Inseego (INSG) - 2024 Q3 - Quarterly Results

Q3 2024 Performance Overview Inseego reported a transformative Q3 2024, achieving significant strategic and financial improvements, including its strongest operating results in years - Management described Q3 as a meaningfully transformative quarter with operational, strategic, and financial improvements, including the best operating results in several years[16] - The company agreed to sell its Telematics business for approximately $52 million in cash, now reported as 'discontinued operations'[15][36] - A key focus was on right-sizing the company's capital structure and driving stockholder value through debt reduction and the cash infusion from the Telematics sale[21] Financial Highlights In Q3 2024, Inseego reported strong financial results with combined revenue of $61.9 million, Adjusted EBITDA of $9.3 million, and GAAP Net Income of $9.0 million Q3 2024 Key Financial Results | Metric | Amount (USD) | | :--- | :--- | | Total Revenue (Continuing & Discontinued) | $61.9 million | | - Revenue from continuing operations | $54.0 million | | - Revenue from discontinued operations | $7.9 million | | Total Adjusted EBITDA (Continuing & Discontinued) | $9.3 million | | - Adjusted EBITDA from continuing operations | $6.7 million | | - Adjusted EBITDA from discontinued operations | $2.6 million | | GAAP Net Income | $9.0 million | - The blended gross margin was 37.9%, composed of 34.8% from continuing operations and 59.0% from discontinued operations[23] - The company paid down its short-term loan from an initial $19.5 million to $6 million as of September 30, 2024[24] Capital Structure Improvements In Q3 2024, the company significantly improved its capital structure by exchanging $91.5 million of convertible notes and anticipating $52 million cash from the Telematics sale - Completed a major debt reduction by exchanging $91.5 million of its 2025 convertible notes for long-term debt and equity[18] - In total, the company has repurchased or exchanged approximately $147 million, or 91%, of the convertible notes outstanding as of December 31, 2023[18] - The $52 million in cash expected from the closing of the Telematics sale will add additional liquidity and flexibility[21] Business Highlights In Q3 2024, Inseego advanced its channel strategy by onboarding 12 new partners, launching new 5G products, and securing a Fortune 150 utility customer - Onboarded 12 new Inseego Ignite partners in Q3, with several producing immediate revenue[26] - Launched the 5G indoor router FX3110 and a new MiFi device into the Inseego Ignite channel program, closing new deals and winning a Fortune 150 utility customer[26][27] - Increased MiFi X PRO sales sequentially across carriers, with strong demand from public sector customers[28] - Launched Inseego products in the new T-Mobile Virtual Inventory Program[28] Q4 2024 Guidance Inseego's Q4 2024 guidance for continuing operations projects revenue between $43.0 million and $47.0 million and Adjusted EBITDA from $3.0 million to $4.0 million - The Q4 2024 guidance is for continuing operations only, as the sale of the telematics business is expected to close during the quarter[29] Q4 2024 Guidance (Continuing Operations) | Metric | Q4 2023 ACTUAL | Q3 2024 ACTUAL | Q4 2024 GUIDANCE | | :--- | :--- | :--- | :--- | | Revenue | $35.9m | $54.0m | $43.0m - $47.0m | | Adjusted EBITDA | $2.3m | $6.7m | $3.0m - $4.0m | Consolidated Financial Statements This section presents unaudited consolidated financial statements for Q3 2024, reclassifying the Telematics business as discontinued operations Consolidated Statements of Operations In Q3 2024, the company reported a net income of $8.1 million, a significant improvement from a $22.6 million loss in Q3 2023, with basic EPS of $0.66 Q3 Statement of Operations Highlights (in thousands USD) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $54,032 | $41,357 | | Gross Profit (Loss) | $18,800 | ($2,165) | | Operating Income (Loss) | $1,016 | ($19,146) | | Net Income (Loss) Attributable to Common Stockholders | $8,142 | ($22,561) | Earnings Per Share (EPS) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Basic EPS | $0.66 | ($1.93) | | Diluted EPS | ($0.06) | ($1.93) | Consolidated Balance Sheets As of September 30, 2024, Inseego's balance sheet shows total assets of $113.4 million and total liabilities of $198.5 million, with the Telematics business reclassified as held for sale Balance Sheet Highlights (in thousands USD) | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $85,100 | $58,226 | | Total Assets | $113,390 | $121,797 | | Total Current Liabilities | $188,854 | $55,911 | | Total Liabilities | $198,453 | $223,902 | | Total Stockholders' Deficit | ($85,063) | ($102,105) | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash from operating activities significantly increased to $45.4 million, while financing activities used $32.8 million - Net cash provided by operating activities for the first nine months of 2024 was $45.4 million, compared to $22.4 million for the same period in 2023[47] - Net cash used in financing activities was $32.8 million, which included $33.8 million for repurchases of 2025 Convertible Notes and $13.5 million in repayments on a short-term loan, offset by $19.4 million in proceeds from the issuance of the short-term loan[47] - The company's cash and cash equivalents at the end of the period stood at $14.7 million, up from $7.5 million at the beginning of the period[47] Supplemental Financial Data This section provides supplemental quarterly financial data for 2024 and 2023, including statements of operations and Adjusted EBITDA reconciliation for continuing and discontinued operations Supplemental Quarterly Statement of Operations Data This data presents quarterly statements of operations for 2024 and 2023, showing sequential revenue growth and improved operating income for continuing operations 2024 Quarterly Revenue from Continuing Operations (in thousands USD) | Quarter | Revenue | | :--- | :--- | | Q1 2024 | $37,505 | | Q2 2024 | $51,620 | | Q3 2024 | $54,032 | 2024 Quarterly Operating Income (Loss) from Continuing Operations (in thousands USD) | Quarter | Operating Income (Loss) | | :--- | :--- | | Q1 2024 | ($2,945) | | Q2 2024 | $1,854 | | Q3 2024 | $1,016 | Reconciliation of GAAP Income (Loss) to Adjusted EBITDA This section reconciles GAAP income to Adjusted EBITDA for 2024 and 2023 quarters, showing Q3 2024 total Adjusted EBITDA of $9.3 million Q3 2024 Adjusted EBITDA Reconciliation (in thousands USD) | Description | Amount | | :--- | :--- | | Income from continuing operations | $7,543 | | Adjusted EBITDA from continuing operations | $6,717 | | Income from discontinued operations | $1,426 | | Adjusted EBITDA from discontinued operations | $2,595 | | Total Adjusted EBITDA | $9,312 | 2024 Quarterly Adjusted EBITDA from Continuing Operations (in thousands USD) | Quarter | Adjusted EBITDA | | :--- | :--- | | Q1 2024 | $1,499 | | Q2 2024 | $6,831 | | Q3 2024 | $6,717 | Non-GAAP Financial Measures & Forward-Looking Statements The company explains its use of non-GAAP financial measures like Adjusted EBITDA and provides a cautionary note on forward-looking statements and associated risks - The company uses non-GAAP financial measures like Adjusted EBITDA for operational decision-making, performance evaluation, and forecasting[4][35] - Adjusted EBITDA excludes items such as interest, taxes, depreciation, amortization, share-based compensation, debt restructuring costs, and other non-recurring expenses[34] - The report contains forward-looking statements based on current management expectations, which are subject to risks including customer dependence, supply chain challenges, competition, and geopolitical instability[54][3]