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Inseego Corp. (INSG) Q3 2019 Earnings Call Transcript

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Inseego Corp. (NASDAQ: INSG)
Q3 2019 Earnings Call
Nov 06, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Hello and welcome to Inseego Corp.'s third-quarter 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, executive vice president of IoT & mobile solutions; Wendy Caceres, chief marketing officer; and 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 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.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you, and hello everyone. I will start my remarks with some important observations. This is an exciting time for Inseego. Our hard work in developing the world's first commercially available mobile broadband 5G products is now bearing fruit.

Inseego is a clear global leader with our 5G portfolio and we have made tangible progress toward our strategic goals in the third quarter. We have lot left to do to fully take advantage of this opportunity, but the management team and the board of directors are pleased with our progress so far. Looking ahead, we remain confident in our 5G prospects and are building a strong foundation to provide significant revenue and cash flow generation starting in mid-2020. We recorded the highest revenue quarter in recent history of $62.7 million which is up 24% year over year and 12% sequentially.

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Most importantly, we are very pleased that we are ahead of expectations and on track to recognize over $10 million of 5G revenue in calendar 2019 coming from 10 carriers in nine countries. This underscores our strategy of launching new products, winning new customers, and expanding into new geographies. Also we are continually working to improve our gross margins where we saw improvements in the third quarter. We expect further progress as we continue to reduce cost on our 4G business and we make a shift to higher-margin 5G products starting in mid-2020.

With respect to our goal of strengthening our balance sheet, we have many non-dilutive options at our disposal and are currently evaluating the optimal path forward. While our 4G business was very strong for the first nine months in 2019, we did have one disappointment which you will see in Q4 as a result of a right Verizon promotional change in our flagship 4G hotspot, the MiFi 8800L. Despite this, demand for our 4G products remain strong. In the third quarter, we launched our FirstNet-certified USB800 modem with AT&T and our MiFi 8000 mobile hotspot continues to do well at Sprint, evidenced by increasing sell-through.

We expect to launch 4G products with other carriers including Bell Canada in Q1 and Telstra in Australia where our new IoT tracker will launch next week. These 4G initiatives are strategically important as we now sell to all the major carriers in the U.S. which is important to our revenue growth and customer diversification and has given us the opportunity to showcase our 5G products to these customers. Now let's take a closer look at our 5G progress that gives us confidence in our revenue expectations of 20% to 25% growth in 2020.

Our first mover advantage along with our technical and performance capabilities in 5G is opening the door to new engagements with numerous operators worldwide. In the past, we have talked about opportunity pipeline which continues to be strong. What we are going to focus on going forward is a number of active trials with operators who are testing our products in their labs and on their networks. Our active trials grew significantly in the third quarter and includes 60 in-service providers who have an aggregate of nearly 600 million wireless subscribers.

And just for reference, that's more than four times the size of Verizon wireless subscriber base. The majority of these trials are with large service providers outside of North America. These trials are encouraging as these service providers are seeing Inseego's devices perform ad speeds between one and two gigabits per second in both millimeter wave and new sub-6 gigahertz bands on real world networks. Given this, we expect to meet our goals of eight to 10 design wins by the end of the year. We are also hard at work designing new products based on second generation 5G chipsets which will include mobile broadband and fixed wireless access devices for both millimeter wave and sub-6 bands.

This ties to our strategic goal of leveraging our mobile technology expertise for a new generation of 5G-enabled products that will take us far beyond the hotspot category. We are executing on this through our close partnerships with Ericsson, Qualcomm, and Verizon. We will establish new strategic relationships outside of the traditional wireless ecosystem that is giving us unique insights into emerging 5G use cases. For example, we recently partnered with Nvidia at Mobile World Congress Americas for a GPU edge compute demonstration powered of our 5G MiFi technology.

To that end, we created an advanced technology group under our new CTO Dan Picker to work with companies large and small across the industry verticals that are now developing 5G products. Our goal is to partner with these firms to create 5G solutions. We successfully launched a similar effort to expand our industrial IoT portfolio by leveraging our 4G capabilities in rapidly growing greenfield markets. We have started generating revenue in FirstNet.

We are expanding our footprint in SD WAN and we are also hard at work part on new opportunities in CBRS. Let's start with FirstNet, public safety network, which serves 9,000 government agencies and other organizations. In the third quarter, we introduced our USB800 modem which is now generating revenue from AT&T. The market software-defined wide area network or SD WAN is expanding rapidly.

Our Skyus line of industrial IoT products which provide wireless connectivity are gaining traction. As a result, we now have strategic partnerships with three leading SD WAN providers, VeloCloud by VMware, Riverbed, and Cisco Meraki. And we have pending engagements with two other market leaders. Together, these companies hold nearly 60% of the share of the SD WAN market.

An additional target market is the newly opened Citizens Broadband Radio Service or CBRS spectrum which recently received FCC approval for additional commercial deployment in markets nationwide. Our product includes support for CBRS and we are working with our customers and partner to develop the market. Turning to enterprise SaaS solutions. We are seeing results and are pleased with the trajectory of the business and expect fleet growth in 2020.

As examples, Australian bookings were up 45% year to date on a year-over-year basis and South Africa bookings were up 54% over the same time period. In Europe, recurring revenue growth was strong overall, up double digits year to date with the U.K. and Germany leading. We have development a new cloud platform called Pegasus, launching in the fourth quarter to accelerate revenue in 2020 and beyond.

This platform will enable us to increase customer retention, accelerate sales to new customers, and grow our partner channel. In the aviation vertical, we are working the next phases of two large Tier 1 rollouts. We are staffing for growth and recently announced important executive appointments. To properly execute on the 5G opportunities requires investment in R&D, sales, marketing and engineering.

We will continue to make investments in the people we need. A few senior hires worth noting include Dan Picker, our new CTO, as I mentioned previously. Wendy Caceres, our new CMO is tasked with increasing awareness of Inseego's brand globally in industry thought leadership. She is also tasked with implementing B2B and B2C demand generation programs.

Adam Gould was recently appointed senior vice president of product management to lead the design and execution of Inseego product roadmaps. So with that, I will turn it over to Steve Smith to discuss Q3 results and guidance.

Steve Smith -- Executive Vice President and Chief Financial Officer

Thank you, Dan, and thank you, everyone, for joining today's call. Q3 was a very strong quarter for Inseego. Revenue was $62.7 million, up approximately 24% on a year-over-year basis and 12% sequentially, beating the top-end of guidance. IoT and mobile solutions revenue was $45.9 million, up almost 33% year over year and 15% from last quarter on the strength of our 4G LTE portfolio and the first sales of our 5G devices, exceeding top-end of guidance.

Enterprise SaaS solutions revenue was $16.8 million, which was at the top-end of guidance, up 5% year over year and 5.5% sequentially reflecting the actions taking to turn around both South African and Australian businesses. In both South African fleet and Australian businesses, we have seen positive leading indicators as Dan has pointed out. Both geographies currently have strong backlog, a robust customer pipeline of new logos and expansions of existing customers. Turning to the balance sheet.

We raised $10 million preferred stock from our two largest equity investors during the quarter. At the end of Q3, we had approximately $13.9 million in cash, down approximately $6.4 million quarter over quarter due to a working capital increase of $6.9 million combined with continued investments in support of our 5G initiative. As pointed out last quarter, due to the June 2020 redemption rate included in convertible debt and the August 2020 maturity of the term loan, both debt instruments appear in current liabilities on our balance sheet. Given that the convert is both trading above par and has more than two and a half years until majority, we do not expect that the redemption rate will be exercised.

As Dan pointed out, we continue to actively work addressing the term loan, convertible debt and working capital flexibility. We have multiple options available, and we expect to announce actions we plant to undertake in the coming months. From this point on, my discussion points will focus on non-GAAP numbers. The reconciliation from GAAP to non-GAAP is detailed in our earnings release.

Last quarter, I said that we expected an increase in gross margin this quarter. Compared to Q2, mobile products gross margin increased 1.9 points from 15.2% to 17.1%. The overall IoT and mobile solutions gross margin was 18.2%, up 1.5 points sequentially. We are seeing the benefits from the cost reductions we expected from Foxconn.

We expect gross margins will continue to improve in coming quarters as we execute on our cost reduction pan. For enterprise SaaS, gross margins of 65.3% were up 2.7 points sequentially. The total non-GAAP gross margin in the third quarter was 30.8%, up 1.1 points sequentially. Total non-GAAP operating expense by $19.2 million, up $3.2 million sequentially.

For several quarters, we have been investing to upgrade our Ctrack and IoT software platform. Dan mentioned our new cloud platforms called Pegasus. We have also been working to fully integrate the entire company on to a common ERP and CRM platforms which will allow us to scale and improve efficiency. Both are project based investments, which we expect to complete in early 2020.

Driven by our 5G initiatives, in Q3 our non-GAAP R&D expense was $6.5 million, up $2.2 million sequentially. The other area of investment for Inseego is the global sales and marketing. As Dan pointed out, we grew our investment year to date to take advantage of our 5G leadership position, as well as 4G and industrial IoT opportunities. In Q3, sales and marketing expenses were $6.8 million, up marginally from Q2.

We have been hiring aggressively to meet the goals of our 2020 growth strategy and we plan to complete the majority of that hiring by the end of Q4. In Q3, we recorded a non-GAAP net loss of $3.1 million, non-GAAP loss per share of $0.0.4 and positive adjusted EBITDA of $4.4 million which was at the top-end of guidance. The IoT and mobile solutions business had pro forma adjusted EBITDA of about $2.3 million and enterprise SaaS solutions had $4.6 million in pro forma adjusted EBITDA. Now on to guidance.

The Verizon promotional change Dan mentioned earlier went into effect in October. So we only have a few weeks of sell-through data. Compound that with typical seasonality, we have decided to take a conservative approach to Q4 guidance. We expect Q4 total revenues to be in the range of $48 million to $55 million with IoT and mobile solutions revenues in the range of $33 million to $38 million and enterprise SaaS solutions revenues between $15 million and $17 million.

Our adjusted EBITDA is expected to be in the range of negative $3 million to positive $1 million. Given the expected growth in 5G coming from expanded geographies, new products and new service providers, specifically in the second half of the year, with Qualcomm Snapdragon X55 based products, we expect full-year 2020 revenues to be 20% to 25% higher than full-year 2019. We expect gross margin gains per quarter as we continue to execute on our cost reduction plans. In the second half of 2020, again the Snapdragon X55 based products launch, we expect gross margins to further improve.

We have a 30% IoT and mobile gross margin target by 2020 year-end. We expect enterprise SaaS gross margin to remain in the mid-60s. Thank you. With that, I will turn the call back over to Dan.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you, Steve. And I want to thank everybody for joining us today. We are at an exciting point in Inseego's history. We can now see the 5G future that we have been working toward over the last two years.

I am proud of what out teams have accomplished. I don't measure our success by any given quarter. This is about building long term shareholder value. I have strong conviction in our industry-leading 5G portfolio and I believe we are well-positioned for long term growth.

I want to thank every Inseego employee for their tireless efforts. They are making a big difference in the market. That concludes my prepared marks and I will turn it back to the operator for Q&A.

Questions & Answers:


Operator

Thank you. [Operator instructions]. The first question will come from Mike Walkley with Canaccord Genuity. Please go ahead.

Anthony Nemoto -- Canaccord Genuity -- Analyst

Hi. This is actually Anthony, on for Mike. In terms of the R&D level in Q4 and going forward into 2020, do you foresee the level from this quarter sustained throughout 2020? Or can we see it potentially come back down as you rollout the 5G X55 based product line?

Dan Mondor -- Chairman and Chief Executive Officer

Yeah. Hi. It's Dan. I will just make a comment or two and ask Steve to add.

As comments, relative to our 5G growth strategy, we see the bulk of our hiring and therefore R&D expense, of course, is proportional to that headcount. We expect to see the majority of that hiring to conclude at the end of the fourth quarter. There maybe some additional hiring into the next year. But that should give you a sense of what you should expect from an expense level going forward.

Steve?

Steve Smith -- Executive Vice President and Chief Financial Officer

Yeah. I think that adequately spells it out. I think you have got the targets that we have laid out in the past with Mike. I don't think we will see any huge increases at all after fourth quarter.

Anthony Nemoto -- Canaccord Genuity -- Analyst

Got it. And then on 2020, the 20% to 25% growth, just given the $10 million 5G related revenue you are expecting this year, can you add a little bit of more color on the cadence of that growth in 2020? I know you said back-half weighted, but any additional color on the cadence would be much appreciated.

Dan Mondor -- Chairman and Chief Executive Officer

Yes. I will a comment on the topic and I will ask Ashish to also comment on. The next generation chipsets, which is what our product newest designs are based on, but essentially what we talked about in excess of $10 million in revenue this year, that is on the first-generation chipset and that is not in the market nor in our model are expected to be the high runner of this year. So it's a great start, a great, great start.

It has really validated our 5G technology and all the things that we expected to happen have happened, performance, customer acceptance, and so forth. And the 16 customer trials I referred to are based on that technology. But the main event is the second generation chipset that we are working on now. And, Ashish, if you would want to add to that?

Ashish Sharma -- Executive Vice president of IoT & Mobile Solutions

Yes. Thanks, Dan. And yes, as Dan mentioned, during the tick-off, development of our next-gen portfolio in 5G where way you will start to see these products ticked to the market by sometime in Q2 and mid next year is when they are going to get launched. And that's when you start to see a lot of the customers start to do more of mass deployments of 5G devices.

Anthony Nemoto -- Canaccord Genuity -- Analyst

Got it. Great. And just last one for me. I will pass it on to queue.

I am sorry. You perhaps said this in the prepared remark, I think. But just to confirm, gross margin for Q4, you still see sequentially up on a consolidated blended basis?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Steve, do you want to...

Steve Smith -- Executive Vice President and Chief Financial Officer

Yes. I would expect them to continue to rise.

Anthony Nemoto -- Canaccord Genuity -- Analyst

OK. Thank you very much.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you.

Operator

The next question will be from Scott Searle with ROTH Capital. Please go ahead.

Scott Searle -- ROTH Capital Partners -- Analyst

Hi. Good afternoon. Thanks for taking my question. Just to follow-up in terms of the EBITDA guidance for the December quarter.

Could you help us calibrate on the opex front? I just wanted to dig in on that a little bit. Non-GAAP opex was a little over $19 million. Where is that going to start to top out in the December quarter? And then I just want to dive in a little bit more from a gross margin standpoint. You are saying, gross margins on IoT will be up sequentially into the fourth quarter and then they will continue up toward a 30% range exiting 2020.

Is that correct, just to be calibrated?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. I think you actually have it, Scott. But, Steve, do you want to...

Steve Smith -- Executive Vice President and Chief Financial Officer

Yeah. I think you have got it adequately, Scott. So as far as opex, it should be up modestly in Q4. But we do expect gross margins to continue upward.

Scott Searle -- ROTH Capital Partners -- Analyst

OK. And then just kind of given the cadence of product introductions, Ashish, are you tying it to the X55 and general availability looking like it's in the second quarter. I am wondering if you could help us understand how big of an inflection that's going to be? I think in the past, as well, you have talked about 5G also being a lead product that is pulling another 4G solutions on the mobile hotspot front. So gigabit LTE, etc.

So if you could kind of help us understand what that hockey-stick starts like? And also, maybe if you could give us some ballpark range of what 5G contribution looks like in 2020? Thanks.

Dan Mondor -- Chairman and Chief Executive Officer

Yeah. I will ask Ashish to comment in a second. But I think it's kind of a two-way arrangement. Some with our 4G initiatives and establishing positions end customers is introducing the 5G conversations.

It actually is also happening in the reverse direction, importantly for brand new customers that are looking to evaluating 5G or extending their interest to 4G. So it's kind of a, if you call, a push-pull effect, I guess, for both. But yes, the major point of inflection is the second-half. And that's really the design cycle of second-generation chipset.

Ashish Sharma -- Executive Vice president of IoT & Mobile Solutions

And, Scott, as Dan mentioned, we have provided in Dan's earlier remarks, he mentioned 20% to 25% increase in top-line revenue next year, which is driven by those deployment. So it's the device, the next-gen devices hitting the market in addition to the operators rolling out more coverage on their networks, right, which is what they are working on right now. As you can see, there is a lot of activity. Every week, every month, there are new markets going up with 5G coverage, and that is what we are tracking toward that in second-half of next year is you will start to see some decent coverage in mass market devices.

And that's when the inflection point happens to what Dan mentioned.

Scott Searle -- ROTH Capital Partners -- Analyst

Maybe just to quickly follow up. In terms of the 16 active service provider trials, could you give us an idea how many are toying with, playing with multiple products, both in gigabit LTE and 5G fixed wireless and mobile hotspot front? Thanks.

Dan Mondor -- Chairman and Chief Executive Officer

Well, just to clarify, with reference to the 16 trials, those are all 5G trials. And it's with a mixture of our mobile broadband products, as well as our fixed wireless products. Some are one, a number are testing both products, in fact. So it's kind of a product line strategy.

But those are 5G trials, Scott.

Scott Searle -- ROTH Capital Partners -- Analyst

Great. Thank you.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you.

Operator

The next question comes from Lance Vitanza with Cowen. Please go ahead.

Lance Vitanza -- Cowen and Company -- Analyst

Hi. Thanks, guys. I know you don't want to put too much importance on any one quarter, but congratulations. This was a good one.

Turning to the Q4 guide. Could we talk a little bit more about that the puts and takes on the top line on the 4G side? Any thoughts on why Verizon decided to be less promotional? And might we anticipate a more promotional environment in Q1? Or is it with the holidays come and gone, this was the one shot that we had at it, we are not going to get it?

Dan Mondor -- Chairman and Chief Executive Officer

Yeah. Thanks, Lance. Promotions change. They do come and they do go, in both directions.

This was a change that happened very recently. In fact, it was at the beginning of October. So we have had very few weeks of sell-through for information to really understand where it ought to be. But obviously, it was a promotional change.

We are seeing a downtick in, at least, the very near term sell-through data, sell-through information. Also, there is the year-end inventory management. That's a fourth quarter phenomenon. So it's the beginning of time.

So don't know where we will go into the future. That's obviously not in our hands. But that's really the scenario that played out. So having said that, we have just wanted to be super conservative in our Q4 guidance.

And it's also, there is quite a range in there. So we are going to learn a lot more in the coming weeks.

Lance Vitanza -- Cowen and Company -- Analyst

And it sounds like meanwhile you have some good momentum on the 5G side. And I apologize if I missed this in the prepared remarks. But did you give a revenue guide number for 5G in the fourth quarter?

Dan Mondor -- Chairman and Chief Executive Officer

No. We have not done that. I guess first thing back to the prior guide down for Q4 is that is entirely a 4G phenomenon. That's one thing.

All we said in 5G is, we are going to be in excess of $10 million in calendar year 2019. So that's really was from a mid-year, actually July's point onward. So that's all we said. We haven't done anything on a quarterly basis there, Lance.

Lance Vitanza -- Cowen and Company -- Analyst

OK. My last question is just on the balance sheet. I am a little surprised that you haven't redone the bank debt yet, just given that it is now a current liability and I would think that there would be an opportunity there to really reduce your interest expense on that trance. I know it's not going to make or break you.

But it would seem to be a no-brainer. I am wondering if I am missing something there? And then related to that, you did mention strengthening the balance sheet via non-dilutive options. That would seem to include things other than just a refinancing, like for example asset sales. And I am wondering if I am thinking about that correctly?

Steve Smith -- Executive Vice President and Chief Financial Officer

So Lance, on the balance sheet side, this is Steve. You know who our backers are. And we have got some significant investors and you can look at their bios on our website. We are working with them and looking at all the options we have available to us to, as far as options with the debt and, as well as getting additional flexibility in our working capital.

So all I can say is, stay tuned, and we will be providing further guidance on that.

Lance Vitanza -- Cowen and Company -- Analyst

Thanks.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you, Lance.

Operator

Our next question comes from Mike Latimore with Northland Capital Markets. Please go ahead.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. Thanks. On the $10 million of 5G revenue, is that all with one customer or across a couple?

Dan Mondor -- Chairman and Chief Executive Officer

No. Mike, that's actually across 10 customers, as a matter of fact in nine countries. So there is a various mix of revenue sources. But the great thing about it is, it's well diversified domestically and internationally.

And in fact the bulk of those customers of the 10 are international.

Mike Latimore -- Northland Capital Markets -- Analyst

Great. And then to the extent there is a pretty big push for the new products in the second quarter and beyond, do you expect maybe some of your carriers to may be pause a little bit ahead of that? Or how do they balance kind of the understanding that those products are coming versus say, selling 4G product?

Dan Mondor -- Chairman and Chief Executive Officer

Well, I think it relates to our design wins and target that we reiterated here. And those are really making decisions for future deployment. That's what that's about. So the cycle of decision-making and then deployment will basically lead to the 2020 guidance we provided.

So they will make their decisions. We are on the hunt there on a lot of them that's part of the 16 trials. They are going to build out their infrastructure. That clearly will have to go hand-in-hand and availability of the products on the second-generation chipsets then leads to product launch second quarter and then revenue uptick beginning mid-year onward.

And that's what we have been consistently saying. I don't know. Ashish, do you have anything to add?

Ashish Sharma -- Executive Vice president of IoT & Mobile Solutions

I fully agree with Dan. I think we are not seeing anybody, I think if you meant to ask, Mike, if 4G is going to slow down, we are not seeing 4G getting slowed down. In fact, the 4G buildouts on advanced LTE still continues. But needless to say, there is a lot of momentum in building out the 5G networks.

And it's all happening globally in pretty much every major market you can name.

Mike Latimore -- Northland Capital Markets -- Analyst

OK. And then just last on the enterprise SaaS business. The South African bookings were up significantly. I guess, one, when you talk about bookings, does that include not just new logos and upsells but renewals? And then two, what is sort of the main area of interest for use case there?

Dan Mondor -- Chairman and Chief Executive Officer

Yes. Thanks. John Weldon is here with me. So, John, why don't you tackle that one?

John Weldon -- Senior Vice President of Enterprise SaaS Solutions

So in the answer to the first question, yes. It includes new logos. It includes expansion to existing clients. It includes renewals.

In terms of the second, it's just better sales efficiency. We have got better product market fit, and we have upgraded the staff and the team. And we are seeing it in our core businesses, whether it's construction, mining, things like that. But at traditional service fleets and heavy-duty fleets, and it's our core customer base down there.

So we are very pleased with the progress.

Mike Latimore -- Northland Capital Markets -- Analyst

OK. Sounds good. Thank you.

Operator

The next question will be from Jaeson Schmidt with Lake Street. Please go ahead.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

Hi, guys. Thanks for taking my questions. I am wondering if you could comment on your industrial IoT gateway business. If there is any particular end markets you are seeing strength? And then how that pipeline has expanded over this past quarter?

Dan Mondor -- Chairman and Chief Executive Officer

Well, yes. Thanks, Jaeson. So we talked about SD WAN as one major horizontal market and the partnerships we are developing there. There are a number of verticals that we are actively selling into and together with our SD WAN providers, there is a complementary solution set that are being marketed into a number of industry vertical markets.

So maybe, Ashish, you can comment on the end markets we are targeting there?

Ashish Sharma -- Executive Vice president of IoT & Mobile Solutions

Yes. To add to what Dan, Jaeson, I mean there is a lot of vertical markets such as connected transportation, connected infrastructure, remote monitoring and management from connecting vehicular applications to connecting corporate branches out into remote locations. I mean there are many applications there. LTE continues to gain more and more prominence.

SD WAN is one of those markets I know. But then again connected infrastructure is another one. So we are building a portfolio which is going after that market of industrial IoT LTE connectivity. And we are seeing progress in SD WAN, we are seeing progress in FirstNet we talked about, CBRS, as you know, is a brand new greenfield opportunity and we have got support for CBRS spectrum built into our devices, and we are working with a key service provider, as well as other type of solution providers in the market to build that market.

So we see that this market is going to grow with over 20% CAGR year over year for many years. And so it's a good opportunity for us.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

OK. And then lastly on the Ctrack business. I know the decision to roll-off the consumer portion of that. You guys still expected to see some tail there.

But is the revenue decline progressing as expected?

Dan Mondor -- Chairman and Chief Executive Officer

Well, yes. I will ask John. But obviously, as you know, it was a deliberate decision to roll off that very low-margin, low-return, high-churn rate business. So that is built in the net results on Ctrack enterprise SaaS.

So it is, I guess, you would call it a headwind but it's a known planned expected headwind.

John Weldon -- Senior Vice President of Enterprise SaaS Solutions

Yeah. I agree with Dan. In terms of the run off rate, it's nearly what we projected. So there is no material impact that's not been known or quantified to this point.

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

OK. Thanks a lot, guys.

Dan Mondor -- Chairman and Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Dan Mondor for any closing remarks.

Dan Mondor -- Chairman and Chief Executive Officer

OK. So thank you very much. I want to start with just making an announcement here. And I am pleased to announce that Wendy Caceres, who has joined us as CMO, would be heading up investor relations.

So, Wendy, welcome to the investor relations role. She certainly looks forward to meeting you and working with you going forward. Another comment I want to make is to remind everyone of some upcoming events we'll be attending. We will be at the ROTH Technology Conference next week on November 13th in New York City and the Needham Growth Conference on January 14th and 15th, also in New York City.

And we are already gearing up for CES and 2020 Mobile World Congress in Barcelona. So I hope to see you in all of these events. Thanks again, everyone.

Operator

[Operator signoff]

Duration: 39 minutes

Call participants:

Dan Mondor -- Chairman and Chief Executive Officer

Steve Smith -- Executive Vice President and Chief Financial Officer

Anthony Nemoto -- Canaccord Genuity -- Analyst

Ashish Sharma -- Executive Vice president of IoT & Mobile Solutions

Scott Searle -- ROTH Capital Partners -- Analyst

Lance Vitanza -- Cowen and Company -- Analyst

Mike Latimore -- Northland Capital Markets -- Analyst

John Weldon -- Senior Vice President of Enterprise SaaS Solutions

Jaeson Schmidt -- Lake Street Capital Markets -- Analyst

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Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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