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Inseego Corp. (NASDAQ:INSG)
Q1 2020 Earnings Call
May 06, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Hello, and welcome to Inseego Corp.'s first-quarter 2020 financial results conference call. Please note that today's event is being recorded. [Operator instructions] On the call today are Dan Mondor, chairman and CEO; Steve Smith, EVP and chief financial officer; Ashish Sharma, president of IoT and mobile solutions; Doug Kahn, EVP of operations and customer success; Wendy Caceres, chief marketing officer and head of investor relations; John Weldon, senior vice president of enterprise SaaS solutions. 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 of factors that could cause actual results to differ materially from expectations, please refer to the risk factors described in our Form 10-K and 10-Q and other SEC filings, which are available on our website. Please also refer to the cautionary note regarding our forward-looking statements section contained in today's press release. I would now like to turn the conference over to Dan Mondor, chairman and CEO. Please go ahead.

Dan Mondor -- Chairman and Chief Executive Officer

Hello, and thank you for joining us today. On behalf of everyone at Inseego, I want to extend our thoughts and prayers to the families affected by the global pandemic. While these are challenging times for almost every organization, the pandemic is affecting Inseego's business in some extraordinary ways. COVID-19 has changed the way millions of people work, learn and connect to vital services remotely, such as telehealth.

In combination, these factors are driving much higher demand for our 4G and 5G MiFi mobile hotspots and Skyus products. We at Inseego feel fortunate to be in the position we are today as the current environment highlights the value of our products to our customers and to society as a whole. Our operations and supply chain team is doing a great job responding to the unprecedented surge in demand from operators worldwide by ramping up supply with speed and efficiency. The rolling demand started in early March with domestic operators, and in the latter part of March, international operators followed suit.

In the first quarter, Inseego revenue totaled $56.8 million, which is well above our fourth-quarter revenue of $52.3 million. And keep in mind that the first quarter really only experienced a week or two of elevated order demand from our carrier customers. Importantly, we've been experiencing higher gross margins in our flagship IoT and mobile solutions business, which will continue to improve through the year. This helped drive a very important milestone for this quarter by achieving positive operating cash flow.

We are seeing increased demand for our MiFi M1000 5G hotspots with orders ahead of plan as this device has 4G gigabit LTE as backup, which continues to be important given the growing demand for stand-alone 4G devices. In addition, the importance of 5G has been highlighted given dramatic network capacity demands during the pandemic. As a result, carrier deployment discussions have accelerated both here in the U.S. and globally, and more on that in a moment.

One last point, which I think is important to keep in mind, about our progress. Historically, we were shipping a single product predominantly to Verizon, and I'm pleased to announce that we are now shipping mobile products in our 4G and 5G portfolio to all the major operators in the U.S., all major operators in Canada, as well as international operators in EMEA and APAC. Many of these carriers are relatively new customers, so we are still at an early stage of revenue growth. But in many of these cases, our 5G discussions have expanded to now include first-time sales of our 4G devices.

We believe this will improve our position in our 5G efforts as our customers will realize the performance, quality and reliability benefits of our 4G devices in the near term. Given all this, we are reiterating our Q2 revenue outlook in the range of $75 million to $85 million. We strengthened our supply chain in 2019 to prepare for the anticipated increase in volume of our products, driven primarily by global 5G network rollout. We moved manufacturing from four smaller contract manufacturers in China to a tier 1 partner, Foxconn, in Taiwan and contracted with a logistics supplier who uses their own planes, allowing us to secure dedicated cargo space.

Additionally, we have qualified second sources for most material and implemented new internal processes to quickly respond to changes in customer demand. These improvements have given us a competitive advantage and enabled our supply chain to quickly ramp production output in response to the ongoing order levels. There is a growing body of evidence that the work-from-home surge isn't a onetime event. Many organizations are seeing the benefits of remote work and are adjusting their policies accordingly.

Over 60% of U.S. employees are now working from home, and about 74% of the CFOs recently surveyed by Gartner expects some of their employees to continue working remotely and will be the new normal. Many large organizations across all industries, private and public, Barclays, Citigroup, Zillow, Nationwide, to name a few, have publicly stated plans to continue remote working arrangements permanently. There's also been a seismic shift in how healthcare is delivered.

CNBC has reported that telehealth visits surged 50% in March, and virtual visits could top 1 billion this year. The dramatic increases reported by large healthcare providers, including Kaiser Permanente, Cleveland Clinic, and Novo and others marks a tipping point in telehealth adoption as millions of patients become comfortable with virtual visits and embrace this mode of consultation. Until schools can reopen safely, the federal government is working to increase funding for online learning technology, including home broadband connectivity. Off-line learning is a powerful tool for both students and workers who need job training, and evidence also points to its continuing -- to it continuing.

Additionally, millions of students have no high-speed Internet access at home, and mobile hotspots provide an economical, plug-and-play solution. While we ramp up production of our existing products, we continue to work closely with mobile operators around the world as they begin to launch their 5G networks in the second half. And these launches remain on track. In fact, the current dynamic with much higher data traffic on wireless networks underscores the need for more 5G capacity.

Some operators have stated publicly that they are increasing network capital expenditures, accelerating rollouts and expanding into newly available spectrum. We continue to monitor progress. As a reminder, our second-generation 5G products support sub-six gigahertz and millimeter wave and Cat 22 4G LTE to deliver robust cellular network coverage. This portfolio also includes the latest WiFi 6 technology.

We expect five mobile hotspot and three fixed wireless 5G launches with six carriers across the globe in the second half of this year with four in North America, one in Europe and one in Asia Pacific, with some of these operators deploying multiple 5G products. Our extensive fixed wireless portfolio includes both millimeter wave and sub-six solutions to support both indoor and outdoor use case deployments. We are also pleased to announce that we have secured an award for a new software-as-a-service product, Inseego Connect, with a tier 1 mobile operator in the U.S. as part of their 5G launch this year.

Inseego Connect is a cloud-based service which provides device configuration, monitoring, analytics and other capabilities. We're also making good progress in our industrial IoT business, including the recent launch of our Skyus 160 gateway, a powerful LTE device that addresses a wide range of use cases from SD WAN to remote monitoring to factory automation. The Skyus 160 is certified for use on the Verizon and AT&T networks and supports the global bands required for EMEA and APAC. The Skyus 160 is also supported by our new Inseego Connect cloud solution.

Now moving to our Enterprise SaaS Solutions. Our Ctrack business is growing steadily, recording the best quarter of fleet unit installations in South Africa in two years and the addition of new partners in Australia, New Zealand and the Netherlands. We also extended our contract with a major customer in the aviation industry, KLM Equipment Services and, despite the planned runoff of the unprofitable consumer business, achieved over 7% year-over-year growth in constant currency. Our mobile operator device management solution, DMS, also continues to add new enterprise and government subscribers at a rapid clip, increasing by 370,000 subscribers in March alone.

Turning to our strategic initiatives. We mentioned in our prior earnings call that we began efforts to deepen our relationships with the U.S. government to increase awareness of Inseego as a U.S. supplier to the administration's objective of a secure 5G network ecosystem.

Given the scale of potential opportunities, we wanted an executive to lead that effort and have recently appointed former Inseego senior executive, Chris Lytle, as head of government affairs, including our initiatives in the education sector. Now I'll turn the call over to Steve to discuss our financial results. Steve?

Steve Smith -- Executive Vice President and Chief Financial Officer

Thank you, Dan, and good afternoon, everyone. I would also like to offer my thoughts to all the families affected by COVID-19 around the world. This is truly an unprecedented time as we are all working and schooling from home and social distancing. I'll jump right into my comments.

We are very pleased with the results of the quarter. Q1 revenue was $56.8 million. This is up 17% year over year and 9% sequentially. Turning to the results of our business units.

First-quarter IoT and mobile revenue was $40.4 million, up 23% from Q1 last year and 14% sequentially from Q4, reflecting the initial surge starting in March associated with the work-from-home demand. We saw demand increase in our 4G and 5G MiFi and Skyus products with much of the increase from our flagship 4G product. Q1 Enterprise SaaS Solutions revenue was $16.5 million, up approximately 4% versus the same period last year. Enterprise SaaS includes both Ctrack and DMS.

Relative to changes on the balance sheet, in Q1, we converted $60 million of the 5.5% senior convertible note for equity, significantly reducing our debt balance and cash interest expense. We restructured the term loan, extending the maturity to March '21 and making all interest payments in Series E preferred. We also successfully raised $25 million in a preferred stock transaction with Mubadala Capital, one of the largest and most sophisticated sovereign wealth funds. These actions together substantially bolster our cash position and reduced our cash debt service by approximately $7.8 million annually.

From this point forward, I'll focus on non-GAAP measures. A reconciliation from GAAP to non-GAAP is detailed in our earnings release. For the IoT and mobile business, gross margin was 19.4% for the quarter, up 4.4 points compared to last quarter and up 2.9% versus the same period last year. As we've previously stated, we are expecting continued improvements in IoT and mobile gross margins, driven by three factors.

First is our continued work to reduce our manufacturing cost, which we treat as a continuous process. Second is our improving product mix shift from 4G mobile devices to 5G and IoT products, which carry more attractive margins. Third is the overall benefit of scale as we spread our costs that were in much larger production volumes. With the expanded order volumes, we have been able to reduce costs to date and expect to achieve a full 200-plus basis points quarter-over-quarter improvement in our existing 4G portfolio, driving those products into the mid- to high 20s.

Enterprise SaaS gross margins of 61.3% was down 70 basis points from last quarter and about 200 basis points from a year ago mainly due to the currency headwinds already mentioned. Total company gross margins in the first quarter were 31.5%, up about 140 basis points sequentially. While we had significantly -- while we had a significant improvement in the IoT and mobile gross margins, the overall product mix compressed the consolidated gross margin percentage. Q1 opex was $22.8 million, compared to $21.8 million in Q4.

R&D expenses of $7.9 million was $400,000 lower than last quarter. Given new carrier certifications happening as we bring on new service providers with new products, there will be some lumpiness in this number. Sales and marketing expenses grew $500,000 to $8.3 million. Substantially all of this increase was related to head count additions to build out our marketing, product management and international sales footprint.

G&A expenses were $6.6 million, the increase reflective of yearly charges associated with the annual audit and the corporate finance initiatives highlighted earlier. Head count was 977 at the end of March, up 39 people from year-end 2019. We expect head count will be -- will increase only modestly going forward to fill a handful of key positions in international sales and product engineering. Our Q1 non-GAAP net loss was $5.7 million or $0.06 per share.

This compares to a loss of $8 million or $0.10 per share last quarter. Adjusted EBITDA for Q1 was a loss of $1.7 million as compared to $2.1 million positive for Q1 '19 and even to last quarter. IoT and mobile solutions had a pro forma adjusted EBITDA loss of $1.9 million, and enterprise SaaS solutions had a positive pro forma adjusted EBITDA of $3.2 million. As Dan mentioned in his opening remarks, we achieved an important milestone by being operating cash flow positive in Q1.

With the continuation of the business trends that we see today in our 4G and 5G business and our improving gross margins and managing all our other expenses, we expect to be operating cash flow positive for 2020. Moving to the second quarter. As discussed, we continue to see significant orders for our flagship 4G and 5G MiFi mobile hotspots from existing, as well as new customers. And as Dan mentioned, we anticipate a revenue range of $75 million to $85 million.

With that, I'll turn the call back over to Dan. Thank you.

Dan Mondor -- Chairman and Chief Executive Officer

Thanks, Steve. I want to close by thanking our employees who, like millions of others in the private and public sector, have been working from home. Our people have been amazing rising to the challenge, and their productivity and spirits are very high. Inseego 5G product launch time lines remain on track.

I also want to thank our supply chain partners who have worked with us hand in hand to respond to the dramatic increase in production to meet the demand surge. Finally, I applaud all mobile network operators who are increasing capacity, increasing data limits and donating devices to help keep everyone connected. With that, we'll turn it to Q&A.

Questions & Answers:


Operator

[Operator instructions] Our first question is from Mike Walkley from Canaccord Genuity. Go ahead.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks for taking my questions, and I hope everybody's doing well on the call. Dan, a question for you just on how supply is coming together to support your guidance for the June quarter. Is there any supply issue maybe limiting upside to the current midpoint of the guidance? If you just see how your supplies come along would be the first question.

Thanks.

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Thanks, Mike. Well, firstly, Foxconn is a terrific partner, immense scale to stand up production lines, run double, triple shifts on extra production lines and, of course, incredible material procurement capabilities. And in fact, I think we've got most of Foxconn working on material procurement for Inseego right now.

So they have an incredible scale. The raw material supply in China really has fully recovered. Foxconn, our contract manufacturer in Taiwan, has been an extraordinarily low number of cases of COVID-19. I think it's not even yet hit 500.

So the supply from China, the production capability of Foxconn, procurement and their production lines' continuity in Taiwan has really put us in great shape. So no, we're not seeing any demand limitations -- supply limitations currently to the level of demand we're seeing.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks. And just building on that for the guidance for Q2, are any of the second-generation 5G products in that guidance? Or is that more starting in Q3? And how is that pipeline shaping up to show maybe that your business is still strong post the channel still going on now for the work-at-home trend?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. So as we've said in the past, our second-generation 5G products are launching in the second half of this year, so to your first point. We continue to engage on a very broad front with, well, dozens of operators. We talked previously about the size of the overall 5G pipeline in terms of our engagements, the volume of RFPs, and that number is 50 and counting.

We're in over 20 -- I think it's 21 now, active trials with customers for our 5G products in all regions. And as I commented earlier, we have plans to launch our mobile hotspot, as well as our fixed wireless access 5G devices with a total of six operators, and some are selecting more than one product from our portfolio, which is terrific. So the pipeline is very strong. The engagements are, in fact, increasing.

So we feel very comfortable where we are.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks. Last question from me, and I'll pass it on. Just, Steve, on the gross margin, I just want to make sure I was clear.

You're indicating maybe up 200 basis points sequentially. And then as the new 5G products ramp, how should that help the overall gross margin profile maybe in the back half of the year? Thank you.

Steve Smith -- Executive Vice President and Chief Financial Officer

Yes. Thanks, Mike. You got it right. We are expecting continued, let me call it, cost reductions.

Our operations team in concert with Foxconn is doing a great job of working cost reductions on parts throughout our portfolio. On the 5G front, the 5G products will command a higher gross margin than the existing 4G portfolio, so that will help as well.

Mike Walkley -- Canaccord Genuity -- Analyst

Thank you very much.

Steve Smith -- Executive Vice President and Chief Financial Officer

Thank you, Mike.

Dan Mondor -- Chairman and Chief Executive Officer

Thanks, Mike.

Operator

Our next question is from Jaeson Schmidt from Lake Street. Go ahead.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

Hey, guys. Thanks for taking my questions. Dan, I know in your prepared remarks, you noted that Q1 only accounted for a few weeks of sort of this increasing hotspot demand. Based on what you guys are seeing, do you think any demand overall is being pulled into the first half of this year? Or do you think this is sustainable throughout 2020?

Dan Mondor -- Chairman and Chief Executive Officer

Well, yes. Thanks, Jaeson. Hi. All the evidence that we have from all the discussions we're having, and there's frankly tons of bodies of research out there and surveys, we really have called it demand surge as opposed to a spike in demand because we see it continuing on and our overall demand levels will plateau at a new higher level.

Now we're not providing outlook for the second half. We gave the outlook for Q2 of $75 million to $85 million. You can obviously look at how substantial that increase is. And we're working on that.

Beyond that, I don't think anyone can say for sure as far as forecasted demand. But all the indications that we have is that it will continue at a higher level than before. And as we work through May and get into June and July, we'll then have more visibility on purchase order levels and that sort of thing. But I will say it's a rolling demand.

It started in early March and then, in the latter part of March, international operators, so literally, we had only a couple of weeks where the demand was reflected in our Q1 results. But orders continue to come in. They are continuing to the day. They are continuing to roll in.

And so all I can tell you right now is I have no -- I see no sign of it abating, and time will tell. As we get further in this quarter, we'll see where that goes. But as I said, all the signs point that way.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

OK. That's helpful. And then could you provide a little more color on sort of what drove the strength in South Africa in the Ctrack business?

Dan Mondor -- Chairman and Chief Executive Officer

Yes, sure. Well, John Weldon's on the line. I'll ask him to jump in with a comment in a second, but just let me kind of just lead it off here. We started implementing turnaround efforts in both South Africa and Australia and New Zealand well over a year ago, new sales leadership, new sales and marketing tools, just strengthening the go-to-market side of the equation.

So there's been really an overall turnaround, including the business leader in South Africa that has led to that, as well as the great efforts of John Weldon leading that team. So John, maybe you could just add a couple of comments to this.

John Weldon -- Senior Vice President of Enterprise SaaS Solutions

Sure, Dan. Thank you. I think the only two things I would add to Dan's comments are product market fit. There were a couple of things that we released last year in terms of video cameras and CAN-bus-related items that got us into a couple of new segments.

And then the other thing is we did a better job on business development with partnerships, so more people referring as leads. We have a tendency to close a much higher percentage of warm leads. So the two of those things really drove a much stronger fleet business in Q1 of this year relative to what we had Q1 of last year.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

OK. That's helpful. Thanks a lot, guys.

Dan Mondor -- Chairman and Chief Executive Officer

Thanks, Jason.

Operator

Our next question is from Mike Latimore from Northland Capital Markets. Go ahead.

Mike Latimore -- Northland Capital Markets -- Analyst

Thanks. Congratulations.

Dan Mondor -- Chairman and Chief Executive Officer

Thanks, Mike.

Mike Latimore -- Northland Capital Markets -- Analyst

Excellent result and outlook. I guess as you start launching your new 5G products that also support 4G, what will be the mix of those new products, do you think, in the third quarter? Will that be predominantly these newer products? Or will it still be kind of traditional 4G products given the work-from-home demand?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. So thanks, Mike. Prior to COVID-19, I would have given an answer that would certainly put more weighting in the mix to 5G than 4G. As we look into the second half of the year, we haven't provided an overall outlook.

We do expect a much higher volume of 4G than we saw previously, so it will depend on the size of the ramp of 5G, and it will depend on the continuation of the COVID-19 demand surge into the second half. So I would say it's an uplift certainly from what we were expecting in 4G and as we launch these 5G products. And importantly, the early days of a launch, stocking orders always happen prelaunch, so that's another factor that's come into place. So hard to say, really hard to say, but we see a rising tide in both 4G and 5G.

Mike Latimore -- Northland Capital Markets -- Analyst

Got it. On the fixed wireless launches, do those customers have a good sense of volumes, have a good sense of like the mix of hotspots versus fixed wireless? Or is it a little too early to say?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Well, I talked about the pipeline of operators and all the RFPs we've been responding to and continue, gee, over the last 12 months plus. So they have definitive plans. We engage with the operators across our portfolio, our 5G hotspots, our fixed wireless, indoor, outdoor, sub-six-millimeter wave.

So the portfolio really can address any of those needs. And we are seeing operators selecting both our hotspot and our fixed wireless that we mentioned launch in the second half. So yes, they have very specific plans. It depends on what they're going to start off with.

I will say this. I will say this for sure. We're seeing incredible, incredible demand for our fixed wireless products. I said on a prior call we expect fixed wireless to be 60% of the overall 5G market demand over time, and we're certainly seeing evidence of that.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. Great. And then just last one. The DMS subscriber growth, maybe you touched on this, but what was the catalyst for that kind of sequential growth?

Dan Mondor -- Chairman and Chief Executive Officer

Well, yes. It is a platform that really manages the subscriptions or portals for a tier 1 carrier, tier 1 operator for their enterprise and government business, so it's sort of how they manage the procurement of the devices through this portal. And so in March, probably not surprisingly, the COVID-19 surge in demand for any form of wireless devices was a big part of that.

Mike Latimore -- Northland Capital Markets -- Analyst

Got it. OK. Thanks a lot.

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Thanks, Mike.

Operator

Our next question is from Scott Searle from ROTH Capital. Go ahead.

Scott Searle -- ROTH Capital Partners -- Analyst

Hi, good afternoon. Thanks for taking my questions. My apologies. I got on the call a couple of minutes late, so I apologize if this is redundant.

But first, Steve, on the opex, it sounds like you're hiring -- you've gone through the major portion of your hiring cycle, but there's still a lot of certifications that are ongoing. So did you give any sequential guidance in terms of how you expect opex to be? And to follow up on Mike's earlier questions around the gross margin profile, given all the mix, the new products in 5G kind of coming into the second half, do you expect mobile and IoT to exit the year closer to 30% in terms of gross margins? And also, if you had any color commentary or mix for the first quarter related to 5G or fixed wireless access in the quarter, it would be helpful. And then I have a couple of follow-ups.

Steve Smith -- Executive Vice President and Chief Financial Officer

Well, that's a mouthful in a single question. So let me start with the opex. So on the opex side, as far as our hiring, that has plateaued a bit. We'll probably hire several, like I pointed out, a handful of different positions to further build out our international sales organization and any kind of critical skills you need on the engineering side.

Now as far as the -- what I'd characterize as lumpiness in the certifications, as we certify new products with new service providers, each of those products requires a certification. And so that's where we'll see the opex move up and down. It will all be in engineering. But the rest of it will be more or less stabilized at this point and then toward the end of the year probably coming down a little bit.

On the gross margins, yes, we're seeing -- on our 4G portfolio, we've had some very -- a lot of good work done as far as lowering the product cost, and that's ongoing. As we pointed out in the past, we've got prescribed cost reductions coming from Foxconn on an ongoing basis. So quarter after quarter, we've got them pretty much -- we can see them coming as we look forward and we bake them in. As far as 5G, yes, it will have a higher gross margin.

As far as 30%, we'll be approaching that toward the end of the year. And there again, it will depend on the product mix. As Dan pointed out, we've had a lot more 4G product that we're selling. And the 4G product, while the margins are improving, they won't be over 30%.

They'll be mid- to high 20s.

Scott Searle -- ROTH Capital Partners -- Analyst

Got you. Very helpful. And maybe to follow up, just in terms of the surging and the rolling demand that you're seeing for mobile hotspots, could you give us an idea of what linearity maybe has looked like in kind of March and April and the early portion of May here? And then I know that's been asked a couple of different ways looking into the second half. But the level of mobile hotspots that you're seeing in the second quarter, is that basically the plateau that we should be thinking about before starting to layer on fixed wireless access opportunities and new carriers in the back half of this year?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Well, Scott, as I said, we've discussed rolling demand, and it continues. We continue to get purchase orders come in, in sizable chunks, so it's hard to see really that far into the future. And so we're really focused on what we've got now and what we're working on supplying.

I think as we move into June, we'll get a better picture of what Q3 looks like. And so I think anyone that you can talk to is not going to declare they know exactly how the rest of the year is going to play out. But again, we point to the evidence and we point to the purchase orders just continuing to come in, so we've been -- early March, now two months later, it's continuing. Time will tell.

Time will tell. And we would provide an outlook for the second half if we had the confidence and the information. It probably, at this point, would be a pretty wide range. But suffice to say, the surge in demand and what we think will be the demand level will plateau at a new higher level than looking back in the quarters, plus 5G, I think, is going to make for a hell of a second half of this year.

Scott Searle -- ROTH Capital Partners -- Analyst

Great. Very helpful. And lastly, if I could, on the fixed wireless access front, could you provide just a little bit more color in terms of the timing? Are you expecting this to ramp up in the third quarter, in the fourth quarter? And maybe thinking about the different carriers, Verizon has talked about launching 10 markets in 2020. Could you give us some maybe color in terms of the size, the magnitude of the markets, pops covered or otherwise and how aggressive this is going to be? Or it sounds like given the backlog as well, certainly 2021 is going to be a much bigger year but how that progresses in the second half.

And I don't know if there's a number that you would hang out there in terms of fixed wireless access revenues in the second half. Thanks and nice quarter.

Dan Mondor -- Chairman and Chief Executive Officer

Thanks, Scott. Yes. Well, we haven't delineated Q3, Q4. We've talked about second half.

There will be mobile hotspots and fixed wireless launching in Q3 and some others launching in Q4. We're not going to provide that level of detail. It's certainly going to roll forward. We're seeing incredible demand and we think, as I said earlier, it's going to be probably the predominant part of the overall 5G unit volume if you want to look at it that way, big time from international operators.

We have incredible engagements with just dozens of international operators and their interest in fixed wireless. They're also interested in our mobile hotspots. But I think the fixed wireless playbook is going to be, if you look at it in totality, more an international play in aggregate just the sheer number of operators than it is in North America. But yes, certainly, Verizon, AT&T and the new T-Mobile will, I'm sure, be looking at rolling out that technology.

Scott Searle -- ROTH Capital Partners -- Analyst

Great. Thank you.

Steve Smith -- Executive Vice President and Chief Financial Officer

Thanks, Scott.

Operator

Our next question is from Lance Vitanza from Cowen. Go ahead.

Lance Vitanza -- Cowen and Company -- Analyst

Hi, guys. Thanks for taking the questions. Nice quarter. You mentioned that you're shipping to nine or 10 major carriers right now, but I think you said that most of them remain at kind of introductory volumes, which makes sense.

Do any of these carriers, in your opinion, have the potential to eventually become as relevant as, say, Verizon has been to you historically in terms of not only end-user demand but also your eventual share position?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Hi, Lance. Thanks for the question. Well, I guess the short answer on a relative basis is, yes, we're not naming a bunch of names in there because that's the service providers' news to launch.

But some of them, of course, you know. We've made some announcements and others we're not yet announcing. But we've gone from predominantly Verizon only to 11 carriers now in basically all regions. So yes, the subscriber account potential, which is always the figure of merit I look at, the revenue potential, certainly, is in excess of what Verizon is by far.

Lance Vitanza -- Cowen and Company -- Analyst

And so then what are the critical path items that need to be accomplished to get from here to there? Is there anything that you can be doing to speed up the ramp? Or does it just take time for a comfort level to build with the newer carriers?

Dan Mondor -- Chairman and Chief Executive Officer

Well, they all have their own onboarding process. It is a pretty extensive -- I always liken it to go for launch, NASA, with all the -- you go down the road, the guys at the terminals. So it's a very orchestrated, it's a very formal, it's a very regimented process. And it just takes time but it's their process, not ours.

So we're there to support them to do all the things we need to do, certainly the product training and education, all the testing, of course, but then the stocking orders so they're ready to launch and have volume supply, whether it be retail, online or through their enterprise sales force. Our ability to speed that up -- I would be less than sincere if I said, yes, we can push that forward. It's a very deliberated, very carefully managed process. And they're all similar.

Some operators are faster. Some take longer. So just sort of the answer, it depends.

Lance Vitanza -- Cowen and Company -- Analyst

Fair enough. Maybe just a question for Steve, and then I'll wrap up here. But you mentioned, obviously, you're operating cash flow positive in the quarter and for the full year. But what about total free cash flow? I know you had $4.5 million, $5 million of kind of capitalized, whether it was PP&E or software, etc., in the quarter.

Do you expect the pace of those investments to continue throughout the course of the year? Or what should we sort of be thinking about in terms of your actual free cash flow for the full year?

Steve Smith -- Executive Vice President and Chief Financial Officer

So let me put it this way, Lance. We expect the cash we have on hand to last us to free cash flow positive overall. It then helps you out.

Lance Vitanza -- Cowen and Company -- Analyst

So no change to what you said in the past. OK. Fair enough, guys. Thanks very much for taking the questions.

Steve Smith -- Executive Vice President and Chief Financial Officer

Thank you, Lance.

Operator

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

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Thank you, operator. So just a couple of final remarks. With numerous 5G customer launches in the second half, combined with the unanticipated demand surge and our expectation of a new normal post COVID-19, we see this year as a groundbreaking year for Inseego.

So thanks again, everyone.

Operator

[Operator signoff]

Duration: 44 minutes

Call participants:

Dan Mondor -- Chairman and Chief Executive Officer

Steve Smith -- Executive Vice President and Chief Financial Officer

Mike Walkley -- Canaccord Genuity -- Analyst

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

John Weldon -- Senior Vice President of Enterprise SaaS Solutions

Mike Latimore -- Northland Capital Markets -- Analyst

Scott Searle -- ROTH Capital Partners -- Analyst

Lance Vitanza -- Cowen and Company -- Analyst

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