Airgain, Inc.

Good afternoon. Welcome to AirGain's second quarter 2020 earnings conference call. My name is Simon, and I will be your coordinator for today's call. Joining us for today's call are AirGain's CEO, Jacob Suen, CFO, David Lyle, and Senior Vice President of Engineering, Kevin Pill. As a reminder, this call will be recorded and made available for replay via a link available in the investor relations section of Airgain's website at www.airgain.com. Following management's prepared remarks, the call will be opened for questions from Airgain's publishing cell site analysts. I would now like to turn the call over to Mr. Lyle.

Thank you and good afternoon to everyone. I caution listeners that during this call, Airgain management will be making forward-looking statements about future events and Airgain's business strategy and future financial and operating performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with a company's business. These forward-looking statements are qualified by the cautionary statements contained in today's earnings release and Airgain's SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 6, 2020. AIRGAIN undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. In addition, this conference call may include a discussion of non-GAAP financial measures, including non-GAAP operating expense, non-GAAP net income, non-GAAP diluted earnings per share, and Pajasati Bhadda. Please see today's earnings release for further details, including a reconciliation of the GAAP to non-GAAP results. Now I'd like to turn the call over to our CEO, Jacob Suen. Jacob?

Thank you, Dave. Welcome, everyone, and thank you for joining us on the call today. I'll start with an update on the second quarter and a brief review of our strategy and they discuss progress we've made on key programs. They will then provide financial details as well as a quick update on the impact of COVID-19 on our business. Following my remarks, let's begin with Airgain Connect. In our May earnings call, we discussed our innovation around the migration to integrated wireless solutions with our new patented AirGain Connect platform launch. How it could be a game changer for AirGain in automotive markets and our next generation Wi-Fi and 5G offerings. We also announced the first AirGain Connect product which targets public safety and fleet vehicles. We have begun field trials and have inquiries from potential customers being processed. Earlier this week, we announced that we have received AirGainConnect device certification on AT&T's LTE network. You can now find our AirGainConnect product on the FirstNet website. We expect to see revenue begin to ramp in Q4 of this year. In addition to progress made on the product front, we are very pleased to announce that we have successfully engaged an additional contract manufacturer outside of China in Southeast Asia. Our new contract manufacturer services many companies globally and is experienced in antenna manufacturing. They have already been qualified and began volume shipments as of this month. This allows us to mitigate potential China terror, impact, and diversify risk away from China, where our two existing contract manufacturers are located. We will continue doing business with our China-based contract manufacturers as they have been great partners to Airgain. Now, let's move on to our strategy, where I'll briefly revisit our strategy for the markets we currently serve. specific to the consumer market, our strategy entails winning new designs with our lineup of Wi-Fi 6 embedded antenna solutions, which includes support for Wi-Fi 6E as well as CBRS. Wi-Fi 6E is an area where more complex antenna technology is required and where we believe we are innovation leaders. On the enterprise market front, We are targeting new 5G device programs, primarily sub-6 GHz, CBRS, and Wi-Fi 6 opportunities for integrated smart antenna systems. This allows us to leverage our core competencies in advanced antenna designs in a market that offers significantly higher selling prices in the tens of dollars to hundreds of dollars range. The automotive market continues to be our largest growth opportunity in the current year but also has significant long-term growth potential. Our strategy is to leverage our Antenna Plus brand in the North American fleet and public safety auto aftermarket segments to generate near-term revenue for longer-term revenue growth opportunities. We are pursuing the European and North American auto OEM markets as well as the fleet aftermarket in Europe. Most importantly, we have now launched our game-changing AirGain Connect platform that will be leveraged into several products to serve multiple markets around the globe. Moving to an update on some key programs we highlighted. during our May earnings call. We are continuing engagement with major gateway program with tier one carrier in North America. We have now received volume orders for Q3 delivery signifying the red has begun. We are also continuing engagement with significant Wi-Fi 6 gateway program started in Q4 of 2019 with North American tier one operator We expect this to launch in Q4 of this year. Now, I would like to highlight some notable design wins and key program initiatives that occurred specifically in the second quarter across our market. On the consumer front, we continue to see momentum for our Wi-Fi 6 embedded antenna solutions. We will select it to provide a new Wi-Fi 6 router design for a fixed wireless broadband internet service provider in North America. Initial orders were placed in Q2 and are expected to continue direct through the end of 2020. We also want a design for a new Wi-Fi 6 DSL gateway shipping into North America. Volume orders have been placed and we expect to see revenue through the end of 2021. During the quarter, we were selected to provide an 802.11ac router design, shipping into one of the largest service providers in Japan. We expect production orders to commence in Q4 of this year. We are also seeing increased demand for mobile hotspots due to work-from-home trends. related to the COVID-19 pandemic. As an example, we recently won a new design for a mobile hotspot for one of the largest telco operators in the world for target markets in Europe. We received sample orders in Q2 and expected to rent in Q3 of this year. In the enterprise market, during the quarter, we securely designed for a wireless industrial automation program. We received sample orders in Q2 and expected to rent in Q3 of this year. Additionally, we started shipping to a large utility company in the US for a machine-to-machine smart utility application and expect shipments to rent in Q3 of this year. We were also selected by one of the top metropolitan transit systems in the U.S. for a machine-to-machine connectivity application. We expect shipments to commence in Q3 of this year. In line with our strategy to generate longer-term revenue opportunities with higher margins, we have engaged in a new in-flight Y56 access point design for the two largest commercial aircraft manufacturers in the world. This is a substantial program with anticipated trivia longevity that shows diversity in enterprise wireless LAN applications with a significantly higher selling price in the $100 range. In automotive, we have been selected by the police agency in Canada's largest for a public safety fleet tracking application. Initial orders have been placed in Q2, and shipments are expected to continue through 2021. In the European automotive leisure market, we have engaged formally on a new program for a specialized combination antenna-supporting TV, FM, and 5G monocelular connectivity for a leading The UK is experiencing a boom in motor homes during the COVID-19 pandemic, with 2020 vehicle registrations up over 20%. This is a new territory opportunity that allows us to leverage our core competencies in complex 5G antenna design, with significantly higher selling prices in the hundreds of dollars range. We are very proud of the progress we've made over the past quarter and excited about the prospect for second half revenue growth. Now, I'd like to turn the call over to our Chief Financial Officer, Dave Lyle, who will walk us through the financial highlights for the quarter. Dave.