Inseego Corp. (NASDAQ:INSG) has reported a robust financial performance in the second quarter of 2024, with revenues reaching $59 million and surpassing market expectations. This success is attributed to the company's mobile business and the renewal of a significant contract for its subscription management platform.
The adjusted EBITDA stood at $8.3 million, bolstered by strong gross margins and effective expense management. The company is currently in the process of searching for a new CEO and remains focused on driving revenue growth and profitability while exploring opportunities for diversification and potential mergers and acquisitions (M&A) after completing its restructuring.
Key Takeaways
- Inseego Corp. reported Q2 2024 revenue of $59 million, beating expectations.
- Adjusted EBITDA for the quarter was $8.3 million.
- The company is making strides in restructuring its capital structure, reducing debt, and improving leverage.
- Q3 2024 revenue is projected to range from $54 million to $58 million, with adjusted EBITDA between $6.5 million and $7.5 million.
- Continued growth is expected in the mobile broadband sector, with a strong product roadmap and market expansion plans.
Company Outlook
- Inseego anticipates revenue growth, profit, and cash generation to continue in the current quarter.
- The company has guided for Q3 2024 revenue to be in the range of $54 million to $58 million.
- Adjusted EBITDA for Q3 is estimated to be between $6.5 million and $7.5 million.
- Inseego is optimistic about its future, with a focus on completing restructuring and a CEO search before considering any offensive M&A moves.
Bearish Highlights
- The company expects slightly lower fixed wireless access revenue in Q3 due to a preceding buy in Q2.
Bullish Highlights
- Inseego is experiencing robust year-over-year growth in the mobile broadband sector.
- The company has made strategic hires to support growth and expects to maintain profitability while expanding its team.
Misses
- There were no significant misses reported in the earnings call.
Q&A Highlights
- The majority of Inseego's revenue is derived from North America, with no major changes in geographic mix expected.
- The company's telematics business is performing well in Europe and ANZ.
- The Ignite Channel Program is anticipated to take time to develop but is a key part of Inseego's strategy to diversify its customer base.
Inseego Corp. remains focused on strengthening its core business while preparing for future opportunities. With a strong product roadmap and a commitment to diversification, the company is poised to continue its trajectory of growth in the dynamic mobile and broadband markets.
InvestingPro Insights
Inseego Corp. (INSG) has demonstrated a notable turnaround in its financial performance, as evidenced by the latest quarterly report. To provide a deeper understanding of the company's financial health and stock behavior, here are some insights based on real-time data from InvestingPro and InvestingPro Tips.
InvestingPro Data highlights a market capitalization of $113.03 million, indicating the company's current value in the market. Despite a challenging revenue growth rate, with a decrease of 19.1% over the last twelve months as of Q1 2024, Inseego managed to report a positive adjusted EBITDA of $8.3 million for Q2 2024. The company's gross profit margin stands at a healthy 27.2%, showcasing its ability to maintain profitability in core operations.
- Market Cap (Adjusted): 113.03M USD
- Revenue Growth (Last Twelve Months as of Q1 2024): -19.1%
- Gross Profit Margin (Last Twelve Months as of Q1 2024): 27.2%
InvestingPro Tips reveal that Inseego's stock has experienced significant price volatility. The stock has seen a substantial decline over the last month, yet it has provided a strong return over the last three months. Analysts are not expecting the company to be profitable this year, which aligns with the reported negative P/E ratio of -1.94. It's noteworthy that the stock does not pay a dividend, which may influence investment decisions for income-focused investors.
- InvestingPro Tip: Stock generally trades with high price volatility
- InvestingPro Tip: Analysts do not anticipate the company will be profitable this year
For investors seeking a comprehensive analysis of Inseego Corp., InvestingPro provides additional tips and metrics. Currently, there are 9 more InvestingPro Tips available, which could further guide investment decisions. To explore these in detail, interested readers can visit https://www.investing.com/pro/INSG.
These insights offer a glimpse into the company's operational efficiency and market performance, which are crucial for investors considering Inseego Corp. as part of their investment portfolio.
Full transcript - Inseego Corp (INSG) Q2 2024:
Operator: Hello, and welcome to Inseego Corp.’s Second Quarter 2024 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 questions-and-answers. [Operator Instructions] On the call today are Phil Brace, Executive Chairman of Inseego’s Board of Directors; and Steven Gatoff, the company’s 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’s 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 Phil Brace, Executive Chairman of Inseego. Please go ahead.
Phil Brace: Thank you, operator. Good afternoon, everyone. It’s a pleasure to be with you today. I’d like to cover three topics with you today. First, I’d like to provide a high-level view of the Q2 results; second, I’d like to share my perspective on the accomplishments that we made in improving our capital structure; and third, I’ll comment on the current quarter and focus areas. I’ll then turn the call over to Steven, and we’ll wrap up with some Q&A. Q2 2024 was a very strong quarter for Inseego. Revenue came in at $59 million, above our guidance and helped by strong year-over-year growth in our mobile business and the effects of the previously discussed renewal of our subscribed management platform at a major customer. Q1 adjusted EBITDA came in at $8.3 million, which was also better than expected and was driven by a strong gross margin percentage and solid OpEx control. During the quarter, the company continued to add leadership capability to the teams in both new sales and operations executives, and you’re already seeing the impact of these additions. During the quarter, we made significant progress on addressing our capital structure. Improved financial performance enabled a series of transactions that resulted in restructuring the majority of our outstanding convert for a mixture of cash, new favorable long-term debt, common equity and warrants. This is a very positive outcome for the company, and we received strong support from our largest bondholders and our largest stockholders. As Steven will talk about in his prepared remarks, the pro forma impact in these transactions resulted in significantly less debt and a very manageable leverage profile. While we still have some work to do, I’m very pleased with the progress today. I’d like to mention briefly our CEO search. As you saw earlier in the week in our filing, I was pleased to extend my term as Executive Chairman of the Board in order to provide some time to finish the restructure work, as well as continue supporting the good momentum in the business. The Board and I are taking a deliberate and methodical approach to the search. The company is currently working well, and I have an excellent engagement with the executive team and the board to drive things forward. On this last front, the outlook for the quarter is for continued year-over-year growth in revenue, profit and cash generation. On the product front, our next generation products are well in development, which I will believe -- which I believe will continue to advance our capabilities and provide increased value to our customers. With the new capital structure, improved financial performance, a strong product roadmap and large growing markets, the future for Inseego is bright. With that, I’d like to thank the team at Inseego who work every day to make these things happen. I’m glad to take any questions in a few minutes, but right now I’d like to pass the call over to Steven.
Steven Gatoff: Thanks, Phil. Good afternoon, everyone. I look forward to covering three things with you today. First, I’ll take you through the details of our Q2 2024 financial results; second, I’d like to share some more information on the important transactions that we executed to restructure our convertible notes and improve our capital structure; and third, I’ll provide some color on the business and guidance for Q3. As Phil mentioned, as we always do, we’ll, of course, wrap up by opening the call to your questions. With that, let’s start with our Q2 results. As Phil highlighted, total revenue came in well above guidance at $59.1 million. Our revenue grew sequentially over Q1 by more than $14 million or 31%, and for the first time in nearly three years, total revenue grew year-over-year, coming in at positive 10% over Q2 2023. The two primary growth drivers were: one, strong performance in the carrier mobile hotspot business on the product side, where Q2 revenue was up 37% year-over-year on our carrier partner, MiFi promotion, that we mentioned on the last call; and, two, growth in our subscribed SaaS offering from the contract renewal that went into effect April 1st and that we also mentioned last call. Looking at FWA product revenue, that came in at essentially the average of the past several quarters. A last-time 4G buy helped shore up the quarter as our newly implemented channel program takes some time to ramp up and our new team builds pipeline and drives their initiatives in the space. Rounding out services and other revenue, our telematics business came in at a consistent and record high level as it did in the previous quarter on good continued global demand and execution in the business. Moving on to gross margin, Q2 gross margin percentage came in at 39% on a non-GAAP basis, consistent with the prior quarter and among the highest level in the past two years. Looking at non-GAAP operating expenses, while a slight uptick in sequential spend from Q1, sound expense management and efficiency efforts saw Q2 total OpEx spend come in lower than it was year-over-year, both in terms of aggregate dollars and as a percentage of revenue. OpEx was 32% of revenue in Q2 2024, down favorably from 39% in the prior quarter and down favorably from 37% sequentially in Q2 of 2023 -- year-over-year, I apologize. We realized efficiencies on a percentage of revenue basis in all areas of OpEx in Q2, from sales and marketing to R&D to G&A. It’s notable that this strong expense outcome was achieved even after including an accrual this quarter for an annual cash incentive bonus for the terrific Inseego employee base. We shared a bit about this on the last call, and so far as it being new incremental spend this year, noting that cash bonus expense hasn’t been included or paid in the past several years. Now it will be, and it is self-funded. Putting this all together, the favorable revenue performance and focused operating expense management resulted in Q2 adjusted EBITDA dollars coming in at more than double the prior Q1 quarter at $8.4 million and at a record high margin of 14%. It was also the sixth consecutive quarter of positive adjusted EBITDA. These improved operating results allowed us to deliver GAAP operating and net income for the first time in more than five years. Wrapping up our Q2 results with a balance sheet, cash improved meaningfully from Q1 coming in at $49 million at June 30th. Our cash on hand benefited from three positive dynamics. One, the ongoing higher profitability and net cash generation of the business in Q2. Two, the advantageous April 2024 $15 million upfront payment on the multiyear subscribed SaaS contract renewal that we mentioned. And three, as I’ll talk about more in a few minutes, there was a tiny benefit from the short-term loan that we took out to repurchase a large convertible bondholder at a discount that funded $16.5 million on that Friday, June 28th, the last business day of June. Accordingly, that funded loan cash shows up on our balance sheet at the June quarter-end. With the $32 million purchase of the bonds occurring on the next business day, on Monday, July 1st, that use of cash and the resulting reduction of debt was technically in Q3 and will be reflected in our Q3 2024 balance sheet. As we also discussed briefly on our last call as a subsequent event, in Q2 we voluntarily paid off and terminated the relatively restrictive and expensive ABL credit facility. This action had a number of benefits including freeing up capital and providing good operating flexibility and that enabled us to enter into the various transactions to address our convertible bonds. The final point to make on the balance sheet is that with the convertible notes now being due within a year, you’ll see them presented in the short-term liability section of the balance sheet. The good news is clearly that we purchased or refinanced nearly 90% of the bonds and with the support from some of our largest and longest-standing stakeholders, we achieved a solid outcome. With that, let’s move on to my second topic and look at the convertible notes restructuring and capital structure improvements that we accomplished in the past few months. As you heard us say over the past several quarters, we’ve been methodical about driving a thoughtful and optimized outcome for our stockholders and relevant stakeholders in restructuring the convertible notes and reducing our overall debt levels. This has been a multi-step process with a lot of considerations. Over the past 75 days, we engaged with all of the top 10 holders of the convertible notes and we have either purchased or entered into binding agreements to exchange the remaining bonds for long-term debt and or equity that covers $142 million or 88% of the $162 million in face value of the bonds. Pro forma for these transactions, there is only $19.9 million of convertible notes remaining outstanding with new long-term debt of $36.6 million and a short-term loan of $19.5 million. That brings pro forma total debt to $76 million on LTM adjusted EBITDA of approximately $20 million. Our pro forma net debt is an even lower leverage ratio of less than 3 times. This is a meaningful reduction in debt and a far more appropriate leverage profile for the company. As a final note on the debt restructuring, we want to also call out an advantageous feature that we were successful in structuring. As part of these transactions, the warrants that were issued to bondholders who exchanged their convertible bonds for new long-term debt and equity are cash pay. That means that upon their exercise, the company will receive approximately $32 million in cash proceeds, a further enhancement of liquidity and financial flexibility. We’re pleased to have executed these transactions and accomplished a meaningful reduction of debt and right-sizing of our capital structure. Adding that positive dynamic to our profitable operations, free cash flow generation and continuing growth, we see the company as now very well positioned and financially strong to support driving further stockholder value. So, with that, let’s turn to the third topic on what we’re seeing in the business in the current quarter and provide our guidance for Q3. Overall, we’re bullish on delivering revenue growth and expect to continue to show improvements in terms of year-over-year performance. On mobile broadband, we have good visibility and confidence in our ability to deliver robust year-over-year growth again in Q3 as we’re continuing to drive our mobile broadband products through our large carrier partner promotion. We’ll see the extent to which Q3 yields the same robust quarterly results that Q2 produced. On FWA, we continue to invest in building pipelines and the overall channel program and expect marginally lower FWA revenue in Q3 considering the FWA last-time 4G buy I mentioned that occurred in Q2. On services and other revenue, we expect to have another solid quarter in Q3 and come in at levels consistent with Q2 2020-2024 on a dollar basis. And so far as gross margin, Q3 2024 non-GAAP gross margin percentage is expected to be relatively consistent with the prior Q2, noting that the final revenue mix in Q3 between mobile broadband, FWA, and services and other will be the ultimate determinant. Q3 non-GAAP operating expenses are expected to be relatively flat over Q2 in the $19 million range. And so considering all this, we’re providing the following guidance for Q3 2024. Total revenue in a range of $54 million to $58 million and adjusted EBITDA in a range of $6.5 million to $7.5 million. In closing, we’re glad to see the strong growth and profitability delivered in Q2 and we’re encouraged by the positive dynamics in the business that are driving continued revenue growth and profitability as we move through 2024. With that, we appreciate your time and support and we’re glad to open the call for any questions. Operator?
Operator: [Operator Instructions] And our first question will come from Lance Vitanza of TD (TSX:TD) Cowen. Please go ahead.
Lance Vitanza: Thanks and congratulations on a strong quarter. On the revenue side, I was particularly impressed with the mobile hotspot sales growth. I’m wondering, do you have much visibility into end market demand and sell-through, and presumably the quarter saw a lot of restocking or stocking up, but is it possible to talk about underlying strength or weakness in final demand?
Phil Brace: Yeah. Hey, Lance, this is Phil. I mean, we kind of teased this on a little bit of the call. We kind of initiated collectively with one of our big carrier partners a program, and frankly, the program has gone really, really well. And you’ll see that our inventory has actually gone down through the quarter as well kind of representing us kind of shipping a lot of products there in that space. Our demand looks to be strong for the quarter. Some of these things I would say are a little bit perishable, right? There’s a product -- there’s a promotion going on and they’re executing well and we’re delivering well. I’ll say right now we are scrambling for parts, right? We are exercising our supply chain and the demand has gone up such that we’re scrambling for parts. So right now the demand and our visibility of the demand is good, and we’re just trying to take advantage of the opportunity while it exists.
Lance Vitanza: Great. Thanks. So, and then turning to the gross margin side, very impressive performance there, up nicely year-over-year. I like to think as much in terms of the incremental gross margin you achieved as revenues expanded. So, revenues were up $5.6 million year-on-year, while gross profit was up $3.9 million on a non-GAAP basis. So, that’s like a 70% incremental margin, which I got to think means that you’ve removed a decent amount of fixed costs from the business. I don’t think I can remember seeing a 70% incremental margin at Inseego, and if it was, it wasn’t any time recently. So nice job there, but can you talk about -- I know you mentioned they were coming in all areas, but is there anything more granular that you can tell us that would help us gauge how durable these changes might be in subsequent periods and yeah?
Phil Brace: Yeah. I’ll try this at a high level, and then, Steven, you want to just help with some of the details. I mean, look, at a high level year-over-year, I’d characterize it as three things. One, you’re seeing good OpEx control, okay? So, year-over-year, we did make some -- we don’t have a ton of fixed costs necessarily, but I think our cost structure has improved, and I think, we’ve been disciplined on how we do that. I think you’ve also seen mix improvement and you’ve also seen just core product gross margin improvement there as well. So I would say there’s probably three big things that drive that. Whether it’s sustainable? I mean, look, I think, the OpEx stuff is going to be sustainable. We’re pretty focused on that as a company, and I think the gross margins going forward is going to really be dominated by mix, I would say, the mixing between the products. So I don’t know if Steven…
Steven Gatoff: Yeah. Yeah. Lance, a really good question, and Phil has good points. If you look at at least two of those big buckets on the cost side, which was a big driver looking back year-over-year, my first quarter here in Q3, we immediately implemented a cost restructuring and we really hunkered down and looked at the business and took out a lot of costs just wholesale. And so you saw an uptick in margins pretty much right after that, beginning in Q4. So that was part of the structural cost structure that Phil mentioned. So that’s part, and that’s pretty sustainable, right? That’s up to us to continue to manage that. And then two, the nitty-gritty behind Phil’s points are that, we basically have now higher margin 5G mobile products as opposed to the back half of last year, certainly most of the year actually, lower margin 4G was more the mobile broadband. And so that structurally has changed, and so that’s a bit of an uptick in margins on a fairly sustainable basis.
Lance Vitanza: Great. And then I guess the last one for me, you did make a bunch of notable hires in the quarter and year-to-date, and I’m just -- I think that’s great in terms of aligning the company for further growth. I’d imagine that that’s also an important priority for you. Should we expect will there be any sort of near-term compression in the kind of below the gross profit line margin, so to speak, just our SG&A going up in the short-term perhaps to sort of accommodate the incremental personnel and so forth, or is that not all that noticeable?
Phil Brace: The punchline is that the folks we added and brought in and recruited and headcount adds were done very, very decidedly, surgically, and kind of a rifle shot, if you will. And in many cases, there was some organizational changes, pruning and it was a switch out, so they were not all gross adds. So it’s a good question. I’m glad you clarified it last. These are not a step function increase in a cost structure. These are really adding folks and skills for the direction that we’re headed, and there are some that we didn’t need in what we had done in the past. So we maintain control over total headcount and compensation to do that. So we do look at it as something that we’re focused on adding while we drive growth, but also maintain profitability. And so, net-net, the punchline also on OpEx, and I think, I mentioned this a little bit in the script, if you will, that total OpEx we expect to be pretty flat on a total dollar basis Q2 to Q3 and probably even going forward. Maybe sales and marketing is a little bit higher, but then we have some savings on G&A and so there are a little bit tradeoffs, but net-net we’re managing it pretty tightly.
Lance Vitanza: Great. All right. Well, thanks for taking the questions.
Phil Brace: Yeah. Sure. Thank you.
Operator: The next question comes from Scott Searle of ROTH Capital. Please go ahead.
Scott Searle: Hey, Good afternoon. Thanks for taking my question. Great job on the quarter, guys. It’s phenomenal what you’ve done in, I guess, over a three-quarter period. I apologize. I got on the call late, so I hope I’m not being redundant here. But looking at the services line, it’s a big step up sequentially. Steve, is there a one-time item in there or something of note, or is that a sustainable level? And then as we’re looking out to the September guidance, I’m wondering if you could just give us directly some of your thought process [Technical Difficulty] access and services. And then I have a couple follow-ups.
Steven Gatoff: Hey, Scott, I got the first one on services and revenue, but I apologize that it was choppy on our end. I didn’t get the question on the mobile hotspot business for Q3 guidance. I didn’t get what the question was.
Scott Searle: My apologies. Sequential outlook, Steve, for hotspots, fixed warehouse access.
Steven Gatoff: Gotcha. Okay. Yeah, Phil and I will tag team. I’ll maybe start with some of the numbers and color and then macro it up for Phil to take. The punchline on services and others, we were really pleased at the beginning of the quarter, the end of the last quarter, to renew our Inseego subscribe, which is a billing -- subscriber billing and subscriber management platform with a large carrier customer. We were able to secure an uptick in the pricing of that. We mentioned that on an earlier call just so no one’s surprised by it. It went into effect this quarter, though, so April 1st is when it went into effect. So you saw a full quarter’s impact in Q2, and therefore, the step up in revenue from Q1 to Q2. And that is a two-year essentially fixed contract and so that is probably the definition of sustainable, and so we’re pretty pleased with that all the way around. We have a really great customer relationship with them and are doing some great work, and so we’re pleased to go extend that out. So that kind of adds a lot of color and kind of good substance to services and others. And then, as we talked a little bit about on the mobile broadband side, we’re seeing really nice uptake in the product overall, and even specifically through one of our large carrier customer promotions that did really well in Q2. We’re engaged with them again in Q3 and so we have high hopes and expectations and have good visibility and we will see -- we’re a little bit into the quarter, so that’s helpful and it’s going well. We have obviously two more months left, so we’ll see to what level that reaches, but we do expect a strong quarter for mobile broadband solutions for Q3. We’ll see to what extent that comes to the Q2 levels as we move forward.
Scott Searle: Very helpful. And in terms of diversification, you still remain fairly concentrated with a couple of large mobile operators in North America. I’m wondering how you guys are progressing in terms of your diversification efforts, both for mobile hotspot and fixed wireless access, if there’s any insight you could give us on that front.
Phil Brace: Yeah. Scott, I’ll take that one. So, that does remain a priority for us. Obviously, we love our biggest customers, we spend a lot of time there and we continue to work hard to earn their business every single day, but we also recognize that we need to diversify ourselves a little bit, and so you’ve seen us make some investments in kind of building up a value-added reseller channel. One of the things we’ve got to work for there, and you saw one of the announcements, is we’ve got to actually have some slightly differentiated products there. For example, when you sell into a particular large carrier, you might imagine that certifications are specific to that carrier. When you sell into a broader reseller channel, you’ve got to have products that are multi-carrier capable and require some different certs and maybe in some cases even have some different capabilities like multi-tenant management and things like that. So I would say we are committed to continue to make investments to go on that front. It’s moving about as fast as I expected, but sometimes these things take some time and so that’s going to be an area I’d continue to ask us for, and it’s going to be an area, a watch item for us as a management team as we go forward in the quarters.
Scott Searle: Yeah. And Phil, lastly, if I could, congratulations. It’s nice to see you’re going to be sticking around for a while in the Executive Chairman role. Along those lines, and I apologize if you covered this earlier, but your priority is now going forward over the next 12 months, and as part of that, given the recap that you guys have executed over the past quarter, do you start thinking about going on the offensive from an M&A standpoint? Thanks.
Phil Brace: Yeah. Good question. I mean, look, I mean, we still have some work to do on the restructure side. Okay, so priority number one for me is to kind of finish up the last few little bits of that. As I mentioned in my prepared remarks, we are taking a deliberate and thoughtful approach on the CEO search, but I’ve got great support from the Board and from the management team. And in terms of priorities, I think what we’re going to be doing and looking at is kind of expanding our revenue diversity. We’re going to be looking at expanding the portfolio footprint. And certainly, I think to the extent that we get ourselves on solid footing and growing, I certainly think we’ll be looking both at organic and inorganic opportunities. But I think our priority right now is just to continue the restructure, get us to start realizing the fruits of some of that labor like we already have. And then I’ve got to say it’s a pleasure to be even at the point where we can consider talking about doing some of those things from where we were just a few quarters ago. So thank you for asking the question. That made me smile.
Scott Searle: Hey. Again, congrats and thanks so much.
Phil Brace: Thanks, Scott.
Steven Gatoff: Thank you.
Operator: The next question comes from Kyle Smith of Stifel. Please go ahead.
Kyle Smith: Hey, guys. Kyle Smith on for Tore Svanberg at Stifel. Also wanted to extend my congrats on the strong results and improved capital structure. My first question is on geographic revenue. So any trends or surprises to note in the June quarter and where do you see the company’s geographic mix shifting over time?
Steven Gatoff: Yes. Steven, thanks, Kyle. The short answer is no, no surprises. The geography of the business tracks pretty closely to the businesses that we do. The vast majority is North America-centric, which is the products business and the subscribed business. And then we have the telematics business that, interestingly, is not North America, right? It’s Europe and ANZ. And so those businesses continue to operate well in their respective regions. And I think to Phil’s good points, there’s a whole bunch of work that we’ve been doing in the last three quarters or so since we all got here to really grow the business and grow it profitably that we’re focused on continuing to do that, that we’re not looking to go do any big global shifts or expansions in the business. And so we’re kind of focusing on our knitting and the geographic concentration kind of is what it is right now.
Kyle Smith: Very helpful. Thanks.
Phil Brace: Yeah.
Kyle Smith: Switching gears a bit, the press release mentioned the Ignite Channel Program, which was also highlighted on the prior earnings call. Maybe if you could give us an update on the progress of the program and remind us of the competitive differentiation and benefits that the program provides.
Phil Brace: Yeah. That’s a good question. I mean, so really, I mean, Inseego, for the most part, prior to this program being launched, had been, I would say, exclusively a major carrier product. That’s how we went through that. And so we have brought on some new executives. We’ve kind of launched a new program for the resellers that included some unique packaging options. I mentioned we’ll be doing some more differentiated products, including multi-carrier certifications. And really the goal there is to expand our reach, because in many cases, a lot of these products, I think on the FWA side, but even on the MiFi side, are sold to small and medium businesses, sometimes even sold to governments, local, federal, state institutions via resellers. And I think our goal is to kind of expand our reach into that channel. We know that, some of the competitors exist and have a robust business in that space. And I think we are coming at it, frankly, from a differentiated point of view, in that we have a rugged, excuse me, a very compact design, embedded antennas that are included in there, unique packaging and decades of experience in this space that have been validated by the major carriers. And so I think we’re going to have a unique value proposition and some of this just takes a little time to develop and it’s going to be a focus area that I need to continue -- we need to continue to hold ourselves accountable to continue to build that.
Kyle Smith: Great. Thanks, everyone, and congrats again.
Phil Brace: Kyle, thanks.
Operator: This concludes our question-and-answer session. The conference has now also concluded. Thank you for attending today’s presentation and you may now disconnect.
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