Airgain, Inc. (Nasdaq: AIRG), a leading provider of wireless
connectivity solutions that creates and delivers embedded
components, external antennas, and integrated systems across the
globe, today reported financial results for the first quarter ended
March 31, 2023.
“We are pleased with our execution in the first quarter in the
face of difficult macroeconomic conditions,” said Airgain’s
President and Chief Executive Officer, Jacob Suen. “We delivered
quarterly sales of $16.4 million, and we announced several new
products this past quarter. Our priorities are to deliver on our
long-term strategy while achieving adjusted EBITDA
profitability.”
First Quarter 2023 Financial Highlights
GAAP
- Sales of $16.4 million
- GAAP gross margin of 38.4%
- GAAP operating expenses of $9.1 million
- GAAP net loss of $2.9 million or $(0.28) per share
Non-GAAP
- Non-GAAP gross margin of 39.1%
- Non-GAAP operating expenses of $7.3 million
- Non-GAAP net loss of $0.9 million or $(0.08) per shares
- Adjusted EBITDA of $(0.7) million
First Quarter 2023 Financial Results
Sales for the first quarter of 2023 were $16.4 million, of which
$8.4 million was generated from the enterprise market, $5.1 million
from the consumer market, and $2.9 million from the automotive
market. Sales decreased by 17.3%, or $3.4 million in the first
quarter of 2023 compared to $19.9 million in the fourth quarter of
2022. Enterprise sales decreased from the fourth quarter of 2022 by
$1.6 million driven by lower enterprise WiFi and industrial IoT
product sales. Consumer sales declined from the fourth quarter of
2022 by $1.3 million, primarily due to demand softness. Automotive
sales decreased $0.5 million from the fourth quarter of 2022. Sales
for the first quarter of 2023 decreased by 6.2%, or $1.1 million
from $17.5 million in the same quarter a year-ago due to lower
sales of $0.9 million from the consumer market and $0.2 million
from the enterprise market.
GAAP gross profit for the first quarter of 2023 was $6.3
million, compared to $5.9 million for the fourth quarter of 2022
and $7.2 million for the same quarter a year ago. Non-GAAP gross
profit for the first quarter of 2023 was $6.4 million, compared to
$6.1 million for the fourth quarter of 2022 and $7.3 million for
the same quarter a year ago (see note regarding "Use of Non-GAAP
Financial Measures" below for further discussion of this non-GAAP
measure).
GAAP gross margin for the first quarter of 2023 was 38.4%,
compared to 29.6% for the fourth quarter of 2022 and 40.8% for the
same quarter a year ago. Non-GAAP gross margin for the first
quarter of 2023 was 39.1% compared to 30.5% for the fourth quarter
of 2022 and 41.4% for the same quarter a year ago. The sequential
gross margin increase was primarily due to an inventory charge
related to the AirgainConnect HPUE product in the fourth quarter of
2022 and a higher enterprise market margin in the first quarter of
2023 (see note regarding "Use of Non-GAAP Financial Measures" below
for further discussion of this non-GAAP measure).
GAAP operating expenses for the first quarter of 2023 was $9.1
million, compared to $9.2 million for the fourth quarter of 2022
and $9.6 million for the same quarter a year ago. Non-GAAP
operating expenses for the first quarter of 2023 were $7.3 million
compared to $7.2 million in the fourth quarter of 2022 and $7.7
million for the same quarter a year ago. The sequential operating
expenses increase resulted from higher trade shows and travel
expenses, partially offset by lower people costs (see note
regarding "Use of Non-GAAP Financial Measures" below for further
discussion of this non-GAAP measure).
GAAP net loss for the first quarter of 2023 was $2.9 million or
$(0.28) per share (based on 10.3 million shares), compared to a net
loss of $3.2 million or $(0.31) per share (based on 10.2 million
shares) for the fourth quarter of 2022 and a net loss of $2.5
million or $(0.25) per share (based on 10.1 million shares) for the
same quarter a year ago. Non-GAAP net loss for the first quarter of
2023 was $0.9 million or $(0.08) per share (based on 10.3 million
shares), compared to a non-GAAP net loss of $1.1 million or $(0.11)
per share (based on 10.2 million shares) for the fourth quarter of
2022 and a non-GAAP net loss of $0.4 million or $(0.04) per share
(based on 10.1 million shares) for the same quarter a year ago. The
decrease in net loss compared to the fourth quarter of 2022 was
primarily due to an HPUE inventory charge in the fourth quarter of
2022, and higher enterprise market gross margin in the first
quarter of 2023, partially offsetting lower sales and higher
operating expenses (see note regarding "Use of Non-GAAP Financial
Measures" below for further discussion of this non-GAAP
measure).
Adjusted EBITDA for the first quarter of 2023 was $(0.7)
million, compared to $(0.9) million for the fourth quarter of 2022
and $(0.3) million for the same quarter a year ago (see note
regarding "Use of Non-GAAP Financial Measures" below for further
discussion of this non-GAAP measure).
Second Quarter 2023 Financial Outlook
GAAP
- Sales are expected to be in the range of $15.7 million to $17.3
million, or $16.5 million at the midpoint
- GAAP gross margin is expected to be in the range of 36.7% to
39.7%
- GAAP operating expense is expected to be approximately $8.0
million
- GAAP net loss per share is expected to be ($0.16) at
midpoint
Non-GAAP
- Non-GAAP gross margin is expected to be in the range of 37.5%
to 40.5%
- Non-GAAP operating expense is expected to be approximately $6.4
million
- Non-GAAP net income per share is expected to be $0.00 at
midpoint
- Adjusted EBITDA is expected to be $0.2 million at the
midpoint
Our financial outlook for the three months ending June 30, 2023,
including reconciliations of GAAP to non-GAAP measures can be found
at the end of this press release.
Conference Call
Airgain, Inc. management will hold a conference call today
Thursday, May 11, 2023, at 5:00 PM Eastern Time (2:00 PM Pacific
Time) to discuss financial results for the first quarter ended
March 31, 2023.
Airgain management will host the presentation, followed by a
question and answer period.
Date: May 11, 2023 Time: 5:00 PM Eastern Time (2:00 PM Pacific
Time) Participant Dial-In: (877) 407-2988 or +1 (201) 389-0923
The conference call will be broadcast simultaneously and
available here and for replay via the investor relations section of
the company's website at investors.airgain.com.
For webcast access, please follow the below web address below to
register for the conference call. Registration:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=apml4mP8
A replay of the webcast will be available via the registration
link after 8:00 PM Eastern Time on the same day until May 11,
2024.
About Airgain, Inc.
Airgain is a leading provider of wireless connectivity solutions
that creates and delivers embedded components, external antennas,
and integrated systems across the globe. Airgain simplifies
wireless connectivity across a diverse set of devices and markets,
from solving complex connectivity issues to speeding time to market
to enhancing wireless signals. Our product offering includes three
distinct sub-brands. Airgain Embedded represents our embedded
modems, antennas, and development kits that are designed to help
design teams bring connected products to market quickly. Airgain
Integrated represents our fully integrated, off the shelf products,
such as our asset trackers and AirgainConnect® platform, that help
solve connectivity issues in an organization’s operating
environment. Airgain Antenna+ represents our external antennas,
such as our fleet and internet of things (IoT) antennas, that help
enhance wireless signals in some of the harshest environments. Our
mission is to connect the world through optimized integrated
wireless solutions. 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
Airgain on LinkedIn and Twitter.
Airgain, AirgainConnect, and the Airgain logo are trademarks or
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 our second quarter 2023 financial outlook and
overall long-term strategy and priorities. 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 risks 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; supply constraints and our customers'
ability to obtain necessary components in our respective supply
chains may negatively affect our sales and operating results; risks
associated with the performance of our products, including bundled
solutions with third-party products; our products are subject to
intense competition and competitive pressures from existing and new
companies may harm our business, sales, growth rates, and market
share; risks associated with quality and timing in manufacturing
our products and our reliance on third-party manufacturers; we may
not be able to maintain strategic collaborations under which our
bundled solutions are offered; the overall global supply shortage
and logistics delays within the supply chain that our products 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; rising interest rates and inflation
may adversely impact our margins, the supply chain and our
customers’ sales, which may negatively affect our sales and
operating results; 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; we sell to customers who are 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 limited number of contract
manufacturers to produce and ship all of our products, and our
contract manufacturers rely on 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 or a failure of these
parties to perform could adversely affect our ability to market and
sell our products; 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 net income (loss) per (basic or diluted) share
(non-GAAP EPS), non-GAAP operating expense, non-GAAP gross profit
and non-GAAP gross margin. 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;
interest income, net of interest expense offset by other expense;
depreciation and amortization; change in the fair value of
contingent consideration, acquisition-related expenses, severance
and exit costs, amortization of inventory step-up and provision
(benefit) for income taxes. In computing non-GAAP operating
expense, we exclude stock-based compensation expense, amortization
of intangibles, change in the fair value of contingent
consideration, acquisition-related expenses and severance and exit
costs. In computing non-GAAP gross profit and non-GAAP gross
margin, we exclude stock-based compensation expense, amortization
of inventory step-up and amortization of intangible assets. 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 considerable number of factors that are outside
of our control and are not necessarily reflective of operational
performance during a period.
Our non-GAAP 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, non-GAAP operating expense, non-GAAP
gross profit and non-GAAP gross margin 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.
Condensed Consolidated Balance
Sheets
(in thousands, except par
value)
(unaudited)
March 31, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
9,839
$
11,903
Trade accounts receivable, net
8,148
8,741
Inventories
4,481
4,226
Prepaid expenses and other current
assets
1,729
2,284
Total current assets
24,197
27,154
Property and equipment, net
2,683
2,765
Leased right-of-use assets
2,022
2,217
Goodwill
10,845
10,845
Intangible assets, net
10,460
11,203
Other assets
216
216
Total assets
$
50,423
$
54,400
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
6,744
$
6,507
Accrued compensation
871
2,874
Accrued liabilities and other
2,156
2,615
Short-term lease liabilities
889
904
Total current liabilities
10,660
12,900
Deferred tax liability
142
139
Long-term lease liabilities
1,321
1,536
Total liabilities
12,123
14,575
Commitments and contingencies (Note
15)
Stockholders’ equity:
Common stock and additional paid-in
capital, par value $0.0001, 200,000 shares authorized; 10,949
shares issued and 10,407 shares outstanding at March 31, 2023; and
10,767 shares issued and 10,226 shares outstanding at December 31,
2022.
112,615
111,282
Treasury stock, at cost: 541 shares at
March 31, 2023 and December 31, 2022.
(5,364
)
(5,364
)
Accumulated deficit
(68,951
)
(66,093
)
Total stockholders’ equity
38,300
39,825
Total liabilities and stockholders’
equity
$
50,423
$
54,400
Airgain, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per
share data)
(unaudited)
Three months ended March
31,
2023
2022
Sales
$
16,444
$
17,522
Cost of goods sold
10,126
10,366
Gross profit
6,318
7,156
Operating expenses:
Research and development
2,449
3,242
Sales and marketing
2,866
2,855
General and administrative
3,793
3,485
Total operating expenses
9,108
9,582
Loss from operations
(2,790
)
(2,426
)
Other expense (income):
Interest income, net
(18
)
(5
)
Other expense
4
15
Total other (income) expense
(14
)
10
Loss before income taxes
(2,776
)
(2,436
)
Income tax expense (benefit)
82
85
Net loss
$
(2,858
)
$
(2,521
)
Net loss per share:
Basic
$
(0.28
)
$
(0.25
)
Diluted
$
(0.28
)
$
(0.25
)
Weighted average shares used in
calculating loss per share:
Basic
10,266
10,130
Diluted
10,266
10,130
Airgain, Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended March
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(2,858
)
$
(2,521
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation
157
168
Impairment of fixed assets
—
8
Amortization of intangible assets
743
757
Stock-based compensation
981
1,241
Deferred tax liability
3
8
Changes in operating assets and
liabilities:
Trade accounts receivable
593
2,578
Inventories
(255
)
230
Prepaid expenses and other current
assets
555
(175
)
Other assets
—
7
Accounts payable
250
1,572
Accrued compensation
(1,109
)
(735
)
Accrued liabilities and other
(459
)
943
Lease liabilities
(35
)
71
Net cash (used in) provided by operating
activities
(1,434
)
4,152
Cash flows from investing
activities:
Purchases of property and equipment
(89
)
(128
)
Net cash used in investing activities
(89
)
(128
)
Cash flows from financing
activities:
Taxes paid for net share settlement of
restricted stock units
(678
)
—
Issuance of common stock, net
137
120
Net cash (used in) provided by financing
activities
(541
)
120
Net (decrease) increase in cash, cash
equivalents and restricted cash
(2,064
)
4,144
Cash, cash equivalents, and restricted
cash; beginning of period
12,078
14,686
Cash, cash equivalents, and restricted
cash; end of period
$
10,014
$
18,830
Supplemental disclosure of non-cash
investing and financing activities:
Operating lease liabilities resulting from
right-of-use assets
$
11
$
197
Accrual of property and equipment
$
13
$
—
Cash, cash equivalents, and restricted
cash:
Cash and cash equivalents
$
9,839
$
18,655
Restricted cash included in prepaid
expenses and other current assets and other assets long term
$
175
175
Total cash, cash equivalents, and
restricted cash
$
10,014
$
18,830
Airgain, Inc.
Sales by Target Market
(in thousands)
(unaudited)
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Consumer
$
5,132
$
6,416
$
6,062
Enterprise
8,437
10,037
8,629
Automotive
2,875
3,436
2,831
Total sales
$
16,444
$
19,889
$
17,522
Airgain, Inc.
Stock-Based Compensation
Expense by Department
(in thousands)
(unaudited)
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Cost of goods sold
$
15
$
98
$
13
Research and development
237
268
267
Sales and marketing
161
339
287
General and administrative
568
698
674
Total stock-based compensation expense
$
981
$
1,403
$
1,241
Airgain, Inc.
(in thousands)
(unaudited)
Reconciliation of GAAP to
non-GAAP Gross Profit
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Gross profit
$
6,318
$
5,880
$
7,156
Stock-based compensation
15
98
13
Amortization of intangible assets
89
89
89
Non-GAAP gross profit
$
6,422
$
6,067
$
7,258
Reconciliation of GAAP to
non-GAAP Gross Margin
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Gross margin
38.4
%
29.6
%
40.8
%
Stock-based compensation
0.1
%
0.5
%
0.1
%
Amortization of intangible assets
0.6
%
0.4
%
0.5
%
Non-GAAP gross margin
39.1
%
30.5
%
41.4
%
Reconciliation of GAAP to
non-GAAP Operating Expenses
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Operating expenses
$
9,108
$
9,157
$
9,582
Stock-based compensation expense
(966
)
(1,305
)
(1,228
)
Amortization of intangible assets
(654
)
(668
)
(668
)
Severance and exit costs
(205
)
—
—
Non-GAAP operating expenses
$
7,283
$
7,184
$
7,686
Airgain, Inc.
(in thousands, except per
share data)
(unaudited)
Reconciliation of GAAP to
non-GAAP Net Income (Loss)
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Net loss
$
(2,858
)
$
(3,220
)
$
(2,521
)
Stock-based compensation expense
981
1,403
1,241
Amortization of intangible assets
743
757
757
Severance and exit costs
205
—
—
Other (income) expense
(12
)
(12
)
7
Provision (benefit) for income taxes
82
(50
)
85
Non-GAAP net income (loss) attributable to
common stockholders
$
(859
)
$
(1,122
)
$
(431
)
Non-GAAP net income (loss) per share:
Basic
$
(0.08
)
$
(0.11
)
$
(0.04
)
Diluted
$
(0.08
)
$
(0.11
)
$
(0.04
)
Weighted average shares used in
calculating non-GAAP net income (loss) per share:
Basic
10,266
10,225
10,130
Diluted
10,266
10,225
10,130
Reconciliation of Net Income
(Loss) to Adjusted EBITDA
Three months ended
March 31, 2023
December 31, 2022
March 31, 2022
Net loss
$
(2,858
)
$
(3,220
)
$
(2,521
)
Stock-based compensation expense
981
1,403
1,241
Depreciation and amortization
900
930
925
Severance and exit costs
205
—
—
Other (income) expense
(12
)
(12
)
7
Provision (benefit) for income taxes
82
(50
)
85
Adjusted EBITDA
$
(702
)
$
(949
)
$
(263
)
Q2-2023 Financial
Outlook
Reconciliations of GAAP to
Non-GAAP Gross Margin, Operating Expense, Net (Loss) Income, EPS
and to Adjusted EBITDA
For the Three Months Ended
June 30, 2023
(dollars in millions, except
per share data)
Gross Margin
Reconciliation:
Operating Expense
Reconciliation:
GAAP gross margin
38.2
%
GAAP operating expenses
$
8.0
Stock-based compensation
0.3
%
Stock-based compensation
(1.0
)
Amortization
0.5
%
Amortization
(0.6
)
Non-GAAP gross margin
39.0
%
Non-GAAP operating expenses
$
6.4
Net (Loss) Income
Reconciliation
Net (Loss) Income per Share
Reconciliation(1):
GAAP net loss
$
(1.8
)
GAAP net loss per share
$
(0.16
)
Stock-based compensation
1.0
Stock-based compensation
0.09
Amortization
0.7
Amortization
0.07
Interest income, net
—
Interest income, net
—
Income tax expense
0.1
Income tax expense
—
Non-GAAP net income
$
—
Non-GAAP net income per share
$
—
Adjusted EBITDA
Reconciliation
GAAP net loss
$
(1.8
)
Stock-based compensation
1.0
Depreciation and amortization
0.9
Interest income, net
—
Income tax expense
0.1
Adjusted EBITDA
$
0.2
(1) Amounts are based on 10.5 million
basic and 10.9 million diluted weighted average shares
outstanding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230511005913/en/
Airgain Contact Michael Elbaz Chief Financial Officer
investors@airgain.com
Airgain Investor Contact Matt Glover Gateway Group, Inc.
+1 949 574 3860 AIRG@gatewayir.com
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