Q2 2024 Inseego Corp Earnings Call

August 7, 2024

Hello and welcome to Inseego Corp's second quarter 2024 financial results conference call. Please note that today's event is being recorded. All participants today will be in a listen-only mode.

Operator: 2024 Financial Results Conference Call. Please note that today's event is being recorded. All participants today will be in a listen-only mode. Should you need assistance, please signify conference specialist by pressing the star key followed by zero.

Operator: Please note that today's event is being recorded. During this call, certain non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available in the investor section of the company's website.

Operator: Note that today's event is being recorded. All participants today will be in a listen-only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity for questions and answers. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity for questions and answers. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

After today's presentation, there will be an opportunity for questions and answers. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Operator: On the call today are Phil Brace, Executive Chairman of Inseego's Board of Directors, and Steven Gatoff, the company's Chief Financial Officer. During this call, certain non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable gap financial measures is included in the earnings release, which is available on the investor section of the company's website. An idea replay of this call will also be archived there.

Operator: On the call today are Phil Brace, Executive Chairman of Inseego's Board of Directors, and Steven Gatoff, the company's Chief Financial Officer. During this call, certain non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the investor section of the company's website. An audio replay of this call will also be archived there.

Speaker Change: On the call today are Phil Brace, Executive Chairman of Inseego's Board of Directors, and Steven Gatoff, the company's Chief Financial Officer.

During this call, certain non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the investor section of the company's website.

An audio replay of this call will also be archived there.

Operator: Please also be advised that today's discussion will contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on the company's current expectations and beliefs. For a discussion on factors that could cause actual results to differ materially from the expectations, please refer to the risk factors described in the company's Form 10-K, 10-Q, and other SEC filings, which are available on the company's website. Please also refer to the cautionary note regarding forward-looking statement section contained in today's press release.

Operator: Please also be advised that today's discussion will contain forward-looking statements. These forward-looking statements are not historical facts but rather are based on the company's current expectations and beliefs. For a discussion on factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in the company's Form 10-K, 10-Q, and other SEC filings, which are available on the company's website. Please also refer to the cautionary note regarding forward-looking statements section contained in today's press release. With that, I'd like to turn the call over to Phil Brace, Executive Chairman of Inseego. Please go ahead.

Speaker Change: Please also be advised that today's discussion will contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on the company's current expectations and beliefs.

Speaker Change: For a discussion on factors that could cause actual results to differ materially from the expectations, please refer to the risk factors described in the company's Form 10-K , 10-Q, and other SEC filings, which are available on the company's website.

Speaker Change: Please also refer to the Cautionary Note regarding forward-looking statements section contained in today's press release.

Phil Brace: With that, I'd like to turn the call over to Phil Brace, Executive Chairman of Inseego. Please go ahead.

Phil Brace: with that i'd like to turn the call over to phil brace executive chairman of an cego please go ahead

Phil Brace: Thank you, operator.

Philip Brace: Thank you all for being here. Good afternoon.

Phil Brace: Good afternoon, everyone. It's a pleasure to be with you today. I'd like to cover three topics for you today. First, I'd like to provide a high-level view of the Q2 results. Second, I'd like to share a high perspective on the accomplishments that we made in improving our capital structure. And third, I'll comment on the current quarter and focus areas.

Philip Brace: It's a pleasure to be with you today. First, I'd like to provide a high-level view of the Q2 results. Second, I'd like to share my perspective on the accomplishments that we have made in improving our capital structure, and third, I'll comment on the current quarter and focus. I'll then turn the call over to Stephen, and we'll wrap up with.

Phil Brace: thankdraw peratater good afternoon and one

Phil Brace: It's a pleasure to be with you today.

Philip Brace: Q2 2024 was a very strong quarter for Inseego, and revenue came in at $59 million, above our guidance. Moreover, the effects of the previously discussed renewal of our subscribed management platform at a major customer base. Q1 adjusted EBITDA came in at $8.3 million, which was also better than expected, and was driven by a strong gross margin percentage and solid OPEX control. During the quarter, the company continued to add leadership capability to the teams and both new sales and operations executives, and you're already seeing the impact of these additions.

Speaker Change: I'd like to cover three topics with you today.

Speaker Change: First, I'd like to provide a high-level view of the Q2 results.

Phil Brace: Second, I'd like to share my perspective on the accomplishments that we made improving our capital structure. And third, I'll comment on the current quarter and focus areas.

Phil Brace: I'll then turn the call over to Steven, and we'll wrap up with some Q&A. Q2, 2024 was a very strong quarter for Inseego. Revenue came in at $59 million above our guidance and helped by strong euro-be-your-growth in our mobile business and the effects of the previously discussed renewal of our subscribe management platform at a major customer. Q1 adjusted even that came in at 8.3 million, which was also better than expected and was driven by a strong growth margin percentage and solid up-ex control. During the quarter, the company continued to add leadership ability to the teams and both new sales and operations executives, and we were already seeing the impact of these additions.

Phil Brace: I'll then turn the call over to Stephen and we'll wrap up with some Q&A.

Phil Brace: Q2 2024 was a very strong quarter for Inseego.

Phil Brace: Revenue came in at $59 million above our guidance and helped by strong year-over-year growth in our mobile business and the effects of the previously discussed renewal of our subscribed management platform at a major customer.

Philip Brace: Q1 adjusted EBITDA came in at $8.3 million, which was also better than expected, and was driven by a strong gross margin percentage and solid OPEX control that resulted in restructuring the majority of our outstanding debt for a mixture of cash, new favorable long-term debt, common equity, and warrants. This is a very positive outcome for the company, and we received strong support from our largest bondholders and our largest stockholders. While we still have some work to do, I'm very pleased with the progress today. What I'd like to mention briefly is our CEO. The board and I are taking a deliberate and methodical approach to the search.

Speaker Change: Q1 adjusted EBITDA came in at $8.3M, which was also better than expected, and was driven by a strong gross margin percentage and solid OPEX control.

Speaker Change: During the quarter the company continued to add leadership capability to the teams in both new sales and operations executives and you're already seeing the impact of these additions.

Phil Brace: During the quarter, we made significant progress on addressing our capital structure. Improved financial performance enabled a series of transactions that resulted in restructuring the majority of her outstanding convert for a mixture of cash, new favorable long-term debt, common equity, and wants. This is a very positive outcome for the company, and we received strong support from our largest bondholders and our largest stocks. As Stephen will talk about his prepared remarks, the pro-forming impact on these transactions resulted in significantly less debt and a very manageable leverage profile. While we still have some work to do, I'm very pleased with the progress today.

Philip Brace: During the quarter, we made significant progress on addressing our capital structure. Improved financial performance enabled a series of transactions. That resulted in restructuring the majority of our outstanding convertible bonds for a mixture of cash, new favorable long-term debt, common equity, and warrants. This is a very positive outcome for the company, and we received strong support from our largest bondholders and our largest stockholders. As Stephen will talk about in his prepared remarks, the pro forma impact of these transactions results in significantly less debt and a very manageable leverage profile.

Speaker Change: During the quarter, we made significant progress on addressing our capital structure.

Phil Brace: Improved financial performance enabled a series of transactions that resulted in restructuring the majority of our outstanding convert for a mixture of cash, new favorable long-term debt, common equity, and warrants.

Speaker Change: This is a very positive outcome for the company and we received strong support from our largest bondholders and our largest stockholders.

Phil Brace: As Stephen will talk about in his prepared remarks, the pro forma impact from these transactions results in significantly less debt and a very manageable leverage profile.

Philip Brace: While we still have some work to do, I'm very pleased with the progress today. What I'd like to mention briefly is our CEO. As you saw earlier in the week, in our filing, I was pleased to extend my term as Executive Chairman of the Board in order to provide some time to finish the restructure work as well as continue supporting the good momentum in the business. The board and I are taking a deliberate and methodical approach to the search. The company is currently working well, and I have excellent engagement with the executive team and the board to drive things forward on this last run.

Stephen: While we still have some work to do, I'm very pleased with the progress today.

Phil Brace: I'd like to mention briefly this, our CO search. As you saw earlier in the week, in our filing, I was pleased to extend my term as Executive Chairman of the Board in order to provide some time to finish the restructure work, as well as continue supporting the good momentum in the business. The Board and I are taking a deliberate and methodical approach to the search. The company is currently working well, and I have an excellent engagement with the executive team and the Board to drive things forward. On this last front, the outlook for the quarter is for continued year-over-year growth in revenue, profit, and cash generation.

Stephen: i'd like to mention briefly our cecoo search

Speaker Change: As you saw earlier in the week,

Phil Brace: In our filing, I was pleased to extend my term as Executive Chairman of the Board in order to provide some time to finish the restructure work as well as continue supporting the good momentum in the business.

Philip Brace: The company is currently working well, and I have an excellent engagement with the executive team and the board to drive things forward. With that, I'd like to thank Stephen and Inseego, who work every day to make these things happen. With that, let's start with our Q2 results. As highlighted above, total revenue came in well above guidance at $59.1 million. Revenue grew sequentially over Q1 by more than $14 million, or 31%. And, for the first time in nearly three years, total revenue grew year over year, coming in at a positive 10% over Q2 2023. Two, growth in our subscribed SaaS offering from the contract renewal that went into effect April 1st and that we also mentioned last call.

Speaker Change: The board and I are taking a deliberate and methodical approach to the search.

Speaker Change: the company is currently working well and i have an excellent engagement with the execut team and the board to drivetingthings forward

Philip Brace: The outlook for the quarter is for continued year-over-growth in revenue, profit, and cash generation. On the product front, our next-generation products are well in development, which I believe will continue to advance our capabilities and provide increased value to our customers. With the new capital structure, improved financial performance, a strong Product Roadmap, and a Large Growing Market, the future for Inseego is bright. With that, I'd like to thank Steven and Inseego, who work every day to make these things happen. I'm glad to take any questions in a few minutes, but right now, I'd like to pass a call on. Thanks, Phil. Good afternoon, everyone.

Speaker Change: On this last front, the outlook for the quarter is for continued year-over-growth in revenue, profit, and cash generation.

Phil Brace: On the product front, our next generation products are well in development, which I believe will continue to advance our capabilities and provide increased value to our customers. With the new capital structure, improved financial performance, a strong product roadmap, and large growing markets. The future for Inseego is bright. With that, I'd like to thank Team Inseego, who worked every day to make this happen.

Phil Brace: On the product front, our next generation products are well in development, which I believe will continue to advance our capabilities and provide increased value to our customers.

Speaker Change: with the new capital structure and proved financial performance

Speaker Change: A Strong Product Roadmap and Large Growing Markets.

Phil Brace: The future for Inseego is bright.

Speaker Change: With that, I'd like to thank Stephen and Inseego who worked every day to make these things happen.

Phil Brace: I'm glad to take any questions in a few minutes, but right now, I'd like to pass the call over to Stephen.

Phil Brace: I'm glad to take any questions in a few minutes, but right now I'd like to pass the call over to Steven.

Steven Gatoff: I look forward to covering three things with you today. First, I'll take you through the details of our Q2 2024 financial results. Second, I'd like to share some more information on the important transactions that we executed to restructure our convertible notes and improve our capital structure. And third, I'll provide some color on the business and guidance for Q3. As Phil mentioned, as we always do, we'll, of course, wrap up by opening the call to your questions.

Steven Gatoff: Thanks, Phil.

Steven Gatoff: Good afternoon, everyone. I look forward to covering three things with you today. First, I'll take you through the details of our Q2 2024 financial results. Second, I'd like to share some more information on the important transactions that we executed to restructure our convertible notes and improve our capital structure. Third, I'll provide some color on the business and guidance for Q3. As Phil mentioned, as we always do, we'll of course wrap up by opening the call to your questions.

Steven Gatoff: Thanks, Phil. Good afternoon, everyone.

Steven Gatoff: I look forward to covering three things with you today. First, I'll take you through the details of our Q2.

Steven Gatoff: 2024 financial results, second.

Speaker Change: i'd like to share some more information on the important transactions in act that we executed

Steven Gatoff: to restructure our convertible notes and improve our capital structure, and third, I'll provide some color on the business and guidance.

Speaker Change: for q three as still mentioned as we always do will of course wrap up by opening the call to your questions

Philip Brace: Looking at FWA product revenue that came in at essentially the average of the past several quarters, a last-time 4G buy helped shore up the quarter as our newly implemented channel program takes some time to ramp up, and our new team builds pipeline and drives their initiatives in the space. Rounding out services and other revenue, our telematics business came in at a consistent and record high level, as it did in the previous quarter, on good continued global demand and execution in the business.

Steven Gatoff: With that, let's start with our Q2 results. As highlighted above, total revenue came in well above guidance at $59.1 million. Revenue grew sequentially over Q1 by more than $14 million, or 31%. And for the first time in nearly three years, total revenue grew year over year, coming in at a positive 10% over Q2 2023. The two primary growth drivers were one, strong performance in the carrier mobile hotspot business on the product side, where Q2 revenue was up 37% year-over-year on our carrier partner MiFi Promotion that we mentioned on the last call.

Steven Gatoff: With that, let's start with our Q2 results. Phil highlighted, total revenue came in well above guidance at $59.1 million. Revenue grew sequentially over Q1 by more than $14 million or 31%. And for the first time in nearly three years, total revenue grew year over year, coming in at positive 10% over Q2 2023. The two primary growth drivers, or one, strong performance in the carrier mobile hotspot business on the product side, where Q2 revenue was up 37% year over year on our carrier partner MyFi promotion that we mentioned on the last call. And two, growth in our subscribe SaaS offering from the contract renewal that went into effect April 1st, and that we also mentioned last call.

Speaker Change: With that, let's start with our Q2 results. Still highlighted, total revenue came in well above guidance at $59.1 million. Revenue grew sequentially over Q1 by more than $14 million, or 31%, and for the first time in nearly three years.

Speaker Change: Total revenue grew year over year, coming in at positive 10% over Q2 2023.

Speaker Change: The two primary growth drivers were one, strong performance in the carrier mobile hotspot business on the product side, where Q2 revenue was up 37% year-over-year on our carrier partner MiFi Promotion that we mentioned on the last call.

Steven Gatoff: And two, growth in our subscribed SaaS offering from the contract renewal that went into effect April 1st, and that we also mentioned last call. Looking at FWA product revenue, which came in at essentially the average of the past several quarters.

Speaker Change: and 2. growth in our subscribed SaaS offering from the contract renewal that went into effect April 1st and that we also mentioned last call.

Steven Gatoff: Looking at FWA product revenue that came in at essentially the average of the past several quarters. A last time for GBI helped shore up the quarter as our newly implemented channel program takes some time to ramp up and our new team builds pipeline and drives their initiatives in the space. Rounding out services and other revenue, our telematics business came in at a consistent and record high level, as it did in the previous quarter, on good continued global demand and execution in the business. We went on to Gross Margin. Q2 Gross Margin percentage came in at 39% on a non-GAAP basis, consistent with a prior quarter and among the highest level in the past two years.

Speaker Change: Looking at FWA product revenue that came in at essentially the average of the past several quarters.

Steven Gatoff: A last-time 4G buy helped shore up the quarter as our newly implemented channel program takes some time to ramp up and our new team builds pipeline and drives their initiatives in the space. Rounding out services and other revenue, our telematics business came in at a consistent and record high level as it did in the previous quarter on good continued global demand and execution in the business. Moving on to gross margin, Q2 gross margin percentage came in at 39% on a non-GAAP basis, consistent with the prior quarter and among the highest levels in the past two years, looking at non-GAAP operating expenses, although a slight uptick in sequential spend from Q1.

Speaker Change: a last time for g by hel shre up the quarter as our newly implemented channel program takes some time to ramp up and our new team builds pipeline and drives their initiatives in the space

Speaker Change: rounding out services and other revenue our telematics business came in at a consistent and record high level as it date of the previous quarter on good continued global demand and execution in the business

Philip Brace: Moving on to Gross Margin, Q2 Gross Margin came in at 39% on a non-GAAP basis, consistent with the prior quarter and among the highest levels in the past two years, while a slight uptick in sequential spend from Q1. Sound expense management and efficiency efforts saw Q2 total OPEC spend come in lower than it was year over year, both in terms of aggregate dollars and as a percentage of revenue.

Speaker Change: on to gross margin q two gth margin percentage came in at thirty-nine percent on a non-gaap basis consistent with a prior quarter and among the highest level in the past two years

Steven Gatoff: Looking at non-GAAP operating expenses while a flight uptick in sequential spend from Q1, sound expense management and efficiency efforts saw Q2 total op-x spend come in lower than it was year-over-year, both in terms of aggregate dollars and as a percentage revenue. Op-x was 32% of revenue in Q2, 2024, down favorably from 39% in the prior quarter and down favorably from 37% sequentially in Q2 of 2023. You'll be your budget. We realize efficiencies on a percentage of revenue basis in all areas of op-x and Q2 from sales and marketing to R&D to GNA. It's notable that this strong expense outcome was achieved even after including in a cruel this quarter for an annual cash and incentive bonus for the terrific Enseego employee banks.

Speaker Change: Looking at non-GAAP operating expenses.

Speaker Change: while a flight uptick in sequential spend from q one sound expense management and efficiency efforts saw q two total opex spend come in lower than it was year-over-year both in terms of aggregate dollars and as a percentage of revenue

Steven Gatoff: Sound expense management and efficiency efforts saw Q2 total OPEC spend come in lower than it was year over year, both in terms of aggregate dollars and as a percentage of revenue. UpEx was 32% of revenue in Q2 of 2024, down favorably from 39% in the prior quarter and down favorably from 37% sequentially in Q2 of 2020.

Philip Brace: UpEx was 32% of revenue in Q2 2024, down favorably from 39% in the prior quarter and down favorably from 37% sequentially in Q2 of 2021. We realize efficiencies on a percentage of revenue basis in all areas of OPEX and Q2, from sales and marketing, to R&D, to G&A. We shared a bit about this on the last call, and as far as it being new incremental spend this year, noting that cash bonus expense hasn't been included or paid in the past several years.

Speaker Change: opex was thirty-two percent of revenue in q two two thousand and twenty-four down favorably from thirty-nine percent in the prior quarter and down favorably from thirty-seven percent sequentially in q two of twenty

Steven Gatoff: Year over year, I apologize. We realize efficiencies on a percentage of revenue basis in all areas of OPEX and Q2, from sales and marketing to R&D to G&A. It's notable that this strong expense outcome was achieved even after including an accrual this quarter for an annual cash incentive bonus for the Torefic Inseego employee base. We shared a bit about this on the last call, and as far as it being new incremental spend this year, noting that cash bonus expense hasn't been included or paid in the past several years. Now it will be, and it is self-funded.

Speaker Change: We realize efficiencies on a percentage of revenue basis in all areas of OPEX and Q2, from sales and marketing to R&D to G&A.

Speaker Change: it's notable that this strong expense outcome was achieved even after including in accruual this quarter for an annual cash andinsenate bonus for the terrific and ceo employee m

Steven Gatoff: We shared a bit about this on the last call, and so far as it being a new incremental spend this year. Noting the cash bonus expense hasn't been included or paid in the past several years. Now it will be, and it is self-funded. Putting this all together, the favorable revenue performance and focused operating expense management resulted in Q2 adjusted EBITDA dollars coming in at more than double the prior Q1 quarter at $8.4 million and at a record high margin of 14%. It was also the sixth consecutive quarter of positive adjusted EBITDA. His improved operating results allowed us to deliver GAAP operating and net income for the first time in more than five years.

Speaker Change: We shared a bit about this on the last call, and so far as it being new incremental spend this year, noting that cash bonus expense hasn't been included or paid in the past several years. Now it will be, and it is self-funded.

Philip Brace: Now it will be, and it is self-funded, to the advantageous April 2024 $15 million upfront payment on the multi-year subscribed FAFSA contract renewal that we mentioned. And three, as I'll talk about more in a few minutes, there was a tiny benefit from the short-term loan that we took out to repurchase a large convertible bondholder at a discount that funded $16.5 million on that Friday, June 28th, the last business day in June.

Steven Gatoff: Putting this all together, the favorable revenue performance and focused operating expense management resulted in Q2 adjusted EBITDA dollars coming in at more than double the prior Q1 quarter at $8.4 million, and at a record high margin of $14 billion. It was also the sixth consecutive quarter of positive adjusted EBITDA. These improved operating results allowed us to deliver GAAP operating and net income for the first time in more than five years. Wrapping up our Q2 results with a balance, cash improved meaningfully from Q1, coming in at $49 million at June 30th. Our cash on hand benefited from three positive dynamics.

Speaker Change: Putting this all together, the favorable revenue performance and focused operating expense management resulted in Q2 adjusted EBITDA dollars coming in at more than double the prior Q1 quarter at $8.4 million and at a record high margin of 14%.

Speaker Change: It was also the 6th consecutive quarter of positive adjusted EBITDA.

Speaker Change: These improved operating results allowed us to deliver GAP operating and net income for the first time in more than five years.

Steven Gatoff: Rapping up our Q2 results with a balance sheet. Cash improved meaningfully from Q1, coming in at $49 million at June 30. Our cash on hand benefited from three positive dynamics. One, the ongoing higher profitability and net cash generation of the business in Q2. Two, the advantageous April 2024 $15 million upfront payment on the multi-year subscribe fast contract renewal that we mentioned. And three, as I'll talk about more in a few minutes, there was a timing benefit from the short-term loan that we took out to repurchase a large convertible bond holder at a discount that funded $16.5 million on that Friday, June 28th, the last business day of June.

Speaker Change: Wrapping up our Q2 results with a balance sheet.

Speaker Change: Cash improved meaningfully from Q1, coming in at $49 million at June 30th. Our cash on hand benefited from three positive dynamics.

Steven Gatoff: One, the ongoing higher profitability and net cash generation of the business, to the advantageous April 2024 $15 million upfront payment on the multi-year subscribed FAFSA contract renewal that we mentioned. And three, as I'll talk about more in a few minutes, there was a tiny benefit from the short-term loan that we took out to repurchase a large convertible bondholder at a discount that funded $16.5 million on that Friday, June 28, the last business day in June.

Speaker Change: 1. The Ongoing Higher Profitability and Net Cash Generation of the Business

Speaker Change: The advantageous April 2024 $15 million upfront payment on the multi-year subscribed SAF contract renewal that we mentioned.

Speaker Change: and three, as I'll talk about more in a few minutes,

Speaker Change: There was a tiny benefit from the short-term loan that we took out to repurchase a large convertible bondholder at a discount that funded $16.5 million on that Friday, June 28th, the last business day of June .

Steven Gatoff: Accordingly, that funded loan cash shows up on our balance sheet at the June quarter end. With the $32 million purchase of the bonds occurring on the next business day on Monday, July 1st, that use of cash and the resulting reduction of debt was technically in Q3 and will be reflected in our Q3.24 balance. As we also discussed briefly on our last call, as a subsequent event, in Q2 we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility. This action had a number of benefits, including freeing up capital and providing good operating flexibility, and that enabled us to enter into the various transactions to address our convertible bonds.

Steven Gatoff: Accordingly, that funded loan cash shows up on our balance sheet at the June quarter end, with the $32 million purchase of the bonds occurring on the next business day, on Monday, July 1st. That use of cash and the resulting reduction of debt was technically in Q3 and will be reflected in our Q3 2024 balance sheet. As we also discussed briefly on our last call as a subsequent event, in Q2, we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility.

Speaker Change: Accordingly, that funded loan cash shows up on our balance sheet at the June quarter end.

Speaker Change: With the $32 million purchase of the bonds occurring on the next business day, on Monday, July 1st.

Philip Brace: That use of cash and the resulting reduction of debt was technically in Q3 and will be reflected in our Q3 2024 balance sheet. In Q2, we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility. And, with the convertible notes now being due within a year, you'll see them presented in the short-term liability section of the balance sheet. The good news is clearly that we purchased or refinanced nearly 90% of the bonds, and with the support from some of our largest and longest-standing stakeholders, we achieved a solid outcome.

Speaker Change: That use of cash and the resulting reduction of debt was technically in Q3 and will be reflected in our Q3 2024 balance sheet.

Speaker Change: As we also discussed briefly on our last call as a subsequent event, in Q2 we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility.

Steven Gatoff: This action has a number of benefits, including freeing up capital and providing good operating flexibility, which enabled us to enter into the various transactions to address our convertible bonds. The final point to make on the balance is that with the convertible notes now being due within a year, you'll see them presented in the short-term liability section of the balance sheet. The good news is clearly that we purchased or refinanced nearly 90% of the bonds, and with the support from some of our largest and longest-standing stakeholders, we achieved a solid outcome.

Speaker Change: This action has a number of benefits.

Speaker Change: Including freeing up capital and providing good operating flexibility and that enabled us to enter into the various transactions to address our convertible bonds.

Steven Gatoff: The final point to make on the balance sheet is that, with the convertible notes now being due within a year, you'll see them presented in the short-term liability section of the balance sheet. The good news is clearly that we purchased or refinanced nearly 90% of the bonds, and with the support from some of our largest and longest standing stakeholders, we achieved a solid outcome.

Speaker Change: The final point to make on the balance sheet is that with the convertible notes now being due within a year, you'll see them presented in the short-term liability section of the balance sheet.

Speaker Change: The good news is clearly that we purchased, or refinanced, nearly 90% of the bonds. And, with the support from some of our largest and longest standing stakeholders, we achieved a solid outcome.

Steven Gatoff: With that, let's move on to my second topic and look at the convertible note restructuring and capital structure improvements that we accomplished in the past few months. As you heard of, say, over the past several quarters, we've been methodical about driving a thoughtful and optimized outcome for our stockholders and relevant stakeholders in restructuring the convertible notes and reducing our overall debt levels. This has been a multi-step process with a lot of considerations. Over the past 75 days, we engaged with all of the top 10 holders of the convertible notes, and we have either purchased or entered into binding agreements to exchange the remaining bonds for long-term debt and/or equity that covers $142 million, or 88% of the $162 million in face value of the bonds.

Speaker Change: With that, let's move on to my second topic and look at the convertible note restructuring and capital structure improvements that we accomplished in the past few months.

Speaker Change: As you heard us say over the past several quarters, we've been methodical about driving a thoughtful and optimized outcome for our stockholders and relevant stakeholders in restructuring the convertible notes and reducing our overall debt levels.

Philip Brace: This has been a multi-step process with a lot of consideration, resulting in an even lower leverage ratio of less than three times. This is a meaningful reduction in debt and a far more appropriate leverage profile for the company. That means that upon their exercise, the company will receive approximately $32 million in cash proceeds, a further enhancement of liquidity and financial flexibility. We're pleased to have executed these transactions and accomplished a meaningful reduction of debt and right-sizing of our capital structure.

Speaker Change: This has been a multi-step process with a lot of considerations.

Steven Gatoff: We engaged with all of the top ten holders of the convertible notes, and we have either purchased or entered into binding agreements to exchange the remaining bonds for long-term debt and or equity that covers $142 million or 88% of the $162 million in face value of the bond. Pro Forma for these transactions. There is only $19.9 million of convertible notes remaining outstanding, with new long-term debt of $36.6 million and a short-term loan of $19.5 million. That brings Proforma's total debt to $76 million on LTM adjusted EBITDA of approximately $20 million; our Proforma NetDev is an even lower leverage ratio of less than three times.

Speaker Change: Over the past 75 days,

Speaker Change: We engaged with all of the top ten holders of the convertible notes.

Speaker Change: and we had either purchased or entered into binding agreements to exchange the remaining bonds

Speaker Change: for long-term debt and or equity that covers one one hundred and forty two million dollars or eighty eight percent of that one hundred sixty two million dollars and face value of the bonds

Steven Gatoff: Proforma for these transactions, there was only $19.9 million of convertible notes remaining outstanding, with new long-term debt of $36.6 million and a short-term loan of $19.5 million. That brings proforma total debt to $76 million on LTM adjusted EBITDA of approximately $20 million. Our proforma net debt is an even lower leverage ratio of less than three times. This is a meaningful reduction in debt and a far more appropriate leverage profile for the company. As a final note on the debt restructuring, we want to also call out an advantageous feature that we were successful at structuring. As part of these transactions, the warrants that were issued to bondholders who exchanged their convertible bonds for new long-term debt and equity are cash pay.

Speaker Change: pro forma for these transactions there is only nineteen point nine million dollars of convertible notes remaining outstanding

Speaker Change: with new long-term debt of $36.6 million and a short-term loan of $19.5 million.

Speaker Change: That brings Proforma total debt to $76 million on LTM adjusted EBITDA of approximately $20 million.

Speaker Change: Our pro forma net debt is an even lower leverage ratio of less than three times.

Speaker Change: This is a meaningful reduction in debt and a far more appropriate leverage profile for the company.

Steven Gatoff: This is a meaningful reduction in debt and a far more appropriate leverage profile for the company. As a final note on the debt restructuring, we wanted to also call out an advantageous feature that we were successful in structuring. As part of these transactions, the warrants that were issued to bondholders who exchanged their convertible bonds for new long-term debt and equity are cash paid.

Speaker Change: as a final node on the debt restructuring

Speaker Change: We wanted to also call out an advantageous feature that we were successful in structuring. As part of these transactions, the warrants that were issued to bondholders who exchanged their convertible bonds for new long-term debt and equity are cash pay.

Steven Gatoff: That means that upon their exercise, the company will receive approximately $32 million, and cash proceeds a further enhancement of liquidity and financial flexibility. We're pleased with executed these transactions and accomplish a meaningful reduction of debt and right size in our capital structure. Adding that positive dynamic to our profitable operations, free cash flow generation, and continuing growth. We see the company as now very well-positioned and financially strong to support driving further stockholder value.

Steven Gatoff: That means that upon their exercise, the company will receive approximately $32 million in cash proceeds, a further enhancement of liquidity and financial flexibility. We're pleased to have executed these transactions and accomplished a meaningful reduction of debt and rightsizing of our capital structure. Adding that positive dynamic to our profitable operations, free cash flow generation, and continuing growth, we see the company as now very well positioned and financially strong to drive further stockholder value.

Speaker Change: That means that upon their exercise, the company will receive approximately $32 million in cash proceeds, a further enhancement of liquidity and financial flexibility.

Speaker Change: We're pleased to have executed these transactions and accomplished a meaningful reduction of debt and right-sizing of our capital structure.

Speaker Change: Adding that positive dynamic to our profitable operations, free cash flow generation and continuing growth, we see the company as now very well positioned and financially strong to support driving further stockholder value.

Steven Gatoff: So, with that, let's turn to the third topic on what we're seeing in the business, the current quarter, and provide our guidance for Q3. Overall, we're bullish on delivering revenue growth and expect to continue to show improvements in terms of year-over-year performance. On mobile broadband, we have good visibility and confidence in our ability to deliver robust year-over-year growth again in Q3, as we're continuing to drive our mobile broadband products through our large carrier partner promotion. We'll see the extent to which Q3 yields the same robust quarterly results that Q2 produced. On FWA, we continue to invest in building pipeline and the overall channel program and expect marginally lower FWA revenue in Q3, considering the FWA last time 4G by, I mentioned, that occurred in Q2.

Steven Gatoff: So with that, let's turn to the third topic of what we're seeing in the business in the current quarter and provide our guidance for Q3. Overall, we're bullish on delivering revenue growth and expect to continue to show improvements in terms of year-over-year performance. On mobile broadband, we have good visibility and confidence in our ability to deliver robust year-over-year growth again in Q3 as we're continuing to drive our mobile broadband products through our large carrier partner promotion.

Speaker Change: So with that, let's turn to the third topic on what we're seeing in the business in the current quarter and provide our guidance for Q3.

Speaker Change: Overall, we're bullish on delivering revenue growth and expect to continue to show improvements in terms of year-over-year performance.

Speaker Change: On mobile broadband, we have good visibility and confidence in our ability to deliver robust year-over-year growth again in Q3 as we're continuing to drive our mobile broadband products through our large carrier partner promotion.

Philip Brace: We'll see the extent to which Q3 yields the same robust quarterly results as Q2. On FWA, we continue to invest in building the pipeline and the overall channel program and expect marginally lower FWA revenue in Q3, considering the FWA last-time 4G buy I mentioned that occurred in Q2. Noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and others will be the ultimate determination. And so, considering all this, we're providing the following guidance for Q3 2024.

Steven Gatoff: We'll see the extent to which Q3 yields the same robust quarterly results as Q2. On FWA, we continue to invest in building the pipeline and the overall channel program and expect marginally lower FWA revenue in Q3, considering the FWA last-time 4G buy I mentioned that occurred in Q2. On services and other revenue, we expect to have another solid quarter in Q3 and come in at levels consistent with Q2 2020-24 on a dollar basis.

Speaker Change: We'll see the extent to which Q3 yields the same robust quarterly results that Q2 produced.

Speaker Change: On FWA, we continue to invest in building pipeline and the overall channel program and expect marginally lower FWA revenue in Q3, considering the FWA last-time 4G buy I mentioned that occurred in Q2.

Steven Gatoff: On services, another revenue, we expect to have another solid quarter in Q3, and come in at levels consistent with Q2 2020-24 on a dollar basis. And so far as gross margin, Q3 2020-24 non-GAAP gross margin percentage is expected to be relatively consistent with the prior Q2. Noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and other will be the ultimate determinant. Q3 non-GAAP operating expenses are expected to be relatively flat over Q2 in the $19 million range.

Speaker Change: On services and other revenue, we expect to have another solid quarter in Q3 and come in at levels consistent with Q2 2020-24 on a dollar basis.

Steven Gatoff: And so far as gross margin, the Q3 2024 non-GAAP gross margin percentage is expected to be relatively consistent with the prior Q2. However, noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and others will be the ultimate determination. Q3 non-GAAP operating expenses are expected to be relatively flat over Q2 in the $19 million range. And so, considering all this, we're providing the following guidance for Q3 2024. Total revenue is in the range of $54 million to $58 million, and adjusted EBITDA is in the range of $6.5 million to $7.5 million.

Speaker Change: and sabars gross margin q three two thousand and twenty four non-gaap gross margin percentage is expected to be relatively consistent with the prior q two

Speaker Change: Noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and other will be the ultimate determinant.

Speaker Change: Q3 non-GAAP operating expenses are expected to be relatively flat over Q2 in the $19 million range.

Steven Gatoff: And so, considering all this, we're providing the following guidance for Q3 2020-24. Total revenue in a range of $54 million to $58 million, and adjusted EBITDA in a range of $6.5 million to $7.5 million. In closing, we're glad to see the strong growth and profitability delivery in Q2, and we're encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as they move through 2024.

Speaker Change: And so considering all this, we're providing the following guidance for Q3 2024.

Philip Brace: Total revenue in the range of $54 million to $58 million and adjusted EBITDA in a range of $6.5 million to $7.5 million.

Philip Brace: In closing, we're glad to see the strong growth and profitability delivered in Q2, and we're encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as we move through 2024. With that, we appreciate your time and support, and we're glad to open the call to any questions.

Steven Gatoff: In closing, we're glad to see the strong growth and profitability delivered in Q2, and we're encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as we move through 2024. With that, we appreciate your time and support, and we're glad to open the call to any questions.

Philip Brace: In closing, we're glad to see the strong growth and profitability delivered in Q2 and we're encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as we move through 2024.

Steven Gatoff: With that, we appreciate your time and support, and we're glad to open the call for any questions.

Philip Brace: With that, we appreciate your time and support, and we're glad to open the call for any questions.

Operator: Operator?

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Once again, that was star then one to ask a question, and at this time we will pause momentarily to assemble the roster.

Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. And our first question will come from Lance Vitanza of TD Cowen. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: To withdraw your question, please press star then 2. Once again, that was star then one to ask a question, and at this time, we will pause momentarily to assemble the roster. And our first question will come from Lance Vitanza of TD Cowen. Please go ahead.

Speaker Change: To withdraw your question, please press star then 2.

Speaker Change: Once again, that was star then one to ask a question, and at this time, we will pause momentarily to assemble the roster.

Lance Vitanza: And our first question will come from Lance Fatanzha of TD Cowan. Please go ahead. Thanks, and congratulations on a strong quarter. On the revenue side, I was particularly impressed with the mobile hotspot sales growth. I'm wondering, do you have much visibility into end-market demand and sell-through? Presumably, the quarter saw a lot of restocking or stocking up, but is it possible to talk about underlying strength or weakness in final demand?

Speaker Change: And our first question will come from Lance Vitanza of TD Cowen. Please go ahead.

Philip Brace: Thanks, and congratulations on a strong quarter. On the revenue side, I was particularly impressed with the mobile hotspot sales growth. I'm wondering, do you have much visibility into end market demand and sell-through? And presumably, the quarter saw a lot of restocking or stocking up, but is it possible to talk about underlying strength or weakness in the final?

Lance Vitanza: Thanks and congratulations on a strong quarter. On the revenue side, I was particularly impressed with the mobile hotspot sales growth. I'm wondering

Lance Vitanza: Do you have much visibility into end market demand and sell through and presumably the quarter saw a lot of restocking or stocking up, but is it possible to talk about underlying strength or weakness in final demand?

Phil Brace: Yeah, I, Lance, this is Phil. I mean, we kind of teased this from a little bit of the call. We kind of initiated collectively with one of our big carrier partners, a program. And frankly, the program has gone really, really well. And you'll see that our inventory has actually gone down through the core as well, kind of representing us kind of shipping, you know, a lot of products there in that space. Our demand looks to be, looks to be strong for the quarter. Now, some of these, some of these things I would say are a little bit perishable, right?

Philip Brace: Yeah, Lance, this is Phil. I mean, we kind of teased this on a little bit of the call; we had, we kind of initiated, collectively with one of our big carrier partners, a program, and frankly, the program has gone really, really well. And you'll see that our inventory has actually gone down through the quarter as well, kind of representing us shipping a lot of products there in that space. Our demand looks to be, looks to be strong for the quarter. Some of these things, I would say, are a little bit perishable, right?

Operator: Yeah, hey Lance, this is Phil. I mean, we kind of teased this on a little bit of the call. We had, we kind of initiated

Speaker Change: Collectively with one of our big carrier partners a program and frankly the program has gone really really well And you'll see that our inventory has actually gone down through the quarter as well kind of representing us kind of shipping

Speaker Change: a lot of products there in that space.

Speaker Change: Our demand looks to be strong for the quarter. Some of these things I would say are a little bit perishable, right? There's a product, there's a promotion going on, and they're executing well, and we're delivering well.

Phil Brace: There's a product, there's a promotion going on, and directs keeping well, and we're delivering well. And I'll say right now we are, we're scrambling for parts, right? We are exercising our supply chain, and the demand has gone up such that we're scrambling for parts. So right now the demand and our disability demand is good. And we're just trying to take advantage of the opportunity while it exists.

Philip Brace: There's a product, there's a promotion going on, and they're executing well, and we're delivering well. And I'll say right now that we are. We're scrambling for parts, right? We are testing our supply chain, and the demand has gone up such that we're scrambling for parts. So right now, the demand and our visibility of the demand is good. And we're just trying to take advantage of the opportunity while it exists.

Speaker Change: I'll say right now we are, we're scrambling for parts, right, we are exercising our supply chain and the demand has gone up such that we're scrambling for parts. So right now the demand and our visibility of the demand is good and we're just trying to take advantage of the opportunity while it exists.

Lance Vitanza: Great. Thanks. So, and then turning to the gross margin side, very impressive performance there, you know, up nicely year over year. I like to think as much in terms of the incremental gross margin you achieved as revenues expanded. So revenues were up 5.6 million year on year, while gross profit was up 3.9 million on a non-GAAP basis. So that's like a 70% incremental margin, which I got to think means that you've removed, you know, a decent amount of fixed costs from the business. I don't think I can remember seeing a 70% incremental margin and CGO.

Philip Brace: Great, thanks. And then turning to the gross margin side, very impressive performance there, you know, up nicely year over year. I like to think of it more in terms of the incremental gross margin you achieved as revenues expanded. So revenues were up 5.6 million year on year, while gross profit was up 3.9 million on a no gap basis. So that's like a 70% incremental margin, which I have to think means that you've removed, you know, a decent amount of fixed costs from the business.

Lance Vitanza: Great, thanks. So, and then turning to the gross margin side.

Lance Vitanza: Very impressive performance there, you know up nicely year over year I like to think as much in terms of the incremental gross margin you achieved as revenues expanded. So

Philip Brace: I don't think I can remember seeing a 70% incremental margin at Inseego, and if it was, it wasn't anytime recently. So nice job there. But can you talk about, I know you mentioned they were coming in all areas, but is there anything more granular that you can tell us that would help us gauge, you know, how durable these changes might be in subsequent periods?

Speaker Change: Revenues were up 5.6 million year-on-year while gross profit was up 3.9 million on a non-gap basis So that's like a 70% incremental margin, which

Operator: After today's presentation, there will be an opportunity for questions and answers. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two.

Lance Vitanza: I gotta think means that you've removed, you know, a decent amount of fixed costs from the business. I don't think I can remember seeing a 70% incremental margin at Inseego, and if it was, it wasn't any time recently.

Lance Vitanza: And if it was, it wasn't any time recently. So nice job there.

Steven Gatoff: But can you talk about? I know you mentioned they were coming in all areas. But is there anything more granular that you can tell us that would help us gauge, you know, how durable these changes might be in subsequent periods and yeah. Yeah, you know, I'll try to just a high level and see when you want to just help with some of the details. I mean, look at a high level year over year, I'm characterizing it as three things. One, you're seeing good offense control. Okay. So year over year, we did make some; we don't have a ton of fixed costs necessarily, but I think our cost structure has improved.

Lance Vitanza: So, nice job there, but can you talk about, I know you mentioned they were coming in all areas, but is there anything more granular that you can tell us that would help us gauge, you know, how durable these changes might be in subsequent periods and, yeah.

Operator: On the call today are Phil Brace, Executive Chairman of Inseego's Board of Directors, and Steven Gatoff, the company's chief financial officer. During this call, certain non-gap financial measures will be discussed. A reconciliation to the most directly comparable gap financial measures is included in the earnings release, which is available on the investor section of the company's website. An idea replay of this call will also be archived there. Please also be advised that today's discussion will contain forward-looking statements.

Philip Brace: Yeah, you know, I'll try just at a high level, and then Steven, you want to just help with some of the details. I mean, look, at a high level year over year, I'd characterize it as three things. One, you're seeing good operating profit control. Okay, so year over year, we did make some, we don't have a ton of fixed costs, necessarily. But I think our cost structure has improved, and I think we've been disciplined on how we do that.

Philip Brace: Yeah, you know, I'll try just at a high level, and then Steven, you want to just help with some of the details. I mean, look, at a high level year over year, I would characterize it as three things. One, you're seeing good operating profit control. Okay, so year over year, we did make some, we don't have a ton of fixed costs, necessarily. But I think our cost structure has improved, and I think we've been disciplined on how we do that. I think you've also seen some improvement.

Philip Brace: Yeah, you know, I'll try to start high-level and then...

Philip Brace: I mean, look, at a high-level year-over-year, I would characterize it as three things.

Philip Brace: Okay, so year over year, we did make some, we don't have a ton of fixed costs necessarily, but I think our cost structure has improved. And I think we've been disciplined on how we how we do that. I think you've also seen mixed improvement.

Operator: 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 the expectations, please refer to the risk factors described in the company's form 10K, 10Q, and other SEC filings, which are available on the company's website. Please also refer to the cautionary note regarding forward-looking statement section contained in today's press release.

Phil Brace: And I think we've been just going on how we, how we do that. I think you've also seen mix improvement. And you've also seen just core product gross margin improvement there as well. So there's probably three big things that drive that. Whether it's sustainable, look, I think the opX stuff is going to be sustainable. We're, you know, we're pretty focused on that as a company. And I think that the gross margin going forward is going to really be dominated by mix, I would say mix between the products. So I don't know. Yeah, yeah, it's a good, let's really good question and to feel good points.

Steven: And you've also seen just core product gross margin improvement there as well. So I'd say there's probably three big things that drive that.

Philip Brace: I think you've also seen mix improvement, and you've also seen just core product gross margin improvement there as well. So I'd say there are probably three big things that drive that. Whether it's sustainable, look, I think the opex stuff is going to be sustainable. We're, we're, you know, we're pretty focused on that as a company. And I think the gross margin going forward is going to really be dominated by the mix, I would say the mix between the products. So I don't know, Steven. Yeah, yeah, that's a really good question. And Phil, a good point.

Philip Brace: And you've also seen just core product gross margin improvement there as well. So I would say there are probably three big things that drive that. Whether it's sustainable, look, I think the opex stuff is going to be sustainable.

Philip Brace: Whether it's sustainable, I think the OPEX stuff is going to be sustainable.

Lance: We're pretty focused on that as a company, and I think the gross margin going forward is going to really be dominated by mix, I would say, the mix between the products. So, I don't know, Steven. Yeah, Lance, that's a really good question, and Phil, good points.

Philip Brace: We're, you know, we're pretty focused on that as a company. And I think the gross margin going forward is going to really be dominated by mix, I would say, the mix between the products. So I don't know, Steven. Yeah, yeah, Lance, that's a really good question.

Steven Gatoff: And Phil, good point. If you look at at least two of those big buckets on the cost side, which was a big driver looking back year over year, my first quarter here in Q3, we immediately implemented a cost restructuring, and we really hunkered down and looked at the business and took out a lot of costs just wholesale. And so you saw an uptick in margins pretty much right after that, beginning in Q4.

Steven Gatoff: If you look at these two of those big buckets on the cost side, which was a big driver looking back year, my first quarter here in Q3, we immediately implemented a cost restructuring. And we really conquered down, looked into business, and took out a lot of costs, just wholesale. And so you saw an uptick in margins. Pretty much right after that, you know, beginning in Q4. So that was part of the structural cost structure that I'm full mention. So that's part, and that that's pretty sustainable, right? That's, you know, enough to continue to manage that.

Phil Brace: With that, I'd like to turn the call over to Phil Brace, Executive Chairman of Inseego. Please go ahead. Thank you, operator. Good afternoon, everyone. It's a pleasure to be with you today.

Speaker Change: If you look at at least two of those big buckets on the cost side, which was a big driver, looking back year over year, my first quarter here in Q3, we immediately implemented a cost restructuring and we really hunkered down and looked at the business and took out a lot of costs.

Phil Brace: I'd like to cover three topics for you today. First, I'd like to provide a high-level view of the Q2 results. Second, I'd like to share high perspective on the accomplishments that we made in improving our capital structure. And third, I'll comment on the current quarter and focus areas.

Speaker Change: just wholesale. And so you saw an uptick.

Speaker Change: in margins pretty much right after that, beginning in Q4, so that was part of the structural cost structure that Phil mentioned, so that's part, and that's pretty sustainable, right?

Steven Gatoff: So that was part of the structural cost structure that Phil mentioned. So that's part. And that's pretty sustainable, right? That's, you know, up to us to continue to manage that. And then two, the nitty-gritty behind Phil's points are that, you know, we basically have higher margin 5G mobile products as opposed to the back half of last year, certainly most of the year actually, lower margin 4G, which was more mobile broadband. And so that structurally has changed. And so that's a bit of an uptick in margins on a fairly sustainable basis.

Phil Brace: I'll then turn the call over to Steven and we'll wrap up with some Q&A. Q2, 2024 was a very strong quarter for Inseego. Revenue came in at $59 million above our guidance and helped by strong euro-be-your-growth in our mobile business and the effects of the previous to discussed renewal of our subscribe management platform at a major customer. Q1 adjusted even that came in at 8.3 million, which was also better than expected and was driven by a strong growth margin percentage and solid up-ex control.

Phil Brace: And then two, the mini gritty behind field points are that, you know, we basically have now higher margin 5G mobile products as opposed to the back half of last year or certainly most of the year actually lower margin 4G. Was more of the mobile broadband. And so that structurally has changed. And so that's a bit of an uptick in margins on a fairly sustainable basis.

Speaker Change: you know have to obdu

Philip Brace: continue to manage that. And then two.

Speaker Change: The nitty-gritty behind Phil's points are that, you know, we basically have now higher margin 5G mobile products as opposed to the back half of last year, certainly most of the year actually, lower margin 4G.

Speaker Change: was more the mobile broadband. And so that structurally has changed, and so that's a bit of an uptick in margins on a fairly sustainable basis.

Lance Vitanza: Jesus. Great.

Steven Gatoff: And then, I guess the last one for me, you know, you did make a bunch of notable hires in the quarter and year to date. And I'm just, I think that's great in terms of aligning the company for further growth. I'd imagine that that's also an important priority for you. Should we expect, will there be any sort of near-term compression in the, you know, kind of below the gross profit line margin, so to speak, you know, just our SG&A going up in the short term perhaps to sort of accommodate the incremental personnel and so forth? Or is that not all that noticeable?

Lance Vitanza: And then I guess the last one for me, you know, you did make a bunch of notable hires in the quarter and year to date. And I'm just, I think that's great in terms of aligning the company for further growth. I'd imagine that that's also an important priority for you. Should we expect, will there be any sort of near-term compression in the, you know, kind of below the gross profit line margin, so to speak, you know, just our S-GNA going up in the short term perhaps to sort of accommodate the incremental personnel and so forth, or is that not all that noticeable?

Phil Brace: During the quarter, the company continued to add leadership ability to the teams and both new sales and operations executives and we were already seeing the impact of these additions. During the quarter, we made significant progress on addressing our capital structure. Improved financial performance enabled a series of transactions that resulted in restructuring the majority of her outstanding convert for a mixture of cash, new favorable long-term debt, common equity, and wants. This is a very positive outcome for the company and we received strong support from our largest bondholders and our largest stocks. As Stephen will talk about his prepared remarks, the pro-forming impact on these transactions resulted significantly less debt and a very manageable leverage profile.

Steven: Great. And then I guess the last one for me, you know, you did make a bunch of notable hires in the quarter and year to date. And I'm just, I think that's great in terms of aligning the company for further growth. I'd imagine that that's also an important priority for you. Should we expect, will there be any sort of near term compression in the, you know, kind of,

Speaker Change: below the gross profit line margin, so to speak, you know, just our SG&A going up in the short term, perhaps, to sort of accommodate the incremental personnel and so forth, or is that not all that noticeable?

Steven Gatoff: The punchline is that the folks we added, brought in, and recruited and headcount ads were done very, very decidedly surgically and kind of a rifle shot, if you will, and in many cases there was some organizational changes, pruning, and it was a switch out, so they were not all gross ads. So it's a good question. I'm glad you clarified it last, like these are not a step function increase in a In doing what we've done in the past, so we, you know, maintain control over total headcount and compensation to do that. So we do look at it as something that we're focused on adding while we, Dr. Steven Gatoff, Unknown Executive, Ashish Sharma, Kyle Smith, Stephen Sek, Inseego,

Steven Gatoff: The punchline is that the folks we added brought in and recruited and headcount ads were done very very decidedly surgically and kind of a rifle shot if you will and in many cases there was some organizational changes pruning and it was a switch out so they were not all gross ads so it's a good question I'm glad you clarified it Lance like these are not a step function increase in a cost structure these are really adding folks and skills for the direction that we're headed and there are some that we didn't need In what we've done in the past, so we maintain control over total headcount and compensation to do that. So we do look at it as something that we're focused on adding while we, Jeremy Kwan, Unknown Executive, Ashish Sharma, Unknown Executive, Ashish Sharma, Unknown

Phil Brace: The punchline is that the folks we added brought in and recruited, and headcount ads were done very, very decidedly, surgically and kind of a rifle shot, if you will. And in many cases, there were some organizational changes, pruning, and it was a switch out, so they were not all gross ads. So that's a good question. I'm glad you clarified it, Lance. Like these are not a step function increase in the cost structure. These are really adding folks and skills for the direction that we're headed. And there's something that we didn't need in what we've done in the past.

Steven Gatoff: The punchline is that the

Steven Gatoff: Folks we added, brought in, and recruited in headcount ads were done very, very

Steven Gatoff: Decidedly, Surgically, Rifle Shot, if you will, and in many cases there was some organizational changes, pruning, and it was a switch out. So they were not all gross ads, so that's a good question, I'm glad you clarified it Lance, like these are not a state.

Phil Brace: While we still have some work to do, I'm very pleased with the progress today.

Phil Brace: I'd like to mention briefly this, our CO search. As you saw earlier in the week, in our filing, I was pleased to extend my term as Executive Chairman of the Board, in order to provide some time to finish the restructure work, as well as continue supporting the good momentum in the business. The Board and I are taking a deliberate and methodical approach to the search. The company is currently working well, and I have an excellent engagement with the executive team and the Board to drive things forward.

Steven Gatoff: Step Function Increase and a Cost Structure. These are really adding folks and skills for the direction that we're headed, and there are some that we didn't need.

Phil Brace: So we, you know, we maintain control over total headcount and compensation to do that. So we do look at it as something that we're focused on adding while we drive growth, but also maintain profitability. And so net net, the punchline also on OpEx is like, and I think I mentioned this a little bit in the script, if you will, that total OpEx we expect to be pretty flat on a total dollar basis Q2 to Q3 and probably even going forward. Yeah, maybe the market is a little bit higher, but then we have some savings on the GNA, so they're a little bit trade-offs, but that net we're managing it pretty highly.

Steven Gatoff: in what we've done in the past. So we maintain control over total headcount and compensation to do that. So we do look at it as something that we're focused on adding while we...

Phil Brace: On this last front, the outlook for the quarter is for continued year-over growth in revenue, profit and cash generation. On the product front, our next generation products are well in development, which I believe will continue to advance our capabilities and provide increased value to our customers. With the new capital structure, improved financial performance, a strong product roadmap, and large growing markets. The future for Inseego is bright.

Speaker Change: Drive growth, but also maintain profitability.

Steven Gatoff: And so, NetNet, the punchline also on OpEx, and I think I mentioned this a little bit in

Speaker Change: In the script, if you will, that total op-ex we expect to be pretty flat on a total dollar basis, Q2 to Q3.

Steven Gatoff: and probably even going forward, maybe sales and marketing is a little bit higher, but then we have some savings on G&A, so there's a little bit of trade-offs, but that and that, we're managing it pretty tightly.

Philip Brace: Great. All right. Well, thanks for taking the question. Yeah, sure.

Lance Vitanza: Great. All right. Thanks for taking the questions. Yes, sir.

Phil Brace: With that, I'd like to thank Team Inseego, who worked every day to make this happen.

Unknown Executive: Great. All right. Well, thanks for taking the questions. Yeah, sure.

Philip Brace: Yeah, sure. Thank you.

Scott Searle: Thank you. The next question comes from Scott Searly of Roth Capital. Please go ahead. Good afternoon. Thanks for seeing my question. A great job on the quarter. Guys, it's not on what you've done, and I guess over a three quarter period. I apologize.

Speaker Change: Great. All right. Well, thanks for taking the questions.

Phil Brace: I'm glad to take any questions in a few minutes, but right now, I'd like to pass the call over to Stephen. Thanks, Phil.

Operator: The next question comes from Scott Searle of Roth Capital. Please go ahead.

Scott Searle: Yeah, sure. Thank you.

Scott Searle: The next question comes from Scott Searle of Roth Capital. Please go ahead. Hey, good afternoon. Thanks for taking my question. Great job on the quarter, guys.

Operator: Okay, good afternoon. Thanks for taking my question. Great job on the quarter, guys. I apologize; I got on the call late, so I hope I'm not being redundant here, but looking at the services line, it's a big step up sequentially. Steve, is there a one-time item in there or something of note, or is that a sustainable level? And then as we're looking out to the September guidance, I'm wondering if you could just give us direction on some of your thoughts. Steven Gatoff, Lance Vitanza, Scott Searle, Jeremy Kwan, Philip Brace, Inseego. Hey Scott, I got the first one on services and revenue, but I apologize. I just cut you off on our end.

Steven Gatoff: I didn't understand the question on the mobile hotspot business for Q3 guidance. I didn't understand what the question was. Oh, my apologies.

Scott Searle: It's phenomenal what you've done in, I guess, over a three-quarter period.

Scott Searle: I got on the call late, so I hope I'm not being redundant here. But, you know, looking at the services line, it's a big step up to Quantially. Steve, is there one-time item in there, or something of note, or is that a sustainable level? And then, as we're looking out to the September guidance, I'm wondering if you could just give us direction, some of your thought processes, and then have a couple follow-ups. Hey, Scott, I got the first one on services and revenue, but I apologize. It's choppy on our end. I didn't get the question on the mobile hotspot business for Q3 guidance.

Scott Searle: I apologize, I got on the call late, so I hope I'm not being redundant here. But, you know, looking at the services line is a big step up sequentially.

Scott Searle: Steve, is there a one-time item in there or something of note, or is that a sustainable level? And then as we're looking out to the September guidance, I'm wondering if you could just give us direction on some of your thought processes.

Scott Searle: I have a couple of follow-ups.

Steven Gatoff: Hey Scott, I got the first one on services and revenue, but I apologize; I just cut you off on our end. I didn't understand the question on the mobile hotspot business for Q3 guidance because I didn't understand what the question was.

Steven Gatoff: Hey Scott, I got the first one on services and revenue, but I apologize, it was choppy on our end. I didn't get the question on the mobile hotspot business for Q3 guidance. I didn't get what the question was.

Steven Gatoff: I didn't get what the question was. Oh, my apologies. Sequential outlook, Steve. You know, for hotspots, fixed-where else access. Gotcha. Okay. Yeah. I feel an and then Mac grow it up for Phil to take. The punchline on services and others, we were really pleased at the beginning of the quarter at the end of last quarter to renew our Encego subscribe, which is a billion subscriber billion and subscriber management platform with a large carrier customer. We were able to secure an uptick in the pricing of that. We mentioned that earlier call just so no one is surprised by it.

Scott Searle: Oh, my apologies. Sequential outlook, Steve. You know, four hotspots, and fixed wireless access.

Scott Searle: Oh, my apologies. Sequential Outlook, Steve. You know, for hotspots, fixed wireless access.

Steven Gatoff: Sequential Outlook, Steve. You know, for hotspots, fixed wireless access. Phil and I will tag team. I'll maybe start with some of the numbers and color and then macro it up for Phil to take.

Scott Searle: Phil and I will tag team. I'll maybe start with some of the numbers and color and then macro it up for Phil to take.

Steven Gatoff: The punchline on services and others: we were really pleased at the beginning of the quarter, the end of the last quarter, to renew our Inseego Subscribe, which is a subscriber billing and subscriber management platform with a large carrier customer. We were able to secure an uptick in the pricing for that. We mentioned that on an earlier call, just so no one was surprised by it. It went into effect this quarter, though, so April 1st is when it went into effect.

Speaker Change: The punchline on services and others, we were really pleased.

Steven Gatoff: And two, growth in our subscribe SaaS offering from the contract renewal that went into effect April 1st, and that we also mentioned last call. Looking at FWA product revenue that came in at essentially the average of the past several quarters. A last time for GBI helped shore up the quarter as our newly implemented channel program takes some time to ramp up and our new team builds pipeline and drives their initiatives in the space.

Speaker Change: At the beginning of the quarter, the end of the last quarter, to renew our Inseego subscribe, which is subscriber billing and subscriber management.

Speaker Change: platform with a large carrier customer and we were able to secure an uptick.

Speaker Change: in the pricing of that, we mentioned.

Steven Gatoff: It went into effect this quarter, though. So April first is when it went into effect. So you saw a full quarter's impact in Q2, and therefore the step up in revenue from Q1 to Q2. And that is a two-year essentially fixed contract. And so that is probably the definition of sustainable. And so we're pretty pleased with that all the way around. It's a really great customer relationship with them and are doing some great work, and so we were pleased to go extend that out. So that kind of adds a lot of color and kind of good substance to services and other.

Speaker Change: that i'm an earlier call just no one surprised by it and i went into effect this quarter then so april first whenit went to fect so you saw a full quarterters impact in q two and therefore the step up in revenue from q one to q two that is a two year entially fixed

Steven Gatoff: So you saw a full quarter's impact in Q2 and therefore a step up in revenue from Q1 to Q2. And that is a two-year centrally fixed contract. And so that is probably the definition of sustainable.

Steven Gatoff: Rounding out services and other revenue, our telematics business came in at a consistent and record high level as it did in the previous quarter on good continued global demand and execution in the business. We went on to Gross Margin, Q2 Gross Margin percentage came in at 39% on a non-gap basis consistent with a prior quarter and among the highest level in the past two years. Looking at non-gap operating expenses while a flight uptick in sequential spend from Q1, sound expense management and efficiency efforts saw Q2 total op-x spend come in lower than it was year-over-year, both in terms of aggregate dollars and as a percentage revenue.

Steven Gatoff: And so we're pretty pleased with that all the way around. It's a really great customer relationship with them, and they do some great work. And so we're pleased to go extend that out. So that kind of adds a lot of color and good substance to services and others.

Speaker Change: contract and so that is probably the definition and sustainable and so we're pretty pleased with that all the way around it's we're really great customer relationship with them and are doing a biggreat work and so we're pleased to go extend that out so that kind kind of v a lot of color and

Philip Brace: And then, as we talked a little bit about on the mobile broadband side, we're seeing really nice uptake in the product overall and, specifically, through one of our large carrier customer promotions that did really well in Q2. We're engaged with them again in Q3. And so we have high hopes and expectations and have good visibility. And we're a little bit into the quarter, so that's helpful, and it's going well. And we obviously have two more months left, so we'll see to what level that reaches.

Steven Gatoff: And then, as we talked a little bit about on the mobile broadband side, we're seeing really nice uptake in the product overall and even specifically through one of our large carrier customer promotions that did really well in Q2. We are engaged with them again in Q3, and so we have high hopes and expectations, and have good visibility, and we'll see we're a little bit into the quarter. So that's helpful, and it's going well, and we have obviously two more months left. So we'll see to one level that reaches, but we do expect a strong quarter for mobile broadband solutions for Q3.

Ben Thede: and Ben Thede.

Speaker Change: We are engaged with them again in Q3 and so, you know, we have high hopes and expectations and have good visibility and we'll see, you know, we're a little bit into the quarter so that's helpful and it's going well and we have obviously two more months left so we'll see to what.

Steven Gatoff: Op-x was 32% of revenue in Q2, 2024, down favorably from 39% in the prior quarter and down favorably from 37% sequentially in Q2 of 2023. You'll be your budget. We realize efficiencies on a percentage of revenue basis in all areas of op-x and Q2 from sales and marketing to R&D to GNA. It's notable that this strong expense outcome was achieved even after including in a cruel this quarter for an annual cash and incentive bonus for the terrific Enseego employee banks.

Philip Brace: But we do expect a strong quarter for mobile broadband solutions in Q3. We'll see to what extent that comes closer to the Q2 levels as we move forward. Very helpful. And, you know, in terms of diversification, you still remain fairly concentrated with a couple of large mobile operators in North America. I'm wondering, you know, how you guys are progressing in terms of your diversification efforts, both for mobile hotspots and fixed wireless access, if there's any, any insight you could give us on that front.

Speaker Change: We do expect a strong quarter for mobile broadband solutions for Q3. We'll see to what extent that comes to Q2 levels as we move forward.

Scott Searle: We'll see to what extent that comes to Q2 levels as we move forward. Very helpful.

Scott Searle: Very helpful. And, you know, in terms of diversification, you still remain fairly concentrated with a couple of large mobile operators in North America. I'm wondering how you guys are progressing in terms of your diversification efforts, both for mobile hotspots and fixed wireless access, if there's any, any insight you could give us on that front.

Scott Searle: And, you know, in terms of diversification, you still remain fairly concentrated with a couple of large mobile operators in North America. I'm wondering, you know, how you guys are progressing in terms of your diversification efforts, both for mobile hotspot and fixed wireless access. If there's any insight, you could give us on that front. Yeah, Scott, I'll take that one. So that does remain a priority for us. Obviously, we would love our biggest customers. We spend a lot of time there. And we continue to work hard to earn their business every single day. But we also recognize that we need to diversify ourselves a little bit.

Scott Searle: Very helpful and you know in terms of diversification you still remain fairly concentrated with a couple of large mobile operators in North America. I'm wondering you know how you guys are progressing in terms of your diversification efforts both for mobile hotspot and fixed wireless access if there's any any insight you could give us on that front.

Philip Brace: Yeah, Scott, I'll take that one. So that does

Steven Gatoff: Yeah, Scott, I'll take that one.

Steven Gatoff: So that does remain a priority for us. Obviously, we love our biggest customers. We spend a lot of time there, and we continue to work hard to earn their business every single day.

Steven Gatoff: We shared a bit about this on the last call and so far as it being a new incremental spend this year. Noting the cash bonus expense hasn't been included or paid in the past several years. Now it will be and it is self-funded. Putting this all together, the favorable revenue performance and focused operating expense management resulted in Q2 adjusted EBITDA dollars coming in at more than double the prior Q1 quarter at $8.4 million and at a record high margin of 14%. It was also the sixth consecutive quarter of positive adjusted EBITDA. His improved operating results allowed us to deliver gap operating and net income for the first time in more than five years.

Steven Gatoff: Yeah, Scott, I'll take that one. So that does remain a priority for us. Obviously, we love our biggest customers. We spend a lot of time there and we continue to work hard to earn their business every single day.

Steven Gatoff: But we also recognize that we need to diversify ourselves a little bit, and so you've seen us make some investments in kind of building up a value-added reseller channel. You know, one of the things we've got to work for there, and you saw one of the announcements, is that we've got to actually have some slightly differentiated products there. For example, when you sell into a particular large carrier, you might imagine that the certifications are specific to that carrier.

Phil Brace: And so you've seen us make some investments in kind of building up a value-added resettled seller channel. You know, one of the things we've got to work for there, and you saw an announcement, says we've got to actually have some slightly differentiated products there. For example, when you sell into a particular large carrier, you might imagine that certifications are specific to that carrier. When you sell into a broader resettled channel, you've got to have products that are multi-carrier capable and require different certs. And maybe in some cases, we even have some different capabilities, like multi-tenant management and things like that.

Speaker Change: but we also recognize that we need to diverseify ourselvess a little bit and so he's seen us ma some investments and kind of building up value-added recentset of souther channel know one of the things we'vegot to work for there and you saw of announcements is we've gotto actually have some

Steven Gatoff: Slightly differentiated products there. For example, when you sell into a particular large carrier, you might imagine that

Steven Gatoff: When you sell into a broader reseller channel, you've got to have products that are multi-carrier capable and require different certificates. And maybe, in some cases, even have some different capabilities like multi-tenant management and things like that. So I would say we are committed to continuing to make investments to move on that front. You know, it's moving about as fast as I expected, but sometimes these things take some time. That's going to be an area I continue to ask us for, and it's going to be an area, a watch item for us as a management team as we go forward in the quarter.

Steven Gatoff: Certifications are specific to that carrier. When you sell into a broader reseller channel, you've got to have products that are multi-carrier capable and require some different certs and maybe in some cases even have some different capabilities like multi-tenant management and things like that.

Phil Brace: So I would say we are committed to continue to make investments to go on that front. You know, it's moving out as fast as I expected. But sometimes, these things take some time. And so that's going to be an area I'd continue to ask us for. And it's going to be an area I watch out for us as a management team. And go forward in the course.

Steven Gatoff: Rapping up our Q2 results with a balance sheet. Cash improved meaningfully from Q1 coming in at $49 million at June 30. Our cash on hand benefited from three positive dynamics. One, the ongoing higher profitability and net cash generation of the business in Q2. Two, the advantageous April 2024 $15 million upfront payment on the multi-year subscribe fast contract renewal that we mentioned. And three, as I'll talk about more in a few minutes, there was a timing benefit from the short-term loan that we took out to repurchase a large convertible bond holder at a discount that funded $16.5 million on that Friday, June 28th, the last business day of June.

Steven Gatoff: So I would say we are committed to continue to make the investments to go on that front. It's moving about as fast as I expected, but sometimes these things take some time. So that's going to be an area I'd continue to ask us for, and it's going to be an area, a watch item for us as a management team as we go forward in the quarters.

Philip Brace: for, and it's going to be an area, a watch item for us as a management team as we go forward in the quarter. And Phil, lastly, if I could, congratulations.

Phil Brace: Yeah. And Phil, lastly, if I could, congratulations. It's nice to see you're going to be sticking around for a while in the executive chairman role. Along those lines, and I apologize if you covered this earlier, but your priorities now going forward over the next 12 months. And as part of that, given the recap that you guys have executed over the past quarter, you start thinking about going on the offensive from an M&A standpoint. Thanks. Yeah, I think question. I mean, look, I mean, we still have, we still have some work to do on the restructure side.

Philip Brace: And Phil, lastly, if I could, congratulations. It's nice to see you're going to be sticking around for a while in the executive chairman role. You know, along those lines, and I apologize if you covered this earlier, but your priorities now going forward over the next 12 months. And as part of that, given the recap that you guys have executed over the past quarter, do you start thinking about going on the offensive from an M&A standpoint? Thanks.

Philip Brace: It's nice to see you're going to be sticking around for a while in the executive chairman role, you know, along those lines. And I apologize if you covered this earlier, but your priorities now going forward over the next 12 months. And as part of that, given the recap that you guys have executed over the past quarter, do you start thinking about going on the offensive from an M&A standpoint? Yeah, good question.

Philip Brace: and Phil lastly if I could congratulations it's nice to see you're going to be sticking around for a while in the executive chairman role

Philip Brace: You know, along those lines, and I apologize if you covered this earlier, but

Speaker Change: Your priorities now going forward over the next 12 months.

Philip Brace: And as part of that, given the recap that you guys have executed over the past quarter, do you start thinking about going on the offensive from an M&A standpoint? Thanks.

Philip Brace: Yeah, good question. I mean, look, I mean, we still have some work to do on the restructuring side. Okay, so priority number one for me is to kind of, kind of finish up the last few little bits of that. You know, as I mentioned in my prepared remarks, we are taking a, you know, a deliberate and methodical approach to the CEO search, but I've got great support from the board and from the management team.

Philip Brace: I mean, look, I mean, we still have some work to do on the restructuring side. Okay, so priority number one for me is to kind of, kind of finish up the last few little bits of that. You know, as I mentioned in my prepared remarks, we are taking a, you know, a deliberate and methodical approach to the CEO search, but I've got great support from the board and from the management team.

Philip Brace: Yeah, good question. I mean, look, I mean, we still have we still have some work to do on the restructure side. Okay. So priority number one for me is to kind of

Phil Brace: Okay. So priority number one for me is to kind of kind of finish up the last few little bits of that. You know, as I mentioned in my prepared remarks, we are taking a, you know, a deliberate and solid approach on the CO search, but I've got great support from the board and from the management team. And in terms of, you know, priorities, I think what we're going to be doing looking at is kind of expanding our revenue diversity. We're going to be looking at expanding the portfolio footprint. And certainly, I think to the extent that we get ourselves on, you know, solid footing and growing, I certainly think we'll be looking both at that organic and an organic opportunities, but I think our priority right now is just continue the restructure.

Philip Brace: Kind of finish up the last few little bits of that

Philip Brace: You know, as I mentioned in my prepared remarks, we are taking a, you know, a deliberate and methodical approach on the CEO search, but I've got great support from the board and from the management team.

Philip Brace: And in terms of, you know, priorities, I think what we're going to be doing and looking at is kind of expanding our revenue diversity. We're going to be looking at expanding the portfolio footprint. And certainly, I think, to the extent that we get ourselves on, you know, solid footing and growing, I certainly think we'll be looking both at organic and inorganic opportunities. But I think our priority right now is just to continue to restructure and get us to start, you know, realizing the fruits of some of that labor like we already have.

Philip Brace: And in terms of, you know, priorities, I think what we're going to be doing looking at is kind of expanding our revenue diversity. We're going to be looking at expanding the portfolio footprint.

Steven Gatoff: As we also discussed briefly on our last call as a subsequent event, in Q2 we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility. This action had a number of benefits including freeing up capital and providing good operating flexibility and that enabled us to enter into the various transactions to address our convertible bonds. The final point to make on the balance sheet is that with the convertible notes now being due within a year you'll see them presented in the short term liability section of the balance sheet. The good news is clearly that we purchased or refinanced nearly 90% of the bonds and with the support from some of our largest and longest standing stakeholders we achieved a solid outcome.

Philip Brace: and certainly I think to the extent that we get ourselves on.

Philip Brace: On solid footing and growing, I certainly think we'll be looking both at organic and inorganic opportunities, but I think our priority right now is just to continue to restructure, get us to start realizing the fruits of some of that labor like we already have.

Phil Brace: Get us to start, you know, realizing the fruits of some of our labor, like we already have. And then I got to say it's just, it's a pleasure to be even in the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question that maybe. Again, congrats and thanks so much.

Philip Brace: And then I got to say, it's just, it's a pleasure to be even at the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question. That made me smile. Hey again, congratulations, and thanks so much.

Philip Brace: And then I got to say, it's just, it's a pleasure to be at the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question.

Philip Brace: I've got to say it's a pleasure to be even in the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question, that made me smile.

Unknown Executive: Thank you for asking the question. That made me smile. Hey, again.

Unknown Executive: Hey, again, congrats and thanks so much.

Unknown Executive: Again, congrats and thanks so much.

Kyle Smith: The next question comes from Kyle Smith of Steve. Please go ahead. Hey guys, Kyle Smith on for Tories, Sanberg. It's people also wanted to extend my congrats on the strong results and improved capital structure. My first question is on geographic revenue. So any trends or surprises to note in the June quarter, and where do you see the company's geographic mix shift in over time? Yes, Stephen. Thanks, Kyle. The short answer is no; no surprises. The geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America centric, which is the products business and the subscribe business.

Unknown Executive: thanks

Operator: The next question comes from Kyle Smith of Stiefel; please go ahead.

Operator: The next question comes from Kyle Smith of Stiefel. Please go ahead.

Operator: Hey guys, Kyle Smith on for Tore Svanberg at Stiefel. Also wanted to extend my congratulations on the strong results and improved capital structure. My first question is on geographic revenue. So any trends or surprises to note in the June quarter, and where do you see the company's geographic mix shifting over time?

Kyle Smith: Hey guys, Kyle Smith on for Tore Svanberg, it's T-Full. Also wanted to extend my congratulations on the strong results and improved capital structure. My first question is on geographic revenue. So any trends or surprises to note in the June quarter, and where do you see the company's geographic mix shifting over time?

Stiefel: Hey guys, Kyle Smith on for Tore Svanberg, it's Stiefel. Also wanted to extend my congrats on the strong results and improved capital structure.

Steven Gatoff: With that let's move on to my second topic and look at the convertible note restructuring and capital structure improvements that we accomplished in the past few months. As you heard of say over the past several quarters we've been methodical about driving a thoughtful and optimized outcome for our stockholders and relevant stakeholders in restructuring the convertible notes and reducing our overall debt levels. This has been a multi-step process with a lot of considerations.

Kyle Smith: My first question is on geographic revenue. So any trends or surprises to note in the June quarter? And where do you see the company's geographic mix shift in over time?

Steven Gatoff: Over the past 75 days we engaged with all of the top 10 holders of the convertible notes and we have either purchased or entered into binding agreements to exchange the remaining bonds for long-term debt and or equity that covers $142 million or 88% of the $162 million in face value of the bonds. Proforma for these transactions there was only $19.9 million of convertible notes remaining outstanding with new long-term debt of $36.6 million and a short-term loan of $19.5 million.

Steven Gatoff: Yes, Steven. Thanks, Kyle.

Steven Gatoff: The short answer is no, no surprises.

Steven Gatoff: The short answer is no, and there will be no surprises. The geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America-centric, which is the products business and the subscribed business. And then we have the telematics business, which, interestingly, is not in North America, right? It's Europe and ANZ. And so those businesses continue to operate well in their respective regions. And I think Phil's good points, you know, there's a whole bunch of work that we've been doing in the last three quarters or so since we all got here to really grow the business and grow it profitably that we're focused on continuing to do that, that we're not looking to do any big global shifts or expansions in the business. And so we're kind of focusing on our knitting, and the geographic concentration is kind of what it is right now.

Steven Gatoff: The short answer is no, and there will be no surprises. The geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America-centric, which is the products business and the subscription business. And then we have the telematics business, which, interestingly, is not in North America, right? It's Europe and ANZ. And so those businesses continue to operate well in their respective regions. And I think Phil's good points, you know, there's a whole bunch of work that we've been doing in the last three quarters or so since we all got here to really grow the business and grow it profitably that we're focused on continuing to do that, that we're not looking to do any big global shifts or expansions in the business. And so we're kind of focusing on our knitting, and the geographic concentration is kind of what it is right now.

Steven Gatoff: Geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America centric which is

Steven Gatoff: the products business and the subscribe business. And then we have the telematics business that interestingly is.

Steven Gatoff: And then we have the telematics business that, interestingly, is not North America, right? It's Europe and ANZ. And so those businesses continue to operate well in their respective regions. And I think to feel good points, you know, there's a whole bunch of work that we've been doing in the last three quarters or so since we all got here to really grow the business and grow it profitably. That we're focused on continuing to do that. That we're not looking to go do any big global ships or expansions in the business. And so we're kind of focusing on our knitting, and the geographic concentration kind of is what it is right now.

Phil: Not North America, right? It's Europe and A.N.Z.

Steven Gatoff: and so those businesses continue to operate well in their respective regions and I think to Phil's good points

Steven Gatoff: there's a whole bunch of work thatwe had been doing in the last three quarters or so since we all got here to really grow the business and grow profitably that we're focused on continuing to do that that we're not looking to go to any big global shift or expansions

Steven Gatoff: in the business. And so we're kind of focusing on our knitting and the geographic concentration kind of is what it is right now.

Steven Gatoff: That brings proforma total debt to $76 million on LTM adjusted EBITDA of approximately $20 million. Our proforma net debt is an even lower leverage ratio of less than three times. This is a meaningful reduction in debt and a far more appropriate leverage profile for the company. As a final note on the debt restructuring we want to also call out an advantageous feature that we were successful at structuring. As part of these transactions the warrants that were issued to bondholders who exchanged their convertible bonds for new long-term debt and equity are cash pay.

Kyle Smith: Very helpful, thanks.

Steven Gatoff: Very helpful, thanks. Switching gears a bit, the press release mentioned the Ignite Channel program, which was also highlighted on the prior earnings call. Maybe you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides.

Philip Brace: Very helpful, thanks. Switching gears a bit, the press release mentioned the Ignite Channel program, which was also highlighted on the prior earnings call. Maybe you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides.

Phil Brace: Switching gears about the press release mentioned the Ignite Channel Program, which was also highlighted on the prior earnings call. Maybe if you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides. Yeah, that's a good question. I mean, so really, I mean, in CGO for the most part, you know, prior to this program being launched at Ben, I would say exclusively a major carrier product. That's how we went through that. And so we have brought up some new executives. We've kind of launched a new program for the resellers that included some unique packaging oppositions.

Speaker Change: Very helpful, thanks.

Steven Gatoff: Switching gears a bit, the press release mentioned

Speaker Change: the ite channel program which was also highlighted on the prior arnings call maybe if you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides

Steven Gatoff: Yeah, it's a good question. I mean, really, I mean, Inseego, for the most part, prior to this program being launched, had been, I would say, exclusively a major carrier product. That's how we went through that. And so we have brought in some new executives, and we've kind of launched a new program for the resellers that included some unique packaging options. As I mentioned, we'll be doing some more differentiated products, including multi carrier certifications.

Philip Brace: Yeah, it's a good question. I mean, really, Inseego, for the most part, prior to this program being launched, had been, I would say, exclusively a major carrier product. That's how we went through that. And so we have brought in some new executives, and we've kind of launched a new program for the resellers that included some unique packaging options. As I mentioned, we'll be doing some more differentiated products, including multi carrier certifications.

Steven Gatoff: Yeah, it's a good question. I mean, so really, I mean, Inseego, for the most part, you know, prior to this program being launched had been

Steven Gatoff: I would say exclusively a major carrier product. That's how we went through that. And so we have brought on some new executives, we've kind of launched a new

Steven Gatoff: That means that upon their exercise the company will receive approximately $32 million and cash proceeds a further enhancement of liquidity and financial flexibility. We're pleased with executed these transactions and accomplish a meaningful reduction of debt and right size in our capital structure. Adding that positive dynamic to our profitable operations, free cash flow generation and continuing growth. We see the company as now very well-positioned and financially strong to support driving further stockholder value.

Steven Gatoff: Program for the resellers that included some unique packaging options. I mentioned we'll be doing some more differentiated products, including multi-carrier certifications.

Phil Brace: I mentioned we'll be doing some more differentiated products, including multi-carrier certifications. And really, the goal there is to expand our reach because, in many cases, a lot of these products, particularly on the FWA side, but even on that, the myfides side, are sold to smaller medium businesses. Sometimes even sold to governments, local, you know, federal state institutions via resellers. And I think our goal is to kind of expand our reach into that channel. We know that you know, some of the competitors exist and have a robust business in that space. And I think we are coming at it, frankly, from a differentiated point of view in that we have a rugged, excuse me, a very compact design, embedded antennas that are included in there, unique packaging, and decades of experience in the space that have been validated by the major carriers.

Philip Brace: And really, the goal there is to expand our reach, because in many cases, a lot of these products, I think on the FQA side, but even on my side, are sold to small and medium businesses, sometimes even sold to governments, local, you know, federal, state institutions via resellers. And I think our goal is to kind of expand our reach into that channel. We know that, you know, some competitors exist and have a robust business in that space.

Steven Gatoff: And really, the goal there is to expand our reach because, in many cases, a lot of these products, I think on the FQA side, but even on my side, are sold to small and medium businesses, sometimes even sold to governments, local, you know, federal state institutions via resellers. And I think our goal is to kind of expand our reach into that channel. We know that, you know, some competitors exist and have a robust business in that space.

Steven Gatoff: And really the goal there is to expand our reach, because in many cases,

Steven Gatoff: A lot of these products, I think on the FTWA side, but even on the MiFi side, are sold to small and medium businesses, sometimes even sold to governments, local, federal, state institutions via resellers.

Steven Gatoff: So with that, let's turn to the third topic on what we're seeing in the business, the current quarter, and provide our guidance for Q3. Overall, we're bullish on delivering revenue growth and expect to continue to show improvements in terms of year-over-year performance. On mobile broadband, we have good visibility and confidence in our ability to deliver robust year-over-year growth again in Q3, as we're continuing to drive our mobile broadband products through our large carrier partner promotion.

Steven Gatoff: And I think our goal is to kind of expand our reach into that channel. We know that some of the competitors exist and have a robust business in that space.

Steven Gatoff: And I think we are coming at it, frankly, from a differentiated point of view in that we have a rugged, excuse me, a very compact design, embedded antennas that are included in their unique packaging, and decades of experience in the space that have been validated by the major carriers. And so I think we're going to have a unique value proposition. And, you know, so this just takes a little time to develop. And it's going to be a focus area that I need to continue to work on. We need to continue to hold ourselves accountable to continue to build that.

Philip Brace: And I think we are coming at it, frankly, from a differentiated point of view, and that is that we have a rugged, excuse me, a very compact design, embedded antennas that are included in their unique packaging, and decades of experience in the space that have been validated by the major carriers. And so I think we're gonna have a unique value proposition. And, you know, so this just takes a little time to develop, and it's going to be a focus area that I need to continue to work on. We need to continue to hold ourselves accountable to continue to build that.

Steven Gatoff: And I think we are coming at it, frankly, from a differentiated point of view in that we have a rugged, excuse me, a very compact design.

Steven Gatoff: embedded antennas that are included in there, unique packaging, and decades of experience in this space that have been validated by the major carriers.

Phil Brace: And so I think we're going to have a unique value proposition. And, you know, so this just takes a little time to develop. And it's going to be a focus area that I need you to continue. You know, we need to continue to hold ourselves accountable to continue to build that.

Steven Gatoff: We'll see the extent to which Q3 yields the same robust quarterly results that Q2 produced. On FWA, we continue to invest in building pipeline and the overall channel program and expect marginally lower FWA revenue in Q3, considering the FWA last time 4G by, I mentioned, that occurred in Q2. On services, another revenue, we expect to have another solid quarter in Q3, and come in at levels consistent with Q2 2020-24 on a dollar basis.

Steven Gatoff: I think we're going to have a unique value proposition and so this just takes a little time to develop and it's going to be a focus area that I need to continue, you know, we need to continue to hold ourselves accountable to continue to build that.

Kyle Smith: Great. Thanks, everyone. And congrats again. We're on, thanks.

Operator: Great. Thanks, everyone, and congrats again.

Unknown Executive: Great. Thanks, everyone, and congrats again.

Unknown Executive: Great, thanks everyone and congrats again.

Operator: This concludes our question and answer session.

Speaker Change: Well, thanks.

Operator: This concludes our question and answer session. The conference has now also concluded.

Operator: This concludes our question and answer session. The conference has now also concluded. Thank you for attending today's presentation, and you may now disconnect.

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

Operator: This concludes our question and answer session. The conference has now also concluded. Thank you for attending today's presentation and you may now disconnect.

And you may now disconnect. Thank you very much.

Steven Gatoff: And so far as gross margin, Q3 2020-24 non-gap gross margin percentage is expected to be relatively consistent with the prior Q2. Noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and other will be the ultimate determinant. Q3 non-gap operating expenses are[inaudible] we're providing the following guidance for Q3 2020-24. Total revenue in a range of $54 million to $58 million, and adjusted EBITDA in a range of $6.5 million to $7.5 million. In closing, we're glad to see the strong growth and profitability delivery in Q2 and we're encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as they move through 2024.

Operator: With that, we appreciate your time and support, and we're glad to open the call for any questions. Operator? We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Once again, that was star then one to ask a question, and at this time we will pause momentarily to assemble the roster.

Lance Vitanza: And our first question will come from Lance Fatanzha of TD Cowan. Please go ahead. Thanks, and congratulations on a strong quarter. On the revenue side, I was particularly impressed with the mobile hotspot sales growth. I'm wondering, do you have much visibility into end-market demand and sell through? Presumably, the quarter saw a lot of restocking or stocking up, but is it possible to talk about underlying strength or weakness in final demand?

Phil Brace: Our demand looks to be, looks to be strong for the quarter. Now, some of these, some of these things I would say are a little bit perishable, right? There's a product, there's a promotion going on and directs keeping well and we're delivering well. And I'll say right now we are, we're scrambling for parts, right? We are exercising our supply chain and the demand has gone up such that we're scrambling for parts. So right now the demand and our disability demand is good. And we're just trying to take advantage of the opportunity while it exists.

Lance Vitanza: Great. Thanks. So, and then turning to the gross margin side, very impressive performance there, you know, up nicely year over year. I like to think as much in terms of the incremental gross margin you achieved as revenues expanded. So revenues were up 5.6 million year on year while gross profit was up 3.9 million on a non-gap basis. So that's like a 70% incremental margin, which I got to think means that you've removed, you know, a decent amount of fixed costs from the business. I don't think I can remember seeing a 70% incremental margin and CGO. And if it was, it wasn't any time recently.

Steven Gatoff: So nice job there. But can you talk about, I know you mentioned they were coming in all areas. But is there anything more granular that you can tell us that would help us gauge, you know, how durable these changes might be in subsequent periods and yeah. Yeah, you know, I'll try to just a high level and see when you want to just help with some of the details. I mean, look at a high level year over year, I'm characterizing it as three things.

Steven Gatoff: One, you're seeing good offense control. Okay. So year over year, we did make some, we don't have a ton of fixed costs necessarily, but I think our cost structure has improved. And I think we've been just going on how we, how we do that. I think you've also seen mix improvement. And you've also seen just core product gross margin improvement there as well. So there's probably three big things that drive that.

Steven Gatoff: Whether it's sustainable, look, I think the opX stuff is going to be sustainable. We're, you know, we're pretty focused on that as a company. And I think that the gross margin going forward is going to really be dominated by mix, I would say mix between the products. So I don't know. Yeah, yeah, it's a good, let's really good question and to feel good points. If you look at these two of those big buckets on the cost side, which was a big driver looking back year, my first quarter here in Q3, we immediately implemented a cost restructuring.

Steven Gatoff: And we really conquered down looked into business and took out a lot of costs, just wholesale. And so you saw an uptick in margins. Pretty much right after that, you know, beginning in Q4. So that was part of the structural cost structure that I'm full mention. So that's part and that that's pretty sustainable, right? That's, you know, enough to continue to manage that. And then two, the mini gritty behind field points are that, you know, we basically have now higher margin 5G mobile products as opposed to the back half of last year or certainly most of the year actually lower margin 4G. Was more of the mobile broadband. And so that structurally has changed. And so that's a bit of an uptick in margins on a fairly sustainable basis.

Phil Brace: Jesus. Great. And then I guess the last one for me, you know, you did make a bunch of notable hires in the quarter and year to date. And I'm just, I think that's great in terms of aligning the company for further growth. I'd imagine that that's also an important priority for you. Should we expect, will there be any sort of near term compression in the, you know, kind of below the gross profit line margin, so to speak, you know, just our S-GNA going up in the short term perhaps to sort of accommodate the incremental personnel and so forth, or is that not all that noticeable?

Phil Brace: The punchline is that the folks we added brought in and recruited and headcount ads were done very, very decidedly surgically and kind of a rifle shot, if you will. And in many cases there was some organizational changes pruning and it was a switch out, so they were not all gross ads. So that's a good question. I'm glad you clarified it, Lance. Like these are not a step function increase in the cost structure.

Phil Brace: These are really adding folks and skills for the direction that we're headed. And there's something that we didn't need in what we've done in the past. So we, you know, we maintain control over total headcount and compensation to do that. So we do look at it as something that we're focused on adding while we drive growth but also maintain profitability. And so net net, the punchline also on OpEx, is like, and I think I mentioned this a little bit in the script, if you will, that total OpEx we expect to be pretty flat on a total dollar basis Q2 to Q3 and probably even going forward. Yeah, maybe the market is a little bit higher, but then we have some savings on the GNA, so they're a little bit trade-offs, but that net we're managing it pretty highly. Great.

Phil Brace: All right. Thanks for taking the questions. Yes, sir. Thank you.

Scott Searle: The next question comes from Scott Searly of Roth Capital. Please go ahead. Good afternoon. Thanks for seeing my question. A great job on the quarter. Guys, it's not on what you've done and I guess over a three quarter period. I apologize. I got on the call late, so I hope I'm not being redundant here. But, you know, looking at the services line, it's a big step up to Quantially.

Steven Gatoff: Steve, is there one time item in there, or something of note, or is that a sustainable level? And then as we're looking out to the September guidance, I'm wondering if you could just give us direction some of your thought processes and then have a couple follow-ups. Hey, Scott, I got the first one on services and revenue, but I apologize. It's choppy on our end. I didn't get the question on the mobile hotspot business for Q3 guidance.

Steven Gatoff: I didn't get what the question was. Oh, my apologies. Sequential outlook, Steve. You know, for hotspots, fixed-where else access. Gotcha. Okay. Yeah. I feel an and then Mac grow it up for Phil to take. The punchline on services and others, we were really pleased at the beginning of the quarter at the end of last quarter to renew our encego subscribe, which is a billion subscriber billion and subscriber management platform with a large carrier customer.

Steven Gatoff: We were able to secure an uptick in the pricing of that. We mentioned that earlier call just so no one surprised by it. It went into effect this quarter though. So April first is when it went into effect. So you saw a full quarter's impact in Q2 and therefore the step up in revenue from Q1 to Q2. And that is a two-year essentially fixed contract. And so that is probably the definition of sustainable.

Steven Gatoff: And so we're pretty pleased with that all the way around. It's a really great customer relationship with them and are doing some great work and so we were pleased to go extend that out. So that kind of adds a lot of color and kind of good substance to services and other. And then as we talked a little bit about on the mobile broadband side, we're seeing really nice uptake in the product overall and even specifically through one of our large carrier customer promotions that did really well in Q2.

Steven Gatoff: We are engaged with them again in Q3 and so we have high hopes and expectations and have good visibility and we'll see we're a little bit into the quarter. So that's helpful and it's going well and we have obviously two more months left. So we'll see to one level that reaches but we do expect a strong quarter for mobile broadband solutions for Q3. We'll see to what extent that comes to Q2 levels as we move forward.

Steven Gatoff: Very helpful. And, you know, in terms of diversification, you still remain fairly concentrated with a couple of large mobile operators in North America. I'm wondering, you know, how you guys are progressing in terms of your diversification efforts, both for mobile hotspot and fixed wireless access.

Scott Searle: If there's any any insight, you could give us on that front.

Phil Brace: Yeah, Scott, I'll take that one. So that does remain a priority for us. Obviously, we would love our biggest customers. We spend a lot of time there. And we continue to work hard to earn their business every single day.

Phil Brace: But we also recognize that we need to diversify ourselves a little bit. And so you've seen us make some investments in kind of building up a value added resettled seller channel. You know, one of the things we've got to work for there and you saw an announcement says we've got to actually have some slightly differentiated products there. For example, when you sell into a particular large carrier, you might imagine that certifications are specific to that carrier.

Phil Brace: When you sell into a broader resettled channel, you've got to have products that are multi-carrier capable and requires different certs. And maybe in some case, we even have some different capabilities, like multi-tenant management and things like that. So I would say we are committed to continue to make investments to go on that front. You know, it's moving out as fast as I expected. But sometimes these things take some time. And so that's going to be an area I'd continue to ask us for. And it's going to be an area I watch out for us as a management team. And go forward in the course. Yeah.

Phil Brace: And Phil, lastly, if I could, congratulations. It's nice to see you're going to be sticking around for a while in the executive chairman role. Along those lines, and I apologize if you covered this earlier, but your priorities now going forward over the next 12 months. And as part of that, given the recap that you guys have executed over the past quarter, you start thinking about going on the offensive from an M&A standpoint. Thanks. Yeah, I think question. I mean, look, I mean, we still have, we still have some work to do on the restructure side. Okay.

Phil Brace: So priority number one for me is to kind of kind of finish up the last few little bits of that. You know, as I mentioned in my prepared remarks, we are taking a, you know, a deliberate and solid approach on the CO search, but I've got great support from the board and from the management team. And in terms of, you know, priorities, I think what we're going to be doing looking at is kind of expanding our revenue diversity.

Phil Brace: We're going to be looking at expanding the portfolio footprint. And certainly, I think to the extent that we get ourselves on, you know, solid footing and growing, I certainly think we'll be looking both at that organic and an organic opportunities, but I think our priority right now is just continue the restructure. Get us to start, you know, realizing the fruits of some of our labor, like we already have. And then I got to say it's just it's a pleasure to be even in the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question that maybe.

Scott Searle: Again, congrats and thanks so much.

Kyle Smith: The next question comes from Kyle Smith of Steve, please go ahead. Hey guys, Kyle Smith on for Tories, Sanberg, it's people also wanted to extend my congrats on the strong results and improved capital structure. My first question is on geographic revenue.

Steven Gatoff: So any trends or surprises to note in the June quarter, and where do you see the company's geographic mix shift in over time? Yes, Stephen, thanks, Kyle. The short answer is no, no surprises. The geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America centric, which is the products business and the subscribe business. And then we have the telematics business that interestingly is not North America, right?

Steven Gatoff: It's Europe and ANZ. And so those businesses continue to operate well in their respective regions. And I think to feel good points, you know, there's a whole bunch of work that we've been doing in the last three quarters or so since we all got here to really grow the business and grow it profitably. That we're focused on continuing to do that. That we're not looking to go do any big global ships or expansions in the business. And so we're kind of focusing on our knitting and the geographic concentration kind of is what it is right now.

Kyle Smith: Very helpful, thanks.

Phil Brace: Switching gears about the press release mentioned the Ignite channel program, which was also highlighted on the prior earnings call. Maybe if you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides. Yeah, that's a good question. I mean, so really, I mean, in CGO for the most part, you know, prior to this program being launched at Ben, I would say exclusively a major carrier product.

Phil Brace: That's how we went through that. And so we have brought up some new executives. We've kind of launched a new program for the resellers that included some unique packaging oppositions. I mentioned we'll be doing some more differentiated products, including multi-carrier certifications. And really, the goal there is to expand our reach because in many cases, a lot of these products, particularly on the FWA side, but even on that, the myfides side are sold to smaller medium businesses.

Phil Brace: Sometimes even sold to governments, local, you know, federal state institutions via via resellers. And I think our goal is to kind of expand our reach into that channel. We know that, you know, some of the competitors exist and have a robust business in that space. And I think we are coming at it, frankly, from a differentiated point of view in that we have a rugged, excuse me, a very compact design embedded antennas that are included in there, unique packaging and decades of experience in the space that have been validated by the major carriers.

Kyle Smith: Great. Thanks, everyone. And congrats again. We're on thanks.

Operator: This concludes our question and answer session. The conference has now also concluded. Thank you for attending today's presentation. And you may now disconnect. .

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