Inseego (US:INSG)2022-11-02 22:48Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $69.2 million, reflecting a 9% increase year-over-year and a 12% increase sequentially [24] - Adjusted EBITDA loss was $2.5 million, which was lower than anticipated due to higher supply chain costs and a non-cash adjustment to R&D expenses [9][29] - Gross margin decreased to 26.3% from 29.5% in Q2 and 28.2% in Q3 of the previous year [26] Business Line Data and Key Metrics Changes - 5G revenue increased by 22% year-over-year, now comprising 49% of total revenue [10] - Software solutions represented 21% of total revenue in Q3 [10] - IoT & Mobile Solutions revenue was $62.6 million, up 10.1% from the same period last year, driven by the MiFi X Pro launch [25] Market Data and Key Metrics Changes - The enterprise Fixed Wireless Access (FWA) business accounted for over 13% of revenue, with a strong margin profile exceeding 40% [11][27] - The company sold 5G products to over 600 enterprises this year, with the enterprise customer base exceeding 1,000 [12] Company Strategy and Development Direction - The company is transitioning from a hotspot manufacturer to a provider of comprehensive connectivity solutions, focusing on enterprise markets [6] - Significant investments have been made in product development and go-to-market initiatives to position the company as a leader in 5G FWA solutions [14] - The company aims to approach cash flow breakeven by year-end, driven by enterprise FWA growth and cost management [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in approaching cash flow breakeven by year-end, citing strong enterprise FWA growth and cost reductions [21][32] - The company does not foresee significant headwinds affecting margins in the upcoming quarter [47] - Management noted that 5G is seen as essential for enterprises, with no slowdown in demand despite macroeconomic concerns [60] Other Important Information - Cash, cash equivalents, and restricted cash at the end of Q3 were $18.1 million, with expectations for lower cash usage moving forward [30][31] - The company has taken out approximately $20 million in costs year-to-date and plans to continue managing expenses tightly [15][50] Q&A Session Summary Question: Breakdown of IoT services revenue increase - Management indicated that the revenue increase was driven by the new hotspot launch with Telstra and growth in enterprise FWA revenue [39] Question: Changes in unit pricing and revenue components - Management clarified that the increase in revenue was primarily due to unit sales rather than pricing changes, with a focus on higher-margin enterprise FWA business [40][41] Question: Visibility on gross margin and potential one-time costs - Management expressed confidence in improved margins for the next quarter, stating that they do not expect similar headwinds to recur [47] Question: Minimum cash balance and convertible note maturity - Management discussed their confidence in cash management and the ability to operate without relying heavily on the revolver [50][52] Question: International revenue percentage and enterprise buyer hesitancy - Management noted that international revenue was over 10% this quarter, primarily due to the Telstra launch, and reported no slowdown in enterprise demand for 5G [58][60]