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 $0.7 million and GAAP EPS of $(0.08) for the three months ended
June 30, 2020 (Q2-20). The Q2-20 net loss decreased $0.5 million
from net loss of $1.2 million for the three months ended March 31,
2020 (Q1-20). Q2-20 non-GAAP net income totaled $0.2 million or
$0.02 per share compared to non-GAAP net loss of $0.5 million or
$(0.05) per share in Q1-20. Adjusted EBITDA increased to $0.3
million in Q2-20 compared to Adjusted EBITDA of $(0.4) million in
Q1-20 (see note regarding "Use of Non-GAAP Financial Measures"
below for further discussion of this non-GAAP measure).
“I am pleased that we exceeded our expectations for Q2 financial
results and are seeing very strong demand for our products in the
third quarter, even in this very challenging environment. We also
delivered on reducing manufacturing risk away from China by
expanding our contract manufacturing to southeast Asia with a very
solid and experienced antenna manufacturer,” said Airgain’s Chief
Executive Officer and President, Jacob Suen. “More importantly, our
progress on our game changing new platform, AirgainConnect, has
already begun drawing attention from potential customers and our
field testing shows that our first product is performing to our
expectations. We also successfully delivered on attaining device
certification on the AT&T network.”
Second Quarter 2020 Financial Highlights
- Sales of $11.4 million
- Gross margin of 47.1%
- Net loss of $0.7 million
- GAAP earnings per share of $(0.08)
- Non-GAAP earnings per share of $0.02
- Adjusted EBITDA of $0.3 million
Second Quarter 2020 Financial Results
Sales increased 2.1% to $11.4 million in Q2-20 compared to $11.2
million in Q1-20. This increase was primarily due to partial
recovery from COVID-19 related revenue declines from carriers in
Q1‑20. Our Q2-20 sales decreased $3.1 million compared to sales of
$14.5 million in the three months ended June 30, 2019 (Q2-19). 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 increased 1.3% in Q2-20 to $5.4 million from $5.3
million in Q1-20. Gross margin was 47.1% in Q2-20, which decreased
from 47.5% in Q1-20 largely due to unfavorable product sales mix.
Q2-20 gross margin increased 0.9% from 46.2% in Q2-19 due to a
favorable change in the product sales mix and manufacturing costs
improvement efforts.
Total operating expenses of $6.0 million for Q2-20 decreased
9.7% compared to $6.6 million in Q1‑20 primarily due to a decrease
in personnel-related expenses and lower travel expenses. Q2‑20
operating expenses decreased 3.2% from $6.2 million in Q2-19. The
decrease was primarily due to a decrease in personnel-related
expenses, lower travel expenses, and tradeshow cancellations. Q2‑20
non-GAAP operating expenses totaled $5.2 million compared to
non-GAAP operating expenses of $5.8 million in Q1-20. Non-GAAP
operating expenses for Q2-19 were $5.5 million (see note regarding
"Use of Non-GAAP Financial Measures," below for further discussion
of this non-GAAP measure).
Net loss totaled $0.7 million or $(0.08) per share (based on 9.7
million shares), compared to a net loss of $1.2 million or $(0.12)
per share (based on 9.7 million shares) in Q1-20. The Q2-20 net
loss increased $1.4 million as compared to the Q2-19 net income of
$0.7 million or $0.07 per share (based on 10.1 million diluted
shares). Q2-20 non-GAAP net income totaled $0.2 million or $0.02
per share (based on 9.9 million diluted shares), compared to
non-GAAP net loss of $0.5 million or $(0.05) per share (based on
9.7 million shares) in Q1-20. Non-GAAP net income in Q2-19 was $1.2
million or $0.12 per share (based on 10.1 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 $0.3
million in Q2-20 compared to Adjusted EBITDA of $(0.4) million in
Q1-20. The Q2-19 Adjusted EBITDA was $1.3 million (see note
regarding "Use of Non-GAAP Financial Measures" below for further
discussion of this non-GAAP measure).
First Six Months 2020 Financial Highlights
- Sales of $22.7 million
- Gross margin of 47.3%
- Net loss of $1.9 million
- GAAP earnings per share of $(0.20)
- Non-GAAP earnings per share of $(0.03)
- Adjusted EBITDA of $(0.03) million
First Six Months 2020 Financial Results
Sales decreased 23.4% to $22.7 million in the first six months
of 2020 compared to $29.6 million in the same six 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 20.4% in the first six months of 2020 to
$10.7 million from $13.5 million in the same six month period a
year ago. Gross margin was 47.3% in the first six months of 2020,
which increased from 45.6% in the same six month period a year ago
and is largely due to a favorable change in product sales mix and
manufacturing costs improvement efforts.
Total operating expenses of $12.6 million for the first six
months of 2020 decreased 1.3% compared to $12.8 million in the same
six 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.
Non-GAAP operating expenses totaled $11.0 million in the first six
months of 2020 compared to non-GAAP operating expenses of $11.5
million in the same six 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 six months of 2020 net loss totaled $1.9 million or
$(0.20) per share (based on 9.7 million shares), compared to net
income of $1.0 million or $0.10 per share (based on 10.1 million
diluted shares) in the same six month period a year ago. For the
first six months of 2020 non-GAAP net loss totaled $0.3 million or
$(0.03) per share (based on 9.7 million shares), compared to
non-GAAP net income of $2.1 million or $0.20 per share (based on
10.1 million diluted shares) in the same six 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 $(0.03) million in the first six
months of 2020 compared to Adjusted EBITDA of $2.3 million in the
same six month period a year ago (see note regarding "Use of
Non-GAAP Financial Measures," below for further discussion of this
non-GAAP measure).
Third Quarter 2020 Financial Outlook
- Total sales are expected to be in the range of $12.0 million to
$13.5 million
- Expected sales strength from the Consumer market, primarily due
to a recovery from COVID-19 slowdown in the first six months of
2020 and including transitions of newer products from two major
service providers, as well as strength in Enterprise market
sales.
- Gross margin is expected to be in the range of 46% to 47%
- Non-GAAP operating expense is expected to be $5.4 million, plus
or minus $0.1 million
Our financial outlook for the three months ending September 30,
2020 (Q3-20), including reconciliations of GAAP to non-GAAP and
Adjusted EBITDA, can be found at the end of this press release.
Conference Call
Airgain management will hold a conference call today Thursday,
August 6, 2020, at 4:30 p.m. Eastern (1:30 p.m. Pacific) to discuss
financial results for the second quarter ended June 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, August 6, 2020 Time: 4:30 p.m. Eastern (1:30
p.m. Pacific)
Please follow the below web address to register for the Second
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. If you are having
technical difficulties registering online, please use the phone
registration by calling 888- 869-1189 or 706- 643-5902.
Registration:
http://www.directeventreg.com/registration/event/1099124
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 September 5, 2020.
U.S. replay dial-in: 855-859-2056 or 404-537-3406 Replay ID:
1099124
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 reducing manufacturing risk out of China; the
potential for our AirgainConnect to serve as a game changing
platform and the performance thereof; and our Q3-20 financial
outlook. 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; 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)
June 30, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
28,593
$
13,197
Short term investments
6,520
21,686
Trade accounts receivable
4,587
7,656
Inventory
871
1,193
Prepaid expenses and other current
assets
1,162
1,361
Total current assets
41,733
45,093
Property and equipment, net
2,211
2,126
Goodwill
3,700
3,700
Customer relationships, net
2,868
3,110
Intangible assets, net
607
687
Other assets
203
10
Total assets
$
51,322
$
54,726
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
2,258
$
3,838
Accrued bonus
845
1,385
Accrued liabilities and other
1,355
1,536
Total current liabilities
4,458
6,759
Deferred tax liability
30
52
Deferred rent obligation under operating
lease
55
11
Total liabilities
4,543
6,822
Stockholders’ equity:
Common stock, par value $0.0001, 200,000
shares authorized; 10,188 shares issued and 9,654 shares
outstanding at June 30, 2020; and 10,146 shares issued and 9,681
shares outstanding at December 31, 2019
1
1
Additional paid-in capital
98,035
96,622
Treasury stock, at cost: 534 shares and
465 shares at June 30, 2020, and December 31, 2019,
respectively
(5,267
)
(4,659
)
Accumulated other comprehensive income
16
8
Accumulated deficit
(46,006
)
(44,068
)
Total stockholders’ equity
46,779
47,904
Commitments and contingencies (note
12)
Total liabilities and stockholders’
equity
$
51,322
$
54,726
Airgain, Inc.
Unaudited Condensed Statements
of Operations
(in thousands, except per
share data)
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2019
Sales
$
11,446
$
11,216
$
14,462
$
22,662
$
29,570
Cost of goods sold
6,052
5,891
7,777
11,943
16,100
Gross profit
5,394
5,325
6,685
10,719
13,470
Operating expenses:
Research and development
2,224
2,418
2,203
4,642
4,541
Sales and marketing
1,379
1,539
2,229
2,918
4,503
General and administrative
2,389
2,678
1,757
5,067
3,752
Total operating expenses
5,992
6,635
6,189
12,627
12,796
Income (loss) from operations
(598
)
(1,310
)
496
(1,908
)
674
Other expense (income):
Interest income, net
(47
)
(124
)
(189
)
(171
)
(376
)
Other expense
11
—
—
11
—
Total other income
(36
)
(124
)
(189
)
(160
)
(376
)
Income (loss) before income taxes
(562
)
(1,186
)
685
(1,748
)
1,050
Provision for income taxes
174
16
23
190
52
Net income (loss)
$
(736
)
$
(1,202
)
$
662
(1,938
)
998
Net income (loss) per share:
Basic
$
(0.08
)
$
(0.12
)
$
0.07
$
(0.20
)
$
0.10
Diluted
$
(0.08
)
$
(0.12
)
$
0.07
$
(0.20
)
$
0.10
Weighted average shares used in
calculating income (loss) per share:
Basic
9,683
9,690
9,697
9,686
9,661
Diluted
9,683
9,690
10,128
9,686
10,071
Airgain, Inc.
Unaudited Condensed Statements
of Cash Flows
(in thousands)
Six months ended June
30,
2020
2019
Cash flows from operating
activities:
Net income (loss)
$
(1,938
)
$
998
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation
242
268
Loss on disposal of property and
equipment
11
—
Amortization
322
328
Amortization of premium (discounts) on
investments, net
27
(185
)
Stock-based compensation
1,322
1,056
Deferred tax liability
(22
)
(8
)
Changes in operating assets and
liabilities:
Trade accounts receivable
3,069
(2,709
)
Inventory
322
256
Prepaid expenses and other assets
188
(41
)
Accounts payable
(1,576
)
1,231
Accrued bonus
(540
)
(1,168
)
Accrued liabilities and other
(137
)
198
Net cash provided by operating
activities
1,290
224
Cash flows from investing
activities:
Purchases of available-for-sale
securities
(752
)
(21,065
)
Maturities of available-for-sale
securities
15,899
20,870
Purchases of property and equipment
(349
)
(405
)
Net cash provided by (used in) investing
activities
14,798
(600
)
Cash flows from financing
activities:
Repurchases of common stock
(608
)
(193
)
Proceeds from issuance of common stock,
net
91
589
Net cash provided by (used in) financing
activities
(517
)
396
Net increase in cash, cash equivalents and
restricted cash
15,571
20
Cash, cash equivalents, and restricted
cash; beginning of period
13,197
13,621
Cash, cash equivalents, and restricted
cash; end of period
$
28,768
$
13,641
Supplemental disclosure of cash flow
information:
Taxes paid
$
59
$
46
Supplemental disclosure of non-cash
investing and financing activities:
Accrual of property and equipment
$
—
$
169
Cash and cash equivalents
$
28,593
$
13,641
Restricted cash included in other
assets
175
—
Total cash, cash equivalents, and
restricted cash
$
28,768
$
13,641
Airgain, Inc. (in thousands,
except per share data) Unaudited Reconciliation of GAAP to non-GAAP
Net Income (Loss)
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2019
Net income (loss)
$
(736
)
$
(1,202
)
$
662
$
(1,938
)
$
998
Stock-based compensation expense
654
668
542
1,322
1,056
Amortization
158
164
164
322
328
Other income
(36
)
(124
)
(189
)
(160
)
(376
)
Provision for income taxes
174
16
23
190
52
Non-GAAP net income (loss) attributable to
common stockholders
$
214
$
(478
)
$
1,202
$
(264
)
$
2,058
Non-GAAP net income (loss) per share:
Basic
$
0.02
$
(0.05
)
$
0.12
$
(0.03
)
$
0.21
Diluted
$
0.02
$
(0.05
)
$
0.12
$
(0.03
)
$
0.20
Weighted average shares used in
calculating non-GAAP income (loss) per share:
Basic
9,683
9,690
9,697
9,686
9,661
Diluted
9,857
9,690
10,128
9,686
10,071
Unaudited Reconciliation of
GAAP to non-GAAP Operating Expenses
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2019
Operating expenses
$
5,992
$
6,635
$
6,189
$
12,627
$
12,796
Stock-based compensation expense
(654
)
(668
)
(542
)
(1,322
)
(1,056
)
Amortization
(124
)
(131
)
(131
)
(255
)
(262
)
Non-GAAP operating expenses
$
5,214
$
5,836
$
5,516
$
11,050
$
11,478
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
Three months ended
Six months ended
June 30,
March 31,
June 30,
June 30,
2020
2019
2020
2019
Net income (loss)
$
(736
)
$
(1,202
)
$
662
$
(1,938
)
$
998
Stock-based compensation expense
654
668
542
1,322
1,056
Depreciation and amortization
278
286
255
564
596
Interest income, net
(47
)
(124
)
(189
)
(171
)
(376
)
Provision for income taxes
174
16
23
190
52
Adjusted EBITDA
$
323
$
(356
)
$
1,293
$
(33
)
$
2,326
Q3 Projections
Reconciliations of GAAP Net
Loss to Non-GAAP Net Income, Operating
Expense, and EPS and to
Adjusted EBITDA
For the Three Months Ended
September 30, 2020
(in millions, except per share
data)
Net Loss
Reconciliation
Adjusted EBITDA
Reconciliation
GAAP net loss
$
(0.29
)
GAAP net loss
$
(0.29
)
Stock-based compensation
0.65
Stock-based compensation
0.65
Amortization
0.16
Depreciation and amortization
0.28
Interest income, net
(0.05
)
Interest income, net
(0.05
)
Provision for income taxes
0.09
Provision for income taxes
0.09
Non-GAAP net income
$
0.56
Adjusted EBITDA
$
0.68
Operating Expense
Reconciliation:
GAAP operating expenses
$
6.17
Stock-based compensation
(0.65
)
Amortization
(0.12
)
Non-GAAP operating expenses
$
5.40
EPS Reconciliation(1):
GAAP EPS
$
(0.03
)
Stock-based compensation expense
0.07
Amortization
0.02
Interest income, net
(0.01
)
Provision for income taxes
0.01
Non-GAAP EPS
$
0.06
(1)
Amounts are based on 9.7 million basic and
9.9 million diluted shares outstanding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005770/en/
David Lyle Chief Financial Officer investors@airgain.com
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