Airgain(AIRG) - 2023 Q4 - Annual Results

Financial Results Fourth Quarter 2023 Financial Results Airgain's Q4 2023 sales declined to $10.1 million, resulting in a wider GAAP net loss of $5.5 million Q4 2023 Key Financial Metrics (GAAP vs. Non-GAAP) | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | Sales | $10.1 million | - | | Gross Margin | 29.1% | 30.3% | | Operating Expenses | $8.4 million | $6.5 million | | Net Loss | $5.5 million | $3.5 million | | Net Loss per Share | $(0.52) | $(0.33) | | Adjusted EBITDA | - | $(3.3) million | Q4 2023 Sales by Market (in millions) | Market | Q4 2023 Sales | Change vs. Q3 2023 | Change vs. Q4 2022 | | :--- | :--- | :--- | :--- | | Enterprise | $4.6 | -$2.2 | -$5.4 | | Consumer | $3.2 | -$1.2 | -$3.2 | | Automotive | $2.3 | -$0.2 | -$1.2 | | Total | $10.1 | -$3.6 | -$9.8 | - The CEO stated a belief that the fourth quarter represented the "trough" for the business after sequential declines throughout the year[3] - The decrease in GAAP gross margin from 38.2% in Q3 2023 to 29.1% in Q4 2023 was primarily attributed to an excess and obsolete inventory charge[6] - The increase in GAAP net loss was driven by lower sales, higher personnel and engineering project expenses, and the inventory charge[7][8] Full Year 2023 Financial Results Airgain's full-year 2023 sales decreased to $56.0 million, resulting in a wider GAAP net loss of $12.4 million Full Year 2023 Key Financial Metrics (GAAP vs. Non-GAAP) | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | Sales | $56.0 million | - | | Gross Margin | 37.1% | 37.9% | | Operating Expense | $33.2 million | $26.4 million | | Net Loss | $12.4 million | $5.1 million | | Net Loss per Share | $(1.20) | $(0.50) | | Adjusted EBITDA | - | $(4.5) million | Full Year 2023 Sales by Market (in millions) | Market | 2023 Sales | Change vs. 2022 | | :--- | :--- | :--- | | Enterprise | $27.2 | -$7.3 | | Consumer | $18.9 | -$6.9 | | Automotive | $9.9 | -$5.7 | | Total | $56.0 | -$19.9 | - Reasons for the annual sales decline include: channel excess inventory correction impacting IIoT products, weaker demand from cable operator customers, and the discontinuation of the AC-HPUE product line[10] - The increase in annual net loss was primarily due to a $7.2 million decrease in gross profit from lower sales, which was only partially offset by a $3.4 million reduction in operating expenses[14] Financial Outlook First Quarter 2024 Financial Outlook Airgain anticipates Q1 2024 sales of $13.3-$14.7 million, projecting a sequential recovery from the Q4 2023 trough Q1 2024 Financial Outlook (Midpoint) | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | Sales | $14.0 million | $14.0 million | | Gross Margin | 38.6% - 41.6% | 39.5% - 42.5% | | Operating Expense | ~$8.1 million | ~$6.4 million | | Net Loss per Share | $(0.24) | $(0.06) | | Adjusted EBITDA | - | $(0.5) million | - The company anticipates a year of gradual growth in 2024, driven by recoveries in end markets, product innovation investments, and the launch of 5G connectivity initiatives[3] Supplemental Information Conference Call Information A conference call was held on March 6, 2024, to discuss Q4 and full-year 2023 financial results - A conference call to discuss financial results was held on Wednesday, March 6, 2024, at 5:00 p.m. Eastern Time[17][18] About Airgain, Inc. Airgain, Inc. simplifies wireless connectivity through embedded components and integrated systems for various markets - Airgain specializes in solving complex connectivity issues and enhancing wireless signals across the enterprise, automotive, and consumer markets[19] Forward-Looking Statements & Non-GAAP Measures This section outlines risks of forward-looking statements and explains non-GAAP measures for clearer operational insights - Forward-looking statements include the Q1 2024 financial outlook and expectations for market recovery, which are subject to numerous business risks and uncertainties[21] - The company uses non-GAAP measures such as Adjusted EBITDA, non-GAAP net loss, and non-GAAP gross margin to provide investors with a clearer view of core business operating results by excluding non-cash or non-recurring expenses[22][23] Consolidated Financial Statements Consolidated Balance Sheets Airgain's balance sheet shows total assets decreased to $42.2 million, primarily due to reduced cash and inventories Key Balance Sheet Items (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $7,881 | $11,903 | | Inventories | $2,403 | $4,226 | | Total Assets | $42,229 | $54,400 | | Total current liabilities | $9,991 | $12,900 | | Total Liabilities | $10,816 | $14,575 | | Total stockholders' equity | $31,413 | $39,825 | Consolidated Statements of Operations Consolidated statements show a full-year 2023 net loss of $12.4 million on $56.0 million sales, worsening from 2022 Key Income Statement Data (in thousands) | Metric | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Sales | $10,070 | $19,889 | $56,040 | $75,895 | | Gross Profit | $2,931 | $5,880 | $20,763 | $27,972 | | Loss from Operations | $(5,488) | $(3,277) | $(12,400) | $(8,580) | | Net Loss | $(5,484) | $(3,220) | $(12,428) | $(8,659) | Consolidated Statements of Cash Flows Net cash used in operating activities for 2023 was $3.3 million, a significant shift from 2022, decreasing cash by $4.1 million Cash Flow Summary (in thousands) | Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(3,301) | $4,446 | | Net cash used in investing activities | $(346) | $(750) | | Net cash used in financing activities | $(458) | $(6,304) | | Net decrease in cash | $(4,102) | $(2,608) | Sales by Target Market Sales by target market show declines across Consumer, Enterprise, and Automotive segments for Q4 and full-year 2023 Sales by Target Market (in thousands) | Target Market | Q4 2023 | Q4 2022 | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | :--- | :--- | | Consumer | $3,209 | $6,438 | $18,934 | $25,793 | | Enterprise | $4,615 | $10,015 | $27,209 | $34,533 | | Automotive | $2,246 | $3,436 | $9,897 | $15,569 | | Total sales | $10,070 | $19,889 | $56,040 | $75,895 | Reconciliation of GAAP to Non-GAAP Measures This section details reconciliations between GAAP and non-GAAP financial measures, adjusting for non-cash items for clearer insights Reconciliation of Net Loss to Adjusted EBITDA (Full Year, in thousands) | Description | Full Year 2023 | Full Year 2022 | | :--- | :--- | :--- | | Net loss (GAAP) | $(12,428) | $(8,659) | | Stock-based compensation expense | $3,681 | $4,978 | | Depreciation and amortization | $3,630 | $3,701 | | Severance and exit costs | $612 | $— | | Other (income) expense | $(109) | $(11) | | Income tax expense | $128 | $84 | | Adjusted EBITDA (Non-GAAP) | $(4,486) | $93 | - The primary adjustments to reconcile GAAP to Non-GAAP figures are non-cash expenses like stock-based compensation and amortization of intangible assets[36][40][42]