Q1 2021 Inseego Corp Earnings Call

May 5, 2021

[music].

Hello, and welcome to see go Corp's first quarter 2021 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 star key followed by zero.

After today's presentation there'll be an opportunity for analysts to ask the question.

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On the call today are day.

Dan Mondor, Chairman and CEO.

Bob Barbieri interim Chief Financial Officer.

Ashish Sharma, President of Iot and mobile solution.

The other members of the management team.

During this call non-GAAP.

GAAP financial measures will be discussed a reconciliation of the most directed directly comparable GAAP financial measures.

In the earnings release.

Which is available on the investors section of the company's website.

Audio replay of this call will also be archived there.

Please also be advised of 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 of on our doctors 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. Thank you and Hello, everyone. It's great to be with you today.

Let me begin by saying the today. This company is better positioned than it ever has been on almost every possible measure.

As I look back of of progress over the last few years is figure was a very different company and a much stronger position.

This is illustrated in the first quarter results compared to last year.

We reported a 120% increase in our combined <unk> and software as a service revenue over last year and gross margins over 35% up over 400 basis points.

We ended the first quarter with approximately $60 million in cash on our balance sheet and zero bank debt.

There are full of predominant reasons for a remarkable transformation.

First we have greatly reduced our customer concentration by expanding our for G and five G carrier customer base in the U S and increasingly in international markets second our rapidly growing software business is yielding recurring higher margin revenue on top of device revenue, which.

Due to our strong gross margins this quarter.

Third carrier customers are embracing our recently launched <unk> fixed wireless access products and we see fixed wireless access as a major growth driver for the company going forward for.

Our first enterprise five <unk> fixed wireless products were launched and sold this quarter in North America, EMEA and Asia Pacific.

As we enter 2021, we have just announced the biggest win in company history with the launch of our <unk> Mifi hotspot of T mobile, which has quickly become our highest volume five G customer.

T. Mobile has also adopted our in single managed software platform, which adds recurring subscription revenue to those hotspot sales.

We are making solid progress in international markets with some initial five G customer deployments with more to come.

We continue with testing regulatory approvals and customer contracts in multiple regions.

While it is taking a little longer to establish business in new regions. We see international markets is an important growth driver.

The most important development in the last six months has been our <unk> fixed wireless access portfolio and the great News is that every customer dialogue now includes fixed wireless in addition to our hotspots.

It is key for mobile operators to create new revenue streams to generate a return on their capital investment in acquiring spectrum and building national networks.

And it's not only relevant for consumer home broadband and entertainment, but also in the enterprise and private network space.

We believe both are very large market opportunities with the wide range of use cases.

I'm very pleased to report the T. Mobile has certified three of our fixed wireless access products for their enterprise business and we're working closely with them to support customer engagements.

And this is central to our <unk> Enterprise initiative announced late last year and it goes far beyond the work from home market.

<unk> enables new technologies for the enterprise, such as edge AI and edge computing.

We of existing <unk> customers, such as Dell Vmware and other enterprise technology leaders and all of our dialogues with of now include our five <unk> product lineup.

<unk> seen recent announcements of our new enterprise products and channel partners in North America, EMEA and Asia Pacific with more to come.

Now, let's turn to our new software as a service offerings all.

Most every conversation we have of carriers and enterprise customers involves our software platforms, which enable them to onboard manage and secure the growing number of <unk> and <unk> devices on their network through centralized cloud management.

Our SaaS business has grown significantly over the last 12 months, representing a healthy 24% of our revenue in the first quarter.

Our <unk> business continues to be strong and we continue to add new customers.

We saw a surge in demand for our forged products starting in March of last year with the pandemic driving the need for work from home solutions.

That helped US win AT&T has reported the customer which means our products are now being sold but all of the largest U S carriers.

Well for <unk> down from 2020 levels, we are seeing higher demand levels than we did pre pandemic.

The bottom line is for you will remain an important part of our business and its key as we continue the land and expand <unk> customers to <unk>.

We are positioning <unk> as a pure play <unk> company ultimately all of our efforts are aligned on the global <unk> opportunity.

This led us to divest of <unk> fleet tracking business in South Africa, which is not a target market for us.

In addition to reducing our head count by over 540 people or 53% overall, the divestiture will increase revenue per employee to over $600000 on a pro forma 2020 basis. We think this is an important financial metric for the investment community to know.

Finally, I want to address the global semiconductor shortage.

Our business has not been impacted thus far thanks to our deep and longstanding direct relationships with key component suppliers. In addition to our manufacturing partners.

Through our proactive approach, we have avoided delay in customer deliveries.

We expect the current conditions will extend through the end of this year and likely into 2022.

Our leadership team will continue to work closely with our silicon partners and take necessary actions to secure supply.

With that I will hand off to Ashish, who will go into further detail on our incredible momentum in <unk> and cloud solutions and some groundbreaking customer use cases ashish.

Ashish.

Thank you Dan over the past year, our customers have relied on our innovation index.

For the cloud then adoption throughout the state of the art <unk> and cloud solutions, while protecting the end users from security threats for.

From my numerous conversations with customers. It is clear that out of five G technology, along with other cloud innovations will form a powerful engine for their business transformation the growth as the technology needs continue to evolve at a rapid pace.

From a product revenue perspective, we saw strength in our <unk> mobile broadband portfolio and <unk> managed cloud portfolio, which now accounts for 20% and 24% of our overall business respectively. This combined 44% is up two ex from a year ago.

The mobile broadband business continues to build up and we are experiencing great reception of our end 2000 and end of 'twenty 105 day solutions from all customers consistent feedback we are receiving from our carrier customers is that of our technology is far superior to any of the similarly categorized.

Product in the market.

We secured another five <unk> operator, Sunrise in Switzerland, the commercial launch planned for early June.

We also just launched the Mifi 8000 in Canada with Rogers and Fido.

Many of the U K customers and international markets, our filing of our <unk> solutions, and we anticipate new launches in the coming months.

Moving to <unk>. The way, we just released a series of new way of makeup products focused in both carrier and enterprise markets, including two indoor activewear products, <unk> 2000, and an FX 2000 and of rugged outdoor product the <unk> thousand and these products are certified for use in many different regions.

Globally and have recently been certified for use on the T Mobile network.

This is a major accomplishment for <unk> of our focus now is on implementing joint go to market strategies to maximize our success in this day early market.

In addition on the enterprise side.

Im happy to report that the of generated our first the make our revenue by shipping units for North America, Australia and Europe.

This was accomplished through our growing list of channel partners, such as scan source and the micro Cynics and North America, Powertech in Australia, and strength solid sales supplies and other scenario.

In terms of our enterprise market push we are seeing some exciting use cases, even at this early stage of <unk> deployment.

Let me provide some examples of customer projects, we are working on.

In the area of traffic transportation and logistics.

A global leader in transport solutions is deploying <unk> on lampposts and the U K to support video streaming the <unk>.

Starting with traffic monitoring, but ultimately the goal is to support autonomous vehicles, the smart city in Georgia.

Three corners is deploying of our <unk> solutions on street lights, and other locations, where fiber would not be economically feasible to the.

Enable smart traffic control management autonomous vehicles and other use cases.

The global leader in packaged delivery is looking at connecting the moat hubs in depots in rural areas, where cellular reception can be greatly improved with our hygiene products.

Our solutions enable many of the 10 use cases as well net for limited a system integrator in Europe is connecting of video feed to our <unk> solutions in conjunction with the AI platform the.

The objective is to provide a solution for retail stores to monitor shelf stock spillage tap surveillance etcetera.

In the U S. A leading retail chain is trialling rademaker as the connectivity solution for vaccine distribution locations.

We're also seeing opportunities in the private network space.

Government agency is evaluating rademaker for secure private networks. When particular use case for them is deploying secure networks and remote areas. The standard coverage is limited.

The transformation of our business to more software and subscriptions continues to show great progress as we achieved 11, 5% quarter over quarter growth in subscriptions, we saw five consecutive quarters of all of 40% growth in other.

Cutting software revenue excluding <unk>.

Dan mentioned earlier AT&T now carries the Mifi 8000, but it is important to note that it will also make an siegel connect available for enterprise customers. We are seeing this in almost all of our customer dialogue that the technological capabilities of our devices, coupled with our software management layer is the <unk>.

For the combination.

It is examples like this that give us confidence that the will continue to grow software beyond its current 24% of total revenue.

Let me conclude with some thoughts on our product portfolio of vision.

Access to corporate data anywhere and everywhere securely has become the beating heart of the new enterprise.

Our <unk> cloud platforms of both with extensive reach massive skin and multiple layers of security. The hub drive. This does the transformation. We are excited about our position of the market the executing and innovating with speed I am so proud of what our five year in cloud teams have achieved.

Now I'd like to turn the call over to Bob.

Thanks, Ashish first off let me say, how happy I am to be here on the call with you today.

Today is my one month anniversary and I have not had the opportunity to speak with many of you. Let me start off the call by introducing myself and offering wire was attracted to join on CECO.

High of over 25 years of experience as the senior executive including being the Chief Financial Officer of growth software cloud and technology companies and specifically public companies such as apogee enterprises loss of software and trade zone.

I was brought on by the board of months CECO as interim Chief Financial officer with the mandate to support the company's transition to a high growth five G on the SaaS company.

I would like to now review the results of our first quarter of fiscal 2021, Q1 revenue was $57 $6 million up of about one 5% from Q1 of 2020, we should recall Q1 2020 benefited from the onset of the COVID-19 demand surge, which began in the final weeks of the <unk>.

<unk>.

The favorable year over year comparison, this largely due to growth of <unk> and software revenue as Dan of Ashish highlighted.

The sequential decline results from a lower level of the surge demand for <unk> hotspots, albeit they are running at higher levels from the pre pandemic activity.

First quarter of Iot and mobile solutions revenue was $43 million up one 3% year over year and down 40% from $72 1 million in Q4.

And <unk> subscriber subscriptions were up 11, 5% sequentially and up 175, 7% year over year, which helped drive the growth versus the prior year.

Sell through of <unk> hotspots continues to be strong and we expect an increase of new shipments in coming quarters.

Units order harmonized with the ongoing demand.

Enterprise SaaS revenue for Q1 was $14 6 million up four 8% quarter over quarter and relatively flat over the prior year.

The sequential increase reflects both better sales as we recover from Lockdowns from South Africa, and the continued strengthening of the Rand versus the U S dollar.

With respect to the sale of <unk> South Africa. The transaction continues to progress. According to schedule and we will continue to anticipate closing the sale at the end of the quarter subject to regulatory approval and other closing conditions. This will lead to approximately an additional $36 million to our cash.

Balance based upon the current exchange rate.

Speaking of cash balance cash at the end of Q1 was almost $60 million, including cash classified for held for sale upload was $20 million from Q4 of 2020 the.

The increase of our cash balance reflects the net proceeds of $29 4 million from our ATM offering in January.

Solid cash collection offset by our need for higher levels of in transit inventory as we transition from air to Ocean shipments were taken these actions to better manage costs as well as buying long lead time components to ensure we can meet customer delivery schedules going forward.

From this point forward I will focus on non-GAAP measures a reconciliation from GAAP to non-GAAP is detailed in our earnings release and as found on our IR Web page for Iot and mobile business gross margin was 26, 1% up 50 basis points from the 25, 6% and the.

Prior quarter and up approximately 560 basis points compared to Q1 of 2020.

Gross margin improved both sequentially and year over year. The result of a higher mix of five <unk> of <unk> managed revenue and the decline of lower margin of <unk> sales from 2020 high as well as solid execution throughout 'twenty, 'twenty, and 2020, one year to date and improving supply chain efficiency.

Going forward, we expect a higher mix of five <unk> and software revenue and new initiatives to improve operational efficiency will lead to better economies of scale, which translate into improved Iot and mobile gross margin steadily as the year progresses.

Our enterprise SaaS solutions gross margin for Q1 was 63, 8% up 130 basis points from 62, 5% in Q4 and down 20 basis points from prior year.

Total company gross margin for Q1 was 35, 7% up 410 basis points from 31, 6% in Q4 and up 420 basis points from the 31, 5% in Q1 of 2020.

As discussed earlier the increase was predominantly a result of better sales of higher margin <unk> products and software uptake in our Iot and mobile business.

Q1, Opex was $26 7 million down $5 6 million compared to $32 3 million in Q for the decrease was primarily a result of the research and development spending related to our <unk> product programs with the capitalization impact over the course of the software.

Useful life.

We capitalize our external use software on a product by product basis per the accounting guidance, therefore of the capitalization and amortization impact to our R&D will cause certain volatility in our quarter over quarter operating expenditures.

<unk> are testing and certification was lower versus the prior quarter.

Sales and marketing and general administrative charges remained relatively flat with the delta being largely seasonal changes due to product launches.

Annual audit fees.

Our Q1, non-GAAP net loss was $7 7 million or a negative <unk> <unk> per share versus $6 9 million or a loss of seven cents per share in the prior quarter and a loss of $5 7 million or six of share last year.

This result reflects our ongoing investment in <unk> in the SaaS product development and additional sales resources offset by stronger gross margins.

Adjusted EBITDA for Q1 was the loss of 900 sales and versus a positive $7 million in Q4, and a loss of $1 7 million last year for additional details while non-GAAP and adjusted EBITDA results. Please refer to the reconciliation tables in our press release.

Finally, some thoughts from the rest of 2021.

As stated previously the company continues to believe that the second half of this year will be better than the first day up driven by <unk> sales growth from existing customers, New five G carrier deployments, primarily internationally revenue growth from our entry into the enterprise market and increased software revenue across our product line.

We're bullish due to the many positives that have been articulated today.

With the expected closing of the <unk> South Africa sale at the end of the second quarter, our financials will more accurately reflect the <unk> pure play as mentioned by Dan.

With that let me turn it back to Dan for closing remarks.

Thanks, Bob we are delighted to have you on the <unk> team.

Wanted to close by expressing my sincere thanks to our dedicated employees, who continue to do an amazing job in these challenging times.

They are the driving force behind our numerous accomplishments and I can't thank them enough.

We've made significant investments over the past two years to create a best in class <unk> and software solutions portfolio and in sales and marketing resources to capture significant market opportunities the.

These investments have begun to be reflected in our results.

The strength of our portfolio has helped us succeed and initial customer engagements across multiple regions in the developing fixed wireless access market.

With carriers and enterprises.

We have excellent customer relationships and are seeing tremendous traction with our industry, leading <unk> products and new software as the service solutions.

This gives us more confidence than ever in our ability to become a high growth high margin <unk> and SaaS Global solutions company generating strong free cash flow.

With the strong second half you can only imagine what 2022 will look like thanks again, everyone.

We will now begin the question and answer session.

Ask the question you May Press Star then one on your telephone keypad.

Thank you you are using a speakerphone please pick up the handset before pressing the can.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Hi.

Our first question comes from John Marchetti with Stifel. Please go ahead.

Thanks, very much Dan if I could just a couple of quick questions on the the.

The overall business trends in the in the enterprise you mentioned some of the initial sales that you saw here in Q1, how do we think about that as we start to move through the year.

Contributing to that second half strength, I mean, obviously big focus on <unk> products, obviously with mobile hotspots and things of that nature, but how do we think about the enterprise opportunity is that more of 22 of that or or do you think it's a real contributor to that that second half growth outlook you just highlighted.

Yeah, Hi, John Great question, Great question well.

As you know we've just recently launched our our enterprise <unk> portfolio. So is.

It is gaining traction in the market terrific debt.

T mobile for business certified three three of our products indoor and outdoor fixed wireless products.

We're starting to work with them on market opportunities and then broadly through our our distribution channel that we described in North America, EMEA and APAC. So we've seen at the beginning to contribute in the second half of it will be of ramp as usual.

But we have.

We have the portfolio, we have the software solutions to go with it.

And the distribution in our target market. So it's a ramp for the second half as we stand and certainly carry of great momentum is what we're expecting to see going into 2010.

And Dan just as a follow up to that is there a better margin profile with those enterprise.

<unk> relative to maybe the the mobile hotspot products, then and obviously the software pieces of very different margin profile, but how do those those solution stack up I guess margin wise relative even to the <unk> mobile hotspots.

Yes.

We all know the the enterprise market in general has a different gross margin profile.

There is the benefits of the distribution, but I will say that yes, it is higher than.

If you will the kind of the carrier gross margin profile as far as fixed wireless access products.

I would expect somewhere in the mid Forty's.

And then maybe just the last question for me and I'll jump back in the queue.

From a software perspective, obviously a lot of the you mentioned.

Some of the carriers that are now offering alongside but as you go to market in that enterprise market as well is there of different attach rate there for software or is it higher or is it lower just curious how that stacks up relative to what youre seeing on maybe some of the mobile hotspot side as well. Thank you.

Yes, Great question. In addition, John Thank you for that.

We're seeing strong attach rates across the board.

As you know and as we announced T. Mobile has adopted our single managed solution as part of the.

The initial five G hotspot deployment AT&T is now adopting and Segal connect to offer to the enterprise customers that as far as part of their the launch of our new the new.

New <unk> hotspot business with them all of the conversations with enterprise at all for the right reasons, but they they want to look at.

How they can deploy how you acquire how you manage and how you secure.

The.

The enterprise so.

They don't have their own sort of naturally.

It's a packaged solution.

We're also seeing an offering we call of <unk> select debt is kind of if you will of bundled offer for.

For select sales partners that sell of the complete package.

The all kind of in the rental type of model, which will add to recurring revenue good recovery high gross margin. So the answer is bullish.

We're seeing strong interest in attach rates in both carrier and enterprise John.

Sure.

Thanks very much.

Thank you.

Our next.

Question comes from Mike Walkley with Canaccord Genuity. Please go ahead.

Yes.

Great. Thanks for taking my question I guess first place to start is just.

Good day learn that <unk> levels are above pre COVID-19 areas, but just trying to get a cadence of.

The work from home and school from anywhere type of.

Surge in demand.

Should we think about the cadence for that business and the overall, maybe Iot and mobile solutions businesses is Q1 of the trough the kind of a seasonally softer quarter and it builds throughout the year or is there still may be a pocket of for the coming out in Q2, and then a stronger second half of the year.

Yeah, Hey, Mike Thanks, very much.

Also of Great question well.

Yeah.

As we've said and mentioned on the earnings call of previously.

We are seeing are for G demand levels for our newest generation hotspots.

Selling at higher levels of pre COVID-19. So that is what we're seeing and we see no evidence of that trailing off now I will say this.

The the onset of COVID-19 and the dynamic that played out towards the end of the first quarter drove <unk> revenue.

Which was a combination of both some of our older legacy products that are coming near the end of life as well as our newer generation. Our CAD 22 kept 2022 of the LTE products.

So the dynamic that played out from 2022. This year is a number of those end of life older for <unk> products of just tailed off.

They were sold out their non no longer sold in the market. They were actually reaching the end of life and attract an uptick in demand accelerated the end of life. So that revenue is being substituted now by our newest generation of <unk> products and that's what I referred to as the run rate, we're seeing is higher than <unk>.

The cohort of those and of course now <unk> is coming in for the next software services coming in the next so long story short there is a substitution effect going on in our revenue composition. The good news is what's driving revenue now is our latest generation LTE.

Of that ongoing work from home demand and <unk> and some of the newer products. So we have a fresher newer revenue, that's making up our Q1, and we will make up the quarters going forward.

Okay. Thank you and then.

Yes, as we think about gross margin trends, maybe on a short term is there any component constraints or tighten the inventory creating.

Some gross margin headwinds as you maybe expedite shipments who are trying to track down components.

But then it sounds like over time of software.

And with the mix changing you should you should see gross margins.

Improving pretty steadily.

Out the year.

Yes, I heard the expression called chip again, I don't know if that one's caught on yet but again.

Again, great question, Mike and thanks for the question, it's obviously topical.

So I think for as we said we're doing a good job of we did get out in front.

With the.

The semiconductor dynamic going on with our key partners.

We did advance purchases to secured component supply, which is reflected in some of our use of cash.

And we see this prevailing this condition prevailing I think through the end of this year likely ends of the early part of 2000 to now there is a lot of the a lot of the.

Technology companies are standing up new foundries billions going in so that will be the coverage supply. So far we have not seen but we've not had customer deliveries impacted we've not seen price increases, but having said that having said that.

If that does begin to occur we will go back to our playbook last year were based on the demand.

We've passed on price increases and we would fully expect to do that going forward. So that's the conversation we have other customers, but I think the macro conditions are well understood.

And kind of keep our eye on the ball.

Working working on the forecasting of preplanning spending a lot of time with our customers talking about future demand and with our key silicon suppliers securing supply.

Great last question I'll pass the line just good to see Sunrise, Switzerland, as the new <unk> customer just any commentary on the pipeline for adding new carrier customers for their fixed wireless or overhaul hotspots for <unk> and.

In 2021.

Well, yes.

The American I think we've we've talked about that we're super excited about the fixed wireless opportunities.

In North America throughout the U S and Canada.

Great start having T mobile certified three of our fixed wireless products fantastic all of the conversations we're having around the world involved both hotspot and fixed wireless.

We're adding new carriers, there were pursuing enterprise business.

I would put it all in one category that we expect fixed wireless to the start to take hold in the second half of this year in the big way and I think theres two elements going forward. One is the consumer of the home broadband Entertainment, we think the enterprise with the number of use cases will be an even bigger playbook.

Book for fixed wireless so.

We're spending a lot of effort on both enterprise and working with the carriers tons of Rfps.

Tons of conversations.

I think I think the markets are getting their bearings of how fixed wireless will play hot.

Hotspots really start at first but now its coming on strong.

The good momentum going forward in fixed wireless.

Alright, it sounds encouraging thanks for taking my questions.

Thanks, Mike.

Our next question comes from Glenn <unk> with Cowen and co. Please go ahead.

Thanks, guys for taking the questions.

I guess I have two the first is.

You've got the company on sound footing, but revenue came in a good bit softer than we were looking for it sounds like though you were neither surprised nor disappointed with the revenue performance in the quarter and if Thats correct. It just leads me to think that the problem is two of certain extent around messaging and so understanding of the new <unk>.

Seasoned CFO in place will and CECO adopt financial guidance at any point over the year, if not today, perhaps in conjunction with <unk>.

<unk> earnings this summer.

Yeah, Hey, Lance thanks for the question.

Well as we were coming off and we indicated.

Prior earnings call that we're going to see of lower levels of demand for our <unk> couple of things I mentioned that.

Q1 of last year and early in the Q2 had a number of our older generation.

<unk> USB prior generation of hotspots debt had come end of life. So that's at year over year faster in comparison.

But.

In General then we were now two or five new products ramping up in our <unk> LTE. The latest Gen hotspot products ramping up so as I said earlier in one of the one of the questions I responded to Theres a mix of very different mix. So.

So we saw the <unk>.

First half of this year.

Yeah.

Generally a little lighter because of the post COVID-19. The good news is though the demand level of our LTE hotspot is higher than pre COVID-19.

<unk> is now a layer on top of its not a substitution effect so.

And as that bills as fixed wireless <unk> enterprise kicks in software, we see of build throughout the year and that's our comment of second half stronger than first half on your question on guidance.

We don't think it's prudent at this point in time, we did not provide guidance. There is a lot of dynamics going on in our business.

All of the all the things I, just mentioned which are nicely additive.

As well as the C track South Africa sales, we wanted to get debt behind and then we'll revisit.

Of how we can communicate today for the markets, but we just don't feel it is wise to provide guidance previously we still sales things that were not at the point that that's prudent and we will determine when we feel comfortable in future I think it's important to know that with all of these new products you need there.

Reached kind of a normalized run rate before you have your bearings on what what the what the ongoing revenue look like so a lot of factors behind not providing guidance. It's not that we're not interested in doing it or were just somewhat negative against that in general it's just the dynamics going on the business.

It's just not prudent at this point.

Fair enough. Okay. So then the other question I had Bob I think you had mentioned on your prepared remarks that the <unk> sell through in particular remains strong and that you expect I think if I get it right you expect orders to harmonize going forward. So what I took from that is that the carriers, we're working off inventory in the quarter is that right.

And if that is the case then did you or could you say when you expect to see the benefit of the sort of the replenishment. So.

So to speak is that of is that of <unk> or is that of <unk> or is that of second half of that thanks.

Yes, good question.

Thanks, Yes.

All of them kind of dovetails a bit too.

What Dan just said, we do see those.

The trends continuing.

Almost in perpetuity and specifically depths of Q2.

Trends, but we're also looking forward to building that momentum that will shape more color around the forward look at the while also shape.

Maybe rethinking the terms of quantitative guidance.

<unk>.

All of these trends are not enough.

For all of the West So what we're trying to do is just gauge debt level of momentum debt level of adoption. So we can kind of move forward and articulate more strongly of those details. If that's helpful to you.

Thanks, Yes. It is I appreciate it.

Good day.

Yes, Thanks for I guess, all I would add one other thing by the way.

Our highest our largest five accounts now is T mobile.

It has typically been for this company variety of itself.

Verizon is going on the strong demand level is good it's not of cannibalization by the way of <unk> of <unk>, that's not what's occurring it's additive and T. Mobile is thankfully has jumped out in front of is the largest.

The largest <unk> customer in Q1, and we expect to add more so I think.

The trend is up to the right.

The timing.

We need to work through that and once we get there we will have our bearings of being able to come back with.

Better information.

Okay. Thanks, guys.

Thanks Lance.

Our next question comes from Michael Latimore with Northland Capital. Please go ahead.

Hi, this is other.

On behalf of Mike Latimore could.

Could you tell me how much did international revenue contribute in terms of percentage.

Yes, hi.

Good question, well I guess, just launched very short we don't breakout the.

Composition of revenue.

That way so.

We are growing our international business as you know through none of the carrier win announcements, we've talked about of Western Europe, Japan, Australia out of the places. So international revenue is growing it is still currently of relatively small percentage.

But I think until such time as the re.

This critical mass it was then.

Talk about absolute numbers, but at this point in time, we're not breaking out international revenue.

As a percentage of the business.

Alright, alright.

Yes.

Any idea as to when you might actually expect the <unk> sales to exceed before <unk> sales.

Oh.

I would expect to see that in the back half of this year.

I think we've commented we had a question like the previously on the prior calls so that was the comment I made them.

Same same view change alright, alright.

Alright, alright, thanks, Thank you.

Thanks very much.

Your next question comes from.

Scott Searle with.

Roth capital. Please go ahead.

Hey, good afternoon, thanks for taking my questions.

Dan Bob I Hope you guys are doing well I apologize I got on the call of a little bit late so I apologize. If this is redundant but did you give any mix of breakdown between <unk> and I just heard the prior comment now T. Mobile is your largest <unk> customers T mobile your largest overall customer.

Hey, Scott Great questions, while we did say on the call debt.

<unk> was 20% of total revenue.

And if you combine <unk> and SaaS reached in the neighborhood of 44% of total revenue. So that's just showing the differential.

<unk>.

T mobile isn't yet our largest customers theres, a large run rate of for G.

<unk> sales continue in horizon.

The.

It is however, our largest <unk> customer in terms of new products.

So that's kind of the landscape there.

Good.

And maybe the follow up on the Verizon accounts, there were some issues with the Franklin wireless recall of this quarter I'm wondering if you've seen any pick up related to that do you get any of that opportunity or is your product more high end than them. Using for example of lower end of <unk> solution.

Yes, so great question, they really don't crossover because it fundamentally is exactly as you said our product is of higher end product geared for enterprise.

Some of these other products you mentioned frankly of our so called lower end products. So they really actually don't overlap.

And the target market so.

Franklin is working through these issues.

But again, it's not really a market sector that the pulls on our product.

So.

Frankly of benefits of the way, we would like to see it.

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.

Great. Thanks for great questions to end on thanks, again, everyone for joining us today and tuning in.

For a great start to what we certainly expect to be a fantastic year with with our new revenue streams from five <unk> fixed wireless SaaS and enterprise as the as the main events.

Recurring revenue growth was strong margins. So thanks again, everyone take care everyone.

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

[music].

Hello, and welcome to see go Corp's first quarter 2021 financial results conference call.

Please note that today's event is being recorded.

Participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity for analysts to ask questions.

If you ask the question you May Press Star then one on your telephone keypad.

To withdraw your question. Please press Star then two.

On the call today are day.

Dan Mondor, Chairman and CEO.

Bob Barbarity interim Chief Financial Officer.

Ashish Sharma, President of Iot and mobile solution.

The other members of the management team.

During this call non <unk>.

GAAP financial measures will be discussed a reconciliation of the most directed directly comparable GAAP financial measures is included in the earnings release.

Which is available on the investors section of the company's website and the.

Audio replay of this fall will also be archived 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 of an ER doctors 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. Thank you and Hello, everyone. It's great to be with you today.

Let me begin by saying the today. This company is better positioned than it ever has been on almost every possible measure.

As I look back of our progress over the last few years as CEO was a very different company and a much stronger position.

This is illustrated in our first quarter results compared to last year.

We reported a 120% increase in our combined <unk> and software as the service revenue over last year and gross margins over 35% up over 400 basis points.

We ended the first quarter was approximately $60 million in cash on our balance sheet and zero bank debt.

There are full of predominant reasons for a remarkable transformation.

First we have greatly reduced our customer concentration by expanding our for G and <unk> carrier customer base in the U S and increasingly in the international markets second our rapidly growing software business is yielding recurring higher margin revenue on top of device revenue, which.

Due to our strong gross margins this quarter.

Third carrier customers are embracing our recently launched <unk> fixed wireless access products and we see fixed wireless access as a major growth driver for the company going forward.

Fourth our first enterprise <unk> fixed wireless products were launched and sold this quarter in North America, EMEA and Asia Pacific.

As we enter 2021, we have just announced the biggest win in company history with the launch of our <unk> Mifi hotspot of T mobile, which has quickly become our highest volume five G customer.

T. Mobile has also adopted our in single managed software platform, which adds recurring subscription revenue to those hotspot sales.

We are making solid progress in international markets with some initial <unk> customer deployments with more accounts.

We continue with testing regulatory approvals and customer contracts in multiple regions.

While it is taking a little longer to establish business in new regions. We see international markets is an important growth driver.

It is key for mobile operators to create new revenue streams to generate a return on their capital investment in acquiring spectrum and building national networks.

And it is not only relevant for consumer home broadband and entertainment, but also in the enterprise and private network space.

We believe both are very large market opportunities with a wide range of use cases.

I'm very pleased to report the T. Mobile has certified three of our fixed wireless access products for their enterprise business and we're working closely with them to support customer engagements.

And this is central to our <unk> Enterprise initiative announced late last year and it goes far beyond the work from home market.

<unk> enables new technologies for the enterprise, such as edge AI and edge computing.

We have existing <unk> customers, such as Dell Vmware and other enterprise technology leaders and all of our dialogues as of now include our <unk> product lineup.

<unk> seen recent announcements of our new enterprise products and channel partners in North America, EMEA and Asia Pacific with more to come.

Now, let's turn to our new software as a service offerings all.

Most every conversation we have with carriers and enterprise customers involves our software platforms, which enable them to onboard manage and secure the growing number of <unk> and five day devices on their network through centralized cloud management.

Our SaaS business has grown significantly over the last 12 months, representing a healthy 24% of our revenue in the first quarter.

Our <unk> business continues to be strong and we continue to add new customers.

We saw a surge in demand for our <unk> products starting in March of last year with the pandemic driving the need for work from home solutions.

That helped US win AT&T is for <unk> customer, which means our products are now being sold but all of the largest U S carriers.

While for <unk> down from 2020 levels, we are seeing higher demand levels than we did pre pandemic.

The bottom line is <unk> will remain an important part of our business and its key as we continue the land and expand <unk> customers to <unk>.

We are positioned in seagraves of pure play <unk> company ultimately all of our efforts are aligned on our global <unk> opportunity.

This led us to divest our <unk> fleet tracking business in South Africa, which is not a target market for us.

Finally, I want to address the global semiconductor shortage or.

Our business has not been impacted thus far same store of deep and longstanding direct relationships with key component suppliers. In addition to our manufacturing partners.

Through our proactive approach, we have avoided delay in customer deliveries.

We expect the current conditions will extend through the end of this year and likely into 2022 or.

Our leadership team will continue to work closely with our silicon partners and take necessary actions to secure supply.

With that I will hand off to Ashish, who will go into further detail on our incredible momentum in <unk> and cloud solutions and from groundbreaking customer use cases ashish.

Thank you Dan over the past year, our customers have relied on our innovation index.

For the cloud then adoption through our state of the art <unk> and cloud solutions, while protecting the end users from security threats for.

From my numerous conversations with customers. It is clear that out of <unk> technology, along with other cloud innovations will form a powerful engine for their business transformation the growth as the technology needs continue to evolve at a rapid pace.

From a product revenue perspective, we saw strength in a lot of <unk> mobile broadband portfolio of <unk> managed cloud portfolio, which now accounts for 20% and 24% of our overall business respectively. This combined 44% is up two ex from a year ago.

Product in the market.

We secured another five geo operator, Sunrise in Switzerland, the commercial launch planned for early June.

We also just launched the Mifi 8000 in Canada with Rogers and Fido.

Many of the UK customers in international markets are Trialing of RFID solutions, and we anticipate new launches in the coming months.

Moving to <unk>. The way, we just released a series of new way of makeup products focused in both carrier and enterprise markets, including two indoor activewear products AFG 2000, and then FX 2000 and of rugged outdoor product. The <unk> 2000, and these products are certified for use in many different regions.

Globally and have recently been certified for use on the T Mobile network.

This is a major accomplishment for <unk> CEO of of <unk>.

Focus now is on implementing joint go to market strategies to maximize our success in the early market.

In addition on the enterprise side.

I am happy to report that the of generated our first the makeup of revenue by shipping units to North America, Australia and Europe.

In terms of our enterprise market push we are seeing some exciting use cases, even at this early stage of <unk> deployment.

Let me provide some examples of customer projects, we are working on.

In the area of traffic transportation and logistics.

A global leader in transport solutions is deploying <unk> on land post in the U K to support video streaming the <unk>.

Starting with traffic monitoring, but ultimately the goal is to support of autonomous vehicles of Smart City in Georgia. The Street corners is deploying of our <unk> solutions on the street lights and other locations, we have fiber would not be economically feasible to enable smart traffic control management autonomous vehicles and other.

The use cases.

Global leader in packaged delivery is looking at connecting the moat hubs in depots in rural areas, where cellular reception can be greatly improved with our hygiene products.

Our solutions enable many retailers use cases as well net for limited a system integrator in Europe is connecting of video feed through our <unk> solutions in conjunction with the AI platform.

The objective is to provide a solution for retail stores to monitor shelf stock spillage tap surveillance etcetera.

And the use of leading retail channel is trialling wave maker is the connectivity solution for vaccine distribution locations.

We're also seeing opportunities in the private network space.

The government agency is evaluating rainmaker for secure private networks.

In particular, the use case for them is deploying secure networks and remote areas. The cellular coverage is limited.

The recurring software revenue excluding <unk>.

Dan mentioned earlier AT&T now carries the Mifi 8000, but it is important to note that it will also make an <unk> connect available for enterprise customers. We are seeing this in almost all of our customer dialogues that the technological capabilities of our devices, coupled with our software management layer has the power.

For the combination it.

It is examples like this that give us confidence that the will continue to grow of software beyond its current 24% of total revenue.

Let me conclude with some thoughts on our product portfolio of vision.

Access to corporate data anywhere and everywhere securely has become the beating heart of the new enterprise.

Our <unk> cloud platforms of both with extensive reach massive scale and multiple layers of security the <unk>.

To drive this digital transformation.

Cited about our position of the market the executing and innovating with speed I am so proud of what our five and cloud teams have achieved now I'd like to turn the call over to Bob.

Thanks, Ashish first off let me say, how happy I am to.

To be here on the call with you today.

Given today's my one month anniversary and I have not had the opportunity to speak with many of you. Let me start off the call by introducing myself and offer and why I was attracted to join the CECO Ivo.

High of over 25 years of experience as the senior executive including being the Chief Financial Officer at growth software cloud and technology companies and specifically public companies such as the apogee enterprises.

<unk> software and <unk>.

I was brought on by the Boardman Sego as interim Chief Financial officer with the mandate to support the company's transition to a high growth five G. In the SaaS company.

I would like to now review the results of our first quarter of fiscal 2021, Q1 revenue was $57 $6 million up about one 5% from Q1 of 2020.

We should recall Q1 2020 benefited from the onset of the COVID-19 demand surge, which began in the final weeks of the quarter.

The favorable year over year comparison is largely due to growth of <unk> and software revenue as Dan and Ashish highlighted.

The sequential decline results from a lower level of the surge demand for <unk> hotspots, albeit they are running at higher levels from the pre pandemic activity.

First quarter Iot <unk> mobile solutions revenue was $43 million up one 3% year over year and down 40% from $72 1 million in Q4.

And the <unk> subscriber subscriptions were up 11, 5% sequentially and up 175, 7% year over year, which helped drive the growth versus the prior year.

Sell through of <unk> hotspots continues to be strong and we expect an increase of new shipments in coming quarters.

Units order harmonized with the ongoing demand.

Enterprise SaaS revenue for Q1 was $14 6 million up four 8% quarter over quarter and relatively flat over the prior year.

This will lead to approximately an additional $36 million to our cash balance based upon the current exchange rate.

Speaking of cash balance cash at the end of Q1 was almost $60 million, including cash classified for held for sale up almost $20 million from Q4 of 2020 the.

The increase of our cash balance reflects the net proceeds of $29 4 million from our ATM offering in January.

Solid cash collection offset by our need for higher levels of in transit inventory as we transition from air to Ocean shipments. We're taking these actions to better manage costs as well as buying long lead from components to ensure we can meet customer delivery schedules going forward.

From this point forward I will focus on non-GAAP measures a reconciliation from GAAP to non-GAAP is detailed in our earnings release and is found on our IR web page for <unk>.

<unk> and mobile business gross margin was 26, 1% up 50 basis points from the 25, 6% in the prior quarter and up approximately 560 basis points compared to Q1 of 2020.

Gross margin improved both sequentially and year over year. The result of a higher mix of <unk> managed revenue and the decline of lower margin of <unk> sales from 2020 high as well as solid execution throughout 'twenty, 2020 'twenty, one year to date and improving supply chain efficiency.

Going forward, we expect a higher mix of <unk> and software revenue and new initiatives to improve operational efficiency will lead to better economies of scale, which translate into improved Iot and mobile gross margin steadily as the year progresses.

Our enterprise SaaS solutions gross margin for Q1 was 63, 8% up of 130 basis points from 62, 5% in Q4 and down 20 basis points from prior year.

Total company gross margin for Q1 was 35, 7% up 410 basis points from 31, 6% in Q4 and up 420 basis points from the 31, 5% in Q1 of 2020.

As discussed earlier the increase was predominantly a result of better sales of higher margin <unk> products and software uptake in our Iot and mobile business.

Useful life.

<unk> are testing and certification was lower versus the prior quarter.

Sales and marketing and general and administrative charges remained relatively flat with the delta being largely seasonal changes due to product launches.

Annual audit fees.

Our Q1, non-GAAP net loss was $7 7 million or a negative <unk> <unk> per share versus $6 9 million or a loss of <unk> <unk> per share in the prior quarter and a loss of $5 7 million or six cents a share last year.

This result reflects our ongoing investment in <unk> in the SaaS product development and additional sales resources offset by stronger gross margins.

Adjusted EBITDA for Q1 was the loss of 900000 versus a positive $7 million in Q4, and a loss of one $7 million last year for additional details while non-GAAP and adjusted EBITDA results. Please refer to the reconciliation tables in our press release.

Finally, some thoughts from the rest of 2021.

As stated previously the company continues to believe that the second half of this year will be better than the first day half driven by <unk> sales growth from existing customers, New five G carrier deployments, primarily internationally revenue growth from our entry into the enterprise market and increased software revenue across our product line.

We're bullish due to the many positives that have been articulated today.

With the expected closing of the <unk> South Africa sale at the end of the second quarter, our financials will more accurately reflect the <unk> pure play as mentioned by Dan.

With that let me turn it back to Dan for closing remarks.

Thanks, Bob we are delighted to have you on the <unk> team.

Want to close by expressing my sincere thanks to our dedicated employees, who continue to do an amazing job in these challenging times. They are the driving force behind our numerous accomplishments and I can't thank them enough.

We've made significant investments over the past two years to create the best in class <unk> and software solutions portfolio and in sales and marketing resources to capture significant market opportunities.

These investments have begun to be reflected in our results.

The strength of our portfolio has helped us succeed and initial customer engagements across multiple regions in the developing fixed wireless access market.

With carriers and enterprises.

We have excellent customer relationships and are seeing tremendous traction with our industry, leading <unk> products and new software as the service solutions.

This gives us more confidence than ever in our ability to become the high growth high margin five G and SaaS Global solutions company generating strong free cash flow.

With the strong second half you can only imagine what 2022 will look like thanks again, everyone.

We will now begin the question and answer session.

To ask the question you May Press Star then one on your telephone keypad.

Thank you Youre using a speakerphone please pick up your handset before pressing the Keene.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Hi.

Our first question comes from John Marchetti with Stifel. Please go ahead.

Thanks, very much Dan if I could just a couple of quick questions on the the.

The overall business trends in the in the enterprise you mentioned some of the initial sales that you saw here in Q1, how do we think about that as we start to move through the year.

Contributing to that second half strength, I mean, obviously big focus on <unk> profit.

Products, obviously with mobile hotspots and things of that nature, but how do we think about the enterprise opportunity is that more of 22 of that or or do you think it's a real contributor to that that second half growth outlook you just highlighted.

Yeah, Hi, John Great question, Great question well.

As you know we've just recently launched our our enterprise <unk> portfolio. So is.

It is gaining traction in the market terrific debt.

T mobile for business certified three three of our products indoor and outdoor fixed wireless products.

We're starting to work with the amas market opportunities and then broadly through our our distribution channel that we described in North America, EMEA and APAC. So we see at the beginning to contribute in the second half of it will be of ramp as usual.

But we have.

We have the portfolio, we have the software solutions to go with it.

And the distribution in our target market. So it's the ramp for the second half as we stand and certainly carry of great momentum is what we're expecting to see going into 2002.

And Dan just as a follow up to that is is there a better margin profile with those enterprise.

Yes.

We all know the the enterprise market in general has a different gross margin profile.

There is the benefits of the distribution, but I will say that yes, it is higher than.

If you will the kind of the carrier gross margin profile as far as the fixed wireless access products.

I would expect somewhere in the mid Forty's.

And then maybe just the last question for me and I'll jump back in the queue.

From a software perspective, obviously a lot of it you mentioned.

Yes, Great question. In addition, John Thank you for that well, we're seeing strong attach rates across the board.

As you know and as we announced T. Mobile has adopted our single managed solution as part of the.

The initial five G hotspot deployment AT&T is now adopting and Segal connect to offer to the enterprise customers that as far as part of the or the launch of our new the.

The new <unk> hotspot business with them all of the conversations with the enterprise at all for the right reasons that they they want to look at.

How they can deploy how you acquire and how you manage and how you secure.

The enterprise so.

They don't have the rolling sort of naturally.

A packaged solution.

And we're also seeing an offering we call them <unk> select debt is kind of if you will of bundled offer for.

For for select sales partners that would solve the complete package.

It all kind of in the rental type of model, which will add to recurring revenue good recovery high gross margin. So the answer is bullish.

We're seeing strong interest in attach rates in both carrier and enterprise John.

Thanks very much.

Thank you.

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

Yes.

Alright, Thanks for taking my question I guess first place to start is just.

Good day learn that the <unk> levels are above pre COVID-19 areas, but just trying to get a cadence of.

The work from home and school from anywhere type of.

Surge in demand.

Should we think about the cadence for that business and the overall, maybe Iot <unk> mobile solutions business. This is Q1 of the trough the kind of a seasonally softer quarter and it builds throughout the year or is there still may be a pocket of for the coming out in Q2, and then a stronger second half of the year.

Yeah, Hey, Mike Thanks, very much.

Also of Great question well.

Yeah.

As we've said and mentioned on the earnings call of previously.

We are seeing our <unk> demand levels for our newest generation hotspots.

Selling at higher levels of pre COVID-19. So that is what we're seeing and we see no evidence of that trailing off the I will say this.

The the onset of COVID-19 and the dynamic that played out of towards the end of the first quarter drove for GE revenue.

Which was the combination of both some of our older legacy products that were coming near the end of life as well as our newer generation, our CAD 22, <unk> 2022 of LTE products.

So the dynamic that played out from 2022. This year is a number of those end of life all of the report new products of just tailed off.

They were sold out their non no longer sold in the market. They were naturally reaching the end of life. In fact, an uptick in demand accelerated end of life. So that revenue is being substituted now by our newest generation of <unk> products and that's what I referred to as the run rate, we're seeing is higher than the <unk>.

The COVID-19 of those and of course now <unk> is coming in for the next software services coming in the next so long story short there is a substitution effect going on in our revenue composition of the good news is what's driving revenue now is our latest generation LTE in terms of that ongoing work from home demand.

<unk> <unk> and some of the newer products. So we have a fresher newer revenue, that's making up our Q1, and we will pick up the quarters going forward.

Okay. Thank you and then.

As we think about gross margin trends, maybe on a short term is there any component constraints or tighten the inventory creating.

Maybe some gross margin headwinds as you maybe expedite shipments who are trying to track down components.

But then it sounds like over time with software.

And with the mix changing you should should see gross margins.

Proving pretty steadily.

The year.

That one's caught on yet but.

Again, great question, Mike and thanks for the question, it's obviously topical.

So I think as we said we're doing a good job of we did get out in front.

With the.

The semiconductor dynamic going on with our our key partners.

We did advanced purchases to secure components supply, which is reflected in some of our use of cash.

And we see this prevailing this condition prevailing I think through the end of this year likely end of the early part of 'twenty two.

Lot of the a lot of the.

To our playbook last year were based on the demand.

We have passed on price increases and we would fully expect to do that going forward. So that's the conversation we have other customers, but I think the macro conditions are well understood.

Kevin keep our eye on the ball.

Working working on the forecasting of preplanning spending a lot of time with our customers talking about future demand and with our key silicon suppliers securing supply.

Okay last question remain of I'll pass the line just good to see Sunrise, Switzerland, as the new <unk> customer just any commentary on the pipeline for adding new carrier customers for their fixed wireless or overall hotspots for <unk>.

In 2021.

Well, yes.

The America I think we've we've talked about that we're super excited about fixed wireless opportunities.

In North America throughout the U S and Canada.

Great start having T mobile certified three of our fixed wireless products fantastic all of the conversations we're having around the world involved both hotspot and fixed wireless.

We're adding new carriers, there we're pursuing enterprise business.

I would put it all in one category, we expect fixed wireless to the start to take hold in the second half of this year in the big way and I think theres two elements going forward. One is the consumer of the home broadband Entertainment, we think the enterprise with the number of use cases will be an even bigger playbook.

Playbook for fixed wireless so.

We're spending a lot of effort on both enterprise and working with the carriers tons of Rfps.

Tons of conversations.

I think I think the markets are getting their bearings of how fixed wireless will play hot.

Hotspots really start at first but now its coming on strong.

The good momentum going forward in fixed wireless.

Alright, it sounds encouraging thanks for taking my questions.

Thanks, Mike.

Our next question comes from Glenn <unk> with Cowen and co. Please go ahead.

Thanks, guys for taking the questions.

I guess I have two the first is.

Seasoned CFO in place will and CECO adopt financial guidance at any point over the year, if not today, perhaps in conjunction with <unk>.

<unk> earnings this summer.

Yeah, Hey, Lance thanks for the question.

Well as we were coming off and we indicated.

Prior earnings call that we're going to see of lower levels of demand for <unk>. A couple of things I mentioned that Q1 of last year and early in the Q2 had a number of our older generation <unk>.

<unk> USD prior generation of hotspots that had come end of life. So that's at year over year faster in comparison.

But in.

In General then we were now to our financing products ramping up in our <unk> LTE. The latest Gen hotspot products ramping up so as I said earlier in one of the one of the questions I responded to Theres a mix of very different mix.

So we saw the <unk>.

First half of this year.

Sure.

Generally a little lighter because of the post COVID-19. The good news is though the demand level of our LTE hotspot is higher than pre COVID-19. Five <unk> is now of layer on top of its not a substitution effect. So.

And as that builds as fixed wireless <unk> enterprise kicks in software, we see of builds throughout the year and that's our comment of second half stronger than first half on your question on guidance.

We don't think it's prudent at this point in time, we did not provide guidance, there's a lot of dynamics going on in our business.

All of the all the things I, just mentioned which are nicely additive.

As well as the C track South Africa sales, we wanted to get debt behind and then we'll revisit.

Of how we can can we.

Indicate to the to the markets, but we just don't feel it is wise to provide guidance previously we still sales thinks that we're not at the point that that is prudent and we will determine when we feel comfortable in the future I think it's important to know that with all of these new products you need the reached kind of a normalized run rate.

Before you have your bearings, what what the what the ongoing revenue looked like so a lot of factors behind not providing guidance. It's not that we're not interested in doing it or were just somewhat negative against the general and shifting the dynamic going on the business.

It's just not true at this point.

What I took from that is that the carriers, we're working off inventory in the quarter is that right and if that is the case then did you or could you say when you expect to see the benefit of.

The replenishment sort of.

The speak of that or is that of <unk> or is that of <unk> or is it a second half of that yes.

Yes, good question.

Thanks.

Just kind of dovetails a bit too.

What Dan just said, we do see those trends continuing.

Almost in perpetuity.

Specifically depths of Q2 trends, but we're also looking forward to building that momentum and then that'll shape more color around the forward look at the while also shape.

Maybe rethinking the terms of quantitative guidance so.

All of these trends are.

For all of the West So what we're trying to do is just gauge that level of momentum that level of adoption. So we could kind of move forward and articulate more strongly of those details. If that's helpful to you.

Thanks, Yes. It is I appreciate it.

Okay.

Yes, Thanks for I guess, all I would add one other thing by the way that.

Our highest our largest five accounts now is T mobile.

It has typically been for this company price itself.

The largest <unk> customer in Q1, and we expect to add more so I think the.

Trend is up to the right.

The timing.

We need to work some of that and once we get there we will have our bearings and be able to come back with.

Better information.

Okay. Thanks, guys.

Thanks Lance.

Our next question comes from Michael Latimore with Northland Capital. Please go ahead.

Hi, this is other.

On behalf of Mike Latimore.

Could you tell me how much did international revenue contribute in terms of percentage.

Yes, hi.

Good question, well I guess, just launched very short we don't break out the <unk>.

Composition of revenue.

That way so.

We are growing our international business as you know through none of the carrier win announcements, we talked a lot of Western Europe, Japan, Australia out of the places. So international revenue is growing it is still currently of relatively small percentage.

I think till such time as it reaches critical mass within the <unk>.

Talk about absolute numbers, but at this point in time, we're not breaking out international revenue.

As a percent of the business.

Alright, alright.

Any idea as to when you might actually expect <unk> sales to exceed before <unk> sales.

Oh.

I would expect to see that in the back half of this year.

I think we've commented we had a question like the previously on the prior calls so that was the comment I made them.

Save you no change alright.

Alright, alright, thank you.

Thanks very much.

Our next question comes from.

Scott Searle with Roth capital. Please go ahead.

Hey, good afternoon, thanks for taking my questions.

Dan Bob I Hope you guys are doing well I apologize I got on the call of little bit late so I apologize. If this is redundant but did you give any mix of breakdown between <unk> and I just heard the prior comment now T. Mobile is your largest <unk> customers T mobile your largest overall customer.

Hey, Scott Great questions, while we did say on the call debt.

<unk> was 20% of total revenue.

And if you combine <unk> and SaaS that reached in the neighborhood of 44% of total revenue. So it is just showing the differential.

<unk>.

T mobile is our largest customer of theirs, a large run rate of <unk>.

<unk> sales continue and horizon.

The.

It is however, our largest <unk> customer in terms of new products.

So that's kind of the landscape there.

Good.

And maybe the follow up on the on the Verizon accounts there were some issues with the Franklin wireless recall of this quarter I'm wondering if you've seen any pick up related to that do you get any of that opportunity or is your product more high end than them. Using for example of lower end of <unk> solution.

Yes, so great question, they really don't crossover because its fundamentally is exactly as you said our product is of higher end product geared for enterprise.

Some of these other products you mentioned Franklin, our so called lower end products. So they really actually don't overlap.

And the target markets so.

I guess Franklin is working through these issues.

But again, it's not really a market sector that the pulls on our product.

So.

Frankly of benefits of the way, we would like to see it.

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.

Great. Thanks, well the great questions to end on thanks, again, everyone for joining us today and tuning in.

We're off to a great start to what we certainly expect to be a fantastic year with with our new revenue streams for <unk> fixed wireless SaaS and enterprise as the as the main events.

Recurring revenue growth was strong margins. So thanks again, everyone take care everyone.

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

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