Inseego Corp.

Julie Cunningham - VP of IR Peter Leparulo - CEO Ken Leddon - CFO

Matthew Hoffman - Cowen and Company Anthony Stoss - Craig-Hallum Charles John - Piper Jaffray Doug Ireland - JMP Securities Tom Kucera - Avondale Partners Anthony Stoss - Craig-Hallum

During this call, non-GAAP financial measures will be discussed. Reconciliations to the most recent comparable GAAP financial measures are included in our first quarter earnings release, which is available on the Investor Relations page of our website at www.novatelwireless.com.

The audio replay of this call will be archived there.

We have also returned to positive EBITDA and free cash flow. While we continue to be impacted by the slowdown in the global economy, our results significantly improved on a sequential basis, and our outlook for next quarter is for continued improvement.

Overall, I believe that we are executing well in a tough environment. We are well into the leading edge of commercializing our strongest product cycle in history in all areas, including embedded, mobile Internet devices, end-to-end solutions, beginning with our MiFi product line, and our core USBs and PC ExpressCard products.

Embedded and mobile Internet devices have led the way in commercialization and deployment.

Our focus on developing mobile content partners over the past year is now coming to fruition, as our new product introductions, which will begin to have a positive impact in coming quarters. As expected, USB product sales declined in the first quarter, most notably in Europe.

A slowdown in demand tied to the global economy, along with increased competition, were major factors. We also believe that certain operators are waiting for the technology shift to HSPA+, which is happening sooner than expected.

We believe we are at the forefront of the shift to HSPA+ in both North America and Europe, having already demonstrated the technology and introduced our HSPA+ Ovation, MC996D USB modem. We believe that this technology shift is the next opportunity to capture the USB market share in the EMEA region.

We developed MiFi on both EVDO and HSPA standards and have already begun shipments. We expect MiFi to launch with Verizon and Telefonica Spain as announced today, as well as a third Tier 1 carrier in the second quarter.

We also expect MiFi to ramp to volume revenues in the second half of the year.

We developed MiFi on both EVDO and HSPA standards and have already begun shipments. We expect MiFi to launch with Verizon and Telefonica Spain as announced today, as well as a third Tier 1 carrier in the second quarter.

We also expect MiFi to ramp to volume revenues in the second half of the year.

We developed MiFi on both EVDO and HSPA standards and have already begun shipments. We expect MiFi to launch with Verizon and Telefonica Spain as announced today, as well as a third Tier 1 carrier in the second quarter.

We also expect MiFi to ramp to volume revenues in the second half of the year.

Part of our efforts in this initiative has been to create a brand and an install base. We are working with operators on broadcast marketing campaigns, which we believe will begin at launch.

In addition, the MiFi product line has received enormous industry recognition for innovation, functionality, and technological importance, including Gear of the Year by PCWorld, CTIA E-Tech Award, and the European Plus X Award. This is one more example of how we have been successful to date with creating interest, awareness and branding around MiFi.

Our second initiative is to develop an open platform ecosystem for applications and services delivery. As we mentioned last quarter, we expect to develop these applications internally with technology partners and in collaboration with third-party developers.

The first example of these efforts is with Alcatel-Lucent, to integrate its Nonstop Laptop Guardian platform on the HSPA version of MiFi.

In addition, with the launch of the MiFi platform, we will launch the first phase of our content delivery portal; a native application enabled by the intelligent server onboard the MiFi device. This portal will be a mash-up Web application, where data and functionality from multiple sources are integrated into a single application that delivers customized information to the end user.

Ultimately, this service will provide personalized content, which provides us an opportunity to generate new revenue streams by selling mobile content to our carrier customers. We believe this is the beginning of a complete and dynamic end-to-end user experience.

Other initiatives in this area are well underway. Our third strategic focus for the year is on our core business, where we are rolling out new products that we believe lead technology transitions for both the coming technology upgrade cycles and for product cost reductions.

We expect USB sales to increase in Q2 as we benefit from carrier awareness campaigns and in-store promotions. By the end of Q2, we will have rolled out several new products, including the Ovation 935D HSPA USB modem, and three next-generation embedded modules.

The E760D embedded module was commercially launched in Q2 by our largest PC OEM customer in 10 laptop and network platforms. In addition, we have design wins and have begun shipping our worldwide Gobi-based embedded module for enterprise platforms.

We have also achieved HSPA+ design wins as operators migrate to this next generation technology.

In addition, with the launch of the MiFi platform, we will launch the first phase of our content delivery portal; a native application enabled by the intelligent server onboard the MiFi device. This portal will be a mash-up Web application, where data and functionality from multiple sources are integrated into a single application that delivers customized information to the end user.

Ultimately, this service will provide personalized content, which provides us an opportunity to generate new revenue streams by selling mobile content to our carrier customers. We believe this is the beginning of a complete and dynamic end-to-end user experience.

Other initiatives in this area are well underway. Our third strategic focus for the year is on our core business, where we are rolling out new products that we believe lead technology transitions for both the coming technology upgrade cycles and for product cost reductions.

We expect USB sales to increase in Q2 as we benefit from carrier awareness campaigns and in-store promotions. By the end of Q2, we will have rolled out several new products, including the Ovation 935D HSPA USB modem, and three next-generation embedded modules.

The E760D embedded module was commercially launched in Q2 by our largest PC OEM customer in 10 laptop and network platforms. In addition, we have design wins and have begun shipping our worldwide Gobi-based embedded module for enterprise platforms.

We have also achieved HSPA+ design wins as operators migrate to this next generation technology.

Longer term, we expect to lower operating expenses as a percentage of sales, but we must strike a balance between spending and building this competitive advantage for the future. While we are cautious, given current global market conditions, we are confident that we have put the wheels in motion to significantly improve our long-term position.

Revenues for the first quarter were $70.4 million, a decrease from the $87.8 million reported in a prior year period, and an 8% increase above last quarter. Revenue by product category is as follows; USB products accounted for $23.9 million, or 34%.

Embedded products were $41 million, or 58%. PC and ExpressCards were $5.1 million, or 7% of revenues.

Revenues by technology; EVDO products were 86%, and HSPA products were 13% of revenues. From a geographic perspective, domestic revenue accounted for approximately 91% of total revenues, and international revenue was 9%.

During the first quarter we shipped to nine operators and nine OEMs in 20 countries. Leading customers in the quarter included, Dell Distribution, Dell, Foxconn, Sprint, Telefonica and Verizon.

Gross margins were 23.1%, above our guidance range of 21% to 22%, as we benefited from a product mix shift. We expect to benefit from increasing revenues from new products in upcoming quarters, but also expect it to continue to be a highly competitive market.

First quarter operating expenses were 26.5% of revenues, or $18.6 million, with the increase primarily in R&D, related to new product development. Total operating expenses in absolute dollars were up 1% compared to the prior year period.

R&D expenses totaled $10.4 million, or 14.7% of revenues. Sales and marketing was $4.2 million, or 6% of revenues.

And G&A was $4.1 million, or 5.8% of revenues. Including the share-based compensation charges of $1.3 million net of taxes, we reported a GAAP net loss for the first quarter of approximately $2.5 million, or $0.08 per share.

On a non-GAAP basis, excluding the non-cash compensation charges, we reported a net loss of $1.1 million, or $0.04 per share. GAAP cash flow from operations was a use of $1.9 million that was driven by an increase in accounts receivables that reflected the sequential increase in revenue and a slight increase in DSO.

EBITDA totaled approximately $1.3 million and free cash flow was approximately $700,000. Now, I will review some balance sheet highlights.

At March 31, 2009, we had approximately $133 million, or $4.38 per share in cash and investments with no debt. AR was up from last quarter at $57.4 million due to the linearity of the quarter and DSO was at 64 days.

We continue to believe that with the strength of our customer base, the quality of our receivables is excellent. Inventory increased sequentially by $4 million in the first quarter to $27.2 million, which equates to about 8 turns per year.

Turning to second quarter 2009 guidance; we remain cautious given the current global economic concerns. At the same time, we believe our visibility has substantially improved for the second quarter based on current order flow.

We are pleased with the ramp of our OEM products and expect these levels to continue in the second quarter. In addition, we have several new product introductions that should start to contribute meaningful revenues in Q2 and ramp in the second half of the year.

Given these factors, our guidance for the second quarter of 2009 is as follows; we expect revenues of approximately $75 million to $80 million. We expect gross margin in the range of 23% to 25%, depending on product mix.

And we expect operating expenses to decrease slightly as a percentage of revenues. Based on our current view, we expect GAAP results in the range of $0.04 to $0.01 loss per share, and non-GAAP results to be in the range of breakeven to $0.03 net income per diluted share.

These estimates are based on approximately 30.7 million shares outstanding. We estimate that EBITDA will be in the range of $2 million to $4 million, and free cash flow will be about $1 million to $3 million.

Now, I will turn the call back to Peter.

Revenues for the first quarter were $70.4 million, a decrease from the $87.8 million reported in a prior year period, and an 8% increase above last quarter. Revenue by product category is as follows; USB products accounted for $23.9 million, or 34%.

Embedded products were $41 million, or 58%. PC and ExpressCards were $5.1 million, or 7% of revenues.

Revenues by technology; EVDO products were 86%, and HSPA products were 13% of revenues. From a geographic perspective, domestic revenue accounted for approximately 91% of total revenues, and international revenue was 9%.

During the first quarter we shipped to nine operators and nine OEMs in 20 countries. Leading customers in the quarter included, Dell Distribution, Dell, Foxconn, Sprint, Telefonica and Verizon.

Gross margins were 23.1%, above our guidance range of 21% to 22%, as we benefited from a product mix shift. We expect to benefit from increasing revenues from new products in upcoming quarters, but also expect it to continue to be a highly competitive market.

First quarter operating expenses were 26.5% of revenues, or $18.6 million, with the increase primarily in R&D, related to new product development. Total operating expenses in absolute dollars were up 1% compared to the prior year period.

R&D expenses totaled $10.4 million, or 14.7% of revenues. Sales and marketing was $4.2 million, or 6% of revenues.

And G&A was $4.1 million, or 5.8% of revenues. Including the share-based compensation charges of $1.3 million net of taxes, we reported a GAAP net loss for the first quarter of approximately $2.5 million, or $0.08 per share.

On a non-GAAP basis, excluding the non-cash compensation charges, we reported a net loss of $1.1 million, or $0.04 per share. GAAP cash flow from operations was a use of $1.9 million that was driven by an increase in accounts receivables that reflected the sequential increase in revenue and a slight increase in DSO.

EBITDA totaled approximately $1.3 million and free cash flow was approximately $700,000. Now, I will review some balance sheet highlights.

At March 31, 2009, we had approximately $133 million, or $4.38 per share in cash and investments with no debt. AR was up from last quarter at $57.4 million due to the linearity of the quarter and DSO was at 64 days.

We continue to believe that with the strength of our customer base, the quality of our receivables is excellent. Inventory increased sequentially by $4 million in the first quarter to $27.2 million, which equates to about 8 turns per year.

Turning to second quarter 2009 guidance; we remain cautious given the current global economic concerns. At the same time, we believe our visibility has substantially improved for the second quarter based on current order flow.

We are pleased with the ramp of our OEM products and expect these levels to continue in the second quarter. In addition, we have several new product introductions that should start to contribute meaningful revenues in Q2 and ramp in the second half of the year.

Given these factors, our guidance for the second quarter of 2009 is as follows; we expect revenues of approximately $75 million to $80 million. We expect gross margin in the range of 23% to 25%, depending on product mix.

And we expect operating expenses to decrease slightly as a percentage of revenues. Based on our current view, we expect GAAP results in the range of $0.04 to $0.01 loss per share, and non-GAAP results to be in the range of breakeven to $0.03 net income per diluted share.

These estimates are based on approximately 30.7 million shares outstanding. We estimate that EBITDA will be in the range of $2 million to $4 million, and free cash flow will be about $1 million to $3 million.

Now, I will turn the call back to Peter.

We are pleased to have demonstrated significant progress during the first quarter and we continue to focus on execution. Our overall product portfolio has never been better, and we look forward to the commercial launch of MiFi with multiple Tier 1 carriers over the coming months.

Now, Ken and I will answer your questions. Operator, please open it up for Q&A.

There is also an optimization, because this product line is very, very flexible. As I tried to suggest in our prepared statements, there are many, many devices for connectivity-only for this product, which require optimization.

And the operators really all have very different plans tapping into the flexibility of this device and want to put it on different channels, which create technology issues that need to be solved, as well as go-to-market plans, which make those operators development partners of ours as we bring those to market. So, all of those we believe put up barriers to the deployment with multiple operators.

There is also an optimization, because this product line is very, very flexible. As I tried to suggest in our prepared statements, there are many, many devices for connectivity-only for this product, which require optimization.

And the operators really all have very different plans tapping into the flexibility of this device and want to put it on different channels, which create technology issues that need to be solved, as well as go-to-market plans, which make those operators development partners of ours as we bring those to market. So, all of those we believe put up barriers to the deployment with multiple operators.

There is also an optimization, because this product line is very, very flexible. As I tried to suggest in our prepared statements, there are many, many devices for connectivity-only for this product, which require optimization.

And the operators really all have very different plans tapping into the flexibility of this device and want to put it on different channels, which create technology issues that need to be solved, as well as go-to-market plans, which make those operators development partners of ours as we bring those to market. So, all of those we believe put up barriers to the deployment with multiple operators.

There is also an optimization, because this product line is very, very flexible. As I tried to suggest in our prepared statements, there are many, many devices for connectivity-only for this product, which require optimization.

And the operators really all have very different plans tapping into the flexibility of this device and want to put it on different channels, which create technology issues that need to be solved, as well as go-to-market plans, which make those operators development partners of ours as we bring those to market. So, all of those we believe put up barriers to the deployment with multiple operators.

Sure. In the core business, the ExpressCards and PC Cards, Matt, were about $5 million, or 7.3%.

The embedded space was $41 million, or 58%. And then the Ovation products were about $24 million, or 34%.

Last question from me. As you look out to next quarter, you gave us nice top line guidance.

Talk about the cash flow. Obviously (inaudible), was that late quarter business closing or was that a reflection of a bit of a challenge in actually collecting on the core business?

Okay. When do you expect those third-party apps to be certified, presumably Verizon and the other carriers?

Operating expenses I think are going to be relatively flat. We will continue to invest maybe incrementally in absolute dollars in R&D in the near future as we launch additional products.

We believe as the revenues ramp up, the R&D and operating expenses as a percent of revenue will drift downward again closer to our historical levels.

And one last question for you guys. Your biggest customer in the quarter, do you expect them to be up in Q2?

Charles, like I said, this is not a science, and in some cases the paranoids survive. We look at this a lot.

And six months is just something that we benchmarked internally, to make sure we keep the momentum going internally at Novatel. So, is that a number that we put together by any scientific method?

No.

Okay. And then just talking about the product itself, any discussion with carriers?

How are they thinking about this product and also maybe six months or a year down the line, if the pricing gets attractive, internally within the company, how are you all thinking about this product in cannibalization with some of your existing product lines? How are you approaching that issue?

So, simply as a connectivity device, they are looking at different usage patterns. You see in the announcements from Telefonica, as well as from Verizon, that without a surcharge, up to five users will be allowed on this device.

So, as a connectivity device, it will supplement the way the people currently attach to the Internet.

Thanks for that color. From the last quarter you talked about increase in the OpEx to support some of the R&D and the sales and marketing.

Could you maybe give some more color on just your commitment to this launch by the carriers? Does it involve any kind of training at the store up level, or do you have any of the related expenses that we should start seeing in the next couple of quarters, if you have greater than expected ramp in unit volume for this new product?

Ken, maybe just one for you; have you all reset company targets for the gross margin and operating margin longer term with this new product cycle, or if you can just refresh us there on those two metrics?

This is Doug Ireland for Sam. I was wondering if you could talk a little bit about your plans for third-party applications in terms of developer outreach.

From your description in using your install base of MiFis as a barrier to entry with the applications, I would think you would be pursuing some form of land grab with low pricing and really trying to push these out so that you could get the developers onboard. Do you have anything to talk about that?

Okay. And did you give a percentage of sales from that customer for the quarter?

Let me try to get you a number. 51%.

Sure. On MiFi, we are distributing this principally through our operator partners and development partners on it.

Those operators have plans in turn to go into the enterprise space with this device, both as a connectivity solution as well as a software platform in various vertical markets.