Inseego (US:INSG)2021-05-06 02:50Financial Data and Key Metrics Changes - The company reported a Q1 revenue of $57.6 million, up approximately 1.5% year-over-year, with a significant increase in combined 5G and software as a service revenue by 120% compared to the previous year [6][33] - Gross margins improved to over 35%, up approximately 400 basis points year-over-year, reflecting a higher mix of 5G and software revenue [6][39] - Cash at the end of Q1 was nearly $60 million, an increase of almost $20 million from Q4 2020, driven by net proceeds from an ATM offering and solid cash collection [36] Business Line Data and Key Metrics Changes - IoT and mobile solutions revenue was $43 million, up 1.3% year-over-year but down 40% from Q4 2020 [34] - Enterprise SaaS revenue for Q1 was $14.6 million, up 4.8% quarter-over-quarter and relatively flat year-over-year [35] - The SaaS business represented 24% of total revenue in Q1, with a quarter-over-quarter growth of 11.5% and a year-over-year growth of 175.7% [14][28] Market Data and Key Metrics Changes - The company is making solid progress in international markets with initial 5G customer deployments, although establishing business in new regions is taking longer [9] - T-Mobile has become the largest 5G customer, with the launch of the 5G Wi-Fi hotspot contributing significantly to revenue [8][49] - The company expects 5G sales to exceed 4G sales in the second half of the year [82] Company Strategy and Development Direction - The company is focused on becoming a pure play 5G company, divesting non-target businesses like Ctrack in South Africa to concentrate on 5G opportunities [15][16] - The 5G fixed wireless access products are seen as a major growth driver, with significant traction in both consumer and enterprise markets [11][12] - The company aims to leverage its software solutions to enhance customer engagement and recurring revenue streams [13][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and growth potential, citing strong demand for 5G products and software solutions [6][48] - The global semiconductor shortage has not yet impacted the business, with proactive measures taken to secure supply [17][64] - The second half of 2021 is expected to be stronger than the first half, driven by 5G sales growth and new carrier deployments [43][72] Other Important Information - The company has reduced its headcount by over 540 people, leading to an increase in revenue per employee to over $600,000 on a pro forma basis [16] - The company is experiencing a transformation towards more software subscriptions, with a significant increase in recurring software revenue [28] Q&A Session Summary Question: How do we think about the enterprise opportunity contributing to second half growth? - Management indicated that the enterprise 5G portfolio is beginning to contribute and expects a ramp in the second half of the year [51][53] Question: Is there a better margin profile with enterprise products compared to mobile hotspots? - Management confirmed that enterprise products generally have a higher gross margin profile, expected to be in the mid-40s [54] Question: How should we think about the cadence for the IoT and mobile solutions businesses? - Management noted that 4G demand levels are above pre-COVID levels and expects a stronger second half driven by newer generation products [60][61] Question: What is the outlook for gross margin trends given component constraints? - Management stated that while they have secured component supply, they expect to see gross margins improve steadily throughout the year [62][64] Question: What is the pipeline for adding new carrier customers for 5G? - Management expressed optimism about fixed wireless opportunities and ongoing conversations with carriers, expecting significant growth in the second half [66][67] Question: How much did international revenue contribute in terms of percentage? - Management did not break out international revenue as a percentage but confirmed it is growing [81] Question: When might 5G sales exceed 4G sales? - Management expects 5G sales to exceed 4G sales in the back half of the year [82] Question: Did you see any pickup related to Franklin Wireless recall? - Management clarified that their products do not overlap with lower-end products and thus have not been affected [85]