Total company revenue for Q3 2024 was $61.9 million, a 27% year-over-year growth. The two primary growth drivers were strong continued performance in carrier mobile hotspot products (mobile solutions revenue grew over 43% year-over-year) and growth in the Inseego subscribed SaaS offering (services and other revenue grew 33% year-over-year). Fixed wireless access (FWA) revenue was lower in Q3 due to reduced consumer-based purchases by a carrier customer being acquired and slower purchasing by another carrier managing inventory. The telematics business, which is reported as discontinued operations, had consistent solid growth. Revenue contribution: mobile solutions contributed significantly due to the large carrier partner MiFi promotion, Inseego subscribe SaaS added meaningfully, while FWA was lower and telematics was in discontinued operations.

Q4 Guidance: - For continuing operations, total revenue from continuing operations is expected to be in the range of $43 million to $47 million, a 25% year-over-year growth at midpoint. - Adjusted EBITDA from continuing operations is expected to be in the range of $3 million to $4 million, more than 50% year-over-year growth at midpoint. - Q4 gross margin percentage expected to increase over Q3 2024 on greater proportion of FWA and services revenue. - Q4 non-GAAP operating expense from continuing operations expected to be relatively flat over Q3 2024.

Risks: - Fixed wireless access revenue was lower due to a carrier customer being acquired reducing purchases and another carrier managing inventory. - Seasonality in Q4 may impact revenue as it is typically lower sequentially. - Dependence on major carrier promotional activity could lead to potential volatility in revenue.

Q: Scott Searle from ROTH Capital asked about net debt commentary and the telematics sale's impact on balance sheet, and early thoughts on 2025 seasonality and business segment growth rates in 2025.

A: Steven Gatoff said net debt numbers on a go forward basis include paying down $15 million stub but current balance sheet numbers don't include cash from telematics sale. Phil Brace said it's early to comment on 2025 seasonality and business segment growth rates with no abnormal seasonal patterns seen yet.

Q: Lance Vitanza from TD Cowen asked about fixed wireless side related to M&A, inventory management, channel program progress, and telematics sale's gross margin difference.

A: Phil Brace commented on M&A impact on fixed wireless and inventory management, Steven Gatoff said gradual progress on channel program and Inseego subscribe business has high margins while telematics business sold has lower margins. Phil Brace explained Inseego subscribe business is separate from telematics disposition.

Q: Tore Svanberg from Stifel Nicolaus asked about mobile solutions business steady state, fixed wireless business and channel strategy, interest expense modeling, and pro forma share count.

A: Phil Brace talked about mobile solutions business reflecting promotional activity and guidance. Phil Brace and Steven Gatoff discussed fixed wireless business and channel strategy, Steven Gatoff explained interest expense modeling and pro forma share count will be in the 10-Q filing with approximately 15 million shares outstanding