Inseego Corp (INSG) 2021 Q1 法說會逐字稿

Hello, and welcome to Inseego Corp.'s First Quarter 2021 Financial Results Conference Call. Please note that today's event is being recorded. (Operator Instructions)

On the call today are Dan Mondor, Chairman and CEO; Bob Barbieri, Interim Chief Financial Officer; Ashish Sharma, President of IoT and Mobile Solutions; and other members of the management team. During this call, non-GAAP financial measures will be discussed. The reconciliation of 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 discussion on factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in our Forms 10-K, 10-Q and other SEC filings, which are available on our website. Please also refer to the cautionary note regarding forward-looking statements section contained in today's press release.

I would now like to turn the call over to Dan Mondor, Chairman and CEO. Please go ahead.

Thank you. Hello, everyone. It's great to be with you today. Let me begin by saying that today this company is better positioned than it ever has been on almost every possible measure. As I look back at our progress over the last few years, Inseego is a very different company and in a much stronger position. This is illustrated in our first quarter results compared to last year. We reported a 120% increase in our combined 5G and software as a service revenue over last year and gross margins over 35%, up over 400 basis points. We ended the first quarter with approximately $60 million in cash on our balance sheet and zero bank debt.

There are 4 predominant reasons for our remarkable transformation. First, we have greatly reduced our customer concentration by expanding our 4G and 5G carrier customer base in the US and increasingly in international markets. Second, our rapidly growing software business is yielding recurring, higher margin revenue on top of device revenue, which contributed to our strong gross margins this quarter. Third, carrier customers are embracing our recently launched 5G fixed wireless access products, and we see fixed wireless access as a major growth driver for the company going forward. Fourth, our first enterprise 5G fixed wireless products were launched and sold this quarter in North America, EMEA and Asia Pacific.

As we enter 2021, we have just announced the biggest win in company history with the launch of our 5G MiFi hotspot at T-Mobile, which has quickly become our highest volume 5G customer. T-Mobile has also adopted our Inseego Manage software platform, which adds recurring subscription revenue to those hotspots sales. We are making solid progress in international markets with some initial 5G customer deployments, with more to come. We continue with testing, regulatory approvals and customer contracts in multiple regions. While it's taking a little longer to establish business in new regions, we see international markets as an important growth driver.

The most important development in the last 6 months has been our 5G fixed wireless access portfolio. And the great news is that every customer dialogue now includes fixed wireless in addition to our hotspots. It is key for mobile operators to create new revenue streams to generate a return on their capital investment and acquiring spectrum and building national networks. And it's not only relevant for consumer home broadband and entertainment but also in the enterprise and private network space. We believe both are very large market opportunities with a wide range of use cases. And I'm very pleased to report that T-Mobile has certified 3 of our fixed wireless access products for their enterprise business, and we're working closely with them to support customer engagements.

And this is central to our 5G enterprise initiative announced late last year, and it goes far beyond the work-from-home market. 5G enables new technologies for the enterprise, such as Edge AI and Edge Computing. We have existing 4G customers such as Dell, VMware, and other enterprise technology leaders. And all of our dialogues with them now include our 5G product lineup. You've seen recent announcements of our new enterprise products and channel partners in North America, EMEA and Asia Pacific with more to come.

Now let's turn to our new software as a service offering. Almost every conversation we have with carriers and enterprise customers involves our software platforms, which enable them to onboard, manage and secure the growing number of 4G and 5G devices on their network through centralized cloud management. Our SaaS business has grown significantly over the last 12 months, representing a healthy 24% of our revenue in the first quarter. Our 4G business continues to be strong, and we continue to add new customers. We saw a surge in demand for our 4G products starting in March of last year with the pandemic driving the need for work-from-home solutions. That helped us win AT&T as a 4G customer, which means our products are now being sold by all of the largest US carriers. While 4G is down from 2020 levels, we are seeing higher demand levels than we did pre-pandemic.

The bottom line is 4G will remain an important part of our business, and it's key as we continue to land and expand 4G customers to 5G. We have positioned Inseego as a pure play 5G company. Ultimately, all our efforts are aligned on the global 5G opportunity. This led us to divest our Ctrack fleet-tracking business in South Africa, which is not a target 5G market for us. In addition to reducing our head count by over 540 people, or 53% overall, the divestiture will increase revenue per employee to over $600,000 on a proforma 2020 basis. We think this is an important financial metric for the investment community to know.

Finally, I want to address the global semiconductor shortage. Our business has not been impacted thus far, thanks to our deep and long-standing direct relationships with key component suppliers in addition to our manufacturing partners. Through our proactive approach, we have avoided delay in customer deliveries. We expect the current conditions will extend through the end of this year and likely into 2022. Our leadership team will continue to work closely with our silicon partners and take necessary actions to secure supply.

With that, I will hand off to Ashish who will go into further detail on our incredible momentum in 5G and cloud solutions and some groundbreaking customer use cases. Ashish?

Thank you, Dan. Over the past year, our customers have relied on our innovation to accelerate broadband adoption through our state-of-the-art 4G, 5G and cloud solutions while protecting the end users from security threats. From my numerous conversations with customers, it is clear that our 5G technology, along with our cloud innovations, will form a powerful engine for their business transformation and growth as their technology needs continue to evolve at a rapid pace. From a product revenue perspective, we saw strength in our 5G mobile broadband portfolio and Inseego Manage cloud portfolio, which now accounts for 20% and 24% of our overall business respectively. This combined 44% is at 2x from a year ago.

The mobile broadband business continues to build up, and we're experiencing great reception of our M2000 and M2100 5G solutions from all customers. The consistent feedback we are receiving from our carrier customers is that our technology is far superior to any other similarly categorized product in the market. We secured another 5G operator, Sunrise in Switzerland, the commercial launch planned for early June. We also just launched the MiFi 8000 in Canada with Rogers and Fido. Many new carrier customers in international markets are trialing our 5G solutions, and we anticipate new launches in the coming months.

Moving to 5G FWA. We just released a series of new Wavemaker products focused in both carrier and enterprise markets, including 2 indoor activewear products, FG2000 and FX2000, and a rugged outdoor product, the FW2000. These products are certified for use in many different regions globally and have recently been certified for use on the T-Mobile network. This is a major accomplishment for Inseego. Our focus now is on implementing joint go-to-market strategies to maximize our success in this very early market.

In addition, on the enterprise side, I'm happy to report that we have generated our first Wavemaker revenue by shipping units to North America, Australia and Europe. This was accomplished through our growing list of channel partners such as Scansource, Ingram Micro, Synnex in North America; Bauer Tech in Australia; and Sphinx, Solid State Supplies and others in Europe. In terms of our enterprise market push, we are seeing some exciting use cases even at this early stage of 5G deployments. Let me provide some examples of customer projects we are working on.

In the area of traffic, transportation and logistics, a global leader in transport solutions is deploying our 5G CPE on lampposts in the UK to support video streaming. They are starting with traffic monitoring, but ultimately the goal is to support autonomous vehicles. A smart city in Georgia, Peachtree Corners, is deploying our 5G solutions on streetlights and other locations where fiber would not be economically feasible, to enable smart traffic control, management of autonomous vehicles and other use cases. A global leader in package delivery is looking at connecting remote hubs and depots in rural areas where cellular reception can be greatly improved with our high-gain products.

Our solutions enable many retail use cases as well. Net4 Limited, a system integrator in Europe, is connecting a video feed through our 5G solutions in conjunction with their AI platform. Their objective is to provide a solution for retail stores to monitor shelf stock, spillage, theft surveillance, et cetera.

In the US, a leading retail chain is trialing Wavemaker as a connectivity solution for vaccine distribution locations. We're also seeing opportunities in the private network space. A government agency is evaluating Wavemaker for secure private networks. One particular use case for them is deploying secure networks in remote areas where cellular coverage is limited.

The transformation of our business to more software and subscriptions continues to show great progress as we achieved 11.5% quarter-over-quarter growth in subscriptions. We saw 5 consecutive quarters of our 40% growth in our recurring software revenue, excluding Ctrack. Dan mentioned earlier, AT&T now carries the MiFi 8000 but it is important to know that it will also make Inseego Connect available for enterprise customers. We are seeing this in almost all of our customer dialogues that the technological capabilities of our devices coupled with our software management layer is a powerful combination. It is examples like this that give us confidence that we will continue to grow software beyond its current 24% of total revenue.

Let me conclude with some thoughts on our product portfolio vision. Access to corporate data anywhere and everywhere securely has become the beating heart of the new enterprise. Our 5G and tower platforms are built with extensive reach, massive scale and multiple layers of security to help drive this digital transformation. We are excited about our position in the market. We're executing and innovating with speed. I'm so proud of what our 5G and cloud teams have achieved.

Now I'd like to turn the call over to Bob.

Thanks, Ashish. First off, let me say how happy I am to be here on the call with you today. Given today is my 1 month anniversary and I've not had the opportunity to speak with many of you, let me start off the call by introducing myself and offering why I was attracted to join Inseego. I have over 25 years of experience as a senior executive including being the Chief Financial Officer at growth software, cloud, and technology companies, and specifically public companies such as Apogee Enterprises, Lawson Software, and TriZetto. I was brought on by the Board of Inseego as Interim Chief Financial Officer with a mandate to support the company's transition to a high growth 5G and SaaS company.

I would like to now review the results of our first quarter of fiscal 2021. Q1 revenue was $57.6 million, up about 1.5% from Q1 of 2020. We should recall Q1 2020 benefited from the onset of the COVID demand surge, which began in the final weeks of the quarter. The favorable year-over-year comparison is largely due to growth in 5G and software revenue, as Dan and Ashish highlighted. The sequential decline results from a lower level of the surge demand for 4G hotspots, albeit they are running at higher levels than the pre-pandemic activity.

First quarter IoT & Mobile Solutions revenue was $43 million, up 1.3% year-over-year and down 40% from $ 72.1 million in Q4. Inseego Subscribe subscriptions were up 11.5% sequentially and up 175.7% year-over-year, which helped drive the growth versus the prior year. Sell-through of 5G hotspots continues to be strong, and we expect an increase in new shipments in coming quarters as units ordered harmonized with the ongoing demand.

Enterprise SaaS revenue for Q1 was $14.6 million, up 4.8% quarter-over-quarter, and relatively flat over the prior year. The sequential increase reflects both better sales as we recover from lockdowns in South Africa and the continued strengthening of the Rand versus the U.S. dollar.

With respect to the sale of Ctrack South Africa, the transaction continues to progress according to schedule. And we'll continue to anticipate closing the sale at the end of the quarter, subject to regulatory approval and other closing conditions. This will lead to approximately an additional $36 million to our cash balance based on the current exchange rate.

Speaking of cash balance, cash at the end of Q1 was almost $60 million, including cash classified for held for sale up almost $20 million from Q4 of 2020. The increase in our cash balance reflects the net proceeds of $29.4 million from our ATM offering in January and solid cash collection offset by our need for higher levels of in-transit inventory as we transition from air to ocean shipments. We're taking these actions to better manage cost as well as buying long lead time components to ensure we can meet customer delivery schedules going forward.

From this point forward, I will focus on non-GAAP measures. A reconciliation from GAAP to non-GAAP is detailed in our earnings release and is found on our IR web page. For IoT & Mobile business, gross margin was 26.1%, up 50 basis points from the 25.6% in the prior quarter and up approximately 560 basis points compared to Q1 of 2020. Gross margin improved both sequentially and year-over-year, the results of a higher mix of 5G and Inseego Manage revenue and the decline of lower margin 4G sales from 2020 high as well as solid execution throughout 2020 and 2021 year-to-date and improving supply chain efficiency. Going forward, we expect a higher mix of 5G and software revenue and new initiatives to improve operational efficiency will lead to better economies of scale, which translate into improved IoT and mobile gross margins steadily as the year progresses.

Our Enterprise SaaS Solutions gross margin for Q1 was 63.8%, up 130 basis points from 62.5% in Q4 and down 20 basis points from prior year. Total company gross margin for Q1 was 35.7%, up 410 basis points from 31.6% in Q4 and up 420 basis points from the 31.5% in Q1 of 2020. As discussed earlier, the increase is predominantly a result of better sales of higher margin 5G products and software uptake in our IoT & Mobile business.

Q1 OpEx was $26.7 million, down $5.6 million, compared to $32.3 million in Q4. The decrease was primarily a result of the research and development spending related to our 5G product programs with the capitalization impact over the course of the software's useful life. We capitalize our external use software on a product-by-product basis per the accounting guidance. Therefore, the capitalization and amortization impact to our R&D will cause certain volatility in our quarter-over-quarter operating expenditures. In addition, our testing and certification was lower versus the prior quarter. Sales and marketing and general administrative charges remained relatively flat, with the delta being largely seasonal changes due to product launches and annual audit fees.

Our Q1 non-GAAP net loss was $7.7 million or negative $0.08 per share versus $6.9 million or a loss of $0.07 per share in the prior quarter and a loss of $5.7 million or $0.06 a share last year. This result reflects our ongoing investment in 5G and SaaS product development and additional sales resources offset by stronger gross margins.

Adjusted EBITDA for Q1 was a loss of $900,000 versus a positive $7 million in Q4 and a loss of $1.7 million last year. For additional details on non-GAAP and adjusted EBITDA results, please refer to the reconciliation tables in our press release.

Finally, some thoughts on the rest of 2021. As stated previously, the company continues to believe that the second half of this year will be better than the first half driven by 5G sales growth from existing customers, new 5G carrier deployments primarily internationally, revenue growth from our entry into the enterprise market and increased software revenue across our product line.

We're bullish due to the many positives that have been articulated today. With the expected closing of the Ctrack South Africa sale at the end of the second quarter, our financials will more accurately reflect the 5G pure play as mentioned by Dan.

With that, let me turn it back to Dan for closing remarks.

Thanks, Bob. We're delighted to have you on the Inseego team. I want to close by expressing my sincere thanks to our dedicated employees who continue to do an amazing job in these challenging times. They are the driving force behind our numerous accomplishments, and I can't thank them enough.

We've made significant investments over the past 2 years to create a best-in-class 5G and software solution portfolio and in sales and marketing resources to capture significant market opportunities. These investments have begun to be reflected in our results.

The strength of our portfolio has helped us succeed in initial customer engagements across multiple regions in the developing fixed wireless access market with carriers and enterprises. We have excellent customer relationships and are seeing tremendous traction with our industry-leading 5G products and new software as a service solutions. This gives us more confidence than ever in our ability to become a high-growth, high-margin 5G and SaaS global solutions company generating strong free cash flow. With a strong second half, you can only imagine what 2022 will look like. Thanks again, everyone.

(Operator Instructions)

Our first question comes from John Marchetti with Stifel.

Dan, if I could, just a couple of quick questions on the overall business trends in the enterprise. You mentioned some of the initial sales that you saw here in Q1. How do we think about that as we start to move through the year contributing to that second half strength? I mean obviously big focus on 5G products obviously with mobile hotspots and things of that nature. But how do we think about the enterprise opportunity? Is that more a '22 event or do you think it's a real contributor to that second half growth outlook you just highlighted?

John, great question. Well, as you know, we've just recently launched our enterprise 5G portfolio. So it is gaining traction in the market. Terrific that T-Mobile for Business certified 3 of our products, indoor and outdoor fixed wireless products. We're starting to work with them on market opportunities. And then broadly through our distribution channel that we described in North America, EMEA and APAC. So we see it beginning to contribute in the second half. It will be a ramp as usual, but we have the portfolio, we have the software solutions to go with it, and the distribution in our target market. So it's a ramp in the second half as we see it, and certainly carry great momentum is what we're expecting to see going into '22.

And Dan, just as a follow-up to that, is there a better margin profile with those enterprise products relative to maybe the mobile hotspot products. And obviously the software piece is a very different margin profile, but how do those solutions stack up, I guess, margin-wise relative even to the 5G mobile hotspots?

Yes. As we all well know, the enterprise market in general has a different gross margin profile. There's the benefits of the distribution. But I will say this, yes, it is higher than, if you will, the kind of the carrier gross margin profile. As far as this fixed wireless access products, I would expect somewhere in the mid 40s.

And then maybe just the last question for me and I'll jump back in the queue. From a software perspective, obviously a lot of it -- you mentioned some of the carriers that are now offering alongside. But as you go to market in that enterprise market as well, is there a different attach rate there for software? Is it higher? Is it lower? Just curious how that stacks up relative to what you're seeing on maybe some of the mobile hotspot side as well.

Yes. A great question in addition, John. Thank you for that. Well, we're seeing strong attach rates across the board. As you know, and as we announced, T-Mobile has adopted our Inseego Manage solution as part of their initial 5G hotspot deployment. AT&T is now adopting Inseego Connect to offer to their enterprise customers. That's as part of the launch of the new 4G hotspot business with them. All of the conversations with enterprise are all for the right reasons, that they want to look at how they can deploy, how you acquire, how you manage and how you secure their enterprise. So they don't have their own, so naturally it's a package solution.

And we're also seeing an offering we call Inseego Select. It is kind of, if you will, a bundled offer for select sales partners that would sell the complete package kind of in a rental type of model, which will add to recurring revenue. Good recovery, high gross margins. So the answer is both. We're seeing strong interest and attach rates in both carrier and enterprise, John.

Our next question comes from Mike Walkley with Canaccord Genuity.

Great. I guess first place to start is, just good to learn that 4G levels are above pre-COVID areas. But just trying to get a cadence of, with the work-from-home and school-from-anywhere type of surge in demand, how should we think about the cadence for that business and the overall maybe IoT and Mobile Solutions businesses. Is Q1 the trough, kind of a seasonally softer quarter and it builds throughout the year, or is there still maybe a pocket of 4G coming out in Q2 and then a stronger second half of the year?

Yes. Mike, thanks very much. And also a great question. Well, as we've said and mentioned on the earnings call previously, we are seeing our 4G demand levels for our newest generation hotspots selling at higher levels than pre-COVID. So that is what we're seeing, and we see no evidence of that trailing off.

Now I will say this, the onset of COVID and the dynamic that played out towards the end of the first quarter drove 4G revenue, which was a combination of both. Some of our older legacy products that were coming near end of life as well as our newer generation, our CAT 20, CAT 22 LTE products. So the dynamic that played out from 2020 to this year is, a number of those end of life older 4G products have just tailed off. They were sold out. They're no longer sold in the market. They were naturally reaching their end of life, and in fact an uptick in demand accelerated the end of life. So that revenue is being substituted now by our newest generation 4G products. And that's what I referred to as the run rate we're seeing is higher than pre-COVID of those. And of course now 5G is coming into the mix, software service is coming in the mix.

So long story short, there's a substitution effect going on in our revenue composition. The good news is, what's driving revenue now is our latest-generation LTE in terms of that ongoing work-from-home demand and 5G and some of the newer products. So we have fresher newer revenue that's making up our Q1 and will make up the quarters going forward.

And then, as we think about gross margin trends, maybe on a short-term, is there any component constraints that are tightening the inventory creating maybe some gross margin headwinds as you maybe expedite shipments or try to track down components? But then it sounds like over time with software and with the mix changing, you should see gross margins improving pretty steadily throughout the year.

Yes. I've heard an expression called chipageddon. I don't know if that one's caught on yet, but, again, great question, Mike, and thanks for the question; it's obviously topical. So I think as we said, we're doing a good job and we did get out in front with the semiconductor dynamic going on with our key partners. We did advance purchases to secure component supply, which is reflected in some of our use of cash. And we see this condition prevailing, I think, through the end of this year, likely into the early part of 22.

Now there's -- a lot of the technology companies are standing up new foundries, billions going in. So there will be the recovery in supply. So far, we've not seen -- we've not had customer deliveries impacted, we've not seen price increases. But having said that, if that does begin to occur, we will go back to our playbook last year where, based on the demand, we've passed on price increases, and we would fully expect to do that going forward. So that's a conversation we have with our customers, but I think the macro conditions are well understood. Going to keep our eye on the ball, working on the forecasting and pre-planning, spending a lot of time with our customers talking about future demand and with our key silicon suppliers securing supply.

All right. Last question for me and I'll pass the line. Just good to see Sunrise Switzerland is a new 5G customer. Just any commentary on pipeline for adding new carrier customers for your fixed wireless or overall hotspots for 5G in 2021?

Well, yes. In North America, I think we've talked about that, we're super excited about fixed wireless opportunities in North America, throughout U.S and Canada. Great start having T-Mobile certify 3 of our fixed wireless products. It's fantastic. All the conversations we're having around the world involve both hotspot and fixed wireless. We're adding new carriers there. We're pursuing enterprise business. I would put it all in 1 category that we expect fixed wireless to start to take hold in the second half of this year in a big way. And I think there's 2 elements going forward. One is the consumer, the home broadband entertainment. We think the enterprise with the number of use cases will be an even bigger playbook for fixed wireless. So we're spending a lot of effort on both enterprise and working with the carriers. Tons of RFPs, tons of conversations. I think the markets are getting their bearings of how fixed wireless will play. Hotspots really started at first, but now it's coming on strong. So we see good momentum going forward in fixed wireless.

Our next question comes from Lance Vitanza with Cowen & Co.

I guess I have 2. The first is, you've got the company on sound footing, but revenue came in a good bit softer than we were looking for. It sounds as though you were neither surprised nor disappointed with the revenue performance in the quarter. And if that's correct, it just leads me to think that the problem is to a certain extent around messaging. And so, understanding of a new seasoned CFO in place, will Inseego adopt financial guidance at any point over the year, if not today, perhaps in conjunction with 2Q earnings this summer?

Lance, thanks for the question. Well, as we were coming off and we indicated on prior earnings call that we were going to see a lower level of demand for our 4G. Couple of things, I mentioned that Q1 of last year, early in the Q2, had a number of our older generation 4G USB prior-generation hotspots that had become end of life, so that's a year-over-year factor in comparison. But in general then, we were now to our 5G products ramping up and our 4G LTE, the latest-gen hotspot products ramping up. So as I said earlier, in one of the questions I responded to, there's a mix, a very different mix.

So we saw the first half of this year generally a little lighter because of post COVID. The good news is though, the demand level of our LTE hotspot is higher than pre COVID. 5G is now a layer on top, it's not a substitution effect. And as that builds, as fixed wireless kicks in, as 5G enterprise kicks in, software, we see a build throughout the year, and that's our comment of second half stronger than first half.

On your question on guidance, we don't think it's prudent at this point in time. We did not provide guidance. There's a lot of dynamics going on in our business; all the things I just mentioned, which are nicely additive, as well as the Ctrack South Africa sale. We want to get that behind and then we'll revisit how we can communicate to the markets. But we just don't feel it is wise to provide guidance previously. We still think that we're not at the point that that's prudent. And we'll determine when we feel comfortable in future. I think it's important to know that with all these new products, you need to reach a normalized run rate before you have your bearings on what the ongoing revenue will look like. So a lot of factors behind not providing guidance. It's not that we were not interested in doing it or we're just somehow negative against it in general; it's just the dynamics going on the business that it's just not prudent at this point.

Fair enough. Okay. So the other question I had, and Bob, I think you had mentioned on your prepared remarks that the 5G sell-through in particular remains strong in that you expect -- I think if I get it right, you expect orders to harmonize going forward. So what I took from that is that the carriers were working off inventory in the quarter. Is that right? And if that is the case, then did you, or could you, say when you expect to see the benefit of the replenishment, so to speak? Is that a 2Q or is that a second half of that?

Yes, good question and thanks. It kind of dovetails a bit to what Ben just said. We do see those trends continuing and almost in perpetuity and specifically that's a 2Q trend, but we're also looking forward to building that momentum, and then that will shape more color around forward look, and will also shape, maybe rethinking the terms of quantitative guidance. So all of these trends are not an if, they're all when. So what we're trying to do is just gauge that level of momentum, that level of adoption, so we can kind of move forward and articulate more strongly those details, if that's helpful to you.

Yes, it is. Appreciate it.

Yes. Thanks. So I guess I would add one other thing, by the way, that our highest, our largest, 5G account now is T-Mobile. It has typically been for this company, Verizon. So Verizon is going on strong, demand level is good. It's not a cannibalization, by the way, of 5G to 4G. That's not what's occurring. It's additive. And T-Mobile thankfully has jumped out in front, is the largest 5G customer in Q1. And we expect to add more. So I think the trend is up to the right. The timing, we need to work through that, and once we get there, we'll have our bearings and be able to come back with better information. Okay.

Our next question comes from Michael Latimore with Northland Capital.

This is Aditya on behalf of Mike Latimore. Could you tell me how much did international revenue contribute in terms of percentage?

Yes. Good question. Well, I guess just long story short, we don't break out the composition of revenue that way. So we are growing our international business, as you know, through a number of the carrier win announcements; we talked about Western Europe, Japan, Australia, other places. So international revenue is growing. It is still currently a relatively small percentage, and I think until such time it reaches critical mass, we will then talk about absolute numbers. But at this point in time, we're not breaking out international revenue as a percent of the business.

All right. Fine. Any idea as to when you might actually expect the 5G sales to exceed the 4G sales?

I would expect to see that in the back half of this year. I think we commented -- we had a question like this previously on a prior call. So that was a comment I made then. Yes, same view, no change.

Our next question comes from Scott Searle with ROTH Capital.

Dan, Bob, I hope you guys are doing well. I apologize, I got on the call a little bit late, so I apologize if this is redundant. But did you give any mix or breakdown between 4G and 5G? And I just heard the prior comment now T-Mobile is your largest 5G customer. Is T-Mobile your largest overall customer?

Scott, great questions. Well we did say on the call that 5G was 20% of total revenue. And if you combine 5G and SaaS, that reaches in the neighborhood of 44% of total revenue, so that's just showing the differential in mix. T-Mobile isn't yet our largest customer. There's a large run rate of 4G LTE sales continuing in Verizon. It is, however, our largest 5G customer in terms of new products. So that's kind of the landscape there.

Good. And maybe to follow up on the Verizon account, there were some issues with Franklin Wireless recall this quarter. I'm wondering if you've seen any pickup related to that. Do you get any of that opportunity or is your product more high-end than them using, for example, a lower end [or big] solution?

Yes, so great question. They really don't cross over because it fundamentally is exactly, as you said, our product is a higher end product geared for enterprise. Some of these other products you mentioned of Franklin are so-called lower end products. So they really actually don't overlap in the target markets. So I guess Franklin is working through these issues, but there, again, it's not really a market sector that pulls on our product. So that's frankly a benefit the way we'd like to see it.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Dan Mondor for any closing remarks.

Great, thanks. Well, great questions to end on. Thanks again, everyone, for joining us today and tuning in. We're off to a great start to what we certainly expect to be a fantastic year with our new revenue streams from 5G, fixed wireless, SaaS and enterprise as the main event and recurring revenue growth with strong margins. So thanks again, everyone. Take care, everyone.

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