Press Release Details

Airgain's mission is to become the world's leading supplier of throughput optimized antenna systems and validation services, enabling advances in wireless connectivity for in-home, enterprise, and M2M applications.

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Airgain Reports Third Quarter and Nine Month 2016 Results

November 10, 2016

SAN DIEGO, CA -- (Marketwired) -- 11/10/16 -- Airgain, Inc. (NASDAQ: AIRG), a leading provider of embedded antenna technologies used to enable high performance wireless networking, today reported results for the third quarter ended September 30, 2016.

Third Quarter 2016 Financial Results

Sales increased 87% to $12.4 million from $6.7 million in the same year-ago period. The increase was primarily driven by an increase in product sales.

Gross profit increased 101% to $5.6 million (44.8% of sales) from $2.8 million (41.6% of sales) in the same year-ago period. The increase in gross profit as a percentage of sales was driven by an increase in the sales of board-mounted antennas, which typically carry higher gross margins.

Total operating expenses increased 53% to $4.3 million from $2.8 million in the same year-ago period. The increase was primarily due to higher personnel expenses to support the company's sales and marketing and R&D initiatives. The increase was also due to higher administrative expenses incurred as a public company, including expenses related to the company's initial public offering.

Net income attributable to common stockholders totaled $861 thousand or $0.16 per diluted share, an improvement from net loss attributable to common stockholders of $617 thousand or $(1.05) per diluted share in the same year-ago period.

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, fair market value for adjustments of warrants, and share-based compensation) increased to $1.6 million from $73 thousand in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Third Quarter 2016 Key Performance Indicators (compared to same year-ago period)

  • Total customer devices increased 93% or 8.0 million devices to 16.6 million devices
  • The average number of antennas per device increased 15% to 2.84
  • The average selling price per device decreased 5% to $0.72

Nine Month 2016 Financial Results

Sales increased 67% to $30.8 million from $18.5 million in the same year-ago period. The increase was primarily driven by an increase in product sales.

Gross profit increased 77% to $13.8 million (44.8% of sales) from $7.8 million (42.3% of sales) in the same year-ago period. The increase in gross profit as a percentage of sales was driven by an increase in the sales of board-mounted antennas.

Total operating expenses increased 38% to $11.5 million from $8.3 million in the same year-ago period. The increase was primarily due to higher personnel expenses to support the company's sales and marketing and R&D initiatives. The increase was also due to higher administrative expenses incurred as a public company, including expenses related to the company's initial public offering.

Net income attributable to common stockholders totaled $1.1 million or $0.25 per diluted share, an improvement from net loss attributable to common stockholders of $2.1 million or $(3.70) per diluted share in the same year-ago period.

Adjusted EBITDA increased to $3.2 million from $123 thousand in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).

Nine Month 2016 Key Performance Indicators (compared to same year-ago period)

  • Total customer devices increased 69% or 15.8 million devices to 38.7 million devices
  • The average number of antennas per device increased 21% to 2.98
  • The average selling price per device decreased 3% to $0.77

Management Commentary

"We're pleased with our results for the third quarter of 2016," said Airgain president and CEO, Charles Myers. "Building on the progress we made in Q2, the third quarter represented another period of strong top-line growth matched by our ability to maintain healthy margins, and ultimately, generate profitability for our shareholders.

"Sales, which were partially affected by some seasonal factors, grew by 87% to $12.4 million, driven by continued growth in our carrier gateway and set top box segments, but also the emerging prominence of our Smart TV segment. In fact, we recently shipped our 25 millionth antenna to the Smart TV market last month."

Conference Call

Airgain management will hold a conference call today (November 10, 2016) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and provide an update on business conditions.

Company president and CEO Charles Myers and CFO Leo Johnson will host the call, followed by a question and answer period.

Date: Thursday, November 10, 2016
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
U.S. dial-in number: 1-888-224-1121
International dial-in number: 1-913-312-0719

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay in the investor relations section of the company's website.

A replay of the conference call will be available after 7:30 p.m. Eastern time through December 10, 2016.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 3519805

About Airgain, Inc.
Airgain is a leading provider of embedded antenna technologies used to enable high performance wireless networking across a broad range of home, enterprise, and industrial devices. Our innovative antenna systems open up exciting new possibilities in wireless services requiring high speed throughput, broad coverage footprint, and carrier grade quality. Our antennas are found in devices deployed in carrier, enterprise, and residential wireless networks and systems, including set-top boxes, access points, routers, gateways, media adapters, digital televisions, and Internet of Things (IoT) devices. Airgain partners with and supplies the largest blue chip brands in the world, including original equipment and design manufacturers, chipset makers, and global operators. Airgain is headquartered in San Diego, California, and maintains design and test centers in San Diego, Cambridge, United Kingdom, Taipei, Taiwan, and Suzhou, China. For more information, visit airgain.com.

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 our future business growth. 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; 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; 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; 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; 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, including under the heading "Risk Factors" in our final prospectus. 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 Airgain's 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 and Amortization (Adjusted EBITDA). We believe Adjusted EBITDA provides useful information to investors with which to analyze our operating trends and performance. In computing Adjusted EBITDA, we also exclude stock-based compensation expense, which represents non-cash charges for the fair value of stock options and other non-cash awards granted to employees, as well as the fair market value adjustments for warrants. 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 a non-GAAP financial measure that excludes 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.

Our Adjusted EBITDA measure 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 is not a measurement of financial performance under GAAP, and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider Adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of specific adjustments to GAAP results is provided in the last table at the end of this release.

   
Airgain, Inc.  
Unaudited Condensed Balance Sheets  
             
    September 30, 2016     December 31, 2015  
Assets                
Current assets:                
  Cash and cash equivalents   $ 16,826,304     $ 5,335,913  
  Trade accounts receivable, net     5,766,465       3,731,998  
  Inventory     105,019       119,733  
  Prepaid expenses and other current assets     439,398       191,502  
Total current assets     23,137,186       9,379,146  
Property and equipment, net     945,007       1,026,784  
Goodwill     1,249,956       1,249,956  
Customer relationships, net     2,901,668       3,137,918  
Intangible assets, net     305,315       345,069  
Other assets     96,119       121,541  
Total assets   $ 28,635,251     $ 15,260,414  
Liabilities, preferred redeemable convertible stock, and stockholders' equity (deficit)                
Current liabilities:                
  Accounts payable   $ 4,183,395     $ 2,873,471  
  Accrued bonus     1,142,243       1,335,500  
  Accrued liabilities     796,033       660,987  
  Deferred purchase price     1,000,000       1,000,000  
  Current portion of long-term notes payable     1,463,300       1,625,030  
  Current portion of deferred rent obligation under operating lease     81,332       81,332  
Total current liabilities     8,666,303       7,576,320  
Preferred stock warrant liability           709,504  
Long-term notes payable     1,666,667       2,721,865  
Deferred tax liability     7,900        
Deferred rent obligation under operating lease     478,592       558,641  
Total liabilities     10,819,462       11,566,330  
Preferred redeemable convertible stock:                
  Series E preferred redeemable convertible stock-- 10,500,000 shares authorized at December 31, 2015; 0 shares and 8,202,466 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $16,274,823 at September 30, 2016 and December 31, 2015, respectively           16,274,823  
  Series F preferred redeemable convertible stock-- 5,000,000 shares authorized at December 31, 2015; 0 shares and 4,734,374 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $10,517,081 at September 30, 2016 and December 31, 2015, respectively           10,517,081  
  Series G preferred redeemable convertible stock-- 23,500,000 shares authorized at December 31, 2015; 0 shares and 10,334,862 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $17,987,553 at September 30, 2016 and December 31, 2015, respectively           16,315,002  
Stockholders' equity (deficit):                
Preferred convertible stock:                
  Series A preferred convertible stock-- 313,500 shares authorized at December 31, 2015; 0 shares and 313,500 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $2,416,194 at September 30, 2016 and December 31, 2015, respectively           976,000  
  Series B preferred convertible stock-- 1,183,330 shares authorized at December 31, 2015; 0 shares and 1,157,606 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $5,081,890 at September 30, 2016 and December 31, 2015, respectively           2,457,253  
  Series C preferred convertible stock-- 682,000 shares authorized at December 31, 2015; 0 shares and 682,000 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $682,000 at September 30, 2016 and December 31, 2015, respectively           549,010  
  Series D preferred convertible stock-- 4,276,003 shares authorized at December 31, 2015; 0 shares and 4,091,068 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively; aggregate liquidation preference of $0 and $4,516,013 at September 30, 2016 and December 31, 2015, respectively           1,986,286  
Common shares, par value $0.0001, 200,000,000 and 80,000,000 shares authorized at September 30, 2016 and December 31, 2015, respectively; 7,577,525 and 665,842 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively     758       1,094,375  
Additional paid in capital     62,540,825        
  Accumulated deficit     (44,725,794 )     (46,475,746 )
Total stockholders' equity (deficit)     17,815,789       (39,412,822 )
Commitments and contingencies (note 13)                
Total liabilities, preferred redeemable convertible stock and stockholders' equity (deficit)   $ 28,635,251     $ 15,260,414  
                 
                 
 
Airgain, Inc.
Unaudited Condensed Statements of Operations
                 
    For the Three Months Ended September 30,   For the Nine Months Ended September 30,
    2016   2015   2016   2015
Sales   $ 12,439,279   $ 6,668,732   $ 30,807,902   $ 18,459,590
Cost of goods sold     6,862,992     3,893,657     17,007,228     10,657,495
  Gross profit     5,576,287     2,775,075     13,800,674     7,802,095
Operating expenses:                        
  Research and development     1,432,581     1,075,228     4,096,670     3,099,080
  Sales and marketing     1,453,391     940,155     4,078,250     2,840,514
  General and administrative     1,459,993     830,723     3,304,790     2,393,433
Total operating expenses     4,345,965     2,846,106     11,479,710     8,333,027
Income (loss) from operations     1,230,322     (71,031)     2,320,964     (530,932)
Other expense (income):                        
  Interest income     (1,735)         (1,735)    
  Interest expense     41,735     7,311     141,505     25,000
  Fair market value adjustment - warrants         (78,833)     (460,289)     (336,971)
Total other expense (income)     40,000     (71,522)     (320,519)     (311,971)
Income (loss) before income taxes     1,190,322     491     2,641,483     (218,961)
Provision (benefit) for income taxes     7,278     (178)     8,078     9,222
Net income (loss)     1,183,044     669     2,633,405     (228,183)
Accretion of dividends on preferred convertible stock     (322,170)     (617,493)     (1,537,021)     (1,827,461)
Net income (loss) attributable to common stockholders   $ 860,874   $ (616,824)   $ 1,096,384   $ (2,055,644)
Net income (loss) per share:                        
  Basic   $ 0.21   $ (0.93)   $ 0.59   $ (3.18)
  Diluted   $ 0.16   $ (1.05)   $ 0.25   $ (3.70)
Weighted average shares used in calculating income (loss) per share                        
  Basic     4,133,020     662,415     1,849,647     646,877
  Diluted     6,689,332     662,415     3,103,784     646,877
                         
                         
   
Airgain, Inc.  
Unaudited Condensed Statement of Stockholders' Equity (Deficit)  
                                         
    Preferred
Convertible Stock
    Common Stock     Additional
Paid-in

Capital
    Accumulated
Deficit
    Total
Stockholders'

Equity (Deficit)
 
    Shares     Amount     Shares   Amount              
Balance at December 31, 2015   6,244,174     $ 5,968,549     665,842   $ 1,094,375     $     $ (46,475,746 )   $ (39,412,822 )
  Stock-based compensation                       224,039             224,039  
  Conversion of warrants             127,143           249,215             249,215  
  Exercise of stock options             46,500     112,100                   112,100  
  Effect of accretion to redemption value                       (473,254 )     (883,453 )     (1,356,707 )
  Change in par value from no par value to $0.0001                 (1,206,391 )     1,206,391              
  Issuance of common stock upon initial public offering, net of issuance costs             1,700,100     170       10,776,559             10,776,729  
  Issuance of warrants                       126,218             126,218  
  Conversion of preferred redeemable convertible stock to common stock upon initial public offering             3,778,753     378       44,463,234             44,463,612  
  Conversion of preferred convertible stock to common stock upon initial public offering   (6,244,174 )     (5,968,549 )   1,259,187     126       5,968,423              
  Net income                             2,633,405       2,633,405  
Balance at September 30, 2016       $     7,577,525   $ 758     $ 62,540,825     $ (44,725,794 )   $ 17,815,789  
                                                   
                                                   
   
Airgain, Inc.  
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(unaudited)
 
                       
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2016   2015     2016     2015  
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
                     
Net income (loss)   $ 1,183,044   $ 669     $ 2,633,405     $ (228,183 )
  Stock-based compensation expense     111,872     29,424       224,039       310,719  
  Depreciation and amortization     214,408     114,168       633,430       343,529  
  Interest and other income     40,000     (71,522 )     (320,519 )     (311,971 )
  Provision (benefit) for income taxes     7,278     (178 )     8,078       9,222  
Adjusted EBITDA   $ 1,556,602   $ 72,561     $ 3,178,433     $ 123,316  
                               
                               

Investor Relations Contact
Matt Glover or Najim Mostamand
Liolios Group, Inc.
+1 949 574 3860
AIRG@liolios.com

Airgain Public Relations Contact
Jules M. Cassano
Director of Marketing
Airgain, Inc.
+1 760 444 6008
media@airgain.com

Source: Airgain, Inc.

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