Next-generation 5G products account for over
30% of Q4 hardware sales
Inseego mobile solutions now available through
all major network operators in the U.S.
Continued momentum with new 5G launches in
North America, EMEA, and APAC in 2020
Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G and
intelligent IoT device-to-cloud solutions, today reported its
results for the fourth quarter and full year ended December 31,
2020. The Company reported fourth quarter net revenue of $86.1
million, GAAP operating loss of $8.6 million, GAAP net loss of
$12.7 million, GAAP net loss of $0.14 per share, adjusted EBITDA of
$7.0 million, and non-GAAP net loss of $0.07 per share. Cash and
cash equivalents at year end was $40.0 million. On a full year
basis, 2020 net revenue was $313.8 million, a 43.0% increase
year-over-year.
“2020 was an epic year for Inseego in every respect, as we
launched our groundbreaking 5G products with mobile operators on
four continents, shipped our first fixed wireless access products,
unveiled a suite of powerful SaaS cloud solutions and posted record
revenues,” said Inseego Chairman and CEO Dan Mondor. “In 2021,
we’re focused on bringing new 5G solutions to carrier customers
globally, expanding into the enterprise market and driving growth
of our cloud SaaS business.”
Corporate Highlights
- 2020 full year net revenue of $313.8 million, up 43.0%
year-over-year, and Q4 2020 net revenue of $86.1 million, up 64.5%
year-over-year
- Year-end cash balance of $40.0 million in the quarter with zero
bank debt
IoT & Mobile
Solutions
- 2020 full year net revenue of $261.2 million, Q4 2020 net
revenue of $72.1 million
- Recognized approximately $37.5 million of 5G revenue in
2020
- Launched new 5G solutions in multiple regions: North America
with T-Mobile, Verizon, and UScellular; Europe with Swisscom; the
Middle East with Vodafone Qatar; and Japan with Sumitomo
subsidiary, Grape One
- Launched the 5G MiFi® M2000 at T-Mobile, the un-carrier’s first
and only 5G mobile hotspot, along with Inseego Manage™ device
management capability to offer to their 100 million-plus consumer
and enterprise customers
- Launched Inseego Manage suite of integrated SaaS applications
for service provider and enterprise customers
- Increased Inseego Manage cloud subscriptions to over 3.5
million subscriptions
Enterprise SaaS
Solutions
- 2020 full year net revenue of $52.6 million, Q4 2020 net
revenue of $14.0 million
- Encountered COVID-related installation restrictions and foreign
exchange rate headwinds
- Recently announced an agreement for the divestiture of
Inseego’s Ctrack business operations in South Africa
“In addition to achieving 43.0% year-over-year top-line growth,
we continued to grow our 5G business as well as the SaaS business,”
said Inseego CFO Craig Foster. “We’re entering 2021 with a strong
balance sheet that enables us to continue developing
industry-leading products for customers worldwide.”
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:
- Online, visit http://investor.inseego.com
- Phone-only participants can pre-register by navigating to
https://dpregister.com/sreg/10151474/e0eaefe9f0
- Those without internet access or unable to pre-register may
dial-in by calling:
- In the United States, call 1-844-763-8274
- International parties can access the call at
1-412-717-9224
An audio replay of the conference call will be available
beginning one hour after the call, through March 15, 2021. To hear
the replay, parties in the United States may call 1-877-344-7529
and enter access code 10151474 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 leader in smart
device-to-cloud solutions that extend the 5G network edge, enabling
broader 5G coverage, multi-gigabit data speeds, low latency and
strong security to deliver highly reliable internet access. Our
innovative mobile broadband, fixed wireless access (FWA) solutions,
and software platform incorporate the most advanced technologies
(including 5G, 4G LTE, Wi-Fi 6 and others) into a wide range of
products that provide robust connectivity indoors, outdoors and in
the harshest industrial environments. Designed and developed in the
USA, Inseego products and SaaS solutions build on the company’s
patented technologies to provide the highest quality wireless
connectivity for service providers, enterprises, and government
entities worldwide. 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, and 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; (14) the Company’s plans and expectations
relating to acquisitions, divestitures (including the expected
divestiture of Inseego’s Ctrack business operations in South
Africa), strategic relationships, international expansion, software
and hardware developments, personnel matters and cost containment
initiatives, including restructuring activities and the timing of
their implementation; and (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.
Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and
non-GAAP operating costs and expenses 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,
loss on debt conversion and extinguishment relating to convertible
senior notes, fair value adjustments on derivative instruments, 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.
Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share
and non-GAAP operating costs and expenses 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 these non-GAAP financial measures
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
financial measures, 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 these
non-GAAP financial measures 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.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(In thousands, except share and
per share data)
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2020
2019
2020
2019
Net revenues:
IoT & Mobile Solutions
$
72,098
$
37,325
$
261,169
$
160,873
Enterprise SaaS Solutions
13,965
15,008
52,663
58,623
Total net revenues
86,063
52,333
313,832
219,496
Cost of net revenues:
IoT & Mobile Solutions
54,007
31,373
202,421
132,980
Enterprise SaaS Solutions
5,610
5,929
20,568
22,545
Total cost of net revenues
59,617
37,302
222,989
155,525
Gross profit
26,446
15,031
90,843
63,971
Operating costs and expenses:
Research and development
15,505
8,525
44,953
23,853
Sales and marketing
9,901
8,145
35,750
28,914
General and administrative
7,432
6,241
30,689
27,327
Amortization of purchased intangible
assets
817
846
3,175
3,421
Impairment of capitalized software
1,410
—
1,410
—
Total operating costs and expenses
35,065
23,757
115,977
83,515
Operating loss
(8,619
)
(8,726
)
(25,134
)
(19,544
)
Other income (expense):
Loss on debt conversion and
extinguishment, net
—
—
(76,354
)
—
Interest expense, net
(1,745
)
(5,045
)
(9,942
)
(20,381
)
Other income (expense), net
(1,826
)
417
992
351
Loss before income taxes
(12,190
)
(13,354
)
(110,438
)
(39,574
)
Income tax provision (benefit)
555
(257
)
748
536
Net loss
(12,745
)
(13,097
)
(111,186
)
(40,110
)
Less: Net loss (income) attributable to
noncontrolling interests
—
42
(29
)
(15
)
Net loss attributable to Inseego Corp.
(12,745
)
(13,055
)
(111,215
)
(40,125
)
Series E preferred stock dividends
(848
)
(230
)
(2,904
)
(361
)
Net loss attributable to common
shareholders
$
(13,593
)
$
(13,285
)
$
(114,119
)
$
(40,486
)
Per share data:
Net loss per common share:
Basic and diluted
$
(0.14
)
$
(0.17
)
$
(1.19
)
$
(0.52
)
Weighted-average shares used in
computation of net loss per common share:
Basic and diluted
99,014,857
80,447,679
96,111,547
78,322,496
INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
December 31,
2020
December 31,
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
40,015
$
12,074
Accounts receivable, net
29,940
19,656
Inventories, net
33,952
25,290
Prepaid expenses and other
10,201
7,117
Total current assets
114,108
64,137
Property, plant and equipment, net
13,699
10,756
Rental assets, net
6,109
5,385
Intangible assets, net
51,487
44,392
Goodwill
32,511
33,659
Right-of-use assets, net
9,092
2,657
Other assets
388
387
Total assets
$
227,394
$
161,373
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
52,339
$
26,482
Accrued expenses and other current
liabilities
23,373
18,048
DigiCore bank facilities
—
—
Total current liabilities
75,712
44,530
Long-term liabilities:
2025 Notes, net
165,147
—
2022 Notes, net
—
101,334
Term loan, net
—
46,538
Deferred tax liabilities, net
4,505
3,949
Other long-term liabilities
9,929
2,380
Total liabilities
255,293
198,731
Stockholders’ deficit:
Preferred stock
—
—
Common stock
99
82
Additional paid-in capital
711,487
584,862
Accumulated other comprehensive loss
(6,972
)
(3,879
)
Accumulated deficit
(732,422
)
(618,303
)
Total stockholders’ deficit attributable
to Inseego Corp.
(27,808
)
(37,238
)
Noncontrolling interests
(91
)
(120
)
Total stockholders’ deficit
(27,899
)
(37,358
)
Total liabilities and stockholders’
deficit
$
227,394
$
161,373
INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2020
2019
2020
2019
Cash flows from operating activities:
Net loss
$
(12,745
)
$
(13,097
)
$
(111,186
)
$
(40,110
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
11,998
5,656
27,946
18,426
Provision for bad debts, net of
recoveries
272
24
512
715
Impairment of capitalized software
1,410
—
1,410
—
Provision for excess and obsolete
inventory
108
591
538
980
Share-based compensation expense
2,231
1,347
10,419
7,302
Amortization of debt discount and debt
issuance costs
384
2,443
4,016
9,772
Fair value adjustment on derivative
instrument
1,969
—
597
—
Loss on debt conversion and
extinguishment, net
—
—
76,354
—
Deferred income taxes
549
(585
)
659
(598
)
Other
617
(509
)
667
840
Changes in assets and liabilities:
Accounts receivable
8,268
2,289
(10,797
)
377
Inventories
(11,258
)
(552
)
(13,336
)
(3,077
)
Prepaid expenses and other assets
848
3,634
(3,070
)
(901
)
Accounts payable
1,917
(4,109
)
27,087
(12,996
)
Accrued expenses, income taxes, and
other
(3,230
)
(133
)
8,234
1,271
Net cash provided by (used in) operating
activities
3,338
(3,001
)
20,050
(17,999
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(652
)
(2,452
)
(5,736
)
(6,621
)
Proceeds from the sale of property, plant
and equipment
65
63
392
517
Additions to capitalized software
development costs and purchases of intangible assets
(9,153
)
(5,309
)
(29,369
)
(22,109
)
Net cash used in investing activities
(9,740
)
(7,698
)
(34,713
)
(28,213
)
Cash flows from financing activities:
Gross proceeds from the issuance of 2025
Notes
—
—
100,000
—
Payment of issuance costs related to 2025
Notes
(45
)
—
(3,645
)
—
Payoff of term loan and related
extinguishment costs
—
—
(48,830
)
—
Cash paid to investors in private exchange
transactions
—
—
(32,062
)
—
Gross proceeds received from issuance of
Series E preferred stock
—
—
25,000
10,000
Repurchase of Series E preferred stock
—
—
(2,354
)
—
Proceeds from the exercise of warrants to
purchase common stock
—
6,903
1,861
17,542
Net borrowing of bank and overdraft
facilities
(309
)
112
(199
)
(1,047
)
Principal payments under finance lease
obligations
(513
)
(227
)
(2,756
)
(1,022
)
Proceeds from stock option exercises and
employee stock purchase plan, net of taxes paid on vested
restricted stock units
2,194
1,739
5,066
1,996
Net cash provided by (used in) financing
activities
1,327
8,527
42,081
27,469
Effect of exchange rates on cash
3,096
301
523
(259
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(1,979
)
(1,871
)
27,941
(19,002
)
Cash, cash equivalents and restricted
cash, beginning of period
41,994
13,945
12,074
31,076
Cash, and cash equivalents, end of
period
$
40,015
$
12,074
$
40,015
$
12,074
INSEEGO CORP.
Reconciliation of GAAP Net Loss
to Non-GAAP Net Loss
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
December 31, 2020
Year Ended
December 31, 2020
Net Loss
Net Loss Per
Share
Net Loss
Net Loss Per
Share
GAAP net loss
$
(12,745
)
$
(0.13
)
$
(111,186
)
$
(1.16
)
Adjustments:
Share-based compensation expense(a)
2,231
0.02
10,419
0.11
Purchased intangibles amortization(b)
1,287
0.01
4,982
0.05
Debt discount and issuance costs
amortization (c)
384
0.01
4,016
0.04
Fair value adjustment on derivative
instrument (d)
1,969
0.02
597
0.01
Loss on debt conversion and extinguishment
(e)
—
—
76,354
0.80
Non-recurring costs(f)
—
—
2,347
0.02
Non-GAAP net loss
$
(6,874
)
$
(0.07
)
$
(12,471
)
$
(0.13
)
(a)
Includes share-based compensation expense
recorded under ASC Topic 718.
(b)
Includes amortization of intangible assets
purchased through acquisitions.
(c)
Includes the debt discount and issuance
costs amortization related to the 2022 Notes and 2025 Notes.
(d)
Includes the fair value adjustment related
to the Company’s interest make-whole derivative instrument.
(e)
Includes the loss on debt conversion and
extinguishment of the 2022 Notes and 2025 Notes.
(f)
Includes non-recurring legal settlement
costs and product transition costs.
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 December 31,
2020
(In thousands)
(Unaudited)
GAAP
Share-based
compensation
expense
(a)
Purchased
intangibles
amortization
(b)
Non-
GAAP
Cost of net revenues
$
59,617
$
287
$
470
$
58,860
Operating costs and expenses:
Research and development
15,505
531
—
14,974
Sales and marketing
9,901
536
—
9,365
General and administrative
7,432
877
—
6,555
Amortization of purchased intangible
assets
817
—
817
—
Impairment of purchased intangible
assets
1,410
—
—
1,410
Total operating costs and expenses
$
35,065
$
1,944
$
817
$
32,304
Total
$
2,231
$
1,287
(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
Twelve Months Ended December 31,
2020
(In thousands)
(Unaudited)
GAAP
Share-based
compensation
expense
(a)
Purchased
intangibles
amortization
(b)
Non-
recurring
costs (c)
Non-GAAP
Cost of net revenues
$
222,989
$
1,583
$
1,807
$
997
$
218,602
Operating costs and expenses:
Research and development
44,953
2,823
—
—
42,130
Sales and marketing
35,750
2,346
—
—
33,404
General and administrative
30,689
3,667
—
1,350
25,672
Amortization of purchased intangible
assets
3,175
—
3,175
—
—
Impairment of capitalized software
1,410
—
—
1,410
Total operating costs and expenses
$
115,977
8,836
3,175
1,350
$
102,616
Total
$
10,419
$
4,982
$
2,347
(a)
Includes share-based compensation expense
recorded under ASC 718.
(b)
Includes amortization of intangible assets
purchased through acquisitions.
(c)
Includes non-recurring legal settlement
costs and product transition costs.
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
December 31, 2020
Year Ended
December 31, 2020
Loss before income taxes
$
(12,190
)
$
(110,438
)
Depreciation and amortization(a)
11,998
27,946
Share-based compensation expense(b)
2,231
10,419
Loss on debt conversion and extinguishment
(c)
—
76,354
Non-recurring costs(d)
1,410
3,757
Interest expense, net(e)
1,745
9,942
Other income, net(f)
1,826
(992
)
Adjusted EBITDA
$
7,020
$
16,988
(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 loss on debt conversion and
extinguishment of the 2022 Notes and 2025 Notes.
(d)
Includes non-recurring legal settlement
costs, product transition costs, and impairment of capitalized
software.
(e)
Includes debt discount and issuance costs
amortization related to the 2022 Notes and 2025 Notes.
(f)
Includes the fair value adjustment related
to the Company’s interest make-whole derivative instrument, as well
as 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
December 31,
2020
September 30,
2020
June 30,
2020
March 31,
2020
December 31,
2019
IoT & Mobile Solutions (a)
$
72,098
$
77,342
$
69,314
$
42,415
$
37,325
Enterprise SaaS Solutions
13,965
12,898
11,375
14,425
15,008
Total net revenues
$
86,063
$
90,240
$
80,689
$
56,840
$
52,333
(a)
Effective in the third quarter ended on
September 30, 2020, IoT & Mobile Solutions now includes the
Company’s Device Management System revenue stream, rebranded as
Inseego Subscribe™, and all prior period balances have been
reclassified from Enterprise SaaS Solutions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210301005934/en/
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
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