Hello, and welcome to Inseego Corp.'s Second Quarter 2025 Financial Results Conference Call. Please note that today's event is being recorded. [Operator Instructions] On the call today are Juho Sarvikas, Chief Executive Officer; 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 Investors 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 the expectations, please refer to the risk 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, sir.

Good afternoon, everyone, and thank you for joining us today. My first full quarter here at Inseego has been both productive and strategically significant as we transform the company to lead in the next generation of enterprise connectivity through cloud managed, high-performance wireless solutions. There are a lot of exciting elements to this. And on today's call, I'd like to focus on the 2 most important ones. First, I'll share my perspective on the key highlights in the business for Q2 and the momentum that we're seeing with our products and customer take-up. And second, I'll update you on our execution of the 2 key strategic growth vectors that I outlined at the beginning of the year around scaling the core and evolving to a solutions company. With that, let's start with the first topic, Q2 results and highlights. Q2 was a pivotal quarter for Inseego as we built meaningful momentum with our products and customer traction, and as a result, we see the company now being well positioned to drive long-term sustainable growth. Financially, we delivered sequential growth in Q2 in both revenue and adjusted EBITDA, exceeding guidance through a combination of strong FWA demand, a favorable product mix and disciplined expense management. Steven will walk through the details shortly. Operationally, this was a significant quarter in 2 fronts. First was the market introduction of our next-generation 5G advance in Inseego Wavemaker FX4100 FWA solution. It leverages our new Edge Router OS and significantly upgrade Inseego Connect SaaS feature set, and the mid-Q2 launch has greatly exceeded our expectations with strong early demand. I'll go into detail in a bit. The second big item for the quarter was that we successfully renewed our stocked MiFi products with our 2 large Tier 1 carrier customers while at the same time,…

Thanks, Juho. Hi, everyone. Thank you for joining us. I'd like to cover 3 topics today. First, I'll take you through the Q2 2025 financial results. Second, I'll provide a brief update on the further strengthening of our capital structure around the convert paydown and our new working capital facility. And third, I'll share some color on the financial profile of the business and provide guidance for Q3 2025 as we head into the second half of the year. As we always do, we'll, of course, wrap up by opening the call to your questions. Let's start with the Q2 financial results. We delivered sequential growth in both revenue and adjusted EBITDA in Q2 2025 and that performance was paired with strong gross margins and disciplined spend to continue meaningful operating leverage and the favorable results. On the top line, total revenue for Q2 was $40.2 million and was driven by better-than-expected FWA volumes, a large channel deal and continued execution in our services offerings. For only the second time in the company's history, Q2 2025 marked a notable dynamic where FWA revenue surpassed mobile hotspot revenue. We see this as an indicator of the execution of our growth strategy and the ongoing shift in our product mix with the tangible data point around the successful ramp of our new FX4100 product that Juho talked about. As expected, mobile revenue came in lower year-over-year on the record promotional activity in 2024 and the timing of new program launches that are expected to occur later in 2025. Our strong services revenue remained consistent at $12 million for the quarter, providing stable, high-margin contribution to results. Non-GAAP gross margin was a solid 41.2% in Q2, reflecting a favorable product mix and the strong FWA results. Looking at non-GAAP operating expenses, Q2 2025…

[Operator Instructions] And your first question today will come from Lance Vitanza with TD Cowen.

Thanks, guys. Can you hear me? .

Yes.

Yes. Great. Congrats on the quarter. A couple of questions, if I could. The first is, could you talk a little bit more about this multimillion-dollar enterprise agreement with the industrial S&P 500 company? It would appear that, that validates the channel partner model. But I'm just wondering how close or how far does this leave you with the end user, with the client? And then if you could just maybe talk about why you won there, price versus quality versus service versus I'm made in America versus the breadth of the portfolio and how quickly -- slowly do you expect wins like this to sort of unfold going forward?

Lance thanks for the question and thanks for joining us. I'll take that. So yes, you're right, it's a multi-million dollar FWA deal with an industrial S&P 500 company. The way we ended up discovering and closing the deal was through our IGNITE -- Inseego IGNITE channel partner program. So we have broad channel and the people in many places. The value proposition that we had was unique in that we were -- we partnered very strong, together with the partner to make sure that we had sufficient support or the technical validation, and it really came down to both the hardware and the software. The partner was very keen in having managed ability and visibility to the entire fleet.

And if I could just -- on the guidance. I guess, how much of the Q3 revenue -- I mean how much Q3 revenue and EBITDA was if any, was associated with that business that you mentioned you pulled out of the forecast due to the congressional lag there?

Yes. So to be -- thank you for inquiring. Our guidance, our forecast has -- while we go have no assumptions of that deal coming back. So we are not including any of it in our forecast or guidance.

My question, though, I guess, was like if that had been in what would that is -- presumably the guidance would have been higher.

Yes, got you. So yes, the deal was north of $10 million. And so whether the deal closed in Q3 or Q4, both, but to the point for the back half of the year, there would have been $10 million plus more revenue on the product side of the business.

Okay. Great. And then -- so then what are the puts and takes depending on the $40 million to $43 million, is any of that range related to potential macro factors? Or does it all sort of assume kind of benign macro environment and just hinges on what the particular customers sell-through might be or are there other factors at play?

Lance, maybe to you -- this is an opportunity to complete my answer to your first question. You're also inquiring on the role of channel for us and what to expect from that go-to-market motion. As I said, like our -- in media priorities, scale with big carriers, big MSOs, and they continue to invest in as far as SMB or channel program. So the part of the Q3 variability, of course, is how much business and opportunity will close in channel.

And to add on to -- you have good point, Lance, to pick up the rest is the view for Q3 is really based on basic blocking and tackling in the business. There's no silver bullet or Herculean assumptions. We're seeing some modest volume growth with the mobile side. And as you heard a lot about, we're seeing nice traction on the carrier side with the new FWA product. And so we have pretty good visibility into that for the current quarter, for sure. And so it's really based on what we're seeing at the carrier. We're not really getting out over our skis on anything on that front.

Great. It's a welcome change from -- before the current leadership team took over. So thank you for that.

Your next question today will come from Tore Svanberg with Stifel, Nicolaus.

This is Jeremy on for Tore. And let me add our congrats on the solid FDA results and the new product launch. Maybe a quick follow- up on the enterprise win. Can you provide any details on the mechanics of it? What type of revenue recognition that goes into that? Is this kind of how an agreement might last? And how -- is there anything we can track in terms of a new potential customer wins in this enterprise segment?

This specific -- thanks, Jeremy, for joining, a great question. This specific deal that we mentioned as part of the prepared remarks was specific to Q2, and we're, of course, working on the pipeline for Q3 and beyond.

Got it. And then I guess maybe looking at the cash flows, it looks like accounts receivables up a lot. I understand that's probably from channel fill like the new product launch. Can we expect some improvement on that cash flow front as you kind of -- as the ramp continues and you increase the collections, how should we think about cash flows in this respect?

Yes. So the short answer is our goal is consistently to drive cash for sure. And obviously, as a profitable business, that affords us that ability. What we're also balancing though is investing in product and building inventory to supply the demand that we're starting to see tick up a little by little. And so we would rather invest and build a little bit more, particularly as we're launching a pretty robust product portfolio in the second half of the year, more so candidly than the company has ever done in probably 5 or 10 years, we're pushing out a whole bunch of new products in the second half. So it's going, as you said, into good investment. The 1 thing that you called out properly is that on the balance sheet, there's a little bit of an uptick in AR, which is for all the right reasons, which is there's really a big uptake at the end of the quarter in our new FX product or FWA product. And so we're thrilled with that. Everything else was kind of business as usual.

Great. That's very helpful. And maybe 1 final question on the new FX4100 launch. Are there any potential catalysts that we can look out for, maybe promotions? And maybe even looking out 12 to 18 months, where do you see FWA in terms of proportional to mobile? Do you expect this 50/50 to continue or maybe FWA to be a kind of more consistently exceeds mobile revenue over time?

Thanks, Jeremy. I'll take the first part. If you look at the FX4100, the -- our unique formula really is if I start from the solution side, performance, I would actually add technology leadership there. So 5G advanced, device performance, but they even maybe more importantly, ease of deployment as well as enterprise-grade feature set. That makes a pretty unique combination. If you just look at what the solution stands for and what enables for our partners to do. The second key catalyst to your point, less so on promotion, although we do have a great promotional framework, but I'm very pleased with the excellent go-to-market collaboration that we've had together with our partner, marketing, field sales, overall enablement. If I compare this to the engagement and also solution maturity with the previous generation product, which is also very successful, this third generation FWA definitely is driving for a much larger impact in the marketplace.

Yes. And good question on the revenue mix. If the strategy kind of coming to fruition, right, where the FWA market, we're beginning to win more and more share, consolidate that market on the mobile -- sorry, on the mobile side. And so that's kind of a nice market that will continue with some modest growth quarter-over-quarter. But we're pretty bullish, as you can hear and tell and see it, and I go to stand and check in the market, on the FWA trajectory. And so we see that continuing to be a positive dynamic in so far as revenue mix and the presence of FWA in the model.

If you look at the overall macro picture, what I would say is that FWA is only start of the journey, like the adaptation curve were nowhere near the peak. And maybe even more importantly, if you look at FWA for enterprise end market, that has not advanced as fast as the consumer side. And we're, of course, participating in enterprise. So I view the TAM growth is something that's highly appealing in addition to our ability to participate.

Great. One last question, I'm sorry. It sounds like your software and services feature set is really expanding and 1 of the key front points. Is there maybe a path to maybe directly monetizing that to see potential expansion in the services line of your revenues?

Yes. So it's a good question. And the short answer is yes. The software functionality, both MDM like Inseego Connect is really a growing investment and growing uptake from customers on the value prop with the product side of the business as well as subscribe BSS TAM-like functionality that we provide to carriers and the investments we're making there on everything from subscriber management, order management, contract management is something that we look to continue to grow and invest in and yield higher revenue as we move forward, for sure.

And maybe to double click on the Device Cloud or Inseego Connect with the MDM functionality, the immediate focus this year has been to enable a broader TAM for our product business by enabling partner integration through API library. I'm actually very pleased how fast the team has been able to act and move in doing that enablement. The feedback from our partners who are now -- right now working on the integration has been excellent. Once this work is complete, and also in parallel, we've released multiple new hero features and what you should expect us to see us do is on the device cloud side continue to develop more value-added feature. And of course, with that, we would target a higher value capture as well.

This will conclude our question-and-answer session. I would like to turn the call back over to management for any closing remarks.

Thank you for the colorful questions. To close, Q2 was an important strategic quarter for Inseego. We launched the FX4100 to strong demand. We renewed our key MiFi relationships and we secured a major new Tier 1 carrier win across both mobile and FWA. These milestones are the data points that validate our strategy as we're building the foundation for a sustainable growth and profitability. I want to acknowledge our exceptional engineering team alongside with the broader Inseego organization whose dedication and teamwork continue to drive our success. Thank you for joining us today, and we look forward to updating you on our continued progress.

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