Airgain, Inc. (NASDAQ: AIRG), a leading provider of advanced
antenna technologies used to enable high performance wireless
networking across a broad range of devices and markets, including
consumer, enterprise, and automotive, today announced GAAP net loss
of $1.2 million and GAAP EPS of $(0.12) for the three months ended
March 31, 2020 (Q1-20). The Q1-20 net income decreased $1.3 million
from the net income of $0.1 million for the three months ended
December 31, 2019 (Q4-19).
“I am pleased that we were able to deliver on our previous
financial guidance given the dynamic environment we are operating
in,” said Airgain’s Chief Executive Officer and President, Jacob
Suen. “More importantly, the launch of AirgainConnect™ serves not
only as a critical pivot-point in our company towards our
transition to a more diverse solutions capability, delivering
higher levels of integration, but also as an example of how our
team can make significant innovations in the face of a rapidly
evolving market.”
2020 Q1 Financial Highlights
- Sales of $11.2 million
- Gross margin of 47.5%
- Net loss of $1.2 million
- GAAP earnings per share of $(0.12)
- Non-GAAP earnings per share of $(0.05)
- Adjusted EBITDA of $(0.4) million
2020 Q1 Financial Results
Sales decreased 14% to $11.2 million in Q1-20 compared to $13.0
million in Q4-19. The lower sales were primarily driven by impacts
from COVID-19 and more modestly by typical seasonal softness in our
products sales. Our Q1-20 sales decreased $3.9 million compared to
sales of $15.1 million in the three months ended March 31, 2019
(Q1-19). The lower sales were primarily driven by impacts from
COVID-19 and a product cycle transition for several large volume
embedded antenna products.
Gross profit decreased 8% in Q1-20 to $5.3 million from $5.8
million in Q4-19. Gross margin was 47.5% in Q1-20, which increased
from 44.4% in Q4-19 largely due to manufacturing efficiencies and
to a lesser extent favorable product sales mix. Q1-20 gross margin
increased 2.6% from 44.9% in Q1-19 due to a favorable change in the
product sales mix.
Total operating expenses of $6.6 million for Q1-20 increased 13%
compared to $5.9 million in Q4-19 primarily due to changes in
personnel expenses. Q1-20 operating expenses were slightly higher
than the $6.6 million in Q1-19. Q1-20 non-GAAP operating expenses
totaled $5.8 million compared to non-GAAP operating expenses of
$5.1 million in Q4-19. Non-GAAP operating expenses for Q1-19 were
$6.0 million (see note regarding "Use of Non-GAAP Financial
Measures," below for further discussion of this non-GAAP
measure).
Net loss totaled $1.2 million or $(0.12) per share (based on 9.7
million shares), compared to net income of $0.1 million or $0.01
per share (based on 10.0 million diluted shares) in Q4-19. The
Q1-20 net loss increased $1.5 million as compared to the Q1-19 net
income of $0.3 million or $0.03 per share (based on 10.0 million
diluted shares). Q1-20 non-GAAP net loss totaled $0.5 million or
$(0.05) per share (based on 9.7 million shares), compared to
non-GAAP net income of $0.7 million or $0.07 per share (based on
10.0 million diluted shares) in Q4-19. Non-GAAP net income in Q1-19
was $0.9 million or $0.09 per share (based on 10.0 million diluted
shares) (see note regarding "Use of Non-GAAP Financial Measures,"
below for further discussion of this non-GAAP measure).
Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, other income, and stock-based compensation) decreased
to $(0.4) million in Q1-20 compared to Adjusted EBITDA of $0.8
million in Q4-19. The Q1-19 Adjusted EBITDA was $1.0 million (see
note regarding "Use of Non-GAAP Financial Measures," below for
further discussion of this non-GAAP measure).
2020 Q2 Financial Outlook
- Total sales are expected to be in the range of $10.5 million to
$12.0 million
- Expected sales strength from the Enterprise market, primarily
due to a recovery from COVID-19 slowdown in Q1-20 of one of our
large Chinese customers, is expected to be offset by pressure from
our Consumer market sales, primarily due to the impact from
COVID-19.
- Gross margin is expected to be in the range of 45% to 47%
- Non-GAAP operating expenses is expected to be $6.0 million,
plus or minus $0.25 million
Our financial outlook for the three months ending June 30, 2020
(Q2-20), including reconciliations of GAAP to non-GAAP and Adjusted
EBITDA, can be found at the end of this press release.
Conference Call
Airgain management will hold a conference call today Thursday,
May 7, 2020, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to
discuss financial results for the first quarter ended March 31,
2020, and to provide an update on business conditions.
Airgain management will host the presentation, followed by a
question and answer period.
Date: Thursday, May 7, 2020 Time: 4:30 p.m. Eastern Time (1:30
p.m. Pacific Time) U.S. dial-in: 1-866-324-3683 International
dial-in: 509-844-0959 Conference ID: 8671588
Please call the conference telephone number five 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 the company at 1-760-579-0200.
The conference call will be broadcast simultaneously and
available for replay via the investor relations section of the
company's website.
A replay of the call is available after 7:30 p.m. Eastern Time
on the same day through June 6, 2020.
U.S. replay dial-in: 1-855-859-2056 or 404-537-3406 Replay ID:
8671588
About Airgain, Inc.
Airgain is a leading provider of advanced antenna technologies
used to enable high performance wireless networking across a broad
range of devices and markets, including consumer, enterprise, and
automotive. Combining design-led thinking with testing and
development, Airgain works in partnership with the entire
ecosystem, including carriers, chipset suppliers, OEMs, and ODMs.
Airgain’s antennas are deployed in carrier, fleet, enterprise,
residential, private, government, and public safety wireless
networks and systems, including set-top boxes, access points,
routers, modems, gateways, media adapters, portables, digital
televisions, sensors, fleet, and asset tracking devices. Airgain is
headquartered in San Diego, California, and maintains design and
test centers in the U.S., U.K., China, and Taiwan. For more
information, visit airgain.com, or follow us on LinkedIn and
Twitter.
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 potential transition to a more diverse
solutions capability and our Q2-20 financial outlook. 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; the COVID-19 pandemic may continue to disrupt and
otherwise adversely affect our operations and those of our
suppliers, partners, distributors and ultimate end customers, and
the overall supply chain that our antennas 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; 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, including our ability to transition to provide a
more diverse solutions capability; our ability to identify and
consummate strategic acquisitions and partnerships; 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 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 earnings per diluted share (non-GAAP EPS), and
non-GAAP operating expenses. 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 also exclude stock-based compensation expense,
which represents non-cash charges for the fair value of stock
awards; other income, which includes interest income offset by
interest expense; depreciation and/or amortization; and provision
for income taxes. In computing non-GAAP operating expenses, we also
exclude stock-based compensation expense and amortization. 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 significant number of factors that are outside
of our control and are not necessarily reflective of operational
performance during a period.
Our Adjusted EBITDA, non-GAAP net income (loss), non-GAAP EPS,
and non-GAAP operating expenses 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, and non-GAAP operating
expenses 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.
Unaudited Condensed Balance
Sheets
(in thousands, except per
share data)
March 31, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
22,533
$
13,197
Short term investments
11,016
21,686
Trade accounts receivable
7,016
7,656
Inventory
996
1,193
Prepaid expenses and other current
assets
1,090
1,361
Total current assets
42,651
45,093
Property and equipment, net
2,140
2,126
Goodwill
3,700
3,700
Customer relationships, net
2,989
3,110
Intangible assets, net
644
687
Other assets
218
10
Total assets
$
52,342
$
54,726
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
3,568
$
3,838
Accrued bonus
411
1,385
Accrued liabilities
1,025
1,451
Current portion of deferred rent
obligation under operating lease
42
85
Total current liabilities
5,046
6,759
Deferred tax liability
52
52
Deferred rent obligation under operating
lease
9
11
Total liabilities
5,107
6,822
Stockholders’ equity:
Common shares, par value $0.0001, 200,000
shares authorized; 10,185 shares issued and 9,697 shares
outstanding at March 31, 2020; and 10,146 shares issued and 9,681
shares outstanding at December 31, 2019
1
1
Additional paid in capital
97,360
96,622
Treasury stock, at cost: 489 shares and
465 shares at March 31, 2020, and December 31, 2019,
respectively
(4,849
)
(4,659
)
Accumulated other comprehensive income
(loss)
(7
)
8
Accumulated deficit
(45,270
)
(44,068
)
Total stockholders’ equity
47,235
47,904
Commitments and contingencies
Total liabilities and stockholders’
equity
$
52,342
$
54,726
Airgain, Inc.
Unaudited Condensed Statements
of Operations
(in thousands, except per
share data)
Three months ended
March 31,
December 31,
March 31,
2020
2019
Sales
$
11,216
$
13,026
$
15,108
Cost of goods sold
5,891
7,248
8,322
Gross profit
5,325
5,778
6,786
Operating expenses:
Research and development
2,418
2,045
2,338
Sales and marketing
1,539
1,072
2,274
General and administrative
2,678
2,751
1,995
Total operating expenses
6,635
5,868
6,607
Income (loss) from operations
(1,310
)
(90
)
179
Other expense (income):
Interest income
(124
)
(155
)
(188
)
Interest expense
—
4
1
Total other income
(124
)
(151
)
(187
)
Income (loss) before income taxes
(1,186
)
61
366
Provision for income taxes
16
(2
)
29
Net income (loss)
$
(1,202
)
$
63
$
337
Net income (loss) per share:
Basic
$
(0.12
)
$
0.01
$
0.03
Diluted
$
(0.12
)
$
0.01
$
0.03
Weighted average shares used in
calculating income (loss) per share:
Basic
9,690
9,697
9,626
Diluted
9,690
10,025
9,961
Airgain, Inc.
Unaudited Condensed Statements
of Cash Flows
(in thousands)
Three months ended March
31,
2020
2019
Cash flows from operating
activities:
Net income (loss)
$
(1,202
)
$
337
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation
122
177
Amortization
164
164
Amortization of premium (discounts) on
investments, net
7
(82
)
Stock-based compensation
668
514
Deferred tax liability
—
5
Changes in operating assets and
liabilities:
Trade accounts receivable
640
(967
)
Inventory
197
68
Prepaid expenses and other assets
238
77
Accounts payable
(291
)
504
Accrued bonus
(974
)
(1,612
)
Accrued liabilities
(426
)
(19
)
Deferred obligation under operating
lease
(45
)
(41
)
Net cash used in operating activities
(902
)
(875
)
Cash flows from investing
activities:
Purchases of available-for-sale
securities
(752
)
(10,462
)
Maturities of available-for-sale
securities
11,400
9,585
Purchases of property and equipment
(115
)
(159
)
Net cash provided by (used in) investing
activities
10,533
(1,036
)
Cash flows from financing
activities:
Repurchases of common stock
(190
)
(193
)
Proceeds from issuance of common stock,
net
70
231
Net cash provided by (used in) financing
activities
(120
)
38
Net increase (decrease) in cash, cash
equivalents and restricted cash
9,511
(1,873
)
Cash, cash equivalents, and restricted
cash; beginning of period
13,197
13,621
Cash, cash equivalents, and restricted
cash; end of period
$
22,708
$
11,748
Supplemental disclosure of cash flow
information:
Interest paid
$
—
$
1
Taxes paid
$
22
$
21
Supplemental disclosure of non-cash
investing and financing activities:
Accrual of property and
equipment
$
21
$
—
Cash and cash equivalents
$
22,533
$
11,748
Restricted cash included in other
assets
175
—
Total cash, cash equivalents, and
restricted cash
$
22,708
$
11,748
Airgain, Inc.
(in thousands, except per
share data)
Unaudited Reconciliation of
GAAP to non-GAAP Net Income (Loss)
Three months ended
March 31,
December 31,
March 31,
2020
2019
Net income (loss)
$
(1,202
)
$
63
$
337
Stock-based compensation expense
668
599
514
Amortization
164
164
164
Other income
(124
)
(151
)
(187
)
Provision for income taxes
16
(2
)
29
Non-GAAP net income (loss) attributable to
common stockholders
$
(478
)
$
673
$
857
Non-GAAP net income (loss) per share:
Basic
$
(0.05
)
$
0.07
$
0.09
Diluted
$
(0.05
)
$
0.07
$
0.09
Weighted average shares used in
calculating non-GAAP income (loss) per share:
Basic
9,690
9,697
9,626
Diluted
9,690
10,025
9,961
Unaudited Reconciliation of
GAAP to non-GAAP Operating Expenses
Three months ended
March 31,
December 31,
March 31,
2020
2019
Operating expenses
$
6,635
$
5,868
$
6,607
Stock-based compensation expense
(668
)
(599
)
(514
)
Amortization
(131
)
(131
)
(131
)
Non-GAAP operating expenses
$
5,836
$
5,138
$
5,962
Unaudited Reconciliation of
Net Income (Loss) to Adjusted EBITDA
Three months ended
March 31,
December 31,
March 31,
2020
2019
Net income (loss)
$
(1,202
)
$
63
$
337
Stock-based compensation expense
668
599
514
Depreciation and amortization
286
284
341
Interest and other income
(124
)
(151
)
(187
)
Provision for income taxes
16
(2
)
29
Adjusted EBITDA
$
(356
)
$
793
$
1,034
Q2-20 Projections
Reconciliations of GAAP Net
Loss to Non GAAP Net Loss, Operating
Expense, and EPS and to
Adjusted EBITDA
For the Three Months Ended
June 30, 2020
(in millions, except per share
data)
Net Loss
Reconciliation:
Adjusted EBITDA
Reconciliation:
GAAP net loss
$
(1.54
)
GAAP net loss
$
(1.54
)
Stock-based compensation
0.69
Stock-based compensation
0.69
Amortization
0.16
Depreciation and amortization
0.29
Other income net of taxes
(0.10
)
Other income net of taxes
(0.10
)
Non GAAP net loss
$
(0.79
)
Adjusted EBITDA
$
(0.66
)
Operating Expense
Reconciliation:
GAAP operating expenses
$
6.82
Stock-based compensation
(0.69
)
Amortization
(0.13
)
Non GAAP operating expenses
$
6.00
EPS Reconciliation(1):
GAAP EPS
$
(0.16
)
Stock-based compensation expense
0.07
Amortization
0.02
Other income net of taxes
(0.01
)
Non GAAP EPS
$
(0.08
)
(1) Amounts are based off of 9.7 million
shares outstanding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507006048/en/
David Lyle Chief Financial Officer investors@airgain.com
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