Signed 5G product agreements with leading mobile network operators worldwide, exceeding 2019 target
5G trials with 20 global mobile network operators
Significantly strengthened balance sheet

SAN DIEGO—March 11, 2020—Inseego Corp. (Nasdaq: INSG) (the “Company”), a pioneer in 5G and intelligent IoT device-to-cloud solutions, today reported its results for the fourth quarter and full year ended December 31, 2019. The Company reported fourth quarter revenue of $52.3 million, GAAP operating loss of $8.7 million, GAAP net loss of $13.1 million, net loss of $0.17 per share, negative adjusted EBITDA of $1.7 million and non-GAAP net loss of $0.10 per share. Cash and cash equivalents at year end was $12.1 million. On a full year basis, 2019 revenue was $219.5 million, an 8.4% increase year-over-year.

“2019 was a year of historic progress for Inseego. We launched our first-to-market 5G products, recognized nearly $11 million of 5G revenue and signed 5G product agreements with leading mobile network operators in North America, Europe, the Middle East and Asia Pacific, exceeding our target for the year. This sets the stage for growth in the second half of 2020 with our second-generation portfolio of secure, enterprise-grade 5G products for fixed wireless, mobile and IoT edge applications,” said Chairman and CEO Dan Mondor. “With the actions we’ve taken to strengthen the balance sheet, we’re extremely well positioned to capitalize on the unprecedented global opportunities that 5G presents.”


Corporate Highlights

–    5G trials underway with 20 leading mobile operators worldwide

–    Recently closed $25 million private placement transaction with Mubadala, providing capital to support global 5G strategy

–     Significantly strengthened balance sheet in Q1 2020, reducing debt by $60 million through convertible note exchanges, and reduced aggregate annual cash interest payments by approximately $7.8 million


IoT & Mobile Solutions

  • 2019 full year revenue of $154.2 million, Q4 2019 revenue of $35.5 million

–    Signed 5G agreements with leading mobile network operators in North America, Europe, the Middle East and Asia-Pacific for fixed wireless access and mobile products

–     Recognized nearly $11 million of 5G revenue in 2019

–    Launched 5G MiFi® mobile hotspot with Vodafone Qatar

–     Launched 4G LTE Cat M1 tracker with Telstra (Australia)


Enterprise SaaS Solutions

–    2019 full year revenue of $65.3 million, Q4 2019 revenue of $16.9 million

–     Ctrack fleet unit bookings grew approximately 36% year-over-year

–     Launched new Ctrack Pegasus cloud platform and SMB-focused Clarity application in the first quarter

–     The DMS subscription management solution continues to be a strategic product that grew 33% year-over-year

“We strengthened the balance sheet by converting $60 million of debt into equity and modified the terms of the senior note, reducing annual cash interest payments by $7.8 million. We’re very pleased with the vote of confidence from Mubadala Capital and their $25 million investment,” said EVP and CFO Steve Smith. “We’re now focused on converting our 2019 design wins into network deployments.”

 

Conference Call Information
Inseego will host a conference call and live webcast for analysts and investors today at 5:00 p.m. ET. A Q&A session with analysts will be held live directly after the prepared remarks. To access the conference call:

  • In the United States, call 1-844-881-0135
  • International parties can access the call at 1-412-317-6727

An audio replay of the conference call will be available beginning one hour after the call, through March 25, 2020. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 10134259 followed by the # key. International parties may call 1-412-317-0088. In addition, the Inseego Corp. press release will be accessible from the Company’s website before the conference call begins.


About Inseego Corp.
Inseego Corp. (Nasdaq: INSG) is an industry pioneer in 5G and intelligent IoT device-to-cloud solutions that enables high performance mobile applications for large enterprise verticals, service providers and small-medium businesses around the globe. Our product portfolio consists of Enterprise SaaS Solutions and IoT & Mobile Solutions, which together form the backbone of compelling, intelligent, reliable and secure IoT services with deep business intelligence. Inseego powers mission critical applications with a “zero unscheduled downtime” mandate, such as asset tracking, fleet management, industrial IoT, SD WAN failover management and mobile broadband services. Our solutions are powered by our key innovations in purpose-built SaaS cloud platforms, IoT and mobile technologies including the newly emerging 5G technology. www.inseego.com #Putting5GtoWork

 

Cautionary Note Regarding Forward-Looking Statements
Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to our future business outlook, the future demand for our products, as well as other statements that are not purely statements of historical fact, are forward-looking in nature. These forward-looking statements are made on the basis of management’s current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements. Actual results could differ materially from our expectations.

Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the future demand for wireless broadband access to data and asset management software and services; (2) the growth of wireless wide-area networking and asset management software and services; (3) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (4) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (5) dependence on third-party manufacturers and key component suppliers worldwide; (6) the impact that new or adjusted tariffs may have on the cost of components or our products, and our ability to sell products internationally; (7) the impact of fluctuations of foreign currency exchange rates; (8) the impact of geopolitical instability on our ability to source components and manufacture our products; (9) unexpected liabilities or expenses; (10) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G products at the speed and functionality required by our customers; (11) litigation, regulatory and IP developments related to our products or components of our products; (12) dependence on a small number of customers for a significant portion of the Company’s revenues; (13) the Company’s ability to raise additional financing when the Company requires capital for operations or to satisfy corporate obligations; and (14) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters and cost containment initiatives, including restructuring activities and the timing of their implementation; (15) the potential impact of COVID-19 on the business.

These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause actual results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as otherwise required pursuant to applicable law and our on-going reporting obligations under the Securities Exchange Act of 1934, as amended.


Non-GAAP Financial Measures
Inseego Corp. has provided financial information in this news release that has not been prepared in accordance with GAAP. Non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share exclude share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to the Company’s convertible senior notes and term loan, restructuring charges, net of recoveries, and non-recurring legal and other expenses. Adjusted EBITDA also excludes interest, taxes, depreciation and amortization (unrelated to acquisitions, the convertible senior notes and the term loans) and foreign currency transaction gains and losses.

Non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool and are not intended to be used in isolation or as a substitute for operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share because we consider each to be an important supplemental measure of our performance.

Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company’s performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in the Company’s stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share, management excludes certain non-cash and one-time items in order to facilitate comparability of the Company’s operating performance on a period-to-period basis because such expenses are not, in management’s view, related to the Company’s ongoing operating performance. Management uses this view of the Company’s operating performance for purposes of comparison with its business plan and individual operating budgets and in the allocation of resources.

The Company further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that the use of non-GAAP operating expenses, adjusted EBITDA, net loss and net loss per share also facilitates a comparison of our underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

In the future, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool.

Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures contained within this news release with our GAAP financial results.

 

Inseego Corp.

Media contact:
Inseego Corp.
Anette Gaven
+1 (619) 993-3058
Anette.Gaven@inseego.com

or

Investor Relations contact:
Investor.Relations@inseego.com
http://investor.inseego.com/

 

 

 

 

INSEEGO CORP.

CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands,
except share and per share data)

(Unaudited)

Three Months
Ended
December 31,

Year Ended
December 31,

2019

2018

2019

2018

Net revenues:

IoT & Mobile Solutions

$

35,477

$

40,092

$

154,167

$

135,349

Enterprise SaaS Solutions

16,856

15,951

65,329

67,114

Total net revenues

52,333

56,043

219,496

202,463

Cost of net revenues:

IoT & Mobile Solutions

30,498

30,176

129,957

105,344

Enterprise SaaS Solutions

6,804

6,074

25,568

26,167

Impairment of abandoned product line, net of recoveries

355

Total cost of net revenues

37,302

36,250

155,525

131,866

Gross profit

15,031

19,793

63,971

70,597

Operating costs and expenses:

Research and development

8,525

5,332

23,853

20,593

Sales and marketing

8,145

6,070

28,914

23,027

General and administrative

6,231

6,691

27,267

25,325

Amortization of purchased intangible assets

846

860

3,421

3,624

Extinguishment of acquisition-related liabilities

(17,174

)

Restructuring charges, net of recoveries

10

26

60

1,191

Total operating costs and expenses

23,757

18,979

83,515

56,586

Operating income (loss)

(8,726

)

814

(19,544

)

14,011

Other income (expense):

Interest expense, net

(5,045

)

(5,084

)

(20,381

)

(20,444

)

Other income (expense), net

417

(341

)

351

(895

)

Loss before income taxes

(13,354

)

(4,611

)

(39,574

)

(7,328

)

Income tax benefit (provision)

(257

)

(370

)

536

815

Net loss

(13,097

)

(4,241

)

(40,110

)

(8,143

)

Less: Net loss (income) attributable to noncontrolling interests

42

50

(15

)

85

Net loss attributable to Inseego Corp.

(13,055

)

(4,191

)

(40,125

)

(8,058

)

Preferred stock dividend

(230

)

(361

)

Net loss attributable to common shareholders

$

(13,285

)

$

(4,191

)

$

(40,486

)

$

(8,058

)

Per share data:

Net loss per common share:

Basic and diluted

$

(0.17

)

$

(0.06

)

$

(0.52

)

$

(0.12

)

Weighted-average shares used in computation of net loss per common share:

Basic and diluted

80,447,679

73,579,670

78,322,496

66,104,376

INSEEGO
CORP.

CONDENSED
CONSOLIDATED BALANCE SHEETS

(In thousands)

December 31,
 2019

December 31,
 2018

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

12,074

$

31,015

Restricted cash

61

Accounts receivable, net

19,656

20,633

Inventories, net

25,290

26,431

Prepaid expenses and other

7,117

6,212

Total current assets

64,137

84,352

Property, plant and equipment, net

10,756

6,698

Rental assets, net

5,385

5,769

Intangible assets, net

44,392

31,985

Goodwill

33,659

32,942

Right-of-use assets, net

2,657

Other assets

387

510

Total assets

$

161,373

$

162,256

LIABILITIES AND
STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable

$

26,482

$

39,245

Accrued expenses and other current liabilities

17,861

13,024

DigiCore bank facilities

187

1,412

Total current liabilities

44,530

53,681

Long-term liabilities:

Convertible senior notes, net

101,334

93,054

Term loan, net

46,538

45,046

Deferred tax liabilities, net

3,949

4,457

Other long-term liabilities

2,380

2,543

Total liabilities

198,731