Inseego Reports Fourth Quarter and Full Year 2021 Financial Results

5G revenue annual growth of 132% year-over-year

Continued strong 5G enterprise pipeline growth across multiple regions

Ashish Sharma appointed CEO; Dan Mondor to become Executive Chairman

SAN DIEGO–(BUSINESS WIRE)–$INSG #5G–Inseego Corp. (Nasdaq: INSG) (the “Company”), a leader in 5G and intelligent IoT device-to-cloud solutions, today reported its results for the fourth quarter and full year ended December 31, 2021. The Company reported fourth quarter net revenue of $72.9 million, GAAP operating loss of $9.8 million, GAAP net loss of $11.4 million, GAAP net loss of $0.11 per share, adjusted EBITDA of negative $1.2 million, and non-GAAP net loss of $0.08 per share. Cash and cash equivalents at year end, including restricted cash, was $49.8 million. On a full year basis, 2021 net revenue was $262.4 million.

“2021 proved to be a transformative year for Inseego. We sharpened our focus on becoming the leader in 5G edge connectivity solutions for the enterprise, and our business grew sequentially in each quarter driven by 5G and cloud solutions,” said Inseego Chairman and CEO Dan Mondor. “With the momentum we are seeing in the 5G enterprise pipeline, supported by the strength of our supply chain and significant operating leverage in our model, I am confident that 2022 will be the breakout year for Inseego.”

Corporate Highlights

– 2021 full year net revenue of $262.4 million, Q4 2021 net revenue of $72.9 million

– Year-end cash, cash equivalents and restricted cash balance of $49.8 million in the quarter with zero bank debt

Business Highlights

– 5G revenue up 132% year-over-year on an annual basis

– 5G and cloud solutions represents 58% of total revenue in the quarter

– 5G Inseego Wavemaker™ FWA solutions launched with T-Mobile for Business, Telstra in Australia and Vodafone Qatar in the fourth quarter

– Market expansion in the Middle East with new Inseego 5G MiFi® M2000 launch with Zain KSA in Saudi Arabia in the first quarter

– Multiple 5G FWA solutions now certified with all tier-one carriers in the United States, including standalone (SA) 5G with T-Mobile

– Continued 5G device-to-cloud enterprise pipeline growth in Australia, Europe, the Middle East and North America markets

“We had a strong finish to 2021 that saw Inseego grow our 5G business sequentially throughout the year. The strength in the quarter and the year was driven primarily by increasing adoption of our 5G and cloud solutions portfolio, demonstrating the remarkable transformation Inseego has undergone,” said Bob Barbieri, CFO at Inseego. “While gross margin decreased as a result of the divestiture of Ctrack South Africa, a seasonal mix shift in device sales, and higher freight and shipping costs, we see gross margin expansion over the long-term as our next-generation 5G solutions will comprise a greater mix of our revenue. Moreover, as we continue to grow the topline in 2022, we expect operating leverage will drive free cash generation in the back half of the year.”

Inseego also announced today that Ashish Sharma will assume the role of chief executive officer and Dan Mondor is becoming executive chairman effective March 1, 2022.

“I am extremely proud of the Inseego team’s accomplishments over the past several years,” said Mondor. “With our growing portfolio of innovative 5G products and software solutions and expanding customer base, Inseego is well positioned to execute on our 5G growth strategy in Enterprise. Ashish has been the architect of our product and go-to-market strategy, including our industry-leading 5G roadmap and global roll-out. With our business model clearly validated and our leadership in 5G, the board of directors and I agreed that this is the right time for Ashish to assume leadership of the company and preside over what I see as the single largest opportunity in Inseego’s history.

“As executive chairman, I will focus on a number of strategic initiatives to maximize shareholder value. Ashish and I have worked closely together over the past few years to lead the company, and we will continue to do so in our new roles to help Inseego execute on its strategy,” he continued.

Sharma has served as Inseego’s president since June 2021. He joined Inseego in 2017 as chief marketing officer and executive vice president of IoT & Mobile Solutions and was promoted to president of IoT & Mobile Solutions in 2020.

“It is a privilege to work side-by-side with Dan, our world-class board of directors, and a very talented leadership team,” said Sharma. “I have been humbled by the passion and perseverance of our employees, and their exceptional talent for delivering market-leading innovation together with our customers and partners over the years. Together, we will build upon our successes and lead the company through its next phase, while exceeding the expectations of our customers and delivering value to our shareholders.”

Conference Call Information

Inseego will host a conference call and live webcast for analysts and investors today at 5:00 p.m. ET. A Q&A session with analysts will be held live directly after the prepared remarks. To access the conference call:

An audio replay of the conference call will be available beginning one hour after the call through March 15, 2022. To hear the replay, parties in the United States may call 1-877-344-7529 and enter access code 6800988 followed by the # key. International parties may call 1-412-317-0088. In addition, the Inseego Corp. press release will be accessible from the Company’s website before the conference call begins.

About Inseego Corp.

Inseego Corp. (Nasdaq: INSG) is an industry leader in smart device-to-cloud solutions that extend the 5G network edge, enabling broader 5G coverage, multi-gigabit data speeds, low latency and strong security to deliver highly reliable internet access. Our innovative mobile broadband, fixed wireless access (FWA) solutions, and software platform incorporate the most advanced technologies (including 5G, 4G LTE, Wi-Fi 6 and others) into a wide range of products that provide robust connectivity indoors, outdoors and in the harshest industrial environments. Designed and developed in the USA, Inseego products and SaaS solutions build on the company’s patented technologies to provide the highest quality wireless connectivity for service providers, enterprises, and government entities worldwide. www.inseego.com #Putting5GtoWork

©2022. Inseego Corp. All rights reserved. The Inseego name and logo, MiFi and Inseego Wavemaker are registered trademarks and trademarks of Inseego Corp. Other Company, product or service names mentioned herein are the trademarks of their respective owners.

Cautionary Note Regarding Forward-Looking Statements

Some of the information presented in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this context, forward-looking statements often address expected future business and financial performance and often contain words such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,” “plan,” “project,” “will” and similar words and phrases indicating future results. The information presented in this news release related to our future business outlook, the future demand for our products, as well as other statements that are not purely statements of historical fact, are forward-looking in nature. These forward-looking statements are made on the basis of management’s current expectations, assumptions, estimates and projections and are subject to significant risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. We therefore cannot guarantee future results, performance or achievements. Actual results could differ materially from our expectations.

Factors that could cause actual results to differ materially from the Company’s expectations include: (1) the future demand for wireless broadband access to data and asset management software and services; (2) the growth of wireless wide-area networking and asset management software and services; (3) customer and end-user acceptance of the Company’s current product and service offerings and market demand for the Company’s anticipated new product and service offerings; (4) increased competition and pricing pressure from participants in the markets in which the Company is engaged; (5) dependence on third-party manufacturers and key component suppliers worldwide; (6) the impact that new or adjusted tariffs may have on the cost of components or our products, and our ability to sell products internationally; (7) the impact of fluctuations of foreign currency exchange rates; (8) the impact of geopolitical instability and supply chain challenges on our ability to source components and manufacture our products; (9) unexpected liabilities or expenses; (10) the Company’s ability to introduce new products and services in a timely manner, including the ability to develop and launch 5G products at the speed and functionality required by our customers; (11) litigation, regulatory and IP developments related to our products or components of our products; (12) dependence on a small number of customers for a significant portion of the Company’s revenues and accounts receivable; (13) the Company’s ability to raise additional financing when the Company requires capital for operations or to satisfy corporate obligations; (14) the Company’s plans and expectations relating to acquisitions, divestitures, strategic relationships, international expansion, software and hardware developments, personnel matters, and cost containment initiatives, including restructuring activities and the timing of their implementations; (15) the global semiconductor shortage and any related price increases or supply chain disruptions, and (16) the potential impact of COVID-19 on the business.

These factors, as well as other factors set forth as risk factors or otherwise described in the reports filed by the Company with the SEC (available at www.sec.gov), could cause actual results to differ materially from those expressed in the Company’s forward-looking statements. The Company assumes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as otherwise required pursuant to applicable law and our on-going reporting obligations under the Securities Exchange Act of 1934, as amended.

Non-GAAP Financial Measures

Inseego Corp. has provided financial information in this news release that has not been prepared in accordance with GAAP. Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and non-GAAP operating costs and expenses exclude preferred stock dividends, net income attributable to noncontrolling interests, share-based compensation expense, amortization of intangible assets purchased through acquisitions, amortization of discount and issuance costs related to the Company’s 2025 Notes, fair value adjustments on derivative instruments, gain on sale of Ctrack South Africa, costs related to the divestiture of Ctrack South Africa, loss on debt conversion and extinguishment relating to the Company’s 2025 Notes, and other non-recurring legal expenses. Adjusted EBITDA also excludes interest, taxes, depreciation and amortization (unrelated to acquisitions, the 2025 Notes), impairment of capitalized software, foreign exchange gains and losses, and other.

Adjusted EBITDA, non-GAAP net loss, non-GAAP net loss per share and non-GAAP operating costs and expenses are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures have limitations as an analytical tool and are not intended to be used in isolation or as a substitute for operating expenses, net loss, net loss per share or any other performance measure determined in accordance with GAAP. We present these non-GAAP financial measures because we consider each to be an important supplemental measure of our performance.

Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company’s performance, prepare forecasts and determine compensation. Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance when planning, forecasting and analyzing future periods. Share-based compensation expenses are expected to vary depending on the number of new incentive award grants issued to both current and new employees, the number of such grants forfeited by former employees, and changes in the Company’s stock price, stock market volatility, expected option term and risk-free interest rates, all of which are difficult to estimate. In calculating non-GAAP financial measures, management excludes certain non-cash and one-time items in order to facilitate comparability of the Company’s operating performance on a period-to-period basis because such expenses are not, in management’s view, related to the Company’s ongoing operating performance. Management uses this view of the Company’s operating performance for purposes of comparison with its business plan and individual operating budgets and in the allocation of resources.

The Company further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision-making. The Company believes that the use of these non-GAAP financial measures also facilitates a comparison of our underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

In the future, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. The limitations of relying on non-GAAP financial measures include, but are not limited to, the fact that other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative tool.

Investors and potential investors are encouraged to review the reconciliation of our non-GAAP financial measures contained within this news release with our GAAP financial results.

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues:

 

 

 

 

 

 

 

IoT & Mobile Solutions

$66,214

 

 

$72,098

 

 

$217,984

 

 

$261,169

 

Enterprise SaaS Solutions

6,678

 

 

13,965

 

 

44,415

 

 

52,663

 

Total net revenues

72,892

 

 

86,063

 

 

262,399

 

 

313,832

 

Cost of net revenues:

 

 

 

 

 

 

 

IoT & Mobile Solutions

51,827

 

 

54,007

 

 

168,604

 

 

202,421

 

Enterprise SaaS Solutions

2,905

 

 

5,610

 

 

17,870

 

 

20,568

 

Total cost of net revenues

54,732

 

 

59,617

 

 

186,474

 

 

222,989

 

Gross profit

18,160

 

 

26,446

 

 

75,925

 

 

90,843

 

Operating costs and expenses:

 

 

 

 

 

 

 

Research and development

13,719

 

 

15,505

 

 

52,673

 

 

44,953

 

Sales and marketing

8,237

 

 

9,901

 

 

38,234

 

 

35,750

 

General and administrative

5,593

 

 

7,432

 

 

28,250

 

 

30,689

 

Amortization of purchased intangible assets

443

 

 

817

 

 

2,092

 

 

3,175

 

Impairment of capitalized software

 

 

1,410

 

 

1,197

 

 

1,410

 

Total operating costs and expenses

27,992

 

 

35,065

 

 

122,446

 

 

115,977

 

Operating loss

(9,832

)

 

(8,619

)

 

(46,521

)

 

(25,134

)

Other income (expense):

 

 

 

 

 

 

 

Gain on sale of Ctrack South Africa

 

 

 

 

5,262

 

 

 

Loss on debt conversion and extinguishment, net

 

 

 

 

(432

)

 

(76,354

)

Interest expense, net

(1,696

)

 

(1,745

)

 

(6,874

)

 

(9,942

)

Other income, net

554

 

 

(1,826

)

 

845

 

 

992

 

Loss before income taxes

(10,974

)

 

(12,190

)

 

(47,720

)

 

(110,438

)

Income tax provision (benefit)

(254

)

 

555

 

 

191

 

 

748

 

Net loss

(10,720

)

 

(12,745

)

 

(47,911

)

 

(111,186

)

Less: Net income attributable to noncontrolling interests

 

 

 

 

(214

)

 

(29

)

Net loss attributable to Inseego Corp.

(10,720

)

 

(12,745

)

 

(48,125

)

 

(111,215

)

Series E preferred stock dividends and deemed dividends from the preferred stock exchange

(647

)

 

(848

)

 

(4,243

)

 

(2,904

)

Net loss attributable to common stockholders

$(11,367

)

 

$(13,593

)

 

$(52,368

)

 

$(114,119

)

Per share data:

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

Basic and diluted

$(0.11

)

 

$(0.14

)

 

$(0.51

)

 

$(1.19

)

Weighted-average shares used in computation of net loss per common share:

 

 

 

 

 

 

 

Basic and diluted

105,205,342

 

 

99,014,857

 

 

103,246,308

 

 

96,111,547

 

INSEEGO CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

December 31,

 

2021

 

 

2020

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$46,474

 

 

$40,015

 

Restricted cash

3,338

 

 

 

Accounts receivable, net

26,781

 

 

29,940

 

Inventories

37,402

 

 

33,952

 

Prepaid expenses and other

13,624

 

 

10,201

 

Total current assets

127,619

 

 

114,108

 

Property, plant and equipment, net

8,102

 

 

13,699

 

Rental assets, net

4,575

 

 

6,109

 

Intangible assets, net

46,995

 

 

51,487

 

Goodwill

20,336

 

 

32,511

 

Right-of-use assets, net

7,839

 

 

9,092

 

Other assets

377

 

 

388

 

Total assets

$215,843

 

 

$227,394

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Accounts payable

$48,577

 

 

$52,339

 

Accrued expenses and other current liabilities

26,253

 

 

23,373

 

Total current liabilities

74,830

 

 

75,712

 

Long-term liabilities:

 

 

 

2025 Notes, net

157,866

 

 

165,147

 

Deferred tax liabilities, net

852

 

 

4,505

 

Other long-term liabilities

7,149

 

 

9,929

 

Total liabilities

240,697

 

 

255,293

 

Commitments and contingencies

 

 

 

Stockholders’ deficit:

 

 

 

Preferred stock

 

 

 

Common stock

105

 

 

99

 

Additional paid-in capital

770,619

 

 

711,487

 

Accumulated other comprehensive loss

(8,531

)

 

(6,972

)

Accumulated deficit

(787,047

)

 

(732,422

)

Total stockholders’ deficit attributable to Inseego Corp.

(24,854

)

 

(27,808

)

Noncontrolling interests

 

 

(91

)

Total stockholders’ deficit

(24,854

)

 

(27,899

)

Total liabilities and stockholders’ deficit

$215,843

 

 

$227,394

 

INSEEGO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$(10,720

)

 

$(12,745

)

 

$(47,911

)

 

$(111,186

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

6,199

 

 

11,998

 

 

25,330

 

 

27,946

 

Fair value adjustment on derivative instrument

(391

)

 

1,969

 

 

(3,826

)

 

597

 

Provision for bad debts, net of recoveries

55

 

 

272

 

 

401

 

 

512

 

Impairment of capitalized software

 

 

1,410

 

 

1,197

 

 

1,410

 

Provision for excess and obsolete inventory

70

 

 

108

 

 

657

 

 

538

 

Share-based compensation expense

2,182

 

 

2,231

 

 

16,649

 

 

10,419

 

Amortization of debt discount and debt issuance costs

378

 

 

384

 

 

1,495

 

 

4,016

 

Loss on debt conversion and extinguishment, net

 

 

 

 

432

 

 

76,354

 

Gain on sale of Ctrack South Africa

 

 

 

 

(5,262

)

 

 

Deferred income taxes

(228

)

 

549

 

 

(53

)

 

659

 

Other

(286

)

 

617

 

 

286

 

 

667

 

Changes in assets and liabilities, net of effects of divestiture:

 

 

 

 

 

 

 

Accounts receivable

(3,982

)

 

8,268

 

 

(1,148

)

 

(10,797

)

Inventories

(4,605

)

 

(11,258

)

 

(12,494

)

 

(13,336

)

Prepaid expenses and other assets

(2,273

)

 

848

 

 

(844

)

 

(3,070

)

Accounts payable

4,098

 

 

1,917

 

 

(3,108

)

 

27,087

 

Accrued expenses, income taxes, and other

(952

)

 

(3,230

)

 

2,987

 

 

8,234

 

Net cash (used in) provided by operating activities

(10,455

)

 

3,338

 

 

(25,212

)

 

20,050

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Acquisition of noncontrolling interest

 

 

 

 

(116

)

 

 

Purchases of property, plant and equipment

(629

)

 

(652

)

 

(4,928

)

 

(5,736

)

Proceeds from the sale of property, plant and equipment

195

 

 

65

 

 

1,338

 

 

392

 

Proceeds from sale of Ctrack South Africa, net of cash divested1

2,163

 

 

 

 

33,689

 

 

 

Additions to capitalized software development costs and purchases of intangible assets

(3,316

)

 

(9,153

)

 

(23,905

)

 

(29,369

)

Net cash provided by (used in) investing activities

(1,587

)

 

(9,740

)

 

6,078

 

 

(34,713

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Gross proceeds received from issuance of Series E preferred stock

 

 

 

 

 

 

25,000

 

Gross proceeds from the issuance of 2025 Notes

 

 

 

 

 

 

100,000

 

Payment of issuance costs related to 2025 Notes

 

 

(45

)

 

 

 

(3,645

)

Cash paid to investors in private exchange transactions

 

 

 

 

 

 

(32,062

)

Payoff of term loan and related extinguishment costs

 

 

 

 

 

 

(48,830

)

Repurchase of Series E preferred stock

 

 

 

 

 

 

(2,354

)

Proceeds from the exercise of warrants to purchase common stock

 

 

 

 

 

 

1,861

 

Net borrowing of bank and overdraft facilities

(50

)

 

(309

)

 

265

 

 

(199

)

Principal payments under finance lease obligations

(62

)

 

(513

)

 

(3,200

)

 

(2,756

)

Proceeds from a public offering, net of issuance costs

 

 

 

 

29,370

 

 

 

Proceeds from stock option exercises and employee stock purchase plan, net of taxes paid on vested restricted stock units

1,054

 

 

2,194

 

 

3,486

 

 

5,066

 

Net cash (used in) provided by financing activities

942

 

 

1,327

 

 

29,921

 

 

42,081

 

Effect of exchange rates on cash

(697

)

 

3,096

 

 

(990

)

 

523

 

Net increase in cash, cash equivalents and restricted cash

(11,797

)

 

(1,979

)

 

9,797

 

 

27,941

 

Cash, cash equivalents and restricted cash, beginning of period

61,609

 

 

41,994

 

 

40,015

 

 

12,074

 

Cash, cash equivalents and restricted cash, end of period

$49,812

 

 

$40,015

 

 

$49,812

 

 

$40,015

 

1

The amount for the year ended December 31, 2021 is net of cash divested of $5.0 million.

INSEEGO CORP.

Reconciliation of GAAP Net Loss Attributable to Common Shareholders to Non-GAAP Net Loss

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

December 31, 2021

 

Year Ended

December 31, 2021

 

Net Loss

 

Net Loss Per Share

 

Net Loss

 

Net Loss Per Share

GAAP net loss attributable to common shareholders

$(11,367

)

 

$(0.11

)

 

$(52,368

)

 

$(0.51

)

Adjustments:

 

 

 

 

 

 

 

Preferred stock dividends(a)

647

 

 

 

 

4,243

 

 

0.04

 

Net income attributable to noncontrolling interests(b)

 

 

 

 

214

 

 

 

Share-based compensation expense

2,182

 

 

0.03

 

 

16,649

 

 

0.17

 

Purchased intangibles amortization

527

 

 

 

 

3,366

 

 

0.03

 

Debt discount and issuance costs amortization(c)

378

 

 

 

 

1,495

 

 

0.02

 

Fair value adjustment on derivative instrument(d)

(391

)

 

 

 

(3,826

)

 

(0.04

)

Gain on sale of Ctrack South Africa

 

 

 

 

(5,262

)

 

(0.05

)

Divestiture related costs(e)

 

 

 

 

2,237

 

 

0.02

 

Loss on debt conversion and extinguishment(f)

 

 

 

 

432

 

 

 

Other(g)

 

 

 

 

176

 

 

 

Non-GAAP net loss

$(8,024

)

 

$(0.08

)

 

$(32,644

)

 

$(0.32

)

(a)

Includes accrued dividends on Series E Preferred Stock and deemed dividend as part of preferred stock exchange.

(b)

Includes net income attributable to noncontrolling interests at Ctrack South Africa.

(c)

Includes the debt discount and issuance costs amortization related to the 2025 Notes.

(d)

Includes the fair value adjustment related to the Company’s interest make-whole derivative instrument.

(e)

Includes transaction costs directly related to the divestiture of Ctrack South Africa.

(f)

Includes the loss on debt conversion and extinguishment of the 2025 Notes.

(g)

Primarily includes non-recurring legal settlements.

Contacts

Inseego Corp.
Media Contact:
Anette Gaven

+1 (619) 993-3058

[email protected]
or

Investor Relations Contact:
Joo-Hun Kim

MKR Group

+1 (212) 868-6760

[email protected]

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