Inseego Reports First Quarter 2019 Financial Results
Revenue and earnings within guidance
Rapid expansion of global 5G customer opportunities
“Our strategy of investing early in 5G is paying off, as global service
providers are showing great interest in our market-leading mobile and
fixed wireless portfolio, which is reflected in a rapid increase in our
opportunity pipeline,” said
Corporate Highlights
- Revenue of
- Accelerating R&D and sales and marketing investments to support growth in global 5G opportunities
IoT & Mobile Solutions
- Q1 2019 revenue of
- 5G opportunity pipeline growth in
- Launching MiFi LTE-Advanced gigabit hotspot with
- Launched a new line of Skyus LTE-Advanced ruggedized edge routers for industrial IoT applications
Enterprise SaaS Solutions
- Q1 2019 revenue of
- Momentum in the Aviation vertical with a new global European carrier
- Solid year over year growth in the Fleet business with
“Inseego is making significant investments in R&D and sales and
marketing to capitalize on global high-growth market opportunities
across our portfolio, especially in 5G,” said
Second 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
|
Inseego Consolidated |
Second Quarter 2019 Outlook |
|
| Revenue | $50.0 million - $56.0 million | |
| Adjusted EBITDA | $2.8 million - $4.5 million | |
|
IoT & Mobile Solutions |
||
| Revenue | $35.0 million - $40.0 million | |
|
Enterprise SaaS Solutions |
||
| Revenue | $15.0 million - $16.0 million | |
Conference Call Information
-
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
About
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 second
quarter ending
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; and (13) 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
Non-GAAP Financial Measures
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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited) |
||||||||
| Three Months Ended March 31, |
||||||||
| 2019 | 2018 | |||||||
| Net revenues: | ||||||||
| IoT & Mobile Solutions | $ | 32,781 | $ | 28,880 | ||||
| Enterprise SaaS Solutions | 15,775 | 17,853 | ||||||
| Total net revenues | 48,556 | 46,733 | ||||||
| Cost of net revenues: | ||||||||
| IoT & Mobile Solutions | 27,600 | 23,752 | ||||||
| Enterprise SaaS Solutions | 6,196 | 6,862 | ||||||
| Impairment of abandoned product line, net of recoveries | — | 576 | ||||||
| Total cost of net revenues | 33,796 | 31,190 | ||||||
| Gross profit | 14,760 | 15,543 | ||||||
| Operating costs and expenses: | ||||||||
| Research and development | 3,485 | 4,976 | ||||||
| Sales and marketing | 6,391 | 5,415 | ||||||
| General and administrative | 6,452 | 6,495 | ||||||
| Amortization of purchased intangible assets | 871 | 964 | ||||||
| Restructuring charges, net of recoveries | 22 | 277 | ||||||
|
Total operating costs and expenses |
17,221 | 18,127 | ||||||
| Operating loss | (2,461 | ) | (2,584 | ) | ||||
| Other income (expense): | ||||||||
| Interest expense, net | (5,075 | ) | (5,100 | ) | ||||
| Other income, net | 313 | 64 | ||||||
| Loss before income taxes | (7,223 | ) | (7,620 | ) | ||||
| Income tax provision | 248 | 440 | ||||||
| Net loss | (7,471 | ) | (8,060 | ) | ||||
| Less: Net loss (income) attributable to noncontrolling interests | (14 | ) | 10 | |||||
| Net loss attributable to Inseego Corp. | $ | (7,485 | ) | $ | (8,050 | ) | ||
| Per share data: | ||||||||
| Net loss per share: | ||||||||
| Basic and diluted | $ | (0.10 | ) | $ | (0.13 | ) | ||
| Weighted-average shares used in computation of net loss per share: | ||||||||
| Basic and diluted | 74,366,879 | 60,721,518 | ||||||
|
INSEEGO CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) |
||||||||
| March 31, 2019 |
December 31, 2018 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 31,878 | $ | 31,015 | ||||
| Restricted cash | 61 | 61 | ||||||
| Accounts receivable, net | 23,684 | 20,633 | ||||||
| Inventories, net | 33,288 | 26,431 | ||||||
| Prepaid expenses and other | 5,889 | 6,212 | ||||||
|
Total current assets |
94,800 | 84,352 | ||||||
| Property, plant and equipment, net | 6,976 | 6,698 | ||||||
| Rental assets, net | 5,404 | 5,769 | ||||||
| Intangible assets, net | 34,026 | 31,985 | ||||||
| Goodwill | 32,776 | 32,942 | ||||||
| Right-of-use assets, net | 3,110 | — | ||||||
| Other assets | 510 | 510 | ||||||
| Total assets | $ | 177,602 | $ | 162,256 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 42,732 | $ | 39,245 | ||||
| Accrued expenses and other current liabilities | 17,420 | 13,024 | ||||||
| DigiCore bank facilities | 1,242 | 1,412 | ||||||
|
Total current liabilities |
61,394 | 53,681 | ||||||
| Long-term liabilities: | ||||||||
| Convertible senior notes, net | 95,124 | 93,054 | ||||||
| Term loan, net | 45,419 | 45,046 | ||||||
| Deferred tax liabilities, net | 4,390 | 4,457 | ||||||
| Other long-term liabilities | 3,871 | 2,543 | ||||||
|
Total liabilities |
210,198 | 198,781 | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock | 79 | 74 | ||||||
| Additional paid-in capital | 558,208 | 546,230 | ||||||
| Accumulated other comprehensive loss | (5,460 | ) | (4,877 | ) | ||||
| Accumulated deficit | (585,302 | ) | (577,817 | ) | ||||
| Total stockholders’ deficit attributable to Inseego Corp. | (32,475 | ) | (36,390 | ) | ||||
| Noncontrolling interests | (121 | ) | (135 | ) | ||||
| Total stockholders’ deficit | (32,596 | ) | (36,525 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 177,602 | $ | 162,256 | ||||
|
INSEEGO CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
| Three Months Ended March 31, |
||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (7,471 | ) | $ | (8,060 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 3,439 | 3,887 | ||||||
| Provision for bad debts, net of recoveries | 230 | 232 | ||||||
| Provision for excess and obsolete inventory, net of recoveries | 309 | 820 | ||||||
| Share-based compensation expense | 1,057 | 880 | ||||||
| Amortization of debt discount and debt issuance costs | 2,443 | 2,443 | ||||||
| Deferred income taxes | (18 | ) | (4 | ) | ||||
| Other | 120 | 1,014 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (3,290 | ) | (3,141 | ) | ||||
| Inventories | (7,850 | ) | 2,798 | |||||
| Prepaid expenses and other assets | 314 | 3,555 | ||||||
| Accounts payable | 3,509 | (9,093 | ) | |||||
| Accrued expenses, income taxes, and other | 2,175 | 289 | ||||||
|
Net cash used in operating activities |
(5,033 | ) | (4,380 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (428 | ) | (326 | ) | ||||
| Proceeds from the sale of property, plant and equipment | 50 | 25 | ||||||
| Additions to capitalized software development costs and purchases of intangible assets | (3,942 | ) | (555 | ) | ||||
| Net cash used in investing activities | (4,320 | ) | (856 | ) | ||||
| 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 | (35 | ) | (218 | ) | ||||
| Principal payments under finance lease obligations | (268 | ) | (209 | ) | ||||
| Principal payments on mortgage bond | — | (85 | ) | |||||
| Proceeds from stock option exercises, net of taxes paid on vested restricted stock units | 287 | 382 | ||||||
| Net cash provided by (used in) financing activities | 10,623 | (130 | ) | |||||
| Effect of exchange rates on cash | (407 | ) | 280 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 863 | (5,086 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 31,076 | 21,259 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 31,939 | $ | 16,173 | ||||
|
INSEEGO CORP. Reconciliation of GAAP Net Loss to Non-GAAP Net Loss (In thousands, except per share data) (Unaudited) |
||||||||
| Three Months Ended March 31, 2019 |
||||||||
|
Net Income |
Income (Loss) |
|||||||
| GAAP net loss | $ | (7,471 | ) | $ | (0.10 | ) | ||
| Adjustments: | ||||||||
| Share-based compensation expense(a) | 1,057 | 0.01 | ||||||
| Purchased intangibles amortization(b) | 1,383 | 0.02 | ||||||
| Debt discount and issuance costs amortization | 2,443 | 0.04 | ||||||
| Restructuring charges, net of recoveries | 22 | — | ||||||
| Non-GAAP net loss | $ | (2,566 | ) | $ | (0.03 | ) | ||
(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 March 31, 2019 (In thousands) (Unaudited) |
|||||||||||||||||||
| GAAP |
Share-based |
Purchased |
Restructuring |
Non-GAAP | |||||||||||||||
| Cost of net revenues | $ | 33,796 | $ | 123 | $ | 512 | $ | — | $ | 33,161 | |||||||||
| Operating costs and expenses: | |||||||||||||||||||
| Research and development | 3,485 | 175 | — | — | 3,310 | ||||||||||||||
| Sales and marketing | 6,391 | 214 | — | — | 6,177 | ||||||||||||||
| General and administrative | 6,452 | 545 | — | — | 5,907 | ||||||||||||||
| Amortization of purchased intangible assets | 871 | — | 871 | — | — | ||||||||||||||
| Restructuring charges, net of recoveries | 22 | — | — | 22 | — | ||||||||||||||
| Total operating costs and expenses | $ | 17,221 | 934 | 871 | 22 | $ | 15,394 | ||||||||||||
| Total | $ | 1,057 | $ | 1,383 | $ | 22 | |||||||||||||
(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 March 31, 2019 |
||||
| Loss before income taxes | $ | (7,223 | ) | |
| Depreciation and amortization(a) | 3,439 | |||
| Share-based compensation expense(b) | 1,057 | |||
| Restructuring charges, net of recoveries | 22 | |||
| Interest expense, net(c) | 5,075 | |||
| Other income, net(d) | (313 | ) | ||
| Adjusted EBITDA | $ | 2,057 | ||
(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.
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 | |||||||||||||||||||
|
March 31, |
December 31, |
September 30, |
June 30, |
March 31, |
|||||||||||||||
| IoT & Mobile Solutions | $ | 32,781 | $ | 40,092 | $ | 34,636 | $ | 31,741 | $ | 28,880 | |||||||||
| Enterprise SaaS Solutions | 15,775 | 15,951 | 15,994 | 17,316 | 17,853 | ||||||||||||||
| Total net revenues | $ | 48,556 | $ | 56,043 | $ | 50,630 | $ | 49,057 | $ | 46,733 | |||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190508005883/en/
Source:
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