Airgain Reports First Quarter 2017 Financial Results

SAN DIEGO, CA -- (Marketwired) -- 05/03/17 -- Airgain, Inc. (NASDAQ: AIRG), a leading provider of embedded antenna technologies used to enable high performance wireless networking, today reported unaudited results for the first quarter ended March 31, 2017.

First Quarter 2017 Financial Highlights

  • Revenue up 32% to $11.3 million
  • Record gross margin of 47.0%
  • Earnings per diluted share of $0.04
  • Adjusted EBITDA increased 101% to $712 thousand

First Quarter 2017 Financial Results
Sales increased 32% to $11.3 million from $8.5 million in the same year-ago period. The increase was primarily driven by an increase in product sales.

Gross profit for the first quarter of 2017 grew 44% to $5.3 million from $3.7 million in Q1 of last year. Gross margin as a percentage of sales increased to 47.0% in Q1-17 compared to 43.2% in the first quarter of 2016. Total operating expenses for the first quarter grew 37% to $4.9 million from $3.6 million in Q1 of last year.

Net income attributable to common stockholders totaled $385 thousand or $0.04 per diluted share (based on 10.2 million shares), an improvement from a net loss attributable to common stockholders of $(465) thousand or $(0.82) per diluted share (based on 0.7 million shares) 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 101% to $712 thousand from $354 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).

First Quarter 2017 Key Performance Indicators (compared to same year-ago period)

  • Total customer devices increased 23% or 2.4 million devices to 12.9 million devices
  • The average number of antennas per device increased 5% to 3.12
  • The average selling price per device increased 8% to $0.86

Management Commentary
"Riding our strong momentum of 2016, we continued to expand our core connected home market, while adding to our sales funnel in new markets like enterprise and automotive," said Airgain's President and Chief Executive Officer, Charles Myers. "Sales grew organically by 32% year-over-year, while our margins showed expansion. This led to another strong quarter of profitability and adjusted EBITDA, more than doubling from the same period a year ago.

"Complementing our healthy financial performance were several achievements on the operational front, we began shipping new connected home devices which join a growing number of design wins based on the 802.11ac standard. Additionally, we started shipping an environmentally hardened outdoor Wi-Fi access point for a major Tier One OEM.

"We acquired the assets of Antenna Plus on April 27, 2017 for $6.4 million in cash. In 2016, Antenna Plus had unaudited revenues of $7.5 million and gross margins greater than 60%, and positive EBITDA. We expect this transaction to be EBITDA accretive within 2017.

"Looking ahead, we will take advantage of our enhanced cash position to opportunistically evaluate attractive technologies and businesses, like Antenna Plus, that can accelerate our future growth. We will continue to invest in our Sales, Marketing, and R&D initiatives to drive our strong organic growth.

Conference Call
Airgain management will hold a conference call today, May 3, 2017 at 4:30 p.m. Eastern Standard Time (1:30 p.m. Pacific Standard Time) to discuss these results and provide an update on business conditions.

Airgain management will host the presentation, where they will also discuss additional details of the Antenna Plus acquisition, followed by a question and answer period.

Date: Wednesday, May 3, 2017
Time: 4:30 p.m. Eastern Standard Time (1:30 p.m. Pacific Standard Time)
U.S. dial-in number: 1-877-451-6152
International dial-in number: 1-201-389-0879

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 Standard Time through June 3, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13658903

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, and Suzhou and Shenzhen, China. For more information, visit

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 the acquisition of the Antenna Plus assets being EBITDA accretive within 2017, our investment in sales, marketing and R&D initiatives, our expansion into new markets and potential technology and business acquisitions and future organic 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: adjustments to the unaudited financial results reported for the first quarter ended March 31, 2017 in connection with the completion of the company's final closing process and procedures, final adjustments, and other developments that may arise during the preparation of our Quarterly Report on Form 10-Q; 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; the Antenna Plus acquisition may negatively affect our operating results, financial condition or cash flows, including as a result of the assumption of known and unknown liabilities; risks associated with integrating the Antenna Plus business into our current business; 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 (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 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.  
Unaduited Condensed Balance Sheets  
    March 31, 2017     December 31, 2016  
Current assets:                
  Cash and cash equivalents   $ 41,859,298     $ 45,161,403  
  Trade accounts receivable, net     7,512,937       5,154,996  
  Inventory     108,321       146,815  
  Prepaid expenses and other current assets     318,937       349,550  
Total current assets     49,799,493       50,812,764  
Property and equipment, net     812,005       807,086  
Goodwill     1,249,956       1,249,956  
Customer relationships, net     2,744,168       2,822,918  
Intangible assets, net     268,123       286,719  
Other assets     189,876       84,060  
Total assets   $ 55,063,621     $ 56,063,503  
Liabilities and stockholders' equity                
Current liabilities:                
  Accounts payable   $ 3,992,976     $ 3,949,005  
  Accrued bonus     599,475       1,748,551  
  Accrued liabilities     803,936       1,072,242  
  Deferred purchase price     1,000,000       1,000,000  
  Current portion of long-term notes payable     1,333,333       1,388,563  
  Current portion of deferred rent obligation under operating lease     81,332       81,332  
Total current liabilities     7,811,052       9,239,693  
Long-term notes payable     1,000,000       1,333,333  
Deferred tax liability     16,000       6,166  
Deferred rent obligation under operating lease     421,170       451,909  
Total liabilities     9,248,222       11,031,101  
Stockholders' equity:                
Common shares, par value $0.0001, 200,000,000 shares authorized at March 31, 2017 and December 31, 2016; 9,488,057 and 9,275,062 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively     949       928  
Additional paid in capital     88,980,356       88,582,470  
  Accumulated deficit     (43,165,906 )     (43,550,996 )
Total stockholders' equity     45,815,399       45,032,402  
Commitments and contingencies                
Total liabilities and stockholders' equity   $ 55,063,621     $ 56,063,503  
Airgain, Inc.  
Unaudited Condensed Statements of Operations  
    For the Three Months Ended March 31,  
    2017     2016  
Sales   $ 11,252,417     $ 8,512,305  
Cost of goods sold     5,963,959       4,834,681  
  Gross profit     5,288,458       3,677,624  
Operating expenses:                
  Research and development     1,596,799       1,321,686  
  Sales and marketing     1,628,141       1,241,104  
  General and administrative     1,638,039       998,040  
Total operating expenses     4,862,979       3,560,830  
Income from operations     425,479       116,794  
Other expense (income):                
  Interest income     (37,201 )     -  
  Interest expense     30,764       52,475  
  Fair market value adjustment - warrants     -       (78,834 )
Total other income     (6,437 )     (26,359 )
Income before income taxes     431,916       143,153  
Provision for income taxes     46,826       4,000  
Net income     385,090       139,153  
Accretion of dividends on preferred convertible stock     -       (604,069 )
Net income (loss) attributable to common stockholders   $ 385,090     $ (464,916 )
Net income (loss) per share:                
    Basic   $ 0.04     $ (0.70 )
    Diluted   $ 0.04     $ (0.82 )
Weighted average shares used in calculating income (loss) per share:                
    Basic     9,359,562       665,842  
    Diluted     10,201,606       665,842  
Airgain, Inc.
Unaudited Condensed Statements of Stockholders' Equity
    Common Stock   Additional
  Accumulated     Total
    Shares   Amount  
Balance at December 31, 2016   9,275,062   $ 928   $ 88,582,470   $ (43,550,996 )   $ 45,032,402
  Stock-based compensation   -     -     73,475     -       73,475
  Exercise of stock options   212,995     21     323,630     -       323,651
  Reversal of costs related to secondary offering   -     -     781     -       781
  Net income   -     -     -     385,090       385,090
Balance at March 31, 2017   9,488,057   $ 949   $ 88,980,356   $ (43,165,906 )   $ 45,815,399
Airgain, Inc.  
Unaudited Statements of Cash Flows  
    For the Three Months Ended March 31,  
    2017     2016  
Cash flows from operating activities:                
Net income   $ 385,090     $ 139,153  
Adjustments to reconcile net income to net cash used in operating activities:                
  Depreciation     115,447       117,445  
  Amortization     97,346       91,333  
  Fair market value adjustment - warrants     -       (78,834 )
  Stock-based compensation     73,475       28,893  
  Deferred tax liability     9,834       -  
  Changes in operating assets and liabilities:                
    Trade accounts receivable     (2,357,941 )     52,995  
    Inventory     38,494       73,048  
    Prepaid expenses and other assets     (75,203 )     83,248  
    Accounts payable     42,917       (349,102 )
    Accrued bonus     (1,149,076 )     (937,250 )
    Accrued liabilities     (268,306 )     (47,302 )
    Deferred obligation under operating lease     (30,739 )     (26,683 )
Net cash used in operating activities     (3,118,662 )     (853,056 )
Cash flows from investing activities:                
Purchases of property and equipment     (119,312 )     (41,030 )
Net cash used in investing activities     (119,312 )     (41,030 )
Cash flows from financing activities:                
Repayment of notes payable     (388,563 )     (404,469 )
Reversal of costs related to intial public offering     781       -  
Proceeds from exercise of stock options     323,651       -  
Net cash used in financing activities     (64,131 )     (404,469 )
Net decrease in cash and cash equivalents     (3,302,105 )     (1,298,555 )
Cash and cash equivalents, beginning of period     45,161,403       5,335,913  
Cash and cash equivalents, end of period   $ 41,859,298     $ 4,037,358  
Supplemental disclosure of cash flow information                
Interest paid   $ 32,508     $ 52,475  
Supplemental disclosure of non-cash investing and financing activities:                
Accretion of Series E, F, and G preferred redeemable convertible stock to redemption amount   $ -     $ 533,203  
Accrual of property and equipment   $ 1,054       -  
Airgain, Inc.  
Unaudited Reconciliation of Net Income to Adjusted EBITDA  
    For the Three Months Ended March 31,  
    2017     2016  
Reconciliation of Net Income to Adjusted EBITDA                
  Net income   $ 385,090     $ 139,153  
    Stock-based compensation expense     73,475       28,893  
    Depreciation and amortization     212,793       208,778  
    Other income     (6,437 )     (26,359 )
    Provision for income taxes     46,826       4,000  
  Adjusted EBITDA   $ 711,747     $ 354,465  

Company Contact
Alexis Waadt
Director of Investor Relations
Airgain, Inc.

Investor Contact
Matt Glover or Najim Mostamand
Liolios Group, Inc.
+1 949 574 3860

Source: Airgain, Inc.