Q4 2024 Inseego Corp Earnings Call

Lionel Bourdain, Rene Descartes, Michael Bolton, M.D. R.B. A.D. M.D. F.K. M.D. A.D. M.D. M.D. F.K. M.D. M.D. F.K. M.D. F.K. M.D. F.K. M.D. F.K. M.D. F.K. M.D. F.K. M.D. F.K.

Speaker Change: Hello and welcome to INSEEGO Corp's fourth quarter and full year 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 signal a conference specialist by pressing the star key followed by zero.

Speaker Change: After today's presentation, there will be an opportunity for Q&A. To ask a question, please press star then 1 on your telephone keypad. And to withdraw your question, please press star and then 2.

Speaker Change: On the call today are Juho Sarbacoss, Chief Executive Officer, and Stephen Gatoff, Chief Financial Officer.

Speaker Change: 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 Investors section of the company's website. An audio replay of this call will be also archived there.

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 risks 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 Forelooking Statements section contained in today's press release. With that, I'd like to turn the call over to Juho Sarbacost, Chief Executive Officer. Please go ahead, sir.

Juho Sarbacost: Thank you and good afternoon everyone. I'm incredibly excited to be here. First I want to thank the board for their trust and support.

Juho Sarbacost: I also want to extend my deep appreciation to the INSEEGO team. You've given me a warm welcome throughout my first 45 days, and it already feels like home.

Juho Sarbacost: This company has so much great talent and I look forward to leading us into the next chapter.

Juho Sarbacost: I want to take a moment to reflect on the past 12 months.

Juho Sarbacost: During this time, Inseego has undergone a significant transformation. We have recapitalized the company by optimizing working capital, restructuring the balance sheet, and materially reducing debt.

Juho Sarbacost: At the same time, we have streamlined our portfolio by divesting non-core assets and strengthening business fundamentals, laying a solid foundation for future growth and expansion.

Juho Sarbacost: These transformational efforts have positioned us for the future, and as CEO, I couldn't be more excited to focus my energy on driving our Go Forward strategy.

Juho Sarbacost: Again, I want to thank the team for their resilience and determination in getting us to this pivotal moment.

Juho Sarbacost: Next, I'd like to share why I joined Inseego, the compelling market opportunity in front of us, and what I'm driving as our strategic focus areas moving forward.

Juho Sarbacost: My entire career has been dedicated to wireless innovation and market expansion.

Juho Sarbacost: Whether in leadership roles across the North America carrier business at Nokia and Microsoft, founding an OEM company to relaunch Nokia phones and scaling it to $3 billion top line, or serving as president of Qualcomm North America.

Juho Sarbacost: I've had the privilege of driving industry transformation and shaping the evolution of wireless technology.

Juho Sarbacost: I understand the space, its challenges, opportunities, and the immense potential. I think it's also important to note that when I ran Qualcomm North America, Inseego was my customer.

Juho Sarbacost: This experience combined with my industry background gave me valuable insights into INSEEGO's position and market opportunity before I even came on board. It's safe to say that I knew what I was stepping into.

Juho Sarbacost: There are three main reasons why I found the opportunity to join Inseego as CEO to be so compelling. First, Inseego sits right in front of a large and very attractive market opportunity.

Juho Sarbacost: Wireless broadband is entering a golden age, evolving from niche use cases to become the preferred primary broadband solution for homes and businesses alike.

Juho Sarbacost: Today, there are 2 billion 5G connections globally, and by the end of the decade, that number is expected to exceed 10 billion.

Juho Sarbacost: According to Wireless Infrastructure Association, Fixed Wireless Access, or FWA, is the largest growing broadband technology in the U.S. and has accounted for the maturity of net additions over the past 18 months, leading all other broadband segments.

Juho Sarbacost: The wireless broadband market is growing already today, despite the current network capacity constraint environment.

Juho Sarbacost: We believe this trend will only accelerate as 5G advanced and 6G take hold in conjunction with the new spectrum that I expect will get unlocked in the upper mid-band and the 7-8 GHz spectrum in the 6G era.

Juho Sarbacost: I'm very bullish on this whole market and the tremendous opportunity it presents.

Juho Sarbacost: The second reason I joined the company is Inseego's unmatched engineering expertise and track record of wireless innovation. Inseego has a long history of industry firsts and pioneering breakthroughs that have shaped the wireless industry.

Juho Sarbacost: From developing the world's first handheld cradle modem, to inventing the MiFi hotspot, revolutionizing mobile connectivity, to leading the pack in millimeter wave, it's safe to say that Inseego has always been a wireless pioneer.

Juho Sarbacost: We have a strong engineering team here in San Diego, quite frankly the best I've seen in wireless, paired with an impressive prototyping and testing facility.

Juho Sarbacost: This combination enables us not only to be the first to market with the latest technology, but also engineer superior products. All our core IP is created right here in the US, which is an invaluable asset.

Juho Sarbacost: We are building the future of wireless broadband right here in San Diego.

Speaker Change: Finally, the third reason I joined Inseego is because it represents a rare opportunity to create significant value. The combination of an incredible expanding market opportunity and Inseego's unique capabilities make this an exciting moment to lead the company.

Speaker Change: With the right technology, talent, and market position, we have a clear path to expand our product portfolio and go-to-market strategy to capture the opportunity ahead of us.

Opportunities like these don't come along very often.

Speaker Change: As CEO, my focus is on unlocking driving sustained long-term growth. I could not be more excited about the journey ahead.

Speaker Change: Next, I'd like to share with you what I see looking ahead and the direction I'm going to take.

Speaker Change: At INSEEGO, we believe that wireless is the future of broadband and will ultimately be the dominant connectivity paradigm.

Speaker Change: Our mission is to accelerate that through our technology leadership. We will be first to market with the latest advancements at 5G walls to 6G and by engineering superior high-performing cloud-managed products.

We've identified two strategic vectors to drive sustained long-term success.

Speaker Change: The first is driving execution and scaling of our FWA and MiFi businesses.

Second is accelerating our software and services roadmap.

In addition, we will revisit our operations strategy.

Let me share some color on each of these.

Speaker Change: The first growth vector executing and scaling our FWA and MyPipe businesses is a statement of both product and go-to-market.

Speaker Change: Our product roadmap will evolve to be better aligned with carriers and their requirements, and we will expand to a tiered portfolio to drive higher-velocity stock SKUs.

Speaker Change: For FWA, this means having stock products in the carrier business segment. And for MiFi, this includes expanding into high-volume, mid- and value-tier segments.

Speaker Change: We will also invest in scaling our product and solution offerings beyond the current prosumer, SMB, and mid-market enterprise to include up-market enterprise as well as industrial segments.

Speaker Change: Alongside this renewed product strategy, we will strengthen our two-pronged go-to-market strategy.

Speaker Change: We have longstanding partnerships with the carriers in North America. Not only do we sell in to get our products stocked, but we also work alongside carrier sales teams to identify new opportunities, find the right solutions for the end customers, and close the deals.

Speaker Change: We also have a strong network of value-added resellers, or VARs, that we partner with.

Speaker Change: Often times, the carrier tries an opportunity with an end customer while the VAR fulfills the order.

Speaker Change: At other times, the VAR directly leads the deal. In both scenarios, Inseco plays a key role in aligning both parties to improve efficiency and to deliver the best possible customer outcome.

Speaker Change: The second growth vector is doubling down on our investment in software, for the entire solution stack both device and in the cloud.

Speaker Change: We will further differentiate our FWA and MiPi products by introducing advanced routing capabilities to meet the needs of enterprise and industrial customers.

Speaker Change: We will look to accelerate our investment in Inseego Connect, our cloud-based device and edge management SaaS platform, to establish leadership in ease of deployment and remote management.

Speaker Change: We will offer extensive API support for partner integrations and leverage new AI capabilities to enhance the data traffic prioritization and network slicing functionality coming with 5G Advanced.

Speaker Change: Inseco Connect is a compelling path to adding reoccurring revenue as well as an important contributor to cross-margin.

Speaker Change: Also in our software and services portfolio, we have our very strong wireless subscriber management platform, In-C-Go Subscribe.

Speaker Change: This is an attractive business that we've built and will continue to invest in, and I'm excited about the prospects of adding new features and functionality to the value proposition.

Speaker Change: We also need to revisit our operations strategy to be able to scale our FWA and MiFi businesses to compete in new segments and to improve our margins.

Speaker Change: I've already introduced material changes to our procurement practices, how we manage our key vendors, our development partnerships with ODMs, as well as our manufacturing partnerships.

Speaker Change: We need to better align ourselves with the best players in the industry for each business segment.

Speaker Change: Just like with our U.S.-based engineering team, I also view this as an area for us to differentiate from a geographic strategy perspective.

Speaker Change: I have deep expertise in this domain and have already identified focus areas for near-term improvements.

Speaker Change: With that, I would like to provide some perspective on my market and customer facing activities.

Speaker Change: I've only been here 45 days, but I've made it a priority to meet the large wireless broadband customers here in the U.S. It has been great to reconnect with my existing relationships and to see that INSEEGO is held at a high regard in the industry and our product leadership is widely acknowledged.

Speaker Change: We've already identified both near-term growth as well as long-term strategic opportunities and are now hard at work to materialize them.

Speaker Change: I'm very encouraged by the momentum and look forward to sharing more in our next earnings call.

Speaker Change: Above all, our focus remains on sustainable long-term growth. The wireless broadband industry operates on long cycles, and while we are laying down the groundwork today, the full impact of our strategy will emerge in late 2025 and 2026.

Speaker Change: Next, I'd like to comment briefly on our 24 results and provide my thoughts on Q1 as we move into 2025.

Speaker Change: This past quarter marked another important step in in-sequel transformation, demonstrating the power of our execution.

Speaker Change: I'm incredibly proud of the team's relentless focus, which delivers strong financial and operational performance.

Speaker Change: In Q4, we achieved 34% year-over-year revenue growth, improved gross margins, executed disciplined expense management, and delivered a third consecutive quarter of positive GAAP operating income.

We deliver Adjusted EPMR Chains, again in the double digits.

Speaker Change: And we sharpen our strategic focus with the closing of the sale of our telematics business.

Looking ahead, as we mentioned on the last call.

Speaker Change: We expect a sequential decline in Q1 revenue due to higher than anticipated customer inventory at year-end.

Speaker Change: Product Transitions, and a promotional initiative that is additive but not at the same robot levels as the second half of 2024 that was two to three times higher than historical levels.

Speaker Change: I'm confident in our long-term strategy and anticipate delivering overall year-over-year revenue growth for 2025.

Speaker Change: With that, I'd like to hand it off to Stephen, who will provide more details on our financial results and outlook. Over to you, Stephen.

Stephen Gatoff: Thank you, Hope. We're thrilled to have you here and welcome your energy and hit-the-ground running leadership in driving the company forward.

Speaker Change: Hi, everyone. I'll cover two pretty concise topics today. First, I'll take you through our Q4 and full year 2024 financial results, and second, I'll share some color on what we're seeing in the business that's

Speaker Change: consistent with our comments on the November call and around which we'll provide guidance for Q1 2025 and a high-level view of full year 2025 top-line expectations. As noted, and as we always do, we'll of course wrap up by opening the call to your questions.

Let's start with our Q4 and 2024 results.

Speaker Change: First off, as you know, we closed the sale of the telematics business in late November 2024 for $52 million in cash.

Speaker Change: were pleased with that price that was roughly two times revenue or essentially double the multiple that the company received for the sale of the legacy South Africa telematics business that Asigo sold back in 2021.

Speaker Change: And so far as our reporting of our financial results per U.S. GAAP, the telematics operations are reported in one net line item as discontinued operations on the P&L.

Speaker Change: As such, our Q4 and full year 2024 financial results for the company's core revenue and expenses are presented on a continuing operations basis.

Speaker Change: As we provided on our last call, we've laid out the apples-to-apples pro forma historical financial information for continuing operations by quarter for 2023 and 2024 in our earnings deck that's posted on our investor relations website.

Speaker Change: With that, let's get into the numbers. As Juho mentioned, Q4 was a solid quarter. Total revenue came in at $48.1 million, an increase of more than 33% year-over-year, and for the third consecutive quarter, total revenue grew again year-over-year for the first time in many years.

Speaker Change: strong performance in the carrier hotspot product from the large carrier partner that we've talked about for the past few quarters, and that drove Q4 2024 mobile solutions revenue growth of more than 59% year over year.

Speaker Change: And two, year-over-year growth in our INSEEGO subscribed FAS offering on the 2024 contract renewal that we've also mentioned on previous calls, that drove services and other revenue growth of 62% year-over-year versus Q4 2023.

rounding out product revenue, fixed wireless access,

Speaker Change: and others focused on the consumer market that is being acquired by another carrier customer.

Speaker Change: As well as by some slower purchasing from another carrier customer who was managing their inventory at year-end. As noted, both of these items are also impacting Q1 2025 that we've mentioned and we'll discuss more shortly.

Finishing revenue with a look at the full year 2024.

Speaker Change: and Sego posted annual revenue growth for the first time since the pandemic.

Speaker Change: 2024 revenue came in at $191.2 million, a year-over-year growth of 14.3%. That consisted of product revenue that grew 8.3% year-over-year and services revenue that grew more than 40% year-over-year.

Moving on to gross margin.

Speaker Change: Q4 2024 non-GAAP gross margin percentage increased both sequentially and year-over-year, coming in at 37.4%, a 260 basis point improvement versus the 34.8% in Q3 2024.

Speaker Change: and a nearly 200 basis point improvement to the 35.6% non-GAAP margin in the same quarter of 2023.

Speaker Change: As we talked about previously, this resulted from our driving higher value and higher margin products and a more favorable revenue mix of products and go-to-market channels.

Speaker Change: Looking next at non-GAAP operating expenses, as you've heard us say consistently, we continue to focus on operational excellence, and for another quarter, we've successfully managed the business to both lower sequential dollar spend versus Q3 2024, and also lower year-over-year spend versus Q4 2021.

2024.

Speaker Change: as a lower percentage of revenue in Q4 year-over-year from 43% of revenue.

Speaker Change: in 2023 to 30% in Q4 2024, and we'd make a point to note that that improvement includes an employee bonus in 2024 for the first time in a very long time.

Thank you. Thank you. Thank you.

pulling this all together.

Speaker Change: The Q4 revenue performance and focused expense management delivered strong Q4 2024 adjusted EBITDA dollars that came in at more than double the prior year quarter at $5.4 million, the third largest result in years.

Speaker Change: Adjusted EBITDA margin also came in at all-time high levels at 11.2% for Q4 2024.

Speaker Change: This strong execution is seen in the full year 2024 results as well. 2024 adjusted EBITDA came in at $20.5 million, the single highest level on an apples-to-apples basis in more than a decade.

Speaker Change: and more than two and a half times 2023 adjusted EBITDA of $8 million.

Speaker Change: Wrapping up our 2024 results with a balance sheet, as you know, we've been methodical about restructuring the convertible notes, reducing overall debt levels, and supporting the value of common stockholders.

Speaker Change: We largely completed right-sizing our capital structure in Q4 with the exchange of more than 91% of the company's 162 million dollars in outstanding convertible notes

Speaker Change: That series of transactions materially reduced our debt, improved our liquidity, and will drive our ability to invest in the business going forward.

Speaker Change: When we started in 2024, the company had more than $165 million in total debt that matured within 15 months and had $3 million in cash.

Speaker Change: We ended 2024 with $56 million in total debt and a healthy cash position of $40 million.

Speaker Change: That total debt consists of the $15 million stub of the convertible note that will be paid off in full on May 1st and $41 million in the cost-effective and long-term senior notes due 2029.

Speaker Change: These notes were part of the consideration received by bondholders who participated in the exchange of the convertible notes.

Speaker Change: Our net debt position at December 31st was an exceedingly manageable $16 million.

Speaker Change: Overall, working capital was well managed this past year, and most importantly, we continue on a trajectory of generating positive operating cash flow.

Speaker Change: With that, let's finish with a second topic around what we're seeing in the business and provide guidance for Q1 2025.

Speaker Change: Consistent with what we talked about on the November call, Q1 presents a slow start to 2025 on a revenue basis for three primary reasons.

Speaker Change: First, Q3 and Q4 2024 had record revenue dynamics that were driven by unprecedented mobile hotspot execution with one of our key carrier customers where product volumes were double and nearly triple historical norms.

Speaker Change: Second, 2024 was the end of a special national mobile hotspot program at one of our North American carrier customers that had generated nice volumes in 2024, but that is not continuing.

Speaker Change: And third, like we discussed around the Q4 numbers, Q1 is also impacted by lower FWA purchases from a large carrier customer that is managing their inventory levels as they transition to the next generation FWA product.

Speaker Change: Having said that, we remain very positive on the prospects for FWA and specifically on our new products that we're looking to bring to market in the middle of 2025.

Speaker Change: For services and other revenue, we expect Q1 levels to be consistent with Q4 2024 on a dollar basis and meaningfully higher than the prior year in Q1 2024.

Speaker Change: Thanks to the good work we've done with the NCGOSubscribe SaaS platform.

Speaker Change: Insofar as gross margin percentage, we are driving continued improvement in Q1 2025 and expect gross margin percentage to increase both sequentially over Q4 2024 and year-over-year on a greater proportion of FWA and services revenue.

Speaker Change: Like we called out in the past, the final mix between mobile broadband, FWA, and services will be the ultimate determinant of where margins shake out.

Speaker Change: Pulling this all together, we're providing the following guidance for Q1 2025. Total revenue in a range of $30 million to $33 million and adjusted EBITDA in a range of $2 million to $3 million.

Speaker Change: While there are some anticipated revenue challenges in Q1 as we start the year, we're bullish on the prospects for the business as we move into 2025.

Speaker Change: We expect our initiatives to introduce new products and diversify the customer base to drive overall revenue growth for the full year 2025, and we expect to deliver sequential quarterly revenue growth each quarter as we move through 2025, beginning with Q2.

Speaker Change: In closing, Insigo has overhauled its financial foundation and is now well positioned to fund our growth initiatives as we move through 2025.

Speaker Change: 2024 was a pivotal year where we delivered a return to total revenue growth, meaningfully expanded the company's profitability, disposed of a non-core asset that generated substantial cash to invest in the business.

Speaker Change: eliminated our convertible debt overhang and invested in a scalable, go-to-market model for long-term expansion.

Speaker Change: with an industry veteran and a CEO role leading the company who has incredible relationships and industry perspectives.

Speaker Change: and a diversified and expanding hardware and SaaS product portfolio, we continue to be focused on driving stockholder value through revenue growth, improved gross margins, operating profitability, and positive cash flow generation.

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

Operator.

Speaker Change: Thank you. 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 speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star and then two.

Speaker Change: And your first question today will come from Scott Zero with Roth Capital. Please go ahead.

Speaker Change: Good afternoon. Thanks for taking the questions. Juho, welcome aboard. Congratulations. It's nice to see someone of your caliber as part of the NCEA organization going forward.

Speaker Change: Before diving into some of your comments, Juho, in terms of...

Speaker Change: the opportunity set and where you're taking the company in the future.

Speaker Change: I wanted to clarify some of the guidance in terms of Steve, you know, from an inventory standpoint, customer inventory, can you give us an idea in terms of how many weeks of inventory we're looking through to burn down? And I want to clarify the comments around 2025 growth for the year.

Speaker Change: That would imply a pretty significant uptick through the second to fourth quarters of this year, north of $50 million a quarter, I think, on average, which is actually above where consensus numbers have been. I just want to clarify that if that's what you're communicating, that type of growth into the middle and second half of 2025.

Speaker Change: Hey, Scott, Stephen, we'll tag team, of course, on NSF Coal with you.

But yes, you heard the outcome.

Speaker Change: The two dynamics, which is we are targeting and anticipate growing revenue for the full year 2025 over 2024.

So, yes, that's the takeaway.

Speaker Change: Yes, it is a challenging revenue start to the year with Q1,

Speaker Change: starting in Q2 and I'm with you on the math that does portend that the back half of the year should see some really good traction from a whole host of initiatives.

Speaker Change: that we've really begun in earnest in the last five weeks with Juho's arrival. And, Scott, like I mentioned in my remarks,

Speaker Change: There's a significant opportunity that we see in the marketplace today with our existing large partners as well as broadening our customer base. So that's one of the key drivers why we have Diablo for the entire year.

Speaker Change: Very helpful, and maybe you vote just to follow up on that comment.

Speaker Change: Where do you see a lot of that growth coming from the second half of this year then?

Speaker Change: Do you have visibility to new customers and design wins on that front? You mentioned some new products as well, I think, on the hotspot front that'll start to kick in the middle of this year. But also, in your opening comments and in the release, you talked about some other vertical market opportunities that you're starting to hit as well, you know, such as medical device and some other markets. I'm wondering if you could expand on some of those thoughts.

Speaker Change: Yeah, absolutely Scott, happy to do that. If you look at our product plan for 2025, first of all, you'll see strong refreshes, if you will, for the product lines that we have in market today, which is

Speaker Change: absolute key for us going forward. We also see great expansion opportunity, I would say particularly on the FWA side, as we continue to invest in our broadened device portfolio, but also in CECO Connect.

Speaker Change: So you should see us continue to grow from S&P to mid-market enterprise and then even more so large enterprise and even industrial segments towards the end of the year.

Speaker Change: So those are some of the key code drivers that I see going forward in 2025.

Speaker Change: and maybe just quickly to follow up and then I'll get back in the queue but in terms of some of the relationships you've talked about with I think a wireless ISP that you mentioned in the current quarter but also your discussion about narrowing the digital divide

Speaker Change: There's obviously a lot going on as it relates to defunding and I think fixed wireless access is gaining much greater traction in terms of

Speaker Change: Probably the mix going forward in terms of those connections. Is that an opportunity for you guys, or are you guys a little bit behind the curve on that front? And we'll see you focusing more on the higher end, I'll call them enterprise types of opportunities. Thanks.

Speaker Change: I think it will be so you'll definitely see us expand our portfolio also in terms of tiering in the marketplace, right? So we are the household name today in premium Wi-Fi. I see no reason why we wouldn't be participating in the marketplace in a broader sense.

Speaker Change: When it comes to government funding, like once that picture clears out, we're definitely going to enjoy the benefit of that, together with the rest of the ecosystem. So we're paying close attention as to how that will play out. If you look at fixed wireless access, I'm also...

Very excited to explore.

residential use cases in addition to the

Speaker Change: enterprise and commercial segment. There's definitely an opportunity with the broader partnership with the large wireless players in the industry, but there might also be wired partnerships that you'll see us enter during 2025.

Great, thanks so much. I'll get back to you.

Peace out. Thank you.

Lance Vitanza: And your next question today will come from Lance Vitanza with TD Cowan. Please go ahead.

Lance Vitanza: Hi, thanks for taking the questions. Juho, welcome, and I appreciate the background that you discussed on the call, but could you perhaps talk a bit more about the customer relationships?

Lance Vitanza: that you bring to bear coming from Qualcomm and how quickly you think you can implement and improve and see those go-to-market processes. I mean, I did note the

Lance Vitanza: Implication for the growth in the back half of the year and frankly that's a little bit faster than I would have expected

Lance Vitanza: But I guess what I'm trying to drive toward is some sense of the timeline on an expected sustainable revenue ramp, if we think that what we see in the second half of this year could extend out into the future, or should we expect some additional lumpiness coming off of that strong back half of this year?

Lance Vitanza: It's great to hear your voice, excellent questions, and you're absolutely correct.

Lance Vitanza: cycle in the wireless industry, like the way that the carriers decide their stock skews, that is a 12-month cycle. But what's important to note that we already today have a broad portfolio which is going to refresh and expand.

Lance Vitanza: during 2025 of products that have been certified across multiple carriers.

Lance Vitanza: which is one of the strengths that we have given that we also operate in-channel.

Lance Vitanza: Going back to your question on the relationships that are pretty bare and what to expect in terms of

Lance Vitanza: engagement on that front. I think it's safe to say that we've engaged with all of the major players when it comes to broadband.

Lance Vitanza: We're also wired in North America and what we're what we're now hard at work is converting the opportunities that we discussed into a Revenue roadmap, and that's that's one of the key things that

Lance Vitanza: giving us the confidence to keep a guide on year-to-year growth for the full year of 2025 like Stephen has said.

Lance Vitanza: And then, thank you. That's helpful. And there's a similar question on the procurement slash supply logistics side. Are those processes that take

Speaker Change: several quarters to successfully implement. I mean, I would kind of imagine that, you know, this year is the year that you put the pieces in place and then you begin reaping some of the, you know, the benefits from these investments, you know, next year, again, on the cost side, procurement and whatnot. Is that sort of fair or do you think you could get more immediate?

you know, relief through the numbers this year.

Speaker Change: You know as we as we grow our top line year-on-year, I think that warrants new discussions with our supplier base.

Speaker Change: whether it's key component vendors, ODMs, or our manufacturing partners for that matter. So I definitely look forward to engaging also the supply chain part of our partners.

Speaker Change: with the discussion. If you look at them from a time-to-market standpoint of view, one of the things that we have as a core asset for the company is the ability to rapidly develop prototypes and basically iterate.

Speaker Change: on the hardware design for new products. That's also very helpful as we're developing new, I'll call it delivery modalities for different segments in our portfolio.

Speaker Change: So you will definitely start engaging differently already during 2025 in terms of how we bring the products to market and how do we think about our development and manufacturing partnerships.

Speaker Change: Great and then one just one last one for me with the telematics sale now behind you is it safe to assume that this is the right asset mix going forward and we really shouldn't be expecting to see any incremental sales divestitures or or the need to go out and make any technology acquisitions going forward is this sort of we have the pieces in place right now?

Speaker Change: Luke, so our objective is to become the leading provider, the partner of choice.

in both mobile and fixed broadband.

That's a statement on both.

hardware portfolio, device software,

Speaker Change: the very unique cloud assets that we command, as well as go-to-market.

Speaker Change: That is the area where you should expect to see us continue to invest as we further accelerate our revenue roadmap.

Speaker Change: We will absolutely also consider inorganic opportunities, but that's going to be through a very diligent and thoughtful process.

as we start engaging in those activities.

Okay, great. Thanks for your help.

Thanks, Len.

Speaker Change: And your next question today will come from Tory Zandberg with Stiefel. Please go ahead.

Yes, thank you and yoo-hoo, welcome to the show.

Tory Zandberg: and Stephen, nice to talk to you. My first question is just a clarification question on the annual or the 2025 outlook.

Speaker Change: So you're saying that you would basically grow on top of the 191 that you reported for 24. There's no other pro forma number that we should think about in this sense.

Tory Zandberg: Hey, Tori, thanks. Yeah, that's basically right. When you're coming off the base, you know, as Juho was just going through, there's a whole bunch of initiatives and things that we're working on now that we

Tory Zandberg: see an acceleration to performance in the past half of the year and exiting the year, but that should portend to growth for the total year over year. So that is the correct takeaway and the numbers you have are correct.

Speaker Change: Great, and you know, I know this is a very difficult question to answer because obviously, you know, we're sort of you're just getting started here But if you if you think about you know, the mobile broadband versus FWA versus software services, how do you envision that mix to evolve, you know over the next several years?

Thank you.

Speaker Change: I don't think I'm in a position to give you ballpark numbers, but I'm definitely happy to help you on how to think about the overall strategy and what to expect going forward.

Speaker Change: First I would like to say that I look at this as a platform. So we have a very modular development strategy when it comes to our hardware.

Speaker Change: which is the device software and key part of our secret sauce that rides on whether it's MyFly or FWA. And of course, Incebo Connect helps you manage your entire fleet, whether you're mobile or fixed.

with the broadband.

Speaker Change: These two opportunities are very different, so if you look at the future growth. FWA, what I expect to see happen is that while the carriers will be capacity constrained on their consumer deployments,

Speaker Change: There's going to be no cap when it comes to the business or enterprise segment part.

Speaker Change: of the carrier FWA rollout. The reason why I say that is that the argument of profitability is so strong that you'll continue to invest in network resource, whatever you need to continue to drive your growth in the enterprise segment.

Speaker Change: That enterprise segment is also the area where our differentiation really shines.

whether it's the full stack solution that I described.

Speaker Change: or our go-to-market capability where we can bring the best of both worlds with the value-added resellers as well as the carrier.

Speaker Change: I strongly feel that FWA, both carrier war, but carrier being the volume driver in this S&P all the way to industrial segment, is going to be a great growth journey for us.

Speaker Change: On MiFi, the same applies. We have public sector, we have mobile enterprise use cases that...

Speaker Change: Our products are perfect and designed for. But then, if you look at the net new white space, if you will, where we're not operating today, that would be MiFi in the carrier core stock SKUs.

More in the math bucket part.

Speaker Change: of the line. So that's an area where I don't see any reason why we wouldn't go and participate more effectively.

Speaker Change: That's great perspective. Just one last one for you, Stephen. So, OPEX.

Speaker Change: You know, based on my math, per your EBITDA guidance, you know, somewhere, you know, sort of high nines.

Speaker Change: Is that sort of the run rate that we should use going forward or will you see some step-ups throughout Canada 25, you know, especially given some of these new go-to-market strategies that Juho just talked about?

Yeah, that's a good point and your rationale is correct.

Speaker Change: particularly early on in the first half of the year as we invest in a lot of new products.

Speaker Change: You won't see that all flow through the P&L specifically, GAP at least, but you will as far as cash as you build new products until they go GA, that's capitalized.

Speaker Change: And so if you look at those two, which we obviously disclosed all of that, you'll see that pick up in Q1 and Q2 of the spend, and then it tapers in the back part of the year to drive that new product and growth.

Sounds good. Thank you very much.

Absolutely. Thank you, Torrey. Thank you.

Speaker Change: This concludes our question and answer session. I'd like to turn the call back over to management for any closing remarks.

Speaker Change: Thank you, Operator, and thank you, everyone, for the thoughtful questions. Inseego is at a pivotal moment with wireless broadband demand accelerating, a strategy to expand in existing and to new markets, and a team with the right capability to go and execute on it.

Speaker Change: We're deploying a scalable, long-term growth plan, strengthening our carrier and valuated retailer partnerships.

Speaker Change: Enhancing our solution portfolio and positioning Inseego as a mobile and fixed wireless broadband provider of choice.

Speaker Change: In two weeks, Stephen and I will be at the Mobile World Congress in Barcelona where we look forward to connecting with many of you and showcasing some of our latest innovations.

Speaker Change: In closing, I want to thank our employees, customers, and partners. Your dedication and hard work drive INSEEGO and the entire industry forward. I couldn't be more excited about the journey ahead.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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