Q3 2024 Airgain Inc Earnings Call
Good afternoon, welcome to air gains third quarter 'twenty 'twenty four earnings Conference call. My name is Sherry and I will be your operator for today's call joining us today are <unk>, president and CEO Jacob.
And CFO, Michael I'll pass.
As a reminder, this call is being recorded and will be made available for replay via a link found in the Investor Relations section of the air cans website at investors that are gating dotcom. Following management's prepared remarks, the call will be open for questions from Eric games covering analysts.
Question listeners that during the call are gains management will be making forward looking statements about future events as well as air gains 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 uncertainty.
He is associated with the company's business. These forward looking statements are qualified by the Questionary statements contained in today's earnings release, and Erik Higgins S. E C filings.
This conference call contains time sensitive information that is accurate only as of the date of this live broadcast November 12, 2020 for Erik Keener undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this conference call.
In addition, this conference call will include a discussion of non-GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of GAAP to non-GAAP results now I would like to turn the call over to Eric change C E O Jacob Schoen Jacob.
Eric Change: Thank you operator.
Good afternoon, everyone and thank you for joining us today.
Eric Change: I'll begin with a brief overview of the company and all of our quarterly performance before handing the call over to our CFO Michael <unk>.
Michael: Who will walk you through our financials and Q4 outlook.
Michael: I will then return for closing thoughts before we open the floor for questions.
Speaker Change: Before we dive into our quarterly results.
I would like to introduce their game to any investors and analysts who may be less familiar with us and their game, we simplify wireless connectivity across the entire value chain.
Speaker Change: Product design and carrier certification to integrate it connectivity solutions.
Speaker Change: Our mission is still make wireless straightforward.
Speaker Change: We're adding connectivity solutions that are easy to understand deploy maintain and integrate.
Speaker Change: Ultimately enhancing the experience with our partners and customers.
Speaker Change: With over 20 years of experience in custom cellular and antenna design.
Speaker Change: We have developed a robust product portfolio ranging from embedded modems, and then peanuts to comprehensive systems, while Asa trucking fixed wireless access.
Speaker Change: Vehicle networking and smart network the Peter solutions.
Speaker Change: Today, we are a global leader in wireless connectivity solutions.
Speaker Change: Serving consumer automotive and enterprise markets worldwide.
Demand for connectivity is surging and we are confident that our expanding addressable market and commitment to innovation will feel sustainable long term growth.
Speaker Change: With emerging technologies, we are well positioned to address the market's evolving needs the industry, leading wireless solutions.
Speaker Change: Turning to our Q3 performance, we achieved strong sequential revenue growth despite continued macroeconomic challenges.
Speaker Change: Which well less severe than last year remain a factor.
Speaker Change: We didn't report it shows of $16 $1 million, a 6% increase over second quarter.
Speaker Change: Which slightly exceeded the midpoint of our guidance range.
Speaker Change: This growth was largely driven by robust sales in consumer embedded antennas and the successful launch of our it can connect to sleep well automotive applications.
Despite softer sales in our enterprise market this quarter.
Speaker Change: We also saw an uptick in sales of our Wi Fi seven wells or antenna systems to a tier one M. S O partner.
Speaker Change: As well as the initial sales of our interconnect lead by G vehicle Gateway.
Speaker Change: I am pleased to share the AC fleet achieved certification from major operators, including T mobile and AT&T, along with key industry bodies.
Speaker Change: Simplification, it's a critical milestone validating our technologies performance.
Speaker Change: Throwing network compatibility.
Speaker Change: And opening other commercialization opportunities across U S markets.
Speaker Change: Turning to our three core markets, our consumer market deliver exceptional growth in Q3.
Speaker Change: Marking our best performance in this market since Q3 of 2022.
Speaker Change: After initial shipments of our first widebody seven Roger antenna system to a tier one M S O last quarter Q.
Speaker Change: Q3 saw us ramp up shipments significantly.
Speaker Change: Additionally, our P O arm and then all embedded antenna shipments continue to accelerate.
Speaker Change: Following initial shipments in Q1.
Speaker Change: <unk> generated $6 $9 million in Germany.
Speaker Change: And then push that $2 million increase over second quarter.
Speaker Change: This growth highlights the strong demand for our base connectivity solutions.
Speaker Change: With Wi Fi seven adoption steadily gaining momentum across the industry.
Speaker Change: While adoption rates barely among msos.
Speaker Change: And again remains at the forefront of the transition to cutting edge wireless technologies.
Speaker Change: Looking ahead, we are optimistic about maintaining this momentum.
Speaker Change: With plans to begin shipments to another tier one M. S O in early 2025.
Speaker Change: Further solidifying our leadership in this evolving space.
Speaker Change: We anticipate a moderation in demand during Q4, which will result in a reduction in Wi Fi seven shipments for the upcoming quarter.
Speaker Change: However, following the typical seasonal impact in Q1, we remain optimistic about the robust growth prospects driven by the ongoing Wi Fi seven industry transition and the accelerating adoption of our <unk> solution.
Speaker Change: We believe these factors collectively strengthen our long term growth trajectory.
Speaker Change: Yeah.
Speaker Change: In our automotive market, what we concentrate on delivering a beans up to market solutions for public safety and transportation vehicles, we achieved strong progress this quarter.
Speaker Change: Even though met persistent inventory challenges.
Speaker Change: Despite these headwinds.
We are encouraged by the positive momentum, we are establishing reflecting the growing demand for our solutions and our ability to effectively navigate industry uncertainty.
Speaker Change: In Q3 automotive market sales reached $2 $5 million.
Speaker Change: A point $8 million increase over the second quarter.
Speaker Change: Driven primarily by higher sales of <unk> antennas and initial shipments of AC.
Speaker Change: This rising demand for our innovative solutions gives us confidence in a sequential increase in sales in this market for fourth quarter.
Speaker Change: This quarter.
Speaker Change: Key achievement was completing the final production certification base or ACP.
Speaker Change: Including approvals for use on AT&T and T mobile networks.
Speaker Change: Customer feedback from the trials has been highly positive.
Speaker Change: Thank you Lily regarding the solutions performance ease of use.
Speaker Change: Impact form factor.
Speaker Change: We believe this all in one concept provides our customers with a time to market advantage and a lower total cost of ownership.
We have expanded customer trials to nearly spotty across domestic and international markets.
Speaker Change: With shipments expected to increase as these trials progress. Additionally.
Speaker Change: Additionally, we anticipate further carrier certifications in the coming months, both domestically and internationally, which should unlock new revenue streams.
Speaker Change: Our rugged outdoor antenna Raycom 13 baiji.
Speaker Change: Designed to deliver high performance <unk> connectivity for fleet and public safety vehicles hunting.
Speaker Change: Continue to gain momentum in Q3.
Speaker Change: Pacifically with counties and municipalities.
Speaker Change: While the longer sales cycle for me come 13, Orange cautious optimism.
The strong interest of this product is highly encouraging.
Speaker Change: Looking ahead, we are confident the automotive market is Klein will continue well see.
Speaker Change: Fueled by the strong momentum and again kind of fleet.
Speaker Change: We anticipate additional reputations and customers trials in Q4.
Speaker Change: Setting us up for a strong finish to the year.
Speaker Change: Finally, our enterprise market saw a larger than anticipated decline in Q3 compared to Q2.
While we continue to expand our asset trucker portfolio.
Speaker Change: Enterprise sales decreased to $6 7 million.
Speaker Change: Now $1.9 million from the previous quarter.
Speaker Change: Truck was primarily due to lower sales of embedded modems and custom products.
Speaker Change: The dip in embedded modem sales reflects a temporary slowdown upped her insurers in Q2, driven by multiple new design wins.
Speaker Change: Finale custom product sales were impacted by excess inventory.
With two major customers, indicating the surplus may extend into the first half of 2025.
Speaker Change: While this inventory challenges.
Speaker Change: They continue to pressure our revenue.
Speaker Change: But we are actively taking steps to lessen the impact as we move forward.
Speaker Change: We continue to make strong progress with our asset trucker strategy.
Speaker Change: Turning our focus be on logistics and rail costs sectors to include health care Iot applications.
Speaker Change: Specifically in the aerial tangible highly body temperature sensitive assets.
Speaker Change: Our newly launched a T flight asset trucker.
Speaker Change: However by advanced artificial intelligence is design tool autonomously detect pickoff in lending events.
This AI driven functionality ensures seamless compliance with FAA regulations by automatically switching to airplane mall.
Speaker Change: Critical to ensure that removed the need for any man it manual intervention.
Speaker Change: Significantly enhances user convenience.
The ATR flight is built for the unique demands of the healthcare Iot sector.
Speaker Change: Offering expand it bother rely well over a year and a broad operating temperature range down to minus 20 degree C ideal for trucking temperature sensitive medical assets like Athene and pharmaceuticals.
Speaker Change: This device has already received strong market validation.
Speaker Change: With an initial purchase order from a major health care provider and we anticipate beginning shipments in Q1, 2020 five.
Speaker Change: In the railcar sector.
<unk> expanded our portfolio with specialized railcar focused features that.
Speaker Change: Built on the design wins announced last year.
Speaker Change: These sector provides us with a unique opportunity to leverage our asset truckers competitive advantages.
Speaker Change: Marine everywhere connectivity.
Bob Murray: Bob Murray longevity.
Bob Murray: Taylor configurations to meet the stringent technical and environmental demands of the market.
Bob Murray: Shipments of our land turn F W. A product which began last quarter.
Bob Murray: Contributed minimally to Q3 revenue due to a slower than expected transition from indoor outdoor solutions in North American markets.
Bob Murray: We believe lanterns primary opportunities lie in bell over applications for small enterprises and network expansion, while commercial and residential uses.
Bob Murray: Well the design win to sales cycle is lengthy we are actively pursuing these applications.
Bob Murray: Looking ahead to the rest of 2024.
Bob Murray: We expect a modest quarter over quarter uptick in enterprise itself.
Bob Murray: Inventory levels normalize.
Bob Murray: By some temporary softness in custom products, we are confident Alex.
Bob Murray: Being product portfolio and sales pipeline position us well to navigate these short term challenges.
Bob Murray: Overall, we are encouraged by the strong momentum demonstrated across several key product lines this quarter.
Bob Murray: Our broad and diverse product portfolio positions us well to capitalize on emerging opportunities.
Bob Murray: Reinforcing our belief in a sustained rebound.
Speaker Change: So we have previously communicated.
Speaker Change: We are actively advancing our strategic shift from being solely a component supplier to becoming a comprehensive provider of wireless system solutions.
Speaker Change: Transformation highlights our commitment to delivering end to end solutions.
Speaker Change: Meet the evolving demands of the market.
Speaker Change: Additionally, a game for long term success.
Speaker Change: Our growth strategy centers on two primary pillars, maximizing our established business and expanding into integrated wireless solutions.
Speaker Change: First we are committed to executing our established business with against traditional strength.
Speaker Change: In component based products.
Speaker Change: Applauded across consumer automotive and enterprise applications.
Speaker Change: This includes our embedded modems.
Speaker Change: Custom products embedded antennas and aftermarket automotive solutions.
Speaker Change: Over the year, we have built strong partnerships across the value chain and achieve significant milestones in recent quarters.
Speaker Change: Looking ahead, we see substantial opportunities within these established product categories.
Speaker Change: By several key factors.
Speaker Change: Including the ongoing ramp up of tier one MSL Wi Fi seven shipments and embed it into our design wins with mobile network operators and expansion of the <unk> antenna sales pipeline.
Speaker Change: Both automotive and enterprise markets.
With our expanding product portfolio and growing customer pipeline, we are optimistic about the growth potential of our established business.
Speaker Change: This strong foundation allows us to leverage our expertise and market presence for long term success.
Speaker Change: Alongside growth in our established components business.
Speaker Change: We see our wireless system solutions as the main driver of upside potential in 2025 M. B a.
Speaker Change: Key areas of focus include assay trucking and by G connectivity solutions.
Speaker Change: Each represent our roadmap solutions and the most significant strategic growth opportunities for us.
Speaker Change: Our advanced <unk>.
Speaker Change: Trucking solutions are increasingly utilized in transportation supply chain management and other specialized applications.
Speaker Change: Over the past year.
Speaker Change: Refined our strategy to focus on sectors, where we can leverage our innovation and brand to expand our product portfolio with clean him.
Speaker Change: Higher margin offerings.
Speaker Change: Suite offers strong recurring revenue potential so multiple subscription based components, including our nimble length cloud based E enablement platform in trucking gas falls.
Speaker Change: Services enhance value for our customers, while establishing a foundation for sustainable long term revenue streams.
Speaker Change: Our <unk> connectivity products open up substantial growth opportunities across multiple sectors.
Speaker Change: With our largest growth drivers in smart network control repeaters.
Speaker Change: Leading the way our lighthouse small either significantly enhances network coverage or mobile operators.
Speaker Change: Addressing connectivity challenges in difficult to reach areas and accelerating <unk> adoption across the industry.
Speaker Change: Vehicle networking.
Speaker Change: Another key growth area, our egg and connect fleet vehicle Gateway is design for public safety and fleet management.
Speaker Change: Delivering essential cellular GPS and Wi Fi connectivity to support mission critical communications.
Speaker Change: Fixed wireless access.
Speaker Change: Our growth opportunities the lane turn if W. A product suite is designed to include broadband connectivity for homes and small offices.
Meeting the rising demand for accessible high speed wireless Internet.
Speaker Change: While this product show strong potential.
Speaker Change: We are taking a measured approach as the market shifts toward alcohol solutions.
Speaker Change: Together.
Speaker Change: <unk> systems solutions.
Speaker Change: Enable us to meet diverse connectivity needs.
Speaker Change: From residential and commercial settings to public safety and transportation.
Speaker Change: Within the fast evolving <unk> landscape.
Interest in our <unk> offerings is strong.
Speaker Change: Giving us confidence in its growth potential for 2025.
Speaker Change: Hey, there again, our vision of connecting the world by making wireless simple is steadily becoming a reality.
Speaker Change: Our expanding suite of innovative solutions is designed to seamlessly connect devices from the core network to the edge.
By delivering high performance intelligent wireless technology.
Speaker Change: We are simplifying connectivity across a broad range of applications.
Speaker Change: From enhancing in building and outdoor cellular coverage towards enabling precise I think trucking in challenging environments.
Speaker Change: With products that optimize signal quality.
Speaker Change: Thin coverage and ensure stable connect connections again is breaking down the complexities of wireless technology.
Speaker Change: Bringing us closer to a wall, where connectivity is both effortless and ubiquitous.
Speaker Change: Also our vision becomes a reality, we're also capturing significant opportunities in a rapidly expanding market landscape.
Speaker Change: Collectively our product line position us within a serviceable addressable market projected at $1 $1 billion in 2024 with substantial expansion to $6 billion in 2025.
Speaker Change: And $5 $5 billion by 2028.
Speaker Change: This remarkable growth is driven by our strategic entry into high growth markets, such as vehicle gateways in smart network control repeaters.
Speaker Change: Which capitalize on the increasing demand for our advanced connectivity solutions.
Speaker Change: This expanded Sam reflects our transformation from a component provider to a comprehensive wireless system solutions company.
Speaker Change: Underscoring our ability to capture significant market share of these sectors rapidly Bob.
Speaker Change: Reaching $5 $5 billion by 2028.
Speaker Change: Our call strategy sets, a strong foundation for substantial long term success across highly main connectivity markets.
Speaker Change: Overall, our multifaceted growth strategy underscores our commitment to capitalizing our current demand while actively positioning our game for substantial long term cool as a leader in advanced wireless connectivity solutions.
Speaker Change: With that I will turn the call over to Michael to discuss our third quarter 2024 financial results and the outlook for the fourth quarter Michael.
Michael: Thank you Jacob.
Michael: Before diving into the numbers. Please note that my review of our financial results and guidance.
Michael: <unk> to non-GAAP figures.
Michael: Information about the non-GAAP financial measures, including GAAP to non-GAAP reconciliations can be found in our earnings release.
Now, let's turn to our third quarter results.
Speaker Change: As Jacob mentioned Q3 sales came in at $16 $1 million, just above our guidance midpoint of $16 million.
Speaker Change: This marks a 6% sequential increase and the 18% year over year growth.
Speaker Change: Largely by the strong performance of our consumer market.
Consumer sales reached $6 $9 million, a sequential increase of $2 million driven by strong demand for our tier one EMS. So Wi Fi seven antennas following initial shipments in Q2.
Speaker Change: Additionally, we experienced continued momentum in our tier one MMO SWA internet sales in the third quarter.
So two motive sales came in at $2 $5 million up.
Speaker Change: $8 million sequentially, driven by increased aftermarket sales and the initial shipments of our <unk> against the next fleet.
Speaker Change: Enterprise sales.
Speaker Change: Were $6 $7 million, reflecting a sequential decrease of one $9 million.
Speaker Change: This decline was primarily due to lower sales of our custom Iot products.
Speaker Change: Impacted by excess inventory levels with two strategic customers.
Speaker Change: Q3 gross margin came in at 42, 8%.
Up 130 basis points sequentially, primarily due to a favorable sales mix.
Speaker Change: Year over year gross margin improved by 380 basis points, reflecting stronger margins in our enterprise and automotive markets.
Speaker Change: This improvement was the result of continuous cost reduction initiatives and the launch of high performance aftermarket and enterprise products over the past year.
Speaker Change: Looking ahead, we expect our Aragon connect and lighthouse solutions to further support gross margin expansions in the coming quarters.
Speaker Change: Q3, operating expenses totaled $6 $9 million remaining flat sequentially.
Speaker Change: Year over year, however, expenses rose by $9 million.
Speaker Change: Primarily due to increased investment in our engineering and sales functions, while G&A expenses remained stable.
Speaker Change: This increase reflects higher project development expenses, including prototypes certifications and testing as well as a roughly 25% increase in engineering and sales personnel expenses.
Speaker Change: The year over year increase was driven by our investment in the AGM Tonight and lighthouse platforms.
Speaker Change: As we enter a new phase in their growth we expect to further invest in these two platforms.
Speaker Change: Q3, adjusted EBITDA was $1 million or an improvement from negative $4 million in the prior quarter.
Speaker Change: This sequential increase was driven by higher sales and improved gross margin.
Speaker Change: While operating expenses remained flat.
Speaker Change: non-GAAP EPS came in at breakeven.
Speaker Change: As of September 32024, our cash balance was $7 $3 million.
Speaker Change: Down one $1 million sequentially.
Speaker Change: Despite the positive adjusted EBITDA, rather than your linearity challenges led to a negative operating cash flow of $1 $2 million.
Speaker Change: Our accounts receivable balance was $11 $8 billion.
Speaker Change: $3 $2 million higher sequentially.
Speaker Change: Cause of the revenue linearity challenge it.
Speaker Change: Net inventory was $2 $6 million, which was $5 billion lower sequentially.
Speaker Change: Now moving to our outlook for the fourth quarter ending December 31 2024.
Speaker Change: As a reminder, we provide quarterly guidance for sales non-GAAP gross margin and expenses non-GAAP EPS and adjusted EBITDA.
Speaker Change: As we believe these metrics to be key indicators.
Speaker Change: For the overall performance of our business.
Speaker Change: For the fourth quarter of 2024, we project sales between.
Speaker Change: $16, two and $18 $2 million.
Speaker Change: The midpoint of $17 $2 million.
Speaker Change: The midpoint represents a 7% sequential growth.
Speaker Change: And a 71% increase over Q4 last year.
Speaker Change: We expect non-GAAP gross margin for the fourth quarter to be in the range of 41, 5% to 44, 5% or 43% at the midpoint.
Speaker Change: The midpoint represents the fourth sequential increase in gross margin.
Speaker Change: We expect operating expenses to be approximately $7 $2 million.
Speaker Change: As we remain focused on Diebold thing the AC fleet and lighthouse platforms supporting customer trials.
Speaker Change: And driving design wins.
Speaker Change: non-GAAP EPS is expected to be <unk> at the midpoint of the guidance.
Speaker Change: Adjusted EBITDA is expected to be.
Speaker Change: One $3 million at the midpoint of the guidance.
Speaker Change: Now I would like to turn the call back over to Jacob for his closing thoughts Jacob.
Jacob Schoen: Thanks, Michael.
Jacob Schoen: Before we open the floor for questions I would like to leave you with a few final thoughts.
Jacob Schoen: First I am incredibly proud of our team's unwavering commitment to air against strategic roadmap, we're executing several key product initiatives.
Jacob Schoen: <unk> lighthouse and AC fleet.
Jacob Schoen: Under tight timelines.
Jacob Schoen: As of today, we are not only meeting our commitments, but also staying on truck with key milestones.
Jacob Schoen: True Testament to our team's dedication and the strength of our leadership.
Jacob Schoen: Second we remain optimistic about the market potential in broader industry recovery.
While certain product segments have faced challenges.
Jacob Schoen: We have made significant strides in product innovation partnership expansion in geographic reach.
Jacob Schoen: Our investments in new product launches and an expanded sales force position us well to navigate industry wide inventory adjustments.
Jacob Schoen: We are confident that our resilience and focused execution will drive meaningful returns in the quarters ahead.
Jacob Schoen: Finally, our innovative products remain central to our value proposition.
As the industry evolves with the shift to Wi Fi seven increased demand for asset tracking in ongoing <unk> coverage challenges the global connectivity opportunity continues to grow.
Jacob Schoen: Many of the regions still represent untapped potential for our solutions.
Jacob Schoen: Our next generation Aegean connect fleet lighthouse smart repeater and smart <unk> solutions address these critical connectivity needs in Ghana strong interest from major industry players.
Jacob Schoen: These innovations set us apart.
Jacob Schoen: <unk> again as a key player in the future or connectivity.
Jacob Schoen: I am very pleased to announce that we have received our first commercial order for the lighthouse small repeater from international immuno.
Jacob Schoen: This milestone validates lighthouse competitive advantage in expanding coverage and enhancing network performance with its ease of installation and deployment lighthouse is uniquely position to accelerate customers' time to market while reducing.
Jacob Schoen: The overall cost of ownership.
Jacob Schoen: Looking ahead, our execution on our product development initiatives and ongoing customer trials, specifically Aegean connect fleet and lighthouse sets the stage for significant growth in 2025.
Jacob Schoen: By expansion across all three of our markets with top up later, please open the call for Q&A.
Speaker Change: Thank you we will now take questions from Eric and sell side analysts.
Speaker Change: We'd 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 and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star kids.
Speaker Change: One moment, while we poll for questions.
Speaker Change: Our first question is from Anthony Stoss with Craig Hallum Capital Group. Please proceed.
Speaker Change: Good afternoon, Jacob Michael Good to hear your voices again Jack.
Speaker Change: Yeah. Thanks for some of the detail on lighthouse can you maybe put a finer point on it in terms of.
Speaker Change: Going customer trials, how many there might be when do you expect them to turn into volume production I know you've got your first order.
Speaker Change: And then also would love to hear more about the <unk>.
Speaker Change: Connect fleet similar question, you talked about a bunch of qualifications coming over the next couple of quarters.
Speaker Change: Maybe give us a.
Speaker Change: So how many that might be and when do you think thats fully ramped.
Speaker Change: Hey, Tony good to hear from you, yes sizable want make sure I answered a couple of questions first you could talk about the trials. So for the for the AC fleet as I indicated in the call that we'd have roughly 40 trials ongoing and we expect that to continue to grow.
Closing out the year end.
Speaker Change: Both domestically and internationally, although primarily domestically here in the U S. We are also doing well for the lighthouse.
Speaker Change: Two paths expects to complete this quarter can you work with.
Speaker Change: We also have one pending in domestically as well.
Got it and then I know you mentioned you expect your enterprise or excuse me your consumer products to be down in Q4, but then likely back up in Q1 for additional and Thats still launching Wifi seven how many other.
Speaker Change: Customers Havent launched Wi Fi.
Speaker Change: Yes.
Speaker Change: Yes, so the first Wi Fi seven.
Speaker Change: The U S. There are really two major msos and one of them first of all we want both of these customers, which is really encouraging so it's more of a timing issue for the first major M. S. O. We actually have started shipment in Q2, and it's actually that's why I actually had a strong growth in Q3, because they really.
Speaker Change: To accelerate that.
Speaker Change: Their deployment and we expect that to continue now the second name is so we expect that deployment to start I would say first half of next year and you know and in addition, we're also working with I mean, all that's more on the the indoor NWA.
Speaker Change: As well.
Speaker Change: And Tony This is Michael just a quick clarification on your question.
Speaker Change: In Q4, we do expect moderation on the revenue mainly because <unk> was so strong in Q1, and we do expect the seasonal impact that we have which tends to be negative.
Speaker Change: In the consumer product line.
Speaker Change: Got it and last question, if I could squeeze in one more.
Speaker Change: Jacob.
Jacob Schoen: Congrats on the major health care provider for your auto airplane mode tracker.
Speaker Change: I'm curious how big a market do you think that is is this a product that you have to do trials with additional health care customers just.
Speaker Change: I'm trying to get a sense of how you expect that to ramp.
Yeah, great questions. Yeah, So certainly I would say still a niche market, but it could certainly apply to a different application I think the fact is that we're now able to devolve, sometimes it's with artificial intelligence I think that's really something the first air against history to be able to enter these new exciting.
Speaker Change: Market, a market and without the ability to be able to have predictability the ability to be able to work with different you know in this case healthcare, but we cant really using that technology to many other sectors as well that's what's getting us excited about the possibilities. So as I mentioned earlier the market is.
Speaker Change: Still a niche although we seeing this particular.
Speaker Change: Particular technology can be applied to multiple sectors in the future.
Speaker Change: Hey, good Jackup will see you next week at our conference.
Thank you thank you Tony.
Speaker Change: As a reminder in star one on your telephone keypad, if he would like to ask a question. Our next question is from Tim Savage, yet with Northland capital markets. Please proceed.
Speaker Change: Hi, good afternoon and congrats.
Speaker Change: Congrats on another really solid quarter.
Speaker Change: I wanted to focus on the <unk>.
Speaker Change: <unk> network infrastructure opportunity as well.
Speaker Change: I know you mentioned an initial commercial order.
Speaker Change: I Wonder if that's part of a broader kind.
Speaker Change: Kind of rollout commitment from this tier one customer.
Speaker Change: And you know what.
Speaker Change: As you get more advanced in these trials.
Speaker Change: What the sort of overall opportunity would be either a major customers such as that one and.
Speaker Change: Pretty significant deployments and how or if you have any.
Speaker Change: Better view to that and and also when do you expect that I'm sure to ship.
Tim Savage: Great questions Tim.
I'm glad you picked it up it's actually one of the exciting banks, that's happening it's actually more pertaining to Q4 than Q3.
Tim Savage: Do we have done a lot of the trials and then discussing about actual deployment and this is actually wasn't expecting this to happen first half of next year as we indicated numerous times previously.
Tim Savage: Really pleased that it's actually happening happening earlier than anticipated and the first order. It's you know it's was a deployment that's already happening and this is only one of many you know we're working with them on a much bigger scale.
Tim Savage: Deployment contract.
Tim Savage: And with this particular, and then I'll allow hoping you'll be able to replicate that through other.
Tim Savage: And our customers as well.
Tim Savage: What we're seeing is that we're now.
Tim Savage: Putting our marketing people many Bollywood we're bringing to the table. So ill just give you a couple of callouts right why is the times of market, where the alternative solutions will take time for the six months, we are able to do that we're talking about less than two weeks.
Tim Savage: What we're able to accomplish with our unique lighthouse Smart network repeater solution and one of the other thing is that we're not only doing these I'll say.
Tim Savage: Point of sale, we're actually working with our customers to do the actual deployment and what those taught me. This means it's more than just a product sale, well actually gonna be providing a maintenance and wear.
Tim Savage: Gonna have recurring revenue on the service as we move forward and that's what's so unique about these new lighthouse opportunity.
Speaker Change: Total interest your questions Tim.
Tim Savage: No I appreciate it.
Speaker Change: If I heard you right, but I think you talked about the prospects for accelerating growth.
Speaker Change: In 'twenty five and certainly you got your addressable market more than doubling.
Speaker Change: And I Wonder if you know in that outlook and you kind of talked about sort of your baseline components business and your newer systems business I don't know if you can breakdown student goes down for us but.
Speaker Change: I guess, how much growth from the <unk> side.
Speaker Change:
Speaker Change: Are you expecting with regard to that outlook for accelerating growth and growth across all your segments.
Speaker Change: At least in your own thinking have you built in material revenue there.
Speaker Change: Hi, Tim This is Michael so it is a bit early to provide any type of guidance beyond Q4 at this point.
Speaker Change: But just to give you some color altogether.
Speaker Change: On the existing businesses. So this is without the.
Speaker Change: <unk> connect platform and without lighthouse platform and you're correct. The the doubling of the Sam is coming from both the vehicle gateway with <unk> connect and also the smart network repeater with lighthouse.
Speaker Change: But in terms of the existing businesses that we currently have we do expect some slight growth year over year, primarily because of some of the headwinds that we have on some of the excess inventory challenges at the same time.
Speaker Change: Also having this growth in asset tracker, along with the FW way for example, and even Iot antenna and consumer as well.
Speaker Change: From a lighthouse and also from AC fleet.
Speaker Change: This is a bit early to tell many because we don't have complete visibility of the overall size of the design wins, but also the sales or the design win to sell cycle is very elongated.
Speaker Change: This commercial order for example that we just received is with a customer that we have been working with for over a year. This was part of the live network trial that we had mentioned back in Q2, and so there was some progress there and we're hoping that the fact that we have delivered on the AC fleet as we were expecting it to.
Speaker Change: And to have initial shipments of the device in Q3, and the fact that we are where we are right now it would lighthouse when we're expecting commercialization to be in early part of next year sets the stage for us to believe that.
Speaker Change: We are poised for some growth in those markets.
Great and maybe one final question for me kind of relevant to that.
Speaker Change: AC fleet commentary I mean, it looks like you mentioned.
Speaker Change: It's a bit of a pullback in consumer and only a modest uptick.
Speaker Change: Or modest recovery enterprise does should we be.
Implying there that that auto is the main driver of your sequential growth in terms of guiding up a million plus in the midpoint.
Speaker Change: Yes sequential growth will be driven by the automotive market and this is also the reason for the wider range that we have on the guidance its primarily the overall lack of visibility specifically on those new initiatives.
Speaker Change: Okay. Thanks very much.
Speaker Change: Thank you.
Speaker Change: Our next question is from Scott Searle with Roth Capital Partners. Please proceed.
Speaker Change: Good afternoon. Thanks for taking my questions, Hey, guys I apologize. If this was covered earlier hopped on the call a little bit late but I wanted to go to the lighthouse it sounds like you've got some pilot activity going on and I'm wondering if there is any further color that you provided in terms of timeline to some of that converting into revenue and second on the nibbling front.
Speaker Change: There have been significant headwinds across the industry just in terms of inventory and I think you guys have been working through that as well. It seems like that is starting to clear off now plus theres a void on top of that I think with the Sierra.
Speaker Change: Sierra wireless.
Speaker Change: I think in effectively addressing the marketplace. So I'm wondering what youre seeing overall in the module and the tracking space. The design activity that goes along with nimble Lincoln, how you're kind of thinking about things as we go into the end of the year end 2025.
Speaker Change: Thank you Scott I'll start so on lighthouse, we do expect some initial revenue in the Q4 quarter.
Speaker Change: And on the nimble link product lines, we did see and we do see some headwinds from a persistent inventory challenges now the overall broader where unquote.
Speaker Change: Inventory correction that we've seen last year is now becoming much more customer customer and product specific and so really it's hitting us in this our costume Iot products, but we have two strategic customers.
Speaker Change: That are experiencing some excess inventory and we had mentioned as what two is that it may extend through the first half of the year of next year and so while we are driving that there are some pockets of growth, especially with asset tracker that we are definitely investing quite a bit on.
Speaker Change: Pick up yeah.
Speaker Change: Yeah, I think that the.
Speaker Change: While we don't get.
Speaker Change: Guidance beyond the next quarter it seems like at the end of the year I think.
Speaker Change: I can share some color as we enter into 2025.
Speaker Change: Certainly the inventory correction in some of the seasonality. We now expect at Baidu I expect that overall, we're going to be seeing growth in all three of our markets with the consumer we have seen that with the Wi Fi say, then with the with the uptick with them at.
Speaker Change: All right.
Speaker Change: We expect that to.
Speaker Change: <unk> 2025 versus 2020 law with the automotive market I think that the big additional contributor it's the AC fleet Aegean connect fleet, so expect that really to help sustain the growth.
Speaker Change: And then in regards to.
Enterprise certainly with the with the maintaining that W. A most solved with the lighthouse now we feel comfortable with we also think that that's going to really help our.
Position us well for the growth.
Speaker Change: And in the past as well so all in all we are expecting you know a nice well, although the first half we may still have to deal with some inventory target collection as you mention and you're seeing that industry wide on the Iot space. We're seeing the same thing, but we do expect that the Lilly.
Speaker Change: At the tail end by the end by the end of the first half.
Speaker Change: Okay, great. Thanks, so much.
Speaker Change: At this time this will conclude our question and answer session. If your question was not answered you may contact.
Speaker Change: Erik <unk> Investor Relations team at <unk>.
Speaker Change: I I R. G at Gateway Dash G. R. P dot com I would now like to turn the call back over to Mr. Flynn for closing remarks.
Speaker Change: Okay.
Mr. Flynn: Thank you all for joining us today I want to extend special appreciation to our outstanding team for their tireless efforts and invaluable contributions they are the driving force behind our success.
Mr. Flynn: I'd also like to thank our investors for their continued support and trust in our vision, we look forward to sharing more updates with you in the future. Operator, you may now conclude the call.
Speaker Change: Thank you. Thank you for joining us today for air gains third quarter 2024 earnings call you may now disconnect.
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