Q3 2024 Inseego Corp Earnings Call
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Speaker Change: Good afternoon, everyone. Welcome to INSEEGO Corp's third quarter 2024 financial results conference call. Please note that today's event is being recorded.
Speaker Change: After today's presentation, there will be an opportunity for Q&A. To ask a question, you may press star and then 1 on your telephone keypad. To withdraw your question, you may press star and 2.
Speaker Change: On the call today are Philip Brace, Executive Chairman of Insego's Board of Directors, and Stephen Gatoff, the company's Chief Financial Officer.
During this call, certain non-GAAP financial measures will be discussed.
Speaker Change: A reconciliation to the most directly comparable gap financial measures is included in the earnings release, which is available on the investors section of the company's website.
Speaker Change: An audio replay of this call will also be archived there.
Speaker Change: Please also be advised that today's discussion will contain forward-looking statements.
Speaker Change: These 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.
Speaker Change: With that, I'd like to turn the floor over to Philip Brace, Executive Chairman of INSEEGO. Please go ahead.
Thank you, operator. Good afternoon, everyone.
Speaker Change: It's a pleasure to be with you today. I'll be making some opening remarks and then I'll be passing it over to Stephen who will provide much of the detail.
Q3 2024 was a significant quarter for INSEEGO.
Stephen Gatoff: We had a number of major events that, when combined, set the company on a positive trajectory for the future.
In particular, the company delivered strong financial results
Stephen Gatoff: We completed the restructuring of our debt and right-sized our capital structure. We divested a non-core international telematics asset for $52 million. And we continue to invest in our people, the product roadmap, and channel expansion to drive opportunities in the future.
Thanks for tuning in.
Let me provide some color.
Stephen Gatoff: First and importantly, our financial results for the quarter were ahead of our expectations.
Stephen Gatoff: Total company revenue came in at 61.9 million, 27% growth versus the same quarter last year and above our guidance.
Stephen Gatoff: The outperformance was driven by strong carrier promotions for our mobile products and good execution by our sales and operations team to capitalize on the increase in demand and delivering the product.
Stephen Gatoff: Our subscribed SaaS management platform also contributed meaningfully with good year-over-year growth in revenue and profit.
Stephen Gatoff: for the Total Company, based on good cost control and strong revenue results.
This delivered the highest adjusted even-though margin in years.
Stephen Gatoff: Second, we substantially reduced our debt and announced the closing of that transaction today.
Stephen Gatoff: In addition to the convert restructuring, based on the strong financial performance throughout the quarter, the company has been paying down the $20 million short-term loan and now has only a $6 million remaining balance.
Stephen Gatoff: Once the $15 million stub of the convertibles and the $6 million short-term loan are repaid, the company will have a manageable $41 million of long-term senior debt outstanding.
down from over $160 million a year ago.
Stephen Gatoff: This represents a dramatic improvement in the company's capital structure and persistence in Segoe Well, looking ahead to the future.
Stephen Gatoff: Third, we signed an agreement to divest our non-core international telematics business for $52 million in cash, which we expect to close this quarter.
Stephen Gatoff: This transaction provides increased liquidity for the company and enables us to focus on the US 5G wireless connectivity business.
Stephen Gatoff: And fourth, INSEEGO continues to invest in a strong product roadmap.
Stephen Gatoff: There are a number of new and exciting growth opportunities in front of us, and we continue to focus on diversifying our revenue base with multi-carrier products for the broader channel ecosystem.
Stephen Gatoff: in addition to expanding our business with the major U.S. carriers.
Stephen Gatoff: This diversification of our revenue base is important to help us weather the potential volatility that comes from us being tied to major carrier promotional activity.
It's also an important incremental driver of our long-term growth.
Stephen Gatoff: Finally, as we look ahead in the current quarter, we see continued year-over-year growth in revenue and adjusted EBITDA for our continuing operations.
Speaker Change: Before I hand the call over to Stephen, I'd like to update you on our CEO search and what I see ahead for Inseego.
Speaker Change: The board, along with the leading executive search firm, have been actively engaged with a number of strong candidates and we are encouraged with where things stand.
Speaker Change: While you can never predict exactly when this will get closed, our current expectation is it will have somewhat in place by the end of Q1 2025.
Speaker Change: Inseego now has a solid capital structure, a new management team,
Speaker Change: is growing, is profitable, is generating free cash flow, and has a strong product roadmap. A dramatically different position than at the beginning of the year.
Speaker Change: With that I would like to thank our stakeholders who work collaboratively to enable the restructuring and the Ensegal employees have been working hard to grow the business and deliver the financial results I share with you today.
Stephen Gatoff: I'm glad to take any questions in a few minutes. Right now I'd like to pass the call over to Stephen.
Stephen Gatoff: Thanks, Phil. Hey, everyone. I'd like to cover four topics with you today. First, I'll take you through the details of our Q3 2024 financial results.
Stephen Gatoff: Second, I'd like to update you on the completion of our capital structure overhaul and debt reduction that just closed. Third, I'll provide an overview of the sale of our telematics business. And fourth, I'll share some color on what we're seeing in the core business and provide guidance for Q4 as we finish out the year.
Stephen Gatoff: As Phil said, as we always do, we'll of course wrap up by opening the call to your questions. With that, let's start with our Q3 2024 results. First off, please note that given the signed agreement to sell the telematics business,
Stephen Gatoff: U.S. GAAP dictates that those operations be reported as held for sale on the balance sheet and in one net line item as discontinued operations in the P&L.
Stephen Gatoff: As such, the Q3 2024 results present the company's revenue and expenses on a continuing operations basis.
Stephen Gatoff: And importantly, we've laid out the apples-to-apples pro forma historical financial information for continuing operations for the prior six quarters in the earnings press release and in a new earnings deck that's on our investor relations website.
Stephen Gatoff: This data will give you the consistent quarterly info and visibility for all of 2023 and 2024 to see the trends and relevant performance in our Go Forward core business.
With that, let's get into the numbers.
Stephen Gatoff: came in at $61.9 million, an increase of more than 27% year-over-year versus Q3 2023, and for the second consecutive quarter, delivered total revenue growth for the first time in years.
Stephen Gatoff: The two primary growth drivers were, one, strong continued performance in the carrier mobile hotspot products from the large carrier partner MiFi promotion that we've talked about for the past few quarters, and that drove Q3 2024 mobile solutions revenue growth of more than 43% year-over-year.
Stephen Gatoff: And two, growth in our INSEEGO subscribed SaaS offering on a contract renewal that we also mentioned on the last call that drove services and other revenue growth of 33% year-over-year.
Stephen Gatoff: and on some slower purchasing from a carrier who is managing their inventory heading into year-end.
Stephen Gatoff: Finishing up with our telematics offerings, which as I said a moment ago we've entered into a contract to sell and is therefore reported as one net in line item and discontinued operations in the P&L, the business came in at a consistent solid growth on good continued demand and execution.
Stephen Gatoff: Moving on to Gross Margin, Q3 2024 Gross Margin Percentage for Total Company that Combines Continued Plus Discontinued Ops.
Stephen Gatoff: came in at approximately 38% compared to 33% on a non-GAAP basis in the same quarter in 2023.
Stephen Gatoff: As we previewed on the last call, the 100 basis point lower sequential gross margin in Q3 2024 was driven in large part by the overperformance of the mobile hotspot business that had a record quarter but contributed at a lower gross margin level.
Stephen Gatoff: Q2 2024, and to a meaningful improvement in efficiency as a lower percentage of revenue.
Stephen Gatoff: Sound headcount and expense management and operating efficiency efforts delivered total Q3 non-GAAP OPEX that was a favorable 3% lower sequentially over Q2 and came in at 28% of revenue on a continuing operations basis.
Stephen Gatoff: improved from 30% in the prior quarter, and meaningfully improved from 34% in Q3 of 2023. And that is including a fully funded bonus this year.
Stephen Gatoff: We realize OPEX efficiencies on a percentage of revenue basis in Q3 in both sales and marketing efficiencies and R&D improvements.
Stephen Gatoff: Pulling this all together, the very strong Q3 revenue performance and focused expense management drove record Q3 2024 adjusted EBITDA dollars
Stephen Gatoff: that came in at more than double the prior year quarter at 9.3 million dollars on a combined continuing plus discontinued operations basis.
Wrapping up our Q3 results with a September balance sheet.
Stephen Gatoff: As you know, we largely completed right-sizing our capital structure, materially reducing our debt, and improving the company's outlook going forward.
Stephen Gatoff: At the very beginning of the quarter, on July 1st in fact, we repurchased a large $45 million position in our convertible bonds at a discount of 30%.
Stephen Gatoff: I'll talk about this more in a moment as a material improvement to our capital structure as a subsequent event to the quarter
Stephen Gatoff: But we ended the September quarter with $107 million in convertible debt outstanding and a small stub of $6 million out of the original $19.5 million short-term loan that we had utilized to take advantage of the opportunity to buy in the large convertible position.
Stephen Gatoff: Overall, working capital continues to be well-managed these past several quarters, and we continue on a trajectory of generating cash flow.
Stephen Gatoff: Is that with the capital structure improvements and convertible restructuring that's further bolstered by ongoing cash generation We no longer have the going concern risk that became part of the company's disclosure earlier this year
Stephen Gatoff: With that, let's move to the second topic and look at the debt restructuring and the overall capital structure improvements that we have accomplished in the past several months.
Stephen Gatoff: As you heard us say since we arrived at Inseego, we've been methodical about driving a thoughtful and optimized outcome for our stockholders and restructuring the convertible notes and reducing overall debt levels.
Stephen Gatoff: This has been a complicated, multi-step process with many considerations, constituents, and moving pieces.
Stephen Gatoff: As you saw, we closed the restructuring of the convertible notes this past week. In total, we repurchased or converted to long-term debt and equity $147 million, or more than 91% of the outstanding notes.
Stephen Gatoff: The total overall consideration in the exchange consisted of four elements.
Stephen Gatoff: 3. The issuance of 2.9 million shares of common stock 4. The issuance of 2.5 million warrants to purchase common stock at a premium to when the agreements were signed
Stephen Gatoff: Pro forma for these transactions, total debt has been reduced to $62 million and is heading lower.
Stephen Gatoff: It consists of the $41 million in long-term senior notes, a small remaining stub of $15 million on the convert, and the remaining $6 million of the short-term loan that you heard me mention a few minutes ago.
Stephen Gatoff: Further to this point, and as I'll talk more about in a moment, we anticipate the six million dollar short-term loan and the fifteen million dollar convert stub to be fully repaid from a combination of balance sheet cash, free cash flow generation, and a portion of the proceeds from the telematic sale.
Stephen Gatoff: Going forward, Pro Forma for the planned additional pay-down of the small remaining debt balances that I just described, and for our anticipated excess cash on the balance sheet post-closing of the telematics sale.
Stephen Gatoff: The company's net debt is expected to be approximately $25 million with an ongoing annual interest expense of approximately $3.7 million.
Stephen Gatoff: Our pro forma capital structure provides the company with significant flexibility as we allocate capital and our free cash flow to driving growth.
As a final note on the capital structure improvement
Stephen Gatoff: We wanted to also call out a meaningful positive for the company. We were successful in structuring the warrants that were issued in the exchanges to be cash pay.
Stephen Gatoff: As such, upon their exercise, the company expects to receive approximately $38 million in cash.
Stephen Gatoff: a further enhancement to our 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.
Stephen Gatoff: Adding that strong dynamic to our profitable operations, free cash flow generation, and continuing growth, we see the company as now well positioned and financially strong to support driving further stockholder value through growth in our new product portfolio.
Stephen Gatoff: With that, let me share some info on the Telematic sale.
Stephen Gatoff: Our decision to divest that business was based on a combination of factors, including the strategic fit within our North American-centric 5G wireless solutions business.
Stephen Gatoff: our desire to de-leverage our capital structure and our intended streamlining of our focus and resource allocation on the strongest growth opportunities in our core product roadmap.
We ran a solid process.
Stephen Gatoff: It's a strong business, and it attracted interest from multiple buyers and were pleased with the sale price at roughly two times revenue, essentially twice the multiple that the company received for the sale of the legacy South Africa telematics business, then Sego Sold back in 2021.
Stephen Gatoff: We expect the transaction to close this quarter, and as I mentioned a few moments ago, we've provided pro forma historical financial info for the core continuing operations going back six quarters to Q1 2023, so you have the full period of comparable quarterly history.
Thank you.
Stephen Gatoff: With that, let's turn to the fourth discussion topic today on what we're seeing in the business in the current quarter and provide our guidance for Q4, which we want to reiterate with the telematics sale is for continuing operations only.
Q4 2024 faces a tough sequential cop for two reasons.
Stephen Gatoff: first, delivering on the heels of a record revenue and adjusted EBITDA quarter in Q3 2024, and second, the impact of the recurring annual seasonality of a lower sequential Q4 on carrier purchasing trends in the second half of December.
Stephen Gatoff: Nonetheless, we are bullish on delivering both meaningful revenue growth and material improvements in adjusted EBITDA year over year.
Stephen Gatoff: In product revenue, while we have reasonably good visibility on mobile broadband and a continued promotion at our largest carrier customer.
Stephen Gatoff: An offsetting end of a promotion at a North American carrier customer and some inventory management focus at another carrier customer temper our expectations to produce another breakout quarter in mobile in Q4 like we did in Q3.
deliver fairly consistent FWA sequential revenue in Q4.
Stephen Gatoff: On services and other revenue, we expect to have another solid quarter in Q4 that comes in at levels consistent with Q3 2024 on a dollar basis and meaningfully higher than the prior year in Q4 2023, thanks to the good work we've done on the Insego Subscribe platform.
Stephen Gatoff: And so far as gross margin, and again on an apples-to-apples continuing operations basis, we expect Q4 2024 gross margin percentage to increase over Q3 2024 on a greater proportion of FWA and services revenue.
Stephen Gatoff: Like our last call, we would again note that the final revenue mix between mobile broadband, FWA, and services and other will be the ultimate determinant.
Q4 non-GAAP operating expense from
Stephen Gatoff: And so, pulling this all together, we're providing Q4 2024 guidance for continuing operations. That is, the core ongoing business does not include the telematics operations as follows.
Stephen Gatoff: Total revenue from continuing operations in a range of $43 million to $47 million, a growth rate of 25% year-over-year at the midpoint.
Stephen Gatoff: and adjusted EBITDA from continuing operations in a range of $3 million to $4 million, a more than 50% growth year-over-year at the midpoint.
In closing, we're happy and not surprised
to see the strong growth and profitability delivered in Q3.
and we're encouraged by the positive dynamics in the business.
that are driving continued traction as we close out 2024.
Stephen Gatoff: and invest in new products to drive revenue growth in 2025. With that, we appreciate your time and support, and we're glad to open the call for questions.
Operator.
Speaker Change: Ladies and gentlemen, we'll now begin the question-and-answer session. To ask a question, once again, you may press star and then 1 on your telephone keypads. If you are using a speakerphone, we do ask you please pick up your handset before pressing the keys to ensure the best sound quality.
Withdraw your questions you may press star and two.
Speaker Change: Again, that is star and then one to join the question queue.
Speaker Change: Hey, good afternoon. Thanks for taking the questions. Nice to see all the efforts on the restructuring come into fruition here, guys.
Speaker Change: Maybe just to quickly follow up, I just want to clarify on the net debt
Speaker Change: commentary. At the current time the $52 million from telematic sale is not being reflected in terms of how you're addressing the balance sheet. Is that correct or are you assuming some of that in the pay down of the $15 million stub and the $6 million term loan?
Speaker Change: Press release, do not include application of the cash from the telematic sale.
Speaker Change: gotcha okay helpful and look you've given a lot of sequential guidance in terms of the different business segments I'm wondering if you could look a little bit further out in terms of
Speaker Change: Seasonality into the March quarter, what your early thoughts are on that front? And then if we look at the different business segments of mobile, hotspot, fixed wireless access, and then see go subscribe, you know, what are the growth rates that you are thinking about at the current time in 2025?
Speaker Change: Hey, Scott, it's Phil. Look, I think it's a little bit early for us to comment on what's happening in 2025. I mean, based on what we see now, if you kind of look at it, I think the Q1 tends to be a little bit seasonally down from the Q4 timeframe. I'm not seeing anything that would suggest abnormal seasonal patterns.
Speaker Change: And for us, you know, we commented that, for example, from FWA, that growth in FWA is really going to come from
Speaker Change: new products we've got coming kind of in the mid part of next year and also kind of coming off some lows where we've got some customers that are got some acquisitions of their own that they're kind of working through so we're kind of expecting that to grow from there so I'd suggest that our FWA growth is
Speaker Change: Maybe not. You know, we've got some puts and takes that are different than what we might see in the market just based on what's happening to our customer base.
Speaker Change: And then mobile, mobile growth really depends on kind of promotions and what's happened there and seasonality there, so it's a little bit early to tell, but
Speaker Change: The kind of how I think about 2025 is, you know, look at look at where we're kind of coming in 2024 and kind of progress what I would say, normal seasonal patterns, what we've seen the last couple of years. So it's kind of what we're what we're looking at.
Speaker Change: Okay, fair enough. And Phil, maybe on the hot spot front, just to
Speak a little bit out further.
Speaker Change: further and I guess strategically how you're thinking about the business.
Speaker Change: Are there different go-to-market strategies and ways that you're thinking about enhancing the gross margin and differentiation of the product portfolio? And then last one, just to throw in, and I'll get back in the queue, you're in a position that the company hasn't been in a long time with a very healthy balance sheet. Do you start to think about some inorganic opportunities going forward? Thanks.
Speaker Change: Yeah, good question. Look, on the gross margin side, I mean, we're never satisfied with the way they are. I think I've been clear about the fact that I think the company's got a long way that we can go, not only in the cost structure of our products, but frankly doing things like monetizing our software and doing a much better job of
Speaker Change: You know, frankly, that's an area where I'm not happy where we are yet as a company, and it's an area that we're going to continue to focus on building going forward.
Speaker Change: pushing on that front. So I would not expect this to be done there.
Speaker Change: And I think when we look at the hot, I mean, one of the areas we're looking at is diversifying our revenue base, right, making sure that we've got products.
that can support multiple carriers.
Speaker Change: maybe different use cases, go out to the channel environments, different approaches there to help diversify our revenue base, improve our gross margins. So I think we have a number of levers to pull, and the company is kind of focused on building those areas going forward. And then I think your second question, what was your second question?
Speaker Change: Just thoughts on the inorganic front, Phil. You know, given where you guys are in the disability business, yeah, how you're thinking about it.
Speaker Change: It's wonderful to be in that position right now, I mean, from where we were three quarters ago. I think that...
Speaker Change: Right now we're going to have a disciplined approach to capital. We're going to be careful. I think we've still got a couple of more things we just need to take care of, including paying down the stub and the remaining loan. But look, we're going to take a disciplined view for that. If there are things that are creative and that will be right in our wheelhouse, then we'll certainly look at that.
But, you know, nothing imminent.
Great, thank you.
Our next question comes from...
Speaker Change: Lance Batanza from TD Talon, please go ahead with your question.
Speaker Change: Thanks guys. Nice job on the quarter. A couple questions on the fixed wireless side.
Speaker Change: You mentioned that there was some M&A. I think you said that a couple of your customers had merged and that was putting some pressure on sales in the quarter. Could you elaborate on that a little bit in terms of magnitude and time frame? Do you expect that that's going to revert to the mean at any point or is this just sort of like a step function lower?
Speaker Change: And then also, I think you called out that you had another customer, and I may be getting this wrong, I apologize, but that was choosing to, that chose to reduce inventory levels into year-end, and I'm wondering if you could provide any additional color on that, and is that sort of, again, like a permanent destocking, or is that something that we think comes back in either the fourth quarter or early in the first quarter, perhaps?
Phil: Yeah, this is Phil. Look, I think the one, I mean, it's pretty public. There's a large U.S. carrier that's being acquired by another large U.S. carrier. The one that is being acquired was one of our customers, and so you might expect they are taking a very conservative
Speaker Change: posture with respect to what they're purchasing and all that other kind of stuff. So I don't necessarily, we're not planning on that.
Speaker Change: to somehow magically get back better, and we'll see what happens when, if and when the companies combine and do all that stuff. I just, I don't know much more I can comment on that publicly. And the other one you commented about was just managing inventory.
We're kind of watching and I think that
Speaker Change: You know, that's something we're just we'll see how that plays out
Speaker Change: I think last quarter you'd mentioned a newly implemented channel program that was beginning to ramp and that there was some question as to how successful and or how quickly that ramp would play out. Any update there? Are you pleased with the results there? Is that sort of going on alongside the noise from what we just discussed or is that also
you know, helping or hurting the results.
Speaker Change: I think we're making gradual incremental progress on that. I'm never satisfied with where that is, so no, I'm not satisfied with that.
Speaker Change: Similar question that I guess Scott asked on the software gross margin side. No. Are we making progress? Yes. Is it an area that's strategically important for us to continue to do? Yes.
Speaker Change: And you'll see us, like as an example, some of the things we're trying to do is put...
Speaker Change: More products out there that are certified across multiple channels because if there are multiple carriers because if you're a channel partner
Speaker Change: You have to be able to offer multiple different options for them depending on the particular use case. So some of those product announcements...
Speaker Change: that we're just starting now, right, are just kind of getting out there. So I would say that we are seeing green shoots. I think that it's positive. I think it continues to be an investment area for us. And I'm not satisfied where we are.
Speaker Change: I don't expect to be satisfied for where we are for quite some time, just because I want to keep us growing in this space.
Speaker Change: Thanks, and just the last one for me on the telematic sale. It looks like that that business the residual, the services business that you have left, the subscription or subscribe rather, that's running at about 85% gross margin. It looks like the business that you are selling is less than 60% gross margin.
Speaker Change: Could you explain why the remaining business is so much more profitable and was this a factor in the decision to divest? Thanks.
very complimentary
5G and wireless.
and Pat Archer.
Speaker Change: That has not a lot to do with the telematics disposition though, they're really run separately from an operations standpoint. As we mentioned on the call, the telematics business is a nice business.
Speaker Change: It's just something insofar as our strategic focus, if we, like other companies, have limited capital that we want to put to work and deploy, we're going to put it in our core sweet spot.
Speaker Change: of our product portfolio and our growth area and our 5G network services in the U.S. And for now, that's where we chose to focus, and it was an attractive asset insofar as generating capital to address capital structure and the other needs in the business.
Great, thank you.
Yeah, sure. Good question. Thanks.
Speaker Change: Our next question comes from Tori Sponberg from Stiefel Nicholas. Please go ahead with your question.
Yes, good afternoon. This is Jeremy calling for Tory.
Speaker Change: I guess maybe my first question for the mobile solutions business
Speaker Change: It sounds like there were, you know, I was aided by some nice, uh...
Speaker Change: promotions in the quarter. At the same time there's some last-time buys I think. Can you just give us a sense of what the steady state for this business is and maybe a little more incentive to see how much 4G is left here and just kind of the makeup of this business please.
[inaudible]
Speaker Change: I'll try my best to answer that. I mean, you know, I don't think there wasn't any material last time buys in there. So, I mean, I don't think any of that was a big play.
Speaker Change: The promotional activity, it's one of those things where, generally speaking, we always have some sort of promotional activity going on, and that's the nature of this business in the carrier space. This particular one is going really, really well, and we did a great job responding to it.
Speaker Change: Our customers are happy with it, and they seem to be extending it into the public sector markets, and we seem to be doing pretty well.
Speaker Change: I mean you can just look at our historic performance over the last three quarters in that space and you can kind of see that we've got...
you know, a pretty good run on that.
Speaker Change: I don't think we put a number on what that is, but it's a material part of the business.
Speaker Change: You know, I think we're looking to try and figure out how to extend it, how to diversify our revenue base, and how to grow our business, you know, and taking advantage of, frankly, making hay when the sun shines, right? The customer has strong demand, and we execute cleanly, and we got it, and, you know, our guidance going forward is reflective of a certain level of promotional activity going forward as well.
So...
Speaker Change: Thank you. That's very helpful. Maybe if we can, I guess, shift gears a little bit to the fixed wireless business. Can you, and I guess, you know, this might be helpful.
Speaker Change: Is this one of the businesses that will be helped by the channel?
strategy going forward? And maybe a question on that.
Speaker Change: Would there, do you expect any OPEX changes over the coming year just to support that new initiative? Also, is there going to be a need to maybe stock the channel or, you know, how do you, how would you expect to manage, you know, the inventory of the products that are aimed specifically at the channel?
Thank you.
Speaker Change: Yeah, look, I do think I think our channel presence are certainly probably disproportionately benefit to FWA space, but I think the mobile space may also be helped by this as well. I mean, and I think from an investor you know perspective or excuse me an investment perspective in OPEX
Speaker Change: We've already kind of reallocated some of our investments along. And if you look at some of the comments that Stephen made, we've actually improved our total spending.
Speaker Change: certainly improved all the metrics of the spending and you know, we expect to maintain a pretty disciplined focus on that going forward. I'm not expecting any step function change in operating expense going into 2020.
Speaker Change: 25. I think we have, you know, you make through some things around the margins here and there, but.
Speaker Change: We have what we have, and we're going to allocate the capital accordingly.
Speaker Change: Great. And maybe just a housekeeping item on the modeling side. Is the interest expense, I think it was $3.7 million, is that where we should be modeling for the other income line? Are there other, you know, meaningful puts and takes there that we should be aware of?
Yeah, we think, generally speaking, interest expense should start to...
Speaker Change: retirement or the pay down of the convert stub and the senior loan. So we talked about a kind of a steady state if you will of 3.5, 3.7 million dollars, you know, compared to you know, kind of 5 million annual run rate now. So we see an improvement and
interest expense from the new cap structure.
Speaker Change: great and one more if I could squeeze it in you know with all the restructuring that you've done
Speaker Change: the increasing shares and the warrants. Can you give us, you know, where you expect pro forma share count to end up, both on a fully diluted and a basic share count basis, please?
Speaker Change: Yeah, sure. The good news for the timing of all of these transactions, so we closed everything last week, which we're thrilled about for many, many reasons, not the least of which is
Speaker Change: that the answer to your question is on the cover of the 10Q that's getting filed tonight because it will have the current total share count outstanding and that number, to preview it, will be approximately 15.5 million shares.
Speaker Change: which is up marginally from 12.5 million shares on the last quarter, 10Q, and that includes the shares that were issued, etc.
Speaker Change: Got it. Great. Thank you very much and congrats on the strong execution.
Speaker Change: And ladies and gentlemen with that we will be concluding today's question and answer session and conference call. We thank you for attending today's presentation. You may now disconnect your lines.