Financial Data and Key Metrics Changes - Q1 2023 sales were $16.4 million, a 6% year-over-year decline primarily due to demand softness in the consumer market [4][11] - Q1 gross margin was 39.1%, an increase of 860 basis points sequentially due to operational efficiencies and higher Enterprise gross margins [12] - Q1 adjusted EBITDA was negative $0.7 million, and non-GAAP EPS was negative at $0.08 [12][13] - Cash balance as of March 31 was $9.8 million, down $2 million sequentially [14] Business Line Data and Key Metrics Changes - Enterprise sales were $8.4 million, reflecting a sequential decrease of $1.6 million [12] - Automotive sales totaled $2.9 million, a sequential decrease of $0.6 million [12] - Consumer sales were $5.1 million, reflecting a sequential decrease of $1.3 million [12] Market Data and Key Metrics Changes - The Enterprise market represented just over 50% of total sales for the quarter, showing resilience against volatile market conditions [5] - The consumer market faced near-term challenges due to macroeconomic conditions and product transitions from Wi-Fi 6 to Wi-Fi 7 [9] Company Strategy and Development Direction - The company is optimistic about new product introductions and design wins leading to sequential sales increases in the second half of 2023 [4] - Focus on expanding market share within distribution channels, particularly in the automotive sector [7][8] - The service addressable market (SAM) has more than doubled from $7.6 billion to $16.5 billion due to new product initiatives [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges short-term challenges but remains optimistic about long-term growth prospects across major markets [21] - The company expects stability in the Enterprise market and growth in automotive and consumer sectors as supply chain issues resolve [31][32] Other Important Information - The company completed a workforce reduction at the end of the quarter, resulting in a decrease in quarterly expenses [13] - New product lines are being developed to address challenges in 5G technologies and improve customer experience [16][17] Q&A Session Summary Question: Update on the timeline for new product introduction and NimbeLink - Management is still working on the next-generation AirgainConnect and hopes to provide updates soon [26][27] - Supply chain issues for NimbeLink have eased significantly, improving the overall situation [28][29] Question: Timing for fixed wireless access solution and growth expectations - Management is optimistic about the second half of the year, expecting improvements in consumer, Enterprise, and automotive sectors [31][32][33] Question: Details on the Lighthouse product and sales expectations - The Lighthouse product is in live field trials, with expectations for deployment next year [35][36] Question: Targeting mix between consumer, auto, and Enterprise - The Enterprise market has been growing steadily, providing resilience against economic conditions, while consumer remains a higher-margin market [38]

[Report Information](index=1&type=section&id=Report%20Information) This section provides essential identification and status details for Airgain, Inc., including its incorporation, filing type, and stock information [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides key identification details for Airgain, Inc., including its incorporation state, filing type, and stock exchange listing - Registrant: **AIRGAIN, INC.**, incorporated in Delaware, with headquarters in San Diego, CA[2](index=2&type=chunk) - Filing Type: **Quarterly Report (Form 10-Q)** for the period ended March 31, 2023[2](index=2&type=chunk) Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common stock, par value $0.0001 per share | AIRG | Nasdaq Capital Market | [Filer Status and Shares Outstanding](index=1&type=section&id=Filer%20Status%20and%20Shares%20Outstanding) Airgain, Inc. is categorized as a Non-accelerated filer and a Smaller reporting company, and its common stock outstanding as of May 5, 2023, is reported - Filer Status: **Non-accelerated filer** and **Smaller reporting company**[4](index=4&type=chunk) - Shares Outstanding: **10,407,336 shares** of common stock as of May 5, 2023[4](index=4&type=chunk) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section outlines the report's structure, detailing the main parts and included financial and other information sections - The report's table of contents outlines two main parts: **Part I. Financial Information** and **Part II. Other Information**, detailing the structure and page numbers of the included sections[7](index=7&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part encompasses the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Airgain, Inc., including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items for the quarter ended March 31, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and stockholders' equity as of March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | **Assets** | | | | | Total current assets | $24,197 | $27,154 | $(2,957) | | Total assets | $50,423 | $54,400 | $(3,977) | | **Liabilities and Stockholders' Equity** | | | | | Total current liabilities | $10,660 | $12,900 | $(2,240) | | Total liabilities | $12,123 | $14,575 | $(2,452) | | Total stockholders' equity | $38,300 | $39,825 | $(1,525) | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement presents the company's revenues, expenses, and net loss for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Operations (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | % Change | | :-------------------------- | :----- | :----- | :----- | :------- | | Sales | $16,444 | $17,522 | $(1,078) | (6.2)% | | Cost of goods sold | $10,126 | $10,366 | $(240) | (2.3)% | | Gross profit | $6,318 | $7,156 | $(838) | (11.7)% | | Total operating expenses | $9,108 | $9,582 | $(474) | (4.9)% | | Loss from operations | $(2,790) | $(2,426) | $(364) | 15.0% | | Net loss | $(2,858) | $(2,521) | $(337) | 13.4% | | Net loss per share (Basic) | $(0.28) | $(0.25) | $(0.03) | 12.0% | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This statement reports the company's net loss and comprehensive loss for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Comprehensive Loss (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | % Change | | :----------- | :----- | :----- | :----- | :------- | | Net loss | $(2,858) | $(2,521) | $(337) | 13.4% | | Comprehensive loss | $(2,858) | $(2,521) | $(337) | 13.4% | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement details changes in the company's stockholders' equity, including net loss and stock-based compensation, for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Stockholders' Equity (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | | :------------------------------------ | :----- | :----- | :----- | | Total stockholders' equity, beginning balance | $39,825 | $44,173 | $(4,348) | | Stock-based compensation | $1,874 | $1,051 | $823 | | Net loss | $(2,858) | $(2,521) | $(337) | | Total stockholders' equity, ending balance | $38,300 | $42,823 | $(4,523) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023, and 2022 Condensed Consolidated Statements of Cash Flows (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Net cash (used in) provided by operating activities | $(1,434) | $4,152 | $(5,586) | | Net cash used in investing activities | $(89) | $(128) | $39 | | Net cash (used in) provided by financing activities | $(541) | $120 | $(661) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(2,064) | $4,144 | $(6,208) | | Cash, cash equivalents, and restricted cash; end of period | $10,014 | $18,830 | $(8,816) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering the company's business, accounting policies, and specific financial line items [Note 1. Description of Business and Basis of Presentation](index=8&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Airgain, Inc. provides wireless connectivity solutions, including embedded components, external antennas, and integrated systems for consumer, enterprise, and automotive markets, operating as a single segment - Airgain, Inc. (with subsidiary NimbeLink Corp.) is a leading provider of connectivity solutions (embedded components, external antennas, integrated systems) for consumer, enterprise, and automotive markets[24](index=24&type=chunk) - The company operates as a single operating segment, with its chief executive officer reviewing results on an aggregate basis[27](index=27&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's key accounting policies, including those for restricted cash, inventories, revenue recognition, and stock-based compensation, noting no material changes or impacts from recent accounting pronouncements - No material changes to significant accounting policies during the three months ended March 31, 2023, compared to the 2022 Annual Report on Form 10-K[30](index=30&type=chunk) - The Company adopted **ASU 2016-13 (Financial Instruments-Credit Losses)** in Q1 2023, which did not have a material impact on financial statements[52](index=52&type=chunk) - Revenue is primarily generated from sales of wireless connectivity solutions, recognized 'point-in-time' upon transfer of control, with minor service and data subscription revenue recognized 'over time' or monthly[39](index=39&type=chunk)[41](index=41&type=chunk) [Note 3. Net Loss Per Share](index=11&type=section&id=Note%203.%20Net%20Loss%20Per%20Share) This note details the computation of basic and diluted net loss per share, indicating that potentially dilutive securities were excluded from the diluted EPS calculation due to the net loss Net Loss Per Share Computation (Three months ended March 31, in thousands except per share data) | Item | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Net loss | $(2,858) | $(2,521) | | Basic weighted average common shares outstanding | 10,266 | 10,130 | | Diluted weighted average common shares outstanding | 10,266 | 10,130 | | Net loss per share (Basic) | $(0.28) | $(0.25) | | Net loss per share (Diluted) | $(0.28) | $(0.25) | - Potentially dilutive securities (**2,224 thousand in 2023** and **1,960 thousand in 2022**) were excluded from diluted net loss per share calculation as their inclusion would be anti-dilutive[57](index=57&type=chunk) [Note 4. Cash and Cash Equivalents](index=12&type=section&id=Note%204.%20Cash%20and%20Cash%20Equivalents) This note provides a breakdown of cash and cash equivalents, primarily consisting of cash and money market funds, showing a decrease from December 31, 2022, to March 31, 2023 Cash and Cash Equivalents (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :------------------ | :------------- | :---------------- | :----- | | Cash | $8,123 | $8,323 | $(200) | | Money market funds | $1,716 | $3,580 | $(1,864) | | Total | $9,839 | $11,903 | $(2,064) | [Note 5. Inventory](index=12&type=section&id=Note%205.%20Inventory) This note details the composition of inventories, including raw materials and finished goods, and also provides information on consigned inventories, noting the company's transition to a fabless model Inventories (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :-------------- | :------------- | :---------------- | :----- | | Raw materials | $1,130 | $1,060 | $70 | | Finished goods | $3,351 | $3,166 | $185 | | Total Inventory | $4,481 | $4,226 | $255 | Consigned Inventories (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :------------------ | :------------- | :---------------- | :----- | | Raw materials | $795 | $631 | $164 | | Finished goods | $2,613 | $2,272 | $341 | | Total Consigned Inventory | $3,407 | $2,903 | $504 | - The company transitioned to a **fabless model** in April 2022, with third parties manufacturing products[33](index=33&type=chunk) [Note 6. Property and Equipment](index=12&type=section&id=Note%206.%20Property%20and%20Equipment) This note provides a breakdown of property and equipment, net of accumulated depreciation, showing a slight decrease from December 31, 2022, to March 31, 2023, with consistent depreciation expense Property and Equipment, Net (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Property and equipment, gross | $7,242 | $7,170 | $72 | | Less accumulated depreciation | $(4,559) | $(4,405) | $(154) | | Property and equipment, net | $2,683 | $2,765 | $(82) | - Depreciation expense was **$0.2 million** for both three months ended March 31, 2023 and 2022[61](index=61&type=chunk) [Note 7. Intangible Assets](index=13&type=section&id=Note%207.%20Intangible%20Assets) This note summarizes the company's acquired intangible assets, including market-related intangibles, customer relationships, and developed technologies, showing a decrease in net carrying amount due to amortization Intangible Assets, Net (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :-------------------------- | :------------- | :---------------- | :----- | | Market related intangibles | $940 | $1,025 | $(85) | | Customer relationships | $6,492 | $7,060 | $(568) | | Developed technologies | $3,028 | $3,117 | $(89) | | Covenants to non-compete | $0 | $1 | $(1) | | Total intangible assets, net | $10,460 | $11,203 | $(743) | Estimated Future Amortization of Intangible Assets (in thousands) | Year | Estimated future amortization | | :-------------------------- | :-------------------------- | | 2023 (remaining nine months) | $2,226 | | 2024 | $2,968 | | 2025 | $2,958 | | 2026 | $557 | | Thereafter | $1,751 | | Total | $10,460 | - Amortization expense was **$0.7 million** for Q1 2023, down from $0.8 million in Q1 2022[62](index=62&type=chunk) [Note 8. Accrued Liabilities and Other](index=13&type=section&id=Note%208.%20Accrued%20Liabilities%20and%20Other) This note provides a detailed breakdown of accrued liabilities and other current liabilities, showing a decrease in total from December 31, 2022, to March 31, 2023 Accrued Liabilities and Other (in thousands) | Item | March 31, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------- | :---------------- | :----- | | Accrued expenses | $1,051 | $815 | $236 | | VAT payable | $339 | $339 | $0 | | Accrued income taxes | $243 | $166 | $77 | | Advanced payments from contract manufacturers | $208 | $210 | $(2) | | Contract liabilities | $0 | $32 | $(32) | | Goods received not invoiced | $94 | $529 | $(435) | | Other current liabilities | $221 | $524 | $(303) | | Accrued liabilities and other | $2,156 | $2,615 | $(459) | [Note 9. Notes Payable and Line of Credit](index=14&type=section&id=Note%209.%20Notes%20Payable%20and%20Line%20of%20Credit) The company's $4.0 million revolving line of credit with Silicon Valley Bank expired in February 2023, with no outstanding balance as of March 31, 2023 - The **$4.0 million revolving line of credit** with Silicon Valley Bank expired in February 2023[65](index=65&type=chunk)[66](index=66&type=chunk) - No balance was owed on the line of credit as of March 31, 2023[66](index=66&type=chunk) [Note 10. Leases](index=14&type=section&id=Note%2010.%20Leases) This note details the company's operating lease arrangements, primarily for office and warehouse facilities, with a weighted average remaining lease term of 2.5 years and a discount rate of 3.9% as of March 31, 2023 - Weighted average remaining lease term for operating leases was **2.5 years** as of March 31, 2023[69](index=69&type=chunk) - Weighted average discount rate for operating leases was **3.9%** as of March 31, 2023[69](index=69&type=chunk) - Short-term lease expense was **$22,000** for the three months ended March 31, 2023, a decrease from $48,600 in the prior year period[70](index=70&type=chunk) Estimated Future Lease Obligations (in thousands) | Year | Estimated future lease obligation | | :-------------------------- | :-------------------------- | | 2023 (remaining nine months) | $732 | | 2024 | $904 | | 2025 | $687 | | Total minimum payments | $2,323 | | Total lease liabilities | $2,210 | | Long-term lease liability | $1,321 | [Note 11. Treasury Stock](index=15&type=section&id=Note%2011.%20Treasury%20Stock) The company's share repurchase program, which expired in September 2021, resulted in the purchase of approximately 541,000 shares for a total cost of $5.4 million - The share repurchase program expired in **September 2021**[73](index=73&type=chunk) - Total shares purchased under the program: **541,000 shares for $5.4 million**[73](index=73&type=chunk) [Note 12. Income Taxes](index=15&type=section&id=Note%2012.%20Income%20Taxes) The company's effective income tax rate was -2.9% for Q1 2023, primarily due to the utilization of deferred tax attributes with a full valuation allowance, a portion of which was released - Effective income tax rate: **-2.9% for Q1 2023** (compared to -3.3% for Q1 2022)[74](index=74&type=chunk) - The variance from the U.S. federal statutory rate of 21.0% is primarily due to the utilization of deferred tax attributes that had a full valuation allowance[74](index=74&type=chunk) - A portion of the valuation allowance was released in Q1 2023 due to deferred tax liabilities associated with acquired intangible assets from the NimbeLink acquisition[76](index=76&type=chunk) [Note 13. Stockholders' Equity](index=15&type=section&id=Note%2013.%20Stockholders'%20Equity) This note provides details on common stock reserved for future issuance under various equity incentive plans, including increases in authorized shares for the 2016 Plan and 2016 Employee Stock Purchase Plan Common Stock Reserved for Future Issuance (in thousands) | Item | March 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------- | :---------------- | | Stock options issued and outstanding | 2,224 | 2,065 | | Stock awards issued and outstanding | 822 | 581 | | Authorized for grants under the 2016 Equity Incentive Plan | 328 | 507 | | Authorized for grants under the Inducement Plan | 323 | 294 | | Authorized for grants under the 2016 Employee Stock Purchase Plan | 457 | 378 | | Total | 4,154 | 3,825 | - Authorized shares for the **2016 Plan increased by 431,000 shares** on January 1, 2023, due to evergreen provisions[78](index=78&type=chunk) - Authorized shares for the **2016 Employee Stock Purchase Plan increased by 100,000 shares** on January 1, 2023, due to evergreen provisions[79](index=79&type=chunk) [Note 14. Stock Based Compensation](index=16&type=section&id=Note%2014.%20Stock%20Based%20Compensation) This note details stock-based compensation expense, which decreased to $0.981 million in Q1 2023, and summarizes activity for stock options, restricted stock units (RSUs), and performance stock units (PSUs) Stock-Based Compensation Expense (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | % Change | | :-------------------------------- | :----- | :----- | :----- | :------- | | Cost of goods sold | $15 | $13 | $2 | 15.4% | | Research and development | $237 | $267 | $(30) | (11.2)% | | Sales and marketing | $161 | $287 | $(126) | (43.9)% | | General and administrative | $568 | $674 | $(106) | (15.7)% | | Total stock-based compensation expense | $981 | $1,241 | $(260) | (20.9)% | - Unrecognized compensation cost for unvested stock options was **$3.6 million** (expected over 2.6 years) and for unvested restricted stock units was **$5.1 million** (expected over 3.4 years) as of March 31, 2023[82](index=82&type=chunk)[84](index=84&type=chunk) - The company settled **$0.9 million of 2022 bonus awards** by granting 187,200 immediately vested RSUs in Q1 2023[87](index=87&type=chunk) [Note 15. Commitments and Contingencies](index=17&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) This note discloses severance costs incurred and the general warranty reserve, also mentioning indemnification agreements with no material costs to date - Severance costs incurred and paid were **$0.1 million** for the three months ended March 31, 2023[90](index=90&type=chunk) - A general warranty reserve of approximately **$0.1 million** was recorded as of March 31, 2023[91](index=91&type=chunk) [Note 16. Concentration of Credit Risk](index=18&type=section&id=Note%2016.%20Concentration%20of%20Credit%20Risk) This note highlights significant customer concentrations in sales and accounts receivable and addresses the concentration of cash, noting no losses from a bank placed into FDIC receivership Concentration of Sales (Three months ended March 31) | Customer | 2023 | 2022 | | :--------- | :--- | :--- | | Customer A | 16 % | 12 % | | Customer B | 14 % | 17 % | | Customer C | 13 % | 6 % | | Customer D | 11 % | 12 % | Concentration of Trade Accounts Receivable | Customer | March 31, 2023 | December 31, 2022 | | :--------- | :------------- | :---------------- | | Customer A | 13 % | 21 % | | Customer B | 11 % | 3 % | | Customer C | 11 % | 0 % | | Customer D | 10 % | 15 % | - The bank where most of the Company's cash was held was placed into receivership with the FDIC on March 10, 2023; however, depositors had access to their funds, and the Company experienced **no losses**; the Company is reallocating cash deposits to mitigate concentration risk[95](index=95&type=chunk) [Note 17. Disaggregated Revenue](index=19&type=section&id=Note%2017.%20Disaggregated%20Revenue) This note disaggregates revenue by market group (Enterprise, Consumer, Automotive) and by geography (North America, China, Rest of the world), showing an overall sales decrease of 6.2% year-over-year Disaggregated Revenue by Market Group (Three months ended March 31, in thousands) | Market Group | 2023 | 2022 | Change | % Change | | :----------- | :----- | :----- | :----- | :------- | | Enterprise | $8,437 | $8,629 | $(192) | (2.2)% | | Consumer | $5,132 | $6,062 | $(930) | (15.3)% | | Automotive | $2,875 | $2,831 | $44 | 1.6% | | Total sales | $16,444 | $17,522 | $(1,078) | (6.2)% | Disaggregated Revenue by Geography (Three months ended March 31, in thousands) | Geography | 2023 | 2022 | Change | % Change | | :-------------------------- | :----- | :----- | :----- | :------- | | North America | $10,168 | $10,479 | $(311) | (3.0)% | | China (including Hong Kong and Taiwan) | $5,969 | $6,459 | $(490) | (7.6)% | | Rest of the world | $307 | $584 | $(277) | (47.4)% | | Total sales | $16,444 | $17,522 | $(1,078) | (6.2)% | [Note 18. Subsequent Events](index=19&type=section&id=Note%2018.%20Subsequent%20Events) No subsequent events requiring disclosure were reported - No subsequent events were reported[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2023, covering business overview, core markets, operational processes, and financial performance [Overview](index=20&type=section&id=Overview) Airgain is a global provider of wireless connectivity solutions, including embedded components, external antennas, and integrated systems, transitioning to a wireless systems provider with a fabless manufacturing model - Airgain provides wireless connectivity solutions (embedded components, external antennas, integrated systems) globally, simplifying connectivity and enhancing wireless signals[100](index=100&type=chunk) - The company is transitioning from a component provider to a wireless systems provider, focusing on platforms like AirgainConnect (e.g., AC-HPUE™ antenna-modem) and cellular-based asset trackers[101](index=101&type=chunk) - Airgain adopted a **fabless manufacturing model** in 2022, utilizing third parties for production while maintaining quality oversight, and holds over **281 issued and pending patents** worldwide[102](index=102&type=chunk) [Core Markets](index=20&type=section&id=Core%20Markets) Airgain focuses on three core markets: Enterprise (IIoT, smart cities, asset tracking), Consumer (Wi-Fi Mesh, smart TVs, 5G FWA), and Automotive (fleet and aftermarket segments, rugged vehicular wireless routers) - **Enterprise Market:** Provides reliable wireless access for high-density environments (buildings, campuses, transportation terminals, stadiums) with antennas for access points, fixed wireless access, small cells, and embedded modems for IIoT, EV charging, smart city, agriculture, and asset tracking[103](index=103&type=chunk) - **Consumer Market:** Deploys antennas in consumer access points, wireless gateways, Wi-Fi Mesh systems, smart TVs, smart home devices, and supports technologies like WLAN, Wi-Fi, LTE, 5G, and LPWAN, with a focus on improving 5G access via FWA and repeaters[103](index=103&type=chunk) - **Automotive Market:** Products are deployed in fleet and aftermarket vehicles, supporting Wi-Fi, LTE, 5G, Satellite, and LPWAN, with a rising demand for in-vehicle connectivity in segments like first responder, utility, agriculture, and service fleets[103](index=103&type=chunk) [Our Process](index=21&type=section&id=Our%20Process) Airgain's process involves partnering with customers from early design stages for internal antennas, offering custom engineering and OTA testing, and assisting with carrier certification for embedded modems - For internal antennas, Airgain partners with customers from prototyping to device throughput testing, offering design, custom engineering, integration, and over-the-air (OTA) testing to optimize performance and reduce time to market[104](index=104&type=chunk) - For embedded modems, the company enables faster time to market by assisting with carrier certification and providing future-proofing features like remote firmware updates and module vendor flexibility[105](index=105&type=chunk) [COVID-19 Pandemic](index=21&type=section&id=COVID-19%20Pandemic) The COVID-19 pandemic caused instability and disruptions, negatively impacting sales and operating results in 2021 and 2022, though recent effects have lessened, future impacts remain uncertain - COVID-19 caused significant instability, including travel restrictions, customer/supplier facility closures, and supply chain disruptions, negatively impacting sales and operating results in 2021 and 2022[106](index=106&type=chunk) - The negative effects from COVID-19 have recently had less impact on sales and operations, but future impacts remain highly uncertain[106](index=106&type=chunk)[107](index=107&type=chunk) [Factors Affecting Our Operating Results](index=21&type=section&id=Factors%20Affecting%20Our%20Operating%20Results) The company's performance is influenced by macroeconomic uncertainties, global supply shortages, inflation, technology leadership, market expansion, manufacturing costs, and product diversification - Performance and future success depend on macroeconomic uncertainties, epidemic diseases, recovery from global supply shortages, inflation's impact on consumer spending, and the ability to develop technology leadership and expand markets[108](index=108&type=chunk) - Other factors include manufacturing costs, investments in growth, expansion into consumer, enterprise, and automotive markets, average selling prices, number of antennas per device, and product diversification[109](index=109&type=chunk) - Inflation increases raw material and employee-related costs, and global economic conditions, trade disputes, or political instability could impact financial results, though no material adverse impact was noted for Q1 2023[111](index=111&type=chunk) [Seasonality](index=22&type=section&id=Seasonality) Operating results are not historically subject to significant seasonal variations, but sales tend to be lower in the first quarter due to the Lunar New Year and broader economic conditions - Operating results historically lack significant seasonal variations, but Q1 sales tend to be lower due to the Lunar New Year[113](index=113&type=chunk) - Broader economic impacts from COVID-19 and general weakening economic conditions may contribute to slower sales[113](index=113&type=chunk) [Key Components of Our Results of Operations and Financial Condition](index=22&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations%20and%20Financial%20Condition) This section defines the key components influencing Airgain's financial results, including sales, cost of goods sold, and operating expenses, and discusses the provision for income taxes - **Sales:** Primarily generated from product sales, recognized at shipment, with immaterial service and subscription revenue[114](index=114&type=chunk) - **Cost of Goods Sold:** Includes manufacturing costs from third-party contract manufacturers and personnel costs for service/subscription revenues[115](index=115&type=chunk) - **Operating Expenses:** Classified into Research and Development, Sales and Marketing, and General and Administrative, with personnel costs (salaries, benefits, stock-based compensation) being the largest component[116](index=116&type=chunk) - **Research and Development:** Expected to increase in absolute dollars with continued investment in new solutions and markets[117](index=117&type=chunk) - **Provision for Income Taxes:** Realizability of deferred tax assets is assessed quarterly, with a valuation allowance established for unrealizable portions, dependent on future taxable income[122](index=122&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's operating results for the three months ended March 31, 2023, versus 2022, highlighting changes in sales, cost of goods sold, gross profit, operating expenses, and other income/expense, leading to an increased net loss Statement of Operations Data (Three months ended March 31, in thousands and as % of sales) | Item | 2023 (k$) | 2023 (%) | 2022 (k$) | 2022 (%) | Change (k$) | % Change | | :-------------------------- | :-------- | :------- | :-------- | :------- | :---------- | :------- | | Sales | $16,444 | 100.0% | $17,522 | 100.0% | $(1,078) | (6.2)% | | Cost of goods sold | $10,126 | 61.6% | $10,366 | 59.2% | $(240) | (2.3)% | | Gross profit | $6,318 | 38.4% | $7,156 | 40.8% | $(838) | (11.7)% | | Research and development | $2,449 | 14.9% | $3,242 | 18.4% | $(793) | (24.5)% | | Sales and marketing | $2,866 | 17.4% | $2,855 | 16.3% | $11 | 0.4% | | General and administrative | $3,793 | 23.1% | $3,485 | 19.9% | $308 | 8.8% | | Total operating expenses | $9,108 | 55.4% | $9,582 | 54.6% | $(474) | (4.9)% | | Loss from operations | $(2,790) | (17.0)% | $(2,426) | (13.8)% | $(364) | 15.0% | | Net loss | $(2,858) | (17.4)% | $(2,521) | (14.4)% | $(337) | 13.4% | [Sales Performance](index=24&type=section&id=Sales%20Performance) Sales decreased by $1.1 million (6.2%) year-over-year to $16.4 million in Q1 2023, driven by lower Enterprise and Consumer market sales, partially offset by a slight increase in Automotive market sales - Total sales decreased by **$1.1 million (6.2%) to $16.4 million** for Q1 2023 compared to Q1 2022[126](index=126&type=chunk) - Enterprise market sales decreased by **$0.2 million** due to lower IIoT product sales[126](index=126&type=chunk) - Consumer market sales decreased by **$1.0 million** due to demand softness[126](index=126&type=chunk) - Automotive market sales increased by **$0.1 million**[126](index=126&type=chunk) [Cost of Goods Sold and Gross Profit](index=24&type=section&id=Cost%20of%20Goods%20Sold%20and%20Gross%20Profit) Cost of goods sold decreased by $0.2 million (2.3%) due to lower sales, but gross profit decreased more significantly by $0.8 million (11.7%), with gross profit margin declining to 38.4% due to an unfavorable sales mix - Cost of goods sold decreased by **$0.2 million (2.3%)** for Q1 2023, primarily due to sales decline[127](index=127&type=chunk) - Gross profit decreased by **$0.8 million (11.7%) to $6.3 million** for Q1 2023[128](index=128&type=chunk)[129](index=129&type=chunk) - Gross profit as a percentage of sales decreased by **240 basis points to 38.4%** due to an unfavorable sales mix in the consumer and enterprise markets[128](index=128&type=chunk)[129](index=129&type=chunk) [Operating Expenses Analysis](index=25&type=section&id=Operating%20Expenses%20Analysis) Total operating expenses decreased by $0.5 million (4.9%) in Q1 2023, driven by lower variable compensation and reduced engineering outsourced services, partially offset by increased trade show, advertising, and travel costs - Total operating expenses decreased by **$0.5 million (4.9%) to $9.1 million** for Q1 2023[130](index=130&type=chunk)[131](index=131&type=chunk) - The decrease was primarily due to lower company-wide variable compensation costs and reduced engineering outsourced services[131](index=131&type=chunk) - Research and development expenses decreased by **$0.8 million (24.5%)**, while General and administrative expenses increased by **$0.3 million (8.8%)**[130](index=130&type=chunk) [Other (Income) Expense](index=25&type=section&id=Other%20(Income)%20Expense) The company reported total other income of $(14) thousand in Q1 2023, a change from $10 thousand in other expense in Q1 2022, primarily driven by increased net interest income Other (Income) Expense (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | % Change | | :------------------ | :----- | :----- | :----- | :------- | | Interest income, net | $(18) | $(5) | $(13) | 260.0% | | Other expense | $4 | $15 | $(11) | (73.3)% | | Total other income | $(14) | $10 | $(24) | (240.0)% | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Airgain had $9.8 million in cash and cash equivalents as of March 31, 2023, and an accumulated deficit of $69.0 million, with management believing existing cash and operational cash flow will be sufficient for the next 12 months - Cash and cash equivalents totaled **$9.8 million** at March 31, 2023[133](index=133&type=chunk) - The company has an accumulated deficit of **$69.0 million** as of March 31, 2023, having incurred net losses in prior years[133](index=133&type=chunk) - The **$4.0 million revolving line of credit** with Silicon Valley Bank expired in February 2023[134](index=134&type=chunk) - Management believes existing cash and cash equivalents, combined with cash proceeds from operations, will be sufficient to meet working capital requirements for at least the next 12 months, despite planned investments in sales force, engineering, and R&D[135](index=135&type=chunk) Summary of Cash Flow Activity (Three months ended March 31, in thousands) | Item | 2023 | 2022 | Change | | :------------------------------------------ | :----- | :----- | :----- | | Net cash (used in) provided by operating activities | $(1,434) | $4,152 | $(5,586) | | Net cash used in investing activities | $(89) | $(128) | $39 | | Net cash (used in) provided by financing activities | $(541) | $120 | $(661) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(2,064) | $4,144 | $(6,208) | - Net cash used in operating activities was **$1.4 million** in Q1 2023, a significant decrease from $4.2 million provided in Q1 2022[137](index=137&type=chunk)[138](index=138&type=chunk) - Net cash used in financing activities was **$0.5 million** in Q1 2023, primarily for taxes on net share settlement of restricted stock units, compared to $0.1 million provided in Q1 2022[139](index=139&type=chunk)[140](index=140&type=chunk) [Contractual Obligations and Commitments](index=26&type=section&id=Contractual%20Obligations%20and%20Commitments) No material changes to contractual obligations were reported during the three months ended March 31, 2023, compared to the disclosures in the Annual Report on Form 10-K for 2022 - No material changes to contractual obligations and commitments were reported for Q1 2023[141](index=141&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) The preparation of financial statements requires management to make estimates and assumptions, with no material changes to critical accounting policies and estimates reported for Q1 2023 - No material changes to critical accounting policies and estimates were reported for Q1 2023[143](index=143&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on recent accounting pronouncements, which indicated the adoption of ASU 2016-13 with no material impact and no other material pronouncements expected - Refer to Note 2 for details on recent accounting pronouncements[144](index=144&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Airgain, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Airgain, Inc. is not required to provide quantitative and qualitative disclosures about market risk[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were **effective at the reasonable assurance level** as of March 31, 2023[148](index=148&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2023[149](index=149&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company may be involved in legal proceedings in the ordinary course of business, but currently believes that the final outcome will not have a material adverse effect on its financial condition or business - The company believes that the final outcome of current legal proceedings will not have a material adverse effect on its financial condition or business[152](index=152&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022, were reported - No material changes to risk factors were reported compared to the Annual Report on Form 10-K for 2022[153](index=153&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - No unregistered sales of equity securities were reported[154](index=154&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[155](index=155&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported during the period - No mine safety disclosures were reported[156](index=156&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No other information requiring disclosure was reported under this item - No other information requiring disclosure was reported[157](index=157&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents, certifications, and XBRL interactive data files - The section lists various exhibits, including Amended and Restated Certificate of Incorporation, Bylaws, Specimen stock certificate, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents[157](index=157&type=chunk)[158](index=158&type=chunk) [SIGNATURES](index=30&type=section&id=SIGNATURES) This section formally attests to the accuracy and completeness of the report through authorized signatures [Signatures](index=30&type=section&id=Signatures) The report is duly signed on behalf of Airgain, Inc. by Jacob Suen, President and Chief Executive Officer, and Michael Elbaz, Chief Financial Officer, on May 11, 2023 - Report signed by **Jacob Suen (President and CEO)** and **Michael Elbaz (CFO)** on May 11, 2023[162](index=162&type=chunk)

Financial Performance and Challenges - The company has an accumulated deficit of $66.1 million as of December 31, 2022, indicating a history of losses and potential future profitability challenges [50]. - The company incurred an accumulated deficit of $66.1 million as of December 31, 2022, and has a history of net losses since its inception before 2013 [66]. - The company expects operating expenses to increase as it hires additional personnel and develops new antenna products, which may impact future profitability [66]. - The company’s operating results may fluctuate significantly due to various factors, including demand variability and global economic conditions [54]. - Economic and market conditions, including rising interest rates and geopolitical events, may negatively impact the company’s business and operating results [146]. Market and Competitive Landscape - The company aims to drive growth in the enterprise and automotive markets, which may develop at varying growth rates and depend on competitive factors [53]. - The company faces intense competition in the antenna solutions market, with pricing pressure and potential loss of market share being significant risks [56]. - The company faces intense competition in the electronics market, leading to aggressive price negotiations and potential lower margins [70]. - The market for the AirgainConnect AC-HPUE product is highly dependent on the first responders market and AT&T's FirstNet network, which has not yet resulted in significant sales [53]. Supply Chain and Operational Risks - The company has experienced significant disruptions in the supply chain, affecting its ability to secure critical components for product development and deployment [50]. - Supply chain disruptions, particularly in semiconductor components, have led to delays and increased costs, impacting the company's ability to meet customer demand [75]. - The company relies on a limited number of contract manufacturers, primarily located in China, which poses risks related to quality control and timely delivery [71]. - The company has contracted with a new contract manufacturer outside of China to diversify its supply chain and avoid supplemental tariffs on imported components [123]. - The U.S. Uyghur Forced Labor Prevention Act may impact the sourcing and availability of products, potentially leading to supply chain disruptions and reputational harm [120]. Product Development and Innovation - The company expects to invest significantly in ongoing research and development to stay competitive in the rapidly evolving wireless market [61]. - The company’s future success depends on its ability to develop and introduce new products that meet customer needs in a rapidly changing technological landscape [61]. - The introduction of new products and enhancements requires coordination with customers, suppliers, and manufacturers, and any failure in this area could adversely affect operating results [61]. - Lengthy sales cycles for some products can last several months to a year or longer, complicating forecasting and increasing the risk of customer cancellations [65]. Customer and Revenue Concentration - Customers accounting for 10% or more of total revenue contributed 57% of sales in aggregate for the year ended December 31, 2022 [69]. - The company relies significantly on channel partners for sales, and any failure in these relationships could materially reduce sales [79]. Regulatory and Compliance Issues - The company may incur substantial costs related to compliance with evolving data privacy laws and regulations, which could adversely affect its financial condition [115]. - The company is subject to governmental export and import controls that could impair its ability to compete in international markets [117]. - Changes in U.S. trade policies and tariffs could significantly reduce global trade and adversely affect the company's business and financial condition [123]. - The company may face challenges in meeting evolving regulatory standards, which could lead to increased costs and operational burdens [124]. Human Resources and Management - The company’s ability to attract and retain qualified personnel is critical for its success, especially in design and technical roles [84]. - The company anticipates significant expansion to achieve its business objectives, which may strain management and operational resources [102]. - The company’s future growth strategy may involve expanding its group of contractors or consultants, which requires effective management to ensure quality [102]. Legal and Litigation Risks - The company is subject to risks from litigation or legal proceedings that could expose it to significant liabilities and damage its reputation [138]. - The company is obligated to indemnify channel partners and end-customers for certain intellectual property infringement claims, which could lead to significant costs [111]. - The company may face significant liabilities and costs due to potential infringement claims from third parties, which could adversely affect its business [108]. International Operations - Approximately 40% of the company's products, based on sales, are outside of North America, indicating a significant international presence [116]. - The company is continuing to expand its international operations as part of its growth strategy, which includes increasing its salesforce reach internationally [116]. Financial and Stock Market Considerations - The company has never declared or paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future [133]. - The trading price of the company's common stock may be volatile, influenced by various market factors and analyst coverage [126]. - The company is classified as a "smaller reporting company," which allows it to take advantage of reduced disclosure obligations until it meets certain thresholds, such as a market value of $250 million or annual revenue of $100 million [135]. - Significant costs are incurred as a result of operating as a public company, particularly after ceasing to qualify as a smaller reporting company, which may require hiring additional staff for compliance [137]. Technology and Information Systems - Information technology systems are critical for the company’s operations, and failures or breaches could materially affect product sales and financial condition [141]. Environmental and Safety Compliance - The company may face increased costs and liabilities due to compliance with environmental and worker health and safety laws [99]. Natural Disaster Risks - The company’s operations are at risk from natural disasters, particularly given its headquarters in Southern California and contract manufacturers in seismically active regions [142].

Airgain, Inc. (NASDAQ:AIRG) Q4 2022 Earnings Conference Call March 9, 2023 5:00 PM ET Company Participants Jacob Suen - President & CEO Michael Elbaz - CFO Morad Sbahi - Chief Revenue Officer Conference Call Participants Scott Searle - ROTH Capital Anthony Stoss - Craig-Hallum Craig Ellis - B. Riley Securities Operator Good afternoon. Welcome to Airgain’s Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Shamaley, and I will be your coordinator for today’s call. Joining us for today’s c ...

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Airgain's unaudited financial statements for Q3 2022 are presented, covering balance sheets, operations, comprehensive loss, equity, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased from **$66.4 million** at year-end 2021 to **$58.3 million** by September 30, 2022, primarily due to reduced cash, while total liabilities also decreased significantly to **$16.3 million** | Account | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,190 | $14,511 | | Total current assets | $29,992 | $35,489 | | Total assets | $58,293 | $66,390 | | **Liabilities & Equity** | | | | Deferred purchase price liabilities | $153 | $8,726 | | Total current liabilities | $14,367 | $19,887 | | Total liabilities | $16,281 | $22,217 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2022 sales increased to **$19.2 million** from **$15.5 million**, with net loss narrowing to **$1.3 million**, while nine-month sales grew to **$56.0 million** with stable net loss | Metric (in thousands, except per share) | Q3 2022 | Q3 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Sales | $19,198 | $15,455 | $56,006 | $50,129 | | Gross Profit | $7,443 | $5,546 | $22,104 | $19,742 | | Loss from operations | $(1,264) | $(3,046) | $(5,303) | $(7,661) | | Net loss | $(1,299) | $(3,069) | $(5,439) | $(5,441) | | Net loss per share (Basic & Diluted) | $(0.13) | $(0.30) | $(0.53) | $(0.54) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly improved to **$2.1 million** for the nine months ended September 30, 2022, compared to a **$6.9 million** use in the prior year, with total cash decreasing by **$5.3 million** | Cash Flow Activity (in thousands) | Nine months ended Sep 30, 2022 | Nine months ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $2,083 | $(6,921) | | Net cash used in investing activities | $(624) | $(14,727) | | Net cash (used in) provided by financing activities | $(6,780) | $2,429 | | Net decrease in cash, cash equivalents and restricted cash | $(5,321) | $(19,219) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's wireless connectivity solutions business, the January 2021 NimbeLink acquisition, revenue disaggregation by market and geography, and customer concentration - The company operates as a single segment providing connectivity solutions (embedded components, external antennas, integrated systems) for consumer, enterprise, and automotive markets[21](index=21&type=chunk)[23](index=23&type=chunk) - In January 2021, the company acquired NimbeLink Corp., an industrial IoT company, for a total purchase consideration of approximately **$22.7 million**, which included **$7.1 million** of goodwill[40](index=40&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) | Customer | % of Total Revenue (9 Months 2022) | % of Total Revenue (9 Months 2021) | | :--- | :--- | :--- | | Customer A | 17% | 13% | | Customer B | 12% | 3% | | Customer C | 13% | 15% | | Revenue by Market Group (in thousands) | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | | Consumer | $19,377 | $23,800 | | Enterprise | $24,496 | $19,231 | | Automotive | $12,133 | $7,098 | | **Total Sales** | **$56,006** | **$50,129** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q3 2022 financial results, highlighting a **24.2%** sales increase driven by consumer and automotive markets, improved gross margin, and sufficient liquidity for the next 12 months [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q3 2022 sales increased by **$3.7 million** (24.2%) year-over-year, driven by consumer and automotive markets, while gross profit margin improved to **38.8%** due to favorable product mix | Metric | Q3 2022 | Q3 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales | $19,198 | $15,455 | $3,743 | 24.2% | | Gross Profit | $7,443 | $5,546 | $1,897 | 34.2% | | Gross Margin | 38.8% | 35.9% | - | 2.9 pts | - The increase in sales for the nine months ended Sep 30, 2022 was driven by a **$5.3 million** increase in the enterprise market and a **$5.0 million** increase in the automotive market, offset by a **$4.4 million** decrease in the consumer market impacted by supply shortages[123](index=123&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$9.2 million** in cash as of September 30, 2022, with operations providing **$2.1 million** in cash for the first nine months, and believes existing liquidity is sufficient for the next 12 months - Cash and cash equivalents were **$9.2 million** at September 30, 2022[135](index=135&type=chunk) - In February 2022, the company secured a **$4.0 million** revolving line of credit with Silicon Valley Bank, which remained undrawn as of the quarter's end[136](index=136&type=chunk) - Net cash provided by operating activities was **$2.1 million** for the nine months ended September 30, 2022, compared to net cash used of **$6.9 million** in the prior year period[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Airgain is classified as a smaller reporting company and is therefore not required to provide detailed disclosures about market risk - As a smaller reporting company, Airgain is exempt from the requirement to provide information under this item[144](index=144&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022[145](index=145&type=chunk) - No changes in internal control over financial reporting occurred during the nine months ended September 30, 2022, that materially affected, or are reasonably likely to materially affect, internal controls[146](index=146&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no involvement in any legal proceedings that would have a material adverse effect on its financial condition or business - The company is not currently involved in any material legal proceedings outside the ordinary course of business[148](index=148&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, but the cessation of AT&T promotional service credits for the AC-HPUE product in Q3 2022 adversely affected sales - The company's success depends on its ability to develop and introduce new products for the rapidly changing wireless market, such as the AirgainConnect platform[149](index=149&type=chunk) - A significant risk emerged in Q3 2022 when AT&T ceased special promotional service credits related to the company's AC-HPUE product, which has adversely affected and may continue to adversely affect sales of that product[149](index=149&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) Morad Sbahi was appointed Chief Revenue Officer effective November 7, 2022, with details of his amended employment agreement, including salary and equity awards - Effective November 7, 2022, Morad Sbahi was appointed as the company's Chief Revenue Officer, previously serving as Senior Vice President of Global Product and Marketing[151](index=151&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required certifications

Airgain, Inc. (NASDAQ:AIRG) Q3 2022 Earnings Conference Call November 10, 2022 5:00 PM ET Company Participants Jacob Suen - President and Chief Executive Officer Michael Elbaz - Chief Financial Officer Morad Sbahi - Chief Revenue Officer Conference Call Participants Scott Searle - ROTH Capital Sabrina Baxamusa - William Blair Tim Savageaux - Northland Capital Markets Michael Mani - B. Riley Operator Good afternoon. Welcome to Airgain’s Third Quarter 2022 Earnings Conference Call. My name is Diego and I will ...

Airgain, Inc. (NASDAQ:AIRG) Q1 2021 Results Conference Call May 10, 2022 5:00 PM ET Company Participants Jacob Suen - Chief Executive Officer Morad Sbahi - Senior Vice President of Product and Marking Victor Blair - Senior Vice President of Operation Conference Call Participants Scott Searle - ROTH Capital Alessandra Vecchi - William Blair Anthony Stoss - Craig Hallum Craig Ellis - B. Riley Securities Tim Savageaux - Northland Capital Markets Operator Good afternoon. Welcome to Airgain’s First Quarter 2022 ...

Business Transition and Strategy - The company reported a significant transition from a components provider to a wireless system solutions provider, leveraging its experience in embedded antenna solutions and modems [112]. - The acquisition of NimbeLink Corp. on January 7, 2021, supports the company's strategy to broaden market diversification, particularly in the industrial IoT space [113]. - The company anticipates growth in sales of the AirgainConnect AC-HPUE and related products, which are crucial for future performance [123]. - The automotive market is a key focus, with a strategy to augment sales in the aftermarket and secure design wins with automotive OEMs [117]. - The company plans to continue investing in long-term growth, including expanding its sales force and research and development for new products and technology solutions [145]. Market Performance - The consumer market is experiencing a rebound, although the COVID-19 pandemic has caused historic lows in orders for the core consumer business [121]. - Revenue from the consumer market decreased by $4.2 million to $6.1 million, while revenue from the enterprise market increased by $4.2 million to $8.6 million for the same period [137]. - Total sales for the three months ended March 31, 2022, were $17.5 million, a slight increase of 0.8% compared to $17.4 million for the same period in 2021 [137]. - The company’s sales tend to be lower in the first quarter due to the Chinese New Year, compounded by broader economic impacts from the COVID-19 pandemic [124]. Financial Results - Gross profit for the three months ended March 31, 2022, was $7.2 million, representing a 3.8% increase from $6.9 million in the same period in 2021 [140]. - Operating expenses increased by 9.2% to $9.6 million for the three months ended March 31, 2022, compared to $8.8 million for the same period in 2021 [141]. - Research and development expenses rose by 19.8% to $3.2 million, primarily due to higher personnel-related costs [142]. - The company reported a net loss of $2.5 million for the three months ended March 31, 2022, compared to a net income of $0.2 million in the same period in 2021 [136]. - Cash, cash equivalents, and restricted cash totaled $18.8 million as of March 31, 2022 [144]. - Net cash provided by operating activities was $4.2 million for the three months ended March 31, 2022, driven by a $4.5 million net change in operating assets and liabilities [147]. - The company has an accumulated deficit of $60.0 million as of March 31, 2022 [144]. Operational Challenges - The company has implemented various practices to mitigate the impact of COVID-19 on operations, including remote work and modified customer engagement [120]. - The company’s operating results are affected by pricing pressures, which may force it to lower prices below established list prices [123]. - The company expects research and development expenses to increase in absolute dollars as it invests in new solutions and improving supply chain efficiencies [129]. Regulatory and Reporting - The company is classified as a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934, and is not required to provide detailed market risk disclosures [152].