AIRGAIN INC (AIRG)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered sequential revenue growth to $13.62M with non-GAAP gross margin of 43.8%, a modest beat vs consensus ($13.47M revenue; EPS -$0.06), as non-GAAP EPS came in at -$0.04; GAAP EPS was -$0.12 . Revenue mix shifted toward Enterprise ($7.15M) on embedded modems and custom IoT strength, while Consumer and Automotive declined sequentially due to lower antenna demand .
• Management guided Q3 2025 revenue to $13.0–$15.0M (midpoint $14.0M), non-GAAP EPS of $0.01, and adjusted EBITDA of $0.2M, signaling a return to profitability in H2 2025; note the call text’s $30–$50M range appears to be a transcription error vs the press release/8-K .
• Strategic milestones: FirstNet Trusted certification for AC-Fleet, launch of Go-Kit Pro, and first Tier 2 utility win; Lighthouse repeater trials advancing globally, with ramps expected in 2026 .
• Stock reaction catalysts: H2 profitability inflection, visible AC-Fleet deployments (Tier 2/3), and Lighthouse trial conversions; tariff/macro backdrop seen as fluid but not materially impacting margins currently .

What Went Well and What Went Wrong

• What Went Well
  • AC-Fleet achieved FirstNet Trusted certification and won a Tier 2 utility deployment, expanding mission-critical fleet opportunities .
  • Enterprise strength: Embedded modems and custom IoT drove Enterprise revenue up $2.8M QoQ to $7.2M; non-GAAP gross margin improved YoY on enterprise product margins .
  • Management reaffirmed H2 2025 profitability path and scalable platform growth in 2026: “positions us to deliver profitability in the second half of 2025, and scale meaningfully in 2026” .
• What Went Wrong
  • Consumer and Automotive revenues fell QoQ (-$0.8M and -$0.4M respectively) due to lower embedded/external antenna demand and channel inventory overhang in automotive/asset tracking .
  • Non-GAAP gross margin dipped sequentially (44.3% → 43.8%) on mix despite YoY improvement, and Adjusted EBITDA remained slightly negative at -$0.4M .
  • Automotive aftermarket and asset tracking remained soft; management cited cautious government agency environment and deployment delays impacting channel inventory digestion .

Financial Results

Guidance Changes

Note: The earnings call transcript referenced a Q3 revenue range of $30–$50M, but the press release and 8-K guide to $13–$15M; we treat the call figure as a transcription error given consistent documentary guidance .

Earnings Call Themes & Trends

Management Commentary

• “We achieved several key milestones, including FirstNet Trusted certification for AC-Fleet, the launch of our Go-Kit Pro mobile connectivity solution, and our first Tier 2 utility win… While broader platform ramps are now expected in 2026, the traction we are seeing positions us to deliver profitability in the second half of 2025” — Jacob Suen, CEO .
• “Enterprise revenue was $7.2M… driven by strong demand for embedded modems and custom IoT solutions… Non-GAAP gross margin was 43.8%… Adjusted EBITDA improved to a loss of $0.4M vs $1.2M in Q1” — Michael Elbaz, CFO .
• “Customers are selecting AC-Fleet because it is a true all-in-one solution with integrated eSIM… lowering total cost of ownership… We remain on track for T-Mobile priority one certification in Q3… Verizon Frontline in Q4… European certification in Q1 2026” — Jacob Suen .

Q&A Highlights

• AC-Fleet opportunity set: ~40 qualified opportunities with 10–15% Tier 1, ~30% Tier 2; cycle times 3 months (Tier 3), 6–12 months (Tier 2), 12–18 months (Tier 1). First Tier 2 conversion in Q2; certifications (eSIM/FirstNet) elongated timelines but enhance differentiation .
• H2 trajectory: Management expects relatively stable existing markets with small, steady increases; 2026 seen as scale year for platforms; ongoing caution in automotive aftermarket and asset tracking due to agency delays .
• Guidance framing: Q3 sequential growth driven by initial AC-Fleet and Lighthouse contributions atop consumer/enterprise base; non-GAAP gross margin 42.5–45.5% and OpEx ~$6.1M support positive non-GAAP EPS and EBITDA at midpoints .

Estimates Context

*Values retrieved from S&P Global.

Key Takeaways for Investors

• Q2 beat on both revenue and non-GAAP EPS vs consensus, driven by embedded modem momentum in Enterprise and disciplined OpEx; gross margin mix remains supportive despite slight QoQ dip .
• H2 profitability hinges on initial AC-Fleet deployments (Tier 2/3) and early Lighthouse trial conversions; monitor certification milestones (T-Mobile Q3, Verizon Q4, EU Q1’26) as catalysts for award flow and pipeline conversion .
• Automotive aftermarket and asset tracking softness persists due to channel inventory and agency delays; expect uneven contributions until inventory normalization and funding cycles improve .
• Guidance implies modest Q3 sequential growth with positive non-GAAP EPS/EBITDA; any upside from faster AC-Fleet Tier 2 conversions or Lighthouse trial wins could be stock-positive near term .
• Strategic focus shifting from components to platform solutions (higher ASPs, margin potential); sustained gross margin improvement and OpEx realignment should lower breakeven and support 2026 scale .
• Watch for additional carrier/operator announcements and regional trial outcomes (US, LATAM, SE Asia, Europe, Middle East) to validate Lighthouse TAM and revenue path .
• Risk checks: tariff/macro environment fluid; management currently sees no material impact on margins or demand, but supply chain disruptions could pressure costs and timelines .