Hello, and welcome to Inseego Corp's First Quarter 2025 Financial Results Conference Call. Please note that today's event is being recorded. All participants today will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity for Q&A. [Operator Instructions] On the call today are Juho Sarvikas, Chief Executive Officer of Inseego and Steven Gatoff, Chief Financial Officer. During this call, certain non-GAAP financial measures 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 Relations section of the Company's website. An audio replay of this call will be also 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 those expectations, please refer to the risks factors described in the Company's Form 10-K, 10-Q and other SEC filings, which are available on the Company's website. Please also refer to the cautionary note regarding forward-looking statements section contained in today's press release. With that, I'd like to turn the call over to Juho Sarvikas, Chief Executive Officer. Please go ahead.

Thank you, operator, and thank you all for joining. This is my second earnings call as the CEO of Inseego, and I'm even more excited to be here today than the last time we spoke in February. I'm proud of the progress we've made executing the strategy I set in motion when I joined Inseego in January. We have a lot of work ahead of us, but we are getting it done. I want to thank the awesome Inseego team for their focus, energy, and commitment. Today, I will focus on two topics. First, I'll give you an overview of our Q1 results. Second, I'd like to share what I'm seeing in the business today and update you on the strategy that's underway and how it's laying the foundation for long-term growth. Let me start with a quick overview of our Q1 financial results that Steven will take you through in more detail. We delivered revenue within guidance and adjusted EBITDA came in above expectations, even with software and hardware volumes. While revenue was impacted by some delayed carrier mobile broadband promotions and FWA orders, gross margin hold strong on the favorable revenue mix. And importantly, we invested in key product and growth initiatives without compromising cost discipline as evident in the strong adjusted EBITDA results. Before I move on to strategy and execution, I want to share one of my key initiatives that we successfully executed in Q1. Inseego has a legacy of leading in wireless innovation and an exceptional team of industry leading engineers in cellular modem and antenna technology. At Mobile World Congress in Barcelona this past March, we were the first OEM in the world to make a 5G Advanced 3GPP Release 18 data call with the new Qualcomm Dragonwing Gen 4 Elite FWA platform in…

Thanks, Juho. Hi, everyone. Thanks for joining us. I'm going to cover three topics today. First, I'll take you through the Q1 2025 financial results. Second, I'd like to share a quick update on our debt pay down that closed last week. And third, I'll provide some financial color on what we are seeing in the business and set out guidance for Q2 2025. As we always do, we will, of course, wrap up by opening the call to your questions. Let's start with the Q1 2025 financial details. Overall, while Q1 presented a slow start to the year on a revenue basis for the three anticipated reasons that we discussed last quarter, we managed our costs well and generated solid non-GAAP profitability and a strong balance sheet as we are implementing our new strategy and setting out the foundation for growth. The three combined dynamics were one, Q3 and Q4 2024 had record revenue that was driven by unprecedented mobile hotspot promotions by a key carrier customer that drove volumes that were double and nearly triple historical norms. Second, 2024 was the end of a special national mobile hotspot program at one of our North American carrier customers that had generated meaningful volume in 2024, but that was not continuing at historical levels. And third, Q1 2025 was impacted by temporarily lower FWA purchases from a carrier customer that is managing their inventory levels as they transition to our next-generation FWA product, a very good thing on a number of fronts, but admittedly sometimes disruptive in the quarter of transition. We remain bullish on FWA over the long-term and as we will talk about more when we get to guidance in the short-term as well. We expect FWA revenue to come up meaningfully in Q2. On the mobile hotspot…

At this time, we will conduct a question-and-answer session. [Operator Instructions] And our first question comes from Jonathan Navarrete of TD Cowen.

Great. Hey, guys. How are you?

Hey, Jonathan.

Just want to start off with the broader macro environment. Just given the uncertainty in all markets right now, are you concerned that some pipeline opportunities may slip into 2026?

We're not seeing that from our customer base and again, today most of our customers are the large carriers in North America, and we're not seeing any movement of the pipeline.

Okay. Next is just on the T-Mobile Partner Plus program. Can you quantify the potential revenue upside from this?

Okay. So we have a large carrier FWA customer here in North America that's bulk of our FWA revenue today. And we have good growth trajectory with that partnership. The broader T-Mobile Partner program, significance of that is that we can get T-Mobile investment in form of subsidy to our channel portfolio. So what that will do is to create pool on our channel program products.

Okay. And just my last one is just can you talk about the cadence of free cash flow for this year? Should we expect it to be positive for 2025? And if so, what are the levers to achieve that? Thank you.

Yes, sure. Good question. Yes, the short answer is yes. We have message and are targeting free cash flow generation for the year still. And we see that improving. I think the message is consistent with what we said kind of going into the year, even last year call at the end of Q4, which is there's some investments that we're making in the first part of the year in product, new products. And so that's a bit of a use of cash and product investment as well as we had some bonus payouts for the first time in the company's history in a decade at least. So that was a bit of a negative in the first half, but we see the second half being positive and it outweighing the first half to produce positive for the year.

Thank you. [Operator Instructions] And our next question comes from Tore Svanberg of Stifel Nicolaus.

Yes, good afternoon. This is Jeremy calling on behalf of Tore. Just I would like to dig a little deeper into the channel strategy. It sounds like you talked about a large potential deal for the channel business. Can you just give us an idea of maybe where this might be coming from? Any kind of additional color on that opportunity would be very helpful including the timing.

Yes. So like, Steven said, we have good confidence in that large general opportunity closing within the quarter. If you look at our channel strategy in broader sense, we have of course significant opportunity in the large carrier and MSO space, but at the same time, we continue to invest in broadening our assortment solution portfolio when it comes to our two tier distribution. And you'll see a lot of these play out between now and the end of the year.

Yes, Jeremy, to your point and to Juho's good point that as we've talked about, the channel program is something relatively new for Inseego with a new team in the past year and so it takes a while to build pipeline. They're doing that. That's a good thing. There are still large deals though that when they happen, there is not seven huge deals in a quarter, there's fewer and so they matter more now.

Very well said.

Got it. That's very helpful. And I guess if we look at – can you give us maybe an update on the competitive landscape in light of – you have competitors in Asia and with given the current geopolitical environment, what that does to your own positioning? Any update on the competitive landscape would be very helpful.

Look, I think we have a really good combination of assets. So we're an American company. All of our critical IP is created here in San Diego. Like I mentioned, we've done a significant work on our supply chain and operational efficiency, which has been significant in terms of our – improving our competitiveness and we've already engaged the large customer base on the back of these renewed capability. So I think we're suited well to continue to drive growth.

Great. And one last question, if I could. In terms of the gross margin, it sounds like, as product revenue continues to cover margins will probably moderate a bit. But gross profit dollars will be up. Do you have a kind of a new target model that we can look out to over the longer term? And also on the OpEx side if the March quarter run rate is kind of where we should expect? Thank you.

Yes, sure. So yes, we haven't given a target model yet. I think, it's our first year, if you will, new strategy CEO, so we'll get to that. We'll dare I say even have an Analyst Day to do that. So we look forward to doing that at some point soon. But the crux of what we're saying that you're looking at in the high-30s would be a good place to be. That number doesn't exist in nature. It's really the high margin SaaS and the kind of 20s margin for the product business. And so it really depends upon the mix shift, how quickly the software business continues to grow where the product distribution business goes, what the ultimate mix will be, Jeremy. But under the current relationship and proportions, it's a high-30s margin contribution. And then what we talked about on the operating expense cadence and guidance, we expect some of the numbers overall on a non-GAAP basis to come up a bit as we're starting to invest a little bit more in Q2 into that new product portfolio and as well we're seeing a lot of traction from all the good stuff that Steve Harmon is doing on the go-to-market and bringing in a lot of talented folks with some great relationships and deal flow.

Great. Thank you very much.

Yes. Sure.

This concludes our question-and-answer session. I'd like to turn the call back to Juho Sarvikas for closing remarks.

Thank you, operator. Inseego is at an inflection point. The progress we've made in just a few months gives me confidence that we're building something scalable, durable and highly relevant to the market. Strategy, execution and innovation are coming together to unlock a new phase of growth for the company. We have strengthened our leadership team with talent that brings deep experience across wireless, enterprise and go-to-market. I've outlined a plan for sequential growth. The strategy and initiatives that we're now executing on, including refreshing our portfolio, strengthening our go-to-market, improving operational efficiency and accelerating our software and services roadmap are setting the stage for compelling growth. We're transforming Inseego from a broad company into a solutions company, and I will share more detail with you in the months ahead. Thank you again for joining us and for your continued support as we execute this important evolution for Inseego.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.