Q4 2020 Inseego Corp Earnings Call

Hello, and welcome to Ensco Corp's fourth quarter and full year 2020 financial results Conference call. Please note that today's event is being recorded all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

After todays presentation, there will be an opportunity for analysts to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two of.

On the call today are Dan Mondor, Chairman and CEO, Craig Foster Chief Financial Officer.

Ashish Sharma President of Iot and mobile solutions. During this call non-GAAP financial measures will be discussed the 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, an audio replay of this call will be also our.

Hi, there.

Please also be advised that todays 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 risk 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 I would now like to turn the call over to Dan Mondor, Chairman and CEO. Please go ahead Hello, everyone. It is great to be with you today.

2020 was a phenomenal year for the CECO in every respect as we extended our lead in the <unk> market.

We launched groundbreaking five G products with mobile operators on four continents.

<unk>, our first fixed wireless access products and.

Unveiled the suite of powerful software the service cloud solutions and posted record revenues.

The launch of our second generation <unk> products and surge in demand for our <unk> products played a major role in our outstanding 2020 financial results.

Our <unk> strategy came to fruition and we recorded significant wins and successful <unk> customer launches in North America, EMEA and Asia Pacific with approximately 12% of our total revenue coming from these products.

The most significant win was the groundbreaking deal with T mobile who selected in the single for their very first and only <unk> mobile broadband hotspot and are in single managed cloud portfolio.

The other carrier now has been Segal five G technology and device management capability to offer to their 100 million plus consumer and enterprise customers.

2020 was the culmination of the of the CECO team of accomplishing what we said over three years ago, when we announced the <unk> two data.

We brought numerous new products to market added major new customers and establish the business in new high growth geographies I cannot tell you how proud I am of our amazing employees.

As we sit here today, the four largest mobile operators in the U S have all of adopted in the single products into their lineups.

Now every American can experience the fastest most reliable and secure <unk> and <unk> mobile technology on the planet.

We successfully navigated the numerous challenges of the Covid pandemic, including Lockdowns globally.

Our team did an outstanding job to fulfill the explosive demand that fueled our impressive revenue and profit growth in 2020.

We've made tremendous progress in the first half of last year strengthening our balance sheet with additional liquidity and elimination of bank debt.

Most recently, we announced the sale of <unk>, South Africa, which allows us to focus on building our business in markets, where we are experiencing substantial demand for our products for the rest of the world as.

As such enterprise SaaS Ctrip will continue to operate in high growth markets in the U K Western Europe, and Australia, New Zealand.

The single managed subscription software business grew by Triple digits in 2020, so our combined cloud subscription business is both sizeable and growing very rapidly.

We think of it is important to be of pure play <unk> story and extend our leadership position in the hardware platforms and grow our cloud subscription business for the decade long <unk> technology cycle.

We launched in single three Donahoe in January with the goal of becoming the global five G technology partner of choice for carriers and enterprise and we're focused on three primary objectives in 2021.

First expand our product footprint with each major carrier with multiple five G product slots for fixed wireless access and mobile broadband hotspots as stock products.

And watch the non stock sell of the strategy to sell of the enterprise markets in conjunction with the carriers enterprise sales force.

Launch a comprehensive five G enterprise portfolio to secure the edge, where the single technology targeting enterprise small medium businesses and private networks and.

And third rollout for a single managed cloud portfolio to grow our recurring revenue cloud subscription business at higher gross margins.

Our <unk> pipeline continues to grow significantly in all regions and we are seeing momentum throughout our entire five G and cloud product portfolio of.

Our new wins are a testament to the strength of our <unk> portfolio.

As we enter 2021, we continue to see strong demand for our new <unk> mobile hotspot products from Verizon and T mobile as well as other new customers.

Carrier five G revenue for mobile broadband products and fixed wireless products will continue to grow in 2021.

And our new five <unk> enterprise products are coming to market in the first half.

Obviously <unk> will continue the transition to <unk>, but it is important to note the forging and <unk> coexist in the network. So it will be of gradual technology transition.

In addition, I should point out that we have AT&T as a major new for <unk> customer.

Craig will comment on our 2021 outlook in his remarks.

Now I would like to turn it over to Ashish to provide the details on our <unk> go to market strategy hardware and software platforms and customer highlights.

Thank you Dan and the pleased with over a five day progress across all geographies and I'd like to highlight several key areas of strategic focus that would drive of growth this year and into the future.

Plus our service provider of business grew significantly in 2020, the growth was driven by the new five new launches with several carriers and by the work from home demand boiler for GE Cogs in 2020, the developed and launched our second generation five day solutions with customers in North America Middle East Japan.

And Europe, resulting in all of 250% year over year of growth in Q4, the executed 75 day mobile broadband launches with Verizon T Mobile U S cellular sumitomo sitcom and Vodafone Qatar we are.

Proud to have the opportunity to work with these early adopters.

And this category of launch with T. Mobile was pretty significant given we are the only five G hotspot in the portfolio and we also launched other than Siegel of managed cloud solution with them.

<unk> is a generational opportunity in the at the top of the first inning of the technology second let me provide some data on debt in January of 'twenty 'twenty. There were 61 life five G networks and there are over 140 as of January of 'twenty one.

And chief of Baidu products, non support all network strategies and frequency bands and the low medium and high band spectrum per day five D. Finally solve the host of last mile access problems with speeds as good and sometimes better than fiber optics and coax cable.

<unk> can provide high speed connectivity dominion's, who are outside of current broadband network footprints.

And can do all of this at costs lower than traditional wired networks.

For the last two or three years.

Said the company up nicely for long term success by taking a lead in the development of multiple generations of five day technology and the plan to stay ahead with the future enhancements and five G.

No debt developing and launching these products is a pretty involved process that includes field testing in Africa comparability, along with the regulatory pre GPP and carrier certifications. It also involves a lot of time spent with the carriers working on developing their five day solution, they want to deliver and the underlying economics.

Of that solution. This is of a core expertise via the <unk>.

Strong execution team that knows how to the and launch these products.

Second the geographic expansion that help drive the long term growth off of the <unk> business. All the only technology lead is opening many dose and other products are outperforming competition in our product categories.

I want to point out debt about 18 months ago, we started to place of key sales since the Pope resources and a few focused markets, which resulted in a strong and growing pipeline of opportunities.

These opportunities are now turning into real deployments and I'm happy to report five day revenue coming from Europe, Middle East and Japan.

As I mentioned earlier launching five day products is an involved process, particularly as it relates to new network build outs and we maintain confidence of continued invest to grow strategy.

Total is our strategy to create a global fixed wireless access business, both hit the <unk> and importantly, with enterprises and.

In Q4, we launched a market leading high performance five <unk> of Louis solution with the U S and.

This is a powerful five day platform that incorporates the latest Wi Fi six technology and can be easily set up utilizing the tivo moving that.

The also just launched a version of the solution for enterprise customers in several global markets and the reception has been extremely positive.

In addition to these in the solutions, we are working on launching several other indoor outdoor and industry left of the resolutions in the next few months.

In several instances, we have two of the field science and technical acceptance from carriers, while working to compete certifications and dig in commercial orders in other cases, we are in the customer labs testing the product and looking forward to getting the approval for <unk>.

<unk> is the new Greenfield market debt reported an alternate way to bring broadband into homes and enterprises.

This includes taking five G into enterprise and SMB markets for van edge use cases.

Businesses of all sizes are focused on creating flexible working environments with employees at home in the office or in the field closer to the workflows.

Our five after the <unk> solutions are a key enabler to this new way of for kids and we are making great strides in bringing high performance after the resolutions with many customers worldwide.

In addition to these traditional after the lunar uses.

An interesting ecosystem starting to form around the private network market. We are actively engaging in the market and we plan to build up of our business as the market develops over the next few years.

Ford is broadening of our software business to value added features that our customers can monetize in 2020. These event of the cloud solutions portfolio and CECO manage.

Our cloud subscriptions grew significantly to over $3 5 million subscriptions. We also launched a new cloud management solution and <unk> connect which is built for highly scalable for remote management of our Fuji and <unk> solutions.

We also released a new mobile app that simplifies the installation and onboarding of other solutions.

These new software solutions allowed the end customers to self install the broadband connections for many different use cases.

Moving forward, we are focused on growing recurring more SaaS like revenues that are bundled with our five G equipment based solutions.

Our focus is on three types of recurring revenue.

Complex scale of your subscription management.

Cloud management services for carriers, and enterprises, and <unk> edge enablement of.

All of these areas have a large tam associated with them now I'd like to hand, it over to Craig.

Good afternoon, everyone and thank you for taking the time to join the call today.

While preparing for the earnings call. We were provided with an opportunity to reflect on the evolution of <unk> is currently undergoing.

It was only a few years ago that we were basically of one product one customer company, while we lacked as a firm was not initiative or drive but of comprehensive strategy on how we're going to develop this growing market for my point of view, our current strategy boils down to four major initiatives all of which are well underway for.

First is our geographic expansion and revenue concentration as noted earlier by Dan We announced the number of new wins with leading international and domestic carriers. These.

These initial returns come after investing in long sales cycles and will help us diversify our revenue in the fast growth markets.

Second is our focus on building industry, leading products. Despite the early nature of the <unk> market and <unk> continues to be on the forefront of product development.

We recently added a significant number of products to our portfolio, including a suite of fixed wireless access points.

We will continue to push the boundaries to better serve our customers' needs.

Third is our focus on software platforms.

We believe that a great deal of our future success will be driven by our ability to differentiate ourselves within our software platform and <unk> manage which was announced during the quarter.

We realized a while ago that it was critical to build a cloud based management and security platform that allowed teams to manage our products ubiquitous computing environment.

Which leads me to our fourth and final point penetration of the enterprise with the growth of five G comes new connectivity needs that require advanced solutions and we believe it is a natural extension of our R&D DNA.

To build comprehensive platforms for the enterprise.

The building the products is actually the easy part and we made several announcements during the quarter. The real focus for us is expanding our relationships with the system integrators and other go to market partners and making sure we will have the right value proposition for customers.

One major development for US was the repackaging of our full offering into recurring revenue pay as you go model we call it the CECO select.

Which we believe will be commercially aligned with our enterprise customers.

With that let's review our results for the fourth quarter.

Net revenue of $86 $1 million.

Down for 6% sequentially and up 64, 5% year over year.

It should be noted the quarter included several initial stocking orders from the previously mentioned new customers too.

Turning to our business units fourth quarter of Iot and mobile solutions revenue was $72 1 million down six 8% from the third quarter.

We saw relatively stable demand for our legacy <unk> products and received a series of stocking orders for a group of new customers we.

We are encouraged for RFG revenue mix, which trended up during the quarter.

<unk> managed software continues to grow rapidly, but the number of subscriptions, increasing 18% quarter over quarter and is up 231% year over year.

Fourth quarter Enterprise SaaS solutions revenue was $14 million up $8 3 million from the prior quarter for this line of business Covid restrictions continue to have an impact on our ability to install our solutions for the field, thus impacting some of our bookings.

We continue to monitor all of the country Covid developments very closely and expect some improvements over the coming periods.

Additionally, the South African Rand, which is our largest ethics closure versus the US dollar has continued to trend positively during the quarter at the beginning of the quarter. The dollar Rand exchange rate was $16 eight and we ended the quarter with the rate at $14 six.

It has been a rollercoaster of a year for the exchange rate and frankly, we will no longer have this complication. After we close the sale of the South African <unk> business unit in the second quarter.

We closed the quarter with the cash balance of $40 million.

With our new products and customers coming to market, we expect inventory to continue to increase.

And we will not have a sense of expected run rates on these new customers for several quarters.

From this point forward I'll focus on non-GAAP measures a reconciliation from GAAP to non-GAAP is detailed in our earnings release.

For the Iot and mobile business gross margins were 25, 6% for the quarter.

Approximately 160 basis points compared to last quarter and up 880 basis points versus the same period a year ago. We continue to work on a series of initiatives to improve our margins through the streamlined operational improvements and leveraging economies of scale.

Enterprise SaaS solutions gross margins for Q4 were 62, 5%, which were down approximately 190 basis points from the prior quarter.

The total company gross margins for the fourth quarter were 31, 6% up approximately 180 basis points sequentially. This.

This increase is due to our software subscriptions sales.

Sales of our new <unk> products, and partially offset by our continued sales volume of lower margin <unk> products.

Q4, Opex was $32 3 million compared to $24 6 million in Q3, our R&D expenses of $15 million will continue to fluctuate as we continue to spend on regional certifications and capitalize some of our software development costs. We currently capitalize our externally of software on a product by product.

The basis per the accounting guidance. Therefore, the capitalization of the amortization impact of our R&D line will be hinged on various factors such as revenue stream or the intrinsic useful life of such software.

Due to the launch of <unk> products in late Q3, our amortization expense on the associated capitalized R&D for <unk> products. In Q4 has increased almost by $5 million compared to Q3.

Sales and marketing expenses increased to $9 4 million and G&A expenses were $6 6 million, both of which were slightly up due to some increased activities around product launches and some enterprise focused activities.

Our Q4, non-GAAP net loss was negative $6 9 million or loss of <unk> seven per share adjusted EBITDA for Q4 was $7 million as compared to $1 7 million loss for Q4, 2019, and a $7 4 million gain last quarter.

Subsequent to the quarter close I wanted to mentioned some additional details on the sale of our South Africa <unk> business to a private equity buyer based in South Africa for 529 million South African Rand, which is approximately $36 2 million U S dollars before deducting transaction related expenses the.

The divestiture of the South African business unit allows us to focus our capital and resources on higher growth regions of the global <unk> market at significantly streamlines the operations of the <unk> business aligning it squarely with our enterprise market focus.

We intend to use the proceeds to reinvest in the strategy points mentioned earlier in my comments.

The deal is subject to local government review and is expected to close in the second quarter of 2021.

And finally, some comments on our outlook for the rest of 2021.

As mentioned before there are separate market dynamics going on in the <unk> and <unk> segments of our business.

Can you the expansion of our <unk> customer base and the launch of our mobile broadband and fixed wireless access products throughout the year is very encouraging and the long term growth trajectory of <unk> revenue is clear gives.

Given the market is transitioning from <unk> to <unk>. It is always challenging to predict the exact trajectory of this technology migration. In addition factors specific to us to add to this complexity are expected lower demand of our legacy for G products and the pending sale of the <unk> South Africa operations next quarter.

Everything into consideration, we expect the second half of the year to be stronger than the first half and we will share more color on this going forward.

Thanks for listening and with that I will turn the call back over to Dan and some final comments.

Thank you Craig.

Covid turned the world upside down in 2020, which both tested and demonstrated our resilience during these extraordinary times.

Despite the numerous challenges we are on an incredible pace of bringing new <unk> products to market and winning new customers.

I want to express our sincere thank you to ebb.

Every single employee who did an amazing job in 2020, despite unprecedented circumstances.

The carrier and enterprise fiber addressable market combined is over $50 billion.

With best in class performance security and reliability of our products. We are confident in our goal to become the global <unk> technology partner of choice for carriers and enterprise.

2020 was a monumental year and we expect 2021 to be even more exciting for the company and investors.

Thank you Mr. Mandara, we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time.

We will pause momentarily to assemble our roster.

Okay.

Our first question will come from Scott Searle with Roth Capital. Please go ahead.

Hey, good afternoon, thanks for taking my questions.

Just a quick clarification.

Occasion, Craig I wanted to make sure I understood the 12% <unk> number or was that for the fourth quarter was that for the year and also to clarify on the R&D front.

Is there a do you have some more granularity as it relates to certification costs, which tend to be lumpier versus anything that's sort of the flow through related to software capitalization.

Sure. So let me start with the first question you had which was sorry.

Talk to the just the 12% total.

12% was the year.

For the year, Okay, yes that was for the year.

And then regarding the the capitalization of software and stuff. So for Q4, we definitely seen of peak of our cost as it relates to the capitalization of amortization relating to software development cost internal and external.

And I think that youre going to see that tick down substantially going forward.

The more normalizing towards where we were in Q3 of this year.

Helpful and.

Just digging in on the sheetrock fun I want to clarify so the intention at this point is to retain the remaining sheetrock businesses that are not south African base, and ultimately kind of fold that into the enterprise business that youre developing is that correct.

Yeah, Scott it's the.

The it's sort of the rest of world asset So we're keeping our.

UK Western Europe, Australia, New Zealand.

Importantly lineup with our target markets and five G.

And our expectation of our enterprise strategy will well aligned there as well so those are strong markets.

Have great growth.

Trajectories, and we think we think it's a good alignment.

As we look across our total cloud subscription business.

The align very well with our five day strategy and with our cloud strategy.

Got you and lastly, if I could you mentioned some.

The initial orders coming from some of the new customers that were announced during the fourth quarter. I was wondering if you could put some more color around the magnitude the size of that and so far we're two months into the first quarter. What are you seeing so far from a linearity perspective, and any color you could give us on kind of the sequential growth of the course of you would be helpful. Thank you.

Sure Yeah well.

You know, it's it's the continued ramp through the year.

Every quarter last year was.

Higher than the previous and we expect that to start that pattern I'm asked all the time.

When are you going to start to see another customer that has the higher business potential of profile than Verizon.

Verizon.

And I'm pleased to report its early in the year six weeks eight weeks in of data and sell through but.

Our <unk> hotspot device as a sell through data from T. Mobile is roughly 50% actually 54% per week of higher than Verizon. So we're seeing very strong demand there and that's the very important customers. So.

We expect to see steady run run rates with the through the operator channel that has to settle down we're onboarding new operators that debt. That's out of just so you know we see we see an up to the end to the right profile of this year.

And quite frankly, we should see in the second half's five G revenue crossing over.

With <unk> in other words higher so very very strong uptake very strong demands.

Great reception and the enterprise activities just getting going.

Great. Thank you.

Thank you.

Our next question will come from John Marchetti with Stifel. Please go ahead.

Thanks, very much Dan of Greg I was wondering if you could talk a little bit more about your expectations for the enterprise contribution here in 'twenty, one where are we getting you mentioned some work that still needs to be done on the go to market side and some things along those lines just how do we think of that as a contributor for for for 'twenty one.

Part of me speaking of a line might be muted.

Alright.

Wanted to say that our principal focus on five G.

Until roughly the middle of last year has been on carriers, that's where we were pursuing that's putting our energy of investment.

Naturally we saw the enterprise market in fact, the <unk>. The enterprise market is about three times larger carriers. So the way my words enterprises of front row seat now in <unk> strategy.

We are launching a number of new <unk> products.

This house.

And we are.

Adding muscle to our channel if you will and high touch sales, but importantly channel partners system integrators that sort of thing.

Is what we're now in the process of recruiting mastery of sales agents et cetera. So we're bulking up the muscling up on our <unk> portfolio at.

At the same time, we're investing in adding resources to recruit and onboard channel partners for the enterprise market. So that's the the power of and their debt we expect the.

A nice uptick in the enterprise business.

That's certainly a fundamental part of our strategy now.

Got it and then on the software side of the business.

<unk>.

I guess, how should we think about that growing through this year and into next day do we expect to see more of these sort of joint sales similar to what we saw with T mobile where that becomes a bigger piece of the initial agreement with the service provider is there a specific software module that comes out to support the enterprise group as well just curious to think about that enterprise.

Concho or excuse me the software contribution as we go through 'twenty, one as well.

Yeah, well, we're very bullish on our cloud subscription business from.

From a growth perspective.

Coming off of last year, and Seagull manage the subscribe component of that software stack was triple digits.

And as we look at the growth profile of the C track assets in UK Western Europe, Australia, New Zealand that has strong double digits. So we see overall, our subscription business growth and strong double digits. This year of putting those two together.

As far as the attach if you will.

Your question.

The T mobile is very strong seagull subscribe customer the.

They are they've adopted in the single connect.

And that's going gangbusters, we're starting to see adoption into other carriers and we're starting to see adoption into <unk>.

Enterprise customers. This is our <unk> product skies. So we see it is of very strong component of our of our growth strategy in all of our margin expansion strategy.

Got it and then maybe I can just get one last one and Greg you mentioned some of the the initial load the <unk> products that you saw with the number of new customers in the fourth quarter.

Those largely completed now for those customers should we be thinking about.

Of the <unk> quarter here is more sort of sell through related or are we still getting a bit of that uplift is azure ad.

Adding some of the the new product into the channel.

Yes, I think thanks for the question.

I think there was a lot of push by the carriers to get their stuff launched in Q4. So that meant we were shipping pretty sizable volumes to the new partners that we had.

And now we're in the middle of getting kind of the run rate reports, which would translate into second orders over the quarter. So I think we're still in the wait and see mode in terms of how the inventory is going to move through based on those initial loads.

Yes. Thank you for back to the the weekly sell through numbers that we're monitoring very closely.

So that's what we're staying on top of.

Thank you.

Yes.

Our next question will come from Mike Walkley with Canaccord Genuity. Please go ahead.

Great. Thanks for taking my question I hope everybody is doing well on the call.

Mike I guess.

And congrats on all of the guys accomplished in 2020 and look forward to all of these new <unk> products and kind of any customers. Just just a question on modeling maybe for Craig just on the Ctrip South Africa business can you help us just what the run rate is of the business sold so we can the maybe remove that from for models as we think about that business.

For the comps going forward.

Sure as you as you think about C track roughly for what we were modeling for the 2021 is the <unk> South Africa is roughly half of our business in the C track line.

Okay great.

Great. Thanks.

Then.

Just just on the on.

Q1, I know it's interesting.

The interesting quarter. After you fill the channel for five day, and you're waiting for orders for sell through and then we had the surge demand, but anything we should think of for Q1 is there any.

He is well known component shortages that might be impacting your business in the first half of the year. How do you guys feel about your ability to supply in any any thoughts on just seasonal trends as we start off the year.

Yes, I can pay my comments Dan here.

Thus far we have not seen an impact.

On the on the component shortage dynamic if you will so a lot of work and planning ahead and ordering frankly these long lead time components.

The market is tight and there's a lot of constraints everyone knows that.

But thus far we're not seeing any impact at least in the near term.

Having said that we are working very hard on that exact thing.

And I'll just add I'll just add one piece of information is that while we believe that we have raw materials inventory covered what we are seeing from our key suppliers is longer lead times, so something that might have been.

Three quarters now moving out to four quarters, so really the onus on us is to make sure that we have the steady supply as we move into the second half of the year and I mentioned in my comments that you should expect to see some increased inventory I would I would think of a bunch of that would be in raw materials to make sure that we secure supply that we need.

Gotcha that's helpful. Thanks.

Maybe.

A question on the on the product roadmap.

We talk about this.

Any early feedback on the private network business with customers and the partnership with <unk>.

Put out a press release, maybe a little color on that and what kind of opportunity you see with them.

Yeah, Ashish do you want to take that one.

Yeah sure Dan Yeah, I mean look.

Early days the private debt broke the.

The market is just beginning and there's lot of activity. There is a lot of new players coming in we've mapped out of the ecosystem and we are working from infrastructure to end customers to system integrators. The software partner instead of working with the whole slew of different.

The technology ecosystem partners. It is a very exciting market, Mike and we believe other solutions they best suited for the market.

And early days, but but you know just a phenomenon.

Use case, there's number of different use cases that are popping up here. So you know.

You're going to hear more from us as we move forward and make progress in this market.

Great last question for me to whoever wants to take them out of past line.

The you're investing in a lot of new products.

Highlighted by <unk> in the early innings day.

Feel like you guys have the cash on hand, and the balance sheet.

In place to support the growth objectives over the course of 2021.

Well I can kind of give the short answer Mike Yes, we do.

[laughter].

No we feel very good about where we're at I mean, we did a lot of work last year a lot of work to strengthen the balance sheet. As you know early in the year and then <unk>.

Subsequently and of course now most recently the sale of Sheetrock <unk> South Africa. So we're in a good spot we like where we are.

The forward volume progress this year, thanks for taking my questions.

Thanks, Mike.

Our next question will come from Jason Schmidt with Lake Street. Please go ahead.

Hey, guys. Thanks for taking my questions. Just curious if you're seeing anything out of the ordinary from a pricing standpoint within the C track business outside the South African operations.

Well I think yeah, Hey, Chris.

One of the one of the things with South Africa challenging business environment, but it also had a.

Fairly low on average <unk> reason for that is legacy consumer market.

Some of the insurance business.

Some of the government business so that was for.

Frankly was the low <unk>.

Type of market and a challenging environment. So.

Long and short of some of the factors behind deciding to divest that asset we're in a much better place in U K Western Europe.

And Australia, and New Zealand and that plus we've got a new product platform called clarity.

We're building the software stack of applications on top of that so in fact, our ARPA profile is going up.

Brigade, rather than rather than down.

Okay. That's helpful. And then just curious looking at the C track business, how you think the north American market fits into the future plans.

Yes, so great question.

You know looking at the overall remaining assets rest of world. We're taking a long look at the North American market that is a function of that.

And are going to be looking at some strategic planning around our growth opportunities. In addition to as I said Western Europe U K, Australia. So we're assessing it there is opportunity there.

We will update as we as we move forward.

Okay. Thanks, a lot guys.

Thank you. Thank you.

Our next question will come from Lance Vitanza with Cowen. Please go ahead.

Hey, guys. Thanks for taking the question congrats on the quarter.

I wanted to ask you about the <unk> managed cloud subscription over $3 5 million is the.

The first question is.

Did you have how many subscriptions EPS at the end of the third quarter and how many to GAAP a year ago.

And then if we could talk a little bit about what impact the subscriptions are happening on the companys revenue and margin profile in other words are we.

Was there any frontloading the subscriptions for us it's the opposite of what we kind of creating that headwind because maybe we're replacing point in time sales with the subscription.

Payoffs, so to speak but any color on that would be appreciated.

Hey, Lance well the.

The first part of your question, we entered 2020.

With 1 million subscriptions, and we exited 2020 with $3 5 million. So there's your growth profile through the year.

T mobile is the great customer and they placed their confidence in us and this is managing subscriptions for principally as enterprise and the government sector.

And you know as magenta and yellow came together last year. It was really a boost in the demand for that.

For the capability with us and as well now you know theyre, adding in shingle connect so I mean that was that was the principal driver was the demand from the markets for them.

Of course for subscriptions to met for for devices and that's what we provide is the surface.

So overall triple digit growth last year.

You know, we're going to moderate our view of this year, we think it's going to be very very strong double digit but.

In the subscribed portion that is.

But we still see very strong both the opportunity in 2021.

Thanks, and then what kind of can you talk at all about the the impact that this growth is <unk>.

Has had and I guess is likely to have going forward on the margin profile. Thanks.

Well, yeah, a highly accretive from a margin perspective as you can probably imagine.

It's a very important growth driver and as I said before.

You know our strategy of this year is expand the carriers with more fired the slots Andrew of enterprise and grow our cloud subscription business.

No.

The single manage under which the subscription module falls is is really that and we are driving for very very strong double digit growth overall.

As I said as well see track rest of world has that profile. So we feel very bullish on our subscription business. This year.

In terms of revenue growth and of course margin expansion.

Thanks, guys I appreciate it.

Our next question will come from Mike Latimore with Northland Capital. Please go ahead.

Hi, this is the on behalf of Mike Latimore.

Could you guys tell me what percentage of the sales by the international in the for Q.

Yes.

Yes.

Sorry that was international sales in fourth quarter, yes.

Yeah.

That's not really something that we break out but Craig.

Let you field that one.

Just give me a second I'm calculating.

Our price.

<unk>.

I wanted to ask the second question and I'll, let Pat will.

Capex.

Yeah.

Alright, My other question to you would be like do you guys have a number on how many of them plus the engage customers did you have in for Q.

Okay.

Craig debt was also over to you as you're calculating.

Yes, so for the rest of the world for for our rest of world of revenue.

Regarding your first question.

Sub 10%.

For total revenue for the company not including the C track of components.

Sorry. Your second question I was focused on getting your answer to the first of second lesson was like.

How many bin puts on H customers did you have in <unk>.

It really falls.

We don't disclose the breakout, but I believe we had to.

The tough as our 10 percenters.

Alright, Alright, I'll pass the line thank.

Thank you.

Thank you.

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

Well I just wanted to say to everyone. Thanks again for joining today's call.

We greatly appreciate it and stay yourself.

Stay safe and healthy everyone. Thank you again.

Conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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Okay.

Okay.

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The inventory.

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