SAN DIEGO - Inseego Corp. (NASDAQ:INSG), a leader in 5G and fixed wireless solutions, announced Monday that it has agreed to sell its fleet management and telematics business for $52 million in cash to a portfolio company of Convergence Partners. This transaction aligns with Inseego's strategy to concentrate on its core 5G mobility and fixed wireless offerings and to improve its capital structure.
The divested business, which operates in the United Kingdom, the European Union, Australia, and New Zealand, will be acquired by an affiliate of Ctrack Africa, which was previously part of Inseego’s portfolio and sold to Convergence in 2021. The reunification under Ctrack is expected to offer benefits of scale and specialization in telematics for customers and employees.
Inseego Executive Chairman, Philip Brace, stated that the proceeds from the sale will be used to fully repay the company's short-term debt, restructure convertible notes, and enhance liquidity. Brace emphasized that this move is part of Inseego's ongoing efforts to strengthen its balance sheet and focus on expanding its 5G business.
The deal is subject to customary closing conditions and is anticipated to close early in Q4 of 2024. The initial purchase price may be adjusted based on standard working capital and other conditions.
Inseego has also confirmed that its financial guidance for Q3 of 2024 remains unchanged. Raymond James & Associates, Inc. served as the financial advisor, with Greenberg Traurig, LLP acting as legal counsel for the transaction.
This sale marks another step in Inseego's strategic realignment towards its 5G enterprise cloud WAN solutions, which serve a wide range of customers from large enterprises to small and medium-sized businesses.
The information provided here is based on a press release statement and includes forward-looking statements that involve risks and uncertainties. These statements reflect management's current expectations and are not guarantees of future performance. Factors such as closing conditions, financial negotiations, and market demand could influence actual outcomes.
In other recent news, Inseego Corp. has made significant strides in restructuring its debt, paying down $9.5 million of its short-term loan and converting $5 million of its convertible notes into long-term debt and equity. The company's recent financial results for Q2 2024 have also been noteworthy, reporting revenues of $59 million and an adjusted EBITDA of $8.3 million. The company's performance was boosted by its mobile business and the renewal of a significant contract for its subscription management platform.
Inseego has also launched the FX3110, a new multi-carrier 5G indoor router, which is certified across all major U.S. carrier networks. This recent development is part of the company's ongoing efforts to provide innovative solutions to its customers.
Analyst firm TD Cowen maintained a Hold rating on Inseego's stock, raising the price target to $15.00 from $13.50, following the company's impressive revenue performance and notable improvement in gross margin. For Q3 2024, Inseego Corp. has projected revenue to range from $54 million to $58 million, with adjusted EBITDA between $6.5 million and $7.5 million. These are some of the recent developments in the company's financial landscape.
InvestingPro Insights
Inseego Corp. (NASDAQ:INSG) has been making strategic moves in the market, and recent data from InvestingPro provides a deeper understanding of the company's financial health and stock performance. With a market capitalization of $214.76 million, Inseego's valuation reflects its position within the technology sector. Despite a negative P/E ratio of -4.78, which shows that the company is not currently profitable, analysts are optimistic, as evidenced by three of them revising their earnings upwards for the upcoming period. This optimism is further supported by the company's strong performance in the stock market, with a significant return over the last week of 14.2%, and an even more impressive return of 299.42% over the past year.
InvestingPro Tips highlight the stock's recent volatility and suggest caution, as the RSI indicates that Inseego may be in overbought territory. Additionally, the company's short-term obligations currently exceed its liquid assets, which could present liquidity challenges. On a positive note, analysts predict that Inseego will become profitable this year, which could be a pivotal turning point for the company's financial trajectory.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips on Inseego Corp. To explore these insights and consider how they might impact investment decisions, visit https://www.investing.com/pro/INSG for further details.
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