UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 2023
____________________
(Exact Name of Registrant as Specified in its Charter)
____________________
(State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer identification number) | ||||||
(Address of principal executive offices) (Zip Code)
(858 ) 812-3400
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
The information in “Item 2.02 Results of Operations and Financial Condition” of this Current Report on Form 8-K and in Exhibit 99.1, attached hereto, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may be incorporated by reference in a filing under the Exchange Act or the Securities Act of 1933, as amended, only if such subsequent filing specifically references such disclosure in this Form 8-K.
On November 2, 2023, Inseego Corp. issued a press release containing preliminary financial results for the quarter ended September 30, 2023.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 2, 2023
| Inseego Corp. | |||||
| By: | /s/ Steven Gatoff | ||||
| Steven Gatoff | |||||
| Chief Financial Officer | |||||
Exhibit 99.1
Inseego Reports Third Quarter 2023 Financial Results
Q3 2023 total revenue of $48.6 million
Recorded net loss of $21.8 million; delivered positive adjusted EBITDA of $4.0 million for Q3 2023
5G Fixed Wireless Access (FWA) revenue represented 23.0% of total revenue and grew 29.0% year-over-year
SAN DIEGO—November 2, 2023—Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G edge cloud solutions,
today reported its results for the third quarter of 2023 ending September 30, 2023. The Company reported third quarter total
revenue of $48.6 million, GAAP operating loss of $18.4 million, GAAP net loss of $21.8 million, GAAP net loss of $0.19 per
share, adjusted EBITDA of $4.0 million, and non-GAAP net loss of $0.16 per share. Cash and cash equivalents at quarter end was $18.9 million.
“We remain focused on maintaining profitability as we transition from 4G to 5G. While supply chain challenges are impacting our business in the near term, we are well positioned to capitalize on the newly developing 5G FWA market”, said Ashish Sharma, CEO of Inseego. “During the last year, our enterprise and SMB customer base has grown by almost 56,000 customers, all driven by our 5G FWA and cloud portfolio. While the FWA market is taking a bit of time to develop, we remain focused on driving success with the early customer base we have established.”
Recent Business Highlights
–Total revenue for Q3 2023 was $48.6 million
–5G revenue accounted for 54.0% of Q3 2023 total revenue
–Cloud software revenue was 30.0% of Q3 2023 revenue
–5G FWA revenue grew 29.0% YoY driven by over 56,000 new enterprise and SMB customers signed up during the last year
–GAAP margin was 3.9%; Non-GAAP gross margin increased year-over-year from 26.4% to 33.0% as the revenue mix continued to shift to higher-margin products
–Operating expenses dropped to lowest in over two years
–Delivered 3rd straight quarter of positive cash flow and adjusted EBITDA
–Steven Gatoff joined as Chief Financial Officer in September
–Philip Brace joined our Board of Directors in September
–Steve Harmon joined as Chief Revenue Officer in October
“We continue to optimize and align our spend with near-term customer demand and our revenue trajectory” said Steven Gatoff,
Chief Financial Officer of Inseego. “We’re focused on managing the decline of legacy 4G revenue as we look to drive growth in 5G. In the current quarter, we see our recent cost savings actions helping to alleviate some of the revenue pressures and we are focused on delivering profitability as we manage through the transition”.
Q4 2023 Guidance
– 4G mobile hotspot revenue to decline as the product category goes end-of-life
– Total revenue is anticipated to be in the range of $40.0 million to $42.0 million for Q4 2023
– Adjusted EBITDA for Q4 2023 expected to be in the range of positive $1.5 million to $2.0 million
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Conference Call Information
Inseego will host a conference call and live webcast today at 5:00 p.m. ET. A Q&A session will be held live directly after the prepared remarks. To access the conference call:
•Online, visit https://investor.inseego.com/events-presentations
•Phone-only participants can pre-register by navigating to https://dpregister.com/sreg/10183330/faad83f75e
•Those without internet access or unable to pre-register may dial in by calling:
•In the United States, call 1-844-282-4463
•International parties can access the call at 1-412-317-5613
An audio replay of the conference call will be available one hour after the call through November 16, 2023. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 3005255 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 the industry leader in 5G Enterprise cloud WAN solutions with millions of end customers and thousands of enterprise and SMB customers on its 4G, 5G and cloud platforms. Inseego’s 5G Edge Cloud combines the industry’s best 5G technology, rich cloud networking features and intelligent edge applications. Inseego powers new business experiences by connecting distributed sites and workforces, securing enterprise data and improving business outcomes with intelligent operational visibility---all over a 5G network. For more information on Inseego, visit www.inseego.com #Putting5GtoWork
©2023. Inseego Corp. All rights reserved. The Inseego name and logo are registered trademarks of Inseego Corp. Other company, product or service names mentioned herein are the trademarks of their respective owners.
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, and other statements that are not purely historical facts are forward-looking. These forward-looking statements are based on management’s current expectations, assumptions, estimates, and projections. They are subject to significant risks and uncertainties that could cause 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 and our ability to accurately forecast; (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) dependence on a small number of customers for a significant portion of the Company’s revenues and accounts receivable; (5) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (6) dependence on third-party manufacturers and key component suppliers worldwide; (7) the impact that new or adjusted tariffs may have on the cost of components or our products, and our ability to sell products internationally; (8) the impact of fluctuations of foreign currency exchange rates; (9) the impact of supply chain challenges on our ability to source components and manufacture our products; (10) unexpected liabilities or expenses; (11) the Company’s ability to introduce new
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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; (12) litigation, regulatory and IP developments related to our products or components of our products; (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, strategic relationships, international expansion, software and hardware developments, personnel matters, and cost containment initiatives, including restructuring activities and the timing of their implementations; (15) the global semiconductor shortage and any related price increases or supply chain disruptions, (16) the potential impact of COVID-19 or other global public health emergencies on the business, (17) the impact of high rates of inflation and rising interest rates, and (18) the impact of geopolitical instability on our 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 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, even if new information becomes available or other events occur in the future, except as otherwise required under applicable law and our ongoing reporting obligations under the Securities Exchange Act of 1934, as amended.
Non-GAAP Financial Measures
Inseego Corp. has provided financial information in this press 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, for example, exclude preferred stock dividends, share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to our 2025 Notes and revolving credit facility, fair value adjustments on derivative instruments, a one-time prior period adjustment related to unamortized debt discount and loss on debt extinguishment pertaining to our 2025 Notes, and other non-recurring expenses. Adjusted EBITDA excludes interest, taxes, depreciation, amortization (unrelated to acquisitions and the 2025 Notes), impairment of capitalized software, impairment of long-lived assets, and foreign exchange 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. They 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 them to be an important supplemental performance measure.
We use these non-GAAP financial measures to make operational decisions, evaluate our performance, prepare forecasts and determine compensation. Further, management and investors benefit from referring to these non-GAAP financial measures in assessing our 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 our 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, we exclude certain non-cash and one-time items to facilitate comparability of our operating performance on a period-to-period basis because such expenses are not, in our view, related to our ongoing operational performance. We use this view of our operating performance to compare it with the business plan and individual operating budgets and in the allocation of resources.
We believe that these non-GAAP financial measures are helpful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that using these non-GAAP financial measures also facilitates comparing our underlying operating performance with other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.
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In the future, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the 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 material limitations are associated with using 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 in this press release with our GAAP financial results.
Investor Relations Contact:
IR@inseego.com
4
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, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||
| IoT & Mobile Solutions | $ | 41,357 | $ | 62,633 | $ | 131,367 | $ | 172,129 | |||||||||||||||
| Enterprise SaaS Solutions | 7,226 | 6,534 | 21,567 | 20,279 | |||||||||||||||||||
| Total net revenues | 48,583 | 69,167 | 152,934 | 192,408 | |||||||||||||||||||
| Cost of net revenues: | |||||||||||||||||||||||
| IoT & Mobile Solutions | 43,560 | 48,209 | 105,011 | 131,805 | |||||||||||||||||||
| Enterprise SaaS Solutions | 3,128 | 3,002 | 8,945 | 9,505 | |||||||||||||||||||
| Total cost of net revenues | 46,688 | 51,211 | 113,956 | 141,310 | |||||||||||||||||||
| Gross profit | 1,895 | 17,956 | 38,978 | 51,098 | |||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Research and development | 8,951 | 15,417 | 27,127 | 47,597 | |||||||||||||||||||
| Sales and marketing | 5,355 | 8,295 | 17,975 | 25,789 | |||||||||||||||||||
| General and administrative | 4,906 | 5,720 | 16,703 | 20,101 | |||||||||||||||||||
| Amortization of purchased intangible assets | 424 | 433 | 1,277 | 1,319 | |||||||||||||||||||
| Write-down of capitalized software | 611 | — | 1,115 | — | |||||||||||||||||||
| Total operating costs and expenses | 20,247 | 29,865 | 64,197 | 94,806 | |||||||||||||||||||
| Operating loss | (18,352) | (11,909) | (25,219) | (43,708) | |||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
| Loss on debt conversion and extinguishment, net | — | — | — | (450) | |||||||||||||||||||
| Interest expense, net | (2,891) | (2,034) | (6,902) | (6,621) | |||||||||||||||||||
| Other (expense) income, net | (578) | (1,758) | 875 | (3,145) | |||||||||||||||||||
| Total other expense | (3,469) | (3,792) | (6,027) | (10,216) | |||||||||||||||||||
| Loss before income taxes | (21,821) | (15,701) | (31,246) | (53,924) | |||||||||||||||||||
| Income tax (benefit) provision | (16) | 42 | 600 | (582) | |||||||||||||||||||
| Net loss | (21,805) | (15,743) | (31,846) | (53,342) | |||||||||||||||||||
| Series E preferred stock dividends | (756) | (691) | (2,218) | (2,029) | |||||||||||||||||||
| Net loss attributable to common stockholders | $ | (22,561) | $ | (16,434) | $ | (34,064) | $ | (55,371) | |||||||||||||||
| Per share data: | |||||||||||||||||||||||
| Net loss per common share: | |||||||||||||||||||||||
| Basic and diluted | $ | (0.19) | $ | (0.15) | $ | (0.30) | $ | (0.52) | |||||||||||||||
| Weighted-average shares used in computation of net loss per common share: | |||||||||||||||||||||||
| Basic and diluted | 116,967,545 | 107,747,468 | 112,247,219 | 106,977,201 | |||||||||||||||||||
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INSEEGO CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)
(Unaudited)
| June 30, 2023 | December 31, 2022 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 18,946 | $ | 7,143 | |||||||
Accounts receivable, net of provision for credit losses of $1,101 and $541, respectively | 17,435 | 25,259 | |||||||||
| Inventories | 21,916 | 37,976 | |||||||||
| Prepaid expenses and other | 5,562 | 7,978 | |||||||||
| Total current assets | 63,859 | 78,356 | |||||||||
Property, plant and equipment, net of accumulated depreciation of $28,240 and $26,049, respectively | 3,597 | 5,390 | |||||||||
Rental assets, net of accumulated depreciation of $5,037 and $5,484, respectively | 5,037 | 4,816 | |||||||||
Intangible assets, net of accumulated amortization of $42,138 and $31,629, respectively | 35,057 | 41,383 | |||||||||
| Goodwill | 21,922 | 21,922 | |||||||||
| Right-of-use assets | 5,819 | 6,662 | |||||||||
| Other assets | 1,464 | 488 | |||||||||
| Total assets | $ | 136,755 | $ | 159,017 | |||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 30,980 | $ | 29,018 | |||||||
| Accrued expenses and other current liabilities | 28,917 | 27,945 | |||||||||
| Total current liabilities | 59,897 | 56,963 | |||||||||
| Long-term liabilities: | |||||||||||
| 2025 Notes, net | 159,541 | 158,427 | |||||||||
| Revolving credit facility, net | — | 6,919 | |||||||||
| Deferred tax liabilities, net | 278 | 323 | |||||||||
| Other long-term liabilities | 7,822 | 6,503 | |||||||||
| Total liabilities | 227,538 | 229,135 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ deficit: | |||||||||||
| Preferred stock, par value $0.001; 2,000,000 shares authorized: | |||||||||||
| Series E Preferred stock, par value $0.001; 39,500 shares designated, 25,000 shares issued and outstanding, liquidation preference of $1,000 per share (plus any accrued but unpaid dividends) | — | — | |||||||||
Common stock, par value $0.001; 150,000,000 shares authorized, 117,024,709 and 108,468,150 shares issued and outstanding, respectively | 117 | 108 | |||||||||
| Additional paid-in capital | 808,203 | 793,855 | |||||||||
| Accumulated other comprehensive loss | (7,288) | (6,329) | |||||||||
| Accumulated deficit | (891,815) | (857,752) | |||||||||
| Total stockholders’ deficit | (90,783) | (70,118) | |||||||||
| Total liabilities and stockholders’ deficit | $ | 136,755 | $ | 159,017 | |||||||
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INSEEGO CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net loss | $ | (21,805) | $ | (15,743) | $ | (31,846) | $ | (53,342) | |||||||||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 5,451 | 6,981 | 16,270 | 20,936 | |||||||||||||||||||
| Provision for credit losses | 368 | 44 | 612 | 29 | |||||||||||||||||||
| Write-down of capitalized software | 611 | — | 1,115 | — | |||||||||||||||||||
| Provision for excess and obsolete inventory | 6,701 | 434 | 7,011 | 1,330 | |||||||||||||||||||
| Share-based compensation expense | 2,267 | 2,406 | 6,030 | 15,892 | |||||||||||||||||||
| Amortization of debt discount and debt issuance costs | 1,071 | 450 | 2,048 | 2,472 | |||||||||||||||||||
| Fair value adjustment on derivative instrument | — | — | — | (902) | |||||||||||||||||||
| Loss on debt conversion and extinguishment, net | — | — | — | 450 | |||||||||||||||||||
| Deferred income taxes | 82 | (127) | 177 | (223) | |||||||||||||||||||
| Right-of-use assets | 223 | (13) | 437 | 1,057 | |||||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | 7,470 | (5,800) | 7,703 | (561) | |||||||||||||||||||
| Inventories | 1,512 | 4,222 | 7,685 | (5,926) | |||||||||||||||||||
| Prepaid expenses and other assets | 1,009 | (377) | 1,479 | 2,723 | |||||||||||||||||||
| Accounts payable | (3,944) | (7,341) | 1,162 | (13,548) | |||||||||||||||||||
| Accrued expenses, income taxes, and other | 8,945 | 8,016 | 2,561 | 6,276 | |||||||||||||||||||
| Operating lease liabilities | (239) | (257) | (41) | (1,366) | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 9,722 | (7,105) | -7105000 | 22,403 | (24,703) | ||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Purchases of property, plant and equipment | (242) | (144) | (403) | (1,203) | |||||||||||||||||||
| Additions to capitalized software development costs | (1,673) | (3,020) | (6,114) | (9,242) | |||||||||||||||||||
| Net cash used in investing activities | (1,915) | (3,164) | (6,517) | (10,445) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Net borrowing (repayment) of bank and overdraft facilities | — | (317) | 79 | (458) | |||||||||||||||||||
| Principal payments under finance lease obligations | — | — | — | (62) | |||||||||||||||||||
| Proceeds from a public offering | — | — | 6,057 | — | |||||||||||||||||||
| Principal payments on financed assets | — | (337) | (360) | (1,567) | |||||||||||||||||||
| Borrowings on revolving credit facility | — | — | |||||||||||||||||||||
| Borrowings (Repayments) on revolving credit facility | (3,253) | 4,500 | (7,851) | 4,500 | |||||||||||||||||||
| Payment of debt issuance costs on revolving credit facility | (1,126) | (1,126) | |||||||||||||||||||||
| Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units | 2 | 80 | 49 | 196 | |||||||||||||||||||
| Net cash (used in) provided by financing activities | (3,251) | 2,800 | (2,026) | 1,483 | |||||||||||||||||||
| Effect of exchange rates on cash | (775) | 1,172 | (2,057) | 1,916 | |||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 3,781 | (6,297) | 11,803 | (31,749) | |||||||||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 15,165 | 24,360 | 7,143 | 49,812 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,946 | $ | 18,063 | $ | 18,946 | $ | 18,063 | |||||||||||||||
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INSEEGO CORP.
Reconciliation of GAAP Net Loss Attributable to Common Shareholders to Non-GAAP Net Loss
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||||||||||||||
| Net Loss | Net Loss Per Share | Net Loss | Net Loss Per Share | ||||||||||||||||||||
| GAAP net loss attributable to common shareholders | $ | (22,561) | $ | (0.19) | $ | (34,064) | $ | (0.30) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Preferred stock dividends(a) | 756 | 0.01 | 2,218 | 0.02 | |||||||||||||||||||
| Share-based compensation expense | 2,267.4 | 0.02 | 6,030 | 0.05 | |||||||||||||||||||
| Purchased intangibles amortization | 424 | — | 1,277 | 0.01 | |||||||||||||||||||
Debt discount and issuance costs amortization(b) | 881 | 0.01 | 1,819 | 0.02 | |||||||||||||||||||
| Non-GAAP net loss | $ | (18,233) | $ | (0.16) | $ | (22,720) | $ | (0.20) | |||||||||||||||
Note: Amounts may not foot due to rounding.
(a) Includes accrued dividends on Series E Preferred Stock.
(b) Includes the debt discount and issuance costs amortization related to the 2025 Notes, and the issuance costs related to the revolving credit facility.
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
8
INSEEGO CORP.
Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses
Three Months Ended September 30, 2023
(In thousands)
(Unaudited)
GAAP | Share-based compensation expense | Purchased intangibles amortization | Non-GAAP | ||||||||||||||||||||
Cost of net revenues | $ | 46,688 | $ | 251 | $ | — | $ | 46,437 | |||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Research and development | 8,951 | 599 | — | 8,352 | |||||||||||||||||||
Sales and marketing | 5,355 | 373 | — | 4,982 | |||||||||||||||||||
General and administrative | 4,906 | 1,044 | — | 3,862 | |||||||||||||||||||
Amortization of purchased intangible assets | 424 | — | 424 | — | |||||||||||||||||||
| Write-down of purchased intangible assets | 611 | — | — | 611 | |||||||||||||||||||
Total operating costs and expenses | $ | 20,247 | $ | 2,016 | $ | 424 | $ | 17,807 | |||||||||||||||
Total | $ | 2,266 | $ | 424 | |||||||||||||||||||
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
9
INSEEGO CORP.
Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP Operating Costs and Expenses
Nine Months Ended September 30, 2023
(In thousands)
(Unaudited)
| GAAP | Share-based compensation expense | Purchased intangibles amortization | Non-GAAP | ||||||||||||||||||||
| Cost of net revenues | $ | 113,956 | $ | 657 | $ | — | $ | 113,299 | |||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Research and development | 27,127 | 1,291 | — | 25,836 | |||||||||||||||||||
| Sales and marketing | 17,975 | 1,093 | — | 16,882 | |||||||||||||||||||
| General and administrative | 16,703 | 2,989 | — | 13,714 | |||||||||||||||||||
| Amortization of purchased intangible assets | 1,277 | — | 1,277 | — | |||||||||||||||||||
| Write-down of purchased intangible assets | 1,115 | — | — | 1,115 | |||||||||||||||||||
| Total operating costs and expenses | $ | 64,197 | $ | 5,373 | $ | 1,277 | $ | 57,547 | |||||||||||||||
| Total | $ | 6,030 | $ | 1,277 | |||||||||||||||||||
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
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INSEEGO CORP.
Reconciliation of GAAP Net Loss Attributable to Common Shareholders to Adjusted EBITDA
(In thousands)
(Unaudited)
| Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||
| GAAP net loss attributable to common shareholders | (22,561) | $ | (34,064) | ||||||||
Preferred stock dividends(a) | 756 | 2,218 | |||||||||
| Income tax provision (benefit) | (16) | 600 | |||||||||
| Depreciation and amortization | 5,451 | 16,270 | |||||||||
| Share-based compensation expense | 2,267 | 6,030 | |||||||||
| Write-down of capitalized software | 611 | 1,115 | |||||||||
| Right-of-use asset impairment | 469 | ||||||||||
Interest expense, net(b) | 2,891 | 6,902 | |||||||||
| Inventory adjustment - E&O and contract manufacturer liability | 13,058 | 13,058 | |||||||||
| Write-off of capitalized inventory order fees | 924 | 924 | |||||||||
Other(c) | 578 | (875) | |||||||||
| Adjusted EBITDA | $ | 3,959 | $ | 12,647 | |||||||
(a) Includes accrued dividends on Series E Preferred Stock.
(b) Includes the debt discount and issuance costs amortization related to the 2025 Notes, and the issuance costs related to the revolving credit facility.
(c) Primarily relates to foreign exchange gains and losses.
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
11
INSEEGO CORP.
Quarterly Net Revenues by Product Grouping
(In thousands)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||
| September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||||||||||||||||||||||
| IoT & Mobile Solutions | $ | 41,357 | $ | 46,383 | $ | 43,627 | $ | 46,272 | $ | 62,633 | |||||||||||||||||||
| Enterprise SaaS Solutions | 7,226 | 7,174 | 7,167 | 6,643 | 6,534 | ||||||||||||||||||||||||
| Total net revenues | $ | 48,583 | $ | 53,557 | $ | 50,794 | $ | 52,915 | $ | 69,167 | |||||||||||||||||||
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