Airgain(AIRG) - 2024 Q3 - Quarterly Report

Financial Performance - Sales for the three months ended September 30, 2024, increased by $2.4 million or 17.6$16.1 million [88]. - Gross profit for the three months ended September 30, 2024, increased by $1.5 million or 28.2$1.4 million or 19.3%, totaling $8.5 million [92]. - Research and development expenses for the three months ended September 30, 2024, increased by$0.6 million or 24.2%, amounting to $2.9 million [92]. - Cost of goods sold for the three months ended September 30, 2024, increased by$0.9 million or 11.0%, totaling $9.4 million [90]. - Net loss for the three months ended September 30, 2024, was$1.8 million, compared to a net loss of $1.9 million in the prior year [86]. - Sales for the nine months ended September 30, 2024, decreased by$0.5 million or 1.0%, totaling $45.5 million [88]. - Gross profit for the nine months ended September 30, 2024, increased by$0.6 million or 3.4%, with a gross profit margin of 40.5% compared to 38.8% in the prior year [91]. - Total operating expenses for the nine months ended September 30, 2024, increased by $0.6 million or 2.6$25.4 million [92]. - Net loss before income taxes for the three months ended September 30, 2024, was $1.8 million, compared to a loss of$1.9 million in the prior year [86]. - Income tax expense for the three months ended September 30, 2024 decreased by $43,000, a 1075.0$0.2 million or 272.6% compared to the same period in the prior year [95]. - The company incurred a net loss of $6.7 million for the nine months ended September 30, 2024, contributing to net cash used in operating activities of$3.5 million [99]. - As of September 30, 2024, the company had cash and cash equivalents of $7.3 million [96]. - The company has an accumulated deficit of$83.5 million as of September 30, 2024 [97]. Market and Product Development - Airgain's enterprise market sales experienced a sequential decline due to demand softness and excess inventories, with expectations of inventory surplus extending into the first half of 2025 [75]. - The company expanded its product offerings with the second generation AirgainConnect® Fleet system solution, a low profile, roof-mounted, all-in-one 5G vehicle gateway [74]. - Airgain's subscription-based NLink cloud-based device enablement platform provides a recurring revenue component for asset tracking solutions [74]. - Airgain's embedded cellular modems and antennas are deployed across various sectors, including smart cities, logistics, and agriculture, minimizing the need for additional carrier certifications [74]. - The consumer market is growing, with Airgain shipping a tier-one MNO embedded antenna system and a tier-one MSO Wi-Fi 7 router antenna system [74]. - Macroeconomic conditions have created demand softness, particularly affecting the enterprise market, while recovery is noted in the consumer segment [75]. - The company anticipates an increase in research and development expenses as it continues to invest in new solutions and markets [82]. Operational and Financial Strategy - The company utilizes an outsource manufacturing model while maintaining oversight for quality, testing, and delivery timelines [73]. - Airgain's operating expenses are primarily driven by personnel costs, which include salaries, benefits, and stock-based compensation [81]. - The company recognizes revenue from product sales at the time of shipment, reflecting the transfer of control over promised goods [79]. - Net cash provided by financing activities was $3.1 million for the nine months ended September 30, 2024, primarily from the issuance of approximately 629,000 shares of common stock [100]. - The company plans to continue investing in long-term growth, including expanding engineering and sales teams to penetrate markets [97]. - As of September 30, 2024,$1.7 million remains available under the At-the-Market Issuance Sales Agreement for future sales of common stock [105]. - The company applied for Employee Retention Credit refunds totaling $2.5 million in August 2023, pending IRS review [101]. - The company concluded that no impairment charge to goodwill was required as of September 30, 2024, based on current and expected cash flows [107].