Airgain, Inc. Q3 FY2025 earnings call

• Core business: Consumer expected double-digit revenue growth for second consecutive year due to WiFi 7 transition and FWA antenna sales; embedded modems expected double-digit growth for second consecutive year driven by utility infrastructure monitoring. Other product lines: Asset tracker sales moderated, aftermarket antenna and enterprise custom products affected by channel inventory overhang due to government project delays, expected to persist in 2026. Leveraging high-performance antenna portfolio into emerging markets. - Growth platforms: AirgainConnect: Achieved T-Mobile key priority certification, sales cycle varies by fleet size (Tier 3: ~3 months, Tier 2: 6-12 months, Tier 1: 12-18 months), sales opportunity pipeline ~80, two-thirds in pretrial phases; Tier 3 opportunities ~60, avg 10 units each, half post-trial. Tier 1 and 2 mostly early engagement. Strong traction in utility and energy infrastructure. Tier 2 to convert to design wins in 2026, Tier 1 in second half. Lighthouse: Achieved FCC certification, U.S. Tier 1 carrier trial to complete by end 2025, system integrator agreement with leading U.S. integrator, Middle East installations progressing with Ormatio, South America trial with top tower provider; modest revenue in first half 2026, stronger growth in second half as integrator engagements expand and international projects advance.

Third quarter revenue was $14 million, midpoint of guidance and up 3% sequentially. Consumer revenue was $6.7 million, up $1 million sequentially due to higher WiFi 7 antenna shipments to cable operators. Enterprise revenue was $6.9 million, down $300,000 sequentially due to lower enterprise antenna sales. Embedded modems had third consecutive quarter of sequential sales growth, driven by utility infrastructure monitoring market. Automotive revenue was $500,000, down $300,000 sequentially due to lower aftermarket antenna sales. Consumer revenue contribution: ~47.86% ($6.7M/$14M). Enterprise revenue contribution: ~49.29% ($6.9M/$14M). Automotive revenue contribution: ~3.57% ($0.5M/$14M). Embedded modems' contribution not explicitly stated by percentage but part of enterprise or separate, but sequential growth noted.

• Fourth quarter revenue expected in range of $12 million to $14 million, midpoint $13 million, sequential decline ~7%. - Non-GAAP gross margin for fourth quarter expected 42.5% to 45.5%, midpoint 44%. - Non-GAAP operating expenses for fourth quarter expected ~$5.8 million, adjusted EBITDA midpoint ~$100,000. - Core markets expected modestly up in 2026 and self-sustaining. - AirgainConnect expected Tier 2 to convert to design wins in 2026, Tier 1 in second half. - Lighthouse expected modest revenue in first half 2026, stronger growth in second half as U.S. system integrator engagements expand and international projects advance.

• Asset tracker sales have moderated due to lack of traction on customer projects. - Aftermarket antenna and enterprise custom products weighed down by channel inventory overhang partly due to government agency project deployment delays, expected to persist in 2026. - Government funding climate may impact the overhang situation. - Lengthy carrier engagement cycle for Lighthouse and AirgainConnect could affect financial impact timing.

Q: Hey, Jacob and Michael, it's Ryan on for Tony. I'm just curious about your recent WiFi 7 design win with the Tier 1 carrier. Is this an existing customer upgrade for you guys, or is it a completely new customer? And then how do you think of the cadence of the ramp on the revenue impact for next year?

A: Thanks. Hi, Ryan. Yes, this is Jacob here. The customer is an existing customer, although this is, you know, as far as the end customer, it is a US Tier 1 operator, and this is their flagship gateway for the next generation. So this is, you know, their largest scale. Look, we talk about the size, it's in excess of 5 million units. You know, it's going to be within five years because that's usually how operators, you know, roll out their deployment. As far as 2026, we would be able to get more visibility, I would say, in the first half of the year because it's planned to be, you know, start deploying in the beginning of the second half of next year.

Q: Maybe one for Michael on OpEx. It's nice to see continued cost discipline both in the results and the guide for December. I'm curious how you think about OpEx fluctuation next year as you ramp some of the new products?

A: So our goal is really to be at EBITDA breakeven, if not positive. And so as we have some runway left to have the revenue ramp in the AC fleet and Lighthouse, we will maintain that tight management of OpEx. We're always looking for efficiencies in our G&A expenses. This has always been the case. And at the same time, we're also looking very deliberately at our investment in our core market, mainly because we want to make sure that we continue to invest in the growth platform just like we have done over the past few years.