NASDAQ:AIRG Airgain Q3 2024 Earnings Report $3.92 -0.11 (-2.70%) As of 01:03 PM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast Airgain EPS ResultsActual EPS-$0.10Consensus EPS -$0.02Beat/MissMissed by -$0.09One Year Ago EPS-$0.11Airgain Revenue ResultsActual Revenue$16.10 millionExpected Revenue$16.00 millionBeat/MissBeat by +$100.00 thousandYoY Revenue GrowthN/AAirgain Announcement DetailsQuarterQ3 2024Date11/12/2024TimeAfter Market ClosesConference Call DateTuesday, November 12, 2024Conference Call Time5:00PM ETUpcoming EarningsAirgain's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Airgain Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 12, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Good afternoon. Welcome to Airgain's Third Quarter 2024 Earnings Conference Call. My name is Sherry, and I will be your operator for today's call. Joining us today are Airgain's President and CEO, Jacob Schwinn and CFO, Michael Albez. As a reminder, this call is being recorded and will be made available for replay via a link found in the Investor Relations section of Airgain's website at investors.airgain.com. Operator00:00:28Following management's prepared remarks, the call will be opened for questions from Airgain's covering analysts. I caution listeners that during the call, Airgain's management will be making forward looking statements about future events as well as Airgain's business strategy and future financial and operating performance. Actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business. These forward looking statements are qualified by the cautionary statements contained in today's earnings release and Airgain's SEC filings. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, November 12, 2024. Operator00:01:19Airgain undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call. In addition, this conference call will include a discussion of non GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of GAAP to non GAAP results. Now I would like to turn the call over to Enercare's CEO, Jacob Schoen. Jacob? Speaker 100:01:49Thank you, operator. Good afternoon, everyone, and thank you for joining us today. I'll begin with a brief overview of the company and our quarterly performance before handing the call over to our CFO, Michael Albaas, who will walk you through our financials and Q4 outlook. I will then return for closing thoughts before we open the floor for questions. Before we dive into our quarterly results, I would like to introduce Airgain to any investors and analysts who may be less familiar with us. Speaker 100:02:30At Airgain, we simplify wireless connectivity across the entire value chain, from product design and carrier certification to integrated connectivity solutions. Our mission is to make wireless straightforward, creating connectivity solutions that are easy to understand, deploy, maintain and integrate, ultimately enhancing the experience for our partners and customers. With over 20 years of experience in custom cellular and antenna design, We have developed a robust product portfolio ranging from embedded modems and antennas to comprehensive systems for asset tracking fixed wireless access, vehicle networking and smart network repeater solutions. Today, we are a global leader in wireless connectivity solutions, serving consumer, automotive and enterprise markets worldwide. Demand for connectivity is surging, and we are confident that our expanding addressable markets and commitment to innovation will fuel sustainable long term growth. Speaker 100:03:58With emerging technologies, we are well positioned to address the market's evolving needs through industry leading wireless solutions. Turning to our Q3 performance, we achieved strong sequential revenue growth despite continued macroeconomic challenges, which were less severe than last year, remain a factor. We reported sales of $16,100,000 a 6% increase over 2nd quarter, which slightly exceeded the midpoint of our guidance range. This growth was largely driven by robust sales in consumer embedded antennas and the successful launch of our AirgainConnect fleet for automotive applications, despite softer sales in our enterprise market this quarter. We also saw an uptick in sales of our Wi Fi 7 router antenna systems to a Tier 1 MSO partner as well as the initial sales of our A Gennect Fleet 5 gs vehicle gateway. Speaker 100:05:20I am pleased to share that AC Fleet achieved certification from major operators including T Mobile and AT and T along with key industry bodies. This certification is a critical milestone, validating our technology's performance, ensuring network compatibility and opening broader commercialization opportunities across U. S. Markets. Turning to our 3 core markets. Speaker 100:05:57Our consumer market delivered exceptional growth in Q3, marking our best performance in this market since Q3 of 2022. After initial shipments of our first Wi Fi seven router antenna system to a Tier 1 MSO last quarter. Q3 saw us ramp up shipments significantly. Additionally, our Tier 1 MNO embedded antenna shipments continue to accelerate for our following initial shipments in Q1, generating $6,900,000 in revenue, an impressive $2,000,000 increase over the Q2. This growth highlights the strong demand for advanced connectivity solutions with WiFi 7 adoption steadily gaining momentum across the industry. Speaker 100:07:02While adoption rates vary among MSOs, Airgain remains at the forefront of the transition to cutting edge wireless technologies. Looking ahead, we are optimistic about maintaining this momentum with plans to begin shipments to another Tier 1 MSO in early 2025, further solidifying our leadership in this evolving space. We anticipate a moderation in demand during Q4, which will result in a reduction in WiFi 7 shipments for the upcoming quarter. However, following the typical seasonal impact in Q1, we remain optimistic about the robust growth prospects driven by the ongoing Wi Fi 7 industry transition and the accelerating adoptions of our MNO solution. We believe these factors collectively strengthen our long term growth trajectory. Speaker 100:08:13In our automotive market, where we concentrate on delivering advanced aftermarket solutions for public safety in transportation vehicles, we achieved strong progress this quarter even amid persistent inventory challenges. Despite these headwinds, we are encouraged by the positive momentum we are establishing, reflecting the growing demand for our solutions and our ability to effectively navigate industry uncertainties. In Q3, automotive market sales reached $2,500,000 a $800,000 increase over the Q2, driven primarily by higher sales of VCOM 13 antennas and initial shipments of AC fleet. This rising demand for our innovative solutions gives us confidence in a sequential increase in sales in this market for Q4. This quarter, a key achievement was completing the final production certification phase for AC fleet, including approvals for use on AT and T and T Mobile Networks. Speaker 100:09:42Customer feedback from trials has been highly positive, particularly regarding the solutions performance, ease of use and compact form factor. We believe this all in one concept provides our customers with a time to market advantage and a lower total cost of ownership. We have expanded customer trials to nearly 40 across domestic and international markets, with shipments expected to increase as these trials progress. Additionally, we anticipate further carrier certifications in the coming months, both domestically and internationally, which should unlock new revenue streams. Our rugged outdoor antenna, RECOM 13 5 gs, designed to deliver high performance 5 gs connectivity for fleet and public safety vehicles, continue to gain momentum in Q3, specifically with counties and municipalities. Speaker 100:10:59While the longer sales cycle for RECOM 13 warrants cautious optimism, the strong interest of this product is highly encouraging. Looking ahead, we are confident the automotive market is primed for continued growth fueled by the strong momentum of Airgain Connect fleet. We anticipate additional certifications and customer trials in Q4, setting us up for a strong finish to the year. Finally, our enterprise market saw a larger than anticipated decline in Q3 compared to Q2. While we continue to expand our asset trucker portfolio, enterprise sales decreased to $6,700,000 down $1,900,000 from the previous quarter. Speaker 100:12:02This drop was primarily due to lower sales of embedded modems and custom products. The dip in embedded modem sales reflects a temporary slowdown after a surge in Q2, driven by multiple new design wins. Additionally, custom product sales were impacted by excess inventory, with 2 major customers indicating this surplus may expand into the first half of twenty twenty five. While these inventory challenges aren't new, they continue to pressure our revenue, but we are actively taking steps to lessen the impact as we move forward. We continue to make strong progress with our asset trucker strategy, broadening our focus beyond logistics and real car sectors to include healthcare IoT applications, specifically in the area of transport of high volume, temperature sensitive assets. Speaker 100:13:21Our newly launched AT Flight Asset Tracker powered by advanced artificial intelligence is designed to autonomously detect takeoff and landing events. This AI driven functionality ensures seamless compliance with FAA regulations by automatically switching to airplane mode, a critical feature that removes the need for any manual intervention and significantly enhances user convenience. The ATFLYTE is built for the unique demands of the healthcare IoT sector, offering expanded battery life of over a year and a broad operating temperature range down to minus 20 degrees C, ideal for tracking temperature sensitive medical assets like vaccines and pharmaceuticals. This device has already received strong market validation with an initial purchase order from a major healthcare provider and we anticipate beginning shipments in Q1 2025. In the railcar sector, we have expanded our portfolio with specialized railcar focused features that built on the design wins announced last year. Speaker 100:14:57This sector provides us with a unique opportunity to leverage our asset truckers' competitive advantages, including cellular connectivity, bodily longevity, and tailored configurations to meet the stringent clinical and environmental demands of the market. Shipments of our lantern FWA product, which began last quarter, contributed minimally to Q3 revenue due to a slower than expected transition from indoor to outdoor solutions in North American markets. We believe Lantern's primary opportunities lie in failover applications for small enterprises and network extension for commercial and residential uses. While the design win to sales cycle is lengthy, we are actively pursuing these applications. Looking ahead to the rest of 2024, we expect a modest quarter over quarter uptick in enterprise sales as inventory levels normalize Despite some temporary softness in custom products, we are confident our expanding product portfolio and sales pipeline position us well to navigate these short term challenges. Speaker 100:16:28Overall, we are encouraged by the strong momentum demonstrated across several key product lines this quarter. Our broad and diverse product portfolio positions us well to capitalize on emerging growth opportunities, reinforcing our belief in a sustained rebound. As we have previously communicated, we are actively advancing our strategic shift from being solely a component supplier to becoming a comprehensive provider of wireless system solutions. This transformation highlights our commitment to delivering end to end solutions that meet the evolving demands of the market, positioning Airgain for long term success. Our growth strategy centers on 2 primary pillars, maximizing our established business and expanding into integrated wireless solutions. Speaker 100:17:40First, we are committed to executing our established business, where Airgain's traditional strength lies in component based products deployed across consumer, automotive and enterprise applications. This includes our embedded modems, custom products, embedded antennas and aftermarket automotive solutions. Over the year, we have built strong partnerships across the value chain and achieved significant milestones in recent quarters. Looking ahead, we see substantial opportunities within these established product categories, driven by several key factors, including the ongoing ramp up of Tier 1 MSO WiFi 7 shipments and embedded antenna design wins with mobile network operators and expansion of the RECOM 13 antenna sales pipeline across both automotive and enterprise markets. With our expanding product portfolio and growing customer pipeline, we are optimistic about the growth potential of our established business. Speaker 100:19:04This strong foundation allows us to leverage our expertise and market presence for long term success. Alongside growth in our established components business, We see our wireless system solutions as the main driver of upside potential in 2025 and beyond. Key areas of focus include asset trucking and 5 gs connectivity solutions, which represent our roadmap solutions in the most significant strategic growth opportunities for us. Our advanced asset trucking solutions are increasingly utilized in transportation, supply chain management, and other specialized applications. Over the past year, we have refined our strategy to focus on sectors where we can leverage our innovation and brand to expand our product portfolio with premium higher margin offerings. Speaker 100:20:17This suite offers strong recurring revenue potential to multiple subscription based components, including our nimble link cloud based device enablement platform and trucking dashboards. These services enhance value for our customers while establishing a foundation for sustainable long term revenue streams. Our 5 gs connectivity products open up substantial growth opportunities across multiple sectors with our largest growth drivers in smart network control repeaters. Leading the way, our Lighthouse Smart Repeater series significantly enhances network coverage for mobile operators, addressing connectivity challenges in difficult to reach areas and accelerating 5 gs adoption across the industry. Vehicle networking, another key growth area. Speaker 100:21:28Our AirgainConnect fleet vehicle gateway is designed for public safety and fleet management, delivering essential cellular GPS and Wi Fi connectivity to support mission critical communications. Fixed wireless access, learning out our growth opportunities, the long term FWA product suite is designed to improve broadband connectivity for homes and small offices, meeting the rising demand for accessible high speed wireless Internet. While this product shows strong potential, we are taking a measured approach as the market shifts toward outdoor solutions. Together, Airgain's systems solutions enable us to meet diverse connectivity needs from residential and commercial settings to public safety and transportation within the fast evolving 5 gs landscape. Interest in our 5 gs offerings is strong, giving us confidence in its growth potential for 2025. Speaker 100:22:49At Airgain, our vision of connecting the world by making wireless simple is steadily becoming a reality. Our expanding suite of innovative solutions is designed to seamlessly connect devices from the core network to the edge. By delivering high performance intelligent wireless technology, we are simplifying connectivity across a broad range of applications from enhancing in building and outbound cellular coverage to enabling precise asset tracking in challenging environments With products that optimize signal quality, extend coverage and ensure stable connections, Airgain is breaking down the complexities of wireless technology, bringing us closer to a world where connectivity is both effortless and ubiquitous. As our vision becomes reality, we're also capturing significant opportunities in a rapidly expanding market landscape. Collectively, our product line position us within a serviceable addressable market projected at 1.1 $1,000,000,000 in 2024 with substantial expansion to $2,600,000,000 in 2025 and $5,500,000,000 by 2028. Speaker 100:24:29This remarkable growth is driven by our strategic entry into high growth markets such as vehicle gateways and smart network control repeaters, which capitalize on the increasing demand for advanced connectivity solutions. This expanded same reflects our transformation from a component provider to a comprehensive wireless systems solutions company, underscoring our ability to capture significant market share as these sectors rapidly evolve, reaching $5,500,000,000 Speaker 200:25:12by Speaker 100:25:132028. Our growth strategy sets a strong foundation for substantial long term success across high demand connectivity markets. Overall, our multi faceted growth strategy underscores our commitment to capitalizing our current demand while actively positioning Airgain for substantial long term growth as a leader in advanced wireless connectivity solutions. With that, I will turn the call over to Michael to discuss our Q3 2024 financial results and outlook for the Q4. Michael? Speaker 200:25:58Thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non GAAP figures. Information about the non GAAP financial measures, including GAAP to non GAAP reconciliations, can be found in our earnings release. Now let's turn to our Q3 results. As Jacob mentioned, Q3 sales came in at $16,100,000 just above our guidance midpoint of $16,000,000 This marks a 6% sequential increase and an 18% year over year growth, driven largely by the strong performance of our consumer market. Speaker 200:26:48Consumer sales reached $6,900,000 a sequential increase of $2,000,000 driven by strong demand for our Tier 1 MSO WiFi 7 Antennas following initial shipments in Q2. Additionally, we experienced continued momentum in our Tier 1 MNO FWA Antenna sales in the Q3. Automotive sales came in at $2,500,000 up $800,000 sequentially, driven by increased aftermarket sales and the initial shipments of our Airgain Connect fleet. Enterprise sales were $6,700,000 reflecting a sequential decrease of $1,900,000 This decline was primarily due to lower sales of our custom IoT products impacted by excess inventory levels with 2 strategic customers. Q3 gross margin came in at 42.8%, up 130 basis points sequentially, primarily due to a favorable sales mix. Speaker 200:28:05Year over year, gross margin improved by 380 basis points, reflecting stronger margins in our enterprise and automotive markets. This improvement was a result of continuous cost reduction initiatives and the launch of high performance aftermarket and enterprise products over the past year. Looking ahead, we expect our AirgainConnect and Lighthouse solutions to further support gross margin expansions in the coming quarters. Q3 operating expenses totaled $6,900,000 remaining flat sequentially. Year over year, however, expenses rose by $900,000 primarily due to increased investments in our engineering and sales functions, while G and A expenses remained stable. Speaker 200:29:03This increase reflects higher product development expenses, including prototypes, certifications and testing, as well as a roughly 25% increase in engineering and sales personnel expenses. The year over year increase was driven by our investment in the AirgainConnect and Lighthouse platforms. As we enter a new phase in their growth, we expect to further invest in these two platforms. Q3 adjusted EBITDA was $100,000 an improvement from negative $400,000 in the prior quarter. This sequential increase was driven by higher sales and improved gross margin, while operating expenses remained flat. Speaker 200:29:52Non GAAP EPS came in at breakeven. As of September 30, 2024, our cash balance was $7,300,000 down $1,100,000 sequentially. Despite positive adjusted EBITDA, revenue linearity challenges led to a negative operating cash flow of $1,200,000 Our account receivable balance was $11,800,000 $3,200,000 higher sequentially because of the revenue linearity challenges. Net inventory was $2,600,000 which was $500,000,000 lower sequentially. Now moving to our outlook for the Q4 ending December 31, 2024. Speaker 200:30:43As a reminder, we provide quarterly guidance for sales, non GAAP gross margin and expenses, non GAAP EPS and adjusted EBITDA as we believe these metrics to be key indicators for the overall performance of our business. For the Q4 of 2024, we project sales between $16,200,000 $18,200,000 with a midpoint of $17,200,000 The midpoint represents a 7% sequential growth and a 71% increase over Q4 last year. We expect non GAAP gross margin for the Q4 to be in the range of 41.5 percent to 44.5 percent or 43% at the midpoint. The midpoint represents the 4th sequential increase in gross margin. We expect operating expenses to be approximately $7,200,000 as we remain focused on developing the AC fleet and lighthouse platforms, supporting customer trials and driving design wins. Speaker 200:32:01Non GAAP EPS is expected to be $0.02 at the midpoint of the guidance. Adjusted EBITDA is expected to be $300,000 at the midpoint of the guidance. Now I would like to turn the call back over to Jacob for his closing thoughts. Jacob? Speaker 100:32:21Thanks, Michael. Before we open the floor for questions, I would like to leave you with a few final thoughts. First, I am incredibly proud of our team's unwavering commitment to Airgain's strategic roadmap. We're executing several groundbreaking product initiatives, including Lighthouse NAC fleet under tight timelines. As of today, we are not only meeting our commitments, but also staying on track with key milestones, a true testament to our team's dedications and the strength of our leadership. Speaker 100:33:032nd, we remain optimistic about the market potential in broader industry recovery. While certain product segments have faced challenges, we have made significant strides in product innovation, partnership expansion and geographic reach. Our investments in new product launches and an expanded sales force position us well to navigate industry wide inventory adjustments. We are confident that our resilience and focused execution will drive meaningful returns in the quarters ahead. Finally, our innovative products remain central to our value proposition. Speaker 100:33:52As the industry evolves with the shift to WiFi 7, increased demand for asset tracking and ongoing 5 gs coverage challenges, the global connectivity opportunity continues to grow. Many regions still represent untapped potential for our solutions. Our next generation AirgainConnect fleet, Lighthouse Smart Repeater and Smart FWA Solutions address these critical connectivity needs and have garnered strong interest from major industry players. These innovations set us apart, positioning Airgain as a key player in the future of connectivity. I am very pleased to announce that we have received our first commercial order for the Lighthouse smart repeater from an international MNO. Speaker 100:34:53This milestone validates Lighthouse competitive advantage in expanding coverage and enhancing network performance. With its ease of installation and deployment, Lighthouse is uniquely positioned to accelerate customers' time to market while reducing the overall cost of ownership. Looking ahead, our execution on our product development initiatives and ongoing customer trials, specifically AirgainConnect fleet in Lighthouse since the stage for significant growth in 2025, driven by expansion across all three of our markets. With that, operator, please open the call for Q and A. Operator00:35:44Thank you. We will now take questions from Araganes' sell side analysts. Our first question is from Anthony Stoss with Craig Hallum Capital Group. Please proceed. Speaker 300:36:21Good afternoon, Jacob and Michael. Good to hear your voices again. Jacob, thanks for some of the detail on Lighthouse. Can you maybe put a finer point on it in terms of the ongoing customer trials? How many there might be? Speaker 300:36:36When you expect them to turn into volume production? I know you've got your first order. And I'd also love to hear more about the AirGate Connect fleet. Similar question, you talked about a bunch of qualifications coming over the next couple of quarters. Maybe give us a sense of how many that might be and when do you think that's fully ramped? Speaker 100:36:59Tony, good to hear from you. Yes, so I just want to make sure I answered a couple of your questions. First, you talk about the trials. So for the AC fleet, as I indicated in the call, that we have roughly 40 trials ongoing and we expect that to continue to grow as we're closing out the year. And they are both domestically and internationally, although primarily domestically here in the U. Speaker 100:37:26S. We are also doing for the Lighthouse. We have 2 that's expected to complete this quarter, Q4. We also have long pending in domestically as well. Speaker 300:37:43Got it. And then I know you mentioned you expect your enterprise excuse me, your consumer products to be down in Q4, but then likely back up in Q1 for additional MSO launching Wi Fi 7. How many other customers haven't launched Wi Fi 7 with you yet? Speaker 100:38:02Yes. So the Thrust Wi Fi 7, in the U. S, there are really 2 major MSOs. And 1 of them first of all, we won both of these customers, which is really encouraging. So it's more of a timing issue. Speaker 100:38:15For the 1st major MSO, we actually have started shipment in Q2 and it's actually that's why we actually have a strong growth in Q3 because they really accelerate their deployment and we expect that to continue. Now the second MSO, we expect that deployment to start, I would say, first half of next year. And in addition, we're also working with MNO that's more on the indoor FWA product as well. Speaker 200:38:46And Tony, this is Michael. Just a quick clarification on your question. In Q4, we do expect a moderation on the revenue, mainly because Q3 was so strong. In Q1, we do expect the seasonal impact that we have, which tends to be negative in the consumer product line. Speaker 300:39:06Got it. And last question, if I could squeeze in one more. Jacob, congrats on the major health care provider for your auto airplane mode tracker. I'm curious how big a market do you think that is? Is this a product that you have to do trials with additional health care customers? Speaker 300:39:22Just trying to get a sense of how you expect that to ramp? Speaker 100:39:27Yes, great questions. Yes, so certainly, I would say still a niche market, but it could certainly apply to different application. I think the fact is that we are now able to develop something with artificial intelligence. I think that's really something the first in Airgain's history to be able to enter this new exciting market AI market. And with that, the ability to be able to have predictability, the ability to be able to work with different, in this case, healthcare, but we can really using that technology to many other sectors as well. Speaker 100:40:01That's what's getting us excited about the possibilities. So as I mentioned to you earlier, the market is still a niche, although we're seeing this particular technology can be applied to multiple sectors in the future. Speaker 300:40:16Very good, Jacob. We'll see you next week at our conference. Speaker 100:40:20Thank you. Thank you, Tony. Operator00:40:29Our next question is from Tim Savageaux with Northland Capital Markets. Please proceed. Speaker 400:40:39Hi, good afternoon and congrats on another real solid quarter. I want to focus on the 5 gs network infrastructure opportunity as well. I know you mentioned an initial commercial order. I wonder if that's part of a broader kind of rollout commitment from this Tier 1 customer. And as you get more advanced in these trials, what the sort of overall opportunity would be at a major customer such as that one in a pretty significant deployment scenario, if you have any better view to that? Speaker 400:41:19And also when do you expect that initial order to ship? Speaker 100:41:23Great questions, Tim, and I'm glad you picked it up. It's actually one of the exciting things that's happening. It's actually more pertaining to Q4 than Q3. In Q3, we have done a lot of the trials and then discussing about actual deployment. And this is actually we're expecting this to happen first half of next year as we've been indicated numerous times previously. Speaker 100:41:49And I'm very pleased that it's actually happening earlier than anticipated. In the first order, it was a deployment that's already happening. And this is only one of many. We are working with them on a much bigger scale deployment contract and with this particular MNO. And we are hoping to be able to replicate that to other customers as well. Speaker 100:42:14And what we seeing is that we're now attacking a market and people really value what we're bringing to the table. So I'll just give you a couple of color, right. One is the time to market, whereas the alternative solution would take them 4 to 6 months, we are able to do that, we talk about less than 2 weeks. It's astounding what we're able to accomplish with our unique Lighthouse Smart Network repeater solution. And one of the other thing is that we're not only doing this as a product sale, we're actually working with the customers to do the actual deployment. Speaker 100:42:48And what does that mean? This means it's more than just a product sale. We're actually going to be providing the maintenance and we're going to have recurring revenue on the service as we move forward. And that's what's so unique about this new lighthouse opportunity. I hope that answers your questions, Tim. Speaker 400:43:08I appreciate it. And I don't know if I heard you right, but I think you talked about the prospects for accelerating growth in 'twenty five and certainly you got your addressable market more than doubling. And I wonder if in that outlook, and you kind of talked about sort of your baseline components business and your newer systems business. I don't know if you can break those down for us. But I guess how much growth from the 5 gs side are you expecting with regard to that outlook for accelerating growth and growth across all your segments? Speaker 400:43:51At least in your own thinking, have you built in material revenue there? Speaker 200:43:56Tim, this is Michael. So it is a bit early to provide any type of guidance beyond Q4 at this point. But just to give you some color altogether, on the existing businesses, so this is without AirgainConnect platform and without Lighthouse platform. And you're correct, the doubling of the SAM is coming from both the vehicle gateway with AirgainConnect and also the smart network repeater with Lighthouse. But in terms of the existing businesses that we currently have, we do expect some slight growth year over year primarily because of some of the headwinds that we have on some of the excess inventory challenges. Speaker 200:44:39But at the same time, we're also having this growth in asset tracker along with FWA, for example, and even antenna and consumer as well, too. From a lighthouse and also from AC fleet, this is a bit early to tell, mainly because we don't have complete visibility of the overall size of the design wins, but also the sales or the design win to sales cycle is very elongated. This commercial order, for example, that we just received is with a customer that we have been working with for over a year. This was part of the live network trial that we had mentioned back in Q2. And so there is some progress there, and we're hoping that the fact that we have delivered on the AC fleet as we were expecting it to be and to have initial shipments of the device in Q3 and the fact that we are where we are right now with Lighthouse when we're expecting commercialization to be in early part of next year sets the stage for us to believe that we are poised for some growth in those markets. Speaker 400:45:51Great. And maybe one final question from me kind of relevant to that AC fleet commentary. I mean, it looks like, when you mentioned a bit of a pullback in consumer and only a modest uptick or modest recovery in enterprise, does should we be implying there that auto is the main driver of your sequential growth in terms of guiding up $1,000,000 plus in the midpoint? Thanks. Speaker 200:46:20Yes. Sequential growth will be driven by the automotive market. And this is also the reason for the wider range that we have on the guidance. It's primarily the overall lack of visibility specifically on those new initiatives. Speaker 400:46:39Okay. Thanks very much. Speaker 200:46:41Thank you. Operator00:46:44Our next question is from Scott Searle with Roth Capital Partners. Please proceed. Speaker 500:46:50Hey, good afternoon. Thanks for taking my questions. Hey, guys, I apologize if this was covered earlier. I hopped on the call a little bit late, but I wanted to go to Lighthouse. It sounds like you've got some pilot activity going on. Speaker 500:47:01I'm wondering if there is any further color that you provide in terms of timeline to some of that converting into revenue? And second, on the nimbaling front, there have been significant headwinds across the industry just in terms of inventory. And I think you guys have been working through that as well. It seems like that is starting to clear up now. Plus there's a void on top of that I think with Sierra Wireless, I think, ineffectively addressing the marketplace. Speaker 500:47:27So I'm wondering what you're seeing overall in the module and the tracking space, the design activity that goes along with NimbleLink and how you're kind of thinking about things as we go into the end of the year and 2025? Thanks. Speaker 200:47:41Thank you, Scott. I'll start. So on Lighthouse, we do expect some initial revenue in the Q4 quarter. And on the NimbleLink product lines, we did see and we do see some headwinds from a persistent inventory challenges. Now the overall broader inventory correction that we have seen last year is now becoming much more customer and product specific. Speaker 200:48:11And so really, it's hitting us in this custom IoT products, but we have 2 strategic customers that are experiencing some excess inventory. And we had mentioned as well too that it may extend through the first half of the year of next year. And so while we are driving that, there are some pockets of growth, especially with asset tracker that we are definitely investing quite a bit on. Jacob? Speaker 100:48:38Yes. I think that, look, while we don't give guidance beyond the next quarter, since we're at the end of the year, I think that I can share some color as we enter into 2025. Certainly, the inventory correction, some of the seasonality, that's expected. But I do expect that overall, we're going to be seeing growth in all three of our markets. With the consumer, we've seen that with the WiFi 7, with the uptick with MNO, with the indoor FWA, we expect that it will be in the growth 2025 versus 2024. Speaker 100:49:16With the automotive market, I think that the big additional contributor is the AC fleet, AirgainConnect fleet. So expect that to really help sustain the growth. And then in regards to enterprise, certainly with the LinkedIn FWA, but more so with the Lighthouse, now we feel comfortable with, we also think that that's going to really help position us well for the growth within enterprise as well. So all in all, we're expecting nice growth, although the first half we may still have to deal with some inventory correction. As you mentioned, you're seeing that industry wide on the IoT space, we're seeing the same thing, but we do expect that really it's a tail end by the end of the first half. Speaker 500:50:08Great. Thanks so much. Operator00:50:15At this time, this will conclude our question and answer session. If your question was not answered, you may contact Airgain's Investor Relations team at airggateway grp.com. I would now like to turn the call back over to Mr. Schwinn for closing remarks. Speaker 100:50:39Thank you all for joining us today. I want to extend special appreciation to our outstanding team for their tireless efforts and invaluable contributions. They are the driving force behind our success. I would also like to thank our investors for their continued support and trust in our vision. We look forward to sharing more updates with you in the future. Speaker 100:51:05Operator, you may now conclude the call. Operator00:51:11Thank you. Thank you for joining us today for Airgain's Q3 2024 earnings call. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAirgain Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Airgain Earnings HeadlinesStockNews.com Begins Coverage on Airgain (NASDAQ:AIRG)April 28, 2025 | americanbankingnews.comAirgain Sets First Quarter 2025 Conference Call for Wednesday, May 7, 2025, at 5:00 p.m. ETApril 18, 2025 | seekingalpha.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. May 5, 2025 | Golden Portfolio (Ad)Airgain® Reports Granting of Inducement Awards Under Nasdaq Listing Rule 5635(c)(4)April 17, 2025 | businesswire.comSky Airline Taps RateGain’s AirGain to Power Smarter PricingApril 15, 2025 | in.investing.comAirgainConnect® Fleet™ 5G Vehicle Gateway Certified on Verizon’s Ultra-Reliable 5G Network for Fleet and Mission-Critical ApplicationsApril 3, 2025 | finance.yahoo.comSee More Airgain Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Airgain? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Airgain and other key companies, straight to your email. Email Address About AirgainAirgain (NASDAQ:AIRG) provides wireless connectivity solutions that creates and delivers embedded components, external antennas, and integrated systems worldwide. The company's products include MaxBeam embedded antennas; profile embedded antennas; profile contour embedded antennas; profile ceramic embedded antenna; ultra embedded antennas; and SmartMax embedded antennas. It offers embedded and NimbeLink embedded moderms; custom cellular solutions; cellular IoT development; cellular IoT development kits; and IoT data plans. In addition, the company provides 5G connectivity, smart repeaters, and fixed wireless access; asset tracking solutions, devices, and partners; and external antennas, fleet antennas, IoT antennas, network antennas, vehicle networking, partner solutions, and accessories. It offers its products under the Antenna Plus brand. It serves industrial, consumer, automotive fleet, enterprise, energy, medical, transportation, agriculture, services, and public safety markets. The company was formerly known as AM Group and changed its name to Airgain, Inc. in 2004. Airgain, Inc. was incorporated in 1995 and is headquartered in San Diego, California.View Airgain ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Is Reddit Stock a Buy, Sell, or Hold After Earnings Release?Warning or Opportunity After Super Micro Computer's EarningsAmazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousRocket Lab Braces for Q1 Earnings Amid Soaring ExpectationsMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback Plan Upcoming Earnings American Electric Power (5/6/2025)Advanced Micro Devices (5/6/2025)Marriott International (5/6/2025)Constellation Energy (5/6/2025)Arista Networks (5/6/2025)Brookfield Asset Management (5/6/2025)Duke Energy (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Ferrari (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 6 speakers on the call. Operator00:00:00Good afternoon. Welcome to Airgain's Third Quarter 2024 Earnings Conference Call. My name is Sherry, and I will be your operator for today's call. Joining us today are Airgain's President and CEO, Jacob Schwinn and CFO, Michael Albez. As a reminder, this call is being recorded and will be made available for replay via a link found in the Investor Relations section of Airgain's website at investors.airgain.com. Operator00:00:28Following management's prepared remarks, the call will be opened for questions from Airgain's covering analysts. I caution listeners that during the call, Airgain's management will be making forward looking statements about future events as well as Airgain's business strategy and future financial and operating performance. Actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business. These forward looking statements are qualified by the cautionary statements contained in today's earnings release and Airgain's SEC filings. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, November 12, 2024. Operator00:01:19Airgain undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call. In addition, this conference call will include a discussion of non GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of GAAP to non GAAP results. Now I would like to turn the call over to Enercare's CEO, Jacob Schoen. Jacob? Speaker 100:01:49Thank you, operator. Good afternoon, everyone, and thank you for joining us today. I'll begin with a brief overview of the company and our quarterly performance before handing the call over to our CFO, Michael Albaas, who will walk you through our financials and Q4 outlook. I will then return for closing thoughts before we open the floor for questions. Before we dive into our quarterly results, I would like to introduce Airgain to any investors and analysts who may be less familiar with us. Speaker 100:02:30At Airgain, we simplify wireless connectivity across the entire value chain, from product design and carrier certification to integrated connectivity solutions. Our mission is to make wireless straightforward, creating connectivity solutions that are easy to understand, deploy, maintain and integrate, ultimately enhancing the experience for our partners and customers. With over 20 years of experience in custom cellular and antenna design, We have developed a robust product portfolio ranging from embedded modems and antennas to comprehensive systems for asset tracking fixed wireless access, vehicle networking and smart network repeater solutions. Today, we are a global leader in wireless connectivity solutions, serving consumer, automotive and enterprise markets worldwide. Demand for connectivity is surging, and we are confident that our expanding addressable markets and commitment to innovation will fuel sustainable long term growth. Speaker 100:03:58With emerging technologies, we are well positioned to address the market's evolving needs through industry leading wireless solutions. Turning to our Q3 performance, we achieved strong sequential revenue growth despite continued macroeconomic challenges, which were less severe than last year, remain a factor. We reported sales of $16,100,000 a 6% increase over 2nd quarter, which slightly exceeded the midpoint of our guidance range. This growth was largely driven by robust sales in consumer embedded antennas and the successful launch of our AirgainConnect fleet for automotive applications, despite softer sales in our enterprise market this quarter. We also saw an uptick in sales of our Wi Fi 7 router antenna systems to a Tier 1 MSO partner as well as the initial sales of our A Gennect Fleet 5 gs vehicle gateway. Speaker 100:05:20I am pleased to share that AC Fleet achieved certification from major operators including T Mobile and AT and T along with key industry bodies. This certification is a critical milestone, validating our technology's performance, ensuring network compatibility and opening broader commercialization opportunities across U. S. Markets. Turning to our 3 core markets. Speaker 100:05:57Our consumer market delivered exceptional growth in Q3, marking our best performance in this market since Q3 of 2022. After initial shipments of our first Wi Fi seven router antenna system to a Tier 1 MSO last quarter. Q3 saw us ramp up shipments significantly. Additionally, our Tier 1 MNO embedded antenna shipments continue to accelerate for our following initial shipments in Q1, generating $6,900,000 in revenue, an impressive $2,000,000 increase over the Q2. This growth highlights the strong demand for advanced connectivity solutions with WiFi 7 adoption steadily gaining momentum across the industry. Speaker 100:07:02While adoption rates vary among MSOs, Airgain remains at the forefront of the transition to cutting edge wireless technologies. Looking ahead, we are optimistic about maintaining this momentum with plans to begin shipments to another Tier 1 MSO in early 2025, further solidifying our leadership in this evolving space. We anticipate a moderation in demand during Q4, which will result in a reduction in WiFi 7 shipments for the upcoming quarter. However, following the typical seasonal impact in Q1, we remain optimistic about the robust growth prospects driven by the ongoing Wi Fi 7 industry transition and the accelerating adoptions of our MNO solution. We believe these factors collectively strengthen our long term growth trajectory. Speaker 100:08:13In our automotive market, where we concentrate on delivering advanced aftermarket solutions for public safety in transportation vehicles, we achieved strong progress this quarter even amid persistent inventory challenges. Despite these headwinds, we are encouraged by the positive momentum we are establishing, reflecting the growing demand for our solutions and our ability to effectively navigate industry uncertainties. In Q3, automotive market sales reached $2,500,000 a $800,000 increase over the Q2, driven primarily by higher sales of VCOM 13 antennas and initial shipments of AC fleet. This rising demand for our innovative solutions gives us confidence in a sequential increase in sales in this market for Q4. This quarter, a key achievement was completing the final production certification phase for AC fleet, including approvals for use on AT and T and T Mobile Networks. Speaker 100:09:42Customer feedback from trials has been highly positive, particularly regarding the solutions performance, ease of use and compact form factor. We believe this all in one concept provides our customers with a time to market advantage and a lower total cost of ownership. We have expanded customer trials to nearly 40 across domestic and international markets, with shipments expected to increase as these trials progress. Additionally, we anticipate further carrier certifications in the coming months, both domestically and internationally, which should unlock new revenue streams. Our rugged outdoor antenna, RECOM 13 5 gs, designed to deliver high performance 5 gs connectivity for fleet and public safety vehicles, continue to gain momentum in Q3, specifically with counties and municipalities. Speaker 100:10:59While the longer sales cycle for RECOM 13 warrants cautious optimism, the strong interest of this product is highly encouraging. Looking ahead, we are confident the automotive market is primed for continued growth fueled by the strong momentum of Airgain Connect fleet. We anticipate additional certifications and customer trials in Q4, setting us up for a strong finish to the year. Finally, our enterprise market saw a larger than anticipated decline in Q3 compared to Q2. While we continue to expand our asset trucker portfolio, enterprise sales decreased to $6,700,000 down $1,900,000 from the previous quarter. Speaker 100:12:02This drop was primarily due to lower sales of embedded modems and custom products. The dip in embedded modem sales reflects a temporary slowdown after a surge in Q2, driven by multiple new design wins. Additionally, custom product sales were impacted by excess inventory, with 2 major customers indicating this surplus may expand into the first half of twenty twenty five. While these inventory challenges aren't new, they continue to pressure our revenue, but we are actively taking steps to lessen the impact as we move forward. We continue to make strong progress with our asset trucker strategy, broadening our focus beyond logistics and real car sectors to include healthcare IoT applications, specifically in the area of transport of high volume, temperature sensitive assets. Speaker 100:13:21Our newly launched AT Flight Asset Tracker powered by advanced artificial intelligence is designed to autonomously detect takeoff and landing events. This AI driven functionality ensures seamless compliance with FAA regulations by automatically switching to airplane mode, a critical feature that removes the need for any manual intervention and significantly enhances user convenience. The ATFLYTE is built for the unique demands of the healthcare IoT sector, offering expanded battery life of over a year and a broad operating temperature range down to minus 20 degrees C, ideal for tracking temperature sensitive medical assets like vaccines and pharmaceuticals. This device has already received strong market validation with an initial purchase order from a major healthcare provider and we anticipate beginning shipments in Q1 2025. In the railcar sector, we have expanded our portfolio with specialized railcar focused features that built on the design wins announced last year. Speaker 100:14:57This sector provides us with a unique opportunity to leverage our asset truckers' competitive advantages, including cellular connectivity, bodily longevity, and tailored configurations to meet the stringent clinical and environmental demands of the market. Shipments of our lantern FWA product, which began last quarter, contributed minimally to Q3 revenue due to a slower than expected transition from indoor to outdoor solutions in North American markets. We believe Lantern's primary opportunities lie in failover applications for small enterprises and network extension for commercial and residential uses. While the design win to sales cycle is lengthy, we are actively pursuing these applications. Looking ahead to the rest of 2024, we expect a modest quarter over quarter uptick in enterprise sales as inventory levels normalize Despite some temporary softness in custom products, we are confident our expanding product portfolio and sales pipeline position us well to navigate these short term challenges. Speaker 100:16:28Overall, we are encouraged by the strong momentum demonstrated across several key product lines this quarter. Our broad and diverse product portfolio positions us well to capitalize on emerging growth opportunities, reinforcing our belief in a sustained rebound. As we have previously communicated, we are actively advancing our strategic shift from being solely a component supplier to becoming a comprehensive provider of wireless system solutions. This transformation highlights our commitment to delivering end to end solutions that meet the evolving demands of the market, positioning Airgain for long term success. Our growth strategy centers on 2 primary pillars, maximizing our established business and expanding into integrated wireless solutions. Speaker 100:17:40First, we are committed to executing our established business, where Airgain's traditional strength lies in component based products deployed across consumer, automotive and enterprise applications. This includes our embedded modems, custom products, embedded antennas and aftermarket automotive solutions. Over the year, we have built strong partnerships across the value chain and achieved significant milestones in recent quarters. Looking ahead, we see substantial opportunities within these established product categories, driven by several key factors, including the ongoing ramp up of Tier 1 MSO WiFi 7 shipments and embedded antenna design wins with mobile network operators and expansion of the RECOM 13 antenna sales pipeline across both automotive and enterprise markets. With our expanding product portfolio and growing customer pipeline, we are optimistic about the growth potential of our established business. Speaker 100:19:04This strong foundation allows us to leverage our expertise and market presence for long term success. Alongside growth in our established components business, We see our wireless system solutions as the main driver of upside potential in 2025 and beyond. Key areas of focus include asset trucking and 5 gs connectivity solutions, which represent our roadmap solutions in the most significant strategic growth opportunities for us. Our advanced asset trucking solutions are increasingly utilized in transportation, supply chain management, and other specialized applications. Over the past year, we have refined our strategy to focus on sectors where we can leverage our innovation and brand to expand our product portfolio with premium higher margin offerings. Speaker 100:20:17This suite offers strong recurring revenue potential to multiple subscription based components, including our nimble link cloud based device enablement platform and trucking dashboards. These services enhance value for our customers while establishing a foundation for sustainable long term revenue streams. Our 5 gs connectivity products open up substantial growth opportunities across multiple sectors with our largest growth drivers in smart network control repeaters. Leading the way, our Lighthouse Smart Repeater series significantly enhances network coverage for mobile operators, addressing connectivity challenges in difficult to reach areas and accelerating 5 gs adoption across the industry. Vehicle networking, another key growth area. Speaker 100:21:28Our AirgainConnect fleet vehicle gateway is designed for public safety and fleet management, delivering essential cellular GPS and Wi Fi connectivity to support mission critical communications. Fixed wireless access, learning out our growth opportunities, the long term FWA product suite is designed to improve broadband connectivity for homes and small offices, meeting the rising demand for accessible high speed wireless Internet. While this product shows strong potential, we are taking a measured approach as the market shifts toward outdoor solutions. Together, Airgain's systems solutions enable us to meet diverse connectivity needs from residential and commercial settings to public safety and transportation within the fast evolving 5 gs landscape. Interest in our 5 gs offerings is strong, giving us confidence in its growth potential for 2025. Speaker 100:22:49At Airgain, our vision of connecting the world by making wireless simple is steadily becoming a reality. Our expanding suite of innovative solutions is designed to seamlessly connect devices from the core network to the edge. By delivering high performance intelligent wireless technology, we are simplifying connectivity across a broad range of applications from enhancing in building and outbound cellular coverage to enabling precise asset tracking in challenging environments With products that optimize signal quality, extend coverage and ensure stable connections, Airgain is breaking down the complexities of wireless technology, bringing us closer to a world where connectivity is both effortless and ubiquitous. As our vision becomes reality, we're also capturing significant opportunities in a rapidly expanding market landscape. Collectively, our product line position us within a serviceable addressable market projected at 1.1 $1,000,000,000 in 2024 with substantial expansion to $2,600,000,000 in 2025 and $5,500,000,000 by 2028. Speaker 100:24:29This remarkable growth is driven by our strategic entry into high growth markets such as vehicle gateways and smart network control repeaters, which capitalize on the increasing demand for advanced connectivity solutions. This expanded same reflects our transformation from a component provider to a comprehensive wireless systems solutions company, underscoring our ability to capture significant market share as these sectors rapidly evolve, reaching $5,500,000,000 Speaker 200:25:12by Speaker 100:25:132028. Our growth strategy sets a strong foundation for substantial long term success across high demand connectivity markets. Overall, our multi faceted growth strategy underscores our commitment to capitalizing our current demand while actively positioning Airgain for substantial long term growth as a leader in advanced wireless connectivity solutions. With that, I will turn the call over to Michael to discuss our Q3 2024 financial results and outlook for the Q4. Michael? Speaker 200:25:58Thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non GAAP figures. Information about the non GAAP financial measures, including GAAP to non GAAP reconciliations, can be found in our earnings release. Now let's turn to our Q3 results. As Jacob mentioned, Q3 sales came in at $16,100,000 just above our guidance midpoint of $16,000,000 This marks a 6% sequential increase and an 18% year over year growth, driven largely by the strong performance of our consumer market. Speaker 200:26:48Consumer sales reached $6,900,000 a sequential increase of $2,000,000 driven by strong demand for our Tier 1 MSO WiFi 7 Antennas following initial shipments in Q2. Additionally, we experienced continued momentum in our Tier 1 MNO FWA Antenna sales in the Q3. Automotive sales came in at $2,500,000 up $800,000 sequentially, driven by increased aftermarket sales and the initial shipments of our Airgain Connect fleet. Enterprise sales were $6,700,000 reflecting a sequential decrease of $1,900,000 This decline was primarily due to lower sales of our custom IoT products impacted by excess inventory levels with 2 strategic customers. Q3 gross margin came in at 42.8%, up 130 basis points sequentially, primarily due to a favorable sales mix. Speaker 200:28:05Year over year, gross margin improved by 380 basis points, reflecting stronger margins in our enterprise and automotive markets. This improvement was a result of continuous cost reduction initiatives and the launch of high performance aftermarket and enterprise products over the past year. Looking ahead, we expect our AirgainConnect and Lighthouse solutions to further support gross margin expansions in the coming quarters. Q3 operating expenses totaled $6,900,000 remaining flat sequentially. Year over year, however, expenses rose by $900,000 primarily due to increased investments in our engineering and sales functions, while G and A expenses remained stable. Speaker 200:29:03This increase reflects higher product development expenses, including prototypes, certifications and testing, as well as a roughly 25% increase in engineering and sales personnel expenses. The year over year increase was driven by our investment in the AirgainConnect and Lighthouse platforms. As we enter a new phase in their growth, we expect to further invest in these two platforms. Q3 adjusted EBITDA was $100,000 an improvement from negative $400,000 in the prior quarter. This sequential increase was driven by higher sales and improved gross margin, while operating expenses remained flat. Speaker 200:29:52Non GAAP EPS came in at breakeven. As of September 30, 2024, our cash balance was $7,300,000 down $1,100,000 sequentially. Despite positive adjusted EBITDA, revenue linearity challenges led to a negative operating cash flow of $1,200,000 Our account receivable balance was $11,800,000 $3,200,000 higher sequentially because of the revenue linearity challenges. Net inventory was $2,600,000 which was $500,000,000 lower sequentially. Now moving to our outlook for the Q4 ending December 31, 2024. Speaker 200:30:43As a reminder, we provide quarterly guidance for sales, non GAAP gross margin and expenses, non GAAP EPS and adjusted EBITDA as we believe these metrics to be key indicators for the overall performance of our business. For the Q4 of 2024, we project sales between $16,200,000 $18,200,000 with a midpoint of $17,200,000 The midpoint represents a 7% sequential growth and a 71% increase over Q4 last year. We expect non GAAP gross margin for the Q4 to be in the range of 41.5 percent to 44.5 percent or 43% at the midpoint. The midpoint represents the 4th sequential increase in gross margin. We expect operating expenses to be approximately $7,200,000 as we remain focused on developing the AC fleet and lighthouse platforms, supporting customer trials and driving design wins. Speaker 200:32:01Non GAAP EPS is expected to be $0.02 at the midpoint of the guidance. Adjusted EBITDA is expected to be $300,000 at the midpoint of the guidance. Now I would like to turn the call back over to Jacob for his closing thoughts. Jacob? Speaker 100:32:21Thanks, Michael. Before we open the floor for questions, I would like to leave you with a few final thoughts. First, I am incredibly proud of our team's unwavering commitment to Airgain's strategic roadmap. We're executing several groundbreaking product initiatives, including Lighthouse NAC fleet under tight timelines. As of today, we are not only meeting our commitments, but also staying on track with key milestones, a true testament to our team's dedications and the strength of our leadership. Speaker 100:33:032nd, we remain optimistic about the market potential in broader industry recovery. While certain product segments have faced challenges, we have made significant strides in product innovation, partnership expansion and geographic reach. Our investments in new product launches and an expanded sales force position us well to navigate industry wide inventory adjustments. We are confident that our resilience and focused execution will drive meaningful returns in the quarters ahead. Finally, our innovative products remain central to our value proposition. Speaker 100:33:52As the industry evolves with the shift to WiFi 7, increased demand for asset tracking and ongoing 5 gs coverage challenges, the global connectivity opportunity continues to grow. Many regions still represent untapped potential for our solutions. Our next generation AirgainConnect fleet, Lighthouse Smart Repeater and Smart FWA Solutions address these critical connectivity needs and have garnered strong interest from major industry players. These innovations set us apart, positioning Airgain as a key player in the future of connectivity. I am very pleased to announce that we have received our first commercial order for the Lighthouse smart repeater from an international MNO. Speaker 100:34:53This milestone validates Lighthouse competitive advantage in expanding coverage and enhancing network performance. With its ease of installation and deployment, Lighthouse is uniquely positioned to accelerate customers' time to market while reducing the overall cost of ownership. Looking ahead, our execution on our product development initiatives and ongoing customer trials, specifically AirgainConnect fleet in Lighthouse since the stage for significant growth in 2025, driven by expansion across all three of our markets. With that, operator, please open the call for Q and A. Operator00:35:44Thank you. We will now take questions from Araganes' sell side analysts. Our first question is from Anthony Stoss with Craig Hallum Capital Group. Please proceed. Speaker 300:36:21Good afternoon, Jacob and Michael. Good to hear your voices again. Jacob, thanks for some of the detail on Lighthouse. Can you maybe put a finer point on it in terms of the ongoing customer trials? How many there might be? Speaker 300:36:36When you expect them to turn into volume production? I know you've got your first order. And I'd also love to hear more about the AirGate Connect fleet. Similar question, you talked about a bunch of qualifications coming over the next couple of quarters. Maybe give us a sense of how many that might be and when do you think that's fully ramped? Speaker 100:36:59Tony, good to hear from you. Yes, so I just want to make sure I answered a couple of your questions. First, you talk about the trials. So for the AC fleet, as I indicated in the call, that we have roughly 40 trials ongoing and we expect that to continue to grow as we're closing out the year. And they are both domestically and internationally, although primarily domestically here in the U. Speaker 100:37:26S. We are also doing for the Lighthouse. We have 2 that's expected to complete this quarter, Q4. We also have long pending in domestically as well. Speaker 300:37:43Got it. And then I know you mentioned you expect your enterprise excuse me, your consumer products to be down in Q4, but then likely back up in Q1 for additional MSO launching Wi Fi 7. How many other customers haven't launched Wi Fi 7 with you yet? Speaker 100:38:02Yes. So the Thrust Wi Fi 7, in the U. S, there are really 2 major MSOs. And 1 of them first of all, we won both of these customers, which is really encouraging. So it's more of a timing issue. Speaker 100:38:15For the 1st major MSO, we actually have started shipment in Q2 and it's actually that's why we actually have a strong growth in Q3 because they really accelerate their deployment and we expect that to continue. Now the second MSO, we expect that deployment to start, I would say, first half of next year. And in addition, we're also working with MNO that's more on the indoor FWA product as well. Speaker 200:38:46And Tony, this is Michael. Just a quick clarification on your question. In Q4, we do expect a moderation on the revenue, mainly because Q3 was so strong. In Q1, we do expect the seasonal impact that we have, which tends to be negative in the consumer product line. Speaker 300:39:06Got it. And last question, if I could squeeze in one more. Jacob, congrats on the major health care provider for your auto airplane mode tracker. I'm curious how big a market do you think that is? Is this a product that you have to do trials with additional health care customers? Speaker 300:39:22Just trying to get a sense of how you expect that to ramp? Speaker 100:39:27Yes, great questions. Yes, so certainly, I would say still a niche market, but it could certainly apply to different application. I think the fact is that we are now able to develop something with artificial intelligence. I think that's really something the first in Airgain's history to be able to enter this new exciting market AI market. And with that, the ability to be able to have predictability, the ability to be able to work with different, in this case, healthcare, but we can really using that technology to many other sectors as well. Speaker 100:40:01That's what's getting us excited about the possibilities. So as I mentioned to you earlier, the market is still a niche, although we're seeing this particular technology can be applied to multiple sectors in the future. Speaker 300:40:16Very good, Jacob. We'll see you next week at our conference. Speaker 100:40:20Thank you. Thank you, Tony. Operator00:40:29Our next question is from Tim Savageaux with Northland Capital Markets. Please proceed. Speaker 400:40:39Hi, good afternoon and congrats on another real solid quarter. I want to focus on the 5 gs network infrastructure opportunity as well. I know you mentioned an initial commercial order. I wonder if that's part of a broader kind of rollout commitment from this Tier 1 customer. And as you get more advanced in these trials, what the sort of overall opportunity would be at a major customer such as that one in a pretty significant deployment scenario, if you have any better view to that? Speaker 400:41:19And also when do you expect that initial order to ship? Speaker 100:41:23Great questions, Tim, and I'm glad you picked it up. It's actually one of the exciting things that's happening. It's actually more pertaining to Q4 than Q3. In Q3, we have done a lot of the trials and then discussing about actual deployment. And this is actually we're expecting this to happen first half of next year as we've been indicated numerous times previously. Speaker 100:41:49And I'm very pleased that it's actually happening earlier than anticipated. In the first order, it was a deployment that's already happening. And this is only one of many. We are working with them on a much bigger scale deployment contract and with this particular MNO. And we are hoping to be able to replicate that to other customers as well. Speaker 100:42:14And what we seeing is that we're now attacking a market and people really value what we're bringing to the table. So I'll just give you a couple of color, right. One is the time to market, whereas the alternative solution would take them 4 to 6 months, we are able to do that, we talk about less than 2 weeks. It's astounding what we're able to accomplish with our unique Lighthouse Smart Network repeater solution. And one of the other thing is that we're not only doing this as a product sale, we're actually working with the customers to do the actual deployment. Speaker 100:42:48And what does that mean? This means it's more than just a product sale. We're actually going to be providing the maintenance and we're going to have recurring revenue on the service as we move forward. And that's what's so unique about this new lighthouse opportunity. I hope that answers your questions, Tim. Speaker 400:43:08I appreciate it. And I don't know if I heard you right, but I think you talked about the prospects for accelerating growth in 'twenty five and certainly you got your addressable market more than doubling. And I wonder if in that outlook, and you kind of talked about sort of your baseline components business and your newer systems business. I don't know if you can break those down for us. But I guess how much growth from the 5 gs side are you expecting with regard to that outlook for accelerating growth and growth across all your segments? Speaker 400:43:51At least in your own thinking, have you built in material revenue there? Speaker 200:43:56Tim, this is Michael. So it is a bit early to provide any type of guidance beyond Q4 at this point. But just to give you some color altogether, on the existing businesses, so this is without AirgainConnect platform and without Lighthouse platform. And you're correct, the doubling of the SAM is coming from both the vehicle gateway with AirgainConnect and also the smart network repeater with Lighthouse. But in terms of the existing businesses that we currently have, we do expect some slight growth year over year primarily because of some of the headwinds that we have on some of the excess inventory challenges. Speaker 200:44:39But at the same time, we're also having this growth in asset tracker along with FWA, for example, and even antenna and consumer as well, too. From a lighthouse and also from AC fleet, this is a bit early to tell, mainly because we don't have complete visibility of the overall size of the design wins, but also the sales or the design win to sales cycle is very elongated. This commercial order, for example, that we just received is with a customer that we have been working with for over a year. This was part of the live network trial that we had mentioned back in Q2. And so there is some progress there, and we're hoping that the fact that we have delivered on the AC fleet as we were expecting it to be and to have initial shipments of the device in Q3 and the fact that we are where we are right now with Lighthouse when we're expecting commercialization to be in early part of next year sets the stage for us to believe that we are poised for some growth in those markets. Speaker 400:45:51Great. And maybe one final question from me kind of relevant to that AC fleet commentary. I mean, it looks like, when you mentioned a bit of a pullback in consumer and only a modest uptick or modest recovery in enterprise, does should we be implying there that auto is the main driver of your sequential growth in terms of guiding up $1,000,000 plus in the midpoint? Thanks. Speaker 200:46:20Yes. Sequential growth will be driven by the automotive market. And this is also the reason for the wider range that we have on the guidance. It's primarily the overall lack of visibility specifically on those new initiatives. Speaker 400:46:39Okay. Thanks very much. Speaker 200:46:41Thank you. Operator00:46:44Our next question is from Scott Searle with Roth Capital Partners. Please proceed. Speaker 500:46:50Hey, good afternoon. Thanks for taking my questions. Hey, guys, I apologize if this was covered earlier. I hopped on the call a little bit late, but I wanted to go to Lighthouse. It sounds like you've got some pilot activity going on. Speaker 500:47:01I'm wondering if there is any further color that you provide in terms of timeline to some of that converting into revenue? And second, on the nimbaling front, there have been significant headwinds across the industry just in terms of inventory. And I think you guys have been working through that as well. It seems like that is starting to clear up now. Plus there's a void on top of that I think with Sierra Wireless, I think, ineffectively addressing the marketplace. Speaker 500:47:27So I'm wondering what you're seeing overall in the module and the tracking space, the design activity that goes along with NimbleLink and how you're kind of thinking about things as we go into the end of the year and 2025? Thanks. Speaker 200:47:41Thank you, Scott. I'll start. So on Lighthouse, we do expect some initial revenue in the Q4 quarter. And on the NimbleLink product lines, we did see and we do see some headwinds from a persistent inventory challenges. Now the overall broader inventory correction that we have seen last year is now becoming much more customer and product specific. Speaker 200:48:11And so really, it's hitting us in this custom IoT products, but we have 2 strategic customers that are experiencing some excess inventory. And we had mentioned as well too that it may extend through the first half of the year of next year. And so while we are driving that, there are some pockets of growth, especially with asset tracker that we are definitely investing quite a bit on. Jacob? Speaker 100:48:38Yes. I think that, look, while we don't give guidance beyond the next quarter, since we're at the end of the year, I think that I can share some color as we enter into 2025. Certainly, the inventory correction, some of the seasonality, that's expected. But I do expect that overall, we're going to be seeing growth in all three of our markets. With the consumer, we've seen that with the WiFi 7, with the uptick with MNO, with the indoor FWA, we expect that it will be in the growth 2025 versus 2024. Speaker 100:49:16With the automotive market, I think that the big additional contributor is the AC fleet, AirgainConnect fleet. So expect that to really help sustain the growth. And then in regards to enterprise, certainly with the LinkedIn FWA, but more so with the Lighthouse, now we feel comfortable with, we also think that that's going to really help position us well for the growth within enterprise as well. So all in all, we're expecting nice growth, although the first half we may still have to deal with some inventory correction. As you mentioned, you're seeing that industry wide on the IoT space, we're seeing the same thing, but we do expect that really it's a tail end by the end of the first half. Speaker 500:50:08Great. Thanks so much. Operator00:50:15At this time, this will conclude our question and answer session. If your question was not answered, you may contact Airgain's Investor Relations team at airggateway grp.com. I would now like to turn the call back over to Mr. Schwinn for closing remarks. Speaker 100:50:39Thank you all for joining us today. I want to extend special appreciation to our outstanding team for their tireless efforts and invaluable contributions. They are the driving force behind our success. I would also like to thank our investors for their continued support and trust in our vision. We look forward to sharing more updates with you in the future. Speaker 100:51:05Operator, you may now conclude the call. Operator00:51:11Thank you. Thank you for joining us today for Airgain's Q3 2024 earnings call. You may now disconnect.Read morePowered by