Inseego (US:INSG)2023-05-04 00:24Financial Data and Key Metrics Changes - In Q1 2023, the company reported revenue of $50.8 million, a decrease of 17% year-over-year, primarily due to lower sales of legacy hotspot products [16] - Adjusted EBITDA reached $4.1 million, marking the highest in recent company history, driven by a better mix of FWA and software solutions [33] - Consolidated gross margin improved to 36.1%, up 580 basis points sequentially and 810 basis points year-over-year [17] Business Line Data and Key Metrics Changes - FWA and cloud software business accounted for 53% of total revenue, growing 35% compared to the prior year [16] - Revenue from IoT & Mobile Solutions was $43.6 million, down 20% from the same period last year, while Enterprise SaaS solution revenue was $7.2 million, up 10% sequentially and 5% year-over-year [37] - Gross margin for the IoT and mobile business was 33.4%, up from 28% in the prior quarter and 24% in the prior year [38] Market Data and Key Metrics Changes - The demand for FWA services is increasing, with carrier customers experiencing growth faster than traditional smartphone subscriptions [10] - The company is seeing customer use cases across various industries, including retail, hospitality, and government, indicating a broad market appeal for FWA solutions [14] Company Strategy and Development Direction - The company is focused on transitioning to a higher-margin enterprise-focused model, with a disciplined approach to maintaining operating expenses [35] - The strategy includes capturing a significant share of the growing 5G market, with an emphasis on delivering high-quality products that meet customer needs [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong backlog of orders for FWA in Q2, indicating a stronger start compared to previous quarters [23] - The company aims to achieve and grow positive free cash flow on a sustained basis, with expectations of mid-30s gross margins becoming the new normal [13][35] Other Important Information - Cash, cash equivalents, and restricted cash at the end of Q1 were $8.7 million, an increase from $7.1 million in the prior quarter [19] - Cost reduction efforts resulted in annual savings exceeding $30 million, contributing to improved profitability [5] Q&A Session Summary Question: Has the good performance in Q1 spilled over into April? - Management confirmed a strong backlog of orders for FWA in Q2, indicating a stronger start than previous quarters [23] Question: Will future quarters be stronger than Q1? - Management noted that while there is strength moving into Q2, variability may occur based on product mix and customer deployments [24] Question: Any updates on extending the maturity of the EBL? - Management discussed past actions taken regarding inventory and lead times, indicating ongoing internal conversations about the EBL [25] Question: What is the competitive landscape like? - Management stated that the ecosystem for FWA solutions is difficult to enter, with significant barriers to entry, and expressed confidence in their competitive position [29]