Q2 2020 Inseego Corp Earnings Call
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Hello, everyone and welcome to actually go Corp. second quarter 2020 financial results Conference call.
Please note that today's event is being recorded.
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On the call today are the m. onto our chairman and CEO, Steve Smith, EVP and Chief Financial Officer.
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 Investor 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.
For a discussion on factors that could cause actual results to differ materially from expectations. Please refer to the risks factors described in our form 10-K, 10-Q, and other SEC filings, which are available on our website.
Please also refer to the cautionary note regarding forward looking statements section contained in today's press release.
At this time I'd like to turn the conference call over to San Juan door, Chairman and CEO.
Please go ahead.
Hello, everyone and.
Thank you for joining us today.
The happen everyone added CEO, we hope you and your families or stay safe and healthy during these very challenging times.
I'm pleased to report second quarter was exceptional for Chico.
With $80.7 million in revenue, which is the highest since we began to turn around in 2017.
We're on track to launch a new fiveg portfolio with multiple operators in the coming months.
And our see outstanding performance in pre launch field trials on life Fiveg networks.
We made significant progress and strengthen the balance sheet and further improved operating cash flow.
Accomplishing this while most of our employees were working from home no easy feat.
Everyone Siegel has risen from the ongoing challenges by adapting quickly to the remote work environments and have been firing on all cylinders with our product sales operations no other teams maintaining high levels of customer engagement and productivity.
The resilience and dedication to supporting our customers through this prices has been truly inspiring.
And the fruits of their labor reflected on our second quarter performance.
We feel fortunate to be position during this time to help so many people stay safely securely connected and productive at home.
As we said last quarter, the dramatic shift to remote work and distance learning has increased the demand for products.
For me is supposed to demand, we scaled up or production capacity and supply chain in a very short window of time.
We delivered nearly doubled the number of devices the second quarter over the first quarter.
We further strengthened our villages liver and high volumes going forward.
We continue to see very strong demand increased opportunity for our products and are well positioned to meet the same an even higher levels of demand than we saw the second quarter.
In addition to delivering higher unit volumes to our existing customers.
We want to new tier one north American customer for Fourg LTE, My five mobile hotspot and are now shipping to that operator.
This is important new business for us and also helps our fiveg engagements with these carriers.
Even after the Cobot 19 pandemic just brought under control we.
We continue to believe the shift to remote work will be a permanent feature of the global economy.
We see many reports about companies pivoting to this new normal.
Well the majority of their employees will have the option to work from home in some capacity going forward.
And several large tech companies have announced plans to extend remote work well into next year.
With this shift organizations understand they have a distributed workforce and it increases their exposure to cyber threats.
They need highly reliable and secure solutions like ours, which is one reason the vast majority in CECO products are sold enterprise customers.
And we are well positioned in multiple public and private verticals from enterprise to SMB to government and other markets.
Well revenue dramatically increase we remain very disciplined and our cost controls and headcount.
As Steve will get into in a minute, we strengthen and simplified our balance sheet in the first half of the here.
This is critical to allow us to remain nimble and take advantage of what we expect to be significant growth driven by our second generation fiveg portfolio, achieving commercial success around the world.
Our two most important goals in the near term are to achieve free cash flow positive for the business overall and deliver on our second generation Fiveg deployments, especially those with new international carrier customers.
All roads lead to these two priorities.
Now I'd like to focus on our exciting new second generation Fiveg products.
This portfolio includes not only mobile hotspot, but also a broad family of fixed wireless access solutions for homes in enterprise vertical markets.
We have a robust in growing pipeline for these products we are reaffirming.
Hi, mobile hotspot in three fixed wireless launches six carriers in the coming months.
No that some of these carriers are new customer different CEO and are located outside North America.
You may recall that at this time last year, we launched our first generation fiveg product with Verizon, which exceeded all expectations in terms of performance and capability.
The success of our first generation Fiveg product was key to design wins of our second generation phage portfolio.
We're now progressing through the prelaunch stages, a fuel testing and regulatory certifications.
We expect to see commercial launches and the revenue from these losses occurring through the balance of 2020 and wrapping up in early next year.
Our new mobile broadband hotspot and fixed wireless fiveg products are performing exceptionally well delivering sustained multi gigabit speeds in the millimeter wave spectrum and extraordinary gigabit plus seeds the sub six gigahertz spectrum.
We believe this is just the beginning as we continue to trial our products with numerous other carriers around the world.
We are seeing outstanding radio performance in our new products. Thanks in part to our proprietary and tenant technologies, which are designed and developed in our labs in San Diego.
Our fiveg fixed wireless access portfolio includes both indoor and outdoor units that extend coverage make it possible to serve customers in suburban and rural areas that were previously unreachable.
In addition to delivery fiveg products with high speed and broad coverage, we're incorporating new technologies like dynamic spectrum Sherri for DSS.
Which enables fiveg in L. team to run simultaneously of low band spectrum.
Many operators worldwide as a keen interest in DSS in order to provide fast broad coverage with fiveg and low in mid band spectrum.
We are bringing this important technology to the market this year.
In summary, we are on track with our new portfolio of Fiveg fixed and mobile hotspot commercial launches with multiple carriers in the coming months.
Now turning to our Aiotv business.
It is also made good progress last quarter with the commercial launch of our new LTE Gateway. The skies 160, which is now available through the Verizon business groups direct fulfillment channel.
The Sky excellent 60 is also certified for use on the ATM network and a growing number of other north American and European carrier networks.
It provides both fixed and mobile connectivity for wide range of applications that require non stop reliability and it supports and single connect our cloud based software solution for added security remote monitoring and management.
We continue to expand our customer base in the SD Lan market as we strengthened our relationships with industry leaders like Vmware and Dell.
We are excited about where we can take our industrial Iot business.
In each of these partner initiatives, our Fourg technology is powering a wide range of use cases.
As we imagine the future.
A myriad of devices will benefit from Fiveg connectivity to deliver solutions across industries, such as factory automation.
Health care safety and security and others.
Our work in industrial Aiotv today paves the way to create the Fiveg use cases up tomorrow.
Now turning to see track.
Colin certainly had an impact on the C track business in the second quarter.
See track business model relies on local offices, selling and physically installing units onsite at the customer premises.
This was not possible in the early part of the second quarter, given the government restrictions imposed in all our geographies.
With the partial easing and restrictions globally in early May we saw steady recovery in the C track business through the remaining part of the quarter.
By June we saw unit bookings and installation activity approach first quarter averages.
In addition to the improved levels of booking in installation activity, we saw strong partner demand for our solutions.
And we signed several leasing and partnership agreements in Australia.
Including SG fleet and Eclipse, we've already generated significant enterprise opportunities for us this year.
We are confident in our team and market positioning.
The continued easing of cold and related restrictions in each geography, we expect our differentiated clarity product to drive gradual quarter over quarter growth in the second half of the year.
Finally, our device management SaaS solution Dms had another strong quarter with a 27% increase quarter over quarter in a subscriber base, including many new government subscribers.
I want to extend the special thank you to our employees customers and partners for coming together to meet unprecedented capacity demands. During this challenging time, while continuing deployments of new Fiveg networks, we truly appreciate their dedication.
With that I'll hand up to Steve to discuss our financial results.
Thanks, Dan and good afternoon, everyone.
As Dan pointed out Inseego team rose to the challenge to deliver strong topline growth fulfilling exceptionally strong demand for our products in response to the.
Work in school from home mandates.
Net revenue of $80.7 million increased 42% sequentially and 44% year over year, reflecting this evolving paradigm shift we continue to see robust demand for our fourg products and more importantly are seeing continued carrier traction for our industry leading fiveg.
Folio.
Turning to our business units second quarter, I OTM mobile solutions revenue was $66.2 million up 66%.
Q2 last year and up 64% from the first quarter, reflecting the demand surge that started in March with the onset of the cold that pandemic.
We saw increased demand across our portfolio with much of the increase from our flagship Fourg My Fi products and the vast majority sold through service providers to enterprise customers.
Second quarter Enterprise SaaS solutions revenue was $14.4 million down approximately 9% versus the same period last year and down 12% from the prior quarter.
For the C track business covered restrictions had an impact on both bookings and installations during the quarter. However, as Dan mentioned the business did recover later in the quarter.
Additionally, currencies versus the US dollar have been impacted across the board South African Rand value has fluctuated, 38% from a low 14 brand to the dollar in early January two as high as 19.3 impacting our year over year revenues as expressed in us dollars.
By approximately 1.7 billion.
During Q2, we significantly strengthened the balance sheet, giving a substantial flexibility going forward recall in Q1, we raised $25 million a preferred stock transaction with the bottle of capital one of the largest and most sophisticated sovereign wealth funds in the world also in Q1, we executed.
A number of transactions that resulted in the conversion of 60 million of the 5.5% convertible bond.
In Q2, we raised 180 million of new 3.25% convertible notes due in 2025. This enabled us to retire the remaining 5.5% convertible notes and pay off in the 47 and a half million dollar senior term loan that had an interest rate.
9.2%. The end result of all of this is zero bank debt and a convertible instrumental to the maturity of May 2025, which we all are all very happy with.
Some accounting of note as result of these transactions, we took a onetime 67 million dollar noncash charge to the piano, reflecting the value of the bonds at conversion Slash exchange. This included an approximate 3 million dollar induced charge.
We closed the quarter with a cash balance of $42.1 million.
From this 0.4 and a focus on non-GAAP measures a reconciliation from GAAP to non-GAAP to detailed in our earnings release.
For the OTN mobile business gross margin was 21% for the quarter up approximately 160 basis points compared to last quarter and up 430 basis points versus the same period a year ago.
Last quarter, we said to expect 200 basis points quarter over quarter improvement.
I think premium buys to meet the burgeoning demand and Tobin influenced increased freight costs, our mobile business gross margin increased 240 basis points quarter over quarter, while we were not able to fully recovered to these premiums and added freight costs during the quarter.
Getting secure internet enhancing people that needed both took precedence over immediate cost recovery, we expect to fully recover these costs over the coming quarters.
Enterprise SaaS solutions gross margin of 64.4%, what's a 310 basis points from last quarter and up about 180 basis points from a year ago.
Total company gross margin in the second quarter was 28.7% down approximately 280 basis points sequentially. This reduction due to the high sequential increase in the lower margin Fourg hotspot shipments in response to the surgeon orders from our carrier customers.
Q2, Opex was 22.9 billion compared to $22.8 million in Q1 as planned the R&D expenses of 9 million.
Were 14% hired the last quarter due to product trials and certifications with multiple service providers.
Sales and marketing expenses dropped 6% to 7.8 million and Gionee expenses were 6.1 billion, both reflective of cost reduction measures in place in limited travel.
Headcount was 983 at the end of June up six from last quarter, We expect head count will increase only modestly going Florida, adding.
Only key positions in sales and product engineering.
Our Q2 non-GAAP net loss was 1.3 billion.
For one penny per share.
Adjusted EBITDA for Q2 was 4.3 month million dollars as compared to $3 million for Q2, 19, and a loss of 1.7 million last quarter.
Yeah, I O T mobile solutions and enterprise SaaS solutions as positive pro forma adjusted EBITDA coming in at 3.8 million and 2.9 million respectively.
On a go forward basis, we've decided to reorganize and portion of the enterprise SaaS solutions business into Aiotv mobile solutions, specifically, the Dms business Dms is a cloud based subscription management solution.
Told to service providers as part of the high OTN mobile portfolio next quarter, we will be reporting enterprise staff as the Standalone see tracked business for reference under this method in Q2, the pro forma adjusted EBITDA for Aiotv and mobile was 5.2 million in the enterprise.
Path was $1.5 million.
Ian Mobile non-GAAP gross margins would be 23% in Q2.
With that I'll turn the call back over to Dan.
Thanks.
We are proud of what we've accomplished over the past two quarters and the past three years on or even more excited about the opportunities ahead.
We are well positioned to meet today surge in demand, we capture a growing share of the global Fiveg market.
I invite you to join us for an upcoming investor event.
With Canaccord Genuity on August 12.
Before we go to Q in a.
I have an important announcement that reflects our progress transforming inseego and our plan for the future.
As I've said the successful transformation of the company that started in 2017 to create Inseego to Dido has set the stage currency goes next chapter of profitable growth driven by Fiveg.
Steve Smith will be stepping down after three years with the company as our CFO.
Steve was the first member of the New management team that we put in place to lead the turnaround.
He was in the trenches would be doing during doing the heavy lifting especially during the difficult early stages. When we had to cut costs conserve cash fix the capital structure and raise new equity all the while meeting to invest in Fiveg future that we clearly saw on the horizon.
His leadership of the finance organization over the past three years has been a major part of the strong position. The company is in today.
Steve will continue to support the company in a consulting capacity in order to support a smooth transition to a new CFO.
So in addition to that I'm pleased to announce Craig Foster who is joining in CEO as our Chief Financial Officer effective Monday August 17th.
Craig has a wealth of experience.
Having served as the CFO of several public and private technology companies.
After successful career in banking with credit Suisse, UBI S and RBC and previously in public accounting with Deloitte and Pricewaterhouse Coopers.
So on behalf of everyone Inseego I want to extend our sincere appreciation as Steve and a warm welcome to Craig.
And we'll be issuing a press release announcing these changes before the market opens tomorrow morning.
So now, let's let's go to Q and a.
Ladies and gentlemen at this time, we'll go to the question answer session. She would like to ask a question. Please press Star then one using a touched on telephone if you are using a speaker phone. We do after you. Please pick up the handset before price and the numbers to ensure the best sound quality.
So it's all your questions you May press star and too.
Once again that is star and then one to ask a question.
And our first question today comes from Mike Walkley from Canaccord Genuity. Please go ahead with your question.
Great. Thank you I hope everybody is.
Healthy and doing well on the phone today.
And Steve Best wishes on your next to endeavors enjoyed working with you a CFO.
Mike My question for the group here is.
Lot of moving parts it sounds like with Fiveg going into a lot of trials just help us think about.
The back half for the year, how you're seeing your business shape up timing of some of these five key ramps.
The surge in Fourg, yet and is that sustainable at these high levels into Q3, just just any guidance you could give us a kind of thinking about the back half of your model would be helpful.
Yes, thanks, Mike Likewise, our whole falls well with you.
Well in terms of the.
The surge in demand that we've spoken about.
Certainly reported the results second quarter results that reflect that we're seeing a sustained strong high level the demand.
For our products.
Yeah.
And as we look at weekly data.
It indicates that the level is sustainable so strong demand for our Fourg LTE and our first generation fiveg product in addressing and fulfilling that demand.
As we as discussed in the past we have.
A number of product launches in the second half of the year reiterated on the call today those those are proceeding on track.
We're now in prelaunch field testing, meaning the final testing of the of the products. Unlike fiveg networks going extremely well.
Mentioned on the call multi gigabit speeds and millimeter wave.
Well over gigabit in sub six which is extraordinary performance in the sub six or who have both reach and throughput performance.
So those will be rolling out.
In the coming months.
And then the ramp for revenue obviously occur.
As those as those launches take place so.
We are looking for for that for the remainder of 2020 and as I said before we see the layering of that continue to surge in demand as well as the Fiveg launched revenue coming together in the second half of this year.
Okay. Thank you that that's helpful and maybe just just a follow up on that Dan just can you help us think about just the fiveg opportunity obviously, the second generation products.
Early stage just can you maybe help us think about yeah. The initial sell in how that might look I mean, it sounds like maybe more a Q4 phenomenon and then on how that stacks on on each other maybe into 2021, just just any broad overview you can share with us.
Yes, well you know the typical staging it falls.
A cycle falls of product a process so.
We entered labs, we exit labs go in the field do prelaunch test data certifications and it always starts with the stocking order.
As the operator starts to roll out the services and the products.
So we expect to see that in this quarter in next.
You know as these as these lead up to launch then it's a continuous flow of orders as the product sell through.
To the end customer.
And that's really the dynamics going to fall. So we've talked about the number of launches six operators.
That are locked and loaded for the second half of this year, we've got a number of trials with other operators that are in slightly earlier stage.
Then then those so we're locked and loaded on those.
On those six launches across eight products and those six operators I should say.
And that's what really focused on to be successful things are going extremely well as I said I couldn't be happier and I would also say this that the performance that we're seeing in these products are right on the box.
Theres really been no tuning and adjusting tweaking the software for performance as right out of the box. So naturally performance will improve without so we're very very bullish on.
And where we are we like the position we're in.
Great. Thanks last question for me know past line I guess, Steve I'll get to for one last question on a public conference call here, just just on gross margin trend as as Fiveg ramps in the mix can you talk about.
How they might be accretive to current gross margins are just how we should think about gross margins over the coming quarters, especially as you might not have as many expedited freight costs. Thank you.
Yes, Mike we've got a thanks for your comments by the way.
When we look at gross margin on a go forward basis im not going to give the individual.
Fiveg fourg, but.
With the increase in 40, though we've seen its actually.
The fourg portfolio, so lower growth gross margin and that's actually kept the.
The gross margins down lower but keep in mind, we did grow our.
Gross margins 240 basis points quarter over quarter in the mobile portfolio this quarter. Despite the increase in premium buys.
I think on a go forward basis expect to 100 160 on the mobile portfolio and overall a couple of points increase in.
And gross margin.
Thank you very much.
And our next question comes from Jason Smith from Lake Street. Please go ahead with your question.
Hey, guys. Thanks for taking my questions I just wanted to start SMB any supplier component constraints in Q2 and are you assuming any of those potential constraints in Q3 as well.
Yes, Hey, Jason Thanks for the question well.
You know this surge in demand as we've talked about really happened in March and it was sudden.
[laughter].
Hi.
So we adjusted our supply chain correspondingly.
And it was a question of catching up to the demand as we went through the quarter. So.
Well, what Steve mentioned on the premium buys an expedited freight.
Came with a cost and that was literally to procure the material as well as obviously ship and deliver from our manufacturing site.
So it was really a question of catching up.
With the supply and the purchasing the premium buys to alternate channels.
And as we got to the end of the second quarter, we had caught up.
Okay.
As I said, we've seen sustained demand.
We actually increased our ability to manufacturing capacity in the second quarter and we're exiting this quarter now in much better shape.
We worked out we've built our muscles and we're ready to go in in Q3, So where we're at a very good place now, but it was it was certainly challenging early on.
In the end March in early April.
Okay. No that's helpful and I know, you're not providing specific guidance for Q3, but based on your comments it sounds like the sustained demand in the Io tea business is expected to continue at least there, but its corridor and your comments on the C track business.
Potentially bottoming in Q2 and seeing some recovery in the back half of that corridor I would expect that recovery would continue in Q3. So is there anything that you're seeing that gives you pause that Q3 would not be up sequentially.
Well I can say is.
The futures very unpredictable say anything shocking there.
The demand for our Fourg hot spots remains really high tenant certainly meets the needs and requirements of.
The whole moved to work from home and now schooling from home.
As as you know the work from home.
Dynamic.
Has continued.
And as now seasonality, where endearing to schooling pyramid and theres associated demand with that.
So we see a sustained level of demand.
Coming for our current generation products and as I said.
The other layer is the revenue that will be coming in from the the fiveg launches this year. So.
We feel very confident where we are we know we've got scaled supply capabilities. We know what the picture look like in Q2, we've learned how to accommodate high levels of volume and Thats, where we sit today, but we're very pleased.
In the demand level, we continue to see obviously the dynamic behind that because of the pandemics. So we feel very fortunate that we can help people stay safe secure and productive at home.
We look at weekly data on what was the sell through.
All I can tell you is demand remains very high.
Okay. That's helpful. Thanks, a lot guide.
Thanks.
Our next question comes from Scott several from Roth Capital. Please go ahead with your question.
Hey, good afternoon, Thanks for taking my question.
Steve Best of luck really enjoyed or or conversations over the years and best of luck in your future endeavors.
Thanks.
Just quickly I don't know if you cover this I got on the call a little bit late but your your largest customer did you get that as a breakout or percentage of revenues and then I have a couple of follow ups.
No we didn't give that.
Okay. It would be Verizon would be our largest customer.
Gotcha.
And Steve maybe just to follow up on Mike's question digging in a little bit more on the gross margins it sounds like.
Your 21% in mobile in I O T. This quarter you had some.
Expedite costs on top of that were a couple of hundred basis points.
It sounds like you will benefit from mix.
As we get into the back half of this year with morphology contribution.
Do you exit the year close to 30% on the gross margin front.
And Scott what were what we said is the fourg portfolios actually.
Running pretty solid right now and while we're increasing the gross margin there and that has I said I expect the mobile business to be increasing under a 160 basis points.
Over the next quarter.
I'd expect about a 2% increase.
Overall for the company or call it 200 basis points approximately.
Okay.
And that's about the extent of the.
Ill look that I can give at this stage.
Hey, Scott just if I can add a comment to that and just relative to dynamic of Q2, and then what's going on going forward. We described the premium buys to expedite parts. We've described the expedited freight cost printed so we were able to so we passed on that cost on.
The unit basis, but the volume of units couldn't make it all up within the quarter.
However, the pass some of those cost in terms of pricing continues forward and that was relative to steves comment that will recover that in the coming quarters, what I'm trying to get that is there is that the increased costs that pulled on margins in Q2.
We have built in cost improvement programs, but also there is that mechanism recovery through the food price increases that will occur over the next couple of quarters. So couple of moving parts there to think about.
Gotcha, and lastly, if I could data on the Fiveg front I think you said five mobile hotspot.
And three fixed wireless access solutions, just want to clarify our they're all going to be shipping in volume by the end of this year or are they going to be in various stages of kind of ramping up and testing and maybe as part of that it sounds like you're getting some pretty good results on the sub six gigahertz stuff.
Specifically, there's a lot of talk about Crs right now I'm wondering if you're actually seeing any interest in activity on that front. Thanks.
Say a ton of interest, yes, and we talked about five mobile broadband hot spots three six wireless products six carriers around the around the globe. So those launches will occur in the second half of this year.
Each carrier has a different process for launch of always like in the two Nassau Countdown go for launch.
All the preparation they need to do we are ready the product. So it is holding depend on the carriers launch cycle. All indications are that it is go for launch.
There will be a progression overtime revenue will build up as you as you launch sell restock and that will go on to is it 2021, and then a new layer launches will layer on top and that's the the number of additional.
Trials and testing that we have going on that are not quite as far as long as the six we referenced so it will be a build up of revenue.
Overtime second half of this year from those and then into the early part of 2021.
Great. Thank you.
Thanks Scott.
Our next question comes from Scott Fessler from Stifel. Please go ahead with your question.
Hey, guys. Thanks for taking my question picking backing off of the five few questions. What's the right way to think about the pace of Fiveg might buy adoption, assuming there's a lag time between when networks go live on when you think by GE hotspots sales started eclipse fourg levels like what's the right kind of Graham and your view.
Yeah.
While it really is the technology, the new technology cycle, and how quickly it ramps of course network dependent the network build outs that we're seeing the customers were involved with hand in hand have not slow down.
So theres, they're continuing to pull on us to get them product to launch.
Every launch starts for the stocking order as I mentioned.
So they get going with their service offering.
What we do see in Fiveg is the ramp.
This is twice as fast as we saw in Fourg.
So is happening much quicker than the Fourg cycle.
Which is a very very very bullish statement.
And what we see in a very near term.
Great. Thank you so much.
Thank you.
Once again, if you would like to ask a question. Please press star and then one to withdraw your questions from the West you May press star into.
Our next question comes from Chris So not from Cowen. Please go with your question.
Hi, guys. Thanks for taking my question.
It's kind of a good segue from the last few questions, but I, but I believe last time, we spoke you had thrown out a number of about 50 in terms of a pipeline of operators 50 operators that you were conducting trials within that about 20 of those are maybe 20 or 21 had active we moved into live try.
Do you have in an update on that ratio at all or how those bigger company.
Yes. Thanks so.
Yes, so the pipeline operators and that reference means all stages from early engagements to later in the in the pipeline staging.
And is a growing number we actually stopped talking about it because it was some sort of like how many stars in the Galaxy one what we tried to do is hone in on the.
On the on the trial activity, which is obviously further along in the pipeline.
So on those.
[noise] 20, or so at the 21, we mentioned previously.
Well six six or in.
Go for launch mode.
There's a number another others center.
Larger than six that are in an earlier stage and yet another number that are earlier, Matt So it's like a sequencing.
Well I'll go on the same but the pipeline remains very robust, it's certainly well in excess of 50 now.
And as I said, the 21 trials are moving forward to commercial reality at different time frames.
Okay. That's helpful. Thank you if we could pivot over to the research and development line I think the tenant a half million dollars their food for Twoq is probably a little bit more than we were thinking and definitely a lot more.
Looking at other a year over year or or sequential increase.
Can we think that it can be you can talk about this as sort of a run rate for what you guys need to spend or with this maybe like a final push into the the end of the first half of the year ahead of all these trials and regulatory certifications and things.
Things that you need to do to get ready for this the second half push.
Chris No you we had a couple of things that went through a you're looking at the gap line.
10.5, and non-GAAP basis it was.
Closer to nine.
What's your.
That's a impacted by a couple of things, yes on the certifications and so on.
And it will be up I wouldn't call. It an ongoing at that level for forever that says we push towards the end and getting to certifications and product in the market.
Okay, and then on top of that we had some stock comp and things like that that went through that obviously you pull out for non-GAAP purposes.
Uh huh.
Okay. That's all from you guys. Thank you couple.
Thanks, and late ladies and gentlemen at this time and showing no additional questions. We'll conclude today's question and answer session.
I'd like to turn the floor back over to Dan Mandar for any closing remarks.
Yes, thank you operator.
So as we launch our second generation Fiveg portfolio in the coming months.
I believe we're entering one of the most exciting periods in the company's history and the wireless industry in general.
The cycles for every new generation mobile technology or long.
And Fiveg is at the very beginning of this cycle.
So users around the world will soon experienced the power fiveg for themselves.
Delivered by innovative high performance devices and cloud solutions.
We believe inseego is exceptionally well positioned for a very strong period of profitable growth well into the future.
So thanks again, everyone for joining us today.
Ladies and gentlemen, with that will conclude today's conference call. We do thank you for attending you may now disconnect your lines.
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