Welcome to Inseego Corp.'s Fourth Quarter and Full Year 2022 Financial Results Conference Call. Please note that today's call will be recorded. All participants will be in listen-only mode. Should you need assistance, please signal conference host by pressing star key followed by zero. After today's presentation, there'll be an opportunity for analysts to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. On the call today are Ashish Sharma, CEO, Bob Barbieri, Chief Financial Officer, and other members of the management team. During this call, non-GAAP financial measure will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the investor section of the company's website. An audio replay of this call will also be archived there. Please also be advised that today's discussion will contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on the company's current expectations and beliefs. For a discussion on factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in our Form 10-K, thank you, and other SEC filings, which are available on our website. Please also refer to the cautionary note regarding forward-looking statements sections contained in today's press release. I would now like to turn the call over to Ashish Sharma, CEO. Please go ahead. Thank you, operator. Good afternoon, everyone, and thanks for joining us. Before we dive into our results for the quarter, I want to step back and reflect on my first year as Inseego CEO. I will highlight three major areas of progress. First, I'm happy to report that we have now transformed Inseego into an enterprise fixed wireless access company with the momentum we saw in 2022, especially in Q4. This is evident from the following. Our FWA business now comprises 30% of our revenue, while cloud software has grown to represent an incremental 27% of our revenue. As we have discussed on prior calls, these two businesses produce significantly higher gross margins than our legacy hotspot business. This was evident in our Q4 results, which saw our gross margin increase by 390 basis points to 30%. We expect to further expand our gross margin in FY23 and beyond as enterprise adoption of FWA and our cloud solutions continues. We've established our FWA and managed software offerings as the leading 5G WAN portfolio in the industry. We have a large and growing pipeline with dozens of large, well-known enterprise customers. They are loving our solutions. They will look to roll out deployments to their distributed sites as the carriers get more adept at pricing 5G enterprise service plans and network coverage improves. We are seeing that improvement every day. We are encouraged by our progress, but we recognize that the enterprise FWA market has taken time to develop and will evolve gradually over the next several quarters. Second, beginning Q2 of 2022, we put in an intense focus on right-sizing the company cost structure while the FWA market develops. We drove several significant initiatives to run the company more efficiently. First, we identified geographic regions where initial interest was high, but the availability of 5G service offerings has lagged. We exited those markets. Japan is a good example of this. Second, we're being more disciplined in our pursuit of any new stock device programs with carriers and will focus only on the few premium slots. Given the requisite high level of sustained R&D investments and certification costs, as well as the lower margins relative to our enterprise opportunity, we think this makes good sense. Third, we have reduced our infrastructure, headcount, and external spending costs globally, as many technology companies have also done. What effects did these changes have? In total, we've eliminated approximately $32 million in annualized cash spend from our cost structure as we enter 2023. Third, I want to address our balance sheet and cash flow expectations. Between the growth in our higher margin enterprise business and the significant cost actions we have taken, we expect to reach cash flow positive in Q2 and build upon that progress over the remainder of the year. This has been a top priority of the management team during 2022, and we are pleased with the progress towards achieving this important milestone. In total, we sold to a few dozen new enterprise customers in the quarter and ended the year with well over 1,000 customers. Importantly, over 90% of our enterprise sales in Q4 included software, which obviously contributes to our overall margin improvement. Let me also address the revenue decline that is driven by lower sales in our hotspot business. The transition from 4G- 5G with our carrier customers continued last quarter as they reduced purchases of 4G products and transitioned completely to 5G. We have talked about this in the last couple of earnings calls. In addition, in 2022, we had carrier upgrades in our 5G hotspots to deliver the latest Qualcomm chipsets, which added some variability during the year. Our hotspot business has normalized to a new level focused only on the business segments. Over the last couple of years, we enjoyed the sole spot with some large carrier customers, but as the market has matured for 5G hotspots, they've introduced other competing products. While our hotspot is the flagship enterprise product of choice with those large carrier customers, the volume for other market segments is now shared by other hotspots. On the lower hotspot sales represented a drop in our top line, the impact on our profit dollars is far less substantial due to the gross margin improvement driven by the better mix of higher margin businesses I just mentioned. That was the progress on those three areas. Next, let me provide a brief summary of our Q4 results. In Q4, we generated revenue of $52.9 million and an adjusted EBITDA loss of $3 million. Importantly, we continued to see enterprise FWA trials convert to deployments. It is important to note that very often customers who purchase our FWA products begin with a small initial pilot with 5-20 devices, which progresses into full-scale deployment over time for hundreds or thousands of locations. We've now been in the enterprise FWA business for a little over a year, and we are seeing pilots convert to deployments. Our FWA business now accounts for about 30% of our revenue. Contributing to our enterprise FWA success is the new go-to-market programs we put in place with all three large carriers in the U.S. who are helping us build this new FWA market. We've discussed end markets in previous calls, some examples of new enterprise customer wins are in multi-location retail and restaurants, construction, home builders, and the SD-WAN space. Our home builder and construction customers are deploying our solutions to establish broadband services for new sites. Utilizing 5G, they can establish that connectivity instantaneously when compared to traditional ISVs. The applications that 5G enables for this sector include material tracking, surveillance, AR/VR, real-time monitoring for OSHA compliance, and reliable uptime for workers that depend on mobile applications on the job site. One of these early adopters is a new addition to our pipeline, another Fortune 500 home builder. They're now exploring applications enabled by our products to support their smart home initiatives. In the retail space, we continue to expand our footprint with existing Fortune 1,000 customers spanning grocery chains, QSR, farm and agricultural supply, and apparel. We are pleased to win a major off-price retailer with roughly 3,500 stores in the U.S. alone. We will begin shipping products to this customer in Q1. In the SD-WAN space, we won a large customer in the Middle East who is rolling out our solution as part of their SD-WAN service offerings. Inseego's products are deployed as part of this customer's virtual edge platform. We've already shipped thousands of units to this customer. We believe we are very early in the adoption cycle for enterprise FWA, but the market is changing rapidly as 5G networks are completed. We have seen this in how our pipeline has grown over the past year and the nature of the customers evaluating our solution. With that, let me turn the call over to Bob, who will provide more details on our Q4 results. Thank you, Ashish. Let me now review the results of our fourth quarter fiscal 2022. Please note that all metrics and comparisons made are non-GAAP on a pro forma basis, adjusting for the divestiture of Ctrack South Africa, which was completed in July 2021. Please refer to our earnings release for additional details on the GAAP to non-GAAP reconciliation. Q4 revenue was $52.9 million, down 27% from the prior year. As Ashish mentioned, our FWA business comprised 30% of total revenue and grew 122% over the prior year period. Next-generation solutions, which are comprised of 5G devices and all of our cloud software assets, decreased 9% over Q4 fiscal 2021 and represented 74% of total revenue in this quarter as compared to 58% of revenue in the year-ago quarter. Software revenue accounted for 27% of total revenue and increased 6% from the year-ago quarter. Fourth quarter IoT and mobile solution revenue was $46.3 million, down 30% from the same period last year. The decline was primarily driven by reduced sales of our hotspot products, partially offset by continued uptake of our solutions by enterprise customers. Enterprise SaaS solutions revenue was $6.6 million, relatively flat both sequentially and year-over-year. Consolidated gross margin was 30.3%, up 390 basis points from 26.4% in Q3 and 490 basis points from 25.4% in Q4 last year. Gross margin for the IoT and mobile business was 28%. Up from 23.4% in the prior quarter and 22.1% in the prior year period. As Ashish alluded to in his comments, the meaningful improvement in gross margin on a sequential and a year-on-year basis was attributable to a significantly higher mix of enterprise fixed wireless revenue. Recall that the contribution margin on the hotspot products has been negatively impacted post-pandemic by higher component and distribution costs, the reduction in the associated revenue did not materially impact our gross profit dollars. We continue to see gross margin on our enterprise fixed wireless sales exceed 40%, which leaves us confident in the trajectory of our gross margins and further margin expansion from here. Gross margin for the enterprise SaaS segment was 56.7%, up slightly compared to the sequential and prior year periods. Q4 non-GAAP net loss was $11.8 million or $0.11 per share, compared with a loss of $0.11 per share in the prior quarter and a loss of $0.08 per share in the year ago quarter. We reported an adjusted EBITDA loss of $3 million, which was higher than the loss of $2.5 million in Q3 and the $1.2 million loss in the year ago period. Included in the loss this quarter was approximately $1 million in expenses that we do not expect to recur going forward. As Ashish mentioned, our efforts to identify additional operating expenses has resulted in the elimination of approximately $10 million in cash expenses during Q4. We note that this reduction is incremental to the $20 million in annualized cost savings we highlighted last quarter. For additional details on our non-GAAP and adjusted EBITDA results, please refer to the reconciliation tables in our press release. Cash, cash equivalents and restricted cash at the end of Q4 was $7.1 million. Our cash usage was impacted by the timing of our year-end payroll, payments made to suppliers and one-time expenses related to our cost reduction efforts. As Ashish noted, we expect our cash balance to trough near the current levels and increase beginning in Q2 of this year as we reach an inflection point in free cash flow generation. We expect EBITDA and cash flow positive in fiscal 2023. Our FY 2023 outlook also assumes a steady increase in our mix of enterprise fixed wireless business throughout the year, continued improvement in gross margin from the 30% achieved in Q4 2022, and a full realization of the over $30 million in reductions in costs recently implemented. Although we are not providing specific quarterly guidance, we expect to see the usual seasonal trends in our business, with revenue declining slightly sequential from Q4- Q1 before ramping higher in the back half of the year. In formulating our EBITDA and cash flow expectations, we've taken a conservative view of our hotspot business, particularly with respect to the pace at which our carrier partners will continue to transition away from 4G products. That being said, there may be quarters where the timing of restocking orders or the pace at which our enterprise business scales could create volatility in our reported revenue and gross margin. We will endeavor to highlight these impacts should they occur over the course of the year. With that, let me turn it back to Ashish for his closing comments. Thanks, Bob. We've made a tremendous amount of progress in transforming Inseego over the past year. Our Q4 results clearly demonstrate the potential margin expansion inherent in our business as 5G enterprise FWA sales increasingly drive our growth. Combined with our efforts to reduce costs, we are inching closer to our goals for profitability and positive cash flow generation. Thank you all for your interest and support. We look forward to taking your questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Scott Searle with Roth Capital Partners. You may now go ahead. Pardon me, Scott Searle from Roth Capital Partners, your line's open. Oops. My apologies. I had you on mute. Hey, guys. Thanks for taking the questions. Hey, I'm not sure if I missed it, earlier on the call, but I was wondering if you could give a quick breakout of 4G and 5G mix, and then the percentage sales of your 10% customers. Hey, Scott. Hey, good talking to you. We had three customers representing over 10% in sales. To answer your second question. Your first question, I would say the 4G sales were approximately 24%-25% of the revenue, of which I would say the hotspots were probably in the range of 6% of the overall revenue. Okay. Very helpful. Ashish, I know in the past, like some of the delays in the rollout had been related to C-band coverage. That is starting to improve now. There are still some ongoing issues in terms of arguing with the FAA, but it's moving in the right direction. I'm wondering what the visibility is on that front to start seeing the carriers a bit more aggressive on that front in terms of pushing 5G fixed wireless access for C-band. Hey, Scott, great question, and that is what, you know, has been holding up the market, as you know, for past year and a half. Every day, we are seeing progress now. Like, we're seeing more coverage pop up on mid-band from all the three carriers. It is starting to look a lot better. Many of these large enterprise customers who've been piloting and trialing our solutions are now starting to go beyond, you know, a few sites to more and more sites. It is definitely looking better, but I would say that we're still in the bottom of the first inning, right, on the market, you know, the new FWA market that is developing. We expect it'll be gradual build up over next several quarters of how that market is gonna develop. Obviously, this quarter, for us as a company, you see that was a huge transformation from being a hotspot company, where a year ago, you know, Q4 of 2021, 70% of our revenue came from hotspots. This quarter, that was less than 30%. And plus, obviously, our FWA business jumped big time, which now constitutes over 30% of the revenue, and hence the uplift in the margin. Truly, company's transforming in what still is a very early market, but the signs are super positive. Gotcha. If I could, sequentially, it sounds like you're expecting some seasonality. I was wondering if you'd give us an idea in terms of sequentially by the product category. I would imagine historic enterprise SaaS probably stays flattish. Mobile hotspots tends to have some seasonality. Enterprise FWA, does that come down as well, or is there some strength there as you're starting to build a little bit of momentum? Yeah, I mean, no, on the SaaS side, on the cloud revenue side, and on the FWA business side, you know, we're gonna continue to see gradual improvement. I'm not, you know, forecasting a seasonality effect there. Hotspot continues to be seasonal, and I would say that, you know, Q1 generally is, you know, on the lower side, and so you would see that. That's the first half, and then second half would start to hopefully improve. Having said all that, as we've mentioned before, the 4G revenue, on the hotspot side, you know, we've been forecasting that to eventually dwindle down and totally go away, and that will happen sometime this year. Hence the reason in this quarter, that revenue, you know, from 12 months ago, just went from being 38% of our revenue to literally 6% of the revenue. Look, that's not a high margin business for us. So while we'll take anything opportunistically that comes from our lead customers, we're really not counting on that revenue. Lastly, if I could, just in terms of trying to get my hands around what normalized OpEx is gonna be going forward. I think you said there was $1 million of non-recurring costs in the quarter, but you've also talked about taking $32 million in costs out, and then there was a number I heard as well, $10 million in there somewhere. I'm not sure if that was recognized on an annualized basis in the fourth quarter. If I look at your OpEx, net of stock comp, you know, and one-time charges, what does that number look like as we get out to the second quarter of 2023 here? Is it closer to, you know... You know, I think this quarter was just under $25 million, you know, pro forma. Is that number then closer to $20 million? In terms of getting to that cash flow break even, cash flow positive, level, what sort of revenue run rate do you need to hit that? Thanks. Yeah, great question, Scott. Let me first answer your question on the OpEx. For Q4, actually, you said the pro forma was below 25. It's actually, you know, lower than 22, you know, the cash piece of it, right? In Q2, by Q2, that would be in the range of $17 million. Like, overall, we've removed, you know, like we said, north of $30 million-$32 million. By Q1, when all the full effect is in place, I mean, we would have removed close to $37 million in, you know, cost from the OpEx. You could see that, you know, we're not gonna... With the change, with the mix and change in revenue mix and the margin mix, we're not really gonna need a huge top line to get profitable. I'd say, you know, anything close to, like, $50-ish million in revenue will get us to, you know. Obviously, that depends on, you know, more and more FWA. It could be even lower numbers than that, but that would be enough to get us cash flow positive. Gotcha. Okay, thanks so much. Thank you, Scott. Our next question will come from Tore Svanberg with Stifel. You may now go ahead. Good afternoon. This is Jeremy Kwan calling for Tory. Yeah, just, congrats, first of all, on the gross margin execution here. Just a question in terms of the, you know, the backlog that you can provide for us. You know, any kind of commentary around that, maybe, order trends. You know, as we move through the prior quarter and where we stand today in terms of the bookings levels. Yeah, Jeremy. Let me address that. First off, like certain piece of our business, about 27% it's subscription business, right? That continues, you know, as is like at the base, continues to grow. Number two piece of the business is the hotspot business, which, you know, the way that works is like we have certain slots with the large carriers, we work with them on a weekly basis to monitor the sell-through. That's where we've seen a bunch of variability in the business. One, 4G kind of just, you know, dwindling down as we had forecasted. Second, we basically launched a new generation of 5G hotspot here with multiple large carriers in Q3 and Q4, there's some seasonality with the switchover. We're seeing lower run rate on that 5G hotspot. We saw that in Q4. I would say the hotspot business right now was probably at the lowest level in Q4, and we expect it to, you know, at some point rebound, although we're not baking that in our future models, right? We don't really. You know, if even if we continue at this level and we continue to improve our, grow our FWA business, which grew significantly this quarter, I think we are a totally different company. Coming to FWA business, that business, we're going through two different routes to market. One is, you know, stocking through carriers, and second is going through distribution and channel partners to a very broad enterprise market. Those both businesses are measured not as much by backlog, but much more by, I would say, you know, either the sell-through or second, the health of the pipeline of opportunities. I would say both of those on the FWA business are really strong at this point, and hence the results in Q4. Great. Thank you. I guess, I think you mentioned having 3. 10%+ customers. Are you able to kind of size that for us and provide a little bit more detail there? Yeah. It's, you know, our traditional, two largest customers are T-Mobile and Verizon, and the third one in the list now is UScellular. Got it. I guess a final question then, just going back to the fixed wireless access market. You know, I think you said it was 30% in Q4. Do you have kind of an idea of where, you know, that could go over the next 12- 18 months, you know, as that piece continues to grow? Yeah, which verticals you see kind of driving that in the near term? Thank you. Yeah, Jeremy, great question. Look, we're not providing guidance, but directionally, I would say in the next 12-18 months, we expect that to become 60%-70% of our revenue in, you know, every quarter. You know, that opportunity is there, and we are seeing the pipeline. I would say in your second question about which verticals, I mean, look, it's across the board, right? From construction to retail to, you know, city infrastructures, to healthcare companies. We're seeing FWA become a new market, you know, horizontally pretty much in, you know, many verticals across the board, right? We've got a great mix of customers and pilots. It just, it's the need being all driven by the distributed nature of a lot of these enterprises now, especially after the pandemic and 5G. FWA is a great technology to provide that very economically and efficiently in a very quick manner. Great. Thank you very much. Thank you, Jeremy. Again, if you have a question, please press star then one. Our next question will come from Jonathan Navarette with Cowen. You may now go ahead. Hey, how are you guys? It's Jonathan on for Lance. My first question is, can you call out some of the cost reductions implemented in 2022 that have helped generate those analyzed savings? Following up on that, are there any additional levers with which you can keep on expanding margins with in terms of cost reductions in 2023, or you guys pretty much have hit an end where there's no need or you guys can't anymore? Good questions, Jonathan. There are a number of different areas, right, that we took the cost out. I would say number one was getting out of some of these geographic regions where there was huge amount of interest in 5G over the last few years, but for one reason or another, the markets just haven't developed quick enough. I mean, there's interest, but they haven't developed quick enough. We've kinda, you know, gotten out of many of those international markets. Number two, based on that number one, we've kinda just really put focus on contracting the R&D to not chase a lot of those slots that we were chasing before and being extremely focused on the markets where there's action, like specifically here in North America and a little bit in Australia. That's where we are focused. That was a big change. Number 3rd, I mean, I would say that we took a very hard look at all of the infrastructure of the company, including North America, Europe, Middle East, Australia, New Zealand, Japan. We did a whole lot of cost reductions to remove the cost from the company. I would say that, you know, we still have a huge leverage built in the strategy that we built. Even though we have removed the cost from the areas that were not quite happening yet, but we can very, very quickly expand the business with the core that we've got here. I would say that that's the focus moving forward, is use the core to grow the top line and the business in the right areas, you know, very quickly, and we believe we could do that moving forward. That makes sense. Given those cost reductions as well as improving revenue mix, is it safe to assume that what we can expect gross margins, non-GAAP basis, to steadily remain above 30% throughout each of the four quarters in 2023? Yeah, I mean, not just remain above 30%, but I would say gradually keep improving. Absolutely. Great. The last one from me. I haven't seen your 10-K out yet, so I haven't been able to check here, but how much availability do you have in your, in your revolver? Is it still give or take about $45 million? Yeah, it's in that range. That's correct. Okay. Gotcha. Do you expect that just given the low cash balance of $7 million that you will be using it in this quarter? Do you feel like there's no need to do that? Yeah, I mean, look, the reason we put in that revolver was just that, right. Which is to use it for working capital as we, you know, kinda, you know, go and get these orders from our lead customers. We have to, you know, procure the material, put some stuff in the inventory and make sure and what is still a very supply chain, you know, constrained environment from just a lead time perspective, that we are able to take all the demand. That's exactly the focus of that revolver. That's what we're gonna continue to use it for. Okay. Got it. Thank you. Okay. Thank you, Jonathan. It appears there are no further questions. This concludes our question and answer session. I would like to turn the conference back over to Ashish Sharma for any closing remarks. Thank you, operator, and thank you everyone for joining us on the call today. We look forward to updating you on next quarter on our continued progress. Thank you again.