Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Airgain Inc (AIRG, Financial) reported $15.2 million in sales for Q2 2024, exceeding the midpoint of their guidance range and marking a 7% increase over the prior quarter.
- The company successfully delivered its first shipments of WiFi-7 antennas to a Tier 1 MSO partner, marking a significant milestone.
- Airgain Inc (AIRG) secured multiple design wins for embedded modems in 5G, automotive, and enterprise antennas, indicating strong market traction.
- The company's RECON13 5G antenna gained significant market traction in automotive applications, helping to offset inventory challenges.
- Airgain Inc (AIRG) is optimistic about its strategic transition from a component manufacturer to a comprehensive wireless system solutions provider, with significant growth potential in asset tracking and 5G connectivity solutions.
Negative Points
- Despite the sequential sales increase, Airgain Inc (AIRG) experienced a 4% year-over-year decline in sales due to ongoing excess inventory challenges.
- Enterprise sales decreased by 3% sequentially, primarily due to a large shipment of custom products in Q1 and subsequent inventory adjustments.
- The automotive sector faced persistent industry-wide excess inventory challenges, which are expected to continue through the end of the year.
- Q2 adjusted EBITDA was negative $0.4 million, and non-GAAP EPS was negative $0.05, indicating financial challenges.
- The company anticipates a slower quarter for design wins in Q3 due to product timelines and inventory normalization with a strategic custom products customer.
Q & A Highlights
Q: Can you describe the opportunity related to the European design win for antennas expected to ship late this year?
A: Jacob Suen, President and CEO, explained that the design win involves a major carrier in the European market, working with an OEM partner from Taiwan. The project is a WiFi-7 gateway design expected to ship by the end of the year, with volumes projected at 1 to 2 million devices annually over the next two to three years.
Q: What is the current status and future outlook for Airgain's asset trackers?
A: Jacob Suen noted that asset trackers are a focus area within their IoT business, with new products being developed. They are securing long-term contracts with railcar customers and exploring opportunities in flight applications and logistics partnerships, indicating strong growth potential.
Q: What are your thoughts on gross margins moving forward, and how do you see the December quarter shaping up?
A: Michael Elbaz, CFO, stated that gross margin improvement is a key focus, driven by high-performance products and cost reductions. While not providing specific guidance for December, he mentioned that the AC Fleet product launch will be crucial for growth, with expectations for continued margin improvements.
Q: How do you view the consumer market's growth potential into Q4, especially regarding MSO design wins?
A: Michael Elbaz indicated that the Tier 1 MSO design win is ramping up in Q3 and expected to continue into Q4. While some MSOs may delay WiFi-7 deployments, the MNO Tier 1 design win from last November is also contributing to growth, suggesting optimism for continued consumer market strength.
Q: Can you provide insights into the timeframe for clearing excess inventory in the enterprise market?
A: Michael Elbaz mentioned that the demand softness has become more product and customer-specific. While there is no specific timeframe for clearing excess inventory, it is being monitored closely, and they expect it to clear over time without being a persistent headwind.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
