November 5, 2020

Inseego Reports Third Quarter 2020 Financial Results

  • Revenue increased 44% year-over-year to $90.2 million 
  • Achieved positive free cash flow
  • Continued strong demand for 4G, 5G and cloud products

SAN DIEGO--(BUSINESS WIRE)--Nov. 5, 2020-- Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G and intelligent IoT device-to-cloud solutions, today reported its results for the third quarter ended September 30, 2020. The Company reported third quarter net revenue of $90.2 million, reflecting year-over-year growth of 44%, GAAP operating loss of $3.4 million, GAAP net loss of $5.4 million, GAAP net loss of $0.06 per share, adjusted EBITDA of $7.4 million and non-GAAP net income of $0.01 per share. Cash and cash equivalents at quarter end was $42.0 million.

“We had a monumental quarter with revenue over $90 million, an adjusted EBITDA of $7.4 million, and we achieved positive free cash flow. These are all major milestones that confirm the success of our turnaround and, at the same time, firmly establish that the company has entered a growth and cash generation phase,” said Inseego Chairman and CEO Dan Mondor. “Global demand for our mobile broadband and fixed wireless access products is very strong, illustrating momentum throughout our 5G portfolio. Our strategy of diversifying our customer base and recurring revenue streams will make for an exciting 2021 for the company and investors.”

Corporate Highlights

  • $90.2 million revenue, up 44% year-over-year and up 12% sequentially
  • $7.4 million adjusted EBITDA, up 69% year-over-year, earnings of $0.01 per share
  • Operating cash flow increased to $12.0 million in the quarter and achieved positive free cash flow
  • Ending cash balance of $42.0 million with zero bank debt
  • Appointed Chris Lytle to Board of Directors
  • Appointed new Chief Financial Officer Craig Foster

IoT & Mobile Solutions

  • Q3 revenue of $77.3 million, up 62% year-over-year and up 12% sequentially
  • GAAP gross margins for mobile products up 140 basis points sequentially with non-GAAP gross margins up 200 basis points sequentially
  • Launched new second-generation 5G MiFi® M2000 series mobile broadband solution at Verizon and UScellular
  • Added Swisscom, the largest mobile operator in Switzerland, as a new customer for the 5G MiFi M2000 on its nationwide 5G network
  • Recently announced Inseego Manage™, a suite of integrated SaaS applications for enterprise and service provider customers to easily manage their LTE and 5G WAN edge through an integrated platform
  • Increased subscriber base for Inseego Subscribe™ SaaS application (formerly branded DMS) by 65% quarter-over-quarter and 181% year-to-date
  • Delivered historically high volumes of LTE products to meet demand for remote work and connectivity

Enterprise SaaS Solutions

  • Q3 revenue of $12.9 million, up 13% sequentially and down 14% year-over-year due to COVID-related installation restrictions and foreign exchange rate headwinds
  • Ctrack business seeing strong recovery in multiple geographies exiting the quarter
  • Continued positive market traction with Ctrack Clarity SMB-focused application

“Our R&D investment is focused on advancing our 5G hardware offerings and integrating them with our cloud-based management platform, which will provide recurring revenue streams attached to Inseego products,” said Inseego Chief Financial Officer Craig Foster. “We continue to diversify and expand our global customer base while building performance-leading products that accelerate the adoption of 5G worldwide. Our exceptional results in the third quarter, driven by continued remote work demands and our new 5G launches, are a testament to our strong focus on the execution of this strategy.”

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:

An audio replay of the conference call will be available beginning one hour after the call, through November 19, 2020. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 10149424 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 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, 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. Adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net income (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, 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 income (loss) and non-GAAP net income (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 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

September 30,

 

Nine Months Ended

September 30,

 

2020

 

2019

 

2020

 

2019

Net revenues:

 

 

 

 

 

 

 

IoT & Mobile Solutions

$

77,342

 

 

$

47,733

 

 

$

189,071

 

 

$

123,548

 

Enterprise SaaS Solutions

 

12,898

 

 

 

14,983

 

 

 

38,698

 

 

 

43,615

 

Total net revenues

 

90,240

 

 

 

62,716

 

 

 

227,769

 

 

 

167,163

 

Cost of net revenues:

 

 

 

 

 

 

 

IoT & Mobile Solutions

 

60,135

 

 

 

38,482

 

 

 

148,414

 

 

 

101,607

 

Enterprise SaaS Solutions

 

4,935

 

 

 

5,609

 

 

 

14,958

 

 

 

16,616

 

Total cost of net revenues

 

65,070

 

 

 

44,091

 

 

 

163,372

 

 

 

118,223

 

Gross profit

 

25,170

 

 

 

18,625

 

 

 

64,397

 

 

 

48,940

 

Operating costs and expenses:

 

 

 

 

 

 

 

Research and development

 

10,684

 

 

 

6,655

 

 

 

29,448

 

 

 

15,328

 

Sales and marketing

 

8,446

 

 

 

7,149

 

 

 

25,849

 

 

 

20,769

 

General and administrative

 

8,699

 

 

 

7,148

 

 

 

23,257

 

 

 

21,086

 

Amortization of purchased intangible assets

 

779

 

 

 

847

 

 

 

2,358

 

 

 

2,575

 

Total operating costs and expenses

 

28,608

 

 

 

21,799

 

 

 

80,912

 

 

 

59,758

 

Operating loss

 

(3,438

)

 

 

(3,174

)

 

 

(16,515

)

 

 

(10,818

)

Other income (expense):

 

 

 

 

 

 

 

Loss on debt conversion and extinguishment, net

 

(1,180

)

 

 

 

 

 

(76,354

)

 

 

 

Interest expense, net

 

(1,657

)

 

 

(5,119

)

 

 

(8,197

)

 

 

(15,336

)

Other income (expense), net

 

1,053

 

 

 

(307

)

 

 

2,818

 

 

 

(66

)

Loss before income taxes

 

(5,222

)

 

 

(8,600

)

 

 

(98,248

)

 

 

(26,220

)

Income tax provision

 

217

 

 

 

223

 

 

 

193

 

 

 

793

 

Net loss

 

(5,439

)

 

 

(8,823

)

 

 

(98,441

)

 

 

(27,013

)

Less: Net loss (income) attributable to noncontrolling interests

 

(3

)

 

 

17

 

 

 

(29

)

 

 

(57

)

Net loss attributable to Inseego Corp.

 

(5,442

)

 

 

(8,806

)

 

 

(98,470

)

 

 

(27,070

)

Series E preferred stock dividends

 

(829

)

 

 

(131

)

 

 

(2,056

)

 

 

(131

)

Net loss attributable to common shareholders

$

(6,271

)

 

$

(8,937

)

 

$

(100,526

)

 

$

(27,201

)

Per share data:

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.06

)

 

$

(0.11

)

 

$

(1.06

)

 

$

(0.35

)

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

 

 

 

 

 

 

 

Basic and diluted

 

98,016,798

 

 

 

79,550,445

 

 

 

95,136,713

 

 

 

77,606,317

 

INSEEGO CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

September 30,

2020

 

December 31,

2019

 

(Unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

41,994

 

 

$

12,074

 

Accounts receivable, net

 

38,042

 

 

 

19,656

 

Inventories, net

 

24,241

 

 

 

25,290

 

Prepaid expenses and other

 

10,962

 

 

 

7,117

 

Total current assets

 

115,239

 

 

 

64,137

 

Property, plant and equipment, net

 

13,052

 

 

 

10,756

 

Rental assets, net

 

5,069

 

 

 

5,385

 

Intangible assets, net

 

51,974

 

 

 

44,392

 

Goodwill

 

28,742

 

 

 

33,659

 

Right-of-use assets, net

 

9,279

 

 

 

2,657

 

Other assets

 

384

 

 

 

387

 

Total assets

$

223,739

 

 

$

161,373

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

51,098

 

 

$

26,482

 

Accrued expenses and other current liabilities

 

23,263

 

 

 

17,861

 

DigiCore bank facilities

 

130

 

 

 

187

 

Total current liabilities

 

74,491

 

 

 

44,530

 

Long-term liabilities:

 

 

 

2025 Notes, net

 

162,839

 

 

 

 

2022 Notes, net

 

 

 

 

101,334

 

Term loan, net

 

 

 

 

46,538

 

Deferred tax liabilities, net

 

3,278

 

 

 

3,949

 

Other long-term liabilities

 

10,353

 

 

 

2,380

 

Total liabilities

 

250,961

 

 

 

198,731

 

Stockholders’ deficit:

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

99

 

 

 

82

 

Additional paid-in capital

 

706,212

 

 

 

584,862

 

Accumulated other comprehensive loss

 

(14,613

)

 

 

(3,879

)

Accumulated deficit

 

(718,829

)

 

 

(618,303

)

Total stockholders’ deficit attributable to Inseego Corp.

 

(27,131

)

 

 

(37,238

)

Noncontrolling interests

 

(91

)

 

 

(120

)

Total stockholders’ deficit

 

(27,222

)

 

 

(37,358

)

Total liabilities and stockholders’ deficit

$

223,739

 

 

$

161,373

 

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2020

 

2019

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(5,439

)

 

$

(8,823

)

 

$

(98,441

)

 

$

(27,013

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

6,256

 

 

 

5,562

 

 

 

15,948

 

 

 

12,770

 

Provision for bad debts, net of recoveries

 

166

 

 

 

306

 

 

 

240

 

 

 

691

 

Provision for excess and obsolete inventory, net of recoveries

 

250

 

 

 

53

 

 

 

430

 

 

 

389

 

Share-based compensation expense

 

2,207

 

 

 

1,253

 

 

 

8,188

 

 

 

5,955

 

Amortization of debt discount and debt issuance costs

 

387

 

 

 

2,443

 

 

 

3,632

 

 

 

7,329

 

Fair value adjustment on derivative instrument

 

(546

)

 

 

 

 

 

(1,372

)

 

 

 

Loss on debt conversion and extinguishment, net

 

1,180

 

 

 

 

 

 

76,354

 

 

 

 

Deferred income taxes

 

100

 

 

 

4

 

 

 

110

 

 

 

(13

)

Other

 

(108

)

 

 

669

 

 

 

50

 

 

 

1,349

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

2,433

 

 

 

(2,600

)

 

 

(19,065

)

 

 

(1,912

)

Inventories

 

(4,803

)

 

 

2,083

 

 

 

(2,078

)

 

 

(2,525

)

Prepaid expenses and other assets

 

1,380

 

 

 

(3,327

)

 

 

(3,918

)

 

 

(4,535

)

Accounts payable

 

2,836

 

 

 

(5,026

)

 

 

25,170

 

 

 

(8,887

)

Accrued expenses, income taxes, and other

 

5,751

 

 

 

2,460

 

 

 

11,464

 

 

 

1,404

 

Net cash provided by (used in) operating activities

 

12,050

 

 

 

(4,943

)

 

 

16,712

 

 

 

(14,998

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(2,253

)

 

 

(1,196

)

 

 

(5,084

)

 

 

(4,169

)

Proceeds from the sale of property, plant and equipment

 

92

 

 

 

 

 

 

327

 

 

 

454

 

Additions to capitalized software development costs and purchases of intangible assets

 

(9,579

)

 

 

(7,999

)

 

 

(20,216

)

 

 

(16,800

)

Net cash used in investing activities

 

(11,740

)

 

 

(9,195

)

 

 

(24,973

)

 

 

(20,515

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Gross proceeds from the issuance of 2025 Notes

 

 

 

 

 

 

 

100,000

 

 

 

 

Payment of issuance costs related to 2025 Notes

 

(1,056

)

 

 

 

 

 

(3,600

)

 

 

 

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

 

 

 

 

10,000

 

 

 

25,000

 

 

 

10,000

 

Repurchase of Series E preferred stock

 

 

 

 

 

 

 

(2,354

)

 

 

 

Proceeds from the exercise of warrants to purchase common stock

 

 

 

 

 

 

 

1,861

 

 

 

10,639

 

Net borrowing/ (repayment) of DigiCore bank and overdraft facilities

 

6

 

 

 

(765

)

 

 

110

 

 

 

(1,159

)

Principal payments under finance lease obligations

 

(781

)

 

 

(263

)

 

 

(2,243

)

 

 

(795

)

Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units

 

1,441

 

 

 

(341

)

 

 

2,872

 

 

 

257

 

Net cash provided by (used in) financing activities

 

(390

)

 

 

8,631

 

 

 

40,754

 

 

 

18,942

 

Effect of exchange rates on cash

 

(26

)

 

 

(877

)

 

 

(2,573

)

 

 

(560

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(106

)

 

 

(6,384

)

 

 

29,920

 

 

 

(17,131

)

Cash, cash equivalents and restricted cash, beginning of period

 

42,100

 

 

 

20,329

 

 

 

12,074

 

 

 

31,076

 

Cash, cash equivalents and restricted cash, end of period

$

41,994

 

 

$

13,945

 

 

$

41,994

 

 

$

13,945

 

INSEEGO CORP.

Reconciliation of GAAP Net Loss to Non-GAAP Net Income (Loss)

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

September 30, 2020

 

Nine Months Ended

September 30, 2020

 

Net Income

(Loss)

 

Income (Loss)

Per Share

 

Net Income

(Loss)

 

Income (Loss)

Per Share

GAAP net loss

$

(5,439

)

 

$

(0.06

)

 

$

(98,441

)

 

$

(1.03

)

Adjustments:

 

 

 

 

 

 

 

Share-based compensation expense(a)

 

2,207

 

 

 

0.02

 

 

 

8,188

 

 

 

0.09

 

Purchased intangibles amortization(b)

 

1,219

 

 

 

0.01

 

 

 

3,694

 

 

 

0.04

 

Debt discount and issuance costs amortization (c)

 

387

 

 

 

 

 

 

3,632

 

 

 

0.04

 

Fair value adjustment on derivative instrument (d)

 

(546

)

 

 

 

 

 

(1,372

)

 

 

(0.02

)

Loss on debt conversion and extinguishment (e)

 

1,180

 

 

 

0.01

 

 

 

76,354

 

 

 

0.79

 

Non-recurring legal and other expenses(f)

 

2,347

 

 

 

0.03

 

 

 

2,347

 

 

 

0.03

 

Non-GAAP net income (loss)

$

1,355

 

 

$

0.01

 

 

$

(5,598

)

 

$

(0.06

)

(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.

(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 September 30, 2020

(In thousands)

(Unaudited)

 

 

GAAP

 

Share-based

compensation

expense

(a)

 

Purchased

intangibles

amortization

(b)

 

Non-

recurring

legal and

other

expenses

(c)

 

Non-

GAAP

Cost of net revenues

$

65,070

 

$

308

 

$

440

 

$

997

 

$

63,325

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

10,684

 

 

491

 

 

 

 

 

 

10,193

Sales and marketing

 

8,446

 

 

531

 

 

 

 

 

 

7,915

General and administrative

 

8,699

 

 

877

 

 

 

 

1,350

 

 

6,472

Amortization of purchased intangible assets

 

779

 

 

 

 

779

 

 

 

 

Total operating costs and expenses

$

28,608

 

$

1,899

 

$

779

 

$

1,350

 

$

24,580

Total

 

 

$

2,207

 

$

1,219

 

$

2,347

 

 

(a)

Includes share-based compensation expense recorded under ASC Topic 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 Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses

Nine Months Ended September 30, 2020

(In thousands)

(Unaudited)

 

 

GAAP

 

Share-based

compensation

expense

(a)

 

Purchased

intangibles

amortization

(b)

 

Non-

recurring

legal and

other

expenses

(c)

 

Non-

GAAP

Cost of net revenues

$

163,372

 

$

1,296

 

$

1,337

 

$

997

 

$

159,742

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

29,448

 

 

2,292

 

 

 

 

 

 

27,156

Sales and marketing

 

25,849

 

 

1,810

 

 

 

 

 

 

24,039

General and administrative

 

23,257

 

 

2,790

 

 

 

 

1,350

 

 

19,117

Amortization of purchased intangible assets

 

2,358

 

 

 

 

2,358

 

 

 

 

Total operating costs and expenses

$

80,912

 

 

6,892

 

 

2,358

 

 

1,350

 

$

70,312

Total

 

 

$

8,188

 

$

3,695

 

$

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

September 30, 2020

 

Nine Months Ended

September 30, 2020

Loss before income taxes

$

(5,222

)

 

$

(98,248

)

Depreciation and amortization(a)

 

6,256

 

 

 

15,948

 

Share-based compensation expense(b)

 

2,207

 

 

 

8,188

 

Loss on debt conversion and extinguishment (c)

 

1,180

 

 

 

76,354

 

Non-recurring legal and other expenses(d)

 

2,347

 

 

 

2,347

 

Interest expense, net(e)

 

1,657

 

 

 

8,197

 

Other income, net(f)

 

(1,053

)

 

 

(2,818

)

Adjusted EBITDA

$

7,372

 

 

$

9,968

 

(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 and product transition costs.

(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

 

September 30,

2020

 

June 30,

2020

 

March 31,

2020

 

December 31,

2019

 

September 30,

2019

IoT & Mobile Solutions (a)

$

77,342

 

$

69,314

 

$

42,415

 

$

37,325

 

$

47,733

Enterprise SaaS Solutions

 

12,898

 

 

11,375

 

 

14,425

 

 

15,008

 

 

14,983

Total net revenues

$

90,240

 

$

80,689

 

$

56,840

 

$

52,333

 

$

62,716

(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.

 

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

Source: Inseego Corp.

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