AIRGAIN INC (AIRG)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue was $15.1M, up 50% YoY but down 6% QoQ; revenue came in below prior Q4 guidance (range $16.2–$18.2M) due to excess customer inventories and project delays; gross margin expanded to 42.2% GAAP (43.4% non-GAAP), driving breakeven non-GAAP EPS and $0.2M Adj. EBITDA despite the top-line shortfall .
• Management recorded its first Lighthouse revenue and announced a multi‑year, multi‑million dollar Omantel partnership; AC‑Fleet gained additional carrier certifications (AT&T alongside T‑Mobile), reinforcing the systems pivot and higher-ASP mix (> $20K Lighthouse vs sub‑$500 legacy) .
• Q1 2025 guide implies seasonal step‑down: sales $11–$13M (midpoint $12M), non‑GAAP GM 42–45%, non‑GAAP OpEx ~$6.5M, non‑GAAP EPS ~$(0.10), Adj. EBITDA ~$(1.1)M; management expects sequential growth resuming as inventory headwinds ease in 2H25 .
• Street consensus from S&P Global was unavailable at the time of analysis; relative performance is assessed vs prior guidance and prior periods. Near‑term stock drivers: revenue miss vs Q4 guide, first Lighthouse commercialization, and cautious Q1 seasonality with improving 2H25 setup .

What Went Well and What Went Wrong

• What Went Well

  • First commercial Lighthouse deployment and initial revenue; CEO emphasized the move to high‑value systems with ASPs >$20K and a growing serviceable addressable market (SAM ~$2.6B in 2025) .
  • Margin execution: GAAP GM rose to 42.2% (non‑GAAP 43.4%), the fourth straight sequential improvement, supported by operational efficiencies and favorable mix; non‑GAAP EPS reached breakeven and Adj. EBITDA turned positive .
  • Strategic pipeline: multi‑year Omantel partnership for Lighthouse and AC‑Fleet certifications (AT&T, T‑Mobile) broaden carrier/channel leverage, with >50 Lighthouse sites planned in 2025 and certifications pursued for first responders and CE markets .

• What Went Wrong

  • Revenue shortfall vs Q4 guidance: Sales of $15.1M missed the $16.2–$18.2M range; CFO cited a ~$2.1M revenue shortfall versus expectations, driven by excess inventories and delayed deployments (particularly Enterprise and Automotive aftermarket) .
  • Segment softness in Enterprise (embedded modems, custom IoT) and lingering Automotive aftermarket inventory headwinds; management expects these to persist through 1H25 .
  • Q1 2025 outlook implies a seasonal and inventory‑driven downtick (sales $11–$13M, negative non‑GAAP EPS and Adj. EBITDA), underscoring near‑term operating leverage constraints before anticipated 2H25 improvement .

Financial Results

Segment sales mix ($M):

KPIs and operating expenses:

Notes:

• Q4 YoY growth was broad with Consumer +$3.3M, Automotive +$1.0M, Enterprise +$0.7M; QoQ decline of $1.0M driven by Consumer and Enterprise inventory dynamics, partially offset by Automotive (AC‑Fleet) .
• Non-GAAP adjustments include stock‑based compensation and intangible amortization among others .

Guidance Changes

Q4 2024: performance vs prior Q4 2024 guidance (given on Nov 12, 2024)

Q1 2025: new guidance issued Feb 27, 2025

Earnings Call Themes & Trends

Management Commentary

• Strategic shift to systems: “We have moved from sub‑$500 ASPs for embedded antenna systems to ASPs exceeding $20,000 for our Lighthouse solution… setting the stage for sustained long‑term growth” – Jacob Suen, CEO .
• Commercial traction and pipeline: “Notably, we recorded our first Lighthouse commercial deployment revenue in Q4… This positive result was driven by higher gross margin and lower expenses, which helped mitigate the negative impact of a $2.1 million revenue shortfall” – Michael Elbaz, CFO .
• 2025 execution priorities: “We anticipate deploying Lighthouse across more than 50 sites… while we remain disciplined in navigating short‑term industry headwinds… which we expect to persist through the first half of the year” – Jacob Suen .
• Certifications and market access: AC‑Fleet certified on AT&T and T‑Mobile; pursuing Verizon Frontline/FirstNet/T‑Priority and CE for international expansion .
• International growth vectors: “Strategic partnership with Omantel… joint sales and marketing… penetrate not only Oman, but… the MENA region altogether” – Michael Elbaz .

Q&A Highlights

• Enterprise recovery visibility: Two custom IoT customers remain inventory‑constrained, but one indicated better 2H; management expects Enterprise to improve in 2H25 though near‑term visibility is limited .
• Lighthouse revenue cadence: 2025 revenue contribution expected to be small but growing via Omantel deployments and global trials; pipeline designed for broader commercialization into FY26 .
• AC‑Fleet conversion funnel: ~43 trials; tiered strategy (Tier 1 >500 vehicles requires 12–18 months and RFP cycles; Tier 2 50–500 vehicles at 6–12 months; Tier 3 <50 vehicles can convert in ~3 months) .
• Macro/regulatory: Tariffs/sanctions risk cited as a factor reducing near‑term Enterprise visibility .
• Trials run-rate: Two Lighthouse trials completed in Q1; two more planned in Q2; at least one in Q3, with additional pending CE certification .

Estimates Context

• S&P Global Wall Street consensus (revenue/EPS) was unavailable at the time of analysis due to data limitations. As a result, we benchmark Q4 results vs company guidance and prior periods rather than Street consensus .
• Relative to prior Q4 guidance: revenue missed the range; margins tracked within ranges; OpEx was better than guided; non‑GAAP EPS and Adj. EBITDA were below guide midpoints, reflecting the ~$2.1M top‑line shortfall and inventory/project delays .

Key Takeaways for Investors

• Mix/GM inflection intact: Despite a revenue miss, GAAP GM expanded to 42.2% (non‑GAAP 43.4%) on efficiencies/mix; non‑GAAP opex discipline continued, supporting breakeven non‑GAAP EPS and positive Adj. EBITDA .
• Systems pivot is real: First Lighthouse revenue, Omantel multi‑year deal, and AC‑Fleet certifications underpin the shift to higher ASP/higher margin solutions and a larger SAM into 2025–2026 .
• Near‑term air pocket: Q1 guide reflects seasonal and inventory headwinds (sales $11–$13M; negative non‑GAAP EPS/EBITDA); consider 2H25 re‑acceleration as Enterprise and Automotive aftermarket normalize and Lighthouse/AC‑Fleet scale .
• Execution milestones to watch: Number of Lighthouse deployments (target >50 in 2025), additional carrier/first‑responder certifications, and trial‑to‑design‑win conversion rates for both Lighthouse and AC‑Fleet .
• Guide vs delivery: Management hit margin/OpEx control but missed Q4 revenue/earnings guide; monitor order timing, inventory digestion at customers, and cadence of new systems orders to restore top‑line momentum .
• International leverage: Omantel partnership plus Lighthouse Solar (off‑grid) open incremental MENA and emerging‑market use cases; certification progress (FCC/CE/U.S. operators) is a key gating factor .
• Balance sheet stable: Cash increased to $8.5M in Q4 (helped by ATM proceeds), giving runway to execute on 2025 commercialization steps; watch cash burn in Q1 with negative EBITDA partially offset by ERC receipt .

Additional quantitative references:

• Q4 market mix: Consumer $6.5M; Enterprise $5.3M; Automotive $3.3M; QoQ Automotive improved on AC‑Fleet while Enterprise lagged on inventories .
• Full‑year 2024: Sales $60.6M; GAAP GM 40.9%; non‑GAAP GM 42.0%; GAAP net loss $(8.7)M; non‑GAAP net loss $(1.4)M; Adj. EBITDA $(0.8)M .