UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.02. | Results of Operations and Financial Condition. |
On November 12, 2024, Inseego Corp. (the “Company”) issued a press release containing preliminary financial results for the quarter ended September 30, 2024. On November 12, 2024, the Company also posted an investor presentation to its website at https://investor.inseego.com/events-presentations (the “Investor Presentation”). The text of the press release and Investor Presentation are furnished as Exhibits 99.1 and 99.2 to this Form 8-K and incorporated herein by reference.
The information in “Item 2.02 Results of Operations and Financial Condition” of this Current Report on Form 8-K and in Exhibits 99.1 and 99.2, 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 (the “Securities Act”), only if such subsequent filing specifically references such disclosure in this Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| 99.1 | Press release, dated November 12, 2024, containing Inseego Corp. preliminary financial results for the quarter ended September 30, 2024. |
| 99.2 | Investor Presentation, dated November 12, 2024. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| INSEEGO CORP. | |||
| Date: November 12, 2024 | By: | /s/ Steven Gatoff | |
| Name: Steven Gatoff | |||
| Title: Chief Financial Officer | |||
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Exhibit 99.1
Inseego Reports Third Quarter 2024 Financial Results
Q3 2024 revenue from continuing and discontinued operations of $61.9 million
Q3 2024 positive Adjusted EBITDA from continuing and discontinued operations of $9.3 million and GAAP Net Income of $9.0 million
Agreed to sell telematics business for $52.0 million in cash
Executed convertible debt restructuring and material reduction in debt
SAN DIEGO—November 12, 2024—Inseego Corp. (Nasdaq: INSG) (the “Company”), a technology leader in 5G mobile and fixed wireless solutions for mobile network operators, Fortune 500 enterprises and SMBs, today reported its results for the third quarter of 2024 ended September 30, 2024.
“The third quarter had several positive, and meaningfully transformative events for Inseego, operationally, strategically and financially,” said Phil Brace, Executive Chairman of Inseego. “The closing of our convertible note restructuring and the announced sale of our Telematics business have allowed us to deliver on our commitment to improve the Company’s capital structure. In addition, our operating results in the quarter were the best they have been in several years. Our focus now is on addressing our 5G pipeline and continuing the trajectory as we develop new products and look to drive long-term growth."
“We continue to be focused on driving stockholder value and are pleased to have restructured 91% of our outstanding convertible notes, meaningfully reducing debt and right-sizing the Company’s capital structure,” Steven Gatoff, Chief Financial Officer of Inseego, commented. "The $52 million in cash we anticipate receiving from the closing of the sale of Telematics will add additional liquidity and flexibility for the Company. On the operational front, Q3 was a pivotal quarter in which we delivered a big revenue quarter and generated strong Adjusted EBITDA and Operating Cash Flow, along with positive GAAP Operating and Net Income.”
Financial Highlights
The following financial highlights present the results of operations of the Company for the quarter ended September 30, 2024. As mentioned above, during the quarter ended September 30, 2024, the Company entered into an agreement to sell its telematics solutions business (the “Telematics Business”) for approximately $52 million in cash. Therefore, all results of operations related to the Telematics Business herein are reported as relating to ‘discontinued operations’, while the Company’s ongoing businesses are being reported as relating to ‘continuing operations’.
| · | Revenue from continuing operations and discontinued operations for Q3 2024 was $61.9 million, comprised of revenue from continuing operations of $54.0 million and revenue from discontinued operations of $7.9 million. | |
| · | Adjusted EBITDA from continuing operations and discontinued operations for Q3 2024 was $9.3 million, comprised of Adjusted EBITDA from continuing operations of $6.7 million and Adjusted EBITDA from discontinued operations of $2.6 million. | |
| · | Gross margin from continuing operations for Q3 2024 was 34.8%, while that from discontinued operations was 59.0%, resulting in a blended rate of 37.9%. |
Capital Structure Improvements
| · | On November 6, 2024, the Company completed its capital structure management initiative and material debt reduction by exchanging $91.5 million of principal value of the Company’s 3.25% convertible notes due 2025 for long-term debt and equity; the Company has now repurchased or exchanged at a discount approximately $147 million, or 91% of aggregate principal amount, of the $162 million of the convertible notes that were outstanding as of December 31, 2023. See separate press release also issued on November 12, 2024 for further details. | |
| · | Paid-down the Company’s short-term loan throughout the third quarter from an initial $19.5 million to be $6 million as of September 30,2024. |
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Business Highlights
| · | Hosted inaugural Channel Partner Advisory Council with key, strategic partners. | |
| · | Onboarded 12 new Inseego Ignite partners in Q3, several of which produced immediate revenue. | |
| · | Launched the multi-carrier certified 5G indoor router FX3110 to the Inseego Ignite channel program and closed new channel deals driving immediate revenue for this program. | |
| · | Launched the first MiFi® specifically for the Inseego Ignite channel program with all tier 1 North American operator certifications and closed the first channel deal with a new win at a Fortune 150 utility company to enable their remote workforce with secure, mobile connectivity. | |
| · | Launched Inseego products in the new T-Mobile Virtual Inventory Program. | |
| · | Increased MiFi® X PRO sales sequentially across carriers, including one who continues to see increased demand with an emphasis on public sector customers. |
Q4 2024 Guidance
As the sale of the Company’s telematics business is expected to close during the fourth quarter of 2024, that business is reported as discontinued operations and the following guidance is reflective of solely the expected results of the Company’s continuing operations. In other words, the Company’s guidance for Q4 2024 excludes any impact of expected results from the Company’s telematics operations.
| · | Total revenue from continuing operations in the range of $43.0 million to $47.0 million compared to revenue from continuing operations for Q3 2024 of $54.0 million and revenue from continuing operations for Q4 2023 of $35.9 million. | |
| · | Adjusted EBITDA from continuing operations in the range of $3.0 million to $4.0 million compared to Adjusted EBITDA from continuing operations for Q3 2024 of $6.7 million and Adjusted EBITDA from continuing operations for Q4 2023 of $2.3 million. |
|
Q4 2023 ACTUAL |
Q3 2024 ACTUAL |
Q4 2024 GUIDANCE | |||
| Revenue (from continuing operations) | $35.9m | $54.0m | $43.0m - $47.0m | ||
| Adjusted EBITDA (from continuing operations) | $2.3m | $6.7m | $3.0m - $4.0m |
Conference Call Information
Inseego will host a conference call and live webcast today at 5:00 p.m. ET. To access the conference call:
| · | Online, visit https://investor.inseego.com/events-presentations | |
| · | Those without internet access 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 26, 2024. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 1249014 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.
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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
©2024. Inseego Corp. All rights reserved. MiFi and 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 Company’s dependence on a small number of customers for a substantial portion of our revenues; (2) the future demand for wireless broadband access to data and asset management software and services and our ability to accurately forecast; (3) the growth of wireless wide-area networking and asset management software and services; (4) 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; (5) our ability to develop sales channels and to onboard channel partners; (6) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (7) dependence on third-party manufacturers and key component suppliers worldwide; (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 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, (18) the impact of import tariffs on our materials and products, and (19) 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.
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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 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, and other non-recurring expenses. Adjusted EBITDA excludes interest, taxes, depreciation, amortization, impairment of capitalized software, impairment of long-lived assets, debt restructuring costs and divestiture related costs, along with certain other non-recurring expenses and foreign exchange gains and losses.
Adjusted EBITDA, non-GAAP cost of revenues, 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 cost of revenues, 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.
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
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INSEEGO CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||||
| Mobile solutions | $ | 32,282 | $ | 22,534 | $ | 73,431 | $ | 64,469 | ||||||||
| Fixed wireless access solutions | 9,723 | 11,114 | 37,222 | 42,489 | ||||||||||||
| Product | 42,005 | 33,648 | 110,653 | 106,958 | ||||||||||||
| Services and other | 12,027 | 7,709 | 32,504 | 24,409 | ||||||||||||
| Total revenues | 54,032 | 41,357 | 143,157 | 131,367 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Product | 33,592 | 42,788 | 86,812 | 101,375 | ||||||||||||
| Services and other | 1,640 | 734 | 5,492 | 3,559 | ||||||||||||
| Total cost of revenues | 35,232 | 43,522 | 92,304 | 104,934 | ||||||||||||
| Gross profit (loss) | 18,800 | (2,165 | ) | 50,853 | 26,433 | |||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Research and development | 5,176 | 5,200 | 15,032 | 14,369 | ||||||||||||
| Sales and marketing | 4,125 | 3,893 | 12,176 | 13,703 | ||||||||||||
| General and administrative | 4,822 | 3,429 | 12,695 | 12,326 | ||||||||||||
| Depreciation and amortization | 3,154 | 3,848 | 10,098 | 13,125 | ||||||||||||
| Impairment of capitalized software | 507 | 611 | 927 | 1,115 | ||||||||||||
| Total operating costs and expenses | 17,784 | 16,981 | 50,928 | 54,638 | ||||||||||||
| Operating income (loss) | 1,016 | (19,146 | ) | (75 | ) | (28,205 | ) | |||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | (5,731 | ) | (2,894 | ) | (9,686 | ) | (6,910 | ) | ||||||||
| Loss on extinguishment of revolving credit facility | – | – | (788 | ) | – | |||||||||||
| Gain on debt restructurings, net | 12,366 | – | 13,690 | – | ||||||||||||
| Other income (expense), net | (72 | ) | 45 | (864 | ) | 50 | ||||||||||
| Income (Loss) before income taxes | 7,579 | (21,995 | ) | 2,277 | (35,065 | ) | ||||||||||
| Income tax provision | 36 | 30 | 171 | 44 | ||||||||||||
| Income (Loss) from continuing operations | 7,543 | (22,025 | ) | 2,106 | (35,109 | ) | ||||||||||
| Income from discontinued operations, net of income tax provision | 1,426 | 220 | 3,032 | 3,263 | ||||||||||||
| Net income (loss) | 8,969 | (21,805 | ) | 5,138 | (31,846 | ) | ||||||||||
| Preferred stock dividends | (827 | ) | (756 | ) | (2,425 | ) | (2,218 | ) | ||||||||
| Net income (loss) attributable to common stockholders | $ | 8,142 | $ | (22,561 | ) | $ | 2,713 | $ | (34,064 | ) | ||||||
| Per share data: | ||||||||||||||||
| Net earnings (loss) per share | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | 0.54 | $ | (1.95 | ) | $ | (0.03 | ) | $ | (3.33 | ) | |||||
| Discontinued operations | $ | 0.12 | $ | 0.02 | $ | 0.25 | $ | 0.29 | ||||||||
| Basic earnings per share (*) | $ | 0.66 | $ | (1.93 | ) | $ | 0.23 | $ | (3.03 | ) | ||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | (0.16 | ) | $ | (1.95 | ) | $ | (0.03 | ) | $ | (3.33 | ) | ||||
| Discontinued operations | $ | 0.11 | $ | 0.02 | $ | 0.25 | $ | 0.29 | ||||||||
| Diluted earnings per share (*) | $ | (0.06 | ) | $ | (1.93 | ) | $ | 0.23 | $ | (3.03 | ) | |||||
| Weighted-average shares used in computation of net earnings (loss) per share | ||||||||||||||||
| Basic (*) | 12,336,503 | 11,696,755 | 12,036,989 | 11,224,722 | ||||||||||||
| Diluted (*) | 13,218,293 | 11,696,755 | 12,036,989 | 11,224,722 | ||||||||||||
(*) Adjusted retroactively for reverse stock split that occurred on January 24, 2024
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INSEEGO CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| September 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 11,972 | $ | 2,409 | ||||
| Accounts receivable, net | 15,612 | 18,202 | ||||||
| Inventories | 18,118 | 20,555 | ||||||
| Prepaid expenses and other | 3,627 | 4,937 | ||||||
| Current assets held for sale | 35,771 | 12,123 | ||||||
| Total current assets | 85,100 | 58,226 | ||||||
| Property, plant and equipment, net | 1,303 | 2,389 | ||||||
| Intangible assets, net | 19,465 | 25,718 | ||||||
| Goodwill | 3,949 | 3,949 | ||||||
| Operating lease right-of-use assets | 3,117 | 4,022 | ||||||
| Other assets | 456 | 1,256 | ||||||
| Non-current assets held for sale | – | 26,237 | ||||||
| Total assets | $ | 113,390 | $ | 121,797 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 35,457 | $ | 23,408 | ||||
| Accrued expenses and other current liabilities | 31,147 | 21,049 | ||||||
| Short-term loan | 6,000 | – | ||||||
| 2025 Convertible Notes, net | 106,250 | – | ||||||
| Revolving credit facility | – | 4,094 | ||||||
| Current liabilities held for sale | 10,000 | 7,360 | ||||||
| Total current liabilities | 188,854 | 55,911 | ||||||
| Long-term liabilities: | ||||||||
| 2025 Convertible Notes, net | – | 159,912 | ||||||
| Operating lease liabilities | 2,979 | 3,972 | ||||||
| Deferred tax liabilities, net | 121 | 112 | ||||||
| Other long-term liabilities | 6,499 | 2,351 | ||||||
| Non-current liabilities held for sale | – | 1,644 | ||||||
| Total liabilities | 198,453 | 223,902 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock (aggregate liquidation preference of $37.5 million) | – | – | ||||||
| Common stock | 13 | 12 | ||||||
| Additional paid-in capital | 825,851 | 810,138 | ||||||
| Accumulated other comprehensive loss | (6,712 | ) | (5,327 | ) | ||||
| Accumulated deficit | (904,215 | ) | (906,928 | ) | ||||
| Total stockholders’ deficit | (85,063 | ) | (102,105 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 113,390 | $ | 121,797 | ||||
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INSEEGO CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 5,138 | $ | (31,846 | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 13,242 | 16,270 | ||||||
| Loss on extinguishment of revolving credit facility | 788 | – | ||||||
| Gain on debt restructurings, net | (13,690 | ) | – | |||||
| Provision for expected credit losses | (231 | ) | 612 | |||||
| Impairment of capitalized software | 927 | 1,115 | ||||||
| Provision for excess and obsolete inventory | 901 | 7,011 | ||||||
| Impairment of operating lease right-of-use assets | 139 | – | ||||||
| Share-based compensation expense | 2,815 | 6,030 | ||||||
| Amortization of debt discount and debt issuance costs | 4,435 | 2,048 | ||||||
| Deferred income taxes | 9 | 177 | ||||||
| Non-cash operating lease expense | 1,218 | 437 | ||||||
| Other | 6 | – | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 2,432 | 7,703 | ||||||
| Inventories | (274 | ) | 7,685 | |||||
| Prepaid expenses and other assets | 1,887 | 1,479 | ||||||
| Accounts payable | 12,284 | 1,162 | ||||||
| Accrued expenses and other liabilities | 14,683 | 2,561 | ||||||
| Operating lease liabilities | (1,334 | ) | (41 | ) | ||||
| Net cash provided by operating activities | 45,375 | 22,403 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (46 | ) | (403 | ) | ||||
| Additions to capitalized software development costs and purchases of intangible assets | (3,608 | ) | (6,114 | ) | ||||
| Net cash used in investing activities | (3,654 | ) | (6,517 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payments related to repurchases of 2025 Convertible Notes | (33,781 | ) | – | |||||
| Proceeds from issuance of short-term loan and warrants, net of issuance costs | 19,350 | – | ||||||
| Proceeds from a public offering of equity, net of issuance costs | – | 6,057 | ||||||
| Principal payments on financed assets | – | (360 | ) | |||||
| Net repayments on revolving credit facility | (4,882 | ) | (7,851 | ) | ||||
| Repayments on short-term loan | (13,500 | ) | – | |||||
| Other financing activities | 2 | 128 | ||||||
| Net cash used in financing activities | (32,811 | ) | (2,026 | ) | ||||
| Effect of exchange rates on cash | (1,682 | ) | (2,057 | ) | ||||
| Net increase in cash and cash equivalents | 7,228 | 11,803 | ||||||
| Cash, cash equivalents and restricted cash from continuing operations, beginning of period | 2,409 | 3,241 | ||||||
| Cash, cash equivalents and restricted cash from discontinued operations, beginning of period | 5,110 | 3,902 | ||||||
| Cash and cash equivalents, beginning of period | 7,519 | 7,143 | ||||||
| Cash, cash equivalents and restricted cash from continuing operations, end of period | 11,972 | 14,424 | ||||||
| Cash, cash equivalents and restricted cash from discontinued operations, end of period | 2,775 | 4,522 | ||||||
| Cash and cash equivalents, end of period | $ | 14,747 | $ | 18,946 | ||||
| 7 |
INSEEGO CORP.
Supplemental 2024 Statement of Operations Data by Quarter
(In thousands)
(Unaudited)
As previously noted above, as a result of the share purchase agreement executed during the quarter under which we agreed to sell our Telematics Business, all results of said business have been classified within “Income from discontinued operations, net of income tax provision” in the above Statement of Operations. All other line items within the Statement of Operations consist solely of the results from the Company’s continuing operations. The company has reclassified all prior periods to conform to this presentation change. Below is a supplemental disclosure the Statement of Operations under the current presentation for each of the quarters in 2024 and 2023 (in thousands):
| Nine Months Ended | Three Months Ended | |||||||||||||||
| September 30, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | |||||||||||||
| Revenues: | ||||||||||||||||
| Mobile solutions | $ | 73,431 | $ | 32,282 | $ | 25,879 | $ | 15,270 | ||||||||
| Fixed wireless access solutions | 37,222 | 9,723 | 13,317 | 14,182 | ||||||||||||
| Product | 110,653 | 42,005 | 39,196 | 29,452 | ||||||||||||
| Services and other | 32,504 | 12,027 | 12,424 | 8,053 | ||||||||||||
| Total revenues | 143,157 | 54,032 | 51,620 | 37,505 | ||||||||||||
| Cost of revenues: | ||||||||||||||||
| Product | 86,812 | 33,592 | 30,507 | 22,713 | ||||||||||||
| Services and other | 5,492 | 1,640 | 2,304 | 1,548 | ||||||||||||
| Total cost of revenues | 92,304 | 35,232 | 32,811 | 24,261 | ||||||||||||
| Gross profit (loss) | 50,853 | 18,800 | 18,809 | 13,244 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Research and development | 15,032 | 5,176 | 5,173 | 4,683 | ||||||||||||
| Sales and marketing | 12,176 | 4,125 | 4,212 | 3,839 | ||||||||||||
| General and administrative | 12,695 | 4,822 | 3,918 | 3,955 | ||||||||||||
| Depreciation and amortization | 10,098 | 3,154 | 3,652 | 3,292 | ||||||||||||
| Impairment of capitalized software | 927 | 507 | – | 420 | ||||||||||||
| Total operating costs and expenses | 50,928 | 17,784 | 16,955 | 16,189 | ||||||||||||
| Operating income (loss) | (75 | ) | 1,016 | 1,854 | (2,945 | ) | ||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | (9,686 | ) | (5,731 | ) | (1,776 | ) | (2,179 | ) | ||||||||
| Loss on extinguishment of revolving credit facility | (788 | ) | – | (788 | ) | – | ||||||||||
| Gain on debt restructurings, net | 13,690 | 12,366 | 1,324 | – | ||||||||||||
| Other income (expense), net | (864 | ) | (72 | ) | (417 | ) | (375 | ) | ||||||||
| Income (Loss) before income taxes | 2,277 | 7,579 | 197 | (5,499 | ) | |||||||||||
| Income tax provision | 171 | 36 | 118 | 17 | ||||||||||||
| Income (Loss) from continuing operations | 2,106 | 7,543 | 79 | (5,516 | ) | |||||||||||
| Income from discontinued operations, net of income tax provision | 3,032 | 1,426 | 545 | 1,061 | ||||||||||||
| Net income (loss) | 5,138 | 8,969 | 624 | (4,455 | ) | |||||||||||
| Preferred stock dividends | (2,425 | ) | (827 | ) | (808 | ) | (790 | ) | ||||||||
| Net income (loss) attributable to common stockholders | $ | 2,713 | $ | 8,142 | $ | (184 | ) | $ | (5,245 | ) | ||||||
| 8 |
INSEEGO CORP.
Supplemental 2023 Statement of Operations Data by Quarter
(In thousands)
(Unaudited)
| Twelve Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2023 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Mobile solutions | $ | 80,498 | $ | 16,029 | $ | 22,534 | $ | 18,895 | $ | 23,040 | ||||||||||
| Fixed wireless access solutions | 54,900 | 12,411 | 11,114 | 19,505 | 11,870 | |||||||||||||||
| Product | 135,398 | 28,440 | 33,648 | 38,400 | 34,910 | |||||||||||||||
| Services and other | 31,888 | 7,479 | 7,709 | 7,983 | 8,717 | |||||||||||||||
| Total revenues | 167,286 | 35,919 | 41,357 | 46,383 | 43,627 | |||||||||||||||
| Cost of revenues: | ||||||||||||||||||||
| Product | 127,157 | 25,782 | 42,788 | 30,620 | 27,967 | |||||||||||||||
| Services and other | 4,353 | 794 | 734 | 1,139 | 1,686 | |||||||||||||||
| Total cost of revenues | 131,510 | 26,576 | 43,522 | 31,759 | 29,653 | |||||||||||||||
| Gross profit (loss) | 35,776 | 9,343 | (2,165 | ) | 14,624 | 13,974 | ||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||
| Research and development | 19,725 | 5,356 | 5,200 | 5,822 | 3,347 | |||||||||||||||
| Sales and marketing | 16,632 | 2,929 | 3,893 | 4,575 | 5,235 | |||||||||||||||
| General and administrative | 15,853 | 3,527 | 3,429 | 4,281 | 4,616 | |||||||||||||||
| Depreciation and amortization | 18,408 | 5,283 | 3,848 | 4,327 | 4,950 | |||||||||||||||
| Impairment of capitalized software | 1,115 | – | 611 | – | 504 | |||||||||||||||
| Total operating costs and expenses | 71,733 | 17,095 | 16,981 | 19,005 | 18,652 | |||||||||||||||
| Operating income (loss) | (35,957 | ) | (7,752 | ) | (19,146 | ) | (4,381 | ) | (4,678 | ) | ||||||||||
| Other (expense) income: | ||||||||||||||||||||
| Interest expense, net | (9,086 | ) | (2,176 | ) | (2,894 | ) | (2,017 | ) | (1,999 | ) | ||||||||||
| Other income (expense), net | 70 | 19 | 45 | 23 | (17 | ) | ||||||||||||||
| Income (Loss) before income taxes | (44,973 | ) | (9,909 | ) | (21,995 | ) | (6,375 | ) | (6,694 | ) | ||||||||||
| Income tax provision | 43 | (1 | ) | 30 | 15 | (1 | ) | |||||||||||||
| Income (Loss) from continuing operations | (45,016 | ) | (9,908 | ) | (22,025 | ) | (6,390 | ) | (6,693 | ) | ||||||||||
| Income from discontinued operations, net of income tax provision | (1,169 | ) | (4,432 | ) | 220 | 1,454 | 1,589 | |||||||||||||
| Net income (loss) | (46,185 | ) | (14,340 | ) | (21,805 | ) | (4,936 | ) | (5,104 | ) | ||||||||||
| Preferred stock dividends | (2,991 | ) | (773 | ) | (756 | ) | (739 | ) | (723 | ) | ||||||||||
| Net income (loss) attributable to common stockholders | $ | (49,176 | ) | $ | (15,113 | ) | $ | (22,561 | ) | $ | (5,675 | ) | $ | (5,827 | ) | |||||
| 9 |
INSEEGO CORP.
Supplemental 2024 Reconciliation of GAAP Income (Loss) from Continuing Operations to Adjusted EBITDA
(In thousands)
(Unaudited)
As is the case with the supplemental quarterly statement of operations tables above, we have split out the reconciliation of Adjusted EBITDA between Adjusted EBITDA from continuing operations, meaning that not related to the Telematics Business, and Adjusted EBITDA from discontinued operations, meaning that related to the Telematics Business. The company has reclassified all prior periods to conform to this presentation change. Below is a reconciliation of Adjusted EBITDA from continuing and discontinued operations for each of the quarters in 2024 and 2023 (in thousands):
| Nine Months Ended | Three Months Ended | |||||||||||||||
| September 30, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | |||||||||||||
| Income (Loss) from continuing operations | $ | 2,106 | $ | 7,543 | $ | 79 | $ | (5,516 | ) | |||||||
| Income tax provision (benefit) | 171 | 36 | 118 | 17 | ||||||||||||
| Interest expense, net | 9,686 | 5,731 | 1,776 | 2,179 | ||||||||||||
| Loss on extinguishment of revolving credit facility | 788 | – | 788 | – | ||||||||||||
| Gain/(loss) on debt restructurings, net | (13,690 | ) | (12,366 | ) | (1,324 | ) | – | |||||||||
| Other (income) expense, net | 864 | 72 | 417 | 375 | ||||||||||||
| Depreciation and amortization | 10,221 | 3,193 | 3,691 | 3,337 | ||||||||||||
| Share-based compensation expense | 2,714 | 1,193 | 834 | 687 | ||||||||||||
| Debt restructuring costs | 1,121 | 669 | 452 | – | ||||||||||||
| Impairment of operating lease right-of-use assets | 139 | 139 | – | – | ||||||||||||
| Impairment of capitalized software | 927 | 507 | – | 420 | ||||||||||||
| Adjusted EBITDA from continuing operations | 15,047 | 6,717 | 6,831 | 1,499 | ||||||||||||
| Income from discontinued operations, net of tax | 3,032 | 1,426 | 545 | 1,061 | ||||||||||||
| Income tax provision (benefit) | 674 | 266 | 188 | 220 | ||||||||||||
| Interest expense, net | (10 | ) | (3 | ) | (2 | ) | (5 | ) | ||||||||
| Other (income) expense, net | (1,124 | ) | (873 | ) | (236 | ) | (15 | ) | ||||||||
| Depreciation and amortization | 3,021 | 980 | 1,003 | 1,038 | ||||||||||||
| Share-based compensation expense | 100 | 35 | 35 | 30 | ||||||||||||
| Divestiture related costs | 764 | 764 | – | – | ||||||||||||
| Adjusted EBITDA from discontinued operations | 6,457 | 2,595 | 1,533 | 2,329 | ||||||||||||
| Adjusted EBITDA from continuing and discontinued operations | $ | 21,504 | $ | 9,312 | $ | 8,364 | $ | 3,828 | ||||||||
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
| 10 |
INSEEGO CORP.
Supplemental 2023 Reconciliation of GAAP Income (Loss) from Continuing Operations to Adjusted EBITDA
(In thousands)
(Unaudited)
| Twelve Months Ended | Three Months Ended | |||||||||||||||||||
| December 31, 2023 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||
| Income (Loss) from continuing operations | $ | (45,016 | ) | $ | (9,908 | ) | $ | (22,025 | ) | $ | (6,390 | ) | $ | (6,693 | ) | |||||
| Income tax provision (benefit) | 43 | (1 | ) | 30 | 15 | (1 | ) | |||||||||||||
| Interest expense, net | 9,086 | 2,176 | 2,894 | 2,017 | 1,999 | |||||||||||||||
| Other (income) expense, net | (70 | ) | (19 | ) | (45 | ) | (23 | ) | 17 | |||||||||||
| Depreciation and amortization | 18,713 | 5,350 | 4,421 | 4,438 | 4,504 | |||||||||||||||
| Share-based compensation expense | 6,972 | 1,333 | 2,123 | 1,820 | 1,696 | |||||||||||||||
| Impairment of operating lease right-of-use assets | 469 | – | – | 469 | – | |||||||||||||||
| Inventory adjustments - E&O and contract manufacturer liability ** | 16,427 | 3,370 | 13,057 | – | – | |||||||||||||||
| Write-off of capitalized inventory order fees ** | 924 | – | 924 | – | – | |||||||||||||||
| Impairment of capitalized software | 1,115 | – | 611 | – | 504 | |||||||||||||||
| Adjusted EBITDA from continuing operations | 8,663 | 2,301 | 1,990 | 2,346 | 2,026 | |||||||||||||||
| Income from discontinued operations, net of tax | (1,169 | ) | (4,432 | ) | 220 | 1,454 | 1,589 | |||||||||||||
| Income tax provision (benefit) | 842 | 287 | (46 | ) | 289 | 312 | ||||||||||||||
| Interest expense, net | (14 | ) | (6 | ) | (3 | ) | (3 | ) | (2 | ) | ||||||||||
| Other (income) expense, net | 16 | 840 | 623 | (635 | ) | (812 | ) | |||||||||||||
| Depreciation and amortization | 3,849 | 939 | 1,032 | 951 | 927 | |||||||||||||||
| Share-based compensation expense | 473 | 83 | 144 | 144 | 102 | |||||||||||||||
| ROU Asset Impairment | – | – | – | – | – | |||||||||||||||
| Impairment of capitalized software | 4,124 | 4,124 | – | – | – | |||||||||||||||
| Adjusted EBITDA from discontinued operations | 8,121 | 1,835 | 1,970 | 2,200 | 2,116 | |||||||||||||||
| Adjusted EBITDA from continuing and discontinued operations | $ | 16,784 | $ | 4,136 | $ | 3,960 | $ | 4,546 | $ | 4,142 | ||||||||||
** These items are not adjusted from the period ending December 31, 2023 going forward
See “Non-GAAP Financial Measures” for information regarding our use of Non-GAAP financial measures.
| 11 |
Exhibit 99.2
Q3 2024 EARNINGS RESULTS November 12, 2024
Scalable Business Model Healthy Total Gross Margin Profile Successfully Resolved Convertible Debt Overhang Return to Profitability Generating Free Cash Flow Return to Revenue Growth Diversified Hardware & SaaS Revenue Streams Divesting Telematics Portfolio to Focus on Key Growth in 5G Areas Inseego Financial Profile | Compelling Improvements & Trajectory 2
Q3 2024 RESULTS * (Nov 12, 2024) GUIDANCE (Aug 7, 2024) $61.9m $54m - $58m TOTAL REVENUE (continuing + discontinued operations) $9.3m $6.5m - $7.5m ADJ EBITDA (continuing + discontinued operations) 15% 12 - 13% Implied margin 3 * Q3 2024 Results represent total Company results from Continuing Operations plus Discontinued Operations (which consists of the Telematics business that is held for sale), as follows: Continuing Discontinued Total Operations + Operations = Company $61.9m $7.9m $54.0m Revenue $9.3m $2.6m $6.7m Adj EBITDA Q3 2024 Financial Results | Beat Guidance The Company's guidance for Q3 2024 was provided on Aug 7, 2024 and was for the full company that includes the Telematics operations. The announcement of the sale of Telematics was made on September 16, 2024; accordingly, the results for the September quarter categorize the Telematics operations in Held - For - Sale/ Discontinued Operations such that those results are combined here to present an apples - to - apples comparison of Q3 2024 results to guidance.
Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations. Inseego has delivered consecutive quarters of both revenue and profitability beat - and - raise dynamics against guidance, reflecting the positive trajectory across the business. The Company now runs an efficient cost structure while driving growth across both Product and SaaS offerings, resulting in much - improved profitability and positive cash generation. Q3 2024 Financial Highlights Include: Strong Revenue From Continuing Operations of $54.0m, growing +31% YoY vs. Q3 2023 on robust performance in both Product and Services & Other portfolios > Including the Telematics operations (that the Company entered into an agreement to sell during the quarter and is therefore reported in the P&L as one line item as Discontinued Operations), Total Revenue for the Company for Q3 2024 is $61.9m Q3 2024 Financial Results | Selected Key Highlights • 1 2 • Solid non - GAAP Gross Margin of 34.8% , +560 bps higher YoY vs. Q3 2023 3 • Efficient non - GAAP Operating Expenses with lower $ and expense:revenue ratio 4 • Achieved positive GAAP Operating Income of $1.0m for second sequential quarter in several years 5 • Record Adj EBITDA of $6.7m consistent with Q2 2024 and growth of +$4.7m ( +230% ) YoY > Similar to Total Revenue reporting above, including the Telematics operations that are reported in Discontinued Operations in the P&L, Total Adj EBITDA for the Company for Q3 2024 is $9.3m 4
x Hosted inaugural Channel Partner Advisory Council with key, strategic partners. x Onboarded 12 new Inseego Ignite partners , several of which produced immediate revenue. x Launched the multi - carrier certified 5G indoor router FX3110 to the Inseego Ignite channel program and closed new channel deals driving immediate revenue for this program. x Launched the multi - carrier certified MiFi® X PRO to the Inseego Ignite channel program and closed the first channel deal with a new win at a Fortune 150 utility company to enable their remote workforce with secure, mobile connectivity. x Launched Inseego products in the new T - Mobile Virtual Inventory Program . x Increased MiFi X PRO sales sequentially across carriers , including one who continues to see increased demand with an emphasis on public sector customers. 5 Q3 2024 | Selected Business Highlights
34.9 38.4 33.6 28.4 29.5 39.2 42.0 8.7 8.0 7.7 7.5 8.1 12.4 12.0 43.6 46.4 41.4 35.9 37.5 51.6 54.0 Q1 2023 Q2 2023 Q3 2023 Product Revenue Q4 2023 Q1 2024 Q2 2024 Q3 2024 Services & Other Revenue Total Revenue | Return to Growth Trajectory ($ millions) Q3 2024 revenue grew +31% YoY and +5% QoQ with favorable change in growth trajectory across all segments. Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations. 6
80% 83% 81% 79% 79% 76% 78% 20% 17% 19% 21% 21% 24% 22% Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2024 2024 2023 2023 2023 2023 Product Revenue Mix Services & Other Revenue Mix 7 Compelling Portfolio | Increasing High - Value Services Contribution Revenue mix continues to shift to higher - profitability Services & Other offerings. Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations.
32.4% 8 32.0% 29.2% 35.6% 35.4% 36.5% 34.8% Q3 Q2 Q1 Q4 Q3 Q2 Q1 2024 2024 2024 2023 2023 2023 2023 Gross Margin | Expanding Positive Contribution Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations. The Company drove a structural shift in its underlying gross margin profitability through a combination of cost controls, thoughtful pricing, and new channel distribution, and continues to look forward to expansion through new products on the roadmap . GROSS MARGIN % (non - GAAP)
Operating Expense Efficiency | Improving Operations at Scale Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations. Disciplined cost management and economies of scale are now resulting in improved expense:revenue ratios across all Operating Expense lines. 5.0 4.3 3.6 2.7 3.7 4.2 4.0 11% 9% 9% 7% 10% 8% 7% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2023 2023 2023 2023 2024 2024 2024 3.1 5.4 4.6 5.1 4.5 5.1 5.0 7% 12% 11% 14% 12% 10% 9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2023 2023 2023 2023 2024 2024 2024 3.6 2.9 2.4 2.8 3.6 2.8 3.1 8% 6% 6% 8% 10% 5% 6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2023 2023 2023 2023 2024 2024 2024 Sales & Marketing (non - GAAP) Research & Development (non - GAAP) General & Administrative (non - GAAP) Operating Expense : Revenue ratio NOTE: These OpEx categories do not include depreciation & amortization expense as that is reported in its own line item; see financial statements for full details. 9 ($ millions)
2.0 2.3 2.0 2.3 1.5 6.8 6.7 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Profitability | Meaningful Shift and Expansion in Adj EBITDA Generation Comments and results reference the Company’s Continuing Operations unless otherwise mentioned, that is, they are pro forma for the sale of the Telematics operations. The Company has significantly improved and delivered meaningful adjusted EBITDA profitability following transformative changes and particularly strong recent business traction. ADJ EBITDA MARGIN % ADJ EBITDA $ 4.6% 10 5.1% 4.9% 6.4% 4.0% 13.2% 12.5% ($ millions)
December 31, September 30, 2023 2024 ASSETS $2,409 $11,972 Cash and cash equivalents 18,202 15,612 Accounts receivable, net 20,555 18,118 Inventory 4,937 3,627 Prepaid expenses and other 12,123 35,771 Current assets held for sale 58,226 85,100 Total current assets 2,389 1,303 Property, plant and equipment, net 29,667 23,414 Goodwill and intangible assets, net 5,278 3,573 Other assets 26,237 — Non - current assets held for sale $121,797 $113,390 Total assets LIABILITIES AND STOCKHOLDERS’ DEFICIT $44,457 $66,604 Accounts payable and other accrued liabilities — 6,000 Short - term loan — 106,250 2025 Convertible Notes, net 4,094 — Revolving credit facility 7,360 10,000 Current liabilities held for sale See slide #13 for a discussion of the 55,911 188,854 Total current liabilities subsequent event in Nov 2024 in which 166,347 9,599 Long - term liabilities the Company closed its restructuring of its 2025 Convertible Notes and 1,644 — Non - current liabilities held for sale meaningfully reduced debt. 223,902 198,453 Total liabilities (102,105) (85,063) Total stockholders’ deficit $121,797 $113,390 Total liabilities and stockholders’ deficit ($ thousands) Balance Sheet | Strong Improvement and Financial Position Results reflect the Company’s Continuing Operations, where the Telematics operations are reported in Held For Sale. 11
• The Company signed an agreement on September 16, 2024 to sell its remaining Telematics operations to an affiliate of Convergence Partners, an international investment management firm, for $52 million in Cash . • The Telematics business operates across the UK, European Union, Australia, and New Zealand; Convergence Partners had previously purchased the Company’s South Africa Telematics business in 2021 for $33 million. • The transaction strengthens Inseego’s balance sheet and continues the streamlining of the Company’s focus on and allocation of resources to the strongest growth opportunities around the core product offerings. • The transaction is expected to close in Q4 2024 . • From a financial statement standpoint, with the signing of the sale agreement in September 2024, the Company is now therefore reporting the results of the Telematics business in a single line on its Statement of Operations as “Discontinued Operations” and on its Balance Sheet as “Assets Held For Sale.” • The Company anticipates using a portion of the proceeds of the Telematics sale, along with balance sheet cash and cash flow generation, to further reduce total debt in paying - off the $15m 2025 Convert stub and the $6m remaining on the short - term loan. 12 Pro forma historical financial information for the Company's Continuing Operations for each of the prior seven quarters across 2024 and 2023 is included in the Appendix of this presentation in order to aid in an apples - to - apples comparison to current period results and reporting. Telematics Sale | Agreement to Sell Telematics Ops for $52m in Cash
CONVERTIBLE NOTES RESTRUCTURING The Company began 2024 with $162m face value of its 3.25% Convertible Notes due May 1, 2025. Through a successful restructuring in Q3 and Q4 2024, the Company exchanged $147m (or 91%) of the Convertible Notes for: (1) The warrants are exercisable on a cash basis, which means that the exercise of all the warrants would yield $30m+ in additional cash to the Company. (2) Provided for illustrative purposes; based on pro forma total debt net of cash from continuing operations of $12m as of September 30, 2024. TOTAL DEBT OUTSTANDING Pro forma for the closing of the Exchange on Nov 6, 2024, and along with the Company’s payoff of its ABL during 2024, the Company materially reduced its debt from $166m at the beginning of 2024 to $62m , a $104m reduction in debt , with a further de - leveraging anticipated for the $15m Convert stub and $6m remaining short - term loan to be paid - off with a portion of the proceeds from the Telematics sale that is expected to close in Q4 2024. 1 $34m in Cash 2 $41m Sr Secured Debt Matures 5/1/29 9% Cash - pay Interest 3 2.9m Shares of Common Stock 4 2.5m Warrants to purchase Common Stock Avg Cash Exercise Price ~$12.50 (1) $41m New Senior Secured Debt $15m Convertible Notes Stub $6m Remaining S/T Loan 13 + + = $62m TOTAL DEBT Capital Structure Overhaul | Meaningful Reduction in Debt $50m NET DEBT (2)
Q4 2024 GUIDANCE (Continuing Ops) Q3 2024 Actual (Continuing Ops) Q4 2023 Actual (Continuing Ops) $43m - $47m $54.0m $35.9m Revenue from Continuing Operations $3m - $4m $6.7m $2.3m Adj EBITDA from Continuing Operations 14 In September 2024, the Company entered into an agreement to sell its Telematics operations for $52m in cash; the transaction is expected to close in Q4 2024 and as such, the financial results of the Telematics business are reported under Discontinued Operations/Held - For - Sale in the Company’s financial statements and are not included in the results from Continuing Operations for which Guidance is being provided. On the Company’s November 12, 2024 Earnings Call, management provided the following guidance for Total Revenue and Adjusted EBITDA from Continuing Operations for Q4 2024: Company Guidance | Q4 2024 (ISSUED: NOV 12, 2024)
$24b TAM across the Mobile Broadband and Fixed Wireless Access markets Improved financial profile with return to revenue growth, profitability and free cash flow generation Addressed convertible overhang, reducing debt and right - sizing capital structure Unique positioning of products built to meet strict US government requirements in support of the “homegrown” US tech initiative 25+ year track record of wireless technology leadership and strong relationships with Tier 1 Service Providers and Fortune 500 customers Inseego Investment Highlights | Compelling Trajectory 15
APPENDIX • Telematics Sale | Pro Forma Historical Financial Info • Reconciliation of non - GAAP numbers
TELEMATICS SALE Additional Pro Forma Historical Financial Information
Inseego Pro Forma P&L – Continuing Operations | 2024 TELEMATICS SALE | ADDITIONAL PRO FORMA HISTORICAL FINANCIAL INFORMATION As a result of the Share Purchase Agreement executed in the 3rd quarter under which the Company agreed to sell its Telematics Business, all results for Telematics are classified below as Discontinued Operations and all other line items within the Statement of Operations consist solely of the results from the Company's continuing operations. The company has reclassified all prior periods to conform to this change, and the below table shows the historical quarters in 2024 under the current continuing operations presentation. ($ thousands) 18
Inseego Pro Forma P&L – Continuing Operations | 2023 TELEMATICS SALE | ADDITIONAL PRO FORMA HISTORICAL FINANCIAL INFORMATION As a result of the Share Purchase Agreement executed in the 3rd quarter under which the Company agreed to sell its Telematics Business, all results for Telematics are classified below as Discontinued Operations and all other line items within the Statement of Operations consist solely of the results from the Company's continuing operations. The company has reclassified all prior periods to conform to this change, and the below table shows the historical quarters in 2023 under the current continuing operations presentation. ($ thousands) 19
NON - GAAP NUMBERS Reconciliations to GAAP Financials
Income (Loss) From Continuing Operations to Adjusted EBITDA | 2024 NON - GAAP TO GAAP RECONCILIATION ($ thousands) 21
NON - GAAP TO GAAP RECONCILIATION Income (Loss) From Continuing Operations to Adjusted EBITDA | 2023 ($ thousands) 22
Continuing Operations Gross Margin & OpEx | Three Months Ended September 30, 2024 ($ thousands) 23 Non - GAAP Purchased intangibles amortization ROU Asset Impairment Debt Restructuring Costs Impairment of Capitalized Software Share - based compensation expense GAAP $54,032 $54,032 Revenues 35,209 - - - - 23 35,232 Cost of revenues 18,823 18,800 Gross Margin 34.8% 34.8% Gross Margin % Operating costs and expenses: 4,980 - - - - 196 5,176 Research and development 4,022 - - - - 103 4,125 Sales and marketing 3,144 - 138 669 - 871 4,822 General and administrative 2,824 330 - - - - 3,154 Depreciation and amortization - - - - 507 - 507 Impairment of cap software $14,970 $330 $138 $669 $507 $1,170 $17,784 Total operating costs & expenses NON - GAAP TO GAAP RECONCILIATION
Non - GAAP Purchased intangibles amortization ROU Asset Impairment Debt Restructuring Costs Impairment of Capitalized Software Share - based compensation expense GAAP $143,157 $143,157 Revenues 92,229 - - - - 75 92,304 Cost of revenues 50,928 50,853 Gross Margin 35.6% 35.5% Gross Margin % Operating costs and expenses: 14,595 - - - - 437 15,032 Research and development 11,862 - - - - 314 12,176 Sales and marketing 9,548 - 138 1,121 - 1,888 12,695 General and administrative 9,108 990 - - - - 10,098 Depreciation and amortization - - - - 927 - 927 Impairment of capitalized software $45,113 $990 $138 $1,121 $927 $2,639 $50,928 Total operating costs and expenses ($ thousands) 24 NON - GAAP TO GAAP RECONCILIATION Continuing Operations Gross Margin & OpEx | Nine Months Ended September 30, 2024
Safe Harbor Statement The following presentation contains statements about expected future events that are forward - looking and subject to risks and uncertainties. For these statements, we claim the safe harbor for “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. For a discussion of factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in our filings with the SEC. Non - GAAP Financial Measures Non - GAAP gross margins and operating expenses exclude restructuring charges, share based compensation expenses, debt restructuring charges, impairments of capitalized software charges, charges related to acquisition and divestiture activities and acquisition - related intangible asset amortization. This presentation contains references to certain non - GAAP financial measures and should be viewed in conjunction with our press releases and supplementary information on our website ( www.inseego.com/investors ) which present a complete reconciliation of GAAP and Non - GAAP results. 25 Disclaimers
www.inseego.com NASDAQ: INSG