Inseego (NASDAQ:INSG) reported third-quarter revenue of $33.3 million and outlined a weaker near-term outlook for its North American business as a delayed fixed wireless access product launch and elevated carrier inventories weigh on orders.
The wireless broadband company also expects its newly acquired Nokia FastMile fixed wireless access business to contribute $35 million to $40 million in fourth-quarter revenue. Consolidated adjusted EBITDA guidance of $0 to $2 million includes $12 million to $14 million in expected Nokia make-whole and engineering support.
“While these results were in line with our expectations, I’m not satisfied with our overall performance,” Chief Executive Officer Juho Sarvikas said. He added that Inseego has reduced spending and begun restructuring its engineering operations to improve execution and move toward profitability.
Third-quarter results and fourth-quarter outlook
Inseego’s third-quarter adjusted EBITDA was a loss of $1 million. Both revenue and adjusted EBITDA were within the company’s guidance ranges, Sarvikas said. The results reflect Inseego’s pre-acquisition business, which the company now refers to as Inseego North America.
Mobile solutions revenue rose 10% from the second quarter to $19.1 million, supported in part by carrier purchases ahead of anticipated component price increases. Fixed wireless access, or FWA, revenue was $4.2 million as Inseego’s largest FWA customer did not recover as expected and a newer U.S. carrier customer worked through inventory purchased in the second quarter.
Software, services and other revenue totaled $10 million. Non-GAAP gross margin was 34%, while non-GAAP operating expenses fell to $14.8 million from $16.9 million in the prior quarter. Chief Financial Officer Steven Gatoff said results included a $1.8 million inventory reserve associated with an older FWA product.
For the fourth quarter, Inseego forecast:
- Inseego North America revenue of $21 million to $25 million.
- FastMile revenue of $35 million to $40 million.
- Consolidated revenue of $56 million to $65 million.
- Consolidated adjusted EBITDA of $0 to $2 million, including the expected Nokia support.
Gatoff said consolidated non-GAAP operating expenses are expected to be approximately $30 million in the fourth quarter. He also said the company’s October cost reductions, which removed approximately $8 million in annual employee and contractor expenses, will not be fully reflected in the quarter because of timing, severance and implementation costs.
Delayed launch and engineering changes
Sarvikas said extended printed circuit board lead times pushed the launch of Inseego’s next-generation FWA product from the fourth quarter into the first quarter of 2027. The delay also moves the anticipated recovery at its largest FWA customer into next year.
Meanwhile, U.S. carrier customers are selling mobile hotspots already in inventory and placing smaller replenishment orders as they manage year-end stock levels, he said. Inseego expects those inventories to be leaner entering 2027.
To address product delivery problems, Inseego hired Nick Lambourne as chief technology officer and began restructuring its engineering function. Sarvikas said the company is unifying development practices and working on a common software platform for mobile hotspots and FWA devices.
The company also won a premium-tier MiFi award from its newest U.S. Tier 1 carrier customer for the first responder market. Sarvikas said revenue from the award is expected around the middle of 2027.
FastMile integration and costs
Inseego closed its acquisition of Nokia’s FastMile FWA business on October 1. Sarvikas said the deal expands the company’s residential product portfolio and global carrier relationships, while adding engineering capabilities.
Higher memory costs have reduced purchasing by FastMile’s largest customer, based in India, contributing to a lower revenue baseline for the acquired business, Sarvikas said. He added that the customer recently renewed its FWA agreement through the end of 2028, including a minimum purchase commitment.
Gatoff described FastMile’s residential business as a higher-volume, lower-margin operation, with a gross margin profile around 10% to 13%. Management said its goal is to bring the acquired business to break-even independently of Nokia’s first-year operating support, partly by combining engineering platforms and operations.
Inseego is also changing how it accounts for internal software development costs beginning in the fourth quarter. Gatoff said a greater share will be expensed as incurred rather than capitalized and amortized over time, reducing adjusted EBITDA relative to the prior approach without changing cash spending.
The company ended September with $6.6 million in cash and a $7.6 million balance on its $20 million working-capital facility. After quarter-end, it received a $10 million equity investment from Nokia and a $10 million engineering support payment for first-year interoperability work, Gatoff said.
About Inseego (NASDAQ:INSG)
Inseego Corp. develops wireless broadband and mobile networking solutions for service providers, enterprises, small businesses, government organizations and consumers. The company focuses on connecting devices, locations and users through cellular networks, with an emphasis on 5G and other high-speed wireless technologies.
Its product portfolio includes mobile hotspots, fixed wireless access equipment, indoor and outdoor customer-premises equipment, routers and gateways. Inseego also provides cloud-based device management and networking software designed to help customers provision, monitor and manage connected equipment.
