Inseego (US:INSG)2022-03-02 02:13Financial Data and Key Metrics Changes - In Q4 2021, the company reported revenue of $72.9 million, reflecting a sequential growth of 15% after adjusting for the sale of Ctrack South Africa, and a 10% increase on an as-reported basis [5][10][29] - For the full year, 5G revenue increased by 132% year-over-year, with a 73% growth in cloud solutions in Q4 compared to Q1 on a pro forma basis [10][29] - Gross margin for the IoT and mobile business was 22.2%, down from 24.4% in the previous quarter, attributed to a product mix shift and higher freight costs [31] Business Line Data and Key Metrics Changes - IoT & Mobile Solutions revenue was $66.2 million in Q4, up 16% from Q3, driven by demand for mobile hotspots [30] - Enterprise SaaS solutions revenue remained flat at $6.7 million sequentially, as the company integrates its software assets into a new cloud-driven 5G enabling solution suite [30] - The company launched a new family of 5G FWA solutions and expanded its cloud-delivered software portfolio, with higher software attach rates and gross margins compared to its carrier hotspot business [12][30] Market Data and Key Metrics Changes - The 5G FWA pipeline grew from 30 enterprise customers in early 2021 to over 200 by the end of the year, indicating significant expansion opportunities [11] - The company expanded its strategic relationship with T-Mobile, which became its largest 5G customer, and announced partnerships with Vodafone Qatar and Zain KSA [13][20] - The Middle East is highlighted as a key region for 5G development, with over 9 million 5G users and 900,000 5G FWA users [20] Company Strategy and Development Direction - The company is transitioning to focus on multiple 5G products, particularly in the enterprise sector, moving away from reliance on a single carrier customer [6][7] - The strategy includes expanding the partner ecosystem, with 79 new channel partners added, and enhancing go-to-market strategies with both channel partners and carriers [12][22] - The company aims for 25% year-over-year growth in 2022 and plans to be free cash flow positive by year-end [15][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate supply chain challenges and expects some stabilization in component costs [16][35] - The outlook for 2022 includes a robust demand for 5G solutions across various verticals, with expectations for revenue growth driven by enterprise fixed wireless access [15][34] - Management emphasized the importance of 5G technology leadership and the growing enterprise pipeline as key factors for future success [34][39] Other Important Information - The company reported a net loss of $8 million or $0.08 per share in Q4, consistent with the prior quarter, and an EBITDA loss of $1.2 million [32] - Cash and cash equivalents at the end of Q4 were $49.8 million, with outstanding convertible debt remaining at $157.9 million [33] Q&A Session Summary Question: Inquiry about gross margin pressures and future expectations - Management indicated that Q4 margins do not reflect expectations for 2022, citing three major headwinds affecting margins, including the divestiture of Ctrack South Africa and logistics costs [44][45] Question: Discussion on the enterprise pipeline and deal sizes - Management expressed optimism about the enterprise pipeline, noting that many customers are moving from initial product trials to broader deployments [47][48] Question: Clarification on the contribution of software and hardware to margins - Management stated that both software and hardware are expected to grow in parallel, with software contributing more over time as the business scales [55][56] Question: Expectations for free cash flow and CapEx in 2022 - Management reaffirmed the goal of being free cash flow positive by the end of 2022 and indicated that CapEx would remain stable without significant growth [61][62]