5G Adoption And FWA Expansion Will Fuel IoT Growth

Key Takeaways

• Rapid new product adoption, expanded carrier partnerships, and channel wins in industrial IoT position Inseego for stronger market share, margin expansion, and diversified revenue streams.
  
• Accelerating SaaS and platform traction, alongside strategic leadership hires, could drive significant improvements in recurring revenue, operational efficiency, and profitability.
  
• Heavy reliance on a few key customers, industry shifts toward open-source tech, and persistent losses expose Inseego to ongoing margin, liquidity, and competitiveness risks.

Catalysts

Engages in the design and development of cloud-managed wireless wide area network (WAN) and intelligent edge solutions for businesses, consumers, and governments in the United Stated, Europe, and internationally.

• Analyst consensus expects FWA and MiFi expansion to drive steady revenue, but exceptionally rapid adoption of the FX4100 FWA solution and the addition of new Tier 1 carrier relationships suggests market share gains and outsized, sustained double-digit revenue growth are underestimated, with product mix also contributing to significant gross margin expansion.
  
• While analysts broadly agree that a shift to software and services should support improved margins, the accelerating success and API-enabled integration of platforms like Inseego Connect and Inseego Subscribe could result in a much more dramatic increase in recurring SaaS revenue and higher net margins than currently modeled, as enterprise clients and global carriers demand deeper device management and security functionality.
  
• Inseego's channel and partner strategy is delivering high-value deals (such as the multimillion-dollar industrial S&P 500 win), validating the ability to unlock large new verticals in industrial IoT, agriculture, and rural broadband, positioning the company to capture substantial incremental revenue and diversify top-line growth well beyond wireless carriers.
  
• The explosive growth in enterprise device connectivity and ongoing transition to 5G and edge computing means Inseego's continuous product innovation cycle-across hardware, mesh networking, and software-defined edge solutions-creates an opportunity to command premium pricing, expand EBITDA margins, and increase hardware/software attach rates at a much faster pace than industry peers.
  
• The hiring of senior leaders with proven expertise in supply chain, business development, and carrier/channel partnerships sets the stage for improved operational leverage, cost containment, and global go-to-market execution, with the potential to transform working capital efficiency and accelerate bottom-line earnings growth as the company scales.

Inseego Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Inseego compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Inseego's revenue will grow by 9.5% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Inseego will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Inseego's profit margin will increase from -7.5% to the average US Communications industry of 9.3% in 3 years.
• If Inseego's profit margin were to converge on the industry average, you could expect earnings to reach $21.2 million (and earnings per share of $1.41) by about August 2028, up from $-13.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 12.3x on those 2028 earnings, up from -10.0x today. This future PE is lower than the current PE for the US Communications industry at 25.1x.
• Analysts expect the number of shares outstanding to grow by 0.59% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.71%, as per the Simply Wall St company report.

Inseego Future Earnings Per Share Growth

Risks

• Inseego's customer base remains highly concentrated with only a few large Tier 1 carrier customers driving the majority of sales, which increases risk to net revenues if any major contract is lost or if carriers exert greater pricing power, impacting future earnings.
  
• The long-term industry shift toward open-source, software-defined, and cloud-native networking threatens Inseego's reliance on proprietary hardware, potentially eroding both revenue and gross margins as buyers migrate towards flexible, lower-cost solutions.
  
• Market dynamics show persistent consolidation among telecom and networking giants, which puts smaller players like Inseego at a scale disadvantage, likely causing ongoing competitive margin pressure and limiting ability to invest in R&D, which could constrain future innovation and top-line growth.
  
• Inseego has a history of operational losses and, while EBITDA and margins have recently improved, if negative free cash flow persists amid increased capital investment in new products and inventory, the company risks future dilution or liquidity stress that could pressure both shareholder returns and sustaining operations.
  
• Geopolitical and regulatory uncertainties, including disruptions related to international supply chains or telecom market access, could lead to unforeseen cost increases or limited market reach, creating risk for both gross margins and revenue sustainability over the long term.

Valuation

• The assumed bullish price target for Inseego is $13.5, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Inseego's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $13.5, and the most bearish reporting a price target of just $8.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $228.2 million, earnings will come to $21.2 million, and it would be trading on a PE ratio of 12.3x, assuming you use a discount rate of 8.7%.
  
• Given the current share price of $8.61, the bullish analyst price target of $13.5 is 36.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.