Inseego signals growth with Q2 revenue guidance of $37M-$40M and strategic FWA expansion

Earnings Call Insights: Inseego Corp. (INSG) Q1 2025

Management View

• CEO Juho Sarvikas highlighted the execution of the company’s refreshed strategy, emphasizing advancements in Fixed Wireless Access (FWA) and MiFi businesses. He noted that Q1 revenue fell within guidance, while adjusted EBITDA exceeded expectations. Key product achievements include the successful demonstration of 5G Advanced capabilities in collaboration with Qualcomm.
• Sarvikas outlined strategic priorities to diversify the customer base and expand product portfolios, particularly focusing on Tier 1 carriers and multiple system operators (MSOs). He emphasized the potential for FWA and MiFi products to address both consumer and enterprise markets.
• CFO Steven Gatoff reported Q1 adjusted EBITDA of $3.7 million, achieving an adjusted EBITDA margin of 11.6%. He also pointed to record non-GAAP gross margins of 47.5%.
• Sarvikas announced the addition of George Mulhern, former CEO of Cradlepoint, to the board of directors, emphasizing his experience in enterprise wireless networking.

Outlook

• Management provided Q2 2025 revenue guidance of $37 million to $40 million and adjusted EBITDA guidance of $2.5 million to $3.5 million. The company expects FWA revenue to increase significantly in Q2.
• Sarvikas expressed confidence in achieving year-over-year revenue growth for 2025, driven by new customer acquisitions and an expanded product portfolio. He noted that sequential quarterly revenue growth is expected to begin in Q2.

Financial Results

• Q1 2025 revenue was impacted by delayed carrier promotions and lower FWA purchases as inventory transitions occurred. However, gross margins improved due to favorable revenue mix and disciplined cost management.
• Services revenue grew nearly 50% year-over-year, supported by strong performance from the Inseego Subscribe SaaS platform.
• The company completed a $15 million debt paydown, reducing total debt to $41 million and reinforcing its financial position.
• The balance sheet showed over $35 million in cash and effective working capital management.

Q&A

• Jonathan Navarrete, TD Cowen, inquired about potential delays in pipeline opportunities and the revenue impact of the T-Mobile Partner Plus program. CEO Sarvikas indicated no delays in the pipeline and highlighted growth prospects tied to T-Mobile’s channel investments.
• Jeremy Kwan, Stifel Nicolaus, asked about the channel strategy and competitive positioning. Sarvikas emphasized the company’s renewed capabilities, supply chain improvements, and a strong value proposition for large enterprise and SMB markets.
• Analysts questioned the sustainability of free cash flow generation, to which CFO Gatoff confirmed positive free cash flow targets for 2025 despite early-year investments.

Sentiment Analysis

• Analysts exhibited cautious optimism, focusing on revenue growth potential and margin sustainability. Key concerns revolved around pipeline execution and competitive pressures.
• Management maintained a confident tone, emphasizing strategic progress and long-term growth potential. Sarvikas noted, “We are confident in the opportunities before us.”
• The tone during prepared remarks was proactive, while responses in Q&A reflected measured confidence, particularly regarding product and channel strategies.

Quarter-over-Quarter Comparison

• Q1 2025 revenue was lower compared to Q4 2024, attributed to record levels in the prior quarter driven by specific carrier promotions.
• Management reiterated its focus on diversifying revenue streams and expanding its customer base, a shift from Q4’s emphasis on mobile hotspots.
• Guidance language remained consistent, with sequential revenue growth anticipated from Q2 2025 onward.

Risks and Concerns

• Management identified delayed carrier promotions, macroeconomic uncertainties, and inventory transitions as challenges in Q1.
• Mitigation strategies include diversifying the customer base, enhancing supply chain flexibility, and focusing on high-margin SaaS offerings.
• Analysts raised concerns about competitive pressures from Asian manufacturers and the geopolitical environment.

Final Takeaway

Inseego is executing a strategic transformation under new leadership, focusing on expanding its FWA and MiFi businesses, diversifying its customer base, and enhancing SaaS offerings. With Q2 2025 revenue guidance of $37 million to $40 million and plans for year-over-year growth, the company is positioning itself for long-term success amidst a dynamic wireless broadband market.

Read the full Earnings Call Transcript