Sequential revenue growth of 15%

Commercial launch of 5G mobile broadband hotspot with Verizon in July

Continued expansion of global 5G pipeline

SAN DIEGO—August 6, 2019—Inseego Corp. (Nasdaq: INSG) (the “Company”), a pioneer in 5G and intelligent IoT device-to-cloud solutions, today reported the following results for the second quarter ended June 30, 2019. The Company reports second quarter revenues of $55.9 million, GAAP operating loss of $5.2 million, GAAP net loss of $10.8 million, or net loss of $0.14 per share, adjusted EBITDA of $3.0 million and non-GAAP net loss of $0.03 per share. Cash and cash equivalents at the end of the period, including restricted cash, was $20.3 million.

“We solidified our leadership position with another industry-first milestone, the launch of our new 5G NR mobile broadband hotspot with Verizon,” said Chairman and CEO Dan Mondor. “The global 5G opportunity pipeline is expanding rapidly and we’re increasing investments in product development and sales and marketing to capitalize on this extraordinary window of opportunity.”

Corporate Highlights

Revenue of $55.9 million, at the high end of guidance, up 15.1% sequentially and 13.9% year-over-year

Accelerating investments to drive growth of the global 5G business

IoT & Mobile Solutions

Q2 2019 revenue of $40.0 million, 26% year-over-year growth

Launched 5G MiFi M1000 mobile broadband hotspot with Verizon nationwide in July

5G live network trials and testing progressing with service providers worldwide

Launched MiFi 8000 gigabit LTE mobile broadband hotspot with Sprint

On target to achieve FirstNet certification for the USB800 4G LTE modem in the third quarter

Gaining traction in the SD-WAN market and partnering with another leading SD-WAN provider

Enterprise SaaS Solutions

Q2 2019 revenue of $15.9 million

Leading indicators for Ctrack signal a return to growth in the second half of 2019

11% year-over-year subscription growth in Europe and United Kingdom fleet business in the first half of 2019

Two aviation design wins in Europe and Asia and phase one deployment with a UK-based regional airline

“We had strong top-line performance this quarter with over 15% sequential growth,” said Steve Smith, EVP and CFO of Inseego. “We expect further revenue growth and gross margin improvements in the second half of 2019.” 

Third Quarter Outlook

The following statements are forward-looking and actual results may differ materially. Please see the section titled “Cautionary Note Regarding Forward-Looking Statements” at the end of this news release. A more detailed description of risks related to our business is included in the reports filed by the Company with the Securities and Exchange Commission (the “SEC”). Our guidance for the third quarter of 2019 reflects current business indicators and expectations as of the date of this news release, including current exchange rates for foreign currencies.

Inseego Consolidated Third Quarter 2019 Outlook
Revenue $58.0 million – $62.0 million
Adjusted EBITDA $3.0 million – $4.5 million
IoT & Mobile Solutions
Revenue $43.0 million – $45.0 million
Enterprise SaaS Solutions
Revenue $15.0 million – $17.0 million

 

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 August 21, 2019. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 10129587 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 #Making5GReal

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 outlook for the third quarter ending September 30, 2019 and 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.

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:

Anette Gaven

+1 (619) 993-3058

Anette.Gaven@inseego.com

or

Investor Relations Contact:

Joo-Hun Kim

MKR Group

+1 (212) 868-6760

joohunkim@mkrir.com


 

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2019 2018 2019 2018
Net revenues:
IoT & Mobile Solutions $ 39,983 $ 31,741 $ 72,764 $ 60,621
Enterprise SaaS Solutions 15,908 17,316 31,683 35,169
Total net revenues 55,891 49,057 104,447 95,790
Cost of net revenues:
IoT & Mobile Solutions 33,986 24,623 61,586 48,375
Enterprise SaaS Solutions 6,350 6,998 12,546 13,860
Impairment of abandoned product line, net of recoveries (221) 355
Total cost of net revenues 40,336 31,400 74,132 62,590
Gross profit 15,555 17,657 30,315 33,200
Operating costs and expenses:
Research and development 5,188 4,968 8,673 9,944
Sales and marketing 7,229 5,635 13,620 11,050
General and administrative 7,449 6,302 13,901 12,797
Amortization of purchased intangible assets 857 931 1,728 1,895
Restructuring charges, net of recoveries 15 643 37 920
Total operating costs and expenses 20,738 18,479 37,959 36,606
Operating loss (5,183) (822) (7,644) (3,406)
Other income (expense):
Interest expense, net (5,142) (5,147) (10,217) (10,247)
Other income (expense), net (72) (438) 241 (374)
Loss before income taxes (10,397) (6,407) (17,620) (14,027)
Income tax provision 322 272 570 712
Net loss (10,719) (6,679) (18,190) (14,739)
Less: Net loss (income) attributable to noncontrolling interests (60) 19 (74) 29
Net loss attributable to Inseego Corp. $ (10,779) $ (6,660) $ (18,264) $ (14,710)
Per share data:
Net loss per share:
Basic and diluted $ (0.14) $ (0.11) $ (0.24) $ (0.24)
Weighted-average shares used in computation of net loss per share:
Basic and diluted 78,844,666 61,468,129 76,618,142 61,096,886

 

INSEEGO CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30,
2019
December 31,
2018
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 20,268 $ 31,015
Restricted cash 61 61
Accounts receivable, net 19,607 20,633
Inventories, net 29,392 26,431
Prepaid expenses and other 7,308 6,212
Total current assets 76,636 84,352
Property, plant and equipment, net 9,224 6,698
Rental assets, net 5,232 5,769
Intangible assets, net 36,760 31,985
Goodwill 33,584 32,942
Right-of-use assets, net 2,709
Other assets 509 510
Total assets $ 164,654 $ 162,256
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable $ 35,856 $ 39,245
Accrued expenses and other current liabilities 14,088 13,024
Convertible senior notes, net 97,194
Term loan, net 45,792
DigiCore bank facilities 1,046 1,412
Total current liabilities 193,976 53,681
Long-term liabilities:
Convertible senior notes, net 93,054
Term loan, net 45,046
Deferred tax liabilities, net 4,559 4,457
Other long-term liabilities 3,447 2,543
Total liabilities 201,982 198,781
Stockholders’ deficit:
Common stock 79 74
Additional paid-in capital 562,405 546,230
Accumulated other comprehensive loss (3,670) (4,877)
Accumulated deficit (596,081) (577,817)
Total stockholders’ deficit attributable to Inseego Corp. (37,267) (36,390)
Noncontrolling interests (61) (135)
Total stockholders’ deficit (37,328) (36,525)
Total liabilities and stockholders’ deficit $ 164,654 $ 162,256

 

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2019 2018 2019 2018
Cash flows from operating activities:
Net loss $ (10,719) $ (6,679) $ (18,190) $ (14,739)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 3,769 3,432 7,208 7,319
Provision for bad debts, net of recoveries 155 82 385 314
Provision for excess and obsolete inventory, net of recoveries 27 256 336 1,076
Share-based compensation expense 3,645 1,064 4,702 1,944
Amortization of debt discount and debt issuance costs 2,443 2,443 4,886 4,886
Deferred income taxes 1 (2) (17) (6)
Other 560 (49) 680 965
Changes in assets and liabilities:
Accounts receivable 3,978 (5,535) 688 (8,676)
Inventories 3,242 705 (4,608) 3,503
Prepaid expenses and other assets (1,522) (674) (1,208) 2,881
Accounts payable (7,370) 9,997 (3,861) 904
Accrued expenses, income taxes, and other (3,231) 243 (1,056) 532
Net cash provided by (used in) operating activities (5,022) 5,283 (10,055) 903
Cash flows from investing activities:
Purchases of property, plant and equipment (2,545) (327) (2,973) (653)
Proceeds from the sale of property, plant and equipment 404 5 454 30
Additions to capitalized software development costs and purchases of intangible assets (4,859) (544) (8,801) (1,099)
Net cash used in investing activities (7,000) (866) (11,320) (1,722)
Cash flows from financing activities:
Proceeds from the exercise of warrant to purchase common stock 10,639
Net repayment of DigiCore bank and overdraft facilities (359) 10 (394) (208)
Principal payments under finance lease obligations (264) (151) (532) (360)
Principal payments on mortgage bond (81) (166)
Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units 311 177 598 559
Net cash provided by (used in) financing activities (312) (45) 10,311 (175)
Effect of exchange rates on cash 724 (1,648) 317 (1,368)
Net increase (decrease) in cash, cash equivalents and restricted cash (11,610) 2,724 (10,747) (2,362)
Cash, cash equivalents and restricted cash, beginning of period 31,939 16,173 31,076 21,259
Cash, cash equivalents and restricted cash, end of period $ 20,329 $ 18,897 $ 20,329 $ 18,897

 

INSEEGO CORP.

Reconciliation of GAAP Net Loss to Non-GAAP Net Loss

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended
June 30, 2019
Six Months Ended
June 30, 2019
Net Income (Loss) Income (Loss) Per Share Net Income (Loss) Income (Loss) Per Share
GAAP net loss $ (10,719) $ (0.14) $ (18,190) $ (0.24)
Adjustments:
Share-based compensation expense(a) 3,645 0.05 4,702 0.06
Purchased intangibles amortization(b) 1,357 0.02 2,740 0.04
Debt discount and issuance costs amortization 2,443 0.03 4,886 0.06
Restructuring charges, net of recoveries 15 37
Non-recurring legal and other expenses 770 0.01 770 0.01
Non-GAAP net loss $ (2,489) $ (0.03) $ (5,055) $ (0.07)

 

(a) Includes share-based compensation expense recorded under ASC Topic 718.

(b) Includes amortization of intangible assets purchased through acquisitions.

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

INSEEGO CORP.

Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses

Three Months Ended June 30, 2019

(In thousands)

(Unaudited)

 

GAAP Share-based compensation expense
(a)
Purchased intangibles amortization
(b)
Restructuring charges, net of recoveries Non-recurring legal and other expenses Non-GAAP
Cost of net revenues $ 40,336 $ 574 $ 500 $ $ $ 39,262
Operating costs and expenses:
Research and development 5,188 957 4,231
Sales and marketing 7,229 818 6,411
General and administrative 7,449 1,296 770 5,383
Amortization of purchased intangible assets 857 857
Restructuring charges, net of recoveries 15 15
Total operating costs and expenses $ 20,738 3,071 857 15 770 $ 16,025
Total $ 3,645 $ 1,357 $ 15 $ 770

 

(a) Includes share-based compensation expense recorded under ASC Topic 718.

(b) Includes amortization of intangible assets purchased through acquisitions.

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

INSEEGO CORP.

Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses

Six Months Ended June 30, 2019

(In thousands)

(Unaudited)

 

GAAP Share-based compensation expense
(a)
Purchased intangibles amortization
(b)
Restructuring charges, net of recoveries Non-recurring legal and other expenses Non-GAAP
Cost of net revenues $ 74,132 $ 697 $ 1,012 $ $ $ 72,423
Operating costs and expenses:
Research and development 8,673 1,132 7,541
Sales and marketing 13,620 1,032 12,588
General and administrative 13,901 1,841 770 11,290
Amortization of purchased intangible assets 1,728 1,728
Restructuring charges, net of recoveries 37 37
Total operating costs and expenses $ 37,959 4,005 1,728 37 770 $ 31,419
Total $ 4,702 $ 2,740 $ 37 $ 770

 

(a) Includes share-based compensation expense recorded under ASC Topic 718.

(b) Includes amortization of intangible assets purchased through acquisitions.

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

INSEEGO CORP.

Reconciliation of GAAP Loss before Income Taxes to Adjusted EBITDA

(In thousands)

(Unaudited)

 

Three Months Ended
June 30, 2019
Six Months Ended
June 30, 2019
Loss before income taxes $ (10,397) $ (17,620)
Depreciation and amortization(a) 3,769 7,208
Share-based compensation expense(b) 3,645 4,702
Restructuring charges, net of recoveries 15 37
Non-recurring legal and other expenses 770 770
Interest expense, net(c) 5,142 10,217
Other income (expense), net(d) 72 (241)
Adjusted EBITDA $ 3,016 $ 5,073

 

(a) Includes depreciation and amortization charges, including amortization of intangible assets purchased through acquisitions.

(b) Includes share-based compensation expense recorded under ASC Topic 718.

(c) Includes the amortization of debt discount and issuance costs related to the convertible senior notes and term loan.

(d) Includes foreign currency transaction gains and losses, net of the gain on the sale of certain fixed assets.

 

See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.

 

INSEEGO CORP.

Quarterly Net Revenues by Product Grouping

(In thousands)

(Unaudited)

Three Months Ended
June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018
IoT & Mobile Solutions $ 39,983 $ 32,781 $ 40,092 $ 34,636 $ 31,741
Enterprise SaaS Solutions 15,908 15,775 15,951 15,994 17,316
Total net revenues $ 55,891 $ 48,556 $ 56,043 $ 50,630 $ 49,057