Airgain, Inc. Price & Performance (AIRG)

Please see today's earnings release for further details, including a reconciliation of GAAP to non GAAP results. Now I'd like to turn the call over to Airgain's CEO, Jacob Sewell.

Good afternoon, and thank you for joining us today. In the fourth quarter, we reached a key milestone with the successful commercial deployment of Lighthouse, marking significant progress toward our strategic objectives. We closed 2024 with strong execution across our AirgainConnect fleet and Lighthouse smart network repeater platform, positioning Airgain for its next phase of growth. 2025 is the year of execution and expansion. We remain laser focused on scaling deployments, accelerating customer adoption and expanding into high value markets. Momentum is already building. Our strategic partnership with Omontel demonstrates Lighthouse' ability to deliver high performance network solutions with significantly reduced deployment times and a lower total cost of ownership. 2024 was a pivotal year for Airgain, marking our transformation from a component supplier to a high value wireless system solutions provider. This shift has fundamentally redefined our business. We have moved from sub-five dollars ASPs for embedded antenna systems to ASPs exceeding $20,000 for our Lighthouse solution, positioning us in higher value, higher margin markets. Over the past year, we have expanded our portfolio, secured key customer wins and strengthen our position in growth markets, setting the stage for sustained long term growth. With higher ASPs and expanding market opportunities, We have grown our serviceable addressable market from $1,100,000,000 in 2024 to $2,600,000,000 in 2025.

Thanks largely to our AC fleet, vehicle gateway and lighthouse smart repeaters, and we expect our same to continue growing. One of our most significant milestones was launching and expanding key product lines across multiple high growth markets, an achievement that solidified our market position and spurred accelerated adoption. In consumer, we ramp Y5-seven antenna shipments to Tier one MSOs, reinforcing Airgain's position as a leader in next generation connectivity. In IoT asset tracking, we launched ATFLIGHT, an AI power solution designed for the healthcare sector that ensures FAA compliance and delivers over a year of battery life for temperature sensitive medical assets. The initial purchase order from a major health care provider validates its market potential with shipments scheduled to begin this year. Additionally, we introduced two advanced railcar asset truckers, and we are actively rolling out a deployment with a leading railcar provider in North America. In the second quarter of twenty twenty four, we launched Lantern, our outdoor five gs fixed wireless access solution, positioning Airgain to seize opportunities in the nascent enterprise sector of the SWA market. In the third quarter of twenty twenty four, we launched AirgainConnect fleet, our five gs vehicle gateway, securing commercial certifications from T Mobile and AT and T. Simultaneously, we accelerated customer trials across domestic and international markets, driving towards broad market adoption.

In the fourth quarter of twenty twenty four, we completed the first commercial deployment of our Lighthouse Smart Network Control repeater. These milestones highlight Airgain's capacity to drive innovation, expand into high value markets, and strengthen our position as a leading provider of advanced wireless connectivity solutions. Our multi year strategic commercial partnership with O'Monteo is a major leap forward in scaling lighthouse deployments, further reinforcing our position as a leader in five gs wireless connectivity across indoor and outdoor markets. This agreement not only validates our technology to Oman Tel, but also we believe establishes a strong foundation for sustained revenue growth in deeper market penetration. Our collaboration goes beyond deployment. It is about developing advanced solutions tailored to the unique needs of The Middle East. By leveraging Airgain's deep expertise in wireless connectivity alongside OmanTio's telecom leadership, We are jointly enhancing network performance, optimizing coverage, and pioneering new five gs advancements. We secured the Oman Teo contract by demonstrating the commercial viability of our Lighthouse smart repeater solution in a large scale deployment last December, achieving a threefold improvement in network speed through seamless integration with existing indoor infrastructure. This milestone highlights the scalability, reliability and efficiency of our technology, further cementing Airgain's role as a key enabler of next generation connectivity.

Our cost effective CapEx and OpEx optimized approach accelerates time to market, while our commitment to strategic co development in research and development has resulted in tailored five gs solutions designed specifically for The Middle East. Building on these significant network performance improvements, we have leveraged our partnership with OmanTL to pioneer even more advanced and sustainable connectivity solutions. This commitment to innovation and environmental responsibility has culminated in the development of Lighthouse Solar, our groundbreaking self sustaining solar power network control levator that redefines network expansion for telecom operators. Engineered with cutting edge renewable technology, it operates entirely off grid, delivering rapid, reliable connectivity while reducing both deployment time and costs. Its innovative technology offers a differentiated solution in areas lacking electricity access while championing environmental sustainability by reducing carbon footprints and supporting green energy initiatives across the telecom industry. Designed with versatility in mind, Lighthouse Solar targets telecom operators seeking to extend five gs coverage into remote rural areas in challenging urban landscapes where traditional infrastructure may falter. It's fast to deploy, eco friendly capabilities are designed to enable operators to overcome geographical constraints and meet growing connectivity demands with a heavy reliance on conventional power grids or fiber backhaul.

This positions Airgain at the forefront of next generation wireless solutions, enabling faster five gs robots, improve user experiences, and long term operational cost savings, all while advancing global efforts toward a more sustainable future. In 2025, we are aggressively driving the adoptions of the AirgainConnect fleet solution, which helps deliver superior connectivity for mission critical fleets. AC fleet eliminates unnecessary external components, reducing installation complexity, maintenance costs and total cost of ownership while enhancing performance and reliability for our customers. Feedback from fleet operators has been really positive, specifically highlighting AC Fleet's exceptional performance and compact all in one design that simplifies installation and deployment. We are targeting key fleet markets, including law enforcement, fire, EMS and utility fleets through a structured go to market strategy designed to accelerate adoption across fleets of all sizes. Our tiered approach allows us to align sales efforts with customer needs, streamline adoption and drive scalable growth in the fleet connectivity markets. Tier one customers comprise large scale fleets with over 500 vehicles, representing high value opportunities with a twelve to eighteen month sales cycle. We target these opportunities both directly into strategic partnerships with operators. Example of a direct sales opportunity we are working on is with a 6,000 vehicle law enforcement agency.

An example of a strategic partnership is our active engagement in a large 30,000 vehicle deployment with a U. S. Operator for a leading utility provider with an initial trial plan for the first half of this year. Tier two customers include mid sized fleets ranging from 50 to 500 vehicles with a shorter six to twelve month sales cycle. We drive sales in this segment through our efforts, BaaS and system integrators to expand market reach. We are actively working with several leading law enforcement agencies across The U. S. With a handful of trials underway. Tier three customers are smaller fleets with fewer than 50 vehicles, upgrading on a faster moving three month sales cycle. These customers represent an immediate revenue driver for 2025 pursuit to direct sales and channel partners. Along with our product and certification investments, we are aggressively building the sales and marketing resources required to capture the short term opportunities this year and building a strong pipeline for 2026 and beyond. With these growth initiatives well underway, I will now turn it over to Michael to walk us through our financial performance for Q4 and 2024 as well as our outlook for the year ahead.

Michael?

Thank 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 fourth quarter results. Q4 sales came in at $15,100,000 which was in line with the midpoint of our preliminary results announced in late January. While this result marks a 6% sequential decline, it represents a 50% increase year over year, driven largely by the consumer market recovery. Consumer sales reached $6,500,000 reflecting another strong sequential performance as robust Tier one MNO sales partially offset the anticipated moderation in our Tier one MSO Wi Fi seven sales following initial Q2 shipments and a strong demand ramp in Q3. Automotive sales came in at $3,300,000 Although sales were $700,000 higher sequentially, a high point for the year, that fell short of our expectations driven by channel excess inventory resulting from delayed aftermarket and customer deployments. Enterprise sales were $5,300,000 reflecting a sequential decrease of $1,300,000 and a low point for the year. This decline was mainly due to reduced sales of embedded modems and custom IoT products impacted by excess customer inventory.

Notably, we recorded our first lighthouse commercial deployment revenue in Q4. In Q4, gross margin reached 43.4%, marking its fourth sequential increase. It improved by 50 basis points, driven primarily by operational efficiencies and a favorable sales mix. Q4 operating expenses totaled $6,500,000 0 point 4 million dollars lower sequentially, primarily due to lower variable compensation expenses. In Q4, adjusted EBITDA reached $200,000 in line with our January preannouncement. This positive result was driven by higher gross margin and lower expenses, which helped mitigate the negative impact of a $2,100,000 revenue shortfall. Non GAAP EPS came in at breakeven. As of 12/31/2024, our cash balance was $8,500,000 up $1,200,000 sequentially. The increase was driven by net cash proceeds of $1,100,000 from our ATM operator. Turning to our results for the full year of 2024. Sales totaled $60,600,000 up 4,600,000 or 8% compared to the prior year. Consumer sales increased by $2,800,000 or 15% driven by the Tier one MSO WiFi seven transition and a ramp in demand for Tier one MNO FWA antennas. Following the Q1 negative seasonal impact, we expect the consumer market to experience steady but modest growth through 2025. Enterprise sales increased by $2,300,000 or 8%, driven primarily by strong sales of embedded modems and custom IoT products in the first half of twenty twenty four.

The combined sales of these two product lines declined by approximately 50% in the second half of twenty twenty four compared to the first half of twenty twenty four. The decline was due to customer specific excess inventories, which we expect to last through the first half of twenty twenty five. We expect the contributions of our growth initiatives, specifically Lighthouse, to positively impact the enterprise market sales in the second half of twenty twenty five. Automotive sales decreased by $500,000 or 5% due to aftermarket excess inventories, partially offset by AirgainConnect shipments. We expect the aftermarket excess inventory to also last through the first half of twenty twenty five and for AirgainConnect design wins to drive growth in the second half of twenty twenty five. Overall, we are driving to deliver quarterly growth through 2025 as the Q1 seasonal impact diminishes and inventory headwinds ease. Gross margin was 42%, reflecting an increase of four ten basis points from the 37.9% reported in 2023. This improvement was primarily driven by steady margin gains in our enterprise and automotive solutions, resulting from ongoing cost reduction initiatives and the launch of differentiated automotive and enterprise products over the past year. Looking ahead, we expect the growth of Air Liquor Connect and Lighthouse Solutions to further drive gross margin expansion in 2025.

Operating expenses totaled $26,800,000,000 a 2% increase year over year. In 2024, we reduced our non GAAP G and A expenses by approximately 15% to expand our R and D and sales and marketing investments and drive our strategic initiatives. Looking ahead, we plan to streamline expenses tied to our existing product lines while continuing to enhance our engineering, marketing and sales functions to support the ramp of Air Gate Connect and Lighthouse design wins and solution sales. Adjusted EBITDA was negative 0 point 8 million dollars for the year, an improvement from negative $4,500,000 in 2023. The year over year adjusted EBITDA improvement was driven by higher sales and gross margin, partially offset by slightly higher operating expenses. Through 2024, we were able to lower our quarterly adjusted EBITDA breakeven point primarily through gross margin rate expansion. Now moving to our outlook for the first quarter ending 03/31/2025. As 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 first quarter of twenty twenty five, we project sales between $11,000,000 and $13,000,000 with a midpoint of $12,000,000 The midpoint represents a 20% sequential decline, primarily driven by the consumer seasonal impact and the aftermarket excess inventory.

We expect non GAAP gross margin for the fourth quarter to be in the range of 42% to 45% or 43.5% at the midpoint. We expect operating expenses to be approximately $6,500,000 Non GAAP EPS is expected to be negative $0.1 at the midpoint of our guidance. Adjusted EBITDA is expected to be negative $1,100,000 at the midpoint of our guidance. The impact of the negative adjusted EBITDA on our cash balance in Q1 will be mitigated by a $1,600,000 processing and receipt of an employee retention credit in Q1. Now I would like to turn the call back over to Jacob for his closing thoughts.

Jacob? Thanks, Michael. Twenty twenty four was a year of strategic transformation for Airgain, marked by continued gross margin expansion, disciplined expense management and the successful execution of our growth initiatives. While short term challenges such as inventory constraints impacted certain lines of business, Our focus on higher value system level solutions like Lighthouse and AirgainConnect continues to drive a long term shift toward profitable growth. With this solid foundation in place, our focus in 2025 is clear execution. We are committed to scaling deployments, accelerating market penetration, and leveraging the momentum we have built. Building on these efforts, investors can expect us to remain laser focused on strategic objectives. For AC Fleet, we are driving to secure key certifications for first responder use from Verizon frontline, AT and T FirstNet and T Mobile T priority, along with CE certification to support international expansion. Our commercial strategy is centered on qualifying new opportunities, transitioning them into trials and converting existing trials into design wins. For Lighthouse, we are actively securing FCC certification and U. S. Operator approvals, while simultaneously pursuing CE certification to accelerate additional international markets. We expect our partnership with OmanTiao will unlock new customer opportunities across the MENA region, while we concurrently drive multiple new trials across Asia, Latin America, Europe and North America to expand our global footprint.

In 2025, we anticipate deploying Lighthouse across more than 50 sites, establishing the foundation for larger scale commercial robots in 2026. At the same time, we remain disciplined and proactive in navigating short term industry headwinds, such as inventory constraints affecting the broader IoT and component sectors, which we expect to persist through the first half of the year. These temporary pressures do not indicate weak demand. With our robust product pipeline, increasing customer engagement and clear commercialization strategy, we believe we are well positioned for sustainable growth in the years ahead. Four years ago, we embarked on a bold journey to transform Airgain into a premier systems solutions company dedicated to delivering advanced wireless connectivity and pioneering five gs innovation By anticipating industry trends in customer needs, we introduced cutting edge products like Lighthouse, Aegon Connect Lead in Lantern. Today, as we accelerate our go to market strategy and commercialize our technology, our North Star strategy is paying off and we are excited about our prospects. Before we conclude, I would like to highlight the key takeaways from today's call. First, twenty twenty four was a transformative year as we transitioned into a high value wireless systems provider, expand our attracetrable market and position ourselves for long term growth.

Second, our strategic initiatives, including Lighthouse and Airgain Connect fleet, are gaining traction in high growth markets, validating our commitment to innovation and differentiation. Third, despite near term industry challenges, we remain laser focused on execution, scaling deployments, driving customer adoption, and strengthening our go to market strategy to accelerate revenue growth in 2025 and beyond. I extend my sincere gratitude to all of our employees for their dedication and hard work in making these achievements possible. Your commitment to innovation and execution propels Airgain forward. I also want to thank our customers, partners and investors for their continuing trust and support. We are energized by the opportunities ahead and confident in our ability to deliver value as we execute our vision. With a strong foundation and clear growth initiatives, I am quite optimistic about Airgain's future. Operator, we are now ready to take questions.

Thank you. We will now take questions from Airgain sell side And our first question comes from Anthony Stoss with Craig Hallum. Please proceed with your question.

Good afternoon, Jacob and Michael. Jacob, I wanted to focus in a little bit more on the Enterprise segment. And I think when you guys pre release the quarter, you talked about two customers delaying projects. And that seems to be your weakest segment. What kind of visibility do you have that gives you the confidence that you'll expect a snapback in the second half of the year? And then for maybe for Michael on the Lighthouse product, maybe you can help us gauge or some kind of detail or color on what what kind of contribution in terms of revenues you might expect in the second half of twenty twenty five? Or is this more of a really beginnings of revenues in 2026?

Hi, Tony. Yes, great questions. So regarding the IoT, the two customers are all relating to the custom projects we've been doing. And the thing is that they have not been able to give us the visibility because of the inventory issue they have been having. However, one of them told us that they should expecting the second half to be better. They are working on a couple of key projects with a couple of key customers and they are expecting some turnaround, I would say, starting in second quarter. So those are the feedback we got. That give us some assurance that second half should be getting better. Certainly, we are still don't have the concrete evidence of that, but we are hopeful, so to speak. Now regarding the revenue for the Lighthouse, maybe a comment before I turn it over to Michael. So Lighthouse, as we indicated, we have secured a strategic contract partnership with OmenTiao. And in the contract part of the contract has the revenue element to it where they are committing to so much revenue for the next several years. So for 2025, even though it will be small, there's already a plan for deployments starting this quarter.

And Michael, you can add more color to it. Sure.

And I would add to this, Tony. First of all, the Lighthouse, the partnership itself, and this is not a supplier type of agreement. This is really a strategic partnership where we are a long term partner to, Omanel. But at the same time, there's also a joint sales and marketing, effort as well to initiative, to be able to penetrate not only Oman, but also, The Middle East and the MENA region altogether. And so we are, as you know, also very much focused on the customer trials that we have. We have a couple this quarter. We have a couple next quarter already scheduled or planned, and we expect to see through so that we can have a customer pipeline that is really ready for FY 'twenty six. In terms of the enterprise business, a couple additional comments on that. The asset tracker is really a source of potential growth for us, specifically starting in the first half of the year. This has to do with the strategy shift that we've done last year toward the railcar, but also the air transportation sectors. And so we've had new products and a overall partnership with some of our key customers.

Albeit, I have to say that there is a lack of visibility, primarily because of some of the macro factors that we're seeing, specifically in terms of tariffs, in terms of sanctions, or at least the threat of that. And so, there is an overall lack of visibility in the short term. I hope this is helpful.

Yes. That was helpful. Thank you. And then if I could sneak in one more and maybe I missed it in your prepared remarks. I I think last quarter you talked about Jacob having 40 different trials ongoing for the new AirgainConnect product. Are they still ongoing? What have you found? And kind of what's the hit rate if they are converting from a trial to revenue?

Yes. So, Tony, yes. So the trials were actually the feedback that we have received so far on the trials have been really positive. Overall, the performance improvement was well spoken. All of them really was impressed were impressed with the performance improvement. They were able to get connected in area where they could not get connectivity before, and that was for them that was very impressive. And certainly the way the ease of installation, that was also something that they really enjoy about the product. Now as far as how many design wins, design wins, already we're able to get a few of them out of the 43 trials. And as I described in the early in the call, we are now seeing the three different tiers, right? For the projects that are in the Tier one, those are the ones that are 500 vehicles or more, it takes longer time. Usually, it takes about twelve to eighteen months because for those bigger deals, typically, they're going to go out and do an RFP. Even though they like our product, they're still going to have to go through what they call an RFP process, and that's why it takes a much longer duration.

The smaller deals, those are the ones, the Tier two is 50 to 500. We see that some of them, they are going to be able to come to a commitment a lot sooner. They may not have to go through an extensive IP process, such as the bigger deals. So those are the ones we think that you can secure within six to twelve months. And then the smaller deal, those are the ones we on the 50 units, we feel like those are the ones we want a few of those and those are the ones that could be we can convert them into revenue as early as within three months. So we're going to continue to grow the pipeline, but we are now having a really clear strategy on how to attack them, which I described earlier, with a truck, with a partnership and with a VAR system integrated model.

Thank you. And our next question comes from Tim Savageaux with Northland Capital Markets. Please proceed with your question.

Hey, good afternoon. I had a question on the lighthouse side, where you guys had mentioned, I guess what I'm looking for trying to get to is a metric or a set of metrics to assess the size of these opportunities that you're facing. And I don't know whether it's based on subscribers with a certain carrier or base stations, but and you mentioned 50 sites to be deployed in 25 with Omontal. I imagine that represents a small fraction of the opportunity there. But would be interested into as to any color you can give there as well as higher level how should we be thinking about the addressable market opportunity for Lighthouse based on some of those metrics I threw out there, subscribers, base stations, etcetera? Thanks.

Yes. Great questions, Tim. I'll start and then having Michael to chime in. So you're right. The 50 deployments that we announced, those are certainly relating to the Oman Teo commitment. So we feel really good about that and that will be a small fraction of what we're going to be able to do with them. We're certainly working with them on a much more strategic sales and marketing plan outside of Oman. That is something actually we're going to actually have a joint announcement next week doing MWC, that's next Wednesday. So certainly you're going to expecting another announcement. We're going to go in-depth about what the partnership is going to look like with a very innovative solution that will be announced as well. That's really going to be actuating the MENA region, Middle East, North Africa region. Now talking about the market size, we talk about on the same that we described, we already talked about $700,000,000 relating to the Lighthouse. And I would say that's only taking into account some of the opportunities we are chasing. Now in a much bigger scale, we certainly, in The U. S. And the rest of the world, we can see a much bigger sense.

Now I think that there are two different major applications that we are seeing. One is indoor, the other one is outdoor. The deployment in December that we described, the commercial deployment, is relating to an indoor application. And those are the ones that we are going to also describe a lot more next week. Those are the ones that require a solution approach, which means we are not only selling just a lighthouse product itself. We are actually going to be going there acting as what they call a mini temp, a telecom equipment manufacturer that will provide a total solution for them to ensure that site is able to be up and running with five gs. And we are able to accomplish that with the Lighthouse being a big part of that, but other products, other devices as well to ensure that the system or the site is able to be up and running. So that is the indoor approach. The outdoor, it's more of a product sale. I mean, there will be rural areas, there will be areas in the urban environment, which they have a coverage gap. And this is where we're going to be able to sell just the lighthouse product itself.

So and it's really complementing what's out there today with the base station, with the small cell. And we talked about earlier this week, we talked about our sustainable lighthouse solar. So So that solar device, the lighthouse solar device, will be able to go out there without any required backhaul, without any required electricity to be able to be out there, taking advantage of the solar and be able to provide cellular and WiFi connectivity within a day. So that market is actually we really think that it's a huge market and we're going to try to size in the market in the coming weeks. But certainly, you can see the potential there that when there's a within three miles of a base station, you can put a lighthouse solar there within half a day and then you can have that area up and running with cellular and broadband connectivity. And I really think there's many applications. I mean, one area I can think of right now is like LA where they just went through a wildfire and really there's no more electricity, there's no more cellular tower nearby. And then you can actually place a lighthouse solar there and that's a great way for the people there to be connected readily.

Even the workers there are still going to be restoring the sites that can be that they can use in our lighthouse solar to have that cellular and broadband connectivity. So I really think that the market is huge. We just don't have the right sizing just yet. And Michael, you can maybe comment a little bit more.

I think you said well. Thank you, Jacob. But Tim, in terms of the internal work ahead of us, our team has been on the ground with Oman for the past six months on and off, and we are still working with them very, very closely in terms of developing the overall deployment plan of those 50 sites that we just mentioned. But there is a lot of work in terms of making sure that we are part of the process, we are aggressively pursuing all those opportunities, and meeting all the customers' satisfaction and requirements, but at the same time being ready as well, too, to expand in the overall Middle East region. In parallel, we are also engaging to quite a number of customer trials. Those are also pretty complex. Our goal ultimately is to have a trial a month, and this is really to secure that customer pipeline, and we expect to do so in South America, in Europe, in The U. S. And so, really building not only the short term, but also the long term approach as well to.

Great. And if I could just follow-up on that. I know you mentioned I think a trial a month, but either currently ongoing or expected throughout '25, can you quantify, I mean, is it 12? That's a trial a month, but can you quantify the number of trials ongoing or expected to be ongoing this year for Lighthouse?

Yes. So right now, in Q1, we already completed two trials that's in Q1 regarding Lighthouse. In second quarter, we already have two committed for the Lighthouse. In Q3, we already have one committed. So the two that was done, it was all in The Middle East in Q1. In Q2, we're expecting one trial to be done in Latin America and then another trial to be done in Middle East. In Q3, we already have a trial committed in Asia and we're also having another trial pending CEASTHR patient for IGRO. So those are the ones that we have clear visibility. We already have strong customer interest, and we just have to coordinate with the local team to be able to make it happen. Thank you. And remember, these are really sizable opportunities. All of these are major mobile network operators that have millions of subscribers.

At this time, this does conclude our question and answer session. Your question was not answered, you may contact Airgain's Investor Relations at team our Investor Relations team at airggateway grp dot com. I'd now like to turn the call back to Mr. Sun for any closing remarks.

Thank you for your engaging questions. We appreciate your continued support and look forward to connecting with you again soon. Operator, please conclude the call.

Thank you for joining us today for Airgain's fourth quarter twenty twenty four earnings conference call. You may now disconnect your lines.