Inseego Reports First Quarter 2024 Financial Results

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INSEEGO CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited)

	Three Months Ended March 31,
	2024			2023
Revenues:
Mobile solutions	$	15,270		$	23,040
Fixed wireless access solutions		14,182			11,870
Product revenues		29,452			34,910
Services and other		15,557			15,884
Total revenues		45,009			50,794
Cost of revenues:
Product		22,713			27,967
Services and other		4,904			4,640
Total cost of revenues		27,617			32,607
Gross profit		17,392			18,187
Operating costs and expenses:
Research and development		5,043			3,775
Sales and marketing		4,995			6,466
General and administrative		4,983			5,724
Depreciation and amortization		3,635			5,309
Impairment of capitalized software		420			504
Total operating costs and expenses		19,076			21,778
Operating loss		(1,684	)		(3,591	)
Other (expense) income:
Interest expense, net		(2,174	)		(1,997	)
Other (expense) income, net		(360	)		795
Loss before income taxes		(4,218	)		(4,793	)
Income tax provision		237			311
Net loss		(4,455	)		(5,104	)
Series E preferred stock dividends		(790	)		(723	)
Net loss attributable to common stockholders	$	(5,245	)	$	(5,827	)
Per share data:
Net loss per common share:
Basic and diluted (*)	$	(0.44	)	$	(0.54	)
Weighted-average shares used in computation of net loss per common share:
Basic and diluted (*)		11,879,719			10,860,189

INSEEGO CORP. CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)

	March 31, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	12,297		$	7,519
Accounts receivable, net		23,476			22,616
Inventories		20,797			22,880
Prepaid expenses and other		6,526			5,211
Total current assets		63,096			58,226
Property, plant and equipment, net		2,287			2,758
Rental assets, net		4,916			5,083
Intangible assets, net		24,281			27,140
Goodwill		21,922			21,922
Operating lease right-of-use assets		5,182			5,412
Other assets		384			1,256
Total assets	$	122,068		$	121,797
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	24,013		$	24,795
Accrued expenses and other current liabilities		30,805			27,022
Revolving credit facility		4,677			4,094
Total current liabilities		59,495			55,911
Long-term liabilities:
2025 Notes, net		160,284			159,912
Operating lease liabilities		4,771			5,039
Deferred tax liabilities, net		675			680
Other long-term liabilities		2,432			2,360
Total liabilities		227,657			223,902
Commitments and contingencies
Stockholders’ deficit:
Preferred stock		—			—
Common stock		12			12
Additional paid-in capital		811,637			810,138
Accumulated other comprehensive loss		(5,065	)		(5,327	)
Accumulated deficit		(912,173	)		(906,928	)
Total stockholders’ deficit		(105,589	)		(102,105	)
Total liabilities and stockholders’ deficit	$	122,068		$	121,797

INSEEGO CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(4,455	)	$	(5,104	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		4,375			5,430
Provision for expected credit losses		(32	)		41
Impairment of capitalized software		420			504
Provision for excess and obsolete inventory		108			217
Share-based compensation expense		717			1,800
Amortization of debt discount and debt issuance costs		489			489
Deferred income taxes		(5	)		101
Non-cash operating lease expense		405			592
Changes in assets and liabilities:
Accounts receivable		(828	)		(1,997	)
Inventories		1,279			3,097
Prepaid expenses and other assets		(785	)		(1,940	)
Accounts payable		(718	)		5,544
Accrued expenses and other liabilities		3,999			(490	)
Operating lease liabilities		(423	)		(625	)
Net cash provided by operating activities		4,546			7,659
Cash flows from investing activities:
Purchases of property, plant and equipment		—			(61	)
Additions to capitalized software development costs and purchases of intangible assets		(577	)		(2,443	)
Net cash used in investing activities		(577	)		(2,504	)
Cash flows from financing activities:
Principal payments under finance lease obligations		—			(199	)
Proceeds from a public offering, net of issuance costs		—			529
Principal payments on financed assets		—			(360	)
Net borrowings (repayments) on revolving credit facility		583			(3,385	)
Proceeds from ESPP		—			75
Net cash provided by (used in) financing activities		583			(3,340	)
Effect of exchange rates on cash		226			(272	)
Net increase in cash and cash equivalents		4,778			1,543
Cash and cash equivalents, beginning of period		7,519			7,143
Cash and cash equivalents, end of period	$	12,297		$	8,686

INSEEGO CORP. Reconciliation of GAAP Gross Margin and Operating Costs and Expenses to Non-GAAP Gross Margin and Operating Costs and Expenses Three Months Ended March 31, 2024 (In thousands) (Unaudited)

	GAAP			Share-based compensation expense		Impairment of Capitalized Software		Purchased intangibles amortization		Non-GAAP
Revenues	$	45,009								$	45,009
Cost of revenues		27,617		$	31	$	—	$	—		27,586
Gross Margin	$	17,392								$	17,423
Gross Margin %		38.6	%								38.7	%

Total operating costs and expenses	$	19,076		$	686	$	420	$	423	$	17,547

INSEEGO CORP. Reconciliation of GAAP Net Loss to Adjusted EBITDA (In thousands) (Unaudited)

	Three Months Ended March 31, 2024
Net loss	$	(4,455	)
Income tax provision (benefit)		237
Interest expense, net		2,174
Other income (expense), net		360
Depreciation and amortization		4,375
Share-based compensation expense		717
Impairment of capitalized software		420
Adjusted EBITDA	$	3,828

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