Inseego Corp. Q1 FY2021 Earnings Call

Hello and welcome to Inseego Corp.'s First Quarter 2021 Financial Results Conference Call. Please note that today's event is being recorded. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity for analysts to ask questions. On the call today are Dan Mondor, Chairman and CEO; Bob Barbieri, Interim Chief Financial Officer; Ashish Sharma, President of IoT and Mobile Solutions; and other members of the management team. During this call, non-GAAP financial measures will be discussed. A reconciliation of 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 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. I would now like to turn the call over to Dan Mondor, Chairman and CEO. Please go ahead.

Thank you, and hello, everyone. It's great to be with you today. Let me begin by saying that today this company is better positioned than it ever has been on almost every possible measure. As I look back at our progress over the last few years, Inseego is a very different company in a much stronger position. This is illustrated in our first quarter results compared to last year. We reported a 120% increase in our combined 5G and software as a service revenue over last year and gross margins over 35%, up over 400 basis points. We ended the first quarter with approximately $60 million in cash on our balance sheet and zero bank debt. There are four predominant reasons for our remarkable transformation. First, we have greatly reduced our customer concentration by expanding our 4G and 5G carrier customer base in the U.S. and increasingly in international markets. Second, a rapidly growing software business is yielding recurring higher margin revenue on top of device revenue, which contributed to our strong gross margins this quarter. Third, carrier customers are embracing our recently launched 5G fixed wireless access products and we see fixed wireless access as a major growth driver for the company going forward. Fourth, our first enterprise 5G fixed wireless products were launched and sold this quarter in North America, EMEA, and Asia Pacific. As we enter 2021, we have just announced the biggest win in company history with the launch of our 5G Wi-Fi hotspot at T-Mobile, which has quickly become our highest volume 5G customer. T-Mobile has also adopted our Inseego managed software platform, which adds recurring subscription revenue to those hotspot sales. We are making solid progress in international markets with some initial 5G customer deployments with more to come. We continue with testing, regulatory approvals, and customer contracts in multiple regions. While it's taking a little longer to establish business in new regions, we see international markets as an important growth driver. The most important development in the last six months has been our 5G fixed wireless access portfolio. And the great news is that every customer dialogue now includes fixed wireless in addition to our hotspots. It is key for mobile operators to create new revenue streams to generate a return on their capital investment in acquiring spectrum and building national networks. And it's not only relevant for consumer home broadband and entertainment, but also in the enterprise and private network space. We believe both are very large market opportunities with a wide range of use cases. And I'm very pleased to report that T-Mobile has certified three of our fixed wireless access products for their enterprise business. And we're working closely with them to support customer engagements. This is central to our 5G Enterprise initiative announced late last year, and it goes far beyond the work-from-home market. 5G enables new technologies for the enterprise, such as edge AI and edge computing. We have existing 4G customers such as Dell, VMware, and other enterprise technology leaders in all of our dialogues that now include our 5G product lineup. You see recent announcements of our new enterprise products and channel partners in North America, EMEA, and Asia Pacific with more to come. Now let's turn to our new software as a service offering. Almost every conversation we have with carriers and enterprise customers involves our software platforms, which enable them to onboard, manage, and secure the growing number of 4G and 5G devices on their network through centralized cloud management. Our SaaS business has grown significantly over the last 12 months, representing a healthy 24% of our revenue in the first quarter. Our 4G business continues to be strong, and we continue to add new customers. We saw a surge in demand for our 4G products starting in March of last year, with the pandemic driving the need for work-from-home solutions. That helped us win AT&T as a 4G customer, which means our products are now being sold by all of the largest U.S. carriers. While 4G is down from 2020 levels, we are seeing higher demand levels than we did pre-pandemic. The bottom line is 4G will remain an important part of our business, and it's key as we continue to land and expand 4G customers to 5G. We have positioned Inseego as a pure play 5G company. Ultimately, all our efforts are aligned on the global 5G opportunity. This led us to divest our Ctrack fleet tracking business in South Africa, which is not a target 5G market for us. In addition to reducing our headcount by over 540 people or 53% overall, the divestiture will increase revenue per employee to over $600,000 on a pro forma 2020 basis. We think this is an important financial metric for the investment community to know. Finally, I want to address the global semiconductor shortage. Our business has not been impacted thus far, thanks to our deep and long-standing direct relationships with key component suppliers, in addition to our manufacturing partners. Through our proactive approach, we have avoided delays in customer deliveries. We expect the current conditions will extend through the end of this year and likely into 2022. Our leadership team will continue to work closely with our silicon partners and take necessary actions to secure supply. With that, I will hand off to Ashish, who will go into further detail on our incredible momentum in 5G and cloud solutions and some groundbreaking customer use cases. Ashish?

Thank you, Dan. Over the past year, our customers have relied on our innovation to accelerate broadband adoption through our state-of-the-art 4G, 5G and cloud solutions, while protecting the end users from security threats. From my numerous conversations with customers, it is clear that our 5G technology, along with our cloud innovations, will form a powerful engine for their business transformation growth as their technology needs continue to evolve at a rapid pace. From a product revenue perspective, we saw strength in our 5G mobile broadband portfolio and Inseego managed cloud portfolio, which now accounts for 20% and 24% of our overall business, respectively. This combined 44% is 2x from a year ago. The mobile broadband business continues to build up, and we are experiencing great reception of our M2000 and M2100 5G solutions from all customers. Consistent feedback we are receiving from our carrier customers is that our technology is far superior to any other similarly categorized product in the market. We secured another 5G operator, Sunrise, in Switzerland, with the commercial launch planned for early June. We also just launched the MiFi 8000 in Canada with Rogers and Fido. Many new carrier customers in international markets are trialing our 5G solutions, and we anticipate new launches in the coming months. Moving to 5G deployments, we just released a series of new Wavemaker products focused on both carrier and enterprise markets, including two indoor activewear products, FG2000 and FX2000, and a rugged outdoor product, the FW2000. These products are certified for use in many different regions globally and have recently been certified for use on the T-Mobile network. This is a major accomplishment for Inseego. Our focus now is on implementing joint go-to-market strategies to maximize our success in this very early market. In addition, on the enterprise side, I'm happy to report that we have generated our first Wavemaker revenue by shipping units to North America, Australia, and Europe. This was accomplished through our growing list of channel partners such as Scansource, Ingram Micro, Synnex in North America, Powertec in Australia, and Sphinx, Solid State Supplies, and others in Europe. In terms of our enterprise market push, we are seeing some exciting use cases even at this early stage of 5G deployments. Let me provide some examples of customer projects we are working on. In the area of traffic, transportation, and logistics, a global leader in transport solutions is deploying our 5G CPE on lampposts in the U.K. to support video streaming. They're starting with traffic monitoring, but ultimately, the goal is to support autonomous vehicles. A smart city in Georgia, Peachtree Corners, is deploying our 5G solutions on streetlights and other locations where fiber would not be economically feasible to enable smart traffic control, management of autonomous vehicles, and other use cases. A global leader in package delivery is looking at connecting remote hubs and depots in rural areas where cellular reception can be greatly improved with our high-gain products. Our solutions enable many retail use cases as well, where a system integrator in Europe is connecting a video feed through our 5G solutions in conjunction with their AI platform. Their objective is to provide a solution for retail stores to monitor shelf stock, spillage, theft, surveillance, etc. In the U.S., a leading retail chain is trialing Wavemaker as a connectivity solution for vaccine distribution locations. We're also seeing opportunities in the private network space. A government agency is evaluating Wavemaker for secured private networks. One particular use case for them is deploying secure networks in remote areas where cellular coverage is limited. The transformation of our business to more software subscriptions continues to show great progress, as we achieved 11.5% quarter-over-quarter growth in subscriptions. These are five consecutive quarters of our 40% growth in our recurring software revenue, excluding Ctrack. Dan mentioned earlier, AT&T now carries the MiFi 8000, but it is important to note that it will also make Inseego Connect available for enterprise customers. We are seeing this in almost all of our customer dialogues; the technological capabilities of our devices coupled with our software management layer is a powerful combination. It is examples like this that give us confidence that we will continue to grow software beyond its current 24% of total revenue. Let me conclude with some thoughts on our product portfolio vision. Access to corporate data anywhere and everywhere securely has become the beating heart of the new enterprise. Our 5G and top platforms are built with extensive reach, massive scale, and multiple layers of security to help drive this digital transformation. We are excited about our position in the market. They're executing and innovating with speed. I'm so proud of what our 5G and cloud teams have achieved. Now I'd like to turn the call over to Bob.

Thanks, Ashish. First off, let me say how happy I am to be here on the call with you today. Given today is my one-month anniversary and I've not had the opportunity to speak with many of you. Let me start off the call by introducing myself and offering why I was attracted to join Inseego. I have over 25 years of experience as a senior executive, including being the Chief Financial Officer at growth software, cloud, and technology companies and specifically public companies such as Apogee Enterprises, Lawson Software, and TriZetto. I was brought on by the Board of Inseego as Interim Chief Financial Officer with a mandate to support the company's transition to a high growth 5G and SaaS company. I would like to now review the results of our first quarter of fiscal 2021. Q1 revenue was $57.6 million, up about 1.5% from Q1 of 2020. We should recall Q1 2020 benefited from the onset of the COVID demand surge, which began in the final weeks of the quarter. The favorable year-over-year comparison is largely due to growth in 5G and software revenue, as Dan and Ashish highlighted. The sequential decline results from a lower level of the surge demand for 4G hotspots, albeit they are running at higher levels than pre-pandemic activity. First quarter IoT in mobile solutions revenue was $43 million, up 1.3% year-over-year and down 40% from $72.1 million in Q4. Inseego subscriptions were up 11.5% sequentially, and up 175.7% year-over-year, which helped drive the growth versus the prior year. Sell-through of 5G hotspots continues to be strong, and we expect an increase in new shipments in coming quarters as units ordered harmonize with the ongoing demand. Enterprise SaaS revenue for Q1 was $14.6 million, up 4.8% quarter-over-quarter and relatively flat over the prior year. The sequential increase reflects both better sales as we recover from lockdowns in South Africa and the continued strengthening of the Rand versus the U.S. dollar. With respect to the sale of Ctrack South Africa, the transaction continues to progress according to schedule. We continue to anticipate closing the sale at the end of the quarter, subject to regulatory approval and other closing conditions. This will lead to approximately an additional $36 million to our cash balance based on the current exchange rate. Speaking of cash balance, cash at the end of Q1 was almost $60 million, including cash classified as held for sale, up almost $20 million from Q4 of 2020. The increase in our cash balance reflects the net proceeds of $29.4 million from our ATM offering in January and solid cash collection offset by our need for higher levels of in-transit inventory as we transition from air to ocean shipments. We've taken these actions to better manage cost, as well as buying long lead-time components to ensure we can meet customer delivery schedules going forward. From this point forward, I will focus on non-GAAP measures. A reconciliation from GAAP to non-GAAP is detailed in our earnings release and is found on our IR web page. For the IoT and mobile business, gross margin was 26.1%, up 50 basis points from the 25.6% in the prior quarter and up approximately 560 basis points compared to Q1 of 2020. Gross margin improved both sequentially and year-over-year, the results of a higher mix of 5G and Inseego managed revenue and the decline of lower margin 4G sales from 2020 highs, as well as solid execution throughout 2020 and 2021 year-to-date and improving supply chain efficiency. Going forward, we expect a higher mix of 5G and software revenue and new initiatives to improve operational efficiency will lead to better economies of scale, which translates into improved IoT and mobile gross margin steadily as the year progresses. Our enterprise SaaS solutions gross margin for Q1 was 63.8%, up 130 basis points from 62.5% in Q4 and down 20 basis points from the prior year. Total company gross margin for Q1 was 35.7%, up 410 basis points from 31.6% in Q4 and up 420 basis points from the 31.5% in Q1 of 2020. As discussed earlier, the increase is predominantly a result of better sales of higher margin 5G products and software uptake in our IoT and mobile business. Q1 OpEx was $26.7 million, down $5.6 million compared to $32.3 million in Q4. The decrease was primarily a result of the research and development spending related to our 5G product programs with the capitalization impact over the course of the software's useful life. We capitalize our external-use software on a product-by-product basis per the accounting guidance. Therefore, the capitalization and amortization impact to our R&D will cause certain volatility in our quarter-over-quarter operating expenditures. In addition, our testing and certification was lower versus the prior quarter. Sales and marketing and general administrative charges remained relatively flat, with the Delta being largely seasonal changes due to product launches and annual audit fees. Our Q1 non-GAAP net loss was $7.7 million, or negative $0.08 per share, versus $6.9 million, or a loss of $0.07 per share in the prior quarter and a loss of $5.7 million, or $0.06 a share last year. This result reflects our ongoing investment in 5G and SaaS product development and additional sales resources offset by stronger gross margins. Adjusted EBITDA for Q1 was a loss of $900,000 versus a positive $7 million in Q4 and a loss of $1.7 million last year. For additional details on non-GAAP and adjusted EBITDA results, please refer to the reconciliation tables in our press release. Finally, some thoughts on the rest of 2021. As stated previously, the company continues to believe that the second half of this year will be better than the first half driven by 5G sales growth from existing customers, new 5G carrier deployments primarily internationally, revenue growth from our entry into the enterprise market, and increased software revenue across our product line. We're bullish due to the many positives that have been articulated today. With the expected closing of the Ctrack South Africa sale at the end of the second quarter, our financials will more accurately reflect the 5G pure play as mentioned by Dan. With that, let me turn it back to Dan for closing remarks.

Thanks, Bob. We're delighted to have you on the Inseego team. I want to close by expressing my sincere thanks to our dedicated employees who continue to do an amazing job in these challenging times. They are the driving force behind our numerous accomplishments and I can't thank them enough. We've made significant investments over the past two years to create a best-in-class 5G and software solution portfolio and in sales and marketing resources to capture significant market opportunities. These investments have begun to be reflected in our results. The strength of our portfolio has helped us succeed in initial customer engagements across multiple regions in the developing fixed wireless access market with carriers and enterprises. We have excellent customer relationships and are seeing tremendous traction with our industry-leading 5G products and new software as a service solutions. This gives us more confidence than ever in our ability to become a high growth, high margin, 5G and SaaS global solutions company generating strong free cash flow. With a strong second half, you can only imagine what 2022 will look like. Thanks again, everyone.

We will now begin the question-and-answer session. First question comes from John Marchetti with Stifel.

Dan, if I could just a couple of quick questions on the overall business trends in the enterprise. You mentioned some of the initial sales that you saw here in Q1. How do we think about that as we start to move through the year contributing to that second half strength? I mean, obviously, a big focus on 5G products, obviously with mobile hotspots and things of that nature. But how do we think about the enterprise opportunity? Is that more a '22 event, or do you think it's a real contributor to that second half growth outlook you just highlighted?

Hi, John, great question. Well, as you know, we've just recently launched our enterprise 5G portfolio. So it is gaining traction in the market, terrific that T-Mobile for business certified three of our products, indoor and outdoor fixed wireless products. We're starting to work with them on market opportunities, and then broadly through our distribution channel that we described in North America and APAC. So we see it beginning to contribute in the second half, it will be a ramp as usual. But we have the portfolio, we have the software solutions to go with it and the distribution in our target market. So it's a ramp for the second half as we see it, and certainly carrier a great momentum is what we're expecting to see going into '22.

And again, just as a follow up to that, is there a better margin profile with those enterprise products relative to maybe the mobile hotspot products? And obviously, the software pieces are very different margin profile, but how do those solutions stack up? I guess margin wise, relative even to the 5g mobile hotspots?

Yes. As we all well know, the enterprise market in general has a different gross margin profile. There are benefits of the distribution, but I will say this, yes, it is higher than if you will, the kind of the carrier gross margin profile as far as the fixed wireless access products. I would expect somewhere in the mid 40s.

And then, maybe just the last question for me, and I'll jump back in the queue. From a software perspective, obviously, a lot of you mentioned some of the carriers that are now offering alongside, but as you go-to-market in that enterprise market as well, is there a different attach rate there for software? Is it higher or is it lower? Just curious, how that stacks up relative to what you're seeing on maybe some of the mobile hotspot side as well. Thank you.

Yes, a great question in addition, John, thank you for that. Well, we're seeing strong attach rates across the board. As you know and as we announced, T-Mobile has adopted our Inseego managed solution as part of their initial 5G hotspot deployment. AT&T is now adopting Inseego Connect to offer to their enterprise customers as part of the launch of our new 4G hotspot business with them. All of the conversations with enterprise and all for the right reasons want to look at how they can deploy, acquire, manage and secure their enterprise. They don't have their own, so naturally, it's a packaged solution. We're also seeing an offering we call Inseego Select that is a bundled offer for select sales partners that would sell the complete package kind of in a rental type of model, which will add to recurring revenue, good recovery, high gross margin. So the answer is both. We're seeing strong interest and attach rates in both carrier and enterprise, John.

Our next question comes from Mike Walkley with Canaccord Genuity.

Great, thanks for taking my question. I guess first place to start is just good to learn that 4G levels are above pre-COVID areas, but just trying to get a cadence of, with the work from home and school from anywhere type of surge in demand. How should we think about the cadence for that business and the overall maybe IoT and mobile solutions businesses? Is Q1 the trough kind of a seasonally softer quarter and it builds throughout the year, or is there still may be a pocket of 4G coming out in Q2 and then a stronger second half of the year?

Yes. Hey, Mike. Thanks very much. And also a great question. Well, as we've said and mentioned on the earnings call previously, we are seeing our 4G demand levels for our newest generation hotspots selling at higher levels than pre-COVID. So that is what we're seeing, and we see no evidence of that trailing off. Now, I will say this, the onset of COVID and the dynamic that played out towards the end of the first quarter drove for 4G revenue, which was a combination of both some of our older legacy products that are coming near end of life as well as our newer generation, our Cat 22, Cat 2022 LTE products. So the dynamic that played out from 2020 to this year is, a number of those end-of-life older 4G products have just tailed off. They were sold out. They're no longer sold in the market; they were naturally reaching their end of life and in fact, an uptick in demand accelerated at the end of life. So that revenue is being substituted now by our newest generation 4G products. And that's what I referred to as the run rate we're seeing is higher than pre-COVID of those. And of course, now 5G is coming into the mix, and software service is coming into the mix. So long story short, there's a substitution effect going on in our revenue composition. The good news is what's driving revenue now is our latest generation LTE, in terms of that ongoing work-from-home demand and 5G and some of the newer products. So we have fresher, newer revenue that's making up our quarter Q1 and will make up the quarters going forward.

Thank you. And then, just as we think about gross margin trends maybe on a short-term, is there any component constraints or tightening, inventory creating maybe some gross margin headwinds as you maybe expedite shipments or try to track down components? But then, it sounds like over time with software and with the mix changing, you should see gross margins improving pretty steadily throughout the year.

Yes, I've heard of the term chip shortage, though I'm not sure if it's widely recognized yet. Great question, Mike. We are indeed managing the situation well. We've proactively engaged with our key partners regarding the semiconductor landscape and made advance purchases to ensure we have the necessary components, which affects our cash usage. We expect this situation to persist until the end of this year and likely into early 2022. Many technology companies are investing billions to establish new foundries, which will lead to a recovery in supply. To date, we haven't encountered any issues with customer deliveries or price increases. However, if such problems arise, we are prepared to implement our strategy from last year, where we adjusted prices based on demand, and we anticipate doing that again if necessary. We maintain open communication with our customers on this topic. Overall, the macro conditions are clear to us as we focus on forecasting and planning, dedicating significant time to discussions with our customers about future demand and ensuring supply with our key silicon suppliers.

Last question for me, just good to see Sunrise Switzerland is a new 5G customer. Just any commentary on a pipeline for adding new carrier customers for either fixed wireless or overall hotspots for 5G in 2021?

Well, yes, in North America, I think we've talked about that we're super excited about fixed wireless opportunities in North America, throughout the U.S. and Canada. Great start having T-Mobile certified three of our fixed wireless products. It is fantastic. All the conversations we're having around the world involve both hotspot and fixed wireless. We're adding new carriers there, we're pursuing enterprise business. I would put it all in one category that we expect fixed wireless to start to take hold in the second half of this year in a big way. There are two elements going forward, one is the consumer to the home broadband entertainment. We think the enterprise with a number of use cases will be an even bigger playbook for fixed wireless. So we're spending a lot of effort on both enterprises and working with the carriers, tons of RFPs, tons of conversations. I think the markets are getting their bearings on how fixed wireless will play. Hotspots really started first, but now it's coming on strong. So we've seen good momentum going forward in fixed wireless.

Great. That sounds encouraging. Thanks for taking my questions.

Our next question comes from Lance Vitanza with Cowen & Co.

Thanks, guys for taking the questions. I guess I have two. The first is you've got the company on sound footing, but revenue came in a good bit softer than we were looking for. It sounds like though you were neither surprised nor disappointed with the revenue performance in the quarter. If that's correct, it just leads me to think that the problem is to a certain extent around messaging. So understanding of a new seasoned CFO in place, will Inseego adopt financial guidance at any point over the year, if not today, perhaps in conjunction with 2Q earnings this summer?

Yes. Hi, Lance. Thanks for the question. Well, as we were coming off and we indicated priorities during the call that we were going to see a lower level of demand for our 4G. A couple of things I mentioned that Q1 of last year and early in the Q2 had a number of our older generation 4G USB prior-generation hotspots that had come to the end of life. So that's a year-over-year faster comparison. But in general, we were now to our 5G products ramping up and our 4G LTE latest-gen hotspot products ramping up. As I said earlier, in one of the questions I responded to, there's a very different mix. We saw the first half of this year generally a little lighter because of post-COVID. The good news, though, is the demand level for our LTE hotspot is higher than pre-COVID. 5G is now a layer on top. It's not a substitution effect. As that builds, as fixed wireless kicks in, as 5G enterprise kicks in, and software, we see a build throughout the year, and that's our comment of the second half stronger than the first half. On your question about guidance, we don't think it's prudent at this point in time. We did not provide guidance. There's a lot of dynamics going on in our business, all the things I just mentioned, which are nicely additive, as well as the Ctrack, South Africa sale. We want to get that behind, and then we'll revisit how we can communicate to the markets. It’s just we don't feel it's wise to provide guidance at this point. It's not that we are not interested in doing it or we're negative against it. It's just the dynamics of the business. It’s just not prudent at this point.

Fair enough. Okay. So the other question I had and Bob, I think you'd mentioned on your prepared remarks that the 5G sell-through in particular remained strong, and that you expect, if I get it right, you expect orders to harmonize going forward. So what I took from that is that the carriers were working off inventory in the quarter, is that right? And if that is the case, then did you or could you say when you expect to see the benefit of the sort of the replenishment, so to speak? Is that a 2Q? Or is that a H2 or is that a second half event? Thanks.

Good question and thanks. This kind of dovetails a bit to what Dan just said, we do see those trends continuing now towards the second quarter, but we're also looking forward to building that momentum, and then that'll shape more color around forward look. We'll also shape maybe rethinking in terms of quantitative guidance. So all of these trends are not fully integrated yet. So what we're trying to do is gauge that level of momentum and that level of adoption so we can move forward and articulate more strongly those details, if that's helpful to you.

Thanks. Yes, it is. Appreciate it.

Thanks, I guess I would add one other thing, by the way that our largest 5G account now is T-Mobile. It has typically been for this company our relationship growing strong demand level is good. It's not a cannibalization, by the way, of 5G to 4G; that's not what's occurring. It's additive. T-Mobile is, thankfully, has jumped out in front as the largest 5G customer in Q1. We expect to add more. I think the trend is up to the right, timing. We need to work through that, and once we get there, we'll have our bearings and be able to come back with better information.

Our next question comes from Michael Latimore with Northland Capital.

Hi, this is Aditya on behalf of Mike Latimore. Could you tell me how much did international revenue contribute in terms of percentage?

Yes. Hi. Good question. Well, I guess just the long story short, we don't break out the composition of revenue that way. So we are growing our international business. As you know, through none of the carrier win announcements, we talked about Western Europe, Japan, Australia, and other places. So international revenue is growing, it is still currently a relatively small percentage. I think until such time as it reaches critical mass, we will then talk about absolute numbers. But at this point in time, we're not breaking out international revenue as a percent of the business.

All right, fine. Any idea as to when you might actually expect the 5G sales to exceed the 4G sales?

I would expect to see that in the back half of this year. I think we commented we had a question like this previously on a prior call. So that was a comment I made then. Yes, same view, no change.

The next question comes from Scott Searles with ROTH Capital.

Dan, Bob, I hope you guys are doing well. I apologize I got on the call a little bit late. So I apologize if this is redundant, but did you give any mix or breakdown between 4G and 5G? And I just heard that T-Mobile is your largest 5G customer. Is T-Mobile your largest overall customer?

Hey, Scott. Great questions. While we did say on the call that 5G was 20% of total revenue. If you combine 5G and SaaS, that reached in the neighborhood of 44% of total revenue. So that's just showing the differential in mix. T-Mobile isn't yet our largest customer. There’s a large run rate of 4G LTE sales continuing. Verizon is, however, our largest 5G customer in terms of new products. So that's kind of the landscape there.

Good. And maybe to follow up on the Verizon account. There were some issues with Franklin Wireless recall this quarter. I'm wondering if you've seen any pickup related to that? Do you get any of that opportunity? Or is your product more high-end than them using, for example, a lower-end solution?

Yes, so great question. They really don't cross over because it fundamentally is exactly as you said, our product is a higher-end product geared for enterprise. Some of these other products you mentioned, Franklin, are so-called lower end products. They really actually don't overlap in the target markets. Thankfully, Franklin's working through these issues. But there again, it's not really a market sector that that pulls on our product. So, that's frankly a benefit the way we like to see it.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Dan Mondor for any closing remarks.

Great, thanks. Well, great questions to end on. Thanks again, everyone for joining us today and tuning in. We're off to a great start to what we certainly expect to be a fantastic year with our new revenue streams from 5G, fixed wireless, SaaS and enterprise as the main events and recurring revenue growth with strong margins. So thanks again, everyone. Take care.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.