Inseego (INSG) Q3 2026 earnings review
Inseego closes the Nokia deal, but both businesses shrink fast
Inseego met its third-quarter targets, but its underlying North America business and its newly acquired Nokia unit are both shrinking. Revenue fell 28% from a year ago as fixed wireless router shipments dropped by three-quarters, and chief executive Juho Sarvikas said the legacy unit still needs to improve. For the fourth quarter, by our math the plan cuts standalone North America sales in half to about $23 million, while the acquired FastMile unit adds $38 million.
| Revenue | $33.3M -27.5% from a year ago |
|---|---|
| Product gross margin | 9.7% 25.0% a year ago |
| Q4 North America revenue outlook | $21–25M -52.5% from a year ago at the middle of the range |
| Q4 total revenue outlook (with FastMile) | $56–65M includes $35–40M from acquired Nokia unit |
⚖️ Verdict: 🔴🔴 Very Bearish
The story got worse because both halves of the combined company are contracting and losing money on hardware. Three months ago, the full-year plan pointed to about $45 million in fourth-quarter North America revenue by our math, so the new outlook marks a second major cut this year, while newly disclosed tables show FastMile had a 3.6% gross margin in the second quarter. One positive: customer collections and $20 million in October cash from Nokia relieved the immediate cash crunch.
The question now is whether Inseego can cut expenses and raise hardware prices before Nokia's $38 million operating subsidy runs out. Either the new engineering chief and $8 million in layoffs turn the combined hardware lines profitable, or the subsidy is used up within three quarters and cash burn returns. Fourth-quarter FastMile gross margin and standalone North America orders will show which path the business is on.
🐂 Bull Case
Nokia Cash and Collections Ease Near-Term Squeeze
Inseego ended June with $1.9 million in cash after delayed customer payments drained its bank account during the first half of the year. Chief financial officer Steven Gatoff welcomed Nokia as a new shareholder and partner after closing the acquisition of FastMile, Nokia's home and business wireless internet unit, on October 1.
- Third-quarter ending cash: $6.6 million, up from $1.9 million in June as customer receivables dropped by $13.3 million
- Third-quarter free cash flow: $10.5 million by our math, as the company collected older bills and delayed paying its own suppliers
- October cash from Nokia: $20 million total, split between a $10 million stock purchase and a $10 million engineering payment
- Fourth-quarter Nokia operating support: $12 million to $14 million expected under the purchase agreement, which caps first-year support at $38 million
The cash crunch eased because customer collections arrived and Nokia funded the deal transition. However, the wireless device maker still owes $57.8 million across its credit line and senior notes, and its unpaid supplier bills rose by $8.2 million in the quarter.
What to watch: fourth-quarter cash flow from operations excluding the one-time Nokia stock and engineering payments. A negative reading would show that core operations still burn cash once the working-capital rebound fades.
New Technology Chief Hired and Costs Cut
Chief executive Juho Sarvikas said he took steps to "address the engineering and product delivery issues" that delayed launches earlier this year. Inseego hired Nick Lambourne as chief technology officer to lead global engineering and cut staff and contractor spending in October to save $8 million a year.
On the commercial side, a major US mobile carrier selected the hardware maker to supply a "ruggedized, high-powered premium-tier MiFi", its portable Wi-Fi hotspot, for emergency workers starting in mid-2027. The company also released new traffic-control software for its enterprise routers and won government security certification for Inseego Subscribe, its subscriber-management software.
What to watch: operating expenses excluding one-offs in the first quarter of 2027, after the October layoffs take full effect. A drop fails to help if engineering cuts cause the mid-2027 carrier hotspot launch to slip.
🐻 Bear Case
North America Fourth-Quarter Plan Cut in Half
"Inseego North America, representing our legacy business, delivered Q3 revenue and adjusted EBITDA within our guided range, but we need to continue to improve our performance," chief executive Juho Sarvikas said. Third-quarter revenue of $33.3 million beat the middle of the company's outlook, yet fell 27.5% from a year ago.
The fourth-quarter outlook shows the legacy business is worsening. Management forecast $21 million to $25 million in fourth-quarter sales for Inseego North America, down 52.5% from a year ago at the middle of the range. Three months ago, the company's $155 million full-year plan pointed to $41.7 million to $48.7 million for the fourth quarter by our math.
The new plan cuts implied full-year standalone revenue to $134.6 million by our math, down from the $190 million target set in May. Fixed wireless router sales fell 76.3% from a year ago to $4.2 million in the third quarter because its largest carrier customer ordered little and its newest carrier paused after a large second-quarter purchase.
What to watch: standalone North America fixed wireless revenue in the fourth quarter. Another reading near $4 million would show that the largest customer's recovery has stalled into 2027.
Acquired FastMile Business Is Also Shrinking
Inseego bought Nokia's FastMile fixed wireless unit on October 1 to double its revenue and add mobile carrier customers across Europe, the Middle East and Asia. When management announced the deal in the spring, it described FastMile as a $200 million annual revenue business with gross margins in the teens.
- FastMile 2025 revenue: $326.6 million, up from $151.9 million in 2024 on a pre-deal carve-out basis
- FastMile recent quarterly sales: fell from $106.6 million in Q3 2025 to $51.6 million in Q1 2026 and $42.6 million in Q2 2026
- FastMile fourth-quarter outlook: $35 million to $40 million, down 45.6% from $68.9 million a year ago at the middle of the range
- FastMile gross margin: dropped to 3.6% in Q2 2026, down from 9.2% in Q1 2026 and 9.0% across 2025
The newly disclosed history shows that Inseego bought a business whose sales have fallen by nearly two-thirds over the past year and whose hardware margin barely covers direct product costs. Combining two shrinking hardware lines gives the group global reach, but it does not create underlying growth.
What to watch: FastMile gross margin in the fourth-quarter report, its first under Inseego's accounting rules. A single-digit reading would confirm that international fixed wireless hardware carries structurally thin margins.
Hardware Margins Missed and Subsidies Carry Q4
Last quarter, management said Rising memory chip costs had hurt second-quarter profit, but price increases would lift hardware gross margin to the high teens in the third quarter. Instead, third-quarter product gross margin fell to 9.7% from 12.3% in the second quarter and 25.0% a year ago by our math.
Simultaneously, high-margin software services revenue dropped 19.0% from last quarter to $10.0 million on a contract reset, dragging total gross margin down 8.3 percentage points from a year ago to 33.3%. Meanwhile, research, sales and administrative costs rose 15.4 percentage points of revenue from a year ago as sales shrank.
For the fourth quarter, Inseego forecast Adjusted EBITDA, or operating cash profit excluding one-offs, of $0 million to $2 million. That figure includes "support payments from Nokia under the acquisition agreement in the range of $12 million to $14 million". Without Nokia's subsidy, the combined company would lose about $12 million on an Adjusted EBITDA basis by our math.
What to watch: how quickly Inseego uses up the $38 million first-year Nokia support cap. At $13 million a quarter, the protection runs out in three quarters unless FastMile losses shrink.
Risks this quarter didn't answer
Several standing risks from the second quarter cannot be checked until the full quarterly filing arrives, though balance-sheet moves heightened the inventory risk.
- Purchase commitments vs falling sales: the release did not update the $119.9 million of non-cancellable supplier orders from June, while balance-sheet inventory more than doubled in three months to $20.5 million and the nine-month obsolete-inventory charge reached $2.9 million.
- Customer concentration: exact revenue shares for the top two carriers await the quarterly filing, though management noted low fixed wireless shipments to both.
- Related-party debt: no update in the release on the $31.8 million of senior notes held by insiders.
👓 Other Themes
Accounting Shift Lowers Capitalized Software Costs
Inseego changed how it accounts for internal software development in its fourth-quarter outlook to match Nokia's historical rules for FastMile. Recording "lower capitalization of internal-use software development costs" puts more engineering pay directly onto the income statement instead of the balance sheet. Under this rule, fourth-quarter 2025 Adjusted EBITDA would have been $3.9 million rather than the reported $6.0 million.
💲 Other KPIs
Mobile hotspot sales rose 19.1% from a year ago and 10.5% from last quarter, making it the only growing product line. However, the presentation noted that growth was helped by carrier "purchases ahead of anticipated memory price increases", meaning orders were pulled forward from future quarters.
Unsold hardware and parts on the balance sheet rose 129.9% from $8.9 million last quarter and 165.5% from $7.7 million at year-end. Inventory built up as North America product sales dropped 26.5% from the second quarter, tying up $15.7 million of operating cash over the first nine months.
The average diluted share count increased 5.9% from a year ago after the company issued stock in January to retire its preferred shares. This third-quarter count does not yet include the roughly 1.9 million shares and 0.8 million warrants issued to Nokia on October 1.
🔮 Guidance
Cut on a comparable basis. The plan combines $21 million to $25 million from North America and $35 million to $40 million from newly acquired FastMile. While the headline total rises 25.0% from last year's standalone fourth quarter, underlying North America sales fall 52.5% from a year ago and miss the $41.7 million to $48.7 million range implied by the prior $155 million full-year plan by our math.
New. The middle of the range is $1.0 million, or 1.7% of guided revenue, compared with a -$1.0 million loss in the third quarter. The figure includes $12 million to $14 million of contractual support payments from Nokia and lower software cost capitalization; excluding the Nokia support, Adjusted EBITDA is negative $12.0 million by our math.
❓ Key Questions
Why did North America fourth-quarter sales drop in half?
Three months ago, the $155 million full-year plan pointed to about $45 million in fourth-quarter North America revenue by our math. Management now guides $21 million to $25 million without explaining which carrier orders vanished.
Why has FastMile revenue fallen 65% since late 2025?
The carve-out table shows FastMile quarterly revenue falling from $106.6 million in Q3 2025 to $35 million to $40 million in the fourth-quarter outlook, with second-quarter gross margin at 3.6%. Investors need to know if FastMile lost major carrier contracts before close.
What caused inventories to more than double to $20.5 million?
Inventories jumped by $11.6 million in the third quarter while North America sales shrank and nine-month obsolete-inventory write-offs hit $2.9 million. Did supplier purchase commitments force Inseego to take components for delayed or cancelled orders?
Why did third-quarter hardware gross margin miss the high-teens plan?
Management said in August that memory chip price pass-throughs were already in place to lift third-quarter product gross margin to the high teens, but GAAP product margin fell to 9.7% instead.