Airgain(AIRG) - 2025 Q1 - Quarterly Report

PART I Item 1. Condensed Consolidated Financial Statements (Unaudited) For Q1 2025, Airgain, Inc. reported sales of $12.0 million and a net loss of $1.5 million, an improvement from Q1 2024 largely due to an Employee Retention Credit refund, with total assets decreasing to $46.1 million Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $46.1 million from $48.4 million at year-end 2024, driven by reduced cash and receivables, while total liabilities also declined to $15.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,401 | $8,510 | | Total current assets | $24,026 | $25,831 | | Total assets | $46,116 | $48,443 | | Total current liabilities | $11,395 | $13,501 | | Total liabilities | $15,790 | $17,474 | | Total stockholders' equity | $30,326 | $30,969 | Condensed Consolidated Statements of Operations For Q1 2025, the company reported a net loss of $1.55 million, an improvement from $2.46 million in Q1 2024, despite sales decreasing to $12.0 million, largely due to a $1.49 million Employee Retention Credit refund Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Sales | $12,013 | $14,231 | | Gross Profit | $5,160 | $5,576 | | Loss from operations | $(3,096) | $(2,629) | | Employee retention credit refund | $1,494 | $— | | Net loss | $(1,546) | $(2,455) | | Net loss per share (Basic & Diluted) | $(0.13) | $(0.23) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved slightly to $1.0 million in Q1 2025, resulting in a total net decrease in cash of $1.1 million for the quarter, ending with $7.5 million in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,025) | $(1,119) | | Net cash used in investing activities | $(42) | $(60) | | Net cash (used in) provided by financing activities | $(43) | $469 | | Net decrease in cash, cash equivalents and restricted cash | $(1,109) | $(712) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation showing significant Enterprise sales decline offset by Consumer growth, high customer concentration, and the recognition of a $1.5 million Employee Retention Credit refund Disaggregated Revenue by Market and Geography (in thousands) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | By Market Group | | | | Enterprise | $4,341 | $8,879 | | Consumer | $6,401 | $3,511 | | Automotive | $1,271 | $1,841 | | By Geography | | | | North America | $5,221 | $10,024 | | China (incl. HK, Taiwan) | $6,512 | $3,303 | - Customer concentration is significant, with Customer A accounting for 37% of total revenue in Q1 2025, up from 15% in Q1 2024 Customer B and C accounted for 13% and 11% respectively[104] - The company operates as a single operating and reportable segment providing wireless connectivity solutions, as reviewed by the Chief Operating Decision Maker (CODM)[25][26][110] - In April 2025, subsequent to the quarter end, the company received an additional ERC payroll tax refund of $0.4 million, net of fees, plus $0.1 million in interest[113] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 15.6% sales decline to lower Enterprise and Automotive sales, offset by Consumer market recovery, with gross margin improving to 43.0% and sufficient liquidity for the next 12 months Results of Operations Q1 2025 sales decreased by $2.2 million (15.6%) year-over-year, primarily due to declines in Enterprise and Automotive sales, partially offset by Consumer growth, while gross profit margin improved to 43.0% Sales by Market (in millions) | Market | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Enterprise | $4.3 | $8.9 | $(4.6) | (51.8)% | | Automotive | $1.3 | $1.8 | $(0.5) | (27.8)% | | Consumer | $6.4 | $3.5 | $2.9 | 82.6% | | Total Sales | $12.0 | $14.2 | $(2.2) | (15.6)% | - Gross profit as a percentage of sales increased to 43.0% in Q1 2025 from 39.2% in Q1 2024, an increase of 380 basis points, primarily driven by improved enterprise product margins and a favorable market sales mix[141] - A $1.5 million Employee Retention Credit (ERC) refund was received in January 2025, significantly improving the net loss for the quarter[143] Liquidity and Capital Resources The company ended Q1 2025 with $7.4 million in cash, believing it has sufficient liquidity for the next 12 months despite an accumulated deficit, and has an At-the-Market (ATM) sales agreement with $0.5 million remaining - Cash and cash equivalents stood at $7.4 million as of March 31, 2025[146] - The company applied for a total of $2.8 million in ERC refunds in 2023 and received $1.5 million in January 2025[152][153] - As of March 31, 2025, $0.5 million remained available for future stock sales under the At-the-Market (ATM) program, with no sales made in Q1 2025[155] Critical Accounting Estimates No material changes occurred in critical accounting policies or estimates from the 2024 Annual Report, and management concluded no goodwill impairment charge was required as of March 31, 2025 - Management assessed goodwill for impairment as of March 31, 2025, and determined that no triggering events indicated that the fair value was less than the carrying amount, thus no impairment charge was necessary[165] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Airgain is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Airgain is exempt from providing quantitative and qualitative disclosures about market risk[169] Item 4. Controls and Procedures As of March 31, 2025, disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[171] - No changes in internal control over financial reporting occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal controls[172] PART II Item 1. Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently involved in any material legal proceedings[175] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, have been identified - No material changes to the risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024, have been identified[176] Item 5. Other Information This section discloses CEO Jacob Suen's adoption of a Rule 10b5-1 trading plan for up to 91,000 shares and the amendment of the At-the-Market (ATM) sales agreement on May 7, 2025 - On March 12, 2025, CEO Jacob Suen adopted a Rule 10b5-1 trading plan for the potential sale of up to 91,000 shares of common stock, effective from June 11, 2025, through June 26, 2026[181] - The company amended and restated its At-the-Market Issuance Sales Agreement on May 7, 2025, with the sales commission payable to Craig-Hallum adjusted to up to 2.5% of gross proceeds[182] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and required certifications from executive officers