• Total Revenue: $61.9 million, a 27% increase year over year.
• Adjusted EBITDA: $9.3 million, significantly ahead of expectations.
• Gross Margin: Approximately 38%, up from 33% in the same quarter last year.
• Mobile Solutions Revenue Growth: Over 43% year over year.
• Services and Other Revenue Growth: 33% year over year.
• Debt Reduction: Reduced to $62 million, with a plan to further reduce to approximately $25 million.
• Operating Expenses: Non-GAAP operating expenses at 28% of revenue, improved from 34% in Q3 2023.
• Telematics Business Sale: Agreement to sell for $52 million, expected to close this quarter.
• Q4 2024 Revenue Guidance: $43 million to $47 million, 25% growth year over year at the midpoint.
• Q4 2024 Adjusted EBITDA Guidance: $3 million to $4 million, over 50% growth year over year at the midpoint.

• Warning! GuruFocus has detected 10 Warning Signs with INSG.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Inseego Corp (NASDAQ:INSG) reported a 27% year-over-year revenue growth for Q3 2024, surpassing their guidance.
• The company successfully restructured its debt, reducing it from over $160 million to a manageable $41 million in long-term senior debt.
• Inseego Corp (NASDAQ:INSG) divested a non-core international Telematics asset for $52 million, enhancing liquidity and allowing focus on the US 5G wireless connectivity business.
• The company achieved a record high adjusted EBITDA margin of 15% for the quarter, driven by strong revenue performance and cost management.
• Inseego Corp (NASDAQ:INSG) continues to invest in a strong product roadmap, aiming to diversify its revenue base and expand its business with major US carriers.

Negative Points

• Fixed Wireless Access (FWA) revenue declined in Q3 due to lower consumer-based purchases by a carrier customer undergoing acquisition.
• The company faces a tough sequential comparison for Q4 2024 due to record revenue and adjusted EBITDA in Q3 and typical seasonal declines in carrier purchasing.
• Gross margin percentage decreased sequentially in Q3 2024 due to the lower margin contribution from the mobile hotspot business.
• Inseego Corp (NASDAQ:INSG) is still working on improving the monetization of its software products, indicating room for growth in this area.
• The company is experiencing some pressure from customer inventory management and acquisition-related purchasing conservatism, which could impact future sales.

Q & A Highlights

Q: Can you clarify if the $52 million from the Telematic sale is included in the net debt commentary? A: Steven Gatoff, CFO: The net debt numbers going forward include paying down the $15 million stub, but as of now, the debt amounts do not include the application of cash from the Telematic sale.

Q: What are your early thoughts on seasonality for the March quarter and growth rates for 2025 across different business segments? A: Philip Brace, Executive Chairman: It's early to comment on 2025, but Q1 tends to be seasonally down from Q4. We expect FW A growth from new products mid-next year and mobile growth depends on promotions and seasonality.

Q: Are there strategies to enhance gross margin and differentiate the product portfolio? Also, any thoughts on inorganic opportunities given the healthy balance sheet? A: Philip Brace, Executive Chairman: We aim to improve gross margins by monetizing software and diversifying our revenue base. Regarding inorganic opportunities, we will take a disciplined approach to capital and consider accretive opportunities.

Q: Can you elaborate on the impact of customer M&A and inventory reductions on sales? A: Philip Brace, Executive Chairman: A large US carrier being acquired has taken a conservative purchasing stance. Another customer managing inventory is expected to revert, but it's not raising alarm bells yet.

Q: Why is the remaining business more profitable than the Telematics business being sold? A: Steven Gatoff, CFO: The remaining business, Inseego Subscribe, is a high-margin SaaS offering. The Telematics business was divested to focus on core growth areas and improve capital structure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.