Q1 2024 Airgain Inc Earnings Call
Operator: Good afternoon. Welcome to Airgain's first quarter 2024 earnings conference call. My name is Shamali, and I will be your operator for today's call. Joining us today are Airgain's President and CEO, Jacob Suen, and CFO, Michael Elbaz. As a reminder, this call will be recorded and made available for replay via a link found in the Investor Relations section of Airgain's website at investors.airgain.com. Following management's prepared remarks, the call will be open for questions from Airgain's covering analysts.
Good afternoon, welcome to the Air Games first quarter 2024 earnings Conference call. My name is Shea Molly and I will be your operator for today's call.
Operator: Joining us today are Eric <unk>, President and CEO, Jacob Suen, and CFO, Michael well box as a reminder, this call will be recorded and made available for replay via a link found in the Investor Relations section of Airlines' website at investors that are gained dotcom. Following management's prepared remarks, the call will be opened for questions from air games covering analysts.
Operator: I caution listeners that during this call, Airgain management will be making forward-looking statements about future events, as well as Airgain's business strategy and future financial and operating performance. However, 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, May 8, 2024.
Operator: I caution listeners that during this call are gained management will be making forward looking statements about future events as well as air games 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 are games S. E. C filings. This conference call contains time sensitive information that is accurate only as of the date of this live.
Broadcast may 8th 'twenty 'twenty four air gain 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 and please see today's earnings release for further details, including a reconciliation of GAAP to non-GAAP results.
Operator: Airgain 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, and 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 Suen.
Now I'd like to turn the call over to <unk> CEO Jacob Suen Jacob.
Jacob Suen: Thank you operator.
Jacob Suen: Welcome, everyone, and thank you for joining us this afternoon. To begin today's discussion, I'll give some company background, followed by a review of our performance for the quarter, before handing the call over to our CFO, Michael Elbaz. He will review our financial results for the quarter in more depth, as well as provide our outlook for second quarter 2024. After that, I will share some closing remarks before opening the call for questions. All right, let's begin.
Jacob Suen: Welcome everyone and thank you for joining us this afternoon.
Jacob Suen: To begin today's discussion.
Jacob Suen: I'll give some company back while followed by a review of our performance for the quarter.
Jacob Suen: For handling the call over to our CFO, Michael <unk>. He will review our financial results for the quarter in more depth as well as provide our outlook for second quarter 'twenty 'twenty four.
Michael: After that I'll share some closing remarks before opening the call for questions.
Jacob Suen: Alright, that's it again for those of you who may be new to our story at Air game, we've simplified wireless connectivity across the value chain from embedded components to integrated systems.
Jacob Suen: For those of you who may be new to our story, at Airgain, we simplify wireless connectivity across the value chain, from embedded components to integrated systems. Our primary markets encompass the enterprise, consumer, and automotive sectors. Within our enterprise market, our products include embedded cellular modems, Custom Products, Asset Truckers, 5G and IoT Antennas, our new 5G outdoor fixed wireless access device, and our 5G smart network controlled cellular repeaters. Our consumer market is comprised mostly of our embedded antenna business, a traditional area of expertise for Airgain. Our consumer products include custom embedded antenna design for customer premises equipment or CPE, such as those that enable Wi-Fi 6E and will enable Wi-Fi 7.
Jacob Suen: Lastly, our automotive market includes both our aftermarket antennas as well as our vehicle networking devices, highlighted by our recently announced Airgain Connect Fleet device. We believe the global connectivity opportunity is large and durable, secular tailwinds, including increased connectivity technology adoption and growing serviceable addressable markets across our product suite will continue to propel the industry and our company forward. At Airgain, we have a track record of developing and offering optimized wireless solutions to our channel partners and customers that help them get connected quickly.
Jacob Suen: Our primary markets encompass the enterprise consumer and automotive sectors.
Jacob Suen: Within our enterprise market our products include embed it.
Jacob Suen: Modems.
Jacob Suen: <unk> products also.
Michael: The truckers.
Michael: G and Iot antenna.
Jacob Suen: Our new five G outdoor fixed wireless access device.
Michael: And I don't know if I G Smart network controlled cell repeaters.
Michael: Our consumer market is comprised mostly of our embedded antenna business a traditional area of expertise, but again.
Michael: Our consumer products include custom embedded antenna design for customer premises equipment or C. T D.
Jacob Suen: Devices, such as those that enable Wi Fi succeed and will enable Wifi server.
Jacob Suen: Lastly, our automotive market includes both our aftermarket and tennis Aswell I saw a vehicle networking devices highlighted by our recently announced Aegean connect fleet device.
Jacob Suen: We believe the global connectivity opportunity is large and durable.
Jacob Suen: Secular tailwind, including increased connectivity technology adoption and growing serviceable addressable markets across our product suite will continue to propel the industry and our company floor.
Jacob Suen: And there again, we have a truck would occur.
Jacob Suen: Ping, an offering optimized wireless solutions to our channel partners and customers that help them get connected quickly.
Jacob Suen: As new technologies emerge, we are confident that we will continue providing leading-edge products to the market. Turning now to a review of our recent operational results in three core markets, we generated $14.2 million in sales in the first quarter, above the midpoint of our guidance range and a 41% increase over the prior quarter.
Michael: As new technologies emerge we are confident that we will continue providing leading edge products too much.
Jacob Suen: Turning now to a review of our recent operational results in three core markets.
Michael: We generated $14 $2 million in sales in the first quarter.
Jacob Suen: Above the mid point of our guidance range and is 41% increase over the prior quarter.
Jacob Suen: Our indicators show that the macroeconomic headwinds and industry-wide demand softness that we have faced in recent quarters are continuing to dissipate, which we believe is a positive sign for the rest of the year. Specifically, we completed significant shipments in Q1 in a few of our product areas, such as our custom products and the embedded motor. Additionally, while still behind where we would expect our typical run rate to be, our consumer market performed better than we anticipated, above our usual seasonality for the beginning of the year.
Jacob Suen: Indicators, so that the macroeconomic headwinds and industry wide demand softness, but we have faced in recent quarters are continuing to dissipate, which we believe is a positive sign for the rest of the year.
Jacob Suen: Specifically, we completed significant shipments in Q1, and a few of our product address such a I saw a custom products and embedded modems.
Jacob Suen: Additionally.
Jacob Suen: While still behind what we would expect our typical run rate to be our consumer market performed better than we anticipated above our usual seasonality for the beginning of the year.
Jacob Suen: Also, as we have discussed in prior quarters, it is crucial for our long-term growth that we continue to invest in our R&D and sales efforts. We believe that cutting-edge products.., and experienced and trained sales teams are significant contributors to our growth, and we expect to continue investing in these areas as we grow our revenue. While headwinds remain in each of our markets, we believe that our Q1 sales result is a positive sign for our expected growth opportunity in the second half of the year, taking a closer look at our three markets.
Jacob Suen: Also as we have discussed in prior quarters. It is crucial for our long term goals, but we continue to invest in our R&D and sales efforts.
Jacob Suen: We believe that cutting edge products.
Jacob Suen: An experienced and trained sales teams are significant contributors to our cool and we expect to continue investing in this area as a streak well our revenue.
Jacob Suen: Well headwinds remain in each of our markets. We believe that our Q1 sales to be job is a positive sign for our expected growth opportunity in the second half of the year.
Jacob Suen: Taking a closer look at our three markets our enterprise market performance in Q1 was largely driven by our custom products and embedded modems products lines.
Jacob Suen: Our enterprise market performance in Q1 was largely driven by our custom products in the embedded modems products line. Our IoT antenna ramp-up is off to a good start, showing both an increase from Q4 and a strong pipeline of opportunities through the year. Although closing IoT antenna contracts sometimes take time due to the product's position within internal router solutions, we are confident in the demand that we're seeing and believe that this is a growth opportunity for us through the rest of 2024.
Jacob Suen: Iot antenna ramp up is off to a good start showing both an increase from Q4 and a strong pipeline of opportunities through the ear.
Jacob Suen: Although closing Iot antenna contracts, sometimes take time.
Jacob Suen: Is it a product position within internal walls or solutions. We are confident in the demand that we're seeing and believe that this is a growth opportunity for us towards the rest of 'twenty 'twenty four.
Jacob Suen: Looking ahead to the second quarter, we expect to hold total enterprise revenue steady. Even as we expect a sequential decline in our custom products due to the large project for which we completed shipments in the first quarter, with our 5G product roadmap, asset tracker portfolio expansion with new real-car-focused features, and strong IoT antenna pipeline, we are confident that we can offset this custom product decline.
Jacob Suen: Looking ahead to second quarter, we expect to hold total enterprise revenue steady.
Jacob Suen: Even though should we expect a sequential decline in our custom products due to the large project for which we completed shipments in the first quarter.
Jacob Suen: With all of our five G product roadmap also shrunk our portfolio expansion with new railcar focused features and strong Iot antenna pipelines.
Jacob Suen: We are confident that we can offset it.
Jacob Suen: Custom products low.
Jacob Suen: In addition, we are pleased that our FWA products are set to ship in the second quarter, a significant milestone especially in light of the extensive efforts across our organization and the achievement of the key certifications that we require to get these products to ship. In our consumer market, our first quarter showed some encouraging signs, even with our typical seasonality for our consumer products, which tends to show a slower start to the year.
Jacob Suen: In addition, we are pleased Oh, it's double the way products are set to ship in second quarter is significant milestone, especially in light of the extensive efforts across our organization and the achievement of the key certification that would require to get this.
Jacob Suen: Products to ship.
Jacob Suen: In our consumer market, our first quarter show.
Jacob Suen: Some encouraging size, even with our typical seasonality for our consumer products, which tends to show a slower start to the year.
Jacob Suen: We will perform Q4 2023 in this market in the first quarter. Also, we believe that they are positive growth indicators in our consumer market. First, as we have mentioned in recent quarters, we expect a significant transition from Wi-Fi 6 and 6E to Wi-Fi 7 among MSOs. While this shift continues to cause buying behavior among our OEM customers as they work to avoid excess inventory, the industry has indicated that this shift will likely start in the second half of the year, as MSOs are keen to improve performance and user experience.
Jacob Suen: We outperformed Q4 'twenty to 'twenty three in this market in the first quarter.
Jacob Suen: Also we believe they are positive indicators.
Jacob Suen: Indicators in our consumer market.
Jacob Suen: We believe this shift presents a compelling long-term opportunity for Airgain to deliver its cutting-edge Y-by-7 antenna technology, as evidenced by the Tier 1 MSO design when we were awarded in March. Additionally, we expect to receive our first production purchase order from another Tier 1 MSO in the coming week. Second, consumer demand continues to shift from wired to wireless providers for Internet service as consumers transition to FWA.
Jacob Suen: First as we have mentioned in recent quarters, we expect a significant changes and some Wifi six and succeed to why five seven among msos.
Jacob Suen: Well this shift continues to cost cautious buying behavior, among our OEM customers as they work to avoid excess inventory. The industry has indicated that this shift will likely start in the second half of the year as the Msos are keen to include pro forma.
Jacob Suen: And you should experience.
Jacob Suen: We believe this shift presents a compelling long term opportunity well again to deliver its cutting edge Wi Fi seven antenna technology.
Jacob Suen: Evidenced by the tier one and so design win we were awarded in March. Additionally.
Jacob Suen: Additionally, we expect to receive our first production purchase order. So I mean, the other tier one and then so in the coming weeks.
Jacob Suen: Second consumer demand continues to shift from wired to wireless providers for Internet service as consumers transition to establish that.
Jacob Suen: We recognized this trend last year and have focused our strategy on penetrating this growing market. As we announced last November, we secured a design win with a DL1 mobile network operator for the antenna design in the indoor FWA router, and we began product shipments in Q1. We expect the shipment ramp of our M&O product, along with some market recovery with our MSOs, to generate sequential growth in the second quarter. Lastly, our automotive market.
Jacob Suen: We recognize this trend last year and half.
Jacob Suen: Our strategy on penetrating this growing market.
Jacob Suen: As we announced last November.
Jacob Suen: Secure a design win with a tier one mobile network operator for the antenna design in there, even though it's probably weighted Walter and we began product shipments in Q1.
Jacob Suen: We expect the shipment ramp of our <unk> product.
Jacob Suen: Long with some market recovery with our M. S OS to generate sequential calls in the second quarter.
Jacob Suen: Lastly, our automotive market.
Jacob Suen: As we expected, our automotive market continues to face industry-wide headwinds across our products in this market, which include aftermarket products that are deployed in a wide range of vehicles, mostly focused on public safety and transportation. However, inventory corrections from lead customers have dampened growth.
Jacob Suen: How should we expect it our older motive market continues to face industry wide headwinds.
Jacob Suen: Most of our products in this market which include aftermarket products.
Jacob Suen: Floyd in a wide range of vehicles.
Jacob Suen: Mostly focused on public safety in transportation.
Jacob Suen: Inventory corrections from Leigh customers have them, well, we containing new to expect to face some challenges in this market in the second quarter as well.
Jacob Suen: We continue to expect to face some challenges in this market in the second quarter as well. However, while we are still at least a quarter away from clearing our inventory challenges, we are pleased with the interest that we're seeing in our automotive market, especially for our Airgain Connect Fleet or AC Fleet products. We are reaching the last few important development milestones and are still on track to ship the AC fleet early in the second half.
Jacob Suen: However, while we are still at least a quarter away from clearing our inventories challenges. We're pleased with the interest that we're seeing in our automotive market, especially for our egg and Kenneth Lee or AC fleet product.
Jacob Suen: We are reaching the last few important development milestones and are still on track to ship AC fleet early in the second half.
Jacob Suen: Overall, we were encouraged by the early indications of recovery that we witnessed in our enterprise and consumer markets. However, we understand that we are not yet fully clear of these persistent industry challenges and will remain responsive to the macroeconomic environment.
Jacob Suen: Overall, we were encouraged by the early indications of recovery that we witnessed in our enterprise and consumer markets.
Jacob Suen: Understand that we are not yet fully clear of these persistent industry challenges and will remain responsive to the macroeconomic environment.
Jacob Suen: But we believe that we have a line of sight into progress across our other products in these markets to anticipate a continual rebound, as we've communicated in past quarters. We are transitioning from being exclusively a component manufacturer to a wireless system solutions provider. As such, our growth strategy is focused on two key elements.
Jacob Suen: But we believe that we have line of sight into progress across our other products in these markets to anticipate a continued rebound.
Jacob Suen: So we've communicated in past quarters, we're transitioning from being exclusively.
Jacob Suen: I'm pulling it manufacturer to a wireless system solutions provider.
Jacob Suen: As such our growth strategy is focused on two key elements.
Jacob Suen: First, continued execution of our established business, across our embedded modems, Custom Products, Embedded Antennas, and Aftermarket Automotive Products. Airgain's traditional expertise is in component-based products that are deployed in various consumer and enterprise applications. We have developed strong relationships with our partners through the value chain and believe that there are lucrative opportunities available ahead for these product categories. As I mentioned, we have already secured a design win this quarter with a T01 MSO. And that is on top of the other T01 design win that we announced last year.
Jacob Suen: First continued execution of our established business.
Jacob Suen: Across our embedded modems custom products embedded antennas and aftermarket automotive products against traditional expertise is seeing component based products that are there.
Jacob Suen: Ploy in various consumer and enterprise applications.
Jacob Suen: We have developed strong relationships with our partners through the value chain and believe that they are lucrative opportunities available ahead for these product categories.
Jacob Suen: As I mentioned, we have already secured a design win this quarter with a Tijuana M. S O N.
Jacob Suen: And that is on top of the other tier one design win that we announced last year.
Jacob Suen: We still expect to start shipments to both MSOs in the second half of 2024. Also, the new line of products we launched in 2023 for our IoT custom products, automotive markets, and industrial IoT antennas are expected to ramp up throughout the year as well. With our customer agreements and funnel, we're encouraged that we will return to growth in our established business this year. Second, integrated wireless solutions expansion, while we continue to drive our existing components business forward.
Jacob Suen: We still expect to start shipments to both msos in the second half of 2024.
Jacob Suen: Also the new line of products, we launched in 2023, well Iot custom products.
Jacob Suen: Automotive markets in industrial Iot antenna is expected to ramp up throughout the year as well.
Jacob Suen: With all our customer agreements and final well incur is that we will return to growth in our established business. This year.
Jacob Suen: Second integrated wireless solutions expansion.
Jacob Suen: Why do we continue to drive our existing components business floor Manny.
Jacob Suen: Many of our forward-looking indicators for 2024 point to our widest connectivity product lines as our solutions with the greatest upside. Specifically, our asset tracking and 5G connectivity products offer the largest strategic growth opportunities for our business on the asset tracking side. Our asset trackers are deployed across transportation, supply chain, and other specialized applications. Asset Truckers brings a recurring revenue opportunity as well, with multiple subscription-based components such as our enabling cloud-based device, enablement platform, and our trucking information dashboard.
Jacob Suen: Many of our forward looking indicators for 'twenty 'twenty four point to our wireless connectivity product lines as our solutions with the greatest upside.
Jacob Suen: Our 5G connectivity products include our Lantern FWA, built to improve connectivity at the home or in the office; our Lighthouse Smart Repeater, designed to expand high-quality coverage for mobile network operators; and I will recently announce our next generation AC fleet, 5G vehicle gateway, created to offer wide area cellular and local area Wi-Fi connectivity across public safety, transportation, and public and private vehicle fleets. We have received significant interest in each of these solutions.
Jacob Suen: Pacifically, our usher trucking in five G connectivity products over the largest strategic growth opportunities for our business.
Jacob Suen: On the asset tracking side.
Jacob Suen: The Asa truckers are deployed across transportation supply chain and other specialized applications.
Jacob Suen: I'll say truckers, Wayne and recurring revenue opportunity as well with multiple subscription based components, such as our nimble and cloud based device enablement platform and our trucking information dashboards.
Jacob Suen: Oh five G connectivity products include our Lantern F. W. A.
Jacob Suen: He helped to improve connectivity, it's a home or in the office, our lighthouse smartly, Peter designed to expand high quality coverage well mobile network operators.
Jacob Suen: Our recently announced next generation AC fleet by Jeep vehicles Gateway.
Jacob Suen: Great to offer why Andrea cellular and local area Wifi connectivity across public safety transportation and public and private vehicle fleets.
Jacob Suen: We have received significant interest for each of these solutions for lighthouse, we're making steady progress on the international strategic partnership that we mentioned last quarter, including a live network trial ultra.
Jacob Suen: For Lighthouse, we are making steady progress on the international strategic partnership that we mentioned last quarter, including a live network trial. All together, we currently have two active customer trials with four more planned for the second half of the year. Also, for AC Fleet, we have over 20 customer trials across our domestic and international customers scheduled for the second quarter. Again, these three product lines represent over $700 million of potential projected serviceable addressable market in 2024 and $1.7 billion of potential additional same in 2025, effectively doubling our foundational target of $1.8 billion for our existing product line.
Jacob Suen: Altogether. We currently have two active customer trials with formal plan for the second half of the year.
Jacob Suen: Also for AC fleet, we have over 20 customer trials across our domestic and international customers schedule for second quarter.
Jacob Suen: Again, these three product lines represent over $700 million of potential projected serviceable addressable market in 2024, and $1 $7 billion of potential additional Sim in 2020 five.
Jacob Suen: Effectively doubling our foundational sin of $1.8 billion for our existing product lines.
Jacob Suen: Our connectivity products are the culmination of several years of investment in shifting Airgain from exclusively components to full systems, and we believe that we have significant upside in this area. Lastly, in February at Mobile World Congress, we will announce our Smart FWA technology, which is designed to transform the 5G customer experience by optimizing connectivity and reducing the number of truckloads and customer returns the operators currently experience. Especially as we work to ship Lantern FWA, we believe that this is a strong market entry point to establish our demand base for the eventual delivery of Smart FWA in 2025 and beyond. With that, I will turn the call over to Michael to discuss our first quarter 2024 financial results and second quarter 2024 outlook in greater detail. Michael.
Jacob Suen: Our connectivity products.
Michael: The culmination of several years of investments in shifting air game. So I'm exclusively component so for systems and we believe that we have significant upside in this area.
Michael: Lastly in February during mobile World Congress, we allows our smart if W. A technology, which is designed to transform the five G customer experience by optimizing connectivity and reducing the number of truck rolls and customer returns the apo.
Jacob Suen: Later.
Michael: <unk> experienced.
Michael: Especially as we work to ship lanes or in S. W. E. We believe that this is a strong market entry point to establish our demand base for the eventual delivery of small, it's probably way in 2020 five M. B a.
Jacob Suen: With that I will turn the call over to Michael to discuss our first quarter 'twenty 'twenty four financial results and second quarter 'twenty 'twenty four outlook in greater detail Michael.
Michael: Thank you Jacob.
Michael Elbaz: Before diving into the numbers, please note that my review of our financial results and guidance refers to non-GAAP figures. Information about non-GAAP financial measures, including GAAP to non-GAAP reconciliations, can be found in our earnings release. Now, let's turn to our first quarter results.
Michael: Before diving into the numbers. Please note that my review of our financial results and guidance refers to non-GAAP figures.
Michael Elbaz: Information about the non-GAAP financial measures, including GAAP to non-GAAP reconciliations can be found in our earnings release.
Michael Elbaz: As Jacob mentioned, Q1 sales were $14.2 million, above the $14 million midpoint of our guidance range. While our first quarter sales increased by 41% sequentially, they were still lower by 13.5% on a year-over-year basis, primarily because of continued headwinds in our consumer and automotive markets. Enterprise sales were $8.9 million, reflecting a sequential increase of $4.3 million, or 92%, driven by the growth in our custom products, embedded modems, and IoT antennas product line.
Michael Elbaz: Now, let's turn to our first quarter results.
Michael Elbaz: Jacob mentioned Q1 sales were $14 $2 million above the $14 million midpoint of our guidance range.
Michael Elbaz: While our first quarter sales increased by 41% sequentially. There was still lower by 13, 5% on a year over year basis, primarily because of continued headwinds in our consumer and automotive markets.
Michael Elbaz: Enterprise sales were $8 $9 million, reflecting a sequential increase of.
Michael Elbaz: $4 $3 million or 92% driven by growth in our costume products embedded modems and Iot antennas product lines.
Michael Elbaz: In our custom products, we completed a large project along with shipments of production units for a strategic customer. In addition, our embedded modem sales increased to pre-2023 levels as distributors continue to recover from excess channel inventory. On a year-over-year basis, enterprise sales increased by over 5%.
Michael Elbaz: In our custom products, we completed a large projects along with shipments of production units for a strategic customer.
Michael Elbaz: In addition, our embedded modem sales increased two pre 2023 level as distributors continue to recover from excess channel inventory.
Michael Elbaz: On a year over year basis enterprise sales increased by over 5%.
Michael Elbaz: Consumer sales were $3.5 million, reflecting a sequential increase of $0.3 million driven primarily by shipments of the Tier 1 M&O Antenna design win we announced last November. Automotive sales were $1.8 million, reflecting a sequential decrease of $0.4 million due to ongoing excess inventory correction. Q1 gross margin was 40.2%, 990 basis points higher sequentially due to a large inventory charge we recorded in the fourth quarter of 2023. On a year-over-year basis, Q1 gross margin was 120 basis points higher, primarily because of a higher automotive margin.
Michael Elbaz: Consumer sales were $3 $5 million, reflecting a sequential increase of four $3 million driven primarily by shipments of the tier one M. A new antenna design win we announced last November.
Michael Elbaz: Automotive sales were $1 $8 million, reflecting a sequential decrease of $4 million due to ongoing excess inventory correction.
Michael Elbaz: Q1 gross margin was 42%.
Michael Elbaz: 990 basis points higher sequentially due to a large inventory charge, we recorded in the fourth quarter of 2023.
Michael Elbaz: On a year over year basis, Q1, gross margin was 120 basis points higher primarily because of the higher automotive margin.
Michael Elbaz: Q1 operating expenses totaled $6.6 million, relatively flat sequentially. However, Q1 2024 operating expenses decreased by $0.7 million from Q1 2023. On a year-over-year basis, engineering expenses increased by over 20% to support new product initiatives. However, this expense increase was more than offset by our focus on efficiencies, which resulted in a reduction of our G&A and marketing communication expenses by over 25% on a year-over-year basis. As a result... Our Q1 adjusted EBITDA was negative $0.7 million.
Michael Elbaz: Q1, operating expenses totaled $6 $6 million relatively flat sequentially.
Michael Elbaz: Q1, 2020 for operating expenses decreased by $7 million from Q1 2023.
Michael Elbaz: On a year over year basis engineering expenses increased by over 20% to support new product initiatives.
Michael Elbaz: This expense increase was more than offset by our focus on efficiencies, which resulted in a reduction of our G&A and marketing communication expenses of over 25% on a year over year basis.
Michael Elbaz: As a result.
Michael Elbaz: Q1, adjusted EBITDA was negative $7 million and non-GAAP EPS was negative.
Michael Elbaz: <unk>.
Michael Elbaz: And non-GAAP EPS was negative. [inaudible] Our cash balance as of March 31, 2024 was $7.2 million, $0.7 million lower sequentially, resulting from negative cash flow from operations of $1.3 million, partially offset by net proceeds from the ATM offering we launched two months ago. Our accounts receivable balance was $9.6 million, $2.3 million higher sequentially, primarily due to higher sales. Net inventory was $2.6 million, $0.
Michael Elbaz: Our cash balance as of March 31, 2024 was $7 $2 million plus $7 million lower sequentially, resulting from negative cash flow from operations of $1 $3 million, partially offset by net proceeds from the ATM offering we launched two months ago.
Michael Elbaz: Our accounts receivable balance was $9 $6 million to $3 million higher sequentially.
Michael Elbaz: Primarily due to higher sales.
Michael Elbaz: Net inventory was $2.6 million pontoon.
Michael Elbaz: $2 million higher sequentially.
Michael Elbaz: Now, moving to our Outlook for the second quarter ending June 30, 2024. 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. We project sales for the 2024 second quarter to be in the range of $14.25 million to $15.75 million, or $15 million at the midpoint of the range.
Speaker Change: Now moving to our outlook for the second quarter ending June 32024.
Michael Elbaz: As a reminder, we provide quarterly guidance for sales non-GAAP gross margin and expenses non-GAAP EPS and adjusted EBITDA as we believe this metric to be key indicators for the overall performance of our business.
Michael Elbaz: We project sales for the 2024 second quarter it should be in the range of $14 million to $5 million to $15 $75 million or <unk>.
Michael Elbaz: $15 million at the midpoint of the range.
Michael Elbaz: We expect sequential growth of approximately 5% at the midpoint of our guidance, driven by growth in our consumer markets from both our MNO and MSO customers. We expect our enterprise sales to be relatively flat sequentially with an anticipated decline in our custom products due to the large project shipments in Q1, offset by growth in our asset trackers, embedded modems, and IoT antennas, as well as the first shipments of our FWA solution.
Michael Elbaz: We expect a sequential growth of approximately 5% at the midpoint of our guidance driven by growth in our consumer market from both.
Michael Elbaz: M N and M S customers.
Michael Elbaz: We expect our enterprise sales to be relatively flat sequentially with an anticipated decline in our costume products due to the large project shipments in Q1.
Michael Elbaz: Offset by growth in our asset truckers embedded modems and Iot antennas as well as first shipments of our SWA solution.
Michael Elbaz: We expect non-GAAP gross margins for the second quarter to be in the range of 39.5% to 42.5% or 41% at the midpoint of the guidance. We anticipate the sequential increase in gross margin to be driven by higher enterprise margin due to differentiated new products and applications. We expect our operating expenses to be approximately $6.8 million. We continue to invest in our engineering and sales teams as we focus on our strategic initiatives in fixed wireless access, vehicle networking, and the smart C-BEN repeaters market. Non-GAAP EPS is expected to be negative 6 cents at the midpoint of our guidance, and adjusted EBITDA is expected to be negative $0.5 million at the midpoint of our guidance.
Michael Elbaz: We expect non-GAAP gross margin for the second quarter. It should be in the range of 39, 5% to 42, 5% or 41% at the midpoint of the guidance.
Michael Elbaz: Yeah.
Michael Elbaz: We anticipate the sequential increase in gross margin to be driven by higher enterprise margin.
Michael Elbaz: Due to differentiated new products and applications.
Michael Elbaz: We expect our operating expenses to be approximately $6 $8 million, we continue to invest in our engineering and sales teams as we focus on our strategic initiatives in fixed wireless access vehicle networking and smart C band repeaters markets.
Michael Elbaz: non-GAAP EPS is expected to be negative six cents at the midpoint of our guidance.
Michael Elbaz: Adjusted EBITDA is expected to be negative <unk> $5 million at the midpoint of our guidance now.
Jacob Suen: Now, I would like to turn the call back over to Jacob for his closing thoughts. Okay, Jacob?
Michael Elbaz: Now I would like to turn the call back over to Jacob for his closing thoughts Jacob.
Jacob Suen: Thanks, Michael.
Jacob Suen: A few closing thoughts before we head to Q&A. First, I am proud of our team's effort and dedication to our strategic roadmap initiative. We have several highly innovative products that are on tight timelines, and as of today, I can confidently say that we are executing on what we have promised and are still on schedule. This is only possible with our team's strong commitment and a highly effective and experienced management team.
Jacob Suen: Few closing thoughts before we head to Q&A.
Jacob Suen: First I am proud of our team's effort and dedication to our strategic roadmap initiatives.
Jacob Suen: We have several highly innovative products that our own tight timelines and as of today I can confidently say that we are executing on what we have promised and are still on schedule.
Jacob Suen: This is only possible with our team's strong commitment and a highly effective and experienced management team.
Jacob Suen: Second, we remain optimistic about our market potential in the industry recovery. Even as we continue to face significant headwinds, we have made real progress in many aspects of our business, including new products, new partners, and new geography. We continue to invest in our growth as well, including the expansion of our sales force as a part of a more aggressive growth strategy in response to progress across several of our product initiatives in improving market demand.
Jacob Suen: Second we remain optimistic about our market potential and industry recovery.
Jacob Suen: Even as we continue to face significant headwinds, we have made real progress, although many aspects of our business.
Jacob Suen: <unk> new products, New partners in new geographies, we continue to invest in our growth as well, including the expansions of our sales force as part of a more aggressive growth strategy in response to progress across several of our product initiatives and improve.
Jacob Suen: <unk> market demand.
Jacob Suen: Especially after rebounding in several product lines in Q1, we believe our industry has started to turn a corner, and I am confident our resiliency will effectively navigate these headwinds and pay off in the coming quarters. Third, our products are at the heart of our value proposition for our customers, especially with the many emerging trends within our industry, including transitions to Wi-Fi 7, increased demand for asset tracking capabilities, and longstanding ten points in the 5G coverage space.
Jacob Suen: Especially after rebounds in several product lines in Q1, we believe that our industry has started to turn a corner and I am confident that allow resiliency well effectively navigate these headwinds won't pay off in the coming quarters.
Jacob Suen: Third our products are at the heart of our value proposition for our customers, especially with the many emerging trends within our industry, including congestion is Wi Fi seven increased demand for asset tracking capabilities.
Jacob Suen: And long standing pinpoints in the five G coverage space, we are confident that the worldwide connectivity opportunity is vast and growing it.
Jacob Suen: We are confident that the worldwide connectivity opportunity is vast and growing, and that many geographies around the globe represent under-tapped markets for our industry and our business. For example, our next-generation smart FWA, AC Fleet, and Lighthouse smart repeater products aim to solve key challenges in the connectivity space. And each has generated strong interest from several major players. We believe that innovations like this set us apart as a key player in our industry.
Jacob Suen: Many geographies around the globe represent under tap markets for our industry and our business.
Jacob Suen: For example, our next generation Smart subsidiary AC Fleet, and lighthouse smartly, Peter products and to solve key challenges in the connectivity space and each has generated strong interest from several major players. We believe that innovation is like.
Jacob Suen: This set us apart as a key player in our industry.
Jacob Suen: So far in the second quarter, we have maintained our existing business execution and continue making progress on our strategic initiatives. We believe in our team, have confidence in our overarching strategy, and look forward to the path ahead for Airgain. And with that, Operator, please open the call for Q&A.
Jacob Suen: So far in second quarter, we have maintained our existing business execution and continue making progress on our strategic initiatives. We believe in our team have confidence in our overarching strategy and look for to the path ahead for Ajay.
Jacob Suen: And with that operator, please open the call for Q&A.
Operator: Thank you. We will now take questions from Airgain's sales side analysts.
Speaker Change: Thank you we will now take questions from Oregon sell side analyst.
Operator: Okay.
Operator: And if you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please as we poll for questions. Now our first question will come from the line of Anthony Stoss with Craig Hallam Capital Group. Please proceed with your question.
Speaker Change: And if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment. Please poll for questions.
Operator: And our first question will come from the line of Anthony Stoss with Craig Hallum Capital Group.
Anthony Joseph Stoss: Please proceed with your question.
Anthony Joseph Stoss: Hi guys, nice progress. Um, Jacob, I wanted to focus in on the fleet products. Just to confirm what I heard, or believe I heard, did you say that you've got, it seems like over a dozen trials that are going on at one point in the call, you talked about you'll be shipping revenue in the second half of the year. And then I had a follow-up from Michael.
Anthony Joseph Stoss: Hey, guys Nice progress Jacob I wanted to focus in on the fleet products just to confirm what I heard or I believe I heard did you say that you've got it seems like over a dozen trials that are going on at one point in the call you talked about you'd be shipping revenue in the second half of the year and then.
Speaker Change: I had a follow up for Michael.
Jacob Suen: Hey, good to hear from you as well, Tony. Yes, so we are going through the last stage of the product development cycle. And the product is due to ship in the early second half of the year. But meanwhile, we actually have 20 plus customer trials, both domestically and internationally, scheduled this quarter, the second quarter, to go through the process.
Michael Elbaz: Hey, good to hear from U S well, Tony Yes. So we are going to the last stage of the product development cycle and the product. It's due to shipping in the early second half of the year, but Meanwhile, we actually have 20 plus.
Jacob Suen: S customers trials, both domestically and internationally schedule in this quarter or second quarter to go through the process.
Anthony Joseph Stoss: Okay, is that, is that a short trial? Or do you think this will take many, many months?
Tony: Okay is that is that a short trial or do you think this is many many months or how do you handicap, what do you think it converts into revenue.
Jacob Suen: Or how do you handicap when you think it will convert into revenue?
Anthony Joseph Stoss: I think it varies. It could be from a couple of weeks to potentially one or two months.
Speaker Change: I think it varies it could be from a couple of weeks to potentially one or two months.
Michael Elbaz: Okay, got it. And then, Michael, I'm curious about your thoughts if you want to... You know, peek into the future. Do you think you'll potentially have positive EBITDA in Q3 or do you seem like maybe you have a better shot in Q4? Any thoughts on that?
Speaker Change: Okay got it and then Michael I'm curious your thought if you want to.
Michael Elbaz: Peek into the future do you think you'll be potentially positive EBITDA in Q3 or it seemed like maybe have a better shot in Q4, maybe your thoughts on that.
Anthony Joseph Stoss: Hi Tony. Yeah, we don't give that much of a guidance altogether, but I think from a direction standpoint, we certainly would like to be break-even in Q3. They might be in Q4 in terms of a positive EPTA at this point.
Michael Elbaz: Hi, Tony Yeah, we don't give that much of the guidance not together, but I think from a directional standpoint, we certainly would like to be breakeven in Q3, they might be in Q4 in terms of a positive EBITDA at this point.
Jacob Suen: Got it. If I could speak one more time on Wi-Fi 7 for the MSOs, Jacob. It seems like everything is being teed up for the second half of this year. Do you think you'll have meaningful revenue on Wi-Fi 7, or is that more of a 2025 event?
Anthony Joseph Stoss: Got it and if I can sneak one more in a Wi Fi seven for the Msos Jacob.
Jacob Suen:
Jacob Suen: It seems like everything's being teed up for the second half. This year do you think you'll have a meaningful revenue Wi Fi seven or is that more of a 2025 event.
Jacob Suen: Based on the current feedback, I think that we have one major T01 MSO in the U.S. that's already indicating that we're going to be receiving PO from them, and then they're going to be shipping in the, I would say, Q3. So that one, we're expecting material revenue contribution for the second half of the year. The second major U.S. T01 MSO seems to be a little bit behind, and the anticipation is that we'll be able to ship maybe some in the latter part of the year.
Jacob Suen: Yeah based on the current feedback I think that you know we have one major msos T O N M and so in the U S that already that's already indicating that we're gonna be receiving P. L from them and then they're going to be shipping in.
Anthony Joseph Stoss: Got it. Thanks for the detail, guys. Best of luck. Thank you.
Anthony Joseph Stoss: I would say Q3, so that one we're expecting material revenue contribution for the second half of the year.
Anthony Joseph Stoss: A second major U S. T O M. S. So seems to be a little bit behind in the intense dissipation is that we'll be able to ship maybe some in the latter part of the year.
Speaker Change: Got it thanks for the detail guys best of luck.
Operator: Thank you. Thank you, Tony.
Speaker Change: Thank you thank you Tony.
Scott Wallace Searle: Thank you. Our next question comes from the line of Scott Searle with Roth MKM. Please proceed with your question.
Speaker Change: Thank you.
Operator: Our next question comes from the line of Scott Searle with Roth and Kim. Please proceed with your question.
Scott Wallace Searle: Hey, good afternoon. Thanks for taking the questions. Hey, Jacob, maybe to dive in on Airgain Connect, the next-gen product, could you give us an idea of how that's shaping up for the second half of this year, kind of what you're looking like from a channel and dealer perspective and kind of the early expectations on that front? And then, Michael, just to dive a little bit more into the consumer in the second half of this year, you know, are you seeing enough in the pipeline that And
Scott Wallace Searle: Hey, good afternoon, thanks for taking the questions.
Scott Wallace Searle: Jacob maybe to dive in on the <unk> connect the Nexgen product could you give us an idea of how that's shaping up for the second half of this year kind of what you're looking like from a channel perspective.
Speaker Change: The year over year expectations on that front and then Michael.
Scott Wallace Searle: Just to dive in a little bit more in consumer in the second half of this year.
Michael Elbaz: Are you seeing enough in the pipeline that the consumer business with Wi Fi gets back to doing $5 million a quarter and then I had a follow up with you.
Jacob Suen: Good to hear from you, Scott. So I'll address the Airgain Connect first before I turn over to Michael. So because of our previous experience, we feel really comfortable about how we're going to go to market with the AC fleet. So right now, we are really targeting three major aspects. One is on the VOS, the Dacapers, the channels, and those are the ones we have dealt with previously. And, you know, so this is one partner relationship in the market, I guess.
Jacob Suen: Hey, good to hear from you Scott So I trust that it can connect first before I turn it over to Michael So you know.
Jacob Suen: Because of our previous experience, we feel when it comes to Bob about the how do we going to go to market with the AC fleet. So right now we are targeting really three major aspects. One is on the vast the dispute serves the channels and those are the ones. We have dealt with previously and you know so.
Jacob Suen: And then the second one is what we call our direct accounts. We're actually currently targeting about roughly 80 customers right now that we're focusing on. These are mostly private and, you know, private fleet companies, such as utility companies, as an example. So these are the ones we're actually engaging in directly. And third, there's another category, what we call strategic partners. And these would be the likes of somebody like a, you know, Exxon or a, you know, Sierra Wireless or a Motorola Solution, that type of name, you know.
Jacob Suen: This one no one partner relationship.
Jacob Suen: I guess the market and then the second one is what we called out direct accounts well, we actually currently targeting about roughly about 80 customers right. Now so we're focusing on is mostly private and private fleet.
Jacob Suen: <unk> such as the utility companies as an example, and so these are the ones who are actually engage them directly.
Jacob Suen: This is there's another oh, there's another that the.
Jacob Suen: The capital evolving cost strategic partners and these will be the likes of <unk>.
Jacob Suen: Somebody like Exxon.
Jacob Suen: Sierra wireless so a multiple Russell loosen that type of names you know and those are the ones that don't buy it directly from us, but you know they can work with us the likes of AT&T as well. So those are the three.
Jacob Suen: And those are the ones that don't buy directly from us, but, you know, they can work with us, the likes of AT&T as well. So those are the three partners or direct customers that we are actively engaging. And we do expect that to really generate material revenue for the second half of the year.
Jacob Suen: Partners all of our customers that we are actively engaging and we do expect that too to really generate material revenue for the second half of the year.
Michael Elbaz: And to answer your question, Scott, in the consumer market, the lead time cycle is very short in this market. So data or backlog data is not very meaningful to predict what will happen in the second half of the year. However, what I can say for sure is that the current backlog that we're sitting on right now is definitely promising for the second quarter, and it will be the main driver of the increase on a sequential basis.
Jacob Suen: And to answer your question Scott on the consumer market. The the lead time cycle is very short on this market. So data our backlog data is not very meaningful to predict what will happen for the second half of the year. However, what I can say for sure is that the current backlog that were sitting on right now.
Michael Elbaz: His desk he promising for the second quarter. It would be the main driver of the increase on a sequential basis.
Michael Elbaz: We do have a first PO for Y5-7, a small one, but first nonetheless. And that's promising as well, too. And the one thing that is also encouraging for us is the M&O Tier 1 design win that we announced. That is in the process of ramping up at this point. And so we do see growth taking place, so this is somewhat of a recovery. As to what shape it will be in the second half of the year, it might be a bit early to tell right now.
Michael Elbaz: We do have our first Po for Wi Fi seven small, but first nonetheless, and that is promising as well too and the one thing that is also encouraging for US is the M. N O a tier one design win that we had announced that is in the process of ramping up at this point and so we do.
Scott Wallace Searle: Great. Thank you. Very helpful.
Scott Wallace Searle: See the growth taking place so somewhat of a recovery or as to what shape. It will be the second half of the year it might be a bit early to tell right now.
Scott Wallace Searle: And if I could follow up on the lantern front, you know, you had some news this week, I believe, about AT&T and T-Mobile activity on that front. And it seems like there's a lot of other trial activity going on. I'm wondering if you could walk us through the paces of certification and timeline to deployment with some of the more advanced carriers. And if you could give us an idea from a pilot perspective, the geographies, you know, where you're seeing a lot of that activity. And kind of what you're baking in is the lower end of the range for contribution in the second half of this year. Thanks. Yeah,
Speaker Change: Great. Thank you helpful and if I could follow up on the land to in front you had some news this week I believe with AT&T and T mobile activity on that front and it seems like Theres a lot of other trial activity going on and I'm wondering if you could walk us through the pieces of it.
Scott Wallace Searle: Certification and timeline to deployment with <unk>.
Scott Wallace Searle: Some of the more advanced carriers.
Scott Wallace Searle: And if you could give us an idea from a pilot perspective, the geographies you know that.
Scott Wallace Searle: Youre seeing a lot of that activity and kind of what you're baking in is the lower end of the range for contribution in the second half of this year.
Scott Wallace Searle: Yeah.
Scott Wallace Searle: Yeah.
Jacob Suen: Yeah, great question, Scott. So, you know, this is, as I indicated, I'm just so proud of the team's effort. You know, it's not easy.
Speaker Change: Yeah, great questions. Scott. So you know this is a as I indicated I'm just so part of the team's effort. It's not easy it's a lot of uncertainty and for the team to be tenacious and navigate through the various certification.
Speaker Change: The trials in Huston and I've just been phenomenal.
Speaker Change: Phenomenal job now the certification and all it takes anywhere from several weeks to several months depends on the different types right, you're talking about PTC I mean, well have to get the certifications from the actual mobile network operators such as stone names you just mentioned as far as the trials we have I was.
Jacob Suen: There are a lot of uncertainties. And for the team to be tenacious and navigate through the various, you know, certifications, the trials, you know, has been, you know, just been phenomenal, done a phenomenal job. Now, the certification, you know, it takes anywhere from several weeks to several months, depending on the different types, right? We talk about PTCRV, but we also have to get the certifications from the actual mobile network operators, such as the names you just mentioned.
Jacob Suen: Majority of the trials is happening right now in North America, including U S and Canada. We also have some internationally in Latin America and also in EMEA.
Jacob Suen: EMEA as well.
Jacob Suen: As far as the trials go, I would say the majority of the trials are happening right now in North America, including the U.S. and Canada. We also have some internationally, in Latin America, and also in EMBA as well. Thank you. I hope I answered your question. Yeah.
Speaker Change: Thank you I hope I answered your question.
Jacob Suen: Okay.
Speaker Change: Thank you.
Operator: Our next question comes from the line of Tim Savageaux with Northland Capital Markets. Please proceed with your question.
Jacob Suen: Our next question comes from the line of Tim <unk> with Northland Capital markets. Please proceed with your question.
Timothy Paul Savageaux: Hi, good afternoon, and congrats again on the nice results and outlook. I wanted to follow up on the 5G repeater, the lighthouse trials, as you mentioned. Two active network trials and four more plans in the second half. Let me, Tina, you've talked about the strategic partnership, but in terms of the trials that you have upcoming, I wonder if you could characterize, sort of, what sort of carriers you're planning on working with in those trials. U.S. International Tier 1 Accessibility: Yes.
Timothy Paul Savageaux: Hi, good afternoon, and congrats again on a nice results and outlook.
Timothy Paul Savageaux: I wanted to follow up on the with five G repeater.
Timothy Paul Savageaux: Lighthouse trials, Thank you mentioned.
Timothy Paul Savageaux: Two active network trials and more and more plans in the second half.
Timothy Paul Savageaux: I mean, you've talked about the strategic partnership but in terms of the trials that you have upcoming I Wonder if you can characterize.
Tina: Sort of what's sort of carriers.
Accessibility: Youre planning on working with those.
Accessibility: Those trials either.
Timothy Paul Savageaux: U S International tier one etcetera.
Tina: Yes, Hey, Jim it's good to talk to you again and and into a great questions Angie.
Jacob Suen: Hey, Tim, good to talk to you again and to, you know, ask great questions on the 5G initiative that we're doing. So, there are two active trials right now. One is the one that we mentioned last quarter, and that one is international.
Tina: Initiatives that were doing so they have two active trials right. Now one is the one that we mentioned last quarter and that one is international and yeah. When we talk about with this thing we're making nice progress.
Jacob Suen: And here, when we talk about, you know, with this thing, we're making nice progress. We're going from, what I call, more of just a field trial now to what I call a live network trial. What I mean by that is that they're actually having customers that we're actually going to, and they're actually going to install our system on their network and are going to stay there, supposedly, you know, permanently if everything goes well.
Jacob Suen: We're going from a what I call him all of it just the field trial now to what I'd call a life network trial, what I mean.
Jacob Suen: And by that is actually having a customer that was actually going to and they were actually going to install a system in to their network and Ghana stayed at supposedly permanently if everything goes well. So so so this is a this is I would say the final two.
Jacob Suen: So, this is, you know, this is, I would say, the final trial before they go ahead and proceed with a, you know, with a purchase order. So, from that perspective, we're really encouraged by the progress.
Jacob Suen: Trial before they go ahead and proceed with a with a with a purchase shoulder. So so from that perspective, we're very encouraged by the progress and and that's an international customers.
Jacob Suen: And that's for international customers. We also have another active trial domestically here in the U.S. with tier one MSOs as well. And that one is still in the early stage. We have four more planned for the second half of the year. Let me, you know, we have, let me see. We have one in the U.S., one in EMBA, and then two in Latin America. And all of the four are either mobile network operators or...
Jacob Suen: Okay, great. Thanks very much.
Jacob Suen: Also having now the active trial domestically here in the U S. With a you know with a Tijuana msos as well and that one is still early stage. We have four more planned for the second half of the year.
Jacob Suen: Let me Oh, we have let me see we have one in the U S.
Jacob Suen: One in EMEA and then two in Latin America.
Jacob Suen: And all of the four are either mobile network operators all power companies.
Timothy Paul Savageaux: And then just to try and summarize what we're hearing here with regard to the second half. And it looks like you've got some growth drivers in consumer. You know, as you talk about the ramp of the fixed wireless antenna. I guess you saw some of that in Q1, but... I guess, how long does that take to get to what you might consider a full or run rate deployment for a
Speaker Change: Okay, great. Thanks, very much and then just to try and summarize what we're hearing here with regard to the second half.
Timothy Paul Savageaux: It looks like you've got some growth drivers and consumer.
Timothy Paul Savageaux: As you talk about the ramp of the.
Timothy Paul Savageaux: Fixed wireless antenna.
Timothy Paul Savageaux: I guess you saw some of that in Q1, but.
Timothy Paul Savageaux: I guess, how long does that.
Timothy Paul Savageaux: To get to what you might consider a full run rate deployment throughout the year follow up.
Jacob Suen: Yeah, so we're starting to see what we call these IoT antennas, you know, certainly for the enterprise market, and we are, you know, and for different applications. Some of them are for what you call the fixed wireless access applications. Some of them are actually for some other unique applications, such as smart city traffic light applications.
Speaker Change: Yeah, So let's start seeing or we call. This Iot antennas, you know certainly in our four leading for the enterprise market and we are.
Jacob Suen: And for different applications some of them for a four well what you call the fixed wireless access applications some of them for actually for some other unique applications such as smart CD traffic lights applications. So all in all will they be seeing a a nice oh.
Jacob Suen: So, all in all, we're really seeing good demand in a couple of these markets, and we expect that to continue, and then Michael can add more to Carla about some of the specific numbers. Sure. Thank you, Tim. This is actually a very good question.
Michael Elbaz: The main.
Jacob Suen: A couple of these markets and we expect that the containing and then Michael can add more color about some of the specific numbers sure. Thank you. Tim. This is actually a very good question. So just to summarize overall from a consumer standpoint, as we mentioned that we do see growth in Q2, and we expect continued growth in the second half of the year.
Michael Elbaz: So, just to summarize overall, from a consumer standpoint, as we mentioned, we do see growth in Q2, and we expect continued growth in the second half of the year, driven by the M&O design win, along with the MSO's Y57 early adoption rate. But the strength of that rebound in the second quarter is just too early to tell right now. On the aftermarket part of the automotive industry, there is still some ongoing excess inventory at this point, and we expect that to be sorted out at the end of the year, probably during the last quarter of the year.
Michael Elbaz: Driven by the M N O a T.
Michael Elbaz: Design win along with the Msos why five seven.
Michael Elbaz: Early adoption rate or the <unk>.
Michael Elbaz: Strength of that rebound in the second quarter is just too early to tell right now on the aftermarket part of automotive.
Michael Elbaz: There is still some ongoing excess inventory at this point and we expect that to be sorted out at the end of the of the year.
Michael Elbaz: Probably the last quarter of the Europe now on the enterprise business, we came out with $8 $9 million of revenue in Q1.
Michael Elbaz: Now, on the enterprise business, we came out with $8.9 million of revenue in Q1. A large part of the growth was due to that large project that we had mentioned in the past of custom products. That one, not having that anymore in Q2, we are very pleased with the offsetting growth that we are seeing on the embedded modems, on the asset tracker, the first shipment of the FWA solution, and on this, what you just mentioned, the IoT antennas, which is really those products that we had mentioned about six to eight months ago, as introduction, and they are finding their way very nicely in those communities, in terms of it's a bit of a long sales cycle altogether, but it definitely helped us with the ramp or the increase in Q1, we're seeing in Q2, and we expect some more in Q3 and Q4.
Michael Elbaz: A large part of the growth was due to that large project that we had mentioned in the past of the custom products.
Michael Elbaz: That one.
Michael Elbaz: Not having that any more in Q2, we are very pleased with the offsetting growth that we're seeing on the embedded modems on the asset tracker are the first shipment of the <unk> solution and on this what you just mentioned the Iot antennas, which is really those are products that we had mentioned about.
Michael Elbaz: The six to eight months ago, as introduction and Theyre funding that way very nicely in those communities in terms of a it's a it's a bit of a long sell cycle altogether, but it definitely helped us with the ramp or the increase in Q1, we're seeing in Q2, and we expect some more in Q3 and Q.
Michael Elbaz: So enterprise, we expect it to be relatively flat for the time being, but the unknown right now is going to be the contribution of the AC fleet, but also Lantern, as we mentioned, and hopefully some lighthouse at the end of the year.
Michael Elbaz: Four so enterprise, we expect it to be relatively flat for the time bank, but the unknown right now are going to be the contribution of the AC fleet, but also lend to and as we mentioned.
Michael Elbaz: And hopefully some some lighthouse at the end of the year.
Michael Elbaz: Yes.
Timothy Paul Savageaux: Okay, got it. And just one final thing on that front. To the extent you're looking for the growth in Included to be consumer driven, is it fair to say that's primarily the M&O design when, It's both, I told you.
Speaker Change: Okay got it and just one final thing on that.
Timothy Paul Savageaux: To the extent youre looking for the growth in.
Timothy Paul Savageaux: And could it be consumer driven is it fair to say that's primarily.
Timothy Paul Savageaux: No.
Timothy Paul Savageaux: Aylwin.
Michael Elbaz: It's both actually, Tim. It's both the MNO and the MSO. MSO, we started to see some recovery. I mean, the level that we were at in Q4 and even Q1 were just really some of the lowest levels that we've seen. So, we do expect some recovery there.
Timothy Paul Savageaux: It's both actually.
Michael Elbaz: And Madhu M. S. M. S. So we started to see some recovery I mean, the level that we were at in Q4, and even Q1, we're just really some of the lowest level that we've seen so we do expect some recovery there.
Speaker Change: Got it thanks very much.
Timothy Paul Savageaux: Thank you, Tim. Thank you.
Speaker Change: Thank you Tim.
Tim: Okay. Thank you.
Operator: Thank you. At this time, this concludes our question and answer session. If your answer was not taken, you may contact Airgain's Investor Relations at AIRG at gateway-grp.com. I'd now like to turn the call back over to Mr. Suen for his closing remarks.
Speaker Change: At this time. This concludes our question and answer session. If you answer was not taken you may contact me or gains and congratulations team.
Operator: Eric.
Suen: A R. G. A gateway that's G RFP dot com I would now like to turn the call back over to Mr. Sullivan for his closing remarks.
Jacob Suen: Thank you for joining us on today's call. I especially want to thank our dedicated employees for their ongoing contributions, and our investors for their continued support. We look forward to providing additional updates at our next opportunity. Operator. Thank you for joining us today for Airgain's first quarter of 2020.
Suen: Thank you for joining us on today's call.
Jacob Suen: Actually I want to thank our dedicated employees for their ongoing contributions and our investors for their continued support we look forward to providing additional updates at our next opportunity Apple later.
Operator: Thank you.
Speaker Change: Thank you for joining us today for <unk> first quarter 2024 earnings call you may now disconnect.
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Operator: Scott Searle, Michael Elbaz, Craig Ellis, Jacob Suen, Michael Elbaz, Airgain Stoss, Timothy Savageaux, Craig Ellis, Scott Searle, Jacob Suen, Michael Elbaz, Airgain Stoss, Michael Elbaz, Craig Ellis, Jacob Suen, Airgain Stoss,
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