Inseego (US:INSG)2019-03-08 02:21Financial Data and Key Metrics Changes - Inseego reported Q4 2018 revenue of $56 million, which was $5.4 million better than the previous quarter and up $9.5 million from Q4 2017, marking a 20% year-over-year growth [45] - Adjusted EBITDA for Q4 was $5.8 million, the highest in nearly a decade, with a 10% EBITDA margin, contributing to an annualized adjusted EBITDA target of $20 million to $25 million [7][59] - Full-year 2018 total revenue was $202.5 million, a decrease of 7.7% from 2017, while full-year adjusted EBITDA was $17.6 million, significantly up from $2.3 million in 2017 [44][45] Business Line Data and Key Metrics Changes - IoT & Mobile Solutions revenue for Q4 was $40 million, up 16% sequentially and 35% year-over-year, driven by the launch of the MiFi gigabit hotspot and design services revenue for new 5G products [61] - Enterprise SaaS Solutions revenue in Q4 was flat sequentially at $16 million, but on a constant currency basis, it grew 1% sequentially and 3% year-over-year [29][65] - Adjusted EBITDA for IoT & Mobile Solutions was $3.3 million in Q4, up 46% from Q3 and up $2.3 million year-over-year, while Enterprise SaaS adjusted EBITDA was $4.4 million, down slightly from the prior quarter [64][66] Market Data and Key Metrics Changes - The company has seen a significant increase in customer engagements, with a service provider pipeline exceeding 20 opportunities in mobile and fixed wireless 5G [11] - The Ctrack business outside of South Africa experienced double-digit annual subscription revenue growth, despite challenges from foreign exchange fluctuations [28][65] - The company is focusing on expanding its presence in the industrial IoT market, with new enterprise customers and partnerships being established [26] Company Strategy and Development Direction - Inseego's strategy includes a focus on 5G market opportunities, with plans to leverage its universal platform architecture for 4G LTE and 5G products [8][15] - The company aims to continue its transformation into Inseego 2.0, emphasizing product innovation, market expansion, and operational improvements [14][20] - A new go-to-market structure has been implemented, with sales leaders appointed for North America and international markets to enhance customer acquisition [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position within the 5G ecosystem, highlighting the importance of live product demonstrations in securing customer interest [89] - The outlook for 2019 is positive, with expectations for significant growth in the second half of the year as new products are launched and customer engagements increase [38][74] - Management acknowledged challenges in Q1 due to component supply shortages but remains optimistic about overcoming these issues and achieving revenue targets [72][96] Other Important Information - The company moved contract manufacturing to Foxconn in Taiwan to enhance scale and reduce tariff exposure [19] - Inseego raised approximately $20 million in new capital to accelerate investment in product development and market resources [16] - The company has strengthened its Board of Directors and resolved a significant lawsuit, contributing to a more stable operational environment [17] Q&A Session Summary Question: Can you help us think about the pipeline with the carriers you are meeting with? - Management noted that the ability to demonstrate live working products has significantly impressed potential customers, leading to follow-ups and engagement for testing and trials [89][91] Question: How should we think about your OpEx levels exiting the year? - Management expects OpEx to eventually stabilize, with a goal of maintaining a $40 million annualized run rate by year-end [92][93] Question: Can you tell us what component was short and its impact on Q1? - The shortage was due to an LED driver part, which caused delays in product launches and affected Q1 revenue [95][96] Question: Can you provide insight into the design activity engagement with new carriers? - Management highlighted strong interest across various service providers for both 5G hotspots and home gateways, with several design wins already secured [110][112] Question: When do you expect to see meaningful revenue from the industrial IoT products? - The launch of industrial IoT products has been delayed to early Q2 due to component shortages, with revenue expected to ramp up thereafter [118]