Inseego (INSG) 2 Aug 232023 Q2 Earnings call transcript

Hello and welcome to Inseego Corp.'s Second Quarter 2023 Financial Results Conference Call. Please note that today's event is being recorded. [Operator Instructions] On the call today are Ashish Sharma, CEO; and Bob Barbieri, Chief Financial Officer; and other members of the management team.

During this call, 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 Investors section of the company's website. this also of archived replay audio call be will there. An discussion be forward-looking advised also will that Please today's contain statements. expectations These forward-looking based beliefs. current are but facts and statements are on not the historical rather company's

regarding factors a the Please are in statements available filings release. from refer forward-looking our that For XX-K, please cautionary refer on could actual to and differ expectations, factors results risk the in website. which XX-Q contained on also today's cause the to Form our materially to described note section SEC discussion other press

like I Ashish ahead. Officer. turn would Chief go to to the call Please Sharma, over Executive

you good you, operator. operating XX% board financial QX and for our particular, us our during I'm have last extremely see see growth and our of across up business, continued confidence quarter Thank us XG gives the teams X.Xx on are businesses and quarter in over can XXXX. that Each was up in very QX achieved. FWA path. By on quarter this the and with focus results. quarter continue for of our accounts, right showing to revenues what solid performed the the proud all we another a sequentially we well over In efficiency was

expect XX% represented hotspots, of XX% the strong quarter consecutive revenues FWA quarter our revenue with which representing of accelerating. our and when with second operating XG on Overall, of quickly While of every flow. resulted us which positive our from indication gross is efficiency continued adoption deliver both This the cost our operating focus another cash quarter, XX% perspective with continued and controls to FWA in FWA revenues. migration for this don't of overall combined a margin to grow nearly time our an product we market it roughly is first that clearly over includes quarterly portfolio allow margin mix

we performance, the are XXXX of half business. first solid our direction about very on Based optimistic

on look delivering continuing this to momentum of of of the half next laser-focused product from on execution and the the portfolio mean, we maintaining are execution, releasing our strong of and existing products, financial discipline. our we As deployments the portfolio, I half ahead those second generation year. By the year, first

As by covers our an the we newly example, in released indoor latest FXXXXX QX, previously mid-band router used DoD. that released the

offer in launched growing focus carrier. We with large to adoption UScellular be different we it good continue and Similarly, terms of have we it the and our of will on rate launching soon the the And in phases packages progress with across multiple we cloud seeing revenue. We customer subscription attach board. already recurring very another are cycle.

will of achieving. continues growth XG sale FWA base grow. we are that cloud expect deployments step-by-step on come on applications layered growth quarters FWA These over Inseego and product as and customer are next We universe top expands several focused the to of our represent

let performance. Now, discuss our me quarterly

the company of which operating something accomplished a very delivered As has the earlier, QX, consecutive we I positive positive in time. cash second in long flow is quarter and mentioned

quarter-to-quarter, consistent a $XX.X I'm positive flow generated and revenue basis. getting million. In flow we is Inseego cash of extremely EBITDA our when While cash on adjusted fluctuate point a on $X.X of will QX, to focused million

million. $X.X half first our of proud very XXXX result are EBITDA We of over

quarter with and in results Our growth by margin of significant revenue. XX.X% our was first driven gross consistent FWA

any not much onetime much product based was QX, quarter. cleaner from clearly, margins margin our to any to quarter, We we changes are XXs low But given path. in our in improved of mid- mix margin. Last we have on did gross a a referenced result so perspective. a few onetime in items items that We the on expect the in gross fluctuate right range it

OpEx as getting we a mentioned commitment are which on to million as calls, in and point where efficiently as I've cash expenses our to basis. possible close a on flow running we resulted cash our Inseego QX, positive sustainable to And to reflecting on focus of continue controllable previous $XX for

to seeing is shared that the As demand, a it we industry. entire relates trend macroeconomic current are environment the different by and is impacting

the is given hotspots growing XG demand in First, products and inconsistent any for FWA both and our period. solid but

We prior at lead partners demand new times orders. often customers sudden which shipments to absorb increases to have in and seen placing these

to need and quickly keeping customers much periods less our which react demand supply compared partners means pre-pandemic to are variations. to our inventory chain Second, these very and we

in is I quarter-to-quarter, we seeing quarter seen gain at greater understanding last within demand and of well the happened couple times leave business. trend Despite cycle, industry we they something from can lead Inseego where lead it as are period this those making any some now prior last to have a dynamic has we quarters try the and customers of us lead if years. for much even ship shorter investments a their times, in have times the products accelerate table a their variability as X backlog Finally, given not XG build on in demand has we in seen than the resulted are over to what had enterprise row. This XG do developed the in

a detail share FWA our bit about progress. me let deployment Now, more

XG seeing is is is of one based but as a a connection with more adoption primary early we FWA the are their lead trials nationwide to both and of stages what are small-scale we well-known seeing, Many that on deployments. assessing backup companies. deployed with have large hope footprints. or large number huge increasing across potential. either are that deployments in network-wide large-scale market FWA We companies across small This An

to half towards observations. As share the XXXX, like a we look few I'd second of

in products. second business. continue half of grow the from to First, in driven a will a revenue shift mix largely business. in see offset second our to primarily expecting of year the the the XXXX, XG FWA of by we growth is to half in are but modest XG by our This function decline XG XG

many line customers better FWA underway. for are cases, before significant at In deployments. for we have scale out trials waiting many of a have mid-band coverage Second, we but customers

Third, strategy of years. from performance and the improved is financial have strength our several the investments our over benefits reflects last much we the and made the

customer focus cash excellence Our year number driving that last improved an and bearing increasing discipline flow margins implemented operational on fruit, starting late of we've and is wins. and

structure focus has past the running cost continue positive cash will been This us generate quarters. business to in efficiently. and on Our allowed the focus flow has rightsized to two

flow working this chain supply largely of described the flows managing be based cash inventory the will working on for likely the demand potential volatility cash hard even be which to achieve. capital expect but and one we in quarter-to-quarter full that volatility is a some above. expect to huge we've We that, and and needs I with company positive year the customers been quarter-to-quarter milestone said for as Having our

to I'll now turn Bob. over it

Thank you, Ashish.

entire to and I Inseego delivering thanks solid another to very delivering for Well the extend First, team worldwide want done. profitability cash my quarter, flow. positive

GAAP reconciliation. earnings me comparisons non-GAAP all non-GAAP Please second Please fiscal to a the release XXXX. our additional are for the and on made quarter Let results to basis. details our on metrics note refer that review of

QX X.X% quarter. $XX.X million, up was from prior the revenue

our revenue period. over the Our total prior and grew FWA year XX% and XX% cloud comprised of software business

our software revenue are represented the of and which in comprised devices solutions of this Next-generation cloud offerings XX% all XG quarter. total

revenue revenue. of XX% total Software accounted for

FWA of Second revenue driven our growth The quarter by IoT Solutions the uptake was X.X% Mobile & from an million, up solutions. $XX.X was last quarter.

the points margin quarter Enterprise Consolidated basis SaaS XX.X% solutions revenue down was X% slightly and in was down year sequentially XX the in, margin from quarter. in prior gross XXX Mobile was business XX.X%, year down and from $X.X up X.X% from basis in up & XX.X%, from XX.X% up points and prior XX% for million, period. XX.X% gross the the over QX IoT prior

As FWA significantly Ashish to margin his basis mix alluded year-over-year higher of a gross revenue. in comments, on the meaningful improvement attributable in was to a

QX and QX share the net with XXXX. SaaS million was from prior XX.X%, negative from margin of for Enterprise $X.XX per non-GAAP in QX loss Gross the or XX.X% up compared loss share per was XX.X% of segment loss and $X.XX in in the EBITDA year million a ago up a up an $X EBITDA in and QX million in than per period. which gain million of year loss of ago share adjusted of was quarter. $X.XX higher We $X reported $X.X quarter the from $X.X a a the in gain

to For EBITDA please our reconciliation non-GAAP and results, release. our refer tables in on press additional details our adjusted

Cash, and restricted up $X.X quarter. cash million. of $XX.X of This our cash balance QX was the cash million prior at was cash balance in the from end equivalents

comments. to back Ashish let that, With turn for closing me his it

FWA by solution portfolio an transform Thanks, these across huge results. first many summarize, our to was Bob. opportunity ability our remains XG Inseego There by software. into customer a enterprise To demonstrated segments and enabled hardware growth company of of half

XG to the our ability gives coverage portfolio to me As confidence our many mid-band in breadth continues ahead. capture of opportunities the scale,

of [Operator Partners. is Searle from Instructions] Scott ROTH Capital question The first

on job Nice the quarter.

of number? the want couple the XX% I quickly not I that had wanted a sure think that in a sure Also, a I mix XG numbers the if make the mix. that front. confirm Is solution for maybe of FWA on the a current period? to to then ago love the I number heard XX% first or you And XG. mix Ashish, comparable I and said there update get quarter the follow-ups. comparable follow to between there correctly. some to thought was was I'd had you And up. number I'm said heard XG you of I that. year quarter. it I software is

start Thanks, with Yes, those you're me Scott. give you well. one, let last hope numbers. doing I the trust. I'll

XX%, to The XX% to So in the I XG about XX%, the of revenue. overall XG was close XX% close the XX% of and revenue. overall range the would was and -- so XX%, over overall was software say revenue like

Bob, little we and then, or front, And be how going should thinking if helpful. be guys Wondering on you thinking tightening bit. a are you up there's up to into things this further maybe quarter. OpEx tightened about? Very some was there's read forward should about we Great. R&D levels the have anything if for the OpEx that these

Yes.

questions. thanks, Let Good me Scott. start,

thinking R&D slightly go flat was start and that so would question. Let remain down. view as OpEx actually, down way. to to regarding me we forward; R&D And question, flat cash your as will your slightly second with flat I

of you book kind limited with what is our of think various software just saw basis I a to how we products. amortize on mix the

look. the So drove that book

FWA, what lot inflection? harder this kind metrics to Does soft pipeline, it looking of then at if that closer from you build that to devices a the you building that it XG is, you're metrics forward, that how Is put time are in a there's wait number think in is the some could in when you to we of like? I just discussion. going sales give pipeline it, customers, we for pilots opportunity or wondering maybe, in happen starting opportunity. out It metrics And starting later addressable Or Ashish, do the terms the us maybe under potentially And really level, the And those wondering coverage. the some to big start around year? until the cycle of XXXX? Great. feels us number and of was compress? we're terms mid-band I'm of see taken it's either the give high like if looking could some up

Yes, Scott.

customer So is The are before. every different good, reason offering the is buildup And factors market as of from what interest really that the like enterprise gradual, is itself the mentioned right, number really I looks would main there be customers. a say SMB of that would pipeline at. or I right,

they We business in XG on of process who XG what enterprise have product, have right? different SMB they workflows, from other all of is and the saw that decision broadband the from the segregate have kind So the and have, very our customers, past. decision-making, that but love it file and the connections they're we they different to operational the trying thousands away filed customers network hotspot put from right,

a Fortune And cycle, the build. of case, step-by-step depends I so you to mean a Lots use big lots would and continues of deployment XXX use lots to right? say XXX, from it's where And companies, a I small. interest. have of worker. is cycle SMBs. Pipeline sale really on mean be gradual like that your I healthy quite case super remote

place, to workforce start cases outdoor thousands just the band to locations and I then connecting where a that matter as few then handing locations, mean more infrastructure. to on of their distributed their existing integrating in part the going broader store product LAN the try of kind take the could for bigger weeks a of locations, WAN and existing use the network the of the out product it is customer like our to XG for customer that's workforce and

months, So trialed time, give those to months of ago the and tried bit like deployments XX who they would And product. they take they have XX example, a locations like you roll X little an customer the a maybe thousand them to it's a for large months multiple you product it take, now the like for few love XX taken product. out to to

of So the each it the in one But business overall, that good. of with case, took enterprises size these really is time.

I if one, last maybe And could. Great.

got multiple wondering carrier standpoint either VAR you're a for or the of or channel lot that otherwise you've that's relationships other terms of there's a in if XG, particularly anything with access, productive fixed I'm loss carriers. productivity. from Just seeing channel

Yes. route to I built we have mean market. a

mentioned, you we As channel. traditional Scott, have the [indiscernible]

have And we from that's multiple carriers. have the lot multiple sell say say super and our enterprises have I push, either program success through of obviously And mean band different that of carriers. stock they seeing a motivated assistance programs the solutions. with with biggest to other we're a We I we XG love programs where with we're to through initial I co-sell would the or the getting them lot they're would carriers. the

of Company. Vitanza Cowen The & is Lance from next question

quarter. A the questions couple on here. of Congratulations

First, so sense. makes if me this tell

cloud So and you've million It $XXX looks business. got and at about run rate a wireless like growing it's access fixed XX% it's revenue at year-on-year.

what the maintain wondering, how possible X years? you Or is revenue look to how about, stream? can do covered considerably growing finally, lower us it really cost was of through triangulate costs? sort growth? I necessary higher the to I is I and I think the are it what we once that think margins? about like those -- questions the how is of value see, your talk Two, think you you support long type XX% plan it I guess, this or that, Is base than growing then next fixed what it growth mean on One, does help flow incremental mean, long just And to So of Or it? a et should cetera? you've business. would fixed over that things? is couple do

Lance, good question.

first would that would jumps. I say to So about of in step-by-step look down, improvements, right? I'll the these see term, is right? early you way break it let I me this every that mean things term, and I try you type mean could So maybe right? new the quarter. incremental down not developing see -- growth short be market, a say FWA up we short at in would it's I the talk in

the And in quarters, would But it, opportunity have longer itself I huge. that down. whatever you the to should that. is X next X market see settle we'll So say term, right,

seeing So we're variability of in the a order the now. the business And the market and just only right sliver flow. hence,

business more our a will grow. with It slower but business a will the Software software now it grows, way lot FWA stable. when up tied at is so is we business our pace have XG grows

long that double step going very looking quarter-to-quarter, the shorter -- How? sense. step, digits, term, just in that by that at say the every would growth rates. lifespan that I movie Within rates makes to high out, of year-over-year So if be plays definitely, it's how growth you're higher

just mean got got I we've on We've growth just we're coming. margins. very last packages in getting your then, FWA would I adoption mean question say, that's in more started. look, early And multiple I about the cycle.

gross those mean, over kick I overall target definitely XX% in, see as things I very definitely So the of achievable. that margin is

actually really That's Okay. helpful.

questions job Next bunch there. of flow, nice a did cash where on free you

it the to expecting close had that pretty kind a We CapEx EBITDA understand just flow. cash your like so we looks free some variance. I'm what generated It number, trying was good. burn was expected. You cash on were of to comparable to

So flow, flow? that to million it free you explain us guessing working maybe it. capital that doesn't I'm EBITDA Bob, cash. you sort could cash levered working calculating of million of $X.X had of can I'm -- just for you possible free $X EBITDA, is walk But from from an inflow some cash accurate? generated capital, Is

out I'm direction standpoint. a digging of did in working Our from positive things. capital couple other just a moderate cash a

The other against we, again, say and working should expectation. things we is for basically our -- had I us

we think from mentioned. in this effect skimming again, you then you spot, good and as a We sheet. a And balance the CapEx. from we're also, lastly probably We -- positive capital, had working saw down

worked been also the expectation aiming just we bit We're to not We skinny kind last X could indefinitely did versus it over movement. standpoint, we're do of or forward that down a prior the -- quarters. but we've as inventory on we do X levels. saying That's quite a year. not from big

Okay. see line. And misreading provide public a that. the if more of wondering million on sort And cash from did if I It flow or I'm something the I'm transaction like you that you in detail looks could raised offering. quarter the below then $X.X

a with still had Lance. Yes. Yes, the that facility liquidity in ATM that one the things we is And in then working was the last Good the thing wanted our No, more years. capacity financing of no. nonoperational achieve and maximum just was of of was couple a for open other contributor a of place to Board, potent, kind flexibility. we

raised is we that about execute did and we where $X.X that's So against million.

of from is Tore Svanberg question Stifel. Next

last offer well. cash performance. sell And that on This follow-up quick just congratulations my on yes, the -- Or I just complete to term? is question. flow raising that continue on medium In now? for the guess, sufficient as Tore. a plans the the million is let me in Are is ATM, Jeremy this is there near there $XX capital? free the to

now, handle active we're not best now. we it in -- I -- to We way think market is the have don't right right the

to of So actions not have we that's additional We've the but correctly financials the accrue are first. year. And sized in But the if latter see to have some cost part company financing. reduction yet we'll factors. that any positively new this taken we will they reserve

we're think So cost from we very, well standpoint. stack very positioned a

on latter way about the in in that there quarter, being is year, bit quantify is I just about the part How QX? that we think didn't should those us? reductions about little And we you -- but for of the that? know cost sequentially a next state for a down to think should how

in what we've would right so? OpEx I Jeremy, Bob back the moderate mentioned cash or slightly year. can And over million going four the think that is have so $XX down we $XX last cost I later taken to company now earlier, the that right of a quarters say out about million you take is there is that that

these getting some visibility. the us pushed on you're the Got to of commentary, Can switching And said to out help you you that kind it for second a sequentially row. quarter it. some orders Just that backlog? you understand provided, having you of when backlog and help about leaving your in added maybe in future being Ashish talk quarters then quantify And then basically us? the up was table? in the the that Are

Yes. Jamie. fulfill can't mean, I Good those quarter. next the pushed to orders out that Yes, question, we get

in orders and CMs of quarter fulfill the the now, we month For chain really all revenue like, shape you terms really this supply look, target we're that just on our we're those it's right? in driving to -- got. So this that of hard finished our a quarter, quarter good first for

for revenue orders on quarter, demand the for we So you. this already have

Got it.

And had in did said you demand for miss, provide already you expectations of quarter? sort place. bulk this You a

products we the exactly ship trying from what inventory we it's unloaded in have we have. I and the coming I And everything dollar we're like customers. those specific can orders products we number the for we're have providing we're for inventory now just say quickly to different would Yes. to look, just that mean, not customers. refer so like -- the

inventory. carriers? last the you're lower jump on question to trying I Got side, queue. And it. Can inventory And internally? targets what in inventory, than kind give sounds have your you the back before it's in the and you'd refill any of have us it then terms like like of But that whether channel -- or or VARs might you commentary you at if supply

inventory And a up mean, I'm Yes. not now. right the the more and of I not channel look, lot lot at a inventory. anticipating carriers building

inventories now. demand what I variability the just up to don't are And they're think just to of we're going we still and the quarters a have to the up demand reason whole talk still again, the we the within pretty lot moderate right cycles run with want cycles, on the of macro, down.

the And to so we maximize we're last on be trying up not customers as that inventory just demand the with had load very year. and to cautious we trying we -- yet our have

question-and-answer our to any conference the would session. over like remarks. concludes to Sharma turn Ashish This back closing for I

today. by Thank you, and again. on you, promise. next joining look everyone, updating you for thank call the our you all We Thank continued to quarter forward operator us

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

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