INSEEGO CORP. Q1 FY2025 earnings call

Key Points

• Juho Sarvikas highlighted progress executing the strategy since joining Inseego, with Q1 results showing revenue within guidance and adjusted EBITDA above expectations.
• In Q1, Inseego was the first OEM to make a 5G Advanced 3GPP Release 18 data call with the Qualcomm Dragonwing Gen 4 Elite FWA platform.
• Strategy focus includes executing and scaling FWA and MiFi business, and accelerating software and services roadmap.
• Overhauled supply chain and engineering strategy to reduce costs and improve efficiency.
• Welcomed George Mulhern, former CEO of Cradlepoint, to the Board of Directors.
• Steven Gatoff discussed Q1 financials, closed debt pay down, and provided Q2 guidance.

In Q1 2025, Inseego delivered revenue within guidance. Mobile revenue grew over 16% year-over-year, and services revenue grew nearly 50% year-over-year. Non-GAAP gross margin percentage increased to a record 47.5% in Q1 2025, driven by sequential margin expansion in both product and services and a revenue mix with greater services revenue. Adjusted EBITDA came in at $3.7 million, which was above expectations, even with software and hardware volumes.

Q2 2025 Guidance

• Total revenue expected in the range of $37 million to $40 million.
• Adjusted EBITDA expected in the range of $2.5 million to $3.5 million.
• Anticipates sequential quarterly revenue growth starting with Q2, influenced by timing of a large channel deal.
• Services revenue expected to be consistent with Q1 on a dollar basis.
• Gross margin percentage expected to be in the high-30s range in Q2 2025.

Risks

• Global tariff and macroeconomic environment, which remains fluid and could lead to potential disruptions and unfavorable economic outcomes.
• Product development and customer purchasing cycles typically span nine to 12 months, impacting the timing of results.

Q: How concerned are you that some pipeline opportunities may slip into 2026 given the broader macro environment?

A: Juho Sarvikas stated they're not seeing pipeline movement from their customer base, especially large North American carriers.

Q: Can you quantify the potential revenue upside from the T-Mobile Partner Plus program?

A: Juho Sarvikas mentioned a large carrier FWA customer in North America with good growth trajectory, and the T-Mobile Partner program creates a pool for channel program products.

Q: Should we expect free cash flow to be positive for 2025 and what are the levers to achieve that?

A: Steven Gatoff said they are targeting free cash flow generation for the year, with investments in the first half and the second half expected to outweigh, leading to positive free cash flow for the year.

Q: Can you give an update on the competitive landscape in light of geopolitical environment?

A: Juho Sarvikas noted Inseego is an American company with critical IP created in San Diego, has improved supply chain and operational efficiency, and is well-positioned to drive growth.

Q: Do you have a new target model for gross margin over the longer term?

A: Steven Gatoff said they haven't given a target model yet but expect the high-30s range to be a good place, depending on mix shift between SaaS and product business.