Hello, everyone, and welcome to Inseego Corp.’s Second Quarter 2020 Financial Results Conference Call. Please note that today’s event is being recorded. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity for analysts to ask questions.

[Operator Instructions] On the call today are Dan Mondor, Chairman and CEO; Steve Smith, EVP and Chief Financial Officer. During this call, non-GAAP financial measures will be discussed.

A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the Investors section of the company’s website. An audio replay of this call will also be archived there. Please also be advised that today’s discussion will contain forward-looking statements.

These forward-looking statements are not historical facts, but rather are based on the company’s current expectations and beliefs.

For a discussion on factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in our Form 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.

At this time, I’d like to turn the conference call over to Dan Mondor, Chairman and CEO. Please go ahead..

Hello, everyone, and thank you for joining us today. On behalf of everyone at Inseego, we hope you and your families are staying safe and healthy during these very challenging times. I’m pleased to report that the second quarter was exceptional for Inseego, with $80.7 million in revenue, which is the highest since we began the turnaround in 2017.

We’re on track to launch our new 5G portfolio with multiple operators in the coming months, and are seeing outstanding performance in prelaunch field trials on live 5G networks. We made significant progress in strengthening the balance sheet and further improved operating cash flow.

Accomplishing this, while most of our employees were working from home, was no easy feat.

Everyone at Inseego has risen to the ongoing challenges by adapting quickly to the remote work environments, and have been firing on all cylinders, with our product, sales, operations and other teams maintaining high levels of customer engagement and productivity.

The resilience and dedication to supporting our customers through this crisis has been truly inspiring, and the fruits of their labor are reflected in our second quarter performance. We feel fortunate to be positioned during this time to help so many people stay safe, securely connected and productive at home.

As we said last quarter, the dramatic shift to remote work and distance learning has increased the demand for our products. To meet this sudden demand, we scaled up our production capacity and supply chain in a very short window of time.

We delivered nearly double the number of devices in the second quarter over the first quarter, and we further strengthened our ability to deliver in high volumes going forward.

We continue to see very strong demand and increased opportunity for our products and are well positioned to meet the same and even higher levels of demand than we saw in the second quarter.

In addition to delivering higher unit volumes to our existing customers, we won a new Tier 1 North American customer for a 4G LTE MiFi mobile hotspot, and are now shipping to that operator. This is an important new business for us and also helps our 5G engagements with these carriers.

Even after the COVID-19 pandemic is brought under control, we continue to believe the shift to remote work will be a permanent feature of the global economy. We’ve seen many reports about companies pivoting to this new normal, where the majority of their employees will have the option to work from home in some capacity going forward.

And several large tech companies have announced plans to extend remote work well into next year. With this shift, organizations understand they have a distributed workforce and it increases their exposure to cyber threats.

They need highly reliable and secure solutions like ours, which is one reason the vast majority of Inseego products are sold to enterprise customers. And we are well positioned in multiple public and private verticals from enterprise to SMB to government and other markets.

While revenue dramatically increased, we remain very disciplined in our cost controls and headcount. As Steve will get into in a minute, we strengthened and simplified our balance sheet in the first half of the year.

This is critical to allow us to remain nimble and take advantage of what we expect to be significant growth, driven by our second-generation 5G portfolio achieving commercial success around the world.

Our two most important goals in the near-term are to achieve free cash flow positive for the business overall; and deliver on our second-generation 5G deployments, especially those with new international carrier customers. All roads lead to these two priorities. Now I’d like to focus on our exciting new second-generation 5G products.

This portfolio includes not only mobile hotspots, but also a broad family of fixed wireless access solutions for homes and enterprise vertical markets. We have a robust and growing pipeline for these products, and we are reaffirming five mobile hotspots and three fixed wireless launches with six carriers in the coming months.

And note that some of these carriers are new customers for Inseego and are located outside North America. You may recall that at this time last year, we launched our first-generation 5G product with Verizon, which exceeded all expectations in terms of performance and capability.

The success of our first-generation 5G product was key to design wins of our second-generation 5G portfolio. We are now progressing through the prelaunch stages of field testing and regulatory certifications.

We expect to see commercial launches, and the revenue from these launches occurring through the balance of 2020 and ramping up in early next year.

Our new mobile broadband hotspot and fixed wireless 5G products are performing exceptionally well, delivering sustained, multi-gigabit speeds in the millimeter wave spectrum, an extraordinary gigabit plus speeds in the sub-6 gigahertz spectrum.

We believe this is just the beginning as we continue to trial our products with numerous other carriers around the world. We are seeing outstanding radio performance in our new products, thanks in part to our proprietary antenna technologies, which are designed and developed in our labs in San Diego.

Our 5G fixed wireless access portfolio includes both indoor and outdoor units that extend coverage, making possible to serve customers in suburban and rural areas that were previously unreachable.

In addition to delivering 5G products with high speed and broad coverage, we are incorporating technologies like dynamic spectrum sharing, or DSS, which enables 5G and LTE to run simultaneously on low band spectrum. Many operators worldwide have keen interest in DSS in order to provide fast, broad coverage with 5G in low and mid-band spectrum.

We are bringing this important technology to the market this year. In summary, we are on track with our new portfolio of 5G fixed and mobile hotspot commercial launches with multiple carriers in the coming months.

Now turning to our IoT business, it has also made good progress last quarter with the commercial launch of our new LTE gateway, the Skyus 160, which is now available through the Verizon business group’s direct fulfillment channel.

The Skyus 160 is also certified for use on the AT&T network and a growing number of other North American and European carrier networks. It provides both fixed and mobile connectivity for a wide range of applications that require nonstop reliability.

And it supports, in single connect, our cloud-based software solution for added security, remote monitoring and management. We continue to expand our customer base in the SD WAN market, as we strengthen our relationships with industry leaders like VMware and Dell. We are excited about where we can take our industrial IoT business.

In each of these partner initiatives, our 4G technology is powering a wide range of use cases. As we imagine the future, a myriad of devices will benefit from 5G connectivity to deliver solutions across the industries such as factory automation, health care, safety and security and others.

Our work in industrial IoT today paves the way to create the 5G use cases of tomorrow. Now turning to Ctrack. COVID certainly had an impact on the Ctrack business in the second quarter. The Ctrack business model relies on local offices selling and physically installing units on-site at the customer premises.

This was not possible in the early part of the second quarter given the government restrictions imposed in all our geographies. With the partial easing and restrictions globally in early May, we saw steady recovery in the Ctrack business through the remaining part of the quarter.

By June, we saw unit bookings and installation activity approach first quarter averages. In addition to the improved levels of booking and installation activity, we saw strong partner demand for our solutions.

And we signed several leasing and partnership agreements in Australia, including SG Fleet and Eclipx, who’ve already generated significant enterprise opportunities for us this year. We are confident in our team and market positioning.

With the continued easing of COVID-related restrictions in each geography, we expect our differentiated Clarity product to drive gradual quarter-over-quarter growth in the second half of the year.

Finally, our device management SaaS solution, DMS, had another strong quarter with a 27% increase quarter-over-quarter in its subscriber base, including many new government subscribers.

I want to extend a special thank you to our employees, customers and partners for coming together to meet unprecedented capacity demands during this challenging time while continuing deployments of new 5G networks. We truly appreciate the dedication. With that, I’ll hand off to Steve to discuss our financial results..

Thanks Dan, and good afternoon, everyone. As Dan pointed out, the Inseego team rose to the challenge to deliver strong top line growth, fulfilling exceptionally strong demand for our products in response to the work and school from home mandates.

Net revenue of $80.7 million increased 42% sequentially and 44% year-over-year, reflecting this evolving paradigm shift. We continue to see robust demand for our 4G products, and more importantly are seeing continued carrier traction for our industry-leading 5G portfolio. Turning to our business units.

Second quarter IoT & Mobile Solutions revenue was $66.2 million, up 66% from Q2 last year and up 64% from the first quarter, reflecting the demand surge that started in March with the onset of the COVID pandemic.

We saw increased demand across our portfolio, with much of the increase from our flagship 4G MiFi products, and a vast majority sold through service providers to enterprise customers. Second quarter enterprise SaaS solutions revenue was $14.1 million, down approximately 9% versus the same period last year and down 12% from the prior quarter.

For the Ctrack business, COVID restrictions had an impact on both bookings and installations during the quarter. However, as Dan mentioned, the business did recover later in the quarter. Additionally, currencies versus the U.S. dollar have been impacted across the board.

The South African rand value has fluctuated 38% from a low of ZAR 14 to the dollar in early January to as high as ZAR 19.3, impacting our year-over-year revenues as expressed in U.S. dollars by approximately 1.7 million. During Q2, we significantly strengthened the balance sheet, giving us substantial flexibility going forward.

Recall in Q1, we raised $25 million in a preferred stock transaction with Mubadala Capital, one of the largest and most sophisticated sovereign wealth funds in the world. Also in Q1, we executed a number of transactions that resulted in the conversion of $60 million of the 5.5% convertible bond.

In Q2, we raised $180 million of new 3.25% convertible notes due in 2025. This enabled us to retire the remaining 5.5% convertible notes and pay off the $47.5 million senior term loan that had an interest rate of 9.2%.

The end result of all of this is zero debt and a convertible instrument with the maturity of May 2025, which we are all very happy with. Some accounting of note. As a result of these transactions, we took a onetime $67 million noncash charge to the P&L, reflecting the value of the bonds at conversion/exchange.

This included an approximate $3 million inducement charge. We closed the quarter with a cash balance of $42.1 million. From this point forward, I’ll focus on non-GAAP measures, a reconciliation from GAAP to non-GAAP detailed in our earnings release.

For the IoT & Mobile business, gross margin was 21% for the quarter, up approximately 160 basis points compared to last quarter and up 430 basis points versus the same period a year ago.

Last quarter, we said to expect 200 basis point quarter-over-quarter improvement despite premium buys to meet the burgeoning demand and COVID-influenced increased freight costs, our mobile business gross margin increased 240 basis points quarter-over-quarter.

While we were not able to fully recover these premiums and added freight costs during the quarter, getting secured Internet in the hands of people that needed it most took precedence over immediate cost recovery. We expect to fully recover these costs over the coming quarters.

Enterprise SaaS Solutions gross margin of 64.4% was up 310 basis points from last quarter and up about 180 basis points from a year ago. The total company gross margin in the second quarter was 28.7%, down approximately 280 basis points sequentially.

This reduction is due to the high sequential increase in the lower margin 4G hotspot shipments in response to the surge in orders from our carrier customers. Q2 OpEx was $22.9 million compared to $22.8 million in Q1.

As planned, R&D expenses of $9 million were 14% higher than last quarter due to product trials and certifications with multiple service providers. Sales and marketing expenses dropped 6% to $7.8 million and G&A expenses were $6.1 million both reflective of cost reduction measures in place and limited travel.

Headcount was 983 at the end of June, up six from last quarter. We expect headcount will increase only modestly going forward, adding only key positions in sales and product engineering. Our Q2 non-GAAP net loss was $1.3 million or $0.01 per share.

Adjusted EBITDA for Q2 was $4.3 million as compared to $3 million for Q2 2019 and a loss of $1.7 million last quarter. Both IoT & Mobile Solutions and Enterprise SaaS Solutions had positive pro forma adjusted EBITDA coming in at $3.8 million and $2.9 million, respectively.

On a go-forward basis, we have decided to reorganize a portion of the Enterprise SaaS Solutions business into IoT & Mobile Solutions, specifically the DMS business. DMS is a cloud-based subscription management solution sold to service providers as part of the IoT & Mobile portfolio.

Next quarter, we will be reporting Enterprise SaaS as the stand-alone Ctrack business. For reference under this method, in Q2, the pro forma adjusted EBITDA for IoT & Mobile was $5.2 million and Enterprise SaaS was $1.5 million. IoT & Mobile non-GAAP gross margins would be 23% in Q2. With that, I’ll turn the call back over to Dan..

Thanks. We are proud of what we have accomplished over the past two quarters and the past three years, and are even more excited about the opportunities ahead. We are well positioned to meet today’s surge in demand and capture a growing share of the global 5G market.

I invite you to join us for an upcoming investor event with Canaccord Genuity on August 12. Before we go to Q&A, I have an important announcement that reflects our progress in transforming Inseego and our plan for the future.

As I’ve said, the successful transformation of the company that started in 2017 to create Inseego 2.0 has set the stage for Inseego’s next chapter of profitable growth driven by 5G. Steve Smith will be stepping down after three years with the company as our CFO.

Steve was the first member of the new management team that we put in place to lead the turnaround.

He was in the trenches with me during – doing the heavy lifting, especially during the difficult early stages when we had to cut costs, conserve cash, fix the capital structure and raise new equity, all the while, needing to invest in a 5G future that we clearly saw on the horizon.

His leadership of the finance organization over the past three years has been a major part of the strong position the company is in today. Steve will continue to support the company in a consulting capacity in order to support a smooth transition to a new CFO.

So in addition to that, I’m pleased to announce Craig Foster, who’s joining Inseego as our Chief Financial Officer effective Monday, August 17.

Craig has a wealth of experience having served as the CFO of several public and private technology companies after a successful career in banking with Credit Suisse, UBS and RBC and previously in public accounting with Deloitte and PricewaterhouseCoopers.

So on behalf of everyone in Inseego, I want to extend our sincere appreciation to Steve, and a warm welcome to Craig, and we will be issuing a press release announcing these changes before the market opens tomorrow morning. So now let’s go to Q&A..

[Operator Instructions] And our first question today comes from Mike Walkley from Canaccord Genuity. Please go ahead with your question..

Great. Thank you. Hope everybody is healthy and doing well on the phone today. And Steve, best wishes on your next endeavors. Enjoyed working with you as CFO. My question for the group here is a lot of moving parts, it sounds like, with 5G going into a lot of trials.

Can you just help us think about the back half of the year, how you’re seeing your business shape up, timing of some of these 5G ramps? The surge in 4G? And is it sustainable at these high levels into Q3? Just any guidance you could give us to kind of thinking about the back half of the year model would be helpful?.

Yes. Thanks, Mike. Likewise, I hope all is well with you. Well, in terms of the surge in demand that we’ve spoken about, certainly reported the results – second quarter results that reflect that, we’re seeing a sustained, strong, high level of demand for our products. And as we look at weekly data, it indicates that the level is sustained.

So strong demand for our 4G and our first-generation 5G product and addressing and fulfilling that demand. As we’ve discussed in the past, we have a number of product launches in the second half of the year. We reiterated on the call today. Those are proceeding on track.

We are now in prelaunch field testing, meaning the final testing of the products on live 5G networks going extremely well. I mentioned on the call, multi-gigabit speeds in millimeter wave, well over 1 gigabit in sub-6, which is extraordinary performance in the sub-6. So you can have both reach and throughput performance.

So those we’ll be rolling out in the coming months. And then the ramp for revenue will obviously occur as those launches take place. So we’re looking for that for the remainder of 2020. And as I said before, we see the layering of the continued surge in demand as well as the 5G launch revenue coming together in the second half of this year..

Okay. Thank you. That’s helpful. And maybe just a follow-up on that, Dan. Just can you help us just think about just the 5G opportunity, obviously, the second-generation products, early stages? Can you maybe help us think about the initial sell-in, how that might look? I mean it sounds like maybe more a Q4 phenomenon.

And then how that stacks on each other maybe into 2021? Just any broad overview you can share with us..

Yes. Well, the typical staging, it follows – a cycle follows a process. So we enter labs, we exit labs, go into the field, do prelaunch testing, the certifications. And it always starts with a stocking order as the operator starts to roll out the services and the products.

So we expect to see that in this quarter and next as these lead up to launch, then it’s a continuous flow of orders as the products sell-through to the end customer. And that’s really – the dynamic is going to follow. So we’ve talked about the number of launches, six operators that are locked and loaded for the second half of this year.

We’ve got a number of trials with other operators that are in slightly earlier stage than those. So we’re locked and loaded on those six launches across eight products and those six operators, I should say. And that’s what we’re really focused on to be successful. Things are going extremely well, as I said, I couldn’t be happier.

And I would also say this that the performance that we’re seeing in these products are right out of the box. There’s really been no tuning and adjusting and tweaking the software for performance, that’s right out of the box. Now naturally, performance will improve with that.

So we’re very, very bullish on where we are and we like the position we’re in..

Great, thanks. Last question for me, and I’ll pass the line. I guess, Steve, I’ll get you for one last question on a public conference call here.

Just on gross margin trends, as 5G ramps in the mix, can you talk about how they might be accretive to current gross margins? Or just how we should think about gross margins over the coming quarters, especially as you might not have to have as many expedited freight costs? Thank you..

Mike, we’ve got – thanks for your comments, by the way. When we look at gross margin on a go-forward basis, I’m not going to give the individual 5G or 4G. But with the increase in 4G that we’ve seen, it’s actually – the 4G portfolio has a lower gross margin, and that’s actually kept the gross margins down lower.

But keep in mind, we did grow our gross margins 240 basis points quarter-over-quarter in the mobile portfolio this quarter despite the increase in premium buys. I think on a go-forward basis, expect 100, 160 on the mobile portfolio. And overall, a couple of points increase in gross margin..

Thank you very much..

And our next question comes from Jaeson Schmidt from Lake Street. Please go ahead with your question..

Thanks for taking my questions.

I just want to start, did you see any supplier component constraints in Q2? And are you assuming any of those potential constraints in Q3 as well?.

Yes. Jaeson, thanks for the question. Well, the surge in demand, as we’ve talked about, really happened in March, and it was sudden and high. So we adjusted our supply chain correspondingly. And it was a question of catching up to the demand as we went through the quarter.

So what Steve mentioned on the premium buys and expedited freight, came with a cost. And that was literally to procure the material as well as obviously, ship and deliver from our manufacturing site. So it was really a question of catching up with the supply, the purchasing, the premium buys through alternative channels.

And as we got to the end of the second quarter, we had caught up. As I said, we’ve seen sustained demand. We actually increased our ability to manufacture capacity in the second quarter, and we’re exiting this quarter now in much better shape. We’ve worked out, we’ve built our muscles, and we’re ready to go in Q3. So we’re at a very good place now.

But it was certainly challenging early in March and early April..

Okay. That’s helpful. And I know you’re not providing specific guidance for Q3. But based on your comments, it sounds like the sustained demand in the IoT business is expected to continue at least through this quarter. And your comments on the Ctrack business potentially bottoming in Q2 and seeing some recovery in the back half of that quarter.

I would expect that recovery would continue in Q3.

So is there anything that you’re seeing that gives you pause that Q3 would not be up sequentially?.

Well, all I can say is the future is very unpredictable, not saying anything shocking there. The demand for our 4G hotspots remains really high, and it certainly meets the needs and requirements of the whole move to work from home and now schooling for home. As you know, the work-from-home dynamic has continued and is now seasonal.

We’re entering the schooling period and there’s associated demand with that. So we see a sustained level of demand coming for our current generation products. And as I said, the other layer is the revenue that will be coming in from the 5G launches this year. So we feel very confident where we are. We know we’ve got scaled supply capabilities.

We know what the picture looked like in Q2. We’ve learned how to accommodate high levels of volume. And that’s where we sit today, but we’re very pleased in the demand level we continue to see. Obviously, the dynamic behind that is because of the pandemic. So we feel very fortunate that we can help people stay, safe, secure and productive at home.

We look at weekly data on what was the sell-through. All I can tell you is demand remains very high..

Okay. That’s helpful, thanks a lot guys..

Thanks, Jaeson..

Our next question comes from Scott Searle from ROTH Capital. Please go ahead with your question..

Hey, good afternoon. Thanks for taking my question. Steve, best of luck. Really enjoyed our conversations over the years and best of luck in your future endeavors..

Thanks, Scott..

Just quickly, I don’t know if you covered this. I got on the call a little bit late. But your largest customer, did you give that as a breakout of percentage of revenues? And then I have a couple of follow-ups..

No, we didn’t give that..

Okay..

It would be – Verizon would be our largest customer..

Got you. And Steve, maybe just to follow-up on Mike’s question, digging in a little bit more on the gross margins. It sounds like you’re 21% in mobile and IoT this quarter, you had some expedite costs on top of that, were a couple of hundred basis points.

It sounds like you’ll benefit from mix as we get into the back half of this year with more 5G contribution.

Do you exit the year close to 30% on the gross margin front?.

Scott, well, what we’re – what we said is the 4G portfolio is actually running pretty solid right now. And while we’re increasing the gross margin there, and as I said, I expect the mobile business to be increasing 160 basis points over the next quarter.

I’d expect about a 2% increase overall for the company or, call it, 200 basis points approximately. And that’s about the extent of the outlook that I can give at this stage..

Hey, Scott, just if I can add a comment to that and just relative to the dynamic of Q2 and then what’s going on going forward. We described the premium buys to expedite parts. We described the expedited freight cost. So we weren’t able to – so we passed on that cost on a unit basis, but the volume of units couldn’t make it all up within the quarter.

However, the pass on those cost in terms of pricing continues forward. And that was relative to Steve’s comment that we’ll recover that in the coming quarters.

What I’m trying to get at there is that the increased cost that pulled down margins in Q2, we have built-in cost improvement programs, but also there is that mechanism of recovery through the fuel price increases that will occur over the next couple of quarters. So a couple of moving parts there to think about..

Got you. And lastly, if I could, Dan. On the 5G front, I think you said five mobile hotspots and three fixed wireless access solutions.

Just want to clarify, are they all going to be shipping in volume by the end of this year? Or are they going to be in various stages of kind of ramping up and testing? And maybe as part of that, it sounds like you’re getting some pretty good results on the sub-6 gigahertz stuff. Specifically, there’s a lot of talk about CBRS right now.

I’m wondering if you’re actually seeing any interest in activity on that front. Thanks..

Seeing a ton of interest, yes. And we talked about five mobile broadband hotspots, three fixed wireless products, six carriers around the globe. So those launches will occur in the second half of this year. Each carrier has a different process for launch. I’ve always likened it to NASA countdown, go for launch, all the preparation they need to do.

We are ready with the products. So it is wholly dependent on the carrier’s launch cycle. All the indications are that it is go for launch. There will be a progression over time. Revenue will build up as you launch, sell, restock, and that will go on into 2021.

And then a new layer of launches will layer on top, and that’s the number of additional trials and testing that we have going on that are not quite as far along as the six we referenced. So it will be a buildup of revenue over time, second half of this year from those and then into the early part of 2021..

Great. Thank you..

Thanks, Scott..

Our next question comes from Scott Fessler from Stifel. Please go ahead with your question..

Hey, guys. Thanks for taking my question.

Picking backing off of the 5G questions, what’s the right way to think about the pace of 5G MiFi adoption? Assuming there’s a lag time between when network go live or when you think 5G hotspot sales start to eclipse 4G levels? Like what’s the right time frame in your view?.

Yes. Well, it really is the technology – the new technology cycle and how quickly it ramps, of course, network dependent. The network build-outs that we’re seeing, the customers we’re involved with hand-in-hand, have not slowed down. So there’s – they’re continuing to pull on us to get the product to launch.

Every launch starts with the stocking order, as I mentioned. So they get going with their service offering. What we do see in 5G is the ramp is twice as fast as we saw in 4G. So it is happening much quicker than the 4G cycle, which is a very, very, very bullish statement on what we see in the very near term..

Great. Thank you so much..

Thank you..

[Operator Instructions] Our next question comes from Chris Sinnott from Cowen. Please go ahead with your question.

Hi, guys. Thanks for taking question. This is kind of a good segue from the last two questions. But I believe the last time we spoke, you had thrown out a number of about 50 in terms of a pipeline of operators, 50 operators that you were conducting trials with. And then about, say, 20 of those or maybe 20 or 21, had actively moved into live trials.

Do you have an update on that ratio at all? Or how those figures come in?.

Yes, thanks. So, yes, the pipeline of operators and that reference means all stages, from early engagement to later in the pipeline staging, is a growing number. We actually stopped talking about it because it was sort of like how many stars in the galaxy.

And what we tried to do is hone in on the trial activity, which is obviously further along in the pipeline. So of those 20 or so – I think 21 that we mentioned previously, well, six are in go-for-launch mode. There’s a number – another – others that are – larger than six that are in an earlier stage and yet another number that are earlier than that.

So it’s like a sequencing. They don’t all go on the same, but the pipeline remains very robust. It’s certainly well in excess of 50 now. And as I said, the 21 trials are moving forward to commercial reality at different time frames..

Okay. That’s helpful. Thank you. If we could pivot over to the research and development line, I think the $10.5 million there for 2Q is probably a little bit more than we were thinking and definitely a lot more looking at either year-over-year or sequential increase.

Can we think of that – to the extent you can talk about this as sort of like a run rate for what you guys need to spend? Or was this maybe like a final push into the end of the first half of the year ahead of all these trials and regulatory certifications and things that you need to do to get ready for the second half push?.

Chris, no, we had a couple of things that went through. You’re looking at the GAAP line, $10.5 million, on a non-GAAP basis, it was closer to $9 million. What’s your – that’s impacted by a couple of things. Yes, on the certifications and so on.

And it will be – I wouldn’t call it ongoing at that level forever unless as we push towards the end and getting the certifications and product in the market. And then on top of that, we had some stock comp and things like that, that went through that, obviously, we pull out for non-GAAP purposes..

Okay. That’s all from me guys. Thank you. It’s helpful..

Thanks..

Ladies and gentlemen, at this time, I’m showing no additional questions. We’ll conclude today’s question-and-answer session. I’d like to turn the floor back over to Dan Mondor for any closing remarks..

Thank you, operator. So as we launch our second-generation 5G portfolio in the coming months, I believe we’re entering one of the most exciting periods in the company’s history and the wireless industry in general. The cycles for every new generation of mobile technology are long, and 5G is at the very beginning of its cycle.

So users around the world will soon experience the power of 5G for themselves, delivered by innovative high-performance devices and cloud solutions. We believe Inseego is exceptionally well positioned for a very strong period of profitable growth well into the future. So thanks again, everyone, for joining us today..

Ladies and gentlemen, with that, we’ll conclude today’s conference call. We do thank you for attending. You may now disconnect your lines..