Q2 2024 Airgain Inc Earnings Call

Jacob Suen: Welcome everyone and thank you for joining us this afternoon. To begin today's discussion, I will give some company background, followed by a review of our performance for the quarter, before handing the call over to our CFO, Michael Elbaz. It will review our financial results for the quarter in more depth, as well as provide our outlook for the third quarter. After that, I will share some closing remarks before opening the call for questions.

Operator: Welcome everyone, and thank you for joining us this afternoon. To begin today's discussion, I will give some company background, followed by a review of our performance for the quarter before handing the call over to our CFO, Michael Elbaz. It will review our financial results for the quarter in more depth, as well as provide our outlook for the third quarter.

Thank you for joining us this afternoon to begin today's discussion I will give some company background followed by a review of our performance for the quarter before handing the call over to our CFO, Michael <unk>, who will review our financial results for the <unk>.

Other in more depth as well as provide our outlook for the third quarter.

Jacob Suen: After that, I will share some closing remarks before opening the call for questions. Before we dive into our quarterly results, I would like to take a moment to introduce Airgain to those 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, asset truckers, custom IoT products, VIG, IoT antennas, our new VIG takes wireless access device, and our VIG smart network control cellular repeaters. Our consumer market is comprised mostly of our embedded antennas business, a traditional area of expertise for Airgain.

After that I'll share some closing remarks before opening the call for questions.

Jacob Suen: Before we dive into our quarterly results, I would like to take a moment to introduce Airgain to those 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, asset trackers, and custom IoT products. 5G IoT Antennas, our new 5G fixed wireless access device, and our 5G smart network control cellular repeaters

Before we dive into our quarterly results I would like to take a moment to introduce again to those who may be new to our story.

And they again, 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 asset truckers custom.

Custom Iot products.

<unk> Iot antennas.

Our new <unk> fixed wireless access device.

Jacob Suen: Our consumer market is comprised mostly of our embedded antennas business, a traditional area of expertise for Airgain. Our consumer products include custom embedded antenna design for customer premises equipment, such as those that enable Wi-Fi 6E and Wi-Fi 7.

Jacob Suen: Our consumer products include custom embedded antenna design for customer premises equipment, devices such as those that enable Wi-Fi 60 and Wi-Fi 7. Lastly, our automotive market encompasses both doctor market antennas and vehicle networking devices, notably our Airgain Connect fleet solution. The global connectivity opportunity is substantial in enduring. We believe cellular trends, including increased adoption of connectivity technologies and expanding addressable markets across our product range, will drive industry and company growth. Airgain has consistently evolved and delivered optimized wireless solutions, enabling our channel partners and customers to connect efficiently. As new technologies emerge, we are well projected to continue providing cutting-edge products to meet evolving demands.

Jacob Suen: Lastly, our automotive market encompasses both aftermarket antennas and vehicle networking devices, notably our Airgain Connect fleet solution. The global connectivity opportunity is substantial and enduring. We believe secular trends, including increased adoption of connectivity technologies and expanding addressable markets across our product range, will drive industry and company growth. We have consistently evolved and delivered optimized wireless solutions, enabling our channel partners and customers to connect efficiently. As new technologies emerge, we are well-positioned to continue providing cutting-edge products to meet evolving demands.

Jacob Suen: Turning now to a review of our recent operational results and three core markets, we generated 15.2 million dollars in sales in the second quarter, above the midpoint of our guidance range and a 7% increase over the prior quarter. This increase was largely driven by higher consumer market sales to our cable, broadband, and mobile network operators. In second quarter, we deliver the first shipments of our fixed wireless access lantern solutions, along with the first shipments of Y5-7 antennas to a T01 MSO partner. We also secure multiple design winds for our embedded modems in our 5G automotive and enterprise antennas.

Jacob Suen: Turning now to a review of our recent operational results in three core markets. We generated $15.2 million in sales in the second quarter, above the midpoint of our guidance range and a 7% increase over the prior quarter.

Jacob Suen: This increase was largely driven by higher consumer market sales to our cable, broadband, and mobile network operators. In the second quarter, we delivered the first shipments of our fixed wireless access lantern solutions, along with the first shipments of Wi-Fi 7 antennas to a Tier 1 MSO partner. We also secured multiple design wings for our embedded modems in our 5G automotive and enterprise antennas.

Jacob Suen: Still, we're paying close attention to the macroeconomic environment as industry-wide payments that we have faced in recent quarters continue to dissipate. Our indicators suggest that previously broad demand softness has become more product and customer-specific. As the industry recalibrates, optimal inventory levels. While some key customers continue to adjust their inventory, affecting all the timing, our broader portfolio generally enjoys clear channels. We anticipate that front trading inventory levels will impact our business. However, we are confident that our existing design winds and the launch of our strategic product initiatives will lead to overall revenue growth.

Jacob Suen: Still, we are paying close attention to the macroeconomic environment as industry-wide headwinds that we have faced in recent quarters continue to dissipate. Our indicators suggest that previously broad demand softness has become more product and customer specific as the industry recalibrates optimal inventory levels. While some key customers continue to adjust their inventories, affecting order timing, our broader product portfolio generally enjoys clear channels. We anticipate that fluctuating inventory levels will impact our business.

Jacob Suen: However, we are confident that our existing design wins and the launch of our strategic product initiatives will lead to overall revenue growth, following a robust Q1 driven by a substantial shipment to a strategic partner in our custom product. Nevertheless, we believe our robust embedded modems product portfolio, expanding IoT antennas and asset tracker sales pipelines, and launch of the Lantern FWA solution strategically position us to offset the temporary softness in custom products. Our consumer market saw notable progress in the second quarter.

Jacob Suen: Taking a closer look at our three markets. Our enterprise market performance in second quarter remain stable compared to Q1. Of it, with a different mix of key drivers, following a robust Q1 driven by a substantial shipment to a strategic partner in our custom products, we anticipated an inventory adjustment in Q2 affecting older volume. However, the expected softness in custom products was counterbalanced by sequential sales increases in our embedded modems, asset truckers, and enterprise antennas. Along with the commencement of Lantern FWA product shipments, enabling us to maintain enterprise revenue compared to Q1. We expanded our asset trucker portfolio with new real-car-focused features with the design we announced last year.

Along with the commencement of lantern W. A product shipments, enabling us to maintain in device revenue compare to first quarter.

We expanded our asset trucker portfolio with new railcar focused features with the design win we announced last year. The railcar segment provides us with a unique opportunity to leverage our asset truckers competitive advantages such as.

Jacob Suen: The real-car segment provides us with a unique opportunity to leverage our asset trucker's competitive advantages, such as cellular connectivity in battery life, and customize them to meet the technical and environmental requirements of the sector. We expect to leverage our real-car product portfolio to the broader transportation segment. In addition, our Recon 13 sales pipeline has continued to grow for enterprise applications specifically with counties and municipalities. Recompt 13 is a low profile, rugged, outdoor antenna designed to provide high performance LTE and 5G connectivity. Although the sales cycle for this antenna contracts is long, we are confident in the demand that we are seeing and believe that this is a growth opportunity for us to address of 2024.

Cellular connectivity and battery life.

And customized to meet the technical and environmental requirements of the sector.

We expect to leverage our railcar product portfolio to the broader transportation segment.

In addition, our recon 13 sales pipeline has continue to grow for enterprise applications, specifically with counties and municipalities.

<unk> 13 is a low profile rugged outdoor antenna design to provide high performance LTE in Baiji connectivity.

Although the sales cycle for these antenna contracts is long 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: Looking ahead to Q3, we anticipate a slower quarter for design wins based on our product timeline and recognize that inventory with our strategic custom products customer will require time to normalize. Nevertheless, we believe our robust embedded models product portfolio, expanding IoT antennas and acid trucker sales pipelines, and launch of the Lantern FWA solution, strategically producing us to offset the temporary softness in custom products. The increasing demand we have seen across these product lines boosters our confidence in their growth potential through the remainder of 2024 and into 2025.

Jacob Suen: Our consumer market saw notable progress in the second quarter. Over recent quarters, we have highlighted the anticipated industry transition from Wi-Fi 6 and 60 to Wi-Fi 7 among MSOs. Driven by their desire to enhance performance and user experience. Our team has been diligently working to meet this demand. This quarter marked a significant milestone as we deliver our first Wi-Fi 7 router antenna system to a T01 MSO, a long-anticipated achievement. While Wi-Fi 7 adoption rates vary among MSOs, with some moving swiftly and others targeting 2025, we believe the air game will play a significant role in driving this industry-wide shift in the coming quarters.

Jacob Suen: We believe that Airgain will play a significant role in driving this industry-wide shift in the coming quarters. Now, let's focus on our automotive product, which currently serves public safety and transportation vehicles with our advanced aftermarket products. We anticipate this strong interest in ongoing trials to convert into material remedy streams. While we recognize that industry challenges persist and require ongoing vigilance regarding the macroeconomic environment, we anticipate continued progress. Airgain's traditional expertise lies in component-based products deployed across consumer, automotive, and enterprise applications, including embedded modems, custom products, embedded antennas, and aftermarket automotive products. We have cultivated strong relationships with our customers.

Jacob Suen: Consumer demand continues to shift from wire to wireless Internet service providers, with a growing preference for FWA. Recognizing this trend early, we strategically focused on penetrating this expanding market. A key milestone was our T01 MSO design win for an indoor FWA router antenna announced last November. While shipments began in Q1, we significantly revved up production during the second quarter. We expect this positive trend to gain momentum in Q3, projecting further sequential growth in our consumer market. In addition, we recently secured a significant design win with one of Europe's leading TLS communications providers for our events embedded in TANAS, and we expect first shipments to occur by the end of the year.

Jacob Suen: Now, let's focus on our automotive product, which currently serves public safety and transportation vehicles with our advanced auto market products. While our growth in this sector has traditionally been driven by several key customers, the industry-wide access inventory challenge that emerged late last year persisted due to Q2. We project this inventory recalibration to continue through the end of the year, but we are actively implementing strategies to navigate this temporary market condition. In second quarter, our highly configurable recalibration by G antenna, continue to gain significant market traction in automotive applications, helping to offset inventory challenges and maintain revenue stability compared to Q1.

Jacob Suen: We anticipate that recalibration projected growth will help mitigate ongoing inventory challenges in other areas of this product market in the coming quarters. One of our lead customers selected recalibration for its transition from 4G to 5G in car systems, further validating its capabilities and market potential. Additionally, our egg and connect fleet or AC fleet product is generating significant market interest, and we are in the final certification phase with trials currently in progress with multiple customer prospects. We anticipate this strong interest and ongoing trials to convert into material revenue streams, beginning in Q3 and ramping up in Q4.

Jacob Suen: Overall, we are encouraged by the ongoing recovery across several of our product lines. While we recognize that industry challenges persist and require ongoing vigilance regarding the macroeconomic environment, we anticipate continued progress about robust and diverse product portfolio projections as well for both opportunities reinforcing our confidence in a sustained rebound.

Jacob Suen: As previously communicated, we are advancing our strategic transition from an exclusive component manufacturer to a comprehensive wireless system solutions provider. As such, our fourth strategy is focused on two key elements. First, continue execution of our established business. Against traditional expertise lies in component-based products deployed across consumer, automotive, and enterprise applications, including embedded modems, custom products embedded in the market, automotive products. We have cultivated strong relationships with partners throughout the Bali chain and achieved several significant milestones in recent quarters. Furthermore, we anticipate lucrative opportunities in these product categories driven by upcoming shipment rooms for Tier 1 MSO Wi-Fi 7 and M&O embedded antenna design wins.

It's with partners throughout the value chain and achieved several significant milestones in recent quarters.

Furthermore, we anticipate lucrative opportunities in these product categories, driven by upcoming shipment ramps for tier one Amazon Wi Fi seven and amino embedded antenna design wins.

Jacob Suen: Expansion of Recom-13 antenna automated and enterprise sales pipelines and new IoT custom products given our expanding product portfolio in customer sales pipeline. We are optimistic about the growth potential of our established business.

Expansion of <unk> antenna automotive and enterprise sales pipelines and.

New Iot custom products.

Given our expanding product portfolio and customer sales pipeline, we are optimistic about the growth potential of our established business.

Jacob Suen: Second, integrated wireless solutions expansion. While we continue to advance our existing components business, our overlooking indicators for 2024 and into 2025 highlight our wireless connectivity product lines as having the greatest upside potential. Specifically, our asset tracking and bi-g connectivity solutions present the most significant strategic growth opportunities. On the asset tracking side, our truckers are deployed across transportation, supply chain, and other specialized applications. This segment offers recurring revenue opportunities to multiple subscription-based components, including our number length cloud-based device enablement platform and tracking information test boards. In addition, we continue to make meaningful progress with a product portfolio design for the transportation sector.

Michael Elbaz: Second, integrated wireless solutions expansion, while we continue to advance our existing components business. On the asset trucking side, our truckers are deployed across transportation, supply chain, and other specialized applications. Our 5G connectivity products include Lantern FWA, designed to enhance connectivity in homes and offices. Lighthouse smart repeater engineered to extend high-quality coverage for mobile network operators, and our next generation AC fleet 5G vehicle gateway developed to provide wide area cellular and local Wi-Fi connectivity for public safety, transportation, and various vehicle fleets will garner significant interest across these solutions, and we believe that we have significant upside in this area.

Second integrated wireless solutions expansion.

While we continue to advance our existing components business.

Our forward looking indicators for 2024 and into 2025 highlight our wireless connectivity product lines as having the greatest upside potential.

Specifically, our asset trucking in Baiji connectivity solutions present, the most significant strategic growth opportunities.

On the asset trucking side, our truckers are deployed across transportation supply chain and other specialized applications.

Segment offers recurring revenue opportunities.

Multiple subscription based components, including our nimble length cloud based device enablement platform and trucking information dashboards.

In addition, we continue to make meaningful progress with a product portfolio design for the transportation sector.

Jacob Suen: Our bi-g connectivity products include lane-turn FWA design to enhance connectivity in homes and offices, lighthouse smart repeater engineer to expand high quality coverage for mobile network operators. And our next generation AC fleet bi-g vehicle gateway evolved to provide wide area cellular and local Wi-Fi connectivity for public safety, transportation, and various vehicle links. We have garnered significant interest across these solutions. For Lighthouse, we are progressing steadily with the previously mentioned international strategic collaboration. Other conducted successful life network trials for in-building service and outdoor coverage solutions. We are working on committed trials with three international mobile network operators and one domestic power company through the end of this year.

Our <unk> connectivity products include lantern FW, a design to enhance connectivity in homes and offices.

Lighthouse smart repeater engineered to explain high quality coverage for mobile network operators.

And our next generation AC fleet by Jeep vehicle Gateway eval to provide wide area cellular and local Wi Fi connectivity for public safety transportation and various vehicle bleach.

We have garner significant interest across these solutions for.

<unk> lighthouse.

We are progressing steadily with the previously mentioned international strategic collaboration.

Having conducted successful life network trials or in building service and outdoor coverage solutions.

We are working on committed trials with three international mobile network operators and one domestic power company towards the end of this year.

Regarding AC fleet, we are working on over 25 customers trials domestically internationally in third quarter.

Jacob Suen: We are working on over 25 customer trials domestically and internationally in third quarter, and we anticipate initial shipments by the end of this quarter.

And we anticipate initial shipments by the end of this quarter.

Jacob Suen: Again, these three product lines represent over $700 million of potential projected serviceable addressable market in 2024. And the $1.7 billion of potential additional same in 2025. Effectively doubling our foundation on same of $1.8 billion for our existing product lines. Our connectivity products are the culmination of several years of investments in shifting air game from exclusively components to full systems. And we believe that we have significant upside in these areas. We ship the Lantern FWA in the second quarter, and we continue to advance our smart FWA technology announced earlier this year. Our focus is on transforming the 5G customer experience by optimizing connectivity and minimizing operators, truck rolls, and customer returns.

Again.

These three product lines represent over $700 million of potential projected serviceable addressable market in 2024, and one $7 billion of potential additional same in 2025.

Effectively doubling our foundational same of one $8 billion for our existing product lines.

Our connectivity products are the culmination of several years of investments in shifting air game from exclusively components to full systems and.

And we believe that we have significant upside in these areas.

We ship the lantern <unk> in second quarter, and we continue to advance our smart SWA technology announced earlier this year.

Our focus is on transforming the <unk> customer experience by optimizing connectivity and minimizing operators truck rolls and customer returns.

Jacob Suen: With that, I'll turn the call over to Michael to discuss our second quarter 2024 financial results and third quarter 2024 outlook in greater detail.

With that I'll turn the call over to Michael to discuss our second quarter 2024 financial results and third quarter 2024 outlook in greater detail Michael.

Michael Elbaz: Michael, thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non-gov figures. Information about the non-gov financial measures, including gap to non-gov reconciliations, can be found in our earnings release.

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 second quarter results.

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.

Michael: Information about the non-GAAP financial measures, including GAAP to non-GAAP reconciliations.

Michael: Can be found in our earnings release.

Michael Elbaz: Now, let's turn to our second quarter results. As Jacob mentioned, Q2 sales were $15.2 million above the $15 million midpoint of the guidance range. Our second quarter sales increased sequentially by $1 million, driven by strong contributions from our consumer markets. While sales increased by 7% sequentially, they were lower by 4% year over year, primarily because we are still addressing an excess inventory environment. Enterprise sales were $8.6 million, reflecting a sequential decrease of $3 million, or 3%. The slight decrease in sales was due to the large shipment of customer products in Q1, which was mostly offset by increases in our embedded modems, asset truckers, enterprise antennas, and first shipments of our lantern FWA products.

Michael Elbaz: The slight decrease in sales was due to the large shipment of custom products in Q1, which was mostly offset by increases in our embedded modems, asset trackers, 130 basis points higher sequentially due to a higher enterprise margin and a favorable market sales mix. On a year-over-year basis, Q2 gross margin was 110 basis points higher as a result of continuous margin improvement in our automotive and enterprise markets. These improvements more than offset the unfavorable year-over-year market sales mix.

Michael: Now, let's turn to our second quarter results.

Michael: As Jacob mentioned Q2 sales were $15 $2 million above the $15 million midpoint of the guidance range.

Michael: Our second quarter sales increased sequentially by $1 million driven by strong contributions from our consumer market.

Speaker Change: While sales increased by 7% sequentially, there were lower by 4% year over year, primarily because we are still addressing an excess inventory environment.

Michael: Enterprise sales were $8 $6 million, reflecting a sequential decrease of $43 million or 3%.

Michael: The slight decrease in sales was due to the lost shipment of costume products in Q1, which was mostly offset by increases in our embedded modems asset truckers.

Enterprise antennas and first shipments of our lantern SWA product.

Michael Elbaz: Consumer sales reached $4.8 million, representing a sequential increase of $1.3 million. This growth was primarily driven by a broad-based market recovery and the ramp-up of Tier One M&O shipments. Additionally, we completed our first shipments of Tier One MSO Y5-7 antennas. Automotive sales were 1.7 million dollars, reflecting a sequential decrease of 1.1 million dollars. Tier 2 gross margin was 41.5%, 130 basis points higher sequentially due to a higher enterprise margin and a favorable market sales mix. On a year-over-year basis, Tier 2 gross margin was 110 basis points higher as a result of continuous margin improvement in our automotive and enterprise markets.

Michael: Consumer sales reach $4 8 billion, representing a sequential increase of $1 $3 million.

Michael: This growth was primarily driven by a broad based market recovery.

Michael: And the ramp up of tier one <unk>.

Michael: <unk> shipments.

Michael: Additionally, we completed our first shipments of tier one EMS, so why five seven antennas.

Michael: Automotive sales were $1 7 million.

Michael: Reflecting a sequential decrease of $1 million.

Michael: Q2, gross margin was 41, 5% 130 basis points higher sequentially due to a higher enterprise margin.

Michael: And a favorable market sales mix.

Michael: On a year over year basis, Q2, gross margin was 110 basis points higher as a result of continuous margin improvement in our automotive and enterprise markets.

Michael Elbaz: These improvements more than upset the unfavorable year-over-year market sales mix. Tier 2 operating expenses totaled 6.9 million dollars, relatively flat sequentially. On a year-over-year basis, Tier 2 expenses increased by 0.3 million dollars. Our first half of 2024 expenses amounted to 13.4 million dollars, reflecting a decrease of 0.4 million dollars, or 3% from our first half of 2023 expenses. Despite the relatively flat year-over-year apex, our GNA and marketing communication expenses declined by approximately 25% year-over-year as we drove process and system efficiencies. Our engineering and sales expenses increased by approximately 20% year-over-year as we focused on the development and launch of our strategic product initiatives.

Michael: These improvements more than offset the unfavorable year over year market sales mix.

Michael Elbaz: Q2 operating expenses totaled $6.9 million, relatively flat sequentially. Our first half of 2024 expenses. Our engineering and sales expenses increased by approximately 20% year-over-year as we focused on the development and launch of our strategic product initiative. Q2 adjusted EBITDA was negative $0.4 million, and non-GAAP EPS was negative 5 cents. Our account receivable balance was $8.6 million, $1 million lower sequentially.

Michael: Q2, operating expenses totaled $6 $9 million Rev.

Michael: Relatively flat sequentially.

Michael: On a year over year basis, Q2 expenses increased by $3 million.

Michael: Our first half of 2020 for expenses.

Michael: Amounted to $13 $4 million, reflecting a decrease of $4 million or 3% from our first half of 2023 expenses.

Michael: Despite the relatively flat year over year, Opex, our G&A and marketing communication expenses declined by approximately 25% year over year.

Michael: As we drove process and system efficiencies.

Michael: Our engineering and sales expenses increased by approximately 20% year over year as we focused on the development and launch of our strategic product initiatives.

Michael Elbaz: Tier 2 adjusted EBDA was negative 0.4 million dollars and non-GAT EPS was negative 5 cents. Our cash balance as of June 30, 2024, was 8.4 million dollars, 1.2 million dollars higher sequentially, resulting from net cash proceeds of 2.5 million dollars, partially offset by negative free cash flows of 1.3 million dollars. Our accounts receivable balance was 8.6 million dollars, 1 million dollars lower sequentially. Net inventory was 3.1 million dollars, which was 1.5 million dollars higher sequentially.

Michael: Q2, adjusted EBITDA was negative zero point $4 million and non-GAAP EPS was negative <unk>.

Michael: Our cash balance as of June 32024 was $8 4 million.

Michael: One $2 million higher sequentially.

Michael: <unk> from net cash proceeds of $2 $5 million from the ATM offering partially offset by negative free cash flows of $1 $3 million.

Michael: Our accounts receivable balance was $8 6 million $1 million lower sequentially.

Michael Elbaz: Net inventory was $3.1 million, which was $0.5 million higher sequentially. Now, moving to our outlook for the third quarter ending September 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 third quarter to be in the range of $15.25 to $16.75 million, or $16 million at the midpoint of the range.

Michael: Net inventory was $3 1 million, which was $5 million higher sequentially.

Michael Elbaz: Now moving to our outlook for the third quarter ending September 30, 2024. As a reminder, we provide quarterly guidances for sales, non-GAT growth margin and expenses, non-GAT EPS and adjusted EBDA as we believe this metrics to be key indicators for the overall. We project sales for the 2024 third quarter to be in the range of 15.25 to 16.75 million dollars, or 16 million dollars at the midpoint of the range. We expect the sequential sales growth of approximately 5% at the midpoint of our guidance range, driven by continued growth in our consumer markets and by the launch of our next generation, Airgain Connect or AC Fleet, by the end of the third quarter.

Michael Elbaz: We expect sequential sales growth of approximately 5% at the midpoint of our guidance range, driven by continued growth in our consumer market and by the launch of our next generation Airgain Connect or AC Fleet at the end of the third quarter. We expect our enterprise sales to be down primarily because of inventory normalization with a lead custom product.

Michael: Now moving to our outlook for the third quarter ending September 32024.

Michael Elbaz: We expect non-GAAP gross margins for the third quarter to be in the range of 41% to 44% or 42.5% at the midpoint of the range. We anticipate the sequential increase in gross margin to be driven by a favorable market-sales mix and Continuous Margin Improvement. We project our operating expenses to be approximately $6.9 million as we continue to focus on the AC Fleet Park launch and Lighthouse customer trials. NOMGAP EPS is expected to be negative one cent at the midpoint of the guidance. Adjusted EBITDA is expected to be break-even at the midpoint of the guidance.

Michael: As a reminder, we provide quarterly guidance is for sales non-GAAP gross margin and.

Michael: 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: We project sales for the 2024.

Michael: Third quarter to be in the range of 15, five to $16 $75 million or $16 million at the midpoint of the range.

Michael: We expect a sequential sales growth of approximately 5% at the midpoint of our guidance range.

Michael: Driven by continued growth in our consumer market.

Michael: And by the launch of our next generation <unk> connect or AC fleet by the end of the third quarter.

Michael Elbaz: We expect our enterprise sales to be down primarily because of inventory normalization with a lead, custom products, customer. We expect non-GAAP gross margins for the third quarter to be in the range of 41% to 44%, or 42.5% at the midpoint of the range. We anticipate the sequential increase in gross margin to be driven by a favorable market sales mix and continuous margin improvements. We project our operating expenses to be approximately 6.9 million dollars as we continue to focus on the AC Fleet Park launch and lighthouse customer trials. Non-god EPS is expected to be negative one cent at the midpoint of the guidance.

Michael: We expect our enterprise sales to be down primarily because of inventory normalization with a lead customer products.

Michael: Customer.

Michael: We expect non-GAAP gross margin for the third quarter to be in the range of 41% to 44% or 42, 5% at the midpoint of the range.

Michael: We anticipate the sequential increase in gross margin to be driven by a favorable market sales mix.

Michael: And continuous margin improvements.

Michael: We project, our operating expenses to be approximately $6 $9 million as we continue to focus on the ACP product launch and lighthouse customer trials.

Michael: non-GAAP EPS is expected to be negative 1% at the midpoint of the guidance.

Michael Elbaz: Adjusted EBDA is expected to be breakeven at the midpoint of the guidance.

Michael: Adjusted EBITDA is expected to be breakeven at the midpoint of the guidance.

Jacob Suen: Now, I would like to turn the microphone back over to Jacob for his closing thoughts.

Jacob Suen: Now, I would like to turn the call back over to Jacob for his closing thoughts. Jacob? Thank you, Michael.

Michael: Now I would like to turn the call back over to Jacob for his closing thoughts checkup. Thanks.

Jacob Suen: Jacob, thanks. Michael.

Jacob: Thanks, Michael.

Jacob Suen: A few closing thoughts before we take questions. First, I am immensely proud of our team's unwavering commitment and tireless dedication to our strategic roadmap initiatives. We are currently developing several groundbreaking products on a stringent timeline. As of today, I can confidently report that we are not only executing on our promises but also maintaining our scheduled milestone. This remarkable achievement is a testament to our team's exceptional dedication and the expertise of our highly effective management team.

Jacob Suen: A few closing thoughts before we take questions. First, I am immensely proud of our team's unwavering commitment and tireless dedication to our strategic roadmap initiatives. We are currently developing several groundbreaking products under stringent timelines. As of today, I can confidently report that we are not only executing on our promises, but also maintaining our scheduled milestones. This remarkable achievement is a testament to our team's exceptional dedication in the expertise of our highly effective management team.

Jacob: A few closing thoughts before we take questions.

Jacob: First I am immensely proud of our team's unwavering commitment and tireless dedication to our strategic roadmap initiatives.

Speaker Change: We are currently developing several groundbreaking products under stringent timelines as.

Michael: As of today.

Speaker Change: <unk> constantly report that but we're not only executing on our promises but also maintaining our scheduled milestones.

Michael: This remarkable achievement is a testament to our team's exceptional dedication and the expertise of our highly effective management team.

Jacob Suen: Second, our outlook on market potential and industry recovery remains optimistic. Despite ongoing challenges in certain product segments, we have achieved significant progress across multiple facets of our business, including product innovation, partnership, expansion, and geographical diversification. We are maintaining our investment in new product launches in bolstering our sales force as part of an assertive growth strategy designed to counter the industry-wide inventory correction. We are confident that our resilience and skillful on navigation of these challenges will yield substantial returns in the coming quarter.

Jacob Suen: Second, our outlook on market potential and industry recovery remains optimistic. Despite ongoing challenges in certain product segments, we have achieved significant progress across multiple facets of our business, including product innovation, Partnership Expansion, and Geographical Diversification.

Michael: Second our outlook on market potential and industry recovery remains optimistic.

Michael: Despite ongoing challenges in certain product segments, we have achieved significant progress across multiple facets of our business.

Jacob: Including product innovation.

Michael: Partnership expansion and geographical diversification.

Jacob Suen: We are maintaining our investment in new product launches and bolstering our sales force as part of an assertive growth strategy designed to counter the industry-wide inventory correction. We are confident that our resilience and skillful navigation of these challenges will yield substantial returns in the coming quarters. Third, our products remain the cornerstone of our value proposition to customers, in light of emerging industry trends, including the transition to Wi-Fi 7, growing demand for asset tracking capabilities, and persistent challenges with 5G coverage.

Michael: We are maintaining our investment in new product launches and bolstering our sales force as Paula and a certain growth strategy designed to counter the industry wide inventory correction.

Michael: We are confident that our resilience and skillful navigation of these challenges will yield substantial returns in the coming quarters.

Jacob Suen: Third, our products remain the cornerstone of our value proposition to customers. In light of emerging industry trends, including the transition to Wi-Fi 7, growing demand for asset tracking capabilities, and persistent challenges in 5G coverage. We are confident that the global connectivity opportunity is not only vast, but expanding. Many regions worldwide represent untapped markets for both our industry and our business. For instance, our next generation SmartWa, AC Fleet, and Lighthouse Smart Repeated Products are designed to address critical connectivity challenges and garner significant interest from major industry players. We believe these innovations distinguish us as the pivotal force in our sector.

Paula: Third of our products remain the cornerstone of our value proposition to customers.

Speaker Change: In light of emerging industry trends.

Speaker Change: Including the transition to Wi Fi seven growing demand for asset tracking capabilities and persistent challenges in <unk> coverage we.

Jacob Suen: We are confident that the global connectivity opportunity is not only vast but expanding. Many regions worldwide represent untapped markets for both our industry and our business. For instance, our next-generation Smart FWA, AC Fleet, and Lighthouse smart repeater products are designed to address critical connectivity challenges and have garnered significant interest from major industry players. We believe these innovations distinguish us as a pivotal force in our sector. Q2 has seen us not only sustain our operational excellence but also make substantial progress on our strategic initiatives.

Michael: We are confident that the global connectivity opportunity is not only vast but expanding.

Speaker Change: Many regions worldwide represent untapped markets for both our industry.

Speaker Change: In our business.

Speaker Change: For instance, our next generation Smart <unk> AC fleet and lighthouse smart repeat of products are designed to address critical connectivity challenges and.

Speaker Change: Garner significant interest from major industry players. We believe these innovations distinguish us as a pivotal force in our sector.

Jacob Suen: Q2 have seen us not only sustain our operational excellence, but also make substantial progress on our strategic initiatives. Our team's performance reinforces our strong confidence in the effectiveness of our global team strategy. We are really optimistic about Airgain School's trajectory and our will position to capture market share.

Speaker Change: Q2 has seen as not only sustain our operational excellence, but also make substantial progress on our strategic initiatives.

Jacob Suen: Our team's performance reinforces our strong confidence in the effectiveness of our forward-looking strategy. We are really optimistic about Airgain's growth trajectory and are well-positioned to capture market share. And with that, operator, please open the call for Q&A.

Speaker Change: Our team's performance reinforces our strong confidence in the effectiveness of our forward looking strategy.

Speaker Change: We are very optimistic about <unk> growth trajectory and are well positioned to capture market share and with that operator. Please open the call for Q&A.

Jacob Suen: And with that, up later, please open the call for Q&A. Thank you.

Speaker Change: Thank you.

Operator: We will now take questions from Airgain Cellside analysts. To ask your question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys.

Operator: We will now take questions from Airgain Southside analysts. To ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the start key. And our first question comes from the line of Anthony Stoss with Craig Hallam. Please proceed.

Speaker Change: We will now take questions from Aratana and sell side analysts.

Speaker Change: To ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two to remove your question to remove your question from the queue.

Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Anthony Stoss: And our first question comes from a line of Anthony Stoss with Craig Hallam.

Speaker Change: And our first question comes from the line of Anthony Stoss with Craig Hallum. Please proceed.

Anthony Stoss: Please proceed. Hi guys, good afternoon and a nice execution both for the corner and the guide. Thank you, Tony.

Anthony Stoss: Hi guys, good afternoon and a nice execution both for the Corps and the Guide.

Anthony Stoss: Hi, guys, good afternoon, and nice execution, both for the quarter and the guide.

Jacob Suen: Thank you. Thank you, Tony.

Speaker Change: Thank you thank you Tony.

Jacob Suen: The Jacob, I want to start with your comments about, I believe you said, as a European design win with four-year antennas that should be shipping late this year. Can you maybe describe the opportunity and kind of the nature of this customer if there's other customers that you can attack quickly than I'd a couple of follow-ups? Yeah, sure. Yeah, so this is a design that we actually work with our partner in the OEM out of Taiwan for the last, I would say, year plus. It's actually one of the major, I would say, you know, Korea in the US space, and they, you know, they are in compasses, not only the German, Germany market, but other markets as well in Europe.

Jacob Suen: Jacob, I wanted to start with your comments about, I believe you said it was a European design win with four-year antennas that should be shipping late this year. Can you maybe describe the opportunity and the kind of nature of this customer? If there's other customers that you can attack quickly, then I had a couple.

Speaker Change: Jacob I wanted to start with your comments about I believe you said is the European design win for your antennas.

Speaker Change: Can be shipping late this year can you maybe describe the opportunity in and kind of the nature of this customer or if there's other customers that you can attack quickly then I had a.

Speaker Change: A couple.

Jacob Suen: Yeah, sure. Yeah, so this is a design that we actually have worked on with our partner in another OEM out of Taiwan for the last, I would say, year plus. It's actually one of the major, I would say, you know, carriers in the U.S. space. And they, you know, they are in compasses not only the German German market but other markets as well in Europe. And this is a, you know, it'

Speaker Change: Yeah sure Yeah. So this is a design that we actually work with our partner and other OEM all of Taiwan for the last I would say a year plus.

Speaker Change: It's actually one of the major.

Speaker Change: I would say carrier in the U S space.

Speaker Change: And they you know they are.

Speaker Change: Encompasses not only the German.

Speaker Change: Germany market, but other markets as well in Europe.

Jacob Suen: And this is a gateway. We actually, this is more of our traditional business where we actually do the design with the Y570 for this particular fiber gateway. And the expectation is that they're going to be beginning shipping by the end of this year for the next two to three years. And, you know, the volume will be, you know, I would say anywhere about one to two million devices per year.

Jacob Suen: We actually, this is more of our traditional business where we actually do the design with the Wi-Fi 7 for this particular fiber gateway. And the expectation is they're going to begin shipping by the end of this year for the next two to three years. And, you know, the volume will be, you know, I would say anywhere about one to two million devices per year.

Speaker Change: This is a it's a it's a gateway.

Speaker Change: Actually this is more of our traditional business, where we actually do the design.

Speaker Change: With the Wi Fi seven for these particular fiber gateway.

Speaker Change: And the expectation is that going to they're going to be begin shipping by the end of this year.

Speaker Change: For the next two to three years.

Speaker Change: And the volume will be.

Speaker Change: Say anywhere about one to 2 million devices per year.

Jacob Suen: And then another one for you, Jacob, before I move to Michael. Do you think that there's... You know, the inventory in the channel is kind of depleted, and what do you see in terms of design traction and kind of growth rates? Seems like that's back to growing pretty quickly again.

Jacob Suen: Thanks, and then another one for you, Jacob, before we move to Michael. Your acid trackers have been really strong, which is nice to see. Do you think that there's, you know, the inventory in the channels kind of depleted, and what do you see in terms of design traction and kind of growth rates? Seems like that's back growing pretty quickly again? Yeah, it's actually Acid Tracker in relating to our overall IOT business. You know, it's an area of focus; you know, we actually are coming up with several new products focusing on the acid tracking customers. Specifically, we talked about the real car customers we want, and we're actually winning a winning design with these particular customers.

Speaker Change: Got it thanks, and then another one for you Jacob before I move to Michael Youre asset trackers have been really strong which is nice to see.

Michael: Do you think that there is.

Michael: The inventory in the channel is kind of depleted and what do you see in terms of the design traction and kind of growth rates seems like thats back growing pretty pretty quickly again.

Jacob Suen: Yeah, it's actually an asset tracker relating to our overall IoT business. You know, it's an area of focus.

Jacob: Yes, actually asset trucker in relating to our overall Iot business you know, it's a it's an area of focus and how we actually are coming out with the <unk>.

Jacob Suen: You know, we're actually coming up with several new products focusing on asset tracking customers. Specifically, we talk about the real customers we want, and we're actually winning winning new designs with these particular customers. And, you know, we're working on even longer-term contracts with these particular customers. In addition, we're also exploring opportunities in some of the flight applications, which I hope to be able to provide more color in the coming weeks. Last but not least, we're also working on some strategic logistics customer partnerships, and we feel strongly about the asset tracking system being, you know, a pivotal part of our future growth business.

Speaker Change: Several new products focusing on the asset trucking customers, specifically, we talked about the railcar customers, we won and we're actually winning.

Speaker Change: Winning designs with these particular customers and we are working on even longer term.

Jacob Suen: And you know, they're working on even longer-term contracts with these particular customers. In addition, we're also engaging some opportunities in some of the flight applications, which I hope to be able to provide more color in the coming weeks. Last but not least, we're also working on some of the strategic logistics customers' partnerships, and we feel strongly about the acid tracking system being, you know, a pivotal part of our future of both business. Got it. Perfect. Thanks for the color, then.

Speaker Change: Concepts with these particular customers.

Speaker Change: In addition, we're also engaging some opportunities in some of the applications, which I hope too.

Speaker Change: Be able to provide more color in the coming weeks.

Speaker Change: Last but not least we're also working on some of those strategic logistics customers partnerships.

Speaker Change: And we feel strongly about.

Speaker Change: Asset tracking system being pivotal.

Speaker Change: Part of our future growth business.

Anthony Stoss: Got it. Perfect. Thanks for the color.

Speaker Change: Got it perfect. Thanks for the color then.

Anthony Stoss: Just two quick ones from Michael, then I'll jump back and cue. I'd love to hear your thoughts on gross margins kind of longer term if we're now set to continue to move higher kind of each and every quarter. And then I know you've, you're only got it for the September quarter, but I'd love to hear your thoughts kind of on seasonally for the December quarter if you think December is up sequentially, flat down from from September. Thank you, Tony. So gross margin has been a continuous focus for us for the past year and a half.

Michael Elbaz: Then just two quick ones for Michael, then I'll jump back in queue. I'd love to hear your thoughts on gross margins kind of over the longer term, if we're now set to continue to move higher kind of each and every quarter. And then I know you're only guiding for the September quarter, but I'd love to hear your thoughts kind of on seasonality for the December quarter, if you think December is up sequentially flat from September.

Speaker Change: Sure, Michael and then I'll jump back in queue.

Speaker Change: Love to hear your thoughts on gross margins kind of longer term. If we're now set to continue to move higher each and every quarter.

Speaker Change: I know you're only guiding for the September quarter, but would love your thoughts kind of on seasonality for the December quarter. Do you think December is up sequentially flat down from September.

Speaker Change: Yeah.

Michael Elbaz: Thank you, Tony. Gross margin has been a continuous focus for us for the past year and a half. We haven't seen the result of all the efforts up until now, which is actually coinciding with the dissipation of some of the excess inventory that the industry still faces. But overall, just to give you some color on that and just on some of those broad changes taking place, we certainly have introduced some high-performance antenna products and also some asset tracker products that are premium and, therefore, garnering a better-than-average gross margin.

Speaker Change: Thank you Tony So gross margin has been a continuous focus for us for the past year and a half.

Michael Elbaz: We haven't seen the result of all the efforts up until now, which is actually coinciding with the dissipation of some of the excess inventory that the industry still faces. But overall, just to give you some color on that and just on some of those broad changes taking place, we certainly, over the past year, have introduced some high performance antenna products and also some of the track of products that are premium. And so they're for garnering better-than-average gross margin. We certainly want to continue with the product portfolio expansion on new products that are really focused on premium or high performance.

Speaker Change: We haven't seen the results of all the efforts up until now which is actually coinciding with the anticipation of some of the excess inventory.

Speaker Change: That the industry still faces but.

Speaker Change: Overall, just to give you some color on that just on some of those.

Speaker Change: Broad.

Speaker Change: Changes taking place, but we certainly over the past year have introduced some high performance antenna products and also some asset chocolate products that are premium and so therefore, garnering better than average gross margin. We certainly want to continue with the product portfolio expansion.

Michael Elbaz: We certainly want to continue with the product portfolio expansion on new products that are really focused on premium or high performance. We also have a continuous focus on product cost reductions and margin improvement, and we have done so over the past few quarters. And then finally, this leverage of the CM model that we have talked about is definitely very helpful now that the excess inventor in the channel has dissipated. And then, in addition to that, would be the launch of the product initiative, which we expect to have a higher gross margin.

Speaker Change: On new products that are really focused on premium or high performance.

Michael Elbaz: We also have a continuous focus on product cost reductions and margin improvement. And we have done so over the past three quarters. And then finally, this leverage of the CM model that we have talked about is definitely very helpful now that the excess inventory in the channel has dissipated. And then, in addition to that, would be the launch of the product initiative, which we expect to be higher gross margin. That overall, so far, has been able to offset some of the price pressure that we have seen because of the excess inventory force right now.

Speaker Change: We also have a continuous focus on product cost reductions and margin improvement and we have done so over the past.

Speaker Change: A few quarters and then finally this leverage of the model that we have talked about is definitely very helpful. Now that the excess inventory in the channel has dissipated and then in addition to that would be the launch of the product initiative, which we expect to be higher gross margin that overall so far.

Michael Elbaz: That, overall, has been able to offset some of the price pressure that we have seen because of the excess inventory force right now. So overall, I would say this is a key focus for us, and we expect to see some margin improvement in future quarters.

Speaker Change: Has been able to offset some of the price pressure that we've seen because of the excess inventory.

Speaker Change: For US right now so overall I would say.

Anthony Stoss: So overall, I would say this is a key focus on for us, and we expect to see some margin improvement in future. Just your thoughts on December seasonality or up-down sequential flat, is there any initial thoughts? December, I believe that the AC fleet is going to be a key determinant in terms of the direction of our overall growth altogether. And so right now we're just focused on the full execution and the customer trials that we are undertaking right now. Okay, very good.

Speaker Change: This is a key focus for.

Speaker Change: For us and we expect to see some margin improvement in future quarters.

Anthony Stoss: Just your thoughts on December, seasonality, or up, down, sequential, or flat?

Speaker Change: Just your thoughts on December seasonality or.

Speaker Change: Down sequential flat.

Speaker Change: Sure.

Michael Elbaz: December I believe that the AC fleet is going to be a key determinant in terms of the direction of our overall growth altogether, and so right now, we just focus on the full execution and the customer trials that we are undertaking right now. Okay, great.

Speaker Change: December I believe that the the AC fleet is going to be a key determinant in terms of.

Speaker Change: The direction of our overall growth altogether and so right now we're just focused on the full execution and and the customer trials that we are undertaking right now.

Anthony Stoss: Okay, very good. Thanks, guys. Thank you, Tony.

Speaker Change: Okay very good thanks, guys.

Operator: Thanks, guys.

Timothy Savageaux: Thank you, Tony. As a reminder, to ask a question, please press star one on your telephone keypad. And the next question will come from the line of Tim Savageaux with Northland Capital Markets. Please proceed.

Speaker Change: Thank you Tony.

Operator: As a reminder, to ask a question, please press star 1 on your telephone keypad. And the next question will come from the line of Tim Savageaux with Northland Capital Markets. Please proceed.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone keypad.

Speaker Change: And the next question will come from the line of Tim Salvager with Northland Capital markets. Please proceed.

Timothy Savageaux: Hey, good afternoon, and congrats on the results and the outlook as well. I want to kind of continue with that thinking about heading into your hands on the consumer side you talked about. And Jigabo wasn't clear whether with the cable MSO design ones, you expect to be positively impacting Q3 or whether they're really kicking in yet. And of course, you mentioned a couple of others as well. So obviously expect consumer to grow in Q3. Looks like pretty decently given the gross margin guide as seen that's mixed effectant. It seems like there's, you know, whether it's seasonality or ramping design ones, you know, a decent reason to believe that consumer strength continues into Q4.

Timothy Savageaux: Hey, good afternoon, and congratulations on the results and the outlook as well. I want to kind of continue with that, thinking about, you know, heading into year end, on the consumer side, you talked about. And Jacob, I wasn't clear whether or not

Tim Salvager: Hey, good afternoon.

Speaker Change: And congrats on the.

Speaker Change: The results and the outlook as well.

Speaker Change: I want to kind of continue with that.

Speaker Change: Thinking about heading into year end.

Speaker Change: On the consumer side.

Speaker Change: You talked about.

Speaker Change: And Jacob I wasn't clear whether.

Timothy Savageaux: The cable MSO design wins, do you expect to be positively impacting Q3 or whether they're really kicking in yet? And, of course, you mentioned a couple of others as well. So, you know, obviously expect consumer growth in Q3, looks like, you know, pretty decently, given the gross margin guide, I assume that's a mixed effect. It seems like there's, you know, whether it's seasonality or ramping design wins, you know, and a decent reason to believe that consumer strength continues into Q4. I don't know if that's independent of AC Fleet, but I just want to kind of bounce that scenario off you guys, and see you again.

Speaker Change: It was the cable Msos design wins, you expect to be positively impacting Q3 or whether there.

Speaker Change: Really kicking in yet.

Speaker Change: Of course, you mentioned.

Speaker Change: Couple of others as well.

Speaker Change: So obviously, we expect consumer to grow in Q3, it looks like pretty decently.

Speaker Change: Given the gross margin guide I assume thats mix affected.

Speaker Change: It seems like there is.

Speaker Change: Whether it's seasonality or ramping design wins.

Speaker Change: A decent reason to believe that consumer strength continues into Q4.

Michael Elbaz: I don't know if that's independent of AC fleet, but I just want to kind of bounce that scenario off you guys and see what you think.

Speaker Change: That's independent of AC fleet could I, just one of them.

Speaker Change: Kind of bounce that scenario off to you guys.

Speaker Change: And see what you think.

Michael Elbaz: Hi Tim, this is Michael. So the tier one MSO design window we announced and got the PO that we announced also last quarter. That we started shipment in Q2 and we're seeing a stronger ramp in Q3, and we're hoping and we expect that the ramp will continue on into Q4 as well to other tier one MSOs. Maybe delayed on the Wi-Fi 7 deployments. So we may expect that to be taking place at the end of the year. But the other part that fueling some of that growth on the consumer market is really the MNO Tier One design window we announced last November.

Michael Elbaz: Hi Tim, this is Michael.

Speaker Change: Hi, Tim This is Michael.

Speaker Change: The tier one <unk> design win that we announced and got the Po.

Michael Elbaz: So the Tier 1 MSO design window that we announced and got the PO that we announced also last quarter, that we started shipment in Q2, and we're seeing a strong ramp in Q3. And we're hoping, and we expect that that ramp will continue on into Q4 as well, too. Other Tier 1 MSOs may be delayed in their Wi-Fi 7 deployments, so we may expect that to be taking place at the end of the year.

Speaker Change: That we announced last quarter.

Speaker Change: That we started a shipment in Q2, and we're seeing a strong ramp in Q3, and we're hoping and we expect that that ramp will continue on into Q4 as well too.

Speaker Change: Other tier one msos.

Speaker Change: May be delayed on the Wi Fi seven deployments. So we may expect that to be taking place at the end of the year.

Michael Elbaz: But the other part that's fueling some of that growth in the consumer market is really the M&O Tier 1 design win that we announced last November. That one continues to ramp up in shipment itself. So right now, we certainly are optimistic about Q3 and optimistic that the trend will hopefully continue on into Q4 as well.

Speaker Change: But the other part that is fueling some of that growth on the consumer market is really the <unk> tier one design win that we announced last November.

Michael Elbaz: That one continues to also ramp in the shipment itself. So right now we certainly are optimistic about Q3 and optimistic that the trend hopefully will continue on into Q4 as well to.

Speaker Change: That one continues to also ramp in the shipment itself. So right now we're certainly are optimistic by Q3 and optimistic that the trend hopefully will continue on into Q4 as well.

Timothy Savageaux: Great and kind of following up on that, you talked about some inventory on the custom product side and enterprise. I don't know if there's a timeframe and also some offsetting drivers across the rest of the product line. Is there a timeframe that you expect that to clear? Would you expect that to persist again through the end of the year to kind of keep a lid on enterprise growth? from until next year.

Timothy Savageaux: And kind of following up on that, you talked about some inventory on the custom product side and enterprise. I don't know if there's a time frame, and you know, there are some offsetting drivers across the rest of the product line. Is there a time frame that you expect that to clear? Would you expect that to persist again through the end of the year to kind of keep a lid on enterprise growth until next year? Yeah, that one is, yeah, sorry.

Speaker Change: Great and kind of following up on that when you talked about some inventory on the custom product side and the enterprise.

Speaker Change: I don't know if there's a timeframe and also some offsetting drivers across the rest of the.

Speaker Change: The rest of the product line is there a timeframe do you expect that to clear.

Speaker Change: Expect that to persist again through the end of the year to kind of keep a lid on.

Speaker Change: Enterprise growth for them.

Speaker Change: Until next year.

Michael Elbaz: Yeah, that one is... Sorry, go ahead, Tim.

Speaker Change: Yes that one is yes.

Michael Elbaz: Sorry, go ahead, Tim. Go ahead. No, it's just going to say, you know, would you expect that to persist for a few quarters or clear any earlier? Yes, I think this is a great question because the broad demand softness that we've seen last year has become much more product and customer specific. And this is one of those. This is something that we have learned in the beginning of the year. And we are monitoring very closely with our strategic customer on their excess inventory levels. And we don't have a time frame as of yet as to when it will be clearing.

Tim Salvager: Sorry go ahead Tim.

Tim Salvager: Tim go ahead.

Timothy Savageaux: No, I was just going to say, would you expect that to persist for a few quarters or to clear any earlier?

Tim Salvager: No I was just going to say.

Speaker Change: Would you expect that to persist for a few quarters or clearer than a year earlier.

Michael Elbaz: Yes, and I think this is a great question because the broad demand softness that we saw last year has become much more product and customer specific, and this is one of those. This is something that we learned at the beginning of the year, and we are monitoring very closely with our strategic customers on their excess inventory levels. And we don't have a timeframe as of yet as to when it will be clearing, but this is certainly something that we are watching very carefully.

Speaker Change: Yes, I think this is a great question because this the breadth of the broad demand softness that we've seen last year has become much more product is customer specific and this is one of those.

Speaker Change: This is something that we have learned in the beginning of the year and we are monitoring very closely with our strategic customer on their excess inventory levels and we don't have a timeframe as of yet.

Speaker Change: Two when it will be clearing.

Michael Elbaz: But this is certainly something that we are watching very carefully. But the overall excess inventory, as I mentioned before, is becoming much more customer specific. And we're expecting that to be clearing over time. And there is no reason to believe that that would be an overall persistent headwind for us. So this is more of a timing at this point.

Speaker Change: But this is certainly something that we're watching very carefully but the overall excess inventory as I mentioned before is becoming much more customer specific and we expect that to be clear any overtime and.

Michael Elbaz: But the overall excess inventory, as I mentioned before, is becoming much more customer specific, and we expect that to be clearing over time, and there is no reason to believe that that will be an overall persistent headwind for us. So this is more of a timing issue at this point in time.

Speaker Change: There is no reason to believe that.

Speaker Change: That will be overall, a persistent headwinds for us. So this is more of a timing at this point yet.

Timothy Savageaux: Okay, great. And then maybe last question for me, a little higher level, sort of like the way you frame the kind of 5G connectivity or coverage sort of portfolio across Lantern Lighthouse and AC Fleet.

Michael Elbaz: Okay, great. And then maybe last question for me at a little higher level, sort of like the way you framed it and a 5G connectivity or coverage sort of portfolio across Lantern Lighthouse and ABC Fleet.

Speaker Change: Okay, Great and then maybe last question for me, a little higher level sort of like the way you framed the.

Speaker Change: And our <unk> connectivity or coverage sort of portfolio across.

Speaker Change: Well answering lighthouse.

Speaker Change: <unk>.

Timothy Savageaux: I mean, as you look at the opportunities heading into 25, you know, at this point, are you ready to talk in any way about, you know, what kind of, I guess, incremental revenue contribution if you look at that portfolio that you're targeting or would be happy with or disappointed by, I guess, as you look into 25, or any sense of the size of the pipeline?

Jacob Suen: I mean, as you look at the opportunity, heading into 25, you know, at this point, you know, are you ready to talk in any way about, you know, what kind of, I guess, incremental revenue contribution if you look at that portfolio, that you're targeting or would be happy with or disappointed by, yes, as you look into 25 or any sense of the size of the pipeline. Yeah, great, great questions, Tim.

Speaker Change: I mean as you look at the opportunities heading into 'twenty five.

Speaker Change: At this point.

Speaker Change: Are you ready to talk in any way about.

Speaker Change: What kind of I guess incremental revenue contribution if you look at that portfolio.

Speaker Change: You're targeting or would be happy with her.

Speaker Change: Disappointed by yes as.

Speaker Change: As you look into 'twenty five.

Speaker Change: Any sense of the size of the pipeline.

Jacob Suen: Yeah, great questions, Tim. I'll talk about the business, and I'll let Michael take the harder questions about revenue projection because we typically don't guide. But certainly, from a business perspective, we are very optimistic about the major initiatives. As I indicated earlier, you know, we have been executing according to schedule. The Lantern FWA was successfully launched in the second quarter. And the AC Fleet, which is a phenomenal product, highly differentiated, you know, all-in-one gateway. It's due to go out by the end of September.

Speaker Change: Yes, great great questions, Tim I'll talk about the business and I'll let.

Jacob Suen: I'll talk about the business, and I'll let Michael pick the other questions about revenue projection because we typically don't guide. But certainly, from a business perspective, we are really optimistic about the major initiatives. As I indicated earlier, you know, we have been executing according to schedule. The Lantern FWA was successfully launched in the second quarter. And AC Fleet, which is a phenomenal product, highly differentiated, you know, only in one gateway. It's due to go out by the end of September. We actually have trials ongoing. And the initial feedback has been, you know, phenomenal. You know, some of the feedback we got is really easy to install.

Speaker Change: Michael I'll take the other questions about revenue projections, because we typically don't guide that certainly from a business perspective, we are very optimistic about the major initiatives as I indicated earlier, we have been executing according to schedule.

Michael: Lantern SWA was successfully launched in second quarter.

Speaker Change: And the AC fleet, which is a phenomenal product highly differentiated in our all in one gateway.

Speaker Change: It's due to go out.

Jacob Suen: We actually have trials ongoing, and the initial feedback has been, you know, phenomenal. You know, some of the feedback we got was very easy to install.

Speaker Change: By the end of September we actually have trials ongoing in the initial feedback has been.

Speaker Change: Phenomenal some of the feedback we got is very easy to install and this is one of the major differentiation in the performance is so much better than otherwise.

Jacob Suen: And this is one of the major differentiations. And the performance is so much better than otherwise. So all, you know, we're already getting a lot of feedback. And we anticipate to have 25 plus customers up and running on the trial in the next week or so. So thanks for moving along quite well. And we do see the egg and connect or call AC Fleet being the main driver as we enter into Q4 in 2025 in particular. This is the one we're focusing on both Thrac and Interact. Interact are going to the vast channels, tackling mostly public safety customers.

Jacob Suen: And this is one of the major differentiations. And the performance is so much better than otherwise. So all in all, we're already getting a lot of feedback, and we anticipate we'll have 25 or so customers up and running on the trial in the next week or so. So things are moving along quite well, and we do see Airgain Connect, or called AC Fleet, being the main driver as we enter into Q4 2025 in particular. This is the one we're focusing on both direct and indirect. Indirect is going to the VAS, the channels, targeting mostly public safety customers. And the direct result are the private and public fleets.

Speaker Change: So all in all we're getting already getting a lot of feedback.

Speaker Change: We anticipate we'll have 25 plus customers.

Speaker Change: Up and running on the trial in the next week or so so things are moving along quite well and we do see the Aegean connect local AC fleet being the main driver as we enter into Q4 in 2025 in particular this is the one we're focusing on both direct and indirect in <unk>.

Speaker Change: Ill go into the vast the channels targeting mostly public safety customers and the direct the other.

Jacob Suen: And the Thrac are the private, private and public fleets. And we are really engaging in both avenues.

Speaker Change: Private and public fleets.

Jacob Suen: And we are really engaging in both avenues. And then the lighthouse, also really pleased, you know, the trial we have done. I mentioned to you last quarter about a live networking trial with lighthouse. It was done, and completed in the second quarter.

Speaker Change: Sure.

Speaker Change: Engaging in both avenues and then the lighthouse also very pleased.

Jacob Suen: And then the lighthouse also really pleased. You know, the trial we have found mentioned to you last quarter about a live networking trial with Lighthouse. It was found completed in the second quarter. And also went really well. The the in building service testing were able to achieve almost 25 times the performance over the existing on the downlink and about 8 to 10 times the performance improvement over the app length. We're also testing an outdoor device where the base station, you know, the way we would achieve before we were able to improve another 30 to 50 percent range.

Speaker Change: The trial, we have Tom mentioned to you last quarter about a light networking trial with lighthouse it was down.

Speaker Change: <unk> in second quarter.

Jacob Suen: And also went very well. In the in-building service testing, we were able to achieve almost 25 times the performance over the existing on the downlink, and about 8 to 10 times the performance improvement over the uplink. We're also testing an outboard device, where the base station, the way we were able to achieve before, we were able to improve another 30% to 50% of the range. So we were able to expand the range of the cell edge by another 30% to 50%. So I think that was really successful. The customers were really pleased to see the results.

Speaker Change: So went very well.

Speaker Change: The in building service testing, we're able to achieve almost 25 25 times the performance over the existing on the downlink and about eight to 10 times the performance improvement over the uplift. We're also testing a outflow.

Speaker Change: Device, whereas.

Speaker Change: The base station.

Speaker Change: With achieved before were able to improve another 30% to 50% range. So were able to extend the range of the cell the cell edge by another 30% to 50%. So it was like I think that was really successful customers I was very pleased to see those results.

Jacob Suen: So we were able to explain in the range of the sales the sale edge by another 30 to 50 percent. So it was I think I was really successful. The customers were really pleased to see those results. And you know, we'll see with them on the, you know, the next engagement topic, which is commercialization. So, you know, we are optimistic about where we're heading into 2025. And you know, even 2024, Q4.

Jacob Suen: And we'll proceed with them on the next engagement topic, which is commercialization. So all in all, we are optimistic about where we're heading into 2025 and even 2024 Q4. And I'll let Michael answer some of the potential revenue projections. OK. So, Tim, overall, I would say we are very optimistic about where we are.

Speaker Change: Our policy with them on the.

Speaker Change: Next <unk>.

Speaker Change: Engagement topic, which is commercialization. So all in all we are optimistic about where we're heading into 2025 and even 2020 for Q4 and I'll, let Michael answer about some of the potential revenue projections.

Michael Elbaz: And I'll let Michael answer about some of the potential revenue projections. Fair. So Tim, the overall I would say we are very optimistic about the traction that we're at in right now. I don't know if I'm a product execution cellphone, but also the customer trial. There is definitely a loan sales cycle, especially when we are looking for easy fleet in terms of strategic partnership with direct customer that will take some time, especially because of the overall budget windows that some of those larger customers have. And likewise, in Lighthouse, we're talking about infrastructure type of a product that is definitely getting into a loan sell cycle, but we are very encouraged by all the trials taking place at this point.

Michael Elbaz: So, Tim, overall, I would say we are very optimistic about the traction that we are in right now, not only from a product execution standpoint, but also from a customer trial. There is definitely a long sales cycle, especially when we are looking for AC Fleet in terms of a strategic partnership with direct customers. That will take some time, especially because of the overall budget windows that some of those larger customers have. And likewise, in Lighthouse, we're talking about an infrastructure-type product that is definitely getting into a long sales cycle, but we are very encouraged by all the trials taking place at this point.

Tim Salvager: So Tim.

Michael: Overall, I think I would say we are very optimistic about.

Michael: The traction that we're in right now are not only from a product execution standpoint, but also the customer trial.

Michael: There is definitely a long sales cycle specialty what we're looking for AC fleet in terms of our strategic partnership with direct customer that will take some time, especially because of the overall budget windows that some of those larger customers have a.

Michael: Likewise in lighthouse, we're talking about an infrastructure type of a product that is definitely getting into a long sell cycle, but we are very encouraged by all the trials taking place at this point.

Michael Elbaz: As Jack Jacob mentioned, we do believe at this point that the AC fleet will be the primary driver from all those product initiatives. Simply because Lighthouse will take some more time from the sales cycle. And lantern is more of a very premium niche stuff of the market designed for premium enterprise and residential customers that require extended coverage and performance. However, in terms of next year and the top process for next year, is that if we are looking to be relatively flat to single-digit growth on our existing business, to get to the higher growth that we all are buying for, the launch of those products is going to be very key for us.

Michael Elbaz: As Jacob mentioned, we do believe at this point that the AC Fleet will be the primary driver of all those product initiatives, simply because Lighthouse will take some more time from the sales cycle. And Lantern is more of a very premium niche type of market designed for premium enterprise and residential customers that require extended coverage and performance. However, in terms of next year and the thought process for next year, if we are looking to be relatively flat to single-digit growth on our existing business to get to the higher growth that we all are vying for, the launch of those products is going to be very key for us. And so, at this point, I would say we're optimistic.

Michael: Jacob mentioned, we do believe at this point that the AC fleet will be the primary driver from all those product initiatives are simply because lighthouse is will take some more time from a sales cycle and lend turn is more of a <unk>.

Jacob: Very premium niche type of a market as designed for premium enterprise and residential.

Jacob: Customers that require extended coverage and performance.

Speaker Change: However in terms of next year and the thought process for next year is that if we are looking to be relatively flat to single digit growth on our existing business to get to the higher growth that we all are buying for the launch of the product is going to be very key for us and so as this.

Timothy Savageaux: And so at this point, I would say we're optimistic. Thank you very much.

Michael: What I would say we're optimistic.

Michael: Thanks very much.

Operator: Thank you, Tim. Thank you.

Tim Salvager: Thank you Tim.

Tim Salvager: Yes.

Tim Salvager: Thank you.

Operator: At this time, this will conclude our question-and-answer session.

Operator: At this time, this will conclude our question and answer session. If your question was not answered, you may contact Airgain's investor relations team at 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 will conclude our question and answer session. If your question was not taken you may contact air gains Investor Relations team at.

Operator: If your question was not taken, you may contact Airgain's investor relations team at AIRG at Gateway-GRP.com.

Tim Salvager: I RG at.

Tim Salvager: Wei hyphen G R P dot com.

Operator: I now like to turn the call back over to Mr. Swain for his closing remarks. We sincerely appreciate your participation in today's call. I would like to extend special recognition to our exceptional employees for their tireless efforts and invaluable contributions. Equally, we are grateful to our investors for their steadfast support and trust in our vision. We eagerly anticipate sharing further updates with you at our next opportunity.

Speaker Change: I'd now like to turn the call back over to Mr. <unk> for his closing remarks.

Jacob Suen: We sincerely appreciate your participation in today's call. I would like to extend special recognition to our exceptional employees for their tireless efforts and invaluable contributions. Equally, we are grateful to our investors for their steadfast support and trust in our vision. We eagerly anticipate sharing further updates with you at our next opportunity. Operator, we can now conclude the call. Thank you for joining us today.

Speaker Change: We sincerely appreciate your participation in today's call.

Mr. <unk>: I would like to extend special recognition to our exceptional employees for their tireless efforts and invaluable contributions equally we are grateful to our investors for their steadfast support and trust in our vision, we eagerly anticipate sharing further updates.

Speaker Change: With you at our next opportunity operator, we can now conclude the call.

Operator: Upgrader, we can now conclude the call. Thank you for joining us today for Airgain's second quarter 2024 earnings call.

Operator: Thank you for joining us today for Airgain's second quarter 2024 earnings call. You may now disconnect.

Speaker Change: Thank you for joining us today for <unk> second quarter 2024 earnings call you may now disconnect.

Operator: You may now disconnect.

Speaker Change:

Speaker Change: Hum.

Speaker Change:

Speaker Change: Hum.

Michael:

Michael: Sure.

Michael: Hum.

Michael: Hum.

Operator: We would do anything for a little comparison.

Michael: Hum.

Michael: Hum.

Michael: Hmm.