Inseego Corp. (INSG) 2026 Q3 法說會逐字稿

Hello and welcome to Inseego Corp.’s third quarter 2026 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 of factors that could cause actual results to differ materially from 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 contained in today’s press release.

With that, I’d like to turn the floor over to Juho Sarvikas, Chief Executive Officer. Please go ahead.

Good afternoon everyone and thank you for joining us today. Q3 played out largely as we described in our last call. Revenue was $33.3 million and adjusted EBITDA was a loss of $1 million, both within our guidance ranges. Mobile revenue increased sequentially while FWA revenue declined, reflecting the customer dynamics we discussed last quarter, a delayed recovery at our largest FWA customer and lower orders from our newest US Tier 1 customer following its large Q2 purchase.

While these results were in line with our expectations, I’m not satisfied with our overall performance. These challenges in our legacy business, which we’re now going to refer to as Inseego North America with the October 1 closing of our acquisition of Nokia’s FWA business, are impacting our current quarter, where the later timing of our new FWA launch and higher carrier inventory levels are affecting our outlook for Q4.

I have taken steps to address the engineering and product delivery issues that I highlighted last quarter, including bringing in a new CTO and beginning to restructure the engineering function. We have also reduced our cost and spend in response to lower revenue, putting us on a path back towards profitability and positioning the business to execute better in 2027.

At the same time, as I just mentioned, we’re pleased to have completed the acquisition of Nokia’s FastMile FWA business on October 1. This addition meaningfully expands Inseego’s broad portfolio and customer relationships and added world-class engineering. I’ll discuss each of these developments today, starting with a closer look at Q3.

With that context, let me share my key takeaways from Q3 before turning to the dynamics we’re seeing now in Q4 and the actions we’re taking to strengthen the business as we close out 2026 and position ourselves for 2027. In mobile, carrier purchases ahead of anticipated component price increases and supply uncertainty supported the quarter’s performance. That purchasing behavior has also contributed to an uneven ordering pattern. FWA remained below the level we needed it to be.

The recovery at our largest FWA customer did not materialize in Q3, and our next-generation product remains central to rebuilding that business. Our newest US Tier 1 customer also continued working through its large Q2 inventory purchase, limiting new orders.

As expected, channel activity was solid with new deployments and repeat orders across enterprise and public sector customers, several included in Inseego Connect subscriptions, reinforcing the value of combining our devices with cloud-based management. We also secured a new premium-tier MiFi award with our newest US Tier 1 carrier customer for the first responder market. This adds a new slot and represents a market share gain for our mobile business.

We expect revenue contribution around mid-next year, providing a new growth opportunity for 2027. Overall, Q3 played out broadly as expected with mobile growth and solid channel activity offset by weakness in FWA. While we made progress on our mobile portfolio, restoring FWA performance remains a priority.

Let me now turn to the dynamics affecting our Q4 outlook and path forward. Two developments have lowered our expectations for our North America business in Q4: the timing of our next-generation FWA launch and carrier customer inventory levels in mobile. As I mentioned, our next-generation FWA product is an important part of restoring go-to-market alignment with our largest FWA customer. We had expected to launch the product in Q4, but extended PCB, or printed circuit board, lead times have pushed supply availability beyond our 2026 launch window.

We are now planning to launch in Q1, shifting the anticipated recovery with this customer into 2027.

On the go-to-market side, our customer has realigned its sales organization and go-to-market approach around this Q1 new product introduction. Together we believe these steps give us a path back to the historical quarterly revenue levels we have generated with this customer.

In mobile, our US carrier customers are working down their inventory levels as they manage their year-end. We’re seeing them selling units already purchased and placing smaller replenishing orders. That dynamic lowers our Q4 sales expectation, but should leave customers with leaner inventory positioning entering 2027 versus the current quarter. The FWA launch and lower aggregate carrier mobile inventory levels at year end compared to Q3 should provide a path to improved revenue performance in North America as we enter 2027.

Moving on, in order to address the engineering execution issues that have had a material impact on 2026 performance, we have begun overhauling the engineering function and operations. Going into 2026, we had won a record amount of new business across all three Tier 1 carriers. As we accelerated new product introductions, all our engineering capability was not up to the task. I have brought in Nick Lambourne as our new Chief Technology Officer. Nick is now leading the restructuring of the engineering function, and I’m pleased with the immediate impact Nick has already had.

Nick came to Inseego from Digi International. He previously served as CTO of Particle, which was acquired by Digi, and brings experience across cellular hardware, embedded software, and cloud services. His mandate is to improve product quality, strengthen program execution, and deliver reliably for our customers. In Nick’s first month, we brought our cloud engineering teams together around a unified platform and introduced a common framework to measure engineering performance.

We’re also establishing shared development practices and tools across our cloud, device, and hardware teams. These initiatives are intended to reduce fragmentation, strengthen accountability, and create a more consistent foundation for delivery. As part of this work, we’re expanding access to AI-enabled development tools and connecting them to shared engineering systems, including source code and task management.

Together with the FastMile team, we’re planning targeted pilots in automated quality assurance and rapid software and hardware prototyping. In parallel, we’re developing a common software platform to support our portfolio of MiFi mobile hotspots and FWA devices. Drawing on the strongest engineering practices from both the Inseego and FastMile teams, our objective is to establish a repeatable development and delivery model that can be tailored to individual programs and operator requirements supported by automated testing and AI-assisted development.

We will measure progress through product quality, test coverage, development cycle times, and our ability to deliver against committed program milestones, which ultimately will result in delivering greater revenue. In addition to overhauling our engineering capability, we have taken steps to reduce our cost structure in response to lower Inseego North America revenue.

In October, we executed an action to reduce operating spend, taking approximately $8 million in annual employee headcount and contractor expenses out of the business. These actions are an important step towards returning the business to profitability. Achieving that goal also requires stronger execution and focus on delivering on the opportunities we have already won.

Now let me turn to the FastMile FWA business acquired from Nokia, which closed on October 1 and will contribute a full quarter of operations in Q4. The acquisition broadens our FWA portfolio, particularly in residential applications, and has established global carrier relationships and strong engineering capabilities. Combining those products within Inseego’s existing enterprise, FWA, mobile, and cloud software portfolio gives us a broader set of solutions to bring to a much-expanded global customer base.

Since closing the FWA acquisition, I have continued spending time with the global team and speaking with customers. Those conversations have reinforced my confidence in the product portfolio, engineering talent, and customer relationships we acquired. Our integration priorities are to maintain continuity for customers, align our product roadmaps, and bring our engineering teams together across the combined business. This is a global integration and bringing our engineering organizations together is an important part of the opportunity.

Nick is leading that work, including shared platforms, tools, and development practices, with the goal of improving delivery and reducing duplication across the combined business. I also want to provide some insights on the macro environment of the business we just acquired.

As we see across the industry, higher memory costs are affecting customer purchasing, particularly in markets where monthly subscriber revenues are meaningfully lower and equipment price increases are harder to absorb. We have seen this with our largest FastMile customer based in India, reducing purchasing in response to those market component price increases, and that’s contributing to a lower revenue baseline for the acquired business that is reflected in our Q4 2026 outlook.

Importantly, that key customer recently renewed its FWA agreement through the end of 2028, including a minimum purchase commitment. This provides a foundation for the relationship and we will share more detail on our business outlook on our February earnings call. Overall, our immediate priorities for the acquisition are customer continuity and operational integration, with a clear focus on putting the underlying acquired business on a path to breakeven independent of Nokia’s first-year operating support.

At the same time, we’re pursuing growth opportunities across both existing Inseego business and the acquired FWA business, building on their respective portfolios and customer relationships. In summary, while we have a significant opportunity ahead, we have a lot of work to do. On one hand, our performance in 2026 has fallen short of our expectations.

On the other hand, the FastMile FWA acquisition has created a significant opportunity for Inseego as a global wireless broadband company and we’re taking the steps needed to rebuild operating and financial momentum. We have taken action to address the engineering and product delivery issues and to reduce our cost structure.

We now need to translate those actions into more consistent execution and financial performance. As we close 2026 and prepare to enter 2027, our focus is on launching the next-generation FWA product and returning to more normalized carrier inventory levels. Together with a leaner cost structure, these steps provide a foundation for improving performance and working our way back to profitability.

Our expanded portfolio, global customer relationships, and engineering capabilities give us the opportunity to serve more customers a wider range of wireless broadband solutions while building an operating structure that can support sustainable profitability across the combined company. I am confident in the opportunity ahead on the new FastMile business and our growth potential. I’m also clear on where we need to improve to deliver on this opportunity.

With that, I will turn the call over to Steven.

Hi everyone, thank you for joining us. I’d like to cover two topics today. First, I’ll take you through more details on our Q3 2026 financial results and second, I’ll talk through the financial profile of the business and provide our guidance for Q4 as we look to close out 2026.

To be clear, Q3 2026 results are for the pre-acquisition Inseego business only, which as you heard we refer to as Inseego North America for discussion purposes. The acquisition of the Nokia Fast Mile FWA business closed last month on October 1, so Q4 2026 includes a full quarter of the acquired business, which we refer to as Fast Mile. As we outlined last quarter, we’re providing the Q4 2026 revenue guidance for each revenue stream along with the total company revenue and adjusted EBITDA guidance. As we always do, we’ll wrap up by opening the call for your questions.

Starting with our Q3 2026 financial results, total revenue was $33.3 million, above the midpoint of our guidance range and largely reflecting the carrier purchasing and inventory dynamics that we outlined on the August call. Product revenue was $23.3 million, or 70% of total revenue, and within that Mobile Solutions revenue was $19.1 million, up 10% sequentially over Q2 2026. Carrier purchases ahead of anticipated memory and wide-ranging component price increases contributed to Q3 shipments, while FWA revenue came in at $4.2 million in Q3.

On this front, our newest US Tier 1 carrier customer continued to work through inventory from its large Q2 2026 purchase, while shipments to our largest FWA customer were lower as anticipated and previously communicated. Software, services, and other revenue was $10 million, or 30% of total revenue for the quarter. Consistent with the contract renewal we discussed in August, Q3 2026 non-GAAP gross margin was 34%, essentially flat sequentially.

A dynamic in Q3 that impacted the product gross was a $1.8 million inventory reserve associated with our soon-to-be legacy FWA product that addresses the lower sales that we’ve discussed. As we’ve talked about in managing memory and component price increases, we have been implementing customer price increases to pass through the higher component costs that are being seen across the industry.

The distinction to note is the impact on gross margin dollars versus gross margin percentage. While we have been able to pass through dollar costs and thereby maintain gross profit dollars per unit, this zero-margin revenue mathematically dilutes the gross margin percentage orders of magnitude. We had approximately $1.5 million of pass-through revenue in Q3 2026, negatively impacting gross margin percentage by about 1.6 percentage points.

Moving down the P&L, Q3 non-GAAP operating expenses were $14.8 million versus $16.9 million in Q2, reflecting the lower aggregate sequential spend. Pulling this together, Q3 2026 adjusted EBITDA was a loss of $1 million, at the better end of our guidance range. Lower operating expenses helped offset the revenue and product gross margin dynamics I just described.

Closing out Q3 with the balance sheet, we ended September with cash of $6.6 million and a balance of $7.6 million on our $20 million working capital facility. As you likely saw in the closing information subsequent to quarter end, we received the $10 million cash equity investment from Nokia in October and a new $10 million engineering support payment for our Inseego product interoperability work over the first year.

With that, let’s turn to the current Q4 and our guidance. As Juho discussed, two important revenue dynamics are shaping the Inseego North America business in the near term.

First, the next-generation FWA product launch has moved out to Q1 2027, so the anticipated recovery with our largest FWA customer and the revenue moves into Q1 2027. Second, in mobile hotspots we’re seeing carriers working through inventory they purchased in Q2 and Q3 2026 such that we’re expecting lower orders in Q4 as they manage their 2026 year-end inventory positions.

Looking at Q4 gross margin, we expect Inseego North America non-GAAP total gross margin to improve sequentially, primarily reflecting a higher proportion of services and other revenue. Product gross margin is also expected to improve with continued solid contribution from channel and the Q3 2026 inventory reserve not repeating. At the total company level, the addition of Fast Mile, which has a lower gross margin profile, will bring down the Q4 2026 consolidated non-GAAP gross margin percentage.

Looking at operating expense, we have reduced headcount and program spend as you have noted, taking out approximately $8 million in annual spend from the Inseego North America business. This action brings our cost structure into better alignment with where we want the combined business to be and moves us to a path to return to profitability as we look to drive revenue growth going forward.

An additional note for our Q4 2026 outlook that is helpful to know is a change in the financial statement treatment of our internal software development costs. Beginning Q4 2026, we have evolved our accounting measures to a more straightforward approach to capitalization which brings our Inseego North America practices into alignment with the practices of the acquired FastMile FWA business. This will result in us recognizing more of the R&D spend as expense in the income statement as it’s incurred in a quarter as opposed to capitalizing it and amortizing it to D&A over time.

Capitalization is not stopping; we’re just expecting it to continue at a reasonably lower level as a greater share of development spending will now go through R&D expense and be included in adjusted EBITDA in a given quarter rather than being capitalized and not get included in adjusted EBITDA. This does not by itself mean that we’re spending more on R&D and it does not drive any change in cash. It is simply a move that brings our accounting for internally driven software development costs more in line with peer practices, our non-GAAP net income measures, and the practices of the FastMile business.

To put that in context, using this same new approach for the prior year Q4 2025 for Inseego North America, adjusted EBITDA would have been approximately $3.9 million or 8% of revenue compared to the $6 million or 12% of revenue that was reported at the time based on accounting practices in that period. That comparison excludes the acquired FWA business. With this backdrop and as we outlined on our last call, we’re now providing Q4 2026 revenue guidance for the Inseego North America business and the acquired FastMile FWA business, along with total company revenue and adjusted EBITDA.

As noted, Q4 2026 includes a full quarter of the FastMile business. Beginning with our Q4 2026 earnings call in February 2027, we intend to guide and report as a combined company with historical financial information and pro forma revenue comparisons provided to support an apples-to-apples assessment of total company performance.

Pulling this all together for Q4 2026, we expect revenue for the Inseego North America business of $21 million to $25 million, revenue for the FastMile business of $35 million to $40 million, total company revenue of $56 million to $65 million, and consolidated adjusted EBITDA of $0 million to $2 million. This adjusted EBITDA expectation is inclusive of the Nokia FastMile make-whole and engineering support that together we expect to be in a range of $12 million to $14 million for Q4.

You’ll see this all in our Q3 2026 earnings presentation that’s published on our IR website, and that includes supplemental financial information and selected historical financial info for the acquired FastMile business. We also wanted to let you know that we’ll be filing additional historical and pro forma financial info over the coming month or so as we complete those filings.

With that, we appreciate your time and support and are glad to open the call for your questions. Operator.

Scott Searle, Roth Capital.

Hey, thanks for taking the questions. Maybe just a quick clarification. I just want to make sure, Steven, I got the $1.8 million obsolete inventory charge. So product gross margin is about 20% in the third quarter. And then I want to clarify if it sounds like $2 million of quarterly OpEx savings, is that fully recognized in the fourth quarter?

No, it’s not, Scott, for two reasons. One, for timing it was done into the quarter and two, there’s a bit of an offset on severance and cost of implementing that.

And product gross margins then normalized to about 20%? That’s currently where we are, and we should expect a slight improvement going forward as surcharges are kicking in fourth quarter '27.

And when you say product gross margin percentage?

I'm normalizing for the inventory charge, Steven.

Feel tied to us, Scott.

Based on okay, but there was a $1.8 million inventory charge in the quarter, is that correct?

I'm sorry, Scott, I apologize, cut out on our end. Would you mind saying that again?

Hey, my apologies, I'm just clarifying. I wanted to make sure there's, I thought I heard a $1.8 million obsolete inventory charge was taken in the third quarter. Is that correct?

Yes, it is.

Okay. And then Juho, moving on to the Nokia FastMile business. Some of the broad-stroke financial details that you included in the release show that the business has been under a little bit of pressure going back into ’25, and several quarters ago was running at north of $70 million a quarter. You’re guiding to $35 to $40 million on the quarter.

I’m wondering if you could take us through some of the dynamic on that front, and also from a gross margin perspective, I assume it’s suffering from the same sort of component and pricing headwinds that you’ve seen in the core business. What is the timing, the strategy, and plan of attack to return that to a more normalized gross margin, and how should we be thinking about that going into ’27? Thanks.

Thanks for the question, Scott. I believe we earlier shared that when Nokia, in the capital markets day in late 2025, announced that they will be divesting the business, some customers reacted to that announcement and some customers were effectively lost at that point in time, while others modified their purchasing behavior. The $200 million number that we’ve communicated on the business was the Q1 ’26 revenue of $50 million annualized. So that was the math behind it.

The Q4 is largely explained or the other dynamic that’s important to understand here is that the rising memory costs have an outsized impact on low-ARPU markets. So if you take India as an example, where we have the largest customer of our new FastMile business, their ARPU is very low, so absorbing increased equipment pricing has its limits and that’s impacting the velocity at the same time. What I’ll say is that I’m very encouraged not only by securing continuation with the existing customers.

One fact I wanted to share here is that that large customer in India they just renewed with us for two years up until the end of 2028. We also have very good response from the broader market and broader customer base that were already FastMile customers. And hey look, one of the reasons why we acquired the business is that we think we can go and grow it.

So that’s absolutely on our agenda. Maybe Steven, if you want to take the question from Scott on the gross margin profile of the FastMile business.

Yeah, we had talked a little bit about that earlier-on-earlier calls, Scott. And the model really, as you know and others know, is more of a high-volume, high-velocity, lower gross margin, more residential-based. There is some business and B2B customers in there on the carrier side as well; it does have a higher margin, but the volume in the customer base, as we’ve discussed, is in the residential. So that has a gross margin profile more in the 10% to 13% zip code than it does for our business.

And maybe, Scott, just to complete the picture here, the customers and the global portfolio are highly complementary. So we add residential; we add what I’ll call rest of the world, which is essentially everything outside of the US where Inseego North America operates today.

At the same time, the back end is highly synergistic. So if you look at the hardware platform, software platform, cloud platform, we won’t have two, we’ll have one, and then we’ll have one global operation across engineering and supply chain. So to Steven’s good point, add a lot of revenue with the gross margin profile that was described, while unifying the back end is the game plan here.

Very helpful. And if I could, a question on mobile hotspots. It sounds like with new product coming into the mix in the first quarter of next year, you start to get back on track. Can you give us an idea of what your expectation would be maybe in the second half of 2027? How big would the mobile hotspot business be, particularly as the competitive dynamics have really shifted in your favor, whether it’s Chinese exclusion or a lot of the other traditional players that have been slowly exiting the market and or losing share to you.

So just love to get your thoughts kind of from a high level of what we could be expecting a couple of quarters out as you have, you know, engineering development back on track and you start to get a little bit more scale in the business. Thanks.

Well, Scott, we’ll probably tag team that as usual, and, you know, for the numbers themselves, super reasonable and smart question, and we’ll probably get to the quantification of that on the next call as we’re in the midst of 2027 planning, you know, particularly for and with the new business. And so, we’ll probably punt to the next call, if you don’t mind, on the actual quantification of that as we kind of move through the year.

It's important to acknowledge that this year has been rather abnormal for two reasons. One, like you pointed out, we had the delays with our new generation, so we lost significant revenue front part of the year. At the same time, once we’ve now gotten the three hotspots out there across all the three US carriers, I’m pleased with how we’re ramping up the sellout run rates. But then what has happened is that the carriers have chosen to do large quantity inventory purchases in Q2 and in Q3 in anticipation, and to mitigate the memory-driven price increases.

So you’ve seen this I’ll call it lumpiness, for lack of a better technical term in the purchasing behavior from the carriers, which is another characteristic of this year. Going into next year, like we mentioned in the prepared remarks, we’re going to enter 2027 with a much leaner mobile inventory level across the carrier base, which is of course very, very favorable. I’m also very excited about the new offerings that our largest mobile hotspot customer has announced. It’s a new offer for mobile business professionals. The initial uplift in terms of sellout is promising, so there’s a lot of tailwinds in that already.

And then on this new award, [Luke], I think one thing we set as a priority right when I got here, beginning of 2025, was that we’re going to go and consolidate the mobile market, and we’ve done a relatively good job in that, in winning a new large Tier 1 carrier. And now this latest win, which I’ll call it a premium tier mobile hotspot. So we’re unseating a competitor. It is high-power class, first responder, but also broader market appeal. So the progress that we’re making on mobile and the way that we’re setting up 2027, I think we should have a pretty good year.

Great. Thanks so much. I'll get back in the queue.

Tyler Burmeister, Lake Street Capital Markets.

Hey guys, thanks for letting me ask some questions here. Maybe first, I don’t know if I missed it, but could you give us first what the Nokia, the FastMile business, what the revenue it did in Q3, and then just as you think about that business heading to next year, based on your conversation with those customers, do you think that can be a growth business next year for you?

Tyler, we’re working on the pro forma and historical info on the FastMile business. We obviously didn’t own it in Q3, so we have not reported, but two data points that we believe are helpful. One is we’ve included you’ll see it published on our website the same period numbers for FastMile business for Q4 of last year. So for the quarter we own it now, Q4, we guided, we broke out the revenue in guidance for FastMile and for North America. And we gave the prior year.

You’ll see that in a table. It’ll list off the revenue, and it’ll show you that the quarterly, it’ll say Q4 2025 revenue, $68 million, for the FastMile business. So, you have apples to apples. Within the next month or so, we’re going to be filing the required pro forma and selected financial info, and then that’s where we’ll provide more quarterly detail on the interim periods as we get all that audited annual numbers into quarterly numbers and post that and publish it.

One of the very exciting things that we’re going through right now is that there are multiple RFPs or bids out there in our new global theater that the team is actively competing for. I’m also very pleased with the competitiveness of the acquired asset, whether it’s engineering, supply chain, or the product team. So, we’re very, very busy in making sure that we compete aggressive, we drive growth in that. There’s a couple of really interesting micro dynamics on FWA if you look at globally.

Here in the US, if you remember a year ago definitely two years ago the narrative was pretty much that the carriers will deploy fiber. Apart from the one guy who really only had cellular assets, the strategy was largely fiber. Fast forward to today, everyone views here in the US FWA as a very important complementary product or service to fiber, and it’s an acknowledgment that it’s a good way of driving your network monetization.

Now if I project that to the global discussions, whether it’s Europe, markets like Australia, I’m seeing that same dynamic play out more and more, where even if the fiber penetration is extremely high, FWA still plays a distinct role in enabling the carriers to drive extra monetization of their network assets. So that’s great.

On the other hand, I mentioned that India is a large customer for us. Obviously that market is very different. In many cases you have no other means of connectivity, there’s no fiber. Fiber deployment might not be realistic. Another example in the broader APAC region would be Indonesia. So, I’m seeing this emergence of FWA as a strategic play for global carriers in developed markets, and then new pockets of developing markets where FWA really will be instrumental in closing the digital divide.

And this asset, this business that we’ve acquired, I think is very uniquely suited to compete in that kind of opportunity space.

Maybe ask in another way, the Nokia business sounds, you know, like you guys just feel very confident that over the next year, with those support payments from Nokia, that you can get that to be profitable post the one-year period there. Just wondering, in that assumption, what’s the required revenue level of that business for it to be able to be profitable one year from now?

I think the key thing, one cornerstone. So we obviously invested in a brand-new sales and marketing model for the new combined company in EMEA and in APAC. As a part of the carve-out, the sales and marketing was largely not there. I’m very happy with that ramp. So we obviously need to feed that team. So that’s an element that we need to cover from the new global business in the gross margin.

So is, of course, G&A expansion. But a really fundamental, super important thing to understand here is that, call it both businesses or both companies so Inseego North America and FastMile were investing independently $30 million plus when it comes to engineering spend. And like I mentioned earlier in this Q&A, when it comes to technology platform, it comes to the actual product reusability across the markets, across the opportunities, significant synergies in terms of where we need to spend the capacity.

So that one plus one or 30-plus plus 30-plus it will obviously equal greatly less than two, and that’s a fundamental driver or lever on driving the profitability of business.

And then good thought and question on, okay, so what does top line look like? And that is something for us that we knew getting into this acquisition what the dynamic was, as you have said before about the analyst day and what that did to the company customer revenues, and what the component memory cost increases are tending to have an outsized impact in more residential low-ARPU markets. And so, our view is we need to get this to a break-even business so that when we come off the support payments it’s not dilutive to EBITDA for the combined company and the stockholders.

So that’s our objective. Almost irrespective of where revenue goes, we will manage to that outcome.

Okay, I appreciate all that color. Maybe last one here, Steven, for you, a little bit on the model just on OpEx, you know, all these different moving pieces a little bit, the combination of the FastMile business, the support payments. Can you, you know, what’s the Q4 OpEx? You’re making your guidance.

Yeah, sure. So, recall, too, that OpEx is going to be for Q4 well, we talk obviously on a non-GAAP basis but combined, right. And so, we’re looking at OpEx, you know, somewhere in the neighborhood of just around $30 million on a combined. And that compares, for example, to an Inseego North America standalone of about $15 million for Q3.

And so, as you can see, the businesses are about the same size, the revenues are about the same size today. Hence the cost synergy opportunity.

Okay. All right. Perfect. That's very helpful.

That's all for me. Thanks, guys.

Christian Schwab, Craig-Hallum Capital Group.

Great, thanks. I understand why the business fell off from $300 million in ’25. Can you tell me how the business grew so quickly from $151 million to $326 million, from ’24 to ’25?

Oh, yeah. So, the big uplift in the acquired FastMile business is really a large Indian customer, which accelerated the FWA deployment. That’s bulk of the growth. There is also a large European customer that ramped in parallel. Those two would be the key drivers for that year-on-year growth.

Fantastic. And those two customers are still customers today. I understand probably one of them is a large Indian customer. Is the European customer still a customer today? Correct?

Correct.

Correct. And yes, they both are customers.

So, is the plan over time to drive this business, the acquired business, to a $200 million run-rate business, or do you see an opportunity for this to become a $300 million business again, taking into account the eventual normalization of memory?

So yes, the FWA, if you look at the market, any industry protection, the CAGR is going to be between now and going into the beginning of the next decade. So, everybody’s consensus is that FWA as a category, volume global is going to experience large growth. We are now in a position where we can compete for all of those opportunities with a very efficient, call it single engineering, single platform investment. If you look at where the FastMile business is or isn’t today, let’s take Europe as an example. Depending on how you count, Europe has three or four large multinational operators.

Currently FastMile is in one of them. Now we see great opportunity in expanding with that one large group. But obviously we’re engaged with the other ones where the business is not participating today. Just picking up another example. If you look at Australia, which has very similar characteristics to our domestic market here in terms of advanced technology, scale of deployment, again, the FastMile business is present at only one of that large pool of customers.

So, I see this addressable market obviously for us opened up on an unprecedented scale with the acquisition by just having the market access. But then at the same the market is growing very fast. And we’re coming from a position where even though FastMile, largely because of the single large customer in India, is the global volume leader in FWA, there is still, from a market share standpoint, plenty of opportunity to go and grow.

I also maintain that the playbook that we have here in the US with more enterprise or B2B FWA is very relevant for the global market. We’ll modify our approach, but that differentiation is clearly appreciated. So not only do all of these global customers want to find the monetization for the networks from FWA, they of course acknowledge the B2B or enterprise segment has higher ARPU for them and, quite frankly, better profitability for us as well.

So there’s multiple vectors of driving the growth. So, we won’t, I don’t think we’ll go into like putting a number behind that and we’ll share more on our view on the business on a February call. But definitely it’s a growth strategy for FastMile standalone and of course for the combined company as well.

Okay. The reason why I ask is if your aspirational goal is on high-volume, lower gross margin residential business is 10% to maybe 13%. Doesn’t look like it’s done that in the last few years, but let’s just call it 10%, and your operating expenses to support that business are $15 million. To get that business to break even or some normalized healthy level of profitability is materially higher.ad

Yeah, so I don’t think your math because there’s nothing wrong with your math. Basically, that’s exactly what we aim to do. You mentioned the memory cost and how that’s impacting the market and, of course, also our gross margins. I do believe that there is an industry-wide phenomenon where a complete pass through of the memory cost, or maybe the other way of looking at it, that the memory price, memory cost increases have made the industry more competitive, and depends on who you talk to or what viewpoint you take.

It does seem like these memory prices will continue to increase between now and end of next year. One number that’s pretty commonly used is 10% per quarter, but then it should flatten out at the end of next year, and there’s going to be a point in time where the data center demand, for a reason or another, will alleviate the pressure and the pricing will start to normalize. Maybe there’s a narrative there were, from a gross margin standpoint, there’s opportunity to recover as well.

But the numbers that you are referring to, I think, are really good planning assumptions now going into next year.

Great. Fantastic. No other questions. Thank you.

And with that, we’ll conclude today’s question and answer session. I’d like to turn the floor back over to Juho for closing remarks.

Thank you, operator. And thanks everyone for joining us today and for your continued interest in Inseego. Steven and I look forward to seeing some of you in New York later this month at Craig-Hallum Alpha Select and Roth Capital Technology Conferences. Really appreciate your time.

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