Inseego's Earnings Call: MSO Forecast Exclusion Contrasts With Upside Potential, Nokia Margins Now Fixed

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $44M, up 28% sequentially and up 9% YOY
• Gross Margin: 34% (non-GAAP), pressured by lower margin product orders

Guidance:

• Q3 2026 total revenue expected in range of $28M to $35M.
• Q3 2026 adjusted EBITDA expected in range of negative $1M to negative $2M.
• Full year 2026 revenue outlook updated to approximately $155M, reflecting lower second half expectations.

Business Commentary:

Revenue Performance and Product Delays:

• Insego Corp reported Q2 revenue of $44 million, reflecting 28% sequential growth and 9% year-over-year growth.
• Growth was driven by strong product revenue, particularly late-quarter orders from carrier customers anticipating memory cost increases.
• However, product delays due to engineering process limitations created a revenue gap, impacting the ability to fully recover lost revenue in 2026.

FWA Segment and Customer Recovery:

• The company's FWA revenue was $14.4 million in Q2, with a large purchase from a new Tier 1 carrier.
• Recovery from the largest FWA customer is slower than expected due to changes in enterprise go-to-market strategy and internal organization.
• The next generation product is expected to aid recovery, but the company is factoring in a slower rebound in its updated outlook.

MSO Opportunity and Subscribe Platform:

• The MSO opportunity was previously estimated at $15 to $20 million, but customer conversion is taking longer than expected.
• The MSO revenue has been removed from the 2026 outlook, with the focus shifting to other opportunities.
• The Subscribe platform achieved CMMC Level 2 certification, enhancing its cybersecurity capabilities, but professional services revenue is expected to decline by approximately $2 million per quarter starting in Q3.

Nokia FWA Acquisition:

• The acquisition of Nokia's FWA business is expected to close in Q4 2026, more than doubling Insego's revenue base.
• The acquired business adds a strong engineering capability and a comprehensive FWA product portfolio.
• Integration planning is underway with priorities on customer continuity, employee integration, and roadmap alignment.

Sentiment Analysis:

Overall Tone: Negative

• Management expressed disappointment over product delays creating a revenue gap not fully recoverable in 2026 and updated full-year outlook lower. Statements include: 'It is disappointing, particularly against the customer wins we brought in.' and 'We are updating our full year 2026 outlook to reflect a lower second half revenue expectation.'

Q&A:

• Question from Tyler Burmeister (Lake Street Capital Markets): Could you provide more details on the guidance, specifically how much MSO revenue was previously assumed in the full year outlook?
  Response: MSO revenue was previously assumed in the range of $15M to $20M but has been removed from the 2026 outlook.

• Question from Tyler Burmeister (Lake Street Capital Markets): Could you clarify the Subscribe software revenue decline of $2M per quarter?
  Response: Subscribe software revenue is expected to decline by $2M starting Q3 and remain at that level, not decline further.

• Question from Tyler Burmeister (Lake Street Capital Markets): What gives confidence in a Q4 snapback and what's the greatest risk?
  Response: Confidence is based on a return to normalized ordering cadence and recovery of the largest FWA customer with a new product launch; the main risk is if that recovery takes longer than expected.

• Question from Tyler Burmeister (Lake Street Capital Markets): On the Nokia acquisition, how much work can be done pre-close, like cross-selling?
  Response: Customer discussions and due diligence are underway, and new product portfolio discussions with Nokia are encouraging, but full integration occurs at close.

• Question from Lance Vitanza (TD Cowan): Could you refresh on the nature of the engineering execution bottleneck and confidence in its resolution?
  Response: The bottleneck stemmed from an inability to parallel process development for a broader product base and customer set; processes have been overhauled, and a new engineering leader is being recruited to resolve it.

• Question from Lance Vitanza (TD Cowan): Are there any implications of the back-half performance on the Nokia acquisition's economics or expectations?
  Response: No implications; the deal terms are fixed, and the acquisition is viewed as synergistic to improve engineering and global operations.

• Question from Lance Vitanza (TD Cowan): Can you provide an update on Nokia FWA business performance relative to the $200M run rate and any transaction adjustments?
  Response: The $200M annual run rate is still the valid baseline; no repricing mechanism is triggered as equity was issued at a fixed price.

• Question from Christian Schwab (Craig Hallam Capital Group): How will the combined company address engineering challenges given the acquisition?
  Response: Nokia's reliable engineering function is intact; integration will create a global one engineering function, with a new leader to oversee the combined setup.

• Question from Christian Schwab (Craig Hallam Capital Group): Could you clarify the memory cost impact on Q2 gross margin and ASP increase status with carriers?
  Response: Q2 gross margin was pressured by a large fixed-price order requiring higher-cost memory; ASP increases have been largely cascaded to customers starting in Q3.

• Question from Christian Schwab (Craig Hallam Capital Group): Is there an expiration date for the Subscribe platform arrangement with the customer?
  Response: The term length for the Subscribe agreement with the customer is still being determined in the normal course of contract renewal, typically ranging from 1 to 3 years.

Contradiction Point 1

Status and Forecast of the MSO Opportunity

Contradiction on whether the MSO deal is still included in the forecast or is pure upside.

Tyler Burmeister (Lake Street Capital Markets) - Tyler Burmeister (Lake Street Capital Markets)

2026Q2: The MSO opportunity... has been removed from the 2026 revenue forecast. - Stephen Gadoff(CFO)

What was the previously assumed MSO revenue in your full-year guidance? - Tyler Burmeister (Lake Street Capital Markets)

2026Q2: This amount has been removed from the 2026 forecast and is now considered upside potential until a contract is signed. - Steven Gatoff(CFO)

Contradiction Point 2

Timeline for Subscribe Software Revenue Decline

Contradiction on the duration over which the $2M quarterly decline will occur.

Tyler Burmeister (Lake Street Capital Markets) - Tyler Burmeister (Lake Street Capital Markets)

2026Q2: The revenue will decline by $2 million starting in Q3 and then remain at that steady level. - Stephen Gadoff(CFO)

Will the expected $2 million quarterly decline in Subscribe software revenue reach zero over six quarters? - Tyler Burmeister (Lake Street Capital Markets)

2026Q2: The revenue will decrease by $2 million starting in Q3 and then remain at that level (e.g., from ~$11M to ~$9M per quarter). - Juho Sarvikas(CEO), Steven Gatoff(CFO)

Contradiction Point 3

Performance Baseline for Nokia FWA Business

Contradiction on whether the $200M run-rate baseline is a target or a comfortable, unadjusted figure.

Lance Vitanza (TD Cowan) - Lance Vitanza (TD Cowan)

2026Q2: The company is comfortable with the $200 million annual run-rate estimate. - Juho Sarvikas(CEO)

Can you provide an update on the Nokia FWA business's performance relative to the ~$200M run-rate baseline and whether there are mechanisms to adjust the economics? - Lance Vitanza (TD Cowen)

2026Q2: The $200 million annual run rate remains a valid and comfortable baseline. - Juho Sarvikas(CEO)

Contradiction Point 4

MSO Deal Forecast and Inclusion in Revenue Guidance

A previously anticipated large MSO deal is removed from the annual forecast.

Tyler Burmeister (Lake Street Capital Markets) - Tyler Burmeister (Lake Street Capital Markets)

2026Q2: The MSO opportunity was a large, previously discussed deal estimated in the **$15 to $20 million range**. However, it is still considered a considerable opportunity and has been **removed from the 2026 revenue forecast**. - Stephen Gadoff(CFO)

What was the previously assumed MSO revenue in your full-year guidance? - Scott Searle (Roth Capital)

2026Q1: MSO engagement pipeline is strong with final conversion pending. - Juho Sarvikas(CEO)

Contradiction Point 5

Nokia Acquisition Gross Margin Potential

Gross margin outlook for the acquired Nokia FWA business shifts from potential improvement to being fixed at mid-teens.

What are your key financial highlights for the quarter? - Christian Schwab (Craig Hallam Capital Group)

2026Q2: The company is **comfortable with the $200 million annual run-rate estimate**... The transaction structure is **not repriced** based on performance... - Juho Sarvikas(CEO)

How is the Nokia FWA business performing relative to the ~$200M run-rate baseline, and are there mechanisms to adjust the economics? - Lance Vitanza (TD Cowen)

2026Q1: Current gross margins for the acquired business are in the mid-teens. There is potential to drive margins higher over time by adding higher-margin business. - Steven Gatoff(CFO)