Airgain, Inc. (Nasdaq: AIRG), a leading provider of advanced
antenna technologies used to enable high performance wireless
networking across a broad range of devices and markets, including
consumer, enterprise, and automotive, today announced GAAP net loss
of $0.3 million and GAAP EPS of $(0.03) for the three months ended
September 30, 2020 (Q3-20). The Q3-20 GAAP net loss decreased $0.4
million from net loss of $0.7 million for the three months ended
June 30, 2020 (Q2-20). Q3-20 non-GAAP net income totaled $0.6
million or $0.06 per diluted share compared to non-GAAP net income
of $0.2 million or $0.02 per diluted share in Q2-20. Adjusted
EBITDA increased to $0.7 million in Q3-20 compared to Adjusted
EBITDA of $0.3 million in Q2-20 (see note regarding "Use of
Non-GAAP Financial Measures" below for further discussion of this
non-GAAP measure).
“I am pleased we executed to our previous financial guidance for
the third quarter and equally excited about the prospects for
growth across our markets in 2021,” said Airgain’s Chief Executive
Officer and President, Jacob Suen. “We are seeing very positive
responses from prospective customers for our new product platform,
AirgainConnect, which is expected to drive material growth in
2021.”
Third Quarter 2020 Financial Highlights
- Sales of $13.0 million
- Gross margin of 46.3%
- Net loss of $0.3 million
- GAAP earnings per share of $(0.03)
- Non-GAAP earnings per diluted share of $0.06
- Adjusted EBITDA of $0.7 million
Third Quarter 2020 Financial Results
Sales increased 13.7% to $13.0 million in Q3-20 compared to
$11.4 million in Q2-20. This increase was primarily due to partial
recovery from COVID-19 related revenue declines from carriers in
Q2‑20. Our Q3-20 sales decrease of $0.1 million from $13.1 million
in the three months ended September 30, 2019 (Q3-19) was due to a
significantly larger order of an automotive product in Q3-19, as
offset by an increase in revenue from several large volume embedded
antenna products in Q3-20.
Gross profit increased 11.8% in Q3-20 to $6.0 million from $5.4
million in Q2-20. Gross margin was 46.3% in Q3-20, which decreased
from 47.1% in Q2-20 largely due to unfavorable product sales mix.
Q3-20 gross margin increased 0.1% from 46.2% in Q3-19.
Total operating expenses of $6.2 million for Q3-20 increased
4.0% compared to $6.0 million in Q2‑20 primarily due to an increase
in personnel-related expenses. Q3-20 operating expenses decreased
0.8% from $6.3 million in Q3-19. The decrease was primarily due to
lower travel expenses. Q3-20 non-GAAP operating expenses totaled
$5.5 million compared to non-GAAP operating expenses of $5.2
million in Q2-20. Non-GAAP operating expenses for Q3-19 were $5.6
million (see note regarding "Use of Non-GAAP Financial Measures,"
below for further discussion of this non-GAAP measure).
Net loss totaled $0.3 million or $(0.03) per share (based on 9.7
million shares) in Q3-20, compared to a net loss of $0.7 million or
$(0.08) per share (based on 9.7 million shares) in Q2-20. The Q3-20
net loss increased $0.1 million as compared to the Q3-19 net loss
of $0.1 million or $(0.01) per share (based on 9.7 million shares).
Q3-20 non-GAAP net income totaled $0.6 million or $0.06 per share
(based on 10.1 million diluted shares), compared to non-GAAP net
income of $0.2 million or $0.02 per share (based on 9.9 million
diluted shares) in Q2-20. Non-GAAP net income in Q3-19 was $0.5
million or $0.05 per share (based on 10.0 million diluted shares)
(see note regarding "Use of Non-GAAP Financial Measures" below for
further discussion of this non-GAAP measure).
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, and stock-based compensation) increased to $0.7
million in Q3-20 compared to Adjusted EBITDA of $0.3 million in
Q2-20. The Q3-19 Adjusted EBITDA was $0.6 million (see note
regarding "Use of Non-GAAP Financial Measures" below for further
discussion of this non-GAAP measure).
First Nine Months 2020 Financial Highlights
- Sales of $35.7 million
- Gross margin of 46.9%
- Net loss of $2.2 million
- GAAP earnings per share of $(0.23)
- Non-GAAP earnings per diluted share of $0.03
- Adjusted EBITDA of $0.7 million
First Nine Months 2020 Financial Results
Sales decreased 16.5% to $35.7 million in the first nine months
of 2020 compared to $42.7 million in the same nine month period a
year ago. The lower sales were primarily driven by impacts from
COVID-19 and a product cycle transition for several large volume
embedded antenna products.
Gross profit decreased 14.3% in the first nine months of 2020 to
$16.7 million from $19.5 million in the same nine month period a
year ago. Gross margin was 46.9% in the first nine months of 2020,
which increased from 45.8% in the same nine month period a year ago
and is primarily due to product cost reductions.
Total operating expenses of $18.9 million for the first nine
months of 2020 decreased 1.2% compared to $19.1 million in the same
nine month period a year ago. The decrease was primarily due to
lower travel expenses and tradeshow cancellations, but partially
offset by an increase in engineering product development costs and
personnel-related expenses. Non-GAAP operating expenses totaled
$16.5 million in the first nine months of 2020 compared to non-GAAP
operating expenses of $17.1 million in the same nine month period a
year ago (see note regarding "Use of Non-GAAP Financial Measures"
below for further discussion of this non-GAAP measure).
In the first nine months of 2020 net loss totaled $2.2 million
or $(0.23) per share (based on 9.7 million shares), compared to net
income of $0.9 million or $0.09 per share (based on 10.1 million
diluted shares) in the same nine month period a year ago. For the
first nine months of 2020 non-GAAP net income totaled $0.3 million
or $0.03 per share (based on 9.9 million diluted shares), compared
to non-GAAP net income of $2.6 million or $0.25 per share (based on
10.1 million diluted shares) in the same nine month period a year
ago (see note regarding "Use of Non-GAAP Financial Measures," below
for further discussion of this non-GAAP measure).
Adjusted EBITDA decreased to $0.7 million in the first nine
months of 2020 compared to Adjusted EBITDA of $2.9 million in the
same nine month period a year ago (see note regarding "Use of
Non-GAAP Financial Measures," below for further discussion of this
non-GAAP measure).
Fourth Quarter 2020 Financial Outlook
- Total sales are expected to be in the range of $12.25 million
to $13.25 million
- Gross margin is expected to be in the range of 45.5% to
46.5%
- Non-GAAP operating expense is expected to be $5.60 million,
plus or minus $0.10 million
- Non-GAAP earnings per diluted share is expected to be $0.03 at
midpoint
- Adjusted EBITDA is expected to be $0.41 million at
midpoint
Our financial outlook for the three months ending December 31,
2020 (Q4-20), including reconciliations of GAAP net loss to
non-GAAP net income, operating expense, and EPS and to adjusted
EBITDA can be found at the end of this press release.
Conference Call
Airgain management will hold a conference call today Thursday,
November 5, 2020, at 4:30 p.m. Eastern (1:30 p.m. Pacific) to
discuss financial results for the third quarter ended September 30,
2020, and to provide an update on business conditions.
Airgain management will host the presentation, followed by a
question and answer period.
Date: Thursday, November 5, 2020 Time: 4:30 p.m. Eastern (1:30
p.m. Pacific)
Please follow the below web address to register for the Third
Quarter 2020 Conference Call. Upon registering, you will be
provided call details with a unique ID. There will be a reminder
email sent out to all registered participants.
Registration:
http://www.directeventreg.com/registration/event/5654866
The conference call will be broadcast simultaneously and
available for replay via the investor relations section of the
company's website.
A replay of the call is available after 7:30 p.m. Eastern on the
same day through December 5, 2020.
U.S. replay dial-in: 855-859-2056 or 404-537-3406 Replay ID:
5654866
About Airgain, Inc.
Airgain is a leading provider of advanced antenna technologies
used to enable high performance wireless networking across a broad
range of devices and markets, including consumer, enterprise, and
automotive. Combining design-led thinking with testing and
development, Airgain works in partnership with the entire
ecosystem, including carriers, chipset suppliers, OEMs, and ODMs.
Airgain’s antennas are deployed in carrier, fleet, enterprise,
residential, private, government, and public safety wireless
networks and systems, including set-top boxes, access points,
routers, modems, gateways, media adapters, portables, digital
televisions, sensors, and fleet and asset tracking devices. Airgain
is headquartered in San Diego, California, and maintains design and
test centers in the U.S., U.K., and China. For more information,
visit airgain.com, or follow us on LinkedIn and Twitter.
Airgain and the Airgain logo are registered trademarks of
Airgain, Inc.
Forward-Looking Statements
Airgain cautions you that statements in this press release that
are not a description of historical facts are forward-looking
statements. These statements are based on the company's current
beliefs and expectations. These forward-looking statements include
statements regarding the timing of launch of the first product from
our AirgainConnect platform, and our Q4-20 financial outlook and
prospects for growth across our markets in 2021, including
AirgainConnect. The inclusion of forward-looking statements should
not be regarded as a representation by Airgain that any of our
plans will be achieved. Actual results may differ from those set
forth in this press release due to the risk and uncertainties
inherent in our business, including, without limitation: the market
for our antenna products is developing and may not develop as we
expect; risks related to the timing of the launch of AT&T’s
FirstNet network upon which our AirgainConnect products will
operate; our operating results may fluctuate significantly,
including based on seasonal factors, which makes future operating
results difficult to predict and could cause our operating results
to fall below expectations or guidance; the COVID-19 pandemic may
continue to disrupt and otherwise adversely affect our operations
and those of our suppliers, partners, distributors and ultimate end
customers, and the overall supply chain that our antennas are used
in, as well as adversely affecting the general U.S. and global
economic conditions and financial markets, and, ultimately, our
sales and operating results; our products are subject to intense
competition, including competition from the customers to whom we
sell and competitive pressures from existing and new companies may
harm our business, sales, growth rates, and market share; risks
associated with the performance of our products including risks
associated with introducing AirgainConnect into the newly licensed
Band 14 frequencies; our future success depends on our ability to
develop and successfully introduce new and enhanced products for
the wireless market that meet the needs of our customers, including
our ability to transition to provide a more diverse solutions
capability; our ability to identify and consummate strategic
acquisitions and partnerships; we sell to customers who are
extremely price conscious, and a few customers represent a
significant portion of our sales, and if we lose any of these
customers, our sales could decrease significantly; we rely on a few
contract manufacturers to produce and ship all of our products, a
single or limited number of suppliers for some components of our
products and channel partners to sell and support our products, and
the failure to manage our relationships with these parties
successfully could adversely affect our ability to market and sell
our products; risks associated with ramping up and relying on a new
third-party manufacturer; if we cannot protect our intellectual
property rights, our competitive position could be harmed or we
could incur significant expenses to enforce our rights; and other
risks described in our prior press releases and in our filings with
the Securities and Exchange Commission (SEC), including under the
heading "Risk Factors" in our Annual Report on Form 10-K and any
subsequent filings with the SEC. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof and we undertake no obligation to revise
or update this press release to reflect events or circumstances
after the date hereof. All forward-looking statements are qualified
in their entirety by this cautionary statement, which is made under
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.
Note Regarding Use of Non-GAAP Financial Measures
To supplement our condensed financial statements presented in
accordance with U.S. generally accepted accounting principles
(GAAP), this earnings release and the accompanying tables and the
related earnings conference call contain certain non-GAAP financial
measures, including adjusted earnings before interest, taxes,
depreciation, amortization (Adjusted EBITDA), non-GAAP net income
(loss) attributable to common stockholders (non-GAAP net income
(loss)), non-GAAP earnings per (basic or diluted) share (non-GAAP
EPS), and non-GAAP operating expenses. We believe these financial
measures provide useful information to investors with which to
analyze our operating trends and performance.
In computing Adjusted EBITDA, non-GAAP net income (loss), and
non-GAAP EPS, we exclude stock-based compensation expense, which
represents non-cash charges for the fair value of stock awards;
other income, which includes loss on disposals and/or interest
income offset by interest expense; depreciation and/or
amortization; and provision for income taxes. In computing non-GAAP
operating expenses we exclude stock-based compensation expense and
amortization. Because of varying available valuation methodologies,
subjective assumptions, and the variety of equity instruments that
can impact a company's non-cash operating expenses; we believe that
providing non-GAAP financial measures that exclude non-cash expense
allows for meaningful comparisons between our core business
operating results and those of other companies, as well as
providing us with an important tool for financial and operational
decision making and for evaluating our own core business operating
results over different periods of time. Management considers these
types of expenses and adjustments, to a great extent, to be
unpredictable and dependent on a significant number of factors that
are outside of our control and are not necessarily reflective of
operational performance during a period.
Our Adjusted EBITDA, non-GAAP net income (loss), non-GAAP EPS,
and non-GAAP operating expenses measures may not provide
information that is directly comparable to that provided by other
companies in our industry, as other companies in our industry may
calculate non-GAAP financial results differently, particularly
related to non-recurring, unusual items. Our Adjusted EBITDA,
non-GAAP net income (loss), non-GAAP EPS, and non-GAAP operating
expenses are not measurements of financial performance under GAAP
and should not be considered as an alternative to operating or net
income or as an indication of operating performance or any other
measure of performance derived in accordance with GAAP. We do not
consider these non-GAAP measures to be a substitute for, or
superior to, the information provided by GAAP financial results.
Reconciliations with specific adjustments to GAAP results and
outlooks are provided at the end of this release.
Airgain, Inc.
Unaudited Condensed Balance
Sheets
(in thousands, except per
share data)
September 30, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
35,795
$
13,197
Short-term investments
2,184
21,686
Trade accounts receivable
4,182
7,656
Inventory
1,077
1,193
Prepaid expenses and other current
assets
1,469
1,361
Total current assets
44,707
45,093
Property and equipment, net
2,323
2,126
Goodwill
3,700
3,700
Customer relationships, net
2,748
3,110
Intangible assets, net
574
687
Other assets
197
10
Total assets
$
54,249
$
54,726
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
3,078
$
3,838
Accrued bonus
1,220
1,385
Accrued liabilities and other
1,653
1,536
Total current liabilities
5,951
6,759
Deferred tax liability
44
52
Deferred rent obligation under operating
lease
190
11
Total liabilities
6,185
6,822
Stockholders’ equity:
Common stock and additional paid-in
capital, par value $0.0001, 200,000 shares authorized; 10,302
shares issued and 9,768 shares outstanding at September 30, 2020;
and 10,146 shares issued and 9,681 shares outstanding at December
31, 2019
99,597
96,623
Treasury stock, at cost: 534 shares and
465 shares at September 30, 2020, and December 31, 2019,
respectively
(5,267
)
(4,659
)
Accumulated other comprehensive income
1
8
Accumulated deficit
(46,267
)
(44,068
)
Total stockholders’ equity
48,064
47,904
Commitments and contingencies
Total liabilities and stockholders’
equity
$
54,249
$
54,726
Airgain, Inc.
Unaudited Condensed Statements
of Operations
(in thousands, except per
share data)
Three months ended
Nine months ended
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2019
Sales
$
13,010
$
11,446
$
13,142
$
35,672
$
42,713
Cost of goods sold
6,981
6,052
7,067
18,924
23,167
Gross profit
6,029
5,394
6,075
16,748
19,546
Operating expenses:
Research and development
2,231
2,224
2,403
6,873
6,944
Sales and marketing
1,559
1,379
1,461
4,477
5,964
General and administrative
2,439
2,389
2,416
7,506
6,168
Total operating expenses
6,229
5,992
6,280
18,856
19,076
Income (loss) from operations
(200
)
(598
)
(205
)
(2,108
)
470
Other expense (income):
Interest income, net
(23
)
(47
)
(183
)
(194
)
(558
)
Other expense
—
11
—
11
—
Total other income
(23
)
(36
)
(183
)
(183
)
(558
)
Income (loss) before income taxes
(177
)
(562
)
(22
)
(1,925
)
1,028
Provision for income taxes
84
174
113
274
165
Net income (loss)
$
(261
)
$
(736
)
$
(135
)
$
(2,199
)
$
863
Net income (loss) per share:
Basic
$
(0.03
)
$
(0.08
)
$
(0.01
)
$
(0.23
)
$
0.09
Diluted
$
(0.03
)
$
(0.08
)
$
(0.01
)
$
(0.23
)
$
0.09
Weighted average shares used in
calculating income (loss) per share:
Basic
9,710
9,683
9,711
9,694
9,678
Diluted
9,710
9,683
9,711
9,694
10,083
Airgain, Inc.
Unaudited Condensed Statements
of Cash Flows
(in thousands)
Nine months ended September
30,
2020
2019
Cash flows from operating
activities:
Net income (loss)
$
(2,199
)
$
863
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation
348
373
Loss on disposal of property and
equipment
11
—
Amortization
475
491
Amortization of premium (discounts) on
investments, net
49
(248
)
Stock-based compensation
1,956
1,605
Deferred tax liability
(8
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
3,474
(1,551
)
Inventory
116
86
Prepaid expenses and other assets
(120
)
(500
)
Accounts payable
(756
)
305
Accrued bonus
(165
)
(674
)
Accrued liabilities and other
296
125
Net cash provided by operating
activities
3,477
875
Cash flows from investing
activities:
Purchases of available-for-sale
securities
(753
)
(30,080
)
Maturities of available-for-sale
securities
20,199
29,520
Purchases of property and equipment
(560
)
(1,045
)
Net cash provided by (used in) investing
activities
18,886
(1,605
)
Cash flows from financing
activities:
Repurchases of common stock
(608
)
(799
)
Proceeds from issuance of common stock,
net
1,018
779
Net cash provided by (used in) financing
activities
410
(20
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
22,773
(750
)
Cash, cash equivalents, and restricted
cash; beginning of period
13,197
13,621
Cash, cash equivalents, and restricted
cash; end of period
$
35,970
$
12,871
Supplemental disclosure of cash flow
information:
Taxes paid
$
137
$
54
Supplemental disclosure of non-cash
investing and financing activities:
Accrual of property and equipment
$
—
$
4
Cash and cash equivalents
$
35,795
$
12,871
Restricted cash included in other
assets
175
—
Total cash, cash equivalents, and
restricted cash
$
35,970
$
12,871
Airgain, Inc.
(in thousands, except per
share data)
Unaudited Reconciliation of
GAAP to non-GAAP Net Income (Loss)
Three months ended
Nine months ended
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2019
Net income (loss)
$
(261
)
$
(736
)
$
(135
)
$
(2,199
)
$
863
Stock-based compensation expense
634
654
549
1,956
1,605
Amortization
153
158
163
475
491
Other income
(23
)
(36
)
(183
)
(183
)
(558
)
Provision for income taxes
84
174
113
274
165
Non-GAAP net income attributable to common
stockholders
$
587
$
214
$
507
$
323
$
2,566
Non-GAAP net income per share:
Basic
$
0.06
$
0.02
$
0.05
$
0.03
$
0.27
Diluted
$
0.06
$
0.02
$
0.05
$
0.03
$
0.25
Weighted average shares used in
calculating non-GAAP income per share:
Basic
9,710
9,683
9,711
9,694
9,678
Diluted
10,069
9,857
10,041
9,929
10,083
Unaudited Reconciliation of
GAAP to non-GAAP Operating Expenses
Three months ended
Nine months ended
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2019
Operating expenses
$
6,229
$
5,992
$
6,280
$
18,856
$
19,076
Stock-based compensation expense
(634
)
(654
)
(549
)
(1,956
)
(1,605
)
Amortization
(121
)
(124
)
(130
)
(376
)
(392
)
Non-GAAP operating expenses
$
5,474
$
5,214
$
5,601
$
16,524
$
17,079
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
Three months ended
Nine months ended
September 30,
June 30,
September 30,
September 30,
2020
2019
2020
2019
Net income (loss)
$
(261
)
$
(736
)
$
(135
)
$
(2,199
)
$
863
Stock-based compensation expense
634
654
549
1,956
1,605
Depreciation and amortization
259
278
268
823
864
Interest income, net
(23
)
(47
)
(183
)
(194
)
(558
)
Provision for income taxes
84
174
113
274
165
Adjusted EBITDA
$
693
$
323
$
612
$
660
$
2,939
Q4 Projections
Reconciliations of GAAP Net
Loss to Non-GAAP Net Income, Operating
Expense, and EPS and to
Adjusted EBITDA
For the Three Months Ended
December 31, 2020
(in millions, except per share
data)
Net Loss
Reconciliation
Adjusted EBITDA
Reconciliation
GAAP net loss
$
(0.49
)
GAAP net loss
$
(0.49
)
Stock-based compensation
0.63
Stock-based compensation
0.63
Amortization
0.15
Depreciation and amortization
0.26
Interest income, net
(0.02
)
Interest income, net
(0.02
)
Provision for income taxes
0.03
Provision for income taxes
0.03
Non-GAAP net income
$
0.30
Adjusted EBITDA
$
0.41
Operating Expense
Reconciliation:
GAAP operating expenses
$
6.35
Stock-based compensation
(0.63
)
Amortization
(0.12
)
Non-GAAP operating expenses
$
5.60
EPS Reconciliation(1):
GAAP EPS
$
(0.05
)
Stock-based compensation
0.06
Amortization
0.02
Interest income, net
—
Provision for income taxes
—
Non-GAAP EPS
$
0.03
(1)
Amounts are based on 9.8 million basic and
10.1 million diluted shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105006135/en/
David B. Lyle Chief Financial Officer investors@airgain.com
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