Inseego (US:INSG)2023-08-03 15:10Revenue Performance - Net revenues for Q2 2023 were $53.6 million, a decrease of 13.4% from $61.9 million in Q2 2022[109] - Net revenues for the six months ended June 30, 2023 were $104.4 million, a decrease of 15.3% compared to $123.2 million for the same period in 2022[121] - IoT & Mobile Solutions revenue decreased by $8.6 million (15.7%) to $46.4 million, primarily due to lower sales of LTE gigabit hotspots as COVID-19 demand eased[109] - IoT & Mobile Solutions net revenues decreased by $19.5 million, or 17.8%, primarily due to lower sales of LTE gigabit hotspots[122] - Enterprise SaaS Solutions revenue increased by $308,000 (4.5%) to $7.2 million, indicating growth in this segment[109] - Enterprise SaaS Solutions net revenues increased by $0.6 million, or 4.3%, driven by the lifting of COVID-19 related installation restrictions[123] Cost and Profitability - Cost of net revenues for the six months ended June 30, 2023 was $67.3 million, or 64.5% of net revenues, down from $90.1 million, or 73.1% in 2022[124] - Gross profit for the six months ended June 30, 2023 was $37.1 million, with a gross margin of 35.5%, compared to $33.1 million and 26.9% in 2022[126] - Research and development expenses decreased by $14.0 million, or 43.5%, to $18.2 million, representing 17.4% of net revenues[128] - Sales and marketing expenses decreased by $4.9 million, or 27.9%, to $12.6 million, representing 12.1% of net revenues[129] - General and administrative expenses decreased by $2.6 million, or 18.0%, to $11.8 million, representing 11.3% of net revenues[130] Cash Flow and Financing - The company reported a net cash provided by operating activities of $12.7 million for the six months ended June 30, 2023, compared to a net cash used of $17.6 million in the same period of 2022[148] - The company incurred a net loss of $10.0 million during the six months ended June 30, 2023, which was partially offset by non-cash charges totaling $15.6 million[149] - Net cash used in investing activities for the six months ended June 30, 2023, was $4.6 million, primarily related to software development for 5G products[151] - As of June 30, 2023, the company had available cash and cash equivalents totaling $15.2 million and $14.2 million of excess availability under its revolving credit facility[135] - As of June 30, 2023, the company had outstanding borrowings of $3.3 million under its revolving credit facility and a gross borrowing base of $17.5 million[143] - The company has $161.9 million in principal amount of 3.5% convertible senior notes due May 1, 2025, with interest payments due semi-annually[145] - The company sold 8,035,959 shares of common stock at an average price of $0.75 per share, generating net proceeds of $5.9 million during the six months ended June 30, 2023[146] Market Environment and Strategy - The demand environment for 5G products during the first half of 2023 was consistent with expectations, despite lower sales in other areas[102] - The company continues to develop strategic relationships with major service providers like Verizon Wireless and T-Mobile to maintain market penetration[101] - The company has made significant investments in SaaS and industrial IoT hardware targeting the emerging 5G market[101] - The macroeconomic environment remains uncertain, impacting demand for products and overall revenue sustainability[102] - The company is exploring acquisition opportunities to complement its business development, potentially involving stock issuance or credit facility draws[107] Risks and External Factors - The company relies on third-party manufacturers for product supply, which poses risks related to material availability and cost fluctuations[100] - A hypothetical 10% change in foreign currency exchange rates would have increased or decreased the company's revenue by approximately $1.5 million for the six months ended June 30, 2023[161] - The company is subject to interest rate risk, with a 1% increase in interest rates on its revolving credit facility potentially resulting in a $0.2 million change in annualized interest expense[157] - Interest expense, net decreased by $0.6 million, or 12.6%, to $4.0 million due to adjustments related to debt extinguishments[132] - Income tax provision increased by $1.2 million, driven by an increase in pre-tax profits at certain foreign subsidiaries[133] - Future payments under non-cancellable purchase obligations were approximately $49.7 million as of June 30, 2023[151]