Q2 2025 Airgain Inc Earnings Call

Good afternoon. Welcome to are gain second quarter 2025 conference call. My name is Ena and I will be your operator for today's call.

Joining us today are are games president and CEO Jacob's twin and CFO Michael Elbas.

As a reminder, this call will be recorded and made available for replay via a link found in investor relations section of kin's website at investors again.com.

Following Management's prepared remarks, the call will be open for question from are games covering analysts.

I caution listeners that during this call are gain management will be making forward looking statements about future events as well as are games business strategy, and future financial and operating performance at your results. Could differ materially from those stated or implied by this forward-looking statements due to risks and uncertainties associated with the company's business.

This forward-looking statements are qualified by the cautionary statements. Contained in today's earnings release in are games as EC filings.

Since this conference call contains time-sensitive information. That is accurate only, as of the date of this life, broadcast, August 6th 2025

Are gain undertakes, no obligation to, revise or update, any forward-looking statements, to reflect events, or circumstances after the date of this conference call. In addition, this conference call will include a discussion of non-gaap financial measures

BC. Today's earnings release for future retails including a Reconciliation of gaap to non-gaap results.

Now, I'd like to turn the call over to airan CEO Jacobs 1. Thank you, please. Go ahead.

Thank you up later and hello, everyone.

Again, enter 2025 with a clear strategy to scale our goals platforms, strengthen our, existing markets, and maintain discipline, operational and financial. Execution in the second quarter we put that strategy into action delivering sequential Revenue growth.

Reducing operating expenses in achieving key Milestones, that set the stage for second half profitability and growth inflection in 2026.

Today, I plan to cover 3, key topics.

first, our second quarter business performance, including Trends in our consumer Enterprise and Automotive markets,

Second for across on our growth platforms.

They can connect in Lighthouse.

With an update on Milestones customer structure.

in the timing of certifications and deployments and finally, our strategic Outlook including our path to profitability in the 2026 growth, inflection of our platforms scale,

Let me start with our updating environment in the existing businesses.

Which form the foundation of our strategy.

The Tariff environment remains fluid, but we have not experienced a material impact on our gross margin or any customer demand.

Our existing markets remain stable in relatively predictable.

In our consumer Market y57 shipments to Tier 1 msos, including a leading us cable provider that launched, its Wi-Fi, 7 offering in April continued to ramp in the quarter.

Demand is normalizing, it healthy levels. Well, above the 2023 trial.

Providing a stable remaining Foundation.

At the same time, we are investing in the growth areas within this Market, to expand our customer base in capitalized on the long-term connected device trends.

In our Enterprise Market.

Agans Nimble, link embedded, modem line, was a strong performer in Q2 and is well, positioned to maintain its momentum in the second half of the year.

Adoption has been highest among industrial iot system. Integrators, who need a turnkey cellular solution? That simplifies certification, reduce engineering effort and shortens time to Market

We have seen the greatest success in utility infrastructure monitoring including Energy Management oil and gas in electrical grid applications.

Additionally in June, we launched our skywire Catwoman base embedded modem.

Please certify for an application use in design to streamline iot. Deployments

by reducing certification hurdles in accelerating iot deployment timelines. This Innovation problems our reach in industrial iot markets.

Conditions remain soft in our automotive, aftermarket and asset tracking markets. After market antenna sales, growth contains to be weighed down by Channel inventory. Overhang, which we expect to persist through the second half of the year.

As a tracking sales, have also moderated this year, reflecting a lack of traction on key projects.

Our Revenue in this area is now comprised of orders from existing customers along with stable recurring Revenue.

Together these existing markets, provide a steady Revenue Foundation, enabling us to drive our growth platform initiatives.

Now, let's turn to a again. Connect our mission critical mobile connectivity platform. Again connect, AC Fleet combines integrated 5G modem Wi-Fi, 6 router and high performance antenna to deliver reliable Broadband for utility in public safety leads.

AC Fleet is progressing to key carrier certifications which are essential for unlocking larger Tier 1 in government opportunities.

We continue to make important progress on this platform.

In may, we achieve firstnet truck state certification for AC Fleet a critical Milestone but opens access to First net dedicated Public. Safety Networks.

Accelerates procurement with government in Municipal agencies.

In serves as a key gating factor for large scale. Utility in first responder deployments

In short.

This most recent AC fleet went from pilot programs to being fully deployable in mission-critical environments.

In June, we introduced the Aging, connect goate pro. A rocket TCA compliant, 5G, mobile connectivity kit with a built-in battery Wi-Fi. 6 GPS in multi-carrier eing.

It is purpose built for First Responders, and remote teams.

Enabling secure Broadband, deployment in seconds.

And compliments, AC Fleet by extending connectivity, beyond the vehicle, to field and temporary operations.

also in June, we secure a new tier 2 utility deployment with a Midwestern electric utility

Marking another, AC Fleet, win in demonstrating the value of our AC Fleet solution to the utility Market.

This Market values AC Fleet for its ability to provide real-time connectivity to close in the field.

Improve situational awareness during outages and emergency response.

in reduced the cost in complexity of network installations across widely distributed leads,

While multiple tier 3, customers have deployed AC Fleet?

This is the first tier 2 customer deploying AC Fleet today as part of its Fleet modernization initiative.

As I have shared on prior calls, the AC Fleet Sales cycle, varies by Fleet size and directly impacts the timing of Revenue recognition.

Tier 3 customers on the 50 Vehicles typically move the fastest.

With a sales cycle of roughly 3 months.

Providing near-term Revenue opportunities.

Tier 2 customers.

50 to 500 Vehicles. Generally Take 6 to 12 months, from engagement to deployment.

Tier 1 customers over 500 vehicles.

Have the longest cycle, 12 to 18 months and often require a formal RFP process.

We currently have roughly 40 sales opportunities in our pipeline.

With a primary focus on the first responder and utility markets.

Net of our design wins in Q2 our sales opportunities pipeline, who approximately 20% in the second quarter. Our strategy is to maintain a broad well-balanced pipeline. The positions the platform for Meaningful scaling in 2026.

will remain on track for T-Mobile priority, 1 application in Q3

For Verizon front line, certification in Q4 2025.

In European certification in q1 2026.

all of which expand our addressable Market, open access to Tier 1 in government, contracts in enable, larger multi Fleet, deployments

Plumbers are selecting AC Fleet because it is a true all-in-1 solution with integrated eing technology.

Simplifying installation enabling seamless carrier switching without Hardware changes.

In lowering total cost of ownership for utilities law enforcement and emergency response agencies.

this e, same capability is a key differentiator

giving fleets, the flexibility to select the best available networks and maintain connectivity in Mission critical scenarios.

We are also investing in AC fleets, go to market strategy.

Strengthening our marketing efforts in participating in Industry events, such as the first net Forum, T-Mobile Fleet in Verizon front line.

Our multi-prong sales strategy of explaining our dedicated Fleet Force sales team from coast to coast, identifying vast and working closely with our distribution partners.

Are designed to accelerate trial, conversions, and drive platform adoption into 2026.

Planning to Lighthouse. Our 5G. Smart Network repeater platform. Serving both us and

International markets.

Lighthouse delivers a unique connectivity solution for expanding 5G connectivity and uploading capacity when networks are underutilized.

Deployed in our greater than months.

Lighthouse offers a cost effective low complexity in in environmentally sustainable solution, especially with its solar enhanced package,

Our go to market strategy is due upon.

Internationally. We collaborate closely with mobile network operators, like omantel with sales Cycles. Typically extend 12 to 18 months from design to deployment

in the US where initially targeting system integrators that serve Enterprises with the sales cycle, can be significantly shorter.

this approach allows us to generate Revenue sooner, while establishing long-term relationships with Ms for larger Network wide, deployments

We are actively investing in the US market, including the hiring of a dedicated Business Development leader to expand our system. Integrator Network,

by working with system integrators, we aim to address both outdoor and indoor connectivity pinpoints

Accelerate deployments and create a more predictable domestic, Revenue stream.

We are scheduled for multiple trials, by the end of the year across several regions.

Including the U.S., Latin America, Southeast Asia, Europe, and the Middle East.

Of our Focus remains on completing certifications conducting and converting tribes to design wins. And designing stages in scaling our Channel and sales infrastructure for broader adoption.

With that.

I'll hand the call over to Michael for a deeper review of our second quarter Financial results. Michael

thank you. Jacob.

Before I dive into the numbers, I will note that my remarks refer to non-gaap figures unless otherwise indicated.

Reconciliations to Gap. Results can be found in today's earnings release.

Second quarter Revenue came in at 13.6 million.

Slightly above the midpoint of our guidance and up, 13% sequentially from the first quarter.

Breaking this down by market.

Enterprise Revenue was

7.2 million, increasing, 2.8 million sequential.

The growth was driven by strong demand for embedded modems.

And custom iot Solutions.

Specifically by end customers in the utility infrastructure, monitoring Market including energy management and electrical grid applications.

These customers can focus on their core expertise, while accelerating their product development timelines with our modem Solutions,

Consumer Revenue was 5.6 million dollars. 10.8 million sequentially consistent with our expectations.

Following the inventory. Pull forward tied to tariffs in q1.

Demand continues to normalize at healthy levels. Providing a stable Baseline for the company.

Automotive revenue was $8 million, down $4 million sequentially, reflecting software demand.

Second quarter, non-GAAP gross margin was.

43.8% down slightly from 44.3% in q1.

On a year-over-year basis. Gross margin increased 230 basis points.

Primarily driven by improved Enterprise product margins.

Second quarter non-gaap operating expenses were 6.5 million lower both sequentially and year-over-year. Reflecting continued Opex discipline.

Adjusted. The EB D, improved to a loss of 0.4 million, compared to a loss of 1.2 million in q1.

Q2 non-gaap net loss was spawned 5 million dollars or 4 cents per share.

We ended the quarter with 7.7 million dollars in cash and equivalents

up on 3 million dollar sequentially.

This increase reflects discipline working Capital Management.

And underscoring our focus on Cache optimization as we drive second, half profitability.

Today, we received $2.1 million in net proceeds from the employee retention credits we applied for two years ago.

The ERC credits helped us set the impact of 1.8 million dollars year to date non-gaap operating loss on our cash balance.

Looking ahead to the third quarter, we expect Revenue in the range of 13 million to 50 million dollars with a midpoint of 14 million. Representing approximately 3%, sequential growth.

We expect the sequential growth will be driven by initial contributions from our platform products.

Including AC Fleet and early Lighthouse. Alongside the stable existing business in consumer and Enterprise

AC Fleet Revenue in Q3 is expected to come from tier 3 and initial tier 2 deployments.

While Lighthouse will begin contributing modest revenue from early International. Try convergence.

These early platform contributions are expected to build through the second half of the year.

And set the stage for Meaningful scaling in 2026.

We expect non-gaap gross margin for the third quarter to be in the range of 42.5% to 45.5% or 44% at the midpoint.

We do not anticipate a material impact from tariffs.

although this environment remains fluid and may result in supply chain, disruption costs,

We expect Q3 non-gaap operating expenses of approximately 6.1 million.

Reflecting a sequential decrease of roughly 6%.

The projected decrease reflects expense realignment, within our existing product lines.

And a decrease in GNA expenses.

At the same time, we continue to invest in sales, marketing, engineering, and customer support to advance our growth platforms.

Our first half non-gaap engineering expenses.

Decreased by 18% year-over-year.

with that, we estimate the engineering expenses for our existing product lines, decrease by approximately 50%

While investment in our AC Fleet and Lighthouse platforms.

Increased by about 45%.

Similarly.

First half non-gaap sales and marketing expenses. Increase 5% year-over-year reflecting your roughly 20% decrease in our existing product lines and a 70% increase in our growth platforms.

We expect this realignment of expenses between existing product lines and new platforms to continue in the second half of the year.

as a me phone of our guidance, we expect positive, adjusted EBA, approximately 0.2 million,

And positive non-gaap EPS of 1 cent per share.

Now, I will turn the call back over to Jacob for his closing remarks. Jacob.

Thank you, Michael.

Looking ahead, our priorities are clear. We expect sequential Revenue growth and a return to availability in the second half of 2025 driven by the stable base in consumer and iot modem sales initial contributions from are game. Connect and continue update discipline.

As we move into 2026, we expect our platform Revenue to scale, meaningfully as certifications, are completed, Global trials, convert to deployments and customer budgets are released. Again, it's well on its way to transforming from a component supplier into a platform Solutions provider.

I want to recognize the strengths of our broader leadership team.

These highly experienced resource driven group works together to execute with discipline. Engage customers, strategically in position. Are game for long-term growth across both domestic and international markets.

I would like to especially welcome golden shink our new senior vice president of global sales.

Gordon wins more than 25 years of experience in high technology sales in organizational leadership.

Ship in the energy and Technology, sectors.

His expertise will be instrumental as we expand our Global reach and deepen, customer engagement. And finally, I want to thank our employees partners and customers for their commitment and support.

We remain confident in our role map, our execution strategy, and our ability to deliver sustainable growth in long-term, value creation that concludes our prepared remarks and we are now ready to take questions from our covering analysts.

Operator. Please provide the instructions for the Q&A session.

Thank you, ladies and gentlemen, we will now begin the question and answer session.

Did you have a question please? Press star 4 by the 1 on your telephone keypad. You will hear it. Returned from technology requests.

And should you wish to cancel your request? Please press star 4 to 2. If you're using a speaker-phone, please leave me a handset. Before pressing any Keys 1 moment, please for your first question.

Once again, that is star and want to ask a question over the phone.

And your first question comes from the line of Anthony STS from Craig Hallam, please go ahead.

Um Jacob I wanted to focus in on. I think you said there was 40 sales opportunities for the AC Fleet Product. Um when I

Sat down with Michael, a couple weeks ago, I saw the product. It's pretty pretty slick actually. So can you kind of

Just confirm the 40 opportunities there and, and how long you think some of those uh, sales will take to either convert or not.

Yes. Hello Tony. Yes. So all of this body opportunities, these are qualified opportunities already by the sales team. So that actively engaging with the customers, and I would say about 10 to 15% of this fully opportunities, are the Tier 1 opportunities. The bigger size that's going to take longer although some of these opportunity.

It's only been happening for several months.

In a, I would say, you know, roughly about 30% or so it's going to be what we call the Tier 2 opportunities, uh, and, you know, and 1 of them will really convert during, you know, the quarter.

The risks are the tier 3 which are smaller deals that we are actively pursuing and closing and those are the 1 that that's going to be more immediate. Now to, you know, appreciate the fact that you check out the device. And I'm sure that you, you know, you really impressed by the, the, the size and the, the, you know, the feature, you know, reach, uh, capabilities of the, the AC Fleet. And that's what that, that's the kind of feedback that we're getting from the customers as well. They also really enjoy the performance. So, all in all, we feel really optimistic about the product and that's why we're really, you know, really, you know, spending our, uh, investment in sales and marketing. Uh, we are much more entrenched with the, you know, with the partners. Uh, but what we also seeing is that it takes time when it comes to certification, right? And 1 of the reasons it's because of the the the the you know, some of the unique features that we bring to the table.

For example, we were very pleased about the AT&T firstnet, uh, track state certification was a certification that took us almost a year to a pain and and we were expecting only 6 months and 1 of the main reason is the new e and feature, which they don't even have the script to to do the testing. That's why some of the the you know, some of the the delay was because of the added unique issues that we are now bringing to the market with uh, AC Fleet. But all in all we are encouraged by the progress. Although we seen the bigger deals are going to be happening. Uh, likely is closing the deal about more about deploying in the field in 2026.

Got it. It is like I threw a question to Michael. I'm not looking for a guide that just kind of gives us.

You know, I'm going to still be up sequentially, or do you think it's going to be up significantly? Like what do you what do you see in the pipeline? That would impact December.

Hi Tony. Uh so uh Q3 Q4 uh as Jacob mentioned, I think we're going to benefit from a relatively stable existing markets. Uh there are some puts on takes on that definitely the consumer Market. The embedded modem Market are definitely the bright spots on the consumer. The Wi-Fi 7 transition is currently very much underway. Uh, another Tier 1 MSO has launched its Wi-Fi 7 offering. So this is giving us quite a bit of a confidence that we'll see that market recovery that we've been talking about really underway and pushing through FY 26, especially as as well as the embedded modem. We do see quite a bit of traction with that utility in monitoring the sector.

Uh, as Jacob mentioned, the automotive Market, we still are hanging on to that, uh, excess inventory and also the asset tracker as well too. We do send say very much of a cautious environment with a specially government agencies. Uh, that's why we're seeing right now on this excess Channel inventory, some of the End customer deployments being delayed. And so, uh, while we are optimistic about, uh, 2026 in the 2025, we still monitoring that very carefully as well too.

Uh, so that what remains is really on the lighthouse and the AC Fleet, that is a full Focus. I mentioned on our Opex discipline. This is, those are the 2 markets that are we. We are really, are focusing to invest, uh, on the sales marketing channel, channel itself, the overall, uh, engineering certification and, uh, and just trying to make as much Headway as possible. And, uh, so the the visibility on that all depends upon those Tier 1 and tier 2, which is really our Focus right now and the number of of the trial that takes place on that. So, I would say relatively stable, uh, um, hopefully, uh, some small but steady, uh, increase. But we're looking at F4 26 to really scale. Meaningfully on those

very good. Thank you guys.

Thank you, Tony.

Thank you. Once again, should you have a question please? Press star 5 by the 1 on your telephone keypad?

There are no further questions at this time. I will now hand the call back to Mr. Jacobs went for any closing remarks.

Thank you all for your thoughtful questions and for your continued interest in are game.

If I were to leave you with 1 key, takeaway from today's call, it is this.

Again is a more focused discipline company position to achieve profitability in the second half of 2025 and to scale meaningfully in 2026 as our platform opportunities convert to remedy.

Operator, you may now conclude the call.

This concludes today's call, thank you for participating. You may all disconnect.