Q1 2025 Inseego Corp Earnings Call

May 8, 2025

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Vikas: On the call today are you hope sorry, Vikas, Chief Executive Officer of <unk>, and Steven <unk>, Chief Financial Officer.

Vikas: 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 Relations section of the company's website.

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

Vikas: Please also be advised that todays discussion will contain forward looking statements. These forward looking statements are not historical facts, but rather are based on the company's current expectations and beliefs for a discussion on factors that could cause actual results to differ materially.

Vikas: From those 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.

Savikas: Please also refer to the cautionary note regarding forward looking statements section contained in today's press release with that I would like to turn the call over to you host Savikas chief.

Chief Executive Officer. Please go ahead.

Savikas: Thank you operator, and thank you all for joining these my second earnings call as the CEO of <unk> and I'm, even more excited to be here today than the last time, we spoke in February.

Savikas: I'm proud of the broker adds we've made executing the strategy I set in motion when I joined <unk> in January we have a lot of work ahead of us, but we're getting it done.

Savikas: Wanted to thank the awesome you see your <unk> team for their focus and energy and commitment.

Savikas: Today I will focus on two topics first I will give you an overview of our Q1 results second I would like to share what im seeing in the business today and update you on the strategy that's underway and how it laid the foundation for long term growth.

Savikas: Let me start with a quick overview of our Q1 financial results. The Stephen will take you through in more detail.

Stephen: We delivered revenue within guidance and adjusted EBITDA came in above expectations, you benefit software hardware volumes, while revenue was impacted by some delays carrier mobile broadband promotions on FW Iot address gross margin held strong unfavorable revenue mix and importantly, we invested in key product and growth initiatives without <unk>.

Speaker Change: Hello and welcome to Inseego Corpse, 1st quarter of 2025, Financial Results Conference

Stephen: <unk> cost discipline is evident in the strong adjusted EBITDA results.

Stephen: Before I move on to strategy and execution I want to share one of my key initiatives that we successfully executed in Q1.

Stephen: <unk> has a legacy of leading in wireless innovation and an exceptional team of industry, leading engineers and cellular modem antenna technology.

Stephen: At mobile World Congress in Barcelona. This past March we were the first OEM in the world to make a <unk> released 18 data call, we'd been new Qualcomm tracker and when Gen. Four Elyse <unk> platform in our next generation of cellular router.

Stephen: <unk> is a testament to <unk> superior engineering capability, our strong partnership with Qualcomm and our commitment to pioneer the latest and greatest in wireless <unk>.

Speaker Change: On my call today, the Stark-Eho Sarvikas, Chief Executive Officer of Inseego, the Indian opposition of the E.R. Q&A, Chief Financial Officer. Please, during this all, certain non-gain your financial measures will be discussed, will draw your question, a reconciliation to the most readily comparable GAAP financial measure today, is included in the earnings release of all the work on the industry relations and should even get out of the company's website.

Speaker Change: I am incredibly proud of the team and their unwavering dedication to make this happen.

Speaker Change: Our announcement has generated significant interest with carriers, who are exploring new monetization opportunities further network and have positioned <unk> well for the future.

Speaker Change: With that let me pivot to the second topic.

Speaker Change: Over the course of my first four months with the company My focus has been laying the groundwork to implement our new strategy.

Speaker Change: Audio replay of this call will also be archived there. 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 of this call, there will also be archived there.

Speaker Change: Im positioning <unk> to power the next generation of enterprise connectivity through software defined high performance wireless networking solutions.

Speaker Change: We will position our solution portfolio to support a broad range of use cases across residential SMB enterprise industrial and Iot and deliver performance security and flexibility at scale.

Speaker Change: Described in the company's form, Fate 10K, are not tender, or a fact, and other, rather, are on the company which are available on the company and website.

Speaker Change: These strategies anchored in wireless broadband combining our mifi and fixed wireless access heartware with cloud managed software solutions to deliver the features and capabilities that our customers need to operate and grow their businesses to deliver on this mission I'm driving execution against two strategic vectors that I outlined.

Speaker Change: Ford also referred to the cautionary nod regarding FOIL looking different cheerly section from those connotation days, pressively referred to the ridden act. I'd like to turn the call to the company to Juho Savinta.

Speaker Change: On our first call in February.

Joho Sarvikas: Chief Executive Officer, please go ahead. Thank you, Operator, and thank you all for joining. This is my second earnings call as the CEO of INSEEGO, and I'm even more excited to be here today than the last time we spoke in February. I'm proud of the progress we've made in executing the strategy I set in motion when I joined INSEEGO in January.

Speaker Change: First the execution and scaling of our <unk> business and second accelerating our software and services roadmap to create a full stack solution offering and transform <unk> into a true solutions company.

Speaker Change: It's focused on the first strategic vector execution, and scaling SWA and Mifi Mike.

Speaker Change: My immediate priority is to expand our footprint with large tier one carriers and multiple system operators or msos.

Joho Sarvikas: We have a lot of work ahead of us, but we're getting it done. I want to thank the awesome Miss Ego team for their focus, energy, and commitment. Today, I'd like to be here to focus. First, I'll give you an overview of our Q1 results. Second, I'd like to share what I'm seeing in the business today and update you on the strategy that's underway and how we're playing the foundation for long-term growth. Let me start with a quick overview of our Q1 financial results that Steven will take you through in more detail.

Speaker Change: This is the single largest and most immediate new and large Tam for us to capture today, our customer base for my plan FWS isn't where it needs to be we are too concentrated and thats something that im actively working to diversify our realigned our <unk> and <unk> brought roadmaps to go after new custom.

Speaker Change: <unk> end markets in the last 90 days, we've introduced several new product lines to existing and new customers to accomplish this goal I spent a lot of time on the road meeting these large customers to share our product and strategy aligned business objectives and prioritize opportunities.

We will focus on two topics.

Joho Sarvikas: Let me start with a quick overview of Q1 financial results, and importantly, we will take a look at it in more detail. We delivered revenue in-guidance and a teletype feedback in the form of best-in-case-results, even with software hardware. Before I move on, just for revenue execution, I want to share one of my key initiatives that we established prior to Q1. Inseego has a legacy of leading environmental innovation and an exceptional team of industry-leading and product-related engineers in cellular modem and henna technology.

Speaker Change: There's meaningful opportunity in front of US you can see gross value proposition of enterprise create wireless broadband solutions and E. Z go as a company that will partner with organizations to help them reach their business goals is resonating very well the combination of our best in class hardware, our internally developed edge router, OIS, which is our <unk>.

Speaker Change: <unk> software and <unk> connect SaaS cloud management platform deliver to a dual go to market motion is a compelling and differentiated offering.

Speaker Change: In SWA, specifically there is a strong demand for enterprise grade solutions for carriers to sell to their SMB and enterprise customers. Additionally, with the Msos, there's significant opportunity in residential fail over SMB and enterprise solutions.

Speaker Change: We are engaging large carriers with our new mifi portfolio I'm getting great feedback on our solutions that can cater to both consumer and enterprise markets.

Joho Sarvikas: I am incredibly proud of the team and their unwavering dedication to make this happen. Our announcement has generated significant interest with carriers who are exploring new marketing opportunities for their networking and positioning its ego well for the future and are committed to pioneering the latest and greatest in wireless. Over the course of my first four months with the company, my partners have been laying the groundwork to implement our new strategy. Our announcement has generated significant interest with carriers

Speaker Change: There is a great opportunity to drive consolidation here with a purpose built product that meets the needs of both markets.

Speaker Change: We've done a lot of great work this past quarter and have a compelling set of new opportunities that we're working on our target continues to be to deliver year over year growth in 2025, and we're focused on closing these deals with an engaged set of new carrier customer expansion and MSR opportunities that we have visibility of.

Speaker Change: <unk>.

Speaker Change: I've also overhauled our supply chain and engineering strategy in the past 90 days identifying significant opportunities to reduce costs improve operational efficiency and enable scale.

Joho Sarvikas: by the Humanic Association of four communities, so for their netbed, high-performing, and easy, well-developed institutions.

Speaker Change: It also involves ensuring that we have the right ODM and OEM partners use to support our ambition.

Speaker Change: I spent time with key component vendors Odm's and manufacturing partners sharing our strategy aligning on requirements and evaluating long term strategy.

Speaker Change: It has been great to see the excitement from the supplier base to be part of our growth journey.

Speaker Change: These efforts have already enabled us to expand our mifi portfolio from premium tier down to mid tier.

Joho Sarvikas: and IOT. To deliver on this mission, I'm driving execution against two strategic vectors that I outlined for our first call in February. First, the execution and scaling of our FWA and Wi-Fi business. Second, accelerating our software and services capabilities to create a full customer solution to operate and grow their businesses. To deliver on this mission, I'm driving execution against two strategic vectors that I outlined for our first call in February.

Speaker Change: As I am talking about supply chain. It makes sense to pause for a moment to discuss the global tariff and macroeconomic environment, which remains very fluid, we've taken deliberate steps to mitigate impacts and develop manufacturing optionality to safeguard asbestos, we can for potential disruptions and unfavorable economic outcomes are.

Speaker Change: Primary manufacturing sites are based in Taiwan, and Vietnam, which reduces our direct exposure to the potential U S. China tariffs.

Joho Sarvikas: My immediate priority is to expand our food brain with large tier 1 accelerators and movable system operators to create a full-stack solution of brains and transform immediate needs into a true solution for us to capture.

Speaker Change: Additionally, our products' HTS code is currently exempt from tariffs. This situation is evolving constantly and we are monitoring it very closely <unk> is an American company with critical intellectual appropriately designed and developed in the United States.

Speaker Change: With that I'd like to discuss my second strategic vector accelerating our software and services roadmap to create a full stack solution offering.

Speaker Change: Beyond scaling our FW and Mifi business. My focus is on evolving do you see go from what has historically been a fairly hardware centric business to becoming a full solution provider. There are two components to this.

Speaker Change: First as Hugo connect our device management SaaS platform at the beginning of 2025, we embarked on a mission to enable Apis for our partners to integrate <unk> connect either their management platforms. Today. These Apis are already at our partners for testing.

Speaker Change: Huge tam unlock that is applicable for a large carrier msos and MSP is both in the channel and direct.

Speaker Change: In parallel we have a resource roadmap to graduate in CECO connect to large enterprise Iot and industrial environments.

Speaker Change: and Edo is a company that we partner with the organization to help them reach their business goals easily and reasonably. There is a strong demand for enterprise-grade solutions for carriers to sell their SMB and enterprise customers. Additionally, we did recognize there is a significant opportunity in residential paylover, SMB and enterprise solutions. As we are engaging large carriers with our new MiFi portfolio, I'm getting great feedback on our solutions for enterprise-grade solutions.

Speaker Change: <unk> connect seats on top of our <unk> and our <unk> signed modules, making it a full stack solution that will deliver extraordinary value to an expanded set of customers and markets later this year and beyond.

Speaker Change: Second <unk> subscribe our subscriber management platform is a great solution and a strategic contributor to a broader solution centric strategy, we have undertaken a new investment or expansion plan on this platform and look forward to updating you more as this moves forward over the coming few quarters.

Speaker Change: Driving and building on these two SaaS offerings I'll look forward to expanding its eagles annual reoccurring revenue opportunity growing top line revenue and delivering extraordinary value to our customers and partners.

Speaker Change: To support our strategy, we have been enhancing our team with exceptional talent and expertise across various functions and disciplines.

Speaker Change: We've done a lot of great work this past quarter, and I've also overhauled our supply chain engineering strategy in the past 90 days. Our target is to find significant opportunities to reduce costs, improve operational efficiency, and enable scale. This also involves ensuring that we have the right ODM and GM partnerships for partner ambition that we have visibility of today. I've also overhauled our supply chain engineering strategy in the past 90 days, aligning our requirements and evaluating long-term strategy.

Speaker Change: Recently, we welcome George Moore, <unk>, former CEO of Cradle point to our board of Directors George has extensive background and leadership experience in shaping the enterprise wireless networking industry will provide tremendous value as we scale and accelerate our transformation into an enterprise solution.

Speaker Change: Sure.

Speaker Change: The dynamics of engineering and manufacturing broadband devices are both cyclical and a long term by nature.

Speaker Change: That will open in customer purchasing cycles typically spend nine to 12 months.

Speaker Change: Group Operational Efficiency and Enable Scale. This all sort of involves ensuring that we have the right ODMs and C-Impact issues to support our mission. I spent time with key component vendors, ODMs and manufacturing partners, sharing our strategies, allowing our group to discuss the global power and macroeconomic engagement, which remains very important. We've taken deliberate steps to mitigate impacts and develop manufacturing optionality to safeguard

Speaker Change: While we've implemented quick and significant adjustments in the last 90 days the larger impact from them is further out.

Speaker Change: The key to success lies in the precise execution of aligning our roadmap strengthening customer engagement and maintaining disciplined focus. This approach ensures we position ourselves to XO, both in the current cycle and those to come.

With that I'd like to hand, it over to Steven.

Volodya, Rob Schringley, and her favorite wedding on the outcomes.

Steven: Thank you.

Steven: Hi, everyone. Thanks for joining us I'm going to cover three topics today first I'll take you through the Q1 2025 financial results second I would like to share a quick update on our debt Paydown that closed last week.

Steven: And third.

Steven: <unk> some financial color on what we're seeing in the business and set our guidance for Q2 2025.

Steven: Always do we'll of course, a wrap up by opening the call to your questions.

Steven: Let's start with the Q1 2025 financial details overall Wow.

Steven: Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non-GAAP profitability and a strong balance sheet as we're implementing our new strategy and setting up the foundation for growth.

Steven: Let me combine dynamics or one Q3, and Q4 2024 had record revenue that was driven by unprecedented mobile hotspot promotion by a key carrier customer that drove volumes that were double and nearly triple historical norms.

Speaker Change: First as Hugo connect our device management SaaS platform at the beginning of 2025, we embarked on a mission to enable Apis for our partners to integrate E. Z go connect either their management platforms to date. These Apis are already at our partners for testing.

Speaker Change: In parallel we have a resource roadmap to graduate E. Z go connect to large enterprise Iot and industrial environments.

Steven: Second 2024 was the end of a special a national mobile hotspot program at one of our North American carrier customers that generate meaningful volume in 2024, but that was not continuing at historical levels and third Q1, 2025 was impacted by temporarily lower SWA purchases.

Speaker Change: <unk> connect sits on top of our <unk> and our <unk> signed modules, making it a full stack solution that will deliver extraordinary value to an expanded set of customers and market later this year and beyond.

Speaker Change: A huge Tam unlock that is applicable for a large carrier msos and MSP is both in the channel and direct.

Speaker Change: In parallel we have a resource roadmap to graduate and CECO connect to large enterprise Iot and industrial environments.

Steven: From a carrier customer is managing their inventory levels as they transition to our next generation <unk> product.

Speaker Change: Second <unk> subscribe our subscriber management platform is a great solution on a strategic contributor to a broader solution centric strategy. We have undertaken a new investment expansion plan on this platform and look forward to updating you more as this moves forward over the coming few quarters.

Steven: Good thing on a number of fronts, but admittedly sometimes disrupted in the quarter of transition.

Steven: We remain bullish on FWS.

Steven: Over the long term and as we'll talk about more when we get to the guidance in the short term as well, we expect <unk> revenue to come up meaningfully in Q2.

Speaker Change: Driving a building on these two SaaS offerings I'll look forward to finding a T goes annual reoccurring revenue opportunity growing top line revenue and delivering extraordinary value to our customers and partners to support.

Speaker Change: Second <unk> subscribe our subscriber management platform is a great solution and a strategic contributor to our broader solution centric strategy. We have undertaken a new investment expansion plan on this platform and look forward to updating you more as this moves forward over the coming few quarters.

Steven: On the mobile hotspot product, while a larger carrier customers promotion started later than anticipated in Q1 2025, we are encouraged to deliver mobile revenue grew more than 16% year over year.

Speaker Change: Our strategy, we have been enhancing our team with exceptional talent and expertise across various functions and disciplines.

Steven: Finishing out revenue with services.

Speaker Change: Most recently, we welcome George Mulhern, former CEO of Cradle point to our board of Directors George has extensive background and leadership experience in shaping the enterprise wireless networking industry will provide tremendous value as we scale and accelerate our transformation into an enterprise solution.

Steven: Nearly 50% year over year on the strength of our subscribe SaaS platform as we've discussed.

Steven: Moving onto gross margin Q1, 2025, non-GAAP gross margin percentage increased to a record 47, 5%.

Speaker Change: Our strategy, we have been enhancing our team with exceptional talent and expertise across various functions and disciplines. Most.

Steven: This was anticipated and was driven by a combination of sequential margin expansion in Q1 in both product and services and by a revenue mix of greater services revenue in the quarter.

Speaker Change: Most recently, we welcome George Mulhern, former CEO upgrade all point to our board of Directors George has extensive background and leadership experience in shaping the enterprise wireless networking industry will provide tremendous value as we scale and accelerate our transformation into an enterprise solution.

Speaker Change: Wider.

Speaker Change: The dynamics of engineering and manufacturing broadband devices are both cyclical and a long term by nature.

Speaker Change: Product development and customer purchasing cycles typically span nine to 12 months.

Steven: Looking at non-GAAP operating expenses Q1, 2025 was another quarter in which we manage the business to lower sequential dollar spend on both the P&L and cash spend basis.

Speaker Change: While we've implemented quick and significant adjustments in the last 90 days the larger impact from them is further out.

Speaker Change: The dynamics of engineering and manufacturing broadband devices are both cyclical and a long term by nature.

Steven: Going forward, we expect continued efficiencies in G&A.

Speaker Change: That will open in customer purchasing cycles typically spend nine to 12 months, while we've implemented quick and significant adjustments in the last 90 days the larger impact from them is further out.

Steven: Some modest increase in sales and marketing as we're expanding our Tam and engaging with new customers and marginally more spend in R&D as we come to the larger investment periods and building out the new products that are rolling out in the second half of 2025 in early 2026.

Speaker Change: With that I'd like to hand, it over to Steven.

Speaker Change: The key to success lies in the precise execution of aligning our roadmap strengthening customer engagement and maintaining disciplined focus.

Speaker Change: Thank you though.

Steven Gathoff: Hi, everyone. Thanks for joining us I'm going to cover three topics today first I'll take you through the Q1 2025 financial results.

Steven: Pulling this all together Q1 revenue performance.

Steven: Risk by focused expense management and investment delivered adjusted EBITDA dollars that came in for the fourth quarter in a row at more than double the prior year quarter as $3 7 million.

Speaker Change: This approach ensures we position ourselves to XO, both in the current cycle and those to come.

Speaker Change: Again, I'd like to share a quick update on our debt Paydown that closed last week.

Steven Gathoff: With that I'd like to hand, it over to Steven.

Speaker Change: Third I'll provide some financial color on what we're seeing in the business and set our guidance for Q2 2025, as we always do well of course, a wrap up by opening the call to your.

Steven Gathoff: Thank you Bill.

Steven Gathoff: Hi, everyone. Thanks for joining us I'm going to cover three topics today first I'll take you through the Q1 2025 financial results.

Steven: Adjusted EBITDA margin came in at the third highest level in a decade at 11, 6% for Q1 2025.

Speaker Change: Questions.

Speaker Change: Let's start with the Q1 2025 financial details overall, while Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non-GAAP profitability.

Steven Gathoff: Again, I'd like to share a quick update on our debt Paydown that closed last week and third I'll provide some financial color on what we're seeing in the business and set our guidance for Q2 2025, as we always do we'll of course, a wrap up by opening the call to your.

Steven: Wrapping up Q1, 2025 results with the balance sheet, we closed the quarter with more than $35 million in cash and strong dsos working capital management and inventory positions.

Steven: That's probably the right point to turn to my second at brief topic on are materially improved capital structure and reduction of debt.

Speaker Change: Our balance sheet as we're implementing our new strategy and setting out the foundation for growth.

Steven Gathoff: Questions.

Steven Gathoff: Let's start with the Q1 2025 financial details overall, while Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non-GAAP profitability and a strong balance sheet as we're implementing our new strategy.

Speaker Change: The three combined dynamics, where one Q3 and Q4 2024 had record revenue that was driven by unprecedented mobile hotspot promotion by a key carrier customer that drove volumes that were double and nearly triple of historical norms.

Steven: On this front, we've been sharing the progress we've made over the past year.

Steven: We're pleased that we completed a meaningful reduction of the company's total debt with a pay down of the $15 million outstanding stub on our convertible notes that matured on may one.

Speaker Change: Second 2024 was the end of a special a national mobile hotspot program at one of our North American carrier customers that generate meaningful volume in 2024, but that was not continuing at historical levels and third Q1, 2025 was impacted by temporarily lower SWA purchases.

Steven: We paid those off last week, thereby reducing total debt to $41 million and further supporting the value of common stockholders.

Steven Gathoff: And setting up the foundation for growth.

Steven Gathoff: Combined dynamics, where one Q3 and Q4 2024 had record revenue that was driven by unprecedented mobile hotspot promotion by a key carrier customer that drove volumes that were double and nearly triple historical norms.

Steven: With that let's finish with the third topic around what we're seeing in the business and provide guidance for Q2 2025.

Steven: As <unk> been discussing while there was the expected revenue challenges as we started the year, we remain bullish on the prospects for the business as we move through 2025, we continue to execute on our initiatives to introduce new products and diversify the customer base to drive growth.

Steven Gathoff: Second 2024 was the end of a special a national mobile hotspot program at one of our North American carrier customers that generate meaningful volume in 2024, but that was not continuing at historical levels and third Q1, 2025 was impacted by temporarily lower SWA purchasing.

Speaker Change: From a carrier customer that is managing their inventory levels as they transition to our next generation SWA product a very good thing on a number of fronts, but admittedly sometimes disrupted in the quarter of transition.

Steven: And as we've discussed previously we expect to deliver sequential quarterly revenue growth beginning with Q2, 2025, and specifically on the heels of improving SWA revenue traction.

Speaker Change: We remain bullish on FW at all.

Speaker Change: Over the long term and as we'll talk about more when we get some guidance in the short term as well, we expect <unk> revenue to come up meaningfully in Q2.

Steven Gathoff: From a carrier customer is managing their inventory levels as they transition to our next generation <unk> product a very good thing on a number of fronts, but admittedly sometimes disrupted in the quarter of transition.

Steven: As we work to deliver this we're growing our Tam and our customer base.

Speaker Change: On the mobile hotspot product, while a larger carrier customers promotion started later than anticipated in Q1 2025, we are encouraged to deliver mobile revenue that grew more than 16% year over year.

Steven: And as we work towards scale, we continue to be influenced by large transactions in the near term.

Steven Gathoff: We remain bullish on FWS.

Steven Gathoff: Over the long term and as we'll talk about more when we get to the guidance in the short term as well, we expect SWA revenue to come up meaningfully in Q2.

Steven: As such we see the magnitude of the growth in Q2 being impacted by the timing of a large channel deal.

Speaker Change: Finishing out revenue with services.

Steven: Something that we have good visibility into our confidence in closing.

Speaker Change: Nearly 50% year over year on the strength of our subscribe SaaS platform as we've discussed.

Steven Gathoff: On the mobile hotspot product, while a larger carrier customers promotion started later than anticipated in Q1 2025, we are encouraged to deliver mobile revenue grew more than 16% year over year.

Steven: For services and other revenue, we expect Q2 levels to be consistent with Q1 on a dollar basis. Thanks to the good work, we've done with EMC got subscribe SaaS platform.

Speaker Change: Moving onto gross margin Q1, 2025, non-GAAP gross margin percentage increased to a record 47, 5%.

Steven: And so far as gross margin percentage with a higher anticipated proportion of product revenue in Q2, 2025% versus Q1, we expect gross margin percentage to be in the high <unk> percentage area in Q2 2025.

Speaker Change: This was anticipated and was driven by a combination of sequential margin expansion in Q1 in both product and services and by a revenue mix of greater services revenue in the quarter.

Steven Gathoff: Finishing out revenue with services.

Steven Gathoff: Nearly 50% year over year on the strength of our subscribe SaaS platform as we've discussed.

Steven Gathoff: Moving onto gross margin Q1, 2025, non-GAAP gross margin percentage increased to a record 47, 5%.

Speaker Change: Looking at non-GAAP operating expenses Q1, 2025 was another quarter in which we manage the business to lower sequential dollar spend on both a P&L and cash spend basis.

Steven: Like we've called out in the past the final revenue mix between mobile broadband SWA and services will be the ultimate determinant of where margins shake out.

Steven Gathoff: This was anticipated and was driven by a combination of sequential margin expansion in Q1 in both product and services and by a revenue mix of greater services revenue in the quarter.

Steven: And so pulling this all together we are providing the following guidance for Q2 2025 total revenue in a range of 37 million to $40 million and adjusted EBITDA in a range of $2 5 billion to $3 5 million.

Speaker Change: Going forward, we expect continued efficiencies in G&A.

Speaker Change: Modest increase in sales and marketing as we're expanding our Tam and engaging with new customers and marginally more spend in R&D as we come to the larger investment periods and building out the new products that are rolling out in the second half of 2025 in early 2026.

Steven Gathoff: Looking at non-GAAP operating expenses Q1, 2025 was another quarter in which we manage the business to lower sequential dollar spend on both the P&L and cash spend basis.

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

Steven Gathoff: Going forward, we expect continued efficiencies in G&A some.

Speaker Change: Pulling this altogether Q1 revenue performance buttressed by focused expense management and investment delivered adjusted EBITDA dollars that came in for the fourth quarter in a row and more than double the prior year quarter as $3 $7 million.

Steven: Operator.

Steven Gathoff: This increase in sales and marketing as we're expanding our Tam and engaging with new customers and marginally more spend in R&D as we come to the larger investment periods and building out the new products that are rolling out in the second half of 2025 in early 2026.

Steven: At this time, we will conduct a question and answer session.

Steven: If you would like to ask a question. Please press star one on your telephone keypad.

Steven: If youre using a speakerphone please pick up your handset.

Steven: Before pressing the keys.

Speaker Change: Adjusted EBITDA margin came in at the third highest level in a decade at 11, 6% for Q1 2025.

Steven Gathoff: Pulling this altogether Q1 revenue performance buttressed by focused expense management and investment delivered adjusted EBITDA dollars that came in for the fourth quarter in a row and more than double the prior year quarter at $3 7 million.

Steven: To withdraw your question please press the pound than one.

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

Speaker Change: Wrapping up Q1, 2025 results with the balance sheet, we closed the quarter with more than $35 million in cash and strong dsos working capital management and inventory positions.

Steven Gathoff: Adjusted EBITDA margin came in at the third highest level in a decade at 11, 6% for Q1 2025.

Speaker Change: That's probably the right point to turn to my second at brief topic on are materially improved capital structure and reduction of debt.

Speaker Change: And our first question comes from Jonathan Nebraska TV Cowen.

Steven Gathoff: Wrapping up Q1, 2025 results with the balance sheet, we closed the quarter with more than $35 million in cash and strong dsos working capital management and inventory positions.

Speaker Change: On this front, we've been sharing the progress we've made over the past year.

Speaker Change: Great Hey, guys how are you.

Speaker Change: Yes.

Speaker Change: We're pleased that we completed a meaningful reduction of the company's total debt with a pay down of the $15 million outstanding stub on the convertible notes that matured on may 1st we paid those off last week, thereby reducing total debt to $41 million and further supporting the value of common stockholders.

Speaker Change: Just wanted to start off with the broader macro environment, just given the uncertainty in oil markets right now.

Steven Gathoff: That's probably the right point to turn to my second at brief topic on are materially improved capital structure and reduction of debt.

Speaker Change: Concern that some pipeline opportunities may slip into 2026.

Speaker Change: We're not seeing that from our customer base and again.

Steven Gathoff: This front, we've been sharing the progress we've made over the past year.

Speaker Change: Today, most of our customers at large are the large carriers in North America.

Speaker Change: With that let's finish with the third topic around what we're seeing in the business and provide guidance for Q2 2025.

Steven Gathoff: We're pleased that we completed a meaningful reduction of the company's total debt with a pay down of the $15 million outstanding stub on the convertible notes that matured on May one.

Speaker Change: <unk>.

Speaker Change: We're not seeing any movement in the pipeline.

Speaker Change: <unk> been discussing while there was the expected revenue challenges as we started the year, we remain bullish on the prospects for the business as we move through 2025, we continue to execute on our initiatives to introduce new products and diversify the customer base to drive growth.

Speaker Change: Okay.

Steven Gathoff: We paid those off last week, thereby reducing total debt to $41 million and further supporting the value of common stockholders.

Speaker Change: Next is just with T mobile partners partner plus program can you quantify the potential revenue upside from this.

Steven Gathoff: With that let's finish with the third topic around what we're seeing in the business and provide guidance for Q2 2025.

Speaker Change: Okay. So we have a large carrier FWS cost come out here in North America.

Speaker Change: And as we've discussed previously we expect to deliver sequential quarterly revenue growth beginning with Q2, 2025, and specifically on the heels of improving SWA revenue traction.

Steven Gathoff: As <unk> been discussing while there was the expected revenue challenges as we started the year, we remain bullish on the prospects for the business as we move through 2025, we continue to execute on our initiatives to introduce new products and diversify the customer base to drive growth.

Speaker Change: The bulk of our.

Speaker Change: Definitely a revenue to date.

Speaker Change: And we have good growth trajectory with that partnership the broader T mobile partner program.

Speaker Change: As we work to deliver this we are growing our Tam and our customer base.

Speaker Change: Significance of that is that we can get T mobile investment in form of subsidy to our child portfolio. So what that will do is to create a pool on our channel program products.

Speaker Change: And as they work towards scale, we continue to be influenced by large transactions in the near term.

Steven Gathoff: And as we've discussed previously we expect to deliver sequential quarterly revenue growth beginning with Q2, 2025, and specifically on the heels of improving SWA revenue traction.

Speaker Change: As such we see the magnitude of the growth in Q2 being impacted by the timing of a large channel deal as such.

Speaker Change: Okay.

Speaker Change: My last one is just can you talk about the cadence of free cash flow for this year should we expect it to be positive for 2025, and if so what are the levers to achieve that thank you.

Speaker Change: That we have good visibility into our confidence in closing.

Steven Gathoff: As we work to deliver this we are growing our Tam and our customer base and.

Speaker Change: For services and other revenue.

Steven Gathoff: And as they work towards scale, we continue to be influenced by large transactions in the near term.

Speaker Change: Q2 levels to be consistent with Q1 on a dollar basis. Thanks to the good work, we've done with EMC does subscribe SaaS platform.

Speaker Change: Yeah sure good question.

Speaker Change: Yes. The short answer is yes, we are at message and are targeting free cash flow generation for the year still.

Steven Gathoff: As such we see the magnitude of the growth in Q2 being impacted by the timing of a large channel deal.

Speaker Change: And so far as gross margin percentage with a higher anticipated proportion of product revenue in Q2, 2025% versus Q1.

Speaker Change: We see that improving I think the message is consistent with what we said kind of going into the year, even even last year call at the end of Q4, which is there are some investments that we're making in the first part of the year and product new products and so that's a bit of a use of cash and product investment as well as we had some bonus payouts for the.

Steven Gathoff: Something that we have good visibility into our confidence in closing.

Steven Gathoff: For services and other revenue, we expect Q2 levels to be consistent with Q1 on a dollar basis. Thanks to the good work, we've done with EMC subscribed SaaS platform.

Speaker Change: That gross margin percentage to be in the high Thirty's percentage area in Q2 2025.

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

Steven Gathoff: And so far as gross margin percentage with a higher anticipated proportion of product revenue in Q2, 2025% versus Q1, we expect gross margin percentage to be in the high Thirty's percentage area in Q2 2025.

First time in the company's history and a decade at least so that was a bit of a negative in the first half, but we see the second half being positive and it outweighing the first half to produce positive for the year.

Speaker Change: And so pulling this all together we're providing the following guidance for Q2 2025 total revenue in a range of $37 million to $40 million and.

Steven Gathoff: Like we've called out in the past the final revenue mix between mobile broadband SWA and services will be the ultimate determinant of where margins shake out.

Speaker Change: <unk> EBITDA in a range of $2 5 billion to $3 $5 million.

Speaker Change: Thank you and as a reminder, if you would like to ask a question. Please press star one.

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

Steven Gathoff: And so pulling this all together we are providing the following guidance for Q2 2025 total revenue in a range of $37 million $240 million and.

Speaker Change: And our next question comes from tore Svanberg of Stifel Nicholas.

Speaker Change: Operator.

Speaker Change: At this time, we will conduct a question and answer session.

Speaker Change: Yes. Good afternoon. This is Jeremy calling on behalf of Tori.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: <unk> EBITDA in a range of $2 5 billion to $3 5 million.

Speaker Change: Just.

Speaker Change: We'd like to dig a little deeper into the channel strategy. It sounds like you have talked about a large.

Speaker Change: If youre using a speakerphone please pick up your handset.

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

Potential deal for it.

Speaker Change: Before pressing the keys.

Speaker Change: For the channel.

Speaker Change: Operator.

Speaker Change: To withdraw your question please press the pound than one.

Speaker Change: <unk> business can you just give us an idea.

Speaker Change: At this time, we will conduct a question and answer session.

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

Speaker Change: Maybe where this might be coming from what.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: What.

Speaker Change: Any any kind of additional color on that opportunity would be very helpful.

Speaker Change: If youre using a speakerphone please pick up your handset.

Speaker Change: Including the timing.

Speaker Change: Yes, so like Steve is that we have good confidence and belt largest general opportunity closing closing within within acute within the quarter.

Speaker Change: Before pressing the keys.

Speaker Change: To withdraw your question please press the pound than one.

Speaker Change: And our first question comes from Jonathan Nebraska TD Cowen.

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

Speaker Change: If you look at our channel.

Speaker Change: The strategy and broader SaaS.

Speaker Change: We have of course significant opportunity in the large carrier and Msos space, but at the same time, we continue to invest in broadening our assortment solution portfolio. When it comes to our two tier distribution and Youll see a lot of these play out between now and the end of the year.

Speaker Change: Great Hey, guys how are you.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Just wanted to start off with the broader macro environment, just given the uncertainty in oil markets right now.

Speaker Change: Concerned at some pipeline opportunities may slip into 2026.

Speaker Change: And our first question comes from Jonathan Nebraska TD Cowen.

Speaker Change: Yes, Jeremy to your point and to use good point that as we've talked about the channel program and something relatively new or <unk>.

Speaker Change: We're not seeing that from our customer base and again.

Jonathan: Great Hey, guys how are you.

Speaker Change: Today, most of our customers at large are the large carriers in North America.

Speaker Change: Hey, John.

Speaker Change: Just wanted to start off with the broader macro environment, just given the uncertainty in oil markets right now.

Speaker Change: <unk> with the new team in the past year and so it takes a while to build pipeline. They are doing that thats. A good thing there is still a large deal that when they happen. There is not seven huge deals in a quarter. There's there is fewer and so they matter more now very well said.

Speaker Change: We're not seeing any movement in the pipeline.

Speaker Change: Concerned at some pipeline opportunities may slip into 2026.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Next is just the T mobile partners partner.

Speaker Change: We're not seeing that from our customer base and again.

Speaker Change: Program can you quantify the potential revenue upside from this.

Speaker Change: Got it that's very helpful.

Speaker Change: Today, most of our customers at large are the large carriers in North America.

Speaker Change: And I guess, if we look at.

Speaker Change: Okay. So we have a large carrier FWS cost for Mercury in North America.

Speaker Change: Can you give us maybe an update on the competitive landscape.

Speaker Change: <unk>.

Speaker Change: We're not seeing any movement or the pipeline.

Speaker Change: In light of yes.

Speaker Change: Part of our revenue to date.

Speaker Change: Yes competitors in Asia and Europe.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Given the current geopolitical environment.

Speaker Change: We have good growth trajectory with that partnership the broader T mobile partner program.

Speaker Change: Next is just the T mobile partners partner.

Speaker Change: What that does.

Speaker Change: Program can you quantify the potential revenue upside from this.

Speaker Change: Europe on positioning.

Speaker Change: So can you guys talk about is that we can get T mobile investment in form of subsidy to our child portfolio. So what that will do is to create pool on our tablet program products.

Speaker Change: Any update on the competitive landscape would be great.

Speaker Change: Helpful.

Speaker Change: Okay. So we have a large carrier FWS cost come right here in North America.

Speaker Change: I think we have a really good combination of asset. So we're an American company all of our critical IP is created here in San Diego.

Speaker Change: Chuck.

Speaker Change: I believe that revenue to date.

Speaker Change: We have good growth trajectory with that partnership the broader T mobile partner program.

Speaker Change: I mentioned, we've done a significant work on our supply chain and operational efficiency, which has been significant in terms of borrower improving our competitiveness and we've already engaged the large large customer base on the back of these renewed capability. So.

Speaker Change: Okay and just.

Steven Gathoff: The significance of that is that we can get T mobile investment in form of subsidy to our child portfolio. So what that will do is to create pool on our tablet program products.

Speaker Change: Yeah sure the question.

Speaker Change: Yes. The short answer is yes, we are at message and are targeting free cash flow generation for the year still.

Speaker Change: I think we're I think we're suited well to continue to drive growth.

Speaker Change: Okay.

Speaker Change: And just my last one is just can you talk about the cadence of free cash flow for this year should we expect it to be positive for 2025, and if so what are the levers to achieve that thank you.

Speaker Change: Great and one last question if I could.

Speaker Change: In terms of.

Speaker Change: Gross margin.

Speaker Change: It sounds like as product revenue continues to recover.

Speaker Change: Yeah sure good question.

Speaker Change: <unk> will probably moderate a bit but gross profit dollars will be up.

Speaker Change: Yes. The short answer is yes, we are at message and are targeting free cash flow generation for the year still.

Speaker Change: Do you have a kind of a new target.

Speaker Change: The model that we can.

Speaker Change: First time in our company's history and a decade at least so that was a bit of a negative in the first half, but we see the second half being positive and it outweighing the first half to produce positive for the year.

Speaker Change: Look out to over the longer term and also on the Opex side.

Speaker Change: March quarter run rate is kind of where we should expect thank you.

Speaker Change: Yes sure.

Speaker Change: Yes, we haven't given a target model, yes, I think it's our.

Speaker Change: First year.

Speaker Change: Will.

Speaker Change: Thank you and as a reminder, if you would like to ask a question. Please press star one.

Speaker Change: New strategies CEO, so well.

Speaker Change: First time in the company's history in a decade at least.

Speaker Change: We get to that will will dare I say, even have an analyst day to do that so.

Operator: And our next question comes from Toray Swanberg of Stifel Nicolas.

Speaker Change: That was a bit of a negative in the first half, but we see the second half being positive and it outweighing the first half to produce positive for the year.

Speaker Change: So we look forward to Ted's point at some point soon.

Speaker Change: But the crux of what were saying that you are you're looking at in the high <unk> would be a good place to be.

Jeremy: Yes. Good afternoon. This is Jeremy calling on behalf of <unk>.

Operator: Just a word.

Operator: I would like to take a little deeper into the channel strategy. It sounds like you have talked about a large.

Speaker Change: Thank you and as a reminder, if you would like to ask a question. Please press star one.

Speaker Change: That number doesn't exist in nature, it's related to high margin SaaS and the kind of <unk> margin for the product business.

Tore Svanberg: Our next question comes from tore Svanberg of Stifel Nicolas.

Operator: Potential deal for it.

Speaker Change: So it really depends upon the mix shift how quickly the software business continues to grow where the product distribution business goes what the ultimate mix will be Jeremy but.

Rick: Rick for channel.

Operator: Business.

Speaker Change: Yes. Good afternoon. This is Jeremy calling on behalf of <unk>.

Operator: Just give us an idea.

Operator: Maybe where this might be coming from.

Speaker Change: Just.

Under the current relationship and proportions, that's a high <unk> margin contribution.

Speaker Change: I would like to dig a little deeper into the channel strategy. It sounds like you have talked about a large.

Operator: Right.

Operator: Any kind of additional color on that opportunity would be very helpful.

Speaker Change: Including the timing.

Speaker Change: And then what we talked about.

Speaker Change: Yeah. So like Steve is that we have good confidence in belt large general productivity closing closing.

Speaker Change: Potential deal for it.

Speaker Change: The.

Speaker Change: For the channel.

Speaker Change: The operating expense.

Speaker Change: Business can you just give us an idea.

Speaker Change: Cadence and guidance, we expect some of the.

Speaker Change: And acute within the quarter.

Speaker Change: Maybe where this might be coming from.

Speaker Change: Numbers overall on a GAAP and a non-GAAP basis to come up a bit as we are starting to invest a little bit more in Q2 on to that new product.

Speaker Change: Look at our channel.

Speaker Change: Strategy and broader SaaS.

Speaker Change: What.

Speaker Change: Any any kind of additional color on that opportunity would be very helpful and.

Speaker Change: We have of course significant opportunity in the large carrier and Msos space, but at the same time, we continue to invest in broadening our assortment our solution portfolio. When it comes to our two tier distribution that youll see a lot of these play out between now and the end of the year.

Speaker Change: Including the timing.

Speaker Change: Our portfolio and as well, we're seeing a lot of traction from all the good stuff that Steve <unk> is doing on the go to market and bringing in a lot of talented folks with some great relationships and deal flow.

Speaker Change: Yes, so like Steve said, we have good confidence and belt largest general opportunity at closing closing within within acute within the quarter.

Speaker Change: Look at our channel.

Speaker Change: Yes, Jeremy to your point and to use the point that as we've talked about the channel program and something relatively new or.

Speaker Change: Strategy and broader SaaS.

Speaker Change: Great. Thank you very much.

Speaker Change: We have of course significant opportunity in the large carriers and msos space, but at the same time, we continue to invest in broadening our assortment solution portfolio. When it comes to our two tier distribution and Youll see a lot of these play out between now and the end of the year.

Speaker Change: Yes sure.

Speaker Change: This concludes our question and answer session I would like to turn the call back to <unk> for closing remarks.

Speaker Change: So you go with the new team in the past year and so it takes a while to build pipeline. They are doing that thats. A good thing there is still a large deal though that when they happen there's not seven huge deals a quarter. There's there is fewer and so they matter more now very well said.

Speaker Change: Thank you operator, you FICO is at an inflection point the brokers. We have made in just a few months gives me confidence that were building something scalable durable and highly relevant to the market.

Speaker Change: Yes, Jeremy to your point and to use the point that as we've talked about the channel program and something relatively new or.

Speaker Change: Got it that's very helpful and.

Speaker Change: Strategy execution, and innovation are coming together to unlock a new phase of growth for the company. We have strengthened our leadership team with talent that brings deep experience in gross wireless enterprise and go to market.

Speaker Change: And I guess, if we look at.

Speaker Change: <unk> with the new team in the past year and so it takes a while to build pipeline. They are doing that thats. A good thing there is still a large deal that when they happen there's not seven huge deals in a quarter. There's there is fewer and so they matter more now very well said.

Speaker Change: Can you give us maybe an update on the competitive landscape.

Speaker Change: In light of.

Speaker Change: Yes competitors in Asia.

Speaker Change: Given the current geopolitical environment.

Speaker Change: I've outlined a plan for a sequential growth for <unk>.

Speaker Change: What that does.

Speaker Change: <unk> churn initiatives that we're now executing on an equally refreshing our portfolio.

Speaker Change: Your own positioning.

Speaker Change: Got it that's very helpful and.

Speaker Change: Update on the competitive landscape would be very helpful.

Speaker Change: And I guess, if we look at.

Speaker Change: Strengthening our go to market again, improving operational efficiency.

Speaker Change: I think we have a really good combination of assets. So we're an American company all of our critical IP is created here in San Diego.

Speaker Change: Can you give us maybe an update on the competitive landscape.

Speaker Change: Accelerating our software and services roadmap are setting the stage for compelling growth.

Speaker Change: In light of.

Speaker Change: Yes competitors in Asia.

Speaker Change: We're transforming <unk> from a broad company into a solutions company and I will share more detail with you in the months ahead.

Speaker Change: Given the current geopolitical environment.

Speaker Change: As I mentioned, we've done a significant work on our supply chain and operational efficiency, which has been significant in terms of our improving our competitiveness and we've already engaged.

Speaker Change: What that does.

Speaker Change: Europe on positioning.

Speaker Change: Any update on the competitive landscape would be very helpful.

Speaker Change: Thank you again for joining us and for your continued support as we execute this important evolution for AC.

Speaker Change: Large customer base on tobacco piece renewed capability they sell a lot.

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

Operator: 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.

Yeah.

Great and one last question if I could.

In terms of the.

Gross margin.

It sounds like you know as part of revenue continues to recover.

Operator: After today's presentation, there will be an opportunity for Q&A. To ask a question, please press star, then one on your telephone keypad. To withdraw your question, please press pound, then 1.

<unk> will probably moderate a bit but gross profit dollars will be up is it do you have a kind of a new target.

Model that we can.

Look out to over the longer term and also on the Opex side.

Operator: On the call today are Juho Sarvikas, Chief Executive Officer of Inseego and Steven Gatoff, 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 Relations section of the company's website. An audio replay of this call will also be archived there.

March quarter run rate is kind of where we should expect thank you.

Yeah sure. So yeah, we haven't given a target model yet I think it's our first year. If you will you know new new strategy CEO. So we'll we will we'll get to that will will dare I say, even have an analyst day to do that.

Speaker Change: So we look forward to doing that at some point soon.

Speaker Change: But the crux of what we're saying that you're you're looking at in the high thirties would be a good place to be.

Speaker Change: That number doesn't exist in nature, it's related to high margin SaaS and the kind of twenties margin for the product business.

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 those 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.

Speaker Change: So it really depends upon the mix shift how quickly the software business continues to grow where the product distribution business goes what the ultimate mix will be Germany, but.

Speaker Change: Under the current relationship and proportions, it's a high thirties margin contribution.

Speaker Change: And then what we talked about on the <unk>.

Speaker Change: Operating expense.

Speaker Change: Cadence and guidance, we expect some of the numbers.

Speaker Change: Numbers overall on a GAAP and a non-GAAP basis to come up a bit as we're starting to invest a little bit more in Q2 into that new product.

Speaker Change: Our portfolio and as well, we're seeing a lot of traction from all the good stuff that Steve Harmon is doing on the go to market and bringing in a lot of talented folks with some great relationships and deal flow.

Juho Sarvikas: With that, I'd like to turn the call over to Juho Sarvikas, Chief Executive Officer. Please go ahead. Thank you, operator, and thank you all for joining. This is my second earnings call as the CEO of Inseego, and I'm even more excited to be here today than the last time we spoke in February. I'm proud of the progress we've made executing the strategy I set in motion when I joined Inseego in January. We have a lot of work ahead of us, but we're getting it done. I want to thank the awesome Inseego team for their focus, energy, and commitment.

Speaker Change: Great. Thank you very much.

Speaker Change: Yeah sure.

Speaker Change: This concludes our question and answer session I would like to turn the call back to your host speakers for closing remarks.

Speaker Change: Thank you operator, you FICO is at an inflection point the brokerage sweep of magazine just a few months gives me confidence that were building something scalable durable and highly relevant to the market.

Juho Sarvikas: Today, I will focus on two topics. First, I'll give you an overview of our Q1 results. Second, I'd like to share what I'm seeing in the business today, and update you on the strategy that's underway and how it's laying the foundation for long term growth. Let me start with a quick overview of our Q1 financial results that Steven will take you through in more detail. We delivered revenue within guidance and adjusted EBITDA came in above expectations, even with softer hardware volumes. While revenue was impacted by some delayed carrier mobile broadband promotions and FWA orders, cross-margin held strong on the favorable revenue mix.

Speaker Change: Both of mine plan for sequential growth.

Speaker Change: It's your own initiatives that we're now executing on equally refreshing of our portfolio.

Speaker Change: Strengthening our go to market and improving operational efficiency.

Speaker Change: <unk>, our software and services road map are sitting at this stage for compelling growth.

Speaker Change: We're transforming easy you go from a broad company into a solutions company and I will share more detail with you in the months ahead.

Juho Sarvikas: And importantly, we invested in key product and growth initiatives without compromising cost discipline, as evident in the strong adjusted EBITDA results.

Joho Sarvikas: You again for joining us and for your continued support as we execute this important evolution for <unk>.

Juho Sarvikas: Before I move on to strategy and execution, I want to share one of my key initiatives that we successfully executed in Q1. Inseego has a legacy of leading in wireless innovation and an exceptional team of industry-leading engineers in cellular modem and antenna technology. At Mobile World Congress in Barcelona this past March, we were the first OEM in the world to make a 5G-advanced, 3GPP-released A-Team data call with the new Qualcomm DragonWin Gen4 Elite FWA platform in our next-generation cellular router. This accomplishment is a testament to Inseego's superior engineering capability, our strong partnership with Qualcomm, and our commitment to pioneer the latest and creative in wireless.

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

Speaker Change: The host has ended this call goodbye.

Juho Sarvikas: I am incredibly proud of the team and their unwavering dedication to make this happen. Our announcement has generated significant interest with carriers who are exploring new monetization opportunities for their network and positioning Inseego well for the future.

Juho Sarvikas: With that, let me pivot to the second topic. Over the course of my first four months with the company, my focus has been on laying the groundwork to implement our new strategy. I'm positioning Inseego to power the next generation of enterprise connectivity through software-defined, high-performance, wireless networking solutions. We will position our solution portfolio to support a broad range of use cases across residential, SMB, enterprise, industrial, and IoT, and deliver performance, security, and flexibility at scale. These strategies anchor in wireless broadband, combining our MiFi and fixed wireless access hardware with cloud managed software solutions to deliver the features and capabilities that our end customers need to operate and grow their businesses.

Juho Sarvikas: To deliver on this mission, I'm driving execution against two strategic vectors that I outlined on our first call in February. First, the execution and scaling of our FWA and MiFi business. And second, accelerating our software and services roadmap to create a full stack solution offering and transform Inseego into a true solutions company.

Juho Sarvikas: Let's focus on the first strategic vector, execution and scaling FWA and MIFA. My immediate priority is to expand our footprint with large tier 1 carriers and multiple system operators or MSOs. This is the single largest and most immediate new and large TAM for us to capture. Today, our customer base for MiFi and FWA isn't where it needs to be. We are too concentrated, and that's something that I'm actively working to diversify. I've realigned our FWA and MiFi product roadmaps to go after new customers and markets. In the last 90 days, we've introduced several new product plans to existing and new customers to accomplish this goal.

Joho Sarvikas: [music].

Juho Sarvikas: I spend a lot of time on the road meeting these large customers to share our products and strategy, align business objectives, and prioritize opportunities. There's meaningful opportunity in front of us. Inseego's value proposition of enterprise-grade wireless broadband solutions and Inseego as a company that will partner with organizations to help them reach their business goals is resonating very well. The combination of our best-in-class hardware, our internally developed Edge RouterOS, which is our on-device software, and Inseego Connect SaaS cloud management platform delivered to a dual go-to-market motion is a compelling and differentiated offering. In FWA specifically, there is a strong demand for enterprise-grade solutions for carriers to sell to their S&P and enterprise customers.

Joho Sarvikas: Yes.

Joho Sarvikas: [music].

Joho Sarvikas: Okay.

Joho Sarvikas: Yes.

Joho Sarvikas: Okay.

Joho Sarvikas: [music].

Okay.

Joho Sarvikas: Okay.

Joho Sarvikas: Yeah.

Juho Sarvikas: Additionally, with the MSOs, there is significant opportunity in residential failover, S&P, and enterprise solutions. As we are engaging large carriers with our new MiFi portfolio, I'm getting great feedback on our solutions that can cater to both consumer and enterprise markets. There is a great opportunity to drive consolidation here with a purpose-built product that meets the needs of both markets.

Juho Sarvikas: We've done a lot of great work this past quarter and have a compelling set of new opportunities that we're working on. Our target continues to be to deliver year-over-year growth in 2025, and we're focused on closing these deals with an engaged set of new carrier customer expansion and MSO opportunities that we have visibility of today.

Juho Sarvikas: I've also overhauled our supply chain and engineering strategy in the past 90 days, identifying significant opportunities to reduce costs, improve operational efficiency, and enable scale. This also involves ensuring that we have the right ODM and CM partnerships to support our ambition. I spent time with key component vendors, ODMs, and manufacturing partners, sharing our strategy, aligning on requirements, and evaluating long-term strategic fits. It has been great to see the excitement from the supplier base to be part of our growth journey. These efforts have already enabled us to expand our MiFi product portfolio from premium tier down to mid-tier.

Juho Sarvikas: As I'm talking about supply chain, it makes sense to pause for a moment to discuss the global tariff and macroeconomic environment, which remains very fluid. We've taken deliberate steps to mitigate impacts and develop manufacturing optionality to safeguard as best as we can for potential disruptions and unfavorable economic outcomes. Our primary manufacturing sites are based in Taiwan and Vietnam, which reduces our direct exposure to potential US-China tariffs. Additionally, our product's HTS code is currently exempt from tariffs. This situation is evolving constantly, and we are monitoring it very closely.

Juho Sarvikas: Inseego is an American company with critical intellectual property designed and developed in the United States.

Juho Sarvikas: With that, I'd like to discuss my second strategic vector, accelerating our software and services roadmap to create a full stack solution offering. Beyond scaling our FWA and MiFi business, my focus is on evolving Inseego from what has historically been a fairly hardware-centric business to becoming a full-solution provider. There are two components to this. First, Inseego Connect, our device management SaaS platform. At the beginning of 2025, we embarked on a mission to enable APIs for our partners to integrate Inseego Connect into their management platforms. Today, these APIs are already at our partners for testing. This is a huge time unlock that is applicable for a large carrier, MSOs, and MSPs, both in the channel and direct.

Juho Sarvikas: In parallel, we have a resource roadmap to graduate Inseego Connect to large enterprise, IoT, and industrial environments. Inseego Connect sits on top of our RouterOS and our Inseego-designed modules, making it a full-stack solution that will deliver extraordinary value to an expanded set of customers and markets later this year and beyond. Second, Inseego Subscribe, our subscriber management platform, is a great solution and a strategic contributor to our broader solution-centric strategy. We have undertaken a new investment and expansion plan on this platform and look forward to updating you more as this moves forward over the coming few quarters.

Juho Sarvikas: Driving and building on these two SaaS offerings, I look forward to expanding Inseego's annual reoccurring revenue opportunity, growing top-line revenue, and delivering extraordinary value to our customers and partners.

Juho Sarvikas: To support our strategy, we have been enhancing our team with exceptional talent and expertise across various functions and disciplines.

Juho Sarvikas: Most recently, we welcomed George Mulhern, former CEO of Cradlepoint, to our Board of Directors. Georgia's extensive background and leadership experience in shaping the enterprise wireless networking industry will provide tremendous value as we scale and accelerate our transformation into an enterprise solution provider. The dynamics of engineering and manufacturing broadband devices are both cyclical and long-term by nature. Product development and customer purchasing cycles typically span 9 to 12 months. While we've implemented quick and significant adjustments in the last 90 days, the larger impact from them is further out. The key to success lies in the precise execution of aligning our roadmap, strengthening customer engagement, and maintaining disciplined focus.

Juho Sarvikas: This approach ensures we position ourselves to excel both in the current cycle and those to come.

Steven Gatoff: With that, I'd like to hand it over to Steve. Thank you, Juho. Hi, everyone. Thanks for joining us.

Steven Gatoff: I'm going to cover three topics today. First, I'll take you through the Q1 2025 financial results. Second, I'd like to share a quick update on our debt paydown that closed last week. And third, I'll provide some financial color on what we're seeing in the business and set out guidance for Q2 2025. As we always do, we'll, of course, wrap up by opening a call to your questions.

Steven Gatoff: Let's start with the Q1 2025 financial details. Overall, while Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non-gap profitability and a strong balance sheet as we're implementing our new strategy and setting out the foundation for growth. The three combined dynamics were, one, Q3 and Q4 2024 had record revenue that was driven by unprecedented mobile hotspot promotions by a key carrier customer that drove volumes that were double and nearly triple historical norms. Second, 2024 was the end of a special national mobile hotspot program at one of our North American carrier customers that had generated meaningful volume in 2024, but that was not continuing at historical levels.

Steven Gatoff: And third, Q1 2025 was impacted by temporarily lower FWA purchases from a carrier customer that is managing their inventory levels as they transition to our next generation FWA product, a very good thing on a number of fronts, but admittedly, sometimes disruptive in the quarter of transition. We remain bullish on FWA over the long term and, as we'll talk about more when we get to guidance, in the short term as well. We expect FWA revenue to come up meaningfully in Q2. On the mobile hotspot product, while a larger carrier customer's promotion started later than anticipated in Q1 2025, we were encouraged to deliver mobile revenue that grew more than 16% year-over-year.

Steven Gatoff: Finishing out revenue with services, they grew nearly 50% year over year on the strength of our subscribed SaaS platform as we've discussed. Moving on to gross margin, Q1 2025 non-GAAP gross margin percentage increased to a record 47.5%. This was anticipated and was driven by a combination of sequential margin expansion in Q1 in both product and services, and by a revenue mix of greater services revenue in the quarter. Looking at non-GAAP operating expenses, Q1 2025 was another quarter in which we managed a business to lower sequential dollar spend on both a P&L and cash spend-based Going forward, we expect continued efficiencies in G&A, some modest increase in sales and marketing as we're expanding our TAM and engaging with new customers.

Steven Gatoff: and marginally more spend in R&D as we come to the larger investment periods and building out the new products that are rolling out in the second half of 2025 and early 2026. Pulling this all together, Q1 revenue performance buttressed by focused expense management and investment. delivered adjusted EBITDA dollars that came in for the fourth quarter in a row at more than double the prior year order at $3.7 million. Adjusted EBITDA margin came in at the third-highest level in a decade at 11.6% for Q1 2025.

Steven Gatoff: Wrapping up Q1 2025 results with a balance sheet, we closed the quarter with more than $35 million in cash and strong DSOs, working capital management, and inventory positions.

Steven Gatoff: That's probably the right point to turn to my second and brief topic on our materially improved capital structure and reduction of debt. On this front, we've been sharing the progress we've made over the past year. We're pleased that we completed a meaningful reduction of the company's total debt with a pay down of the $15 million outstanding stub on the convertible notes that matured on May 1st. We paid those off last week, thereby reducing total debt to $41 million and further supporting the value of common stockholders.

Steven Gatoff: With that, let's finish with the third topic around what we're seeing in the business and provide guidance for Q2 2025. As we've been discussing, while there was the expected revenue challenges as we started the year, we remain bullish on the prospects for the business as we move through 2025. We continue to execute on our initiatives to introduce new products and diversify the customer base to drive growth. And as we've discussed previously, we expect to deliver sequential quarterly revenue growth beginning with Q2 2025, and specifically on the heels of improving FWA revenue traction. As we work to deliver this, we're growing our TAM and our customer base.

Steven Gatoff: And as we work towards scale, we continue to be influenced by large transactions in the near term. As such, we see the magnitude of the growth in Q2 being impacted by the timing of a large channel depletion. It's something that we have good visibility into, confidence and closeness. For services and other revenue, we expect Q2 levels to be consistent with Q1 on a dollar basis thanks to the good work we've done with the Inseego Subscribed SAS platform. And so far as growth margin percentage, with a higher anticipated proportion of product revenue in Q2 2025 versus Q1, we expect growth margin percentage to be in the high 30s percentage area in Q2 2025.

Steven Gatoff: Like we've called out in the past, the final revenue mix between mobile broadband, FWA, and services will be the ultimate determinant of where margins shake out.

Steven Gatoff: And so pulling this all together, we're providing the following guidance for Q2 2025. Total revenue in a range of $37 million to $40 million, and adjusted EBITDA in a range of $2.5 million to $3.5 million.

Operator: With that, we appreciate your time and support, and we're glad to open the call for questions. If you would like to ask a question, please press star 1 on your telephone keypad. using a speakerphone. pick up your handset before pressing After all your questions, please press pound.

Operator: At this time, we will pause momentarily to...

Jonathan Navarrete: And our first question comes from Jonathan Navarrete of TD College. Hey guys, how are you? Just want to start off with the broader macro environment. Just given the uncertainty in oil markets right now, are you concerned that some pipeline opportunities may slip into 2026? We're not seeing that from our customer base and again today most of our customers are the large carriers in North America and we're not seeing any movement of the pipeline. Okay, um...

Jonathan Navarrete: Next is just on the T-Mobile Partner Plus program. Can you quantify the potential revenue upside from this? Okay, so we have a large carrier FWA customer here in North America that's part of our FWA revenue today. And we have good growth trajectory with that partnership.

Jonathan Navarrete: The broader T-Mobile partner program, significance of that is that we can get T-Mobile investment in form of subsidy to our channel portfolio. So what that will do is to create pull on our channel program product.

Jonathan Navarrete: Okay, and just my last one is just can you talk about the cadence of free cash flow for this year? Should we expect it to be positive for 2025? And if so, what are the levers to achieve that?

Steven Gatoff: Thank you. Yeah, sure. Good question. The short answer is yes, we have a message and are targeting free cash flow generation for the year still, and we see that improving. I think the message is consistent with what we said kind of going into the year, even last year called the end of Q4, which is there's some investments that we're making in the first part of the year in product, new products, and so that's a bit of a use of cash in product investment, as well as we had some bonus payouts for the first time in the company's history in a decade at least.

Steven Gatoff: So that was a bit of a negative in the first half, but we see the second half being positive and it outweighing the first half to produce positive for the year. Thank you.

Operator: And as a reminder, if you would like to ask a question, please press star 1.

Tore Svanberg: And our next question. Tore Svanberg of Stiefel Nikolaus Yes, good afternoon. This is Jeremy Kwan on behalf of TORI.

Jeremy Kwan: would like to dig a little deeper into the channel strategy. It sounds like you have, you know, you talked about a large potential deal for the channel business. Can you just give us an idea of, you know, maybe where this might be coming from? What, you know, any kind of additional color on that? very helpful, including the time. Yeah, so like Steven said, we have good confidence in that large-scale opportunity closing within the quarter. If you look at our channel strategy in a broader sense, we have, of course, a significant opportunity in the large carrier and MSO space.

Jeremy Kwan: But at the same time, we continue to invest in broadening our assortment solution portfolio when it comes to our two-tiered distribution. And you will see a lot of this play out between now and the end of the year.

Steven Gatoff: Yeah, Jeremy, to your point, and to Juho's good point, as we've talked about, the channel program is something relatively new for Inseego with the new team in the past year, and so it takes a while to build pipeline. They're doing that. That's a good thing. There are still large deals, though, that when they happen, there's not seven huge deals in a quarter. There's fewer. And so, you know, they matter more now. Very well said. Got it. That's very helpful.

Jeremy Kwan: And I guess if we look at, you know, can you give us maybe an update on the competitive landscape? You know, in light of, you know, you have competitors in Asia and, you know, given the current geopolitical environment, you know, what that does to your own positioning.

Juho Sarvikas: Any update on the competitive landscape? Look, I think we have a really good combination of assets. So we're an American company. All of our critical IP is created here in San Diego. Like I mentioned, we've done significant work on our supply chain and operational efficiency, which has been significant in terms of improving our competitiveness. And we've already engaged the large customer base on the back of this renewed capability. So... I think we're suited well to continue to drive growth. Great.

Jeremy Kwan: And one last question, if I could, in terms of the gross margin, it sounds like, you know, as product revenue continues to recover, you know, margins will probably moderate a bit, but, you know, gross profit dollars will be up.

Steven Gatoff: Is it, do you have a kind of a new target model that we can look out to over the longer term? And also on the OPEX side, if the March quarter run rate is kind of where we should expect?

Steven Gatoff: Thank you. Yeah, sure. So, yeah, we haven't given a target model yet. I think, you know, it's our first year, if you will, you know, new strategy CEO. So we'll get to that. We'll, dare I say, even have an analyst day to do that. So we look forward to doing that at some point soon. But the crux of what we're saying that you're looking at, you know, in the high 30s would be a good place to be. You know, that number doesn't exist in nature. It's really the high margin SAS and the kind of 20s margin for the product business.

Steven Gatoff: And so it really depends upon the mix shift, how quickly the software business continues to grow, where the product distribution business goes, what the ultimate mix will be, Jeremy. But, you know, under the current relationship and proportions, you know, it's a high 30s margin contribution. And then what we talked about on the operating expense cadence and guidance, we expect some of the numbers overall on a non-GAAP basis to come up a bit as we're starting to invest a little bit more in Q2 into that new product portfolio. And as well, we're seeing a lot of traction from all the good stuff that Steve Harman is doing on the go-to-market and bringing in a lot of talented folks with some great relationships and deal flow.

Jeremy Kwan: Great, thank you very much. Yeah, sure.

Operator: This concludes our question and answer session.

Juho Sarvikas: I'd like to turn the call back to Juho Sarvikas for closing remarks. Thank you, operator. Inseego is at an inflection point. The progress we've made in just a few months gives me confidence that we're building something scalable, durable, and highly relevant to the market. Strategy, execution, and innovation are coming together to unlock a new phase of growth for the company. We have strengthened our leadership team with talent that brings deep experience across wireless, enterprise, and go-to markets.

Juho Sarvikas: I've outlined a plan for sequential... The strategy and initiatives that we're now executing on, including refreshing our portfolio Strengthening our go-to market, improving operational efficiency, and accelerating our soft grant services roadmap are setting the stage for compelling growth. We're transforming Inseego from a product company into a solutions company, and I will share more detail with you in the months ahead.

Juho Sarvikas: Thank you again for joining us and for your continued support as we execute this important evolution for Inseego.

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

Operator: You may now disconnect.

Q1 2025 Inseego Corp Earnings Call

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