Airgain, Inc.

Good afternoon. Welcome to Airgain's fourth quarter and full year 2025 conference call. My name is Kevin, and I'll be your operator for today's call. Joining us today are Airgain's president and CEO, Jacob Suen, and CFO, Michael Albaez. As a reminder, this call will be recorded and made available for replay via a link found in the investor relations section of Airgain's website at investors.airgain.com. Following management's prepared remarks, the call will be open for questions from Airgain's covering analysts. I caution listeners that during this call, Airgain management will be making forward-looking statements about future events as well as Airgain's business strategy and future financial and operator performance. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in today's earnings release and Ergain's SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, February 26, 2026. Ergain 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 will include a discussion of non-GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of GAAP to non-GAAP results. Now I'd like to turn the call over to Airgain CEO, Jacob Suen. Jacob, please go ahead.

Good afternoon, everyone, and thank you for joining us. First, I would like to reflect on 2025, which was a pivotal and highly productive year for Airgain CEO, as we executed against our long-term strategy and position the company for its next phase of growth. During the year, we strengthened the resilience of our existing business, improved margins, and reinforced our financial foundation. We expanded our design wind pipelines with tier one service providers, securing important new programs that deepen our strategic customer relationships, and position us for growth. We also made significant progress advancing our AirGate Connect vehicle gateway platform and our Lighthouse infrastructure platform. Both platforms achieved important technical validations, customer engagements, and ecosystem milestones that moved them closer to scale commercial deployment. Together, these accomplishments marked an important transition for AirGain. Over the past several years, we have defined our strategy, developed differentiated platform solutions, and validated them with customers. As we enter 2026, our focus is increasingly centered on commercial execution, converting our growing pipeline into deployments and scaling our platforms to drive sustainable long-term growth. This transformation is rooted in AirGain's DNA, our deep RF engineering expertise, system-level design capabilities, and long-standing carrier relationships. By leveraging these strengths, we have deliberately reposition again beyond component-level products into integrated connectivity platforms, addressing large and expanding opportunities across fleet, enterprise, and infrastructure markets. At the same time, we have remained disciplined in managing our business. We improved gross margins, optimized our cost structure, and focused our investments on the highest ROI opportunities. These actions have lowered our break-even point and improved the scalability and resiliency of our business. While fourth quarter revenue came in at the lower end of our guidance range, this was driven primarily by timing dynamics rather than any structural change in demand. Importantly, The strategic progress we have made has strengthened our competitive position, expanded our growth opportunities, and reinforced our confidence in Ergan's long-term outlook. With our existing business providing a stable cash-generating foundation and our strategic platforms advancing toward commercialization, we believe Ergan is entering an important phase focused on execution, scaling, and realizing the significant opportunities ahead. Let me begin with our core markets, starting with consumer. Our consumer business continues to perform well and remains a critical foundation for AirGain, benefiting from the transition to Wi-Fi 7 and our deep relationships with Tier 1 cable and mobile network operators. Consumer revenue reached $26.1 million for the full year, representing a 20% increase compared to 2024. Just as importantly, this business continues to deliver strong adjusted EBITDA profitability, reflecting the strength of our brand, technology leadership, strategic customer relationships, and disciplined operating model. our consumer business remains a critical strategic foundation for AirGain, providing durable revenue, strong cash generation, and the financial stability to continue investing in and scaling our growth platforms. Historically, our consumer business was primarily focused on leading MSOs, where we established strong incumbency projections and long standing customer relationships. Over the past few years, we have successfully applied that same strategy and approach to Tier 1 MNOs, expanding our engagement into larger, longer duration programs. As a result, we are increasingly involved early in the design cycle, working alongside customers as a strategic partner to help optimize system performance and connectivity architecture. We believe this deeper integration strengthens our incumbency and reinforces Ergen's position as a trusted connectivity partner across Tier 1 service providers as our solutions become embedded in next-generation broadband platforms. This growing incumbency and the stickiness of our relationships with Tier 1 MNOs directly enabled our most recent design win. As you saw from our press release earlier this week, we secure a multi-year, multi-million dollar embedded antenna design win, supporting a next generation 5G home connectivity platform for a tier one North America MNO. This program includes antenna systems for both a 5G fixed wireless access router and an in-home Wi-Fi extender and is expected to enter mass production later this year. This WAN builds on our previously announced Wi-Fi 7 design WAN for a next generation fiber broadband gateway with another tier one North American MNO. In addition, a program we secured with a large European operator two years ago is now limping into production. and recent industry consolidation among Tier 1 MSOs has expanded our project opportunities and strengthened our design wind pipeline. These design winds reinforce our brand's strength and validate our position as an incumbent connectivity partner with Tier 1 carriers. Importantly, these relationships extend beyond our consumer business As customers view AirGain as a trusted connectivity partner, they create strategic pathways for our AirGain Connect vehicle gateway platform and Lighthouse infrastructure platform, expanding our opportunity to support broader enterprise fleet and infrastructure connectivity deployments. While we expect consumer growth to be modest in 2026, we believe the depth of our customer relationships, expanding design wind pipeline, and growing incumbency position provide a strong foundation for future growth as these programs scale through 2026 and into 2027. Turning to our enterprise market, we continue to sharpen our focus on higher value opportunities while strengthening the profitability and strategic positioning of this business. IoT represented the majority of our enterprise revenue in 2025. While revenue declined year over year due to excess inventory and a large customer, we've discussed previously, the profitability of this business improved significantly. Over the past year, we took deliberate actions to focus on our SkyWire embedded modem portfolio, improving product mix, increasing gross margin, and optimizing operating expenses. These actions reflect our disciplined approach to investing in areas where we see the strongest long-term return and greatest strategic value. Our SkyWire portfolio continues to benefit from strong brand recognition and customer loyalty. Skywire is widely recognized for its reliability, pre-certification, and ease of integration, enabling customers to accelerate deployment timelines and simplify deployment. These advantages make Skywire an increasingly attractive solution across a wide range of IoT applications reinforcing our position as a trusted connectivity partner. We are also making strong progress on our Cat1Biz embedded modem roadmap within the SkyWire portfolio. Cat1Biz is an emerging cellular standard optimized for IoT applications, offering lower costs, lower power consumption, and longer product life cycles while maintaining reliable LTE connectivity. Importantly, we're seeing growing validation of the SkyWire platform through new customer engagements and design wins. Late last year, a large industrial infrastructure customer selected our CAT1-based SkyWire modules as part of a major deployment initiative. This engagement highlights the growing customer preference for pre-certified, fully integrated connectivity solutions that simplify deployment, reduce engineering complexity, and accelerate time to market. We will also secure a design win within emerging robotics customers developing next-generation autonomous systems. They selected Skywire for its reliability, pre-certification, and ability to support seamless nationwide connectivity across distributed robotic fleets. This wind expands Skywire into the fast-growing robotics and automation market and demonstrates the platform's ability to support increasingly advanced and mission-critical applications. These design winds reinforce Skywire's strong competitive positioning and demonstrate its expanding role across industrial infrastructure, robotics, and other emerging IoT segments. Taken together, these actions have strengthened the financial and strategic foundation of our IoT business. We expect modest growth in 2026 as customer inventory levels normalize and new design wins scale into production in the second half of the year. Turning to our other core markets, our aftermarket antenna business continues to be affected by excess channel inventory. And while this has created short-term variability, we have taken a disciplined approach to managing this business, focusing on profitability and operational efficiency. Turning now to AirGain Connect and our broader vehicle gateway strategy. AirGain Connect represents a key pillar of our long-term platform strategy and reflects AirGain's evolution toward delivering integrated system-level connectivity solutions. Vehicle gateways are becoming increasingly critical as enterprise, utility, infrastructure, and public safety operators rely on continuous, high-performance wireless connectivity to support mission-critical field operations. Our AirGain Connect AC Fleet platform is a fully integrated, all-in-one vehicle gateway solution that combines high-performance antennas, embedded cellular modems, and secure cloud-based management into a ruggedized system purposely built for demanding mobile environments. This integrated architecture delivers superior performance, simplifies deployment, and improves operational reliability for customers operating in harsh real-world conditions. AC Fleet is highly differentiated in the market due to its system-level integration, rugged design, and ability to support mission-critical applications where connectivity performance durability and reliability are essential. We continue to make strong progress expanding and advancing our AirGain Connect pipeline, reflecting increasing customer engagement and growing validation of our platform. As of last week, our pipeline includes approximately 100 active opportunities, including fully Tier 1 and Tier 2 opportunities, roughly double the number we had just a few months ago. These larger, more strategic opportunities now reflect expanding engagement with major enterprise, utility, sanitation, and infrastructure customers. Just as importantly, these opportunities are progressing meaningfully toward commercialization. More than a quarter of our Tier 1 and Tier 2 opportunities are in trial or negotiation phases. And we believe this demonstrates clear customer validation and the advancement toward potential deployment. We're also seeing a significant shift in the composition of our pipeline. Many of our largest opportunities are now outside the traditional first responder market, reflecting strong momentum in enterprise fleet, sanitation, and utility applications. These markets represent larger deployment opportunities and shorter sales cycle. A clear example of this progress is our large utility customers engagement, which has advanced from an initial product evaluation to a broader enterprise level initiative. This expansion significantly increases the potential scope and long-term value of the opportunity, reinforcing the strength of our platform and value proposition. Overall, the growth, quality, and advancement of our pipeline reflect increasing market adoption, positioning Ace AirGAN Connect to contribute more meaningfully as we move through 2026 and beyond. As part of our commitment to this vehicle gateway strategy, I'm excited to announce that we recently acquired the HPOE, or High Power Use Equipment, product line from Nextivity. This acquisition brings proven field deploy technology into Ergen's portfolio and expands our ability to support mission critical connectivity applications. HPOE technology improves uplink performance, extends network reach, and enables reliable connectivity in demanding operating environments. It is actively deployed today across commercial and public safety networks, including FirstNet, where performance and reliability are essential. The additions of HPE expands and strengthens our AirGain Connect platform, enhancing our ability to deliver more comprehensive high-performance connectivity solutions for enterprise fleet, utility, and public safety customers. Strategically, this acquisition expands our vehicle gateway portfolio, customer engagement, and addressable market, positioning us to capture long-term value as mission critical connectivity requirements continue to evolve. Together, AC Fleet and HPE significantly strengthen our vehicle gateway competitive positioning as we capitalize on the growing demand for reliable, system-level connectivity solutions across enterprise and infrastructure markets. While AirGain Connect focuses on enabling reliable connectivity in mobile environment, our Lighthouse platform extends these capabilities into fixed infrastructure, enabling carriers, power operators, and enterprise customers to improve network coverage, capacity, and performance. Turning now to Lighthouse. Lighthouse represents our infrastructure platform focused on expanding and improving cellular coverage across both indoor and outdoor environments. As a reminder, Lighthouse is designed to help carriers, power operators, and enterprise customers extend network coverage, improve performance, and optimize capacity in areas where traditional infrastructure deployment is difficult, costly, or insufficient. As network operators continue to expand 4G and 5G coverage and address growing data demand, we believe Lighthouse represents a significant long-term opportunity for air game. During the quarter, we successfully completed two important Lighthouse trials that demonstrate the real world value in technical differentiation of our platform. In a domestic trial with a tier one US mobile network operator, Lighthouse demonstrated the ability to significantly improve network performance through advanced carrier aggregation, and capacity uploading capabilities. In this one-day deployment, Lighthouse enabled seamless uploading of congested LTE traffic onto underutilized 5G spectrum, including overall network efficiency and performance. This capability is particularly important for operators as they manage growing network congestion while maximizing the value of the existing spectrum in infrastructure investments. Internationally, we also completed a live trial with a major global tower operator at a large convention center in Latin America. This deployment demonstrated Lighthouse's ability to support multiple carriers simultaneously and rapidly improve network performance in a high density environment. These results validate Lighthouse's ability to address complex real-world coverage challenges and reinforce its applicability across a wide range of infrastructure deployment scenarios. These successful trials represent important milestones and further validate the strength and differentiation of our technology. In parallel, We established our first system integrator partnership in the US and are actively engaging with additional system integrators to expand our routes to market. System integrators play a critical role in deploying and scaling infrastructure solutions, and their engagement represents an important step in accelerating Lighthouse adoption and commercialization. We're also finalizing a strategic partnership with a leading global provider of intelligent cellular coverage solutions to co-develop next-generation integrated 4G and 5G coverage platforms. This partnership combines Lighthouse with complementary cellular coverage technologies to deliver more comprehensive and scalable solutions for operators, enterprises, and infrastructure customers. Importantly, it expands Lighthouse applicability across a broader range of deployment scenarios, including complex indoor and outdoor environments. This collaboration represents a significant strategic milestone for Lighthouse. It validates the strength of our platform, enhances our ecosystem positioning, and accelerates our ability to bring integrated infrastructure solutions to market. We look forward to sharing more details at Mobile World Congress next week and believe this partnership represents an important catalyst for advancing Lighthouse commercialization and long-term growth. Taken together, the progress we are making across trials, customer engagement, and partner development, it reinforces our confidence in Lighthouse long-term opportunity and positions the platform to begin contributing more meaningfully as deployments scale over time. With that, I'll turn the call over to Michael to review our financial results. Michael.

Thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non-GAAP figures. Information about the non-GAAP financial measures, including GAAP to non-GAAP reconciliations, can be found in our earnings release. Now, let's turn to our fourth quarter results. Q4 sales came in at $12.1 million, which was at the low end of our guidance range, primarily reflecting timing and supply factors within our enterprise embedded modems product line. These dynamics were timing-related and did not reflect a change in underlying customer demand. Consumer sales reached $7.3 million, reflecting another strong sequential performance, driven by increased Y57 antenna shipments to cable operators. $7.3 million represents the highest quarterly consumer revenue since Q3 of 2022. reflecting the successful transition of MSO customers to next-generation Wi-Fi 7 platforms and reinforcing the strength and durability of our consumer business. Enterprise sales came in at $4.3 million, down $2.6 million sequentially, driven by lower embedded modems and enterprise antenna sales. Automotive sales came in at $0.5 million, flat sequentially. Non-GAAP gross margin for the fourth quarter was 46.3%, 230 basis points higher than the midpoint of our guidance, and a 190 basis points sequential increase. The sequential gross margin improvement was driven by the favorable product mix in the consumer market, along with operational efficiencies. Non-GAAP operating expenses for the fourth quarter totaled $5.9 million in line with our guidance and slightly lower sequentially. In Q4, adjusted EBITDA was negative $0.2 million compared to $0.1 million midpoint of guidance. Non-GAAP EPS was negative $0.03. As of December 31, 2025, our cash balance was $7.4 million, up $.3 million sequentially, primarily due to cash proceeds of $.4 million from our ATM. Turning to our results for the full year of 2025, sales totaled $51.8 million, down $8.8 million, or 15%, compared to the prior year. Consumer sales were only $6.1 million for the full year, up 20% driven by increased shipments to both cable and mobile network operators. Following typical seasonal softness in the first quarter, we expect the consumer business to grow modestly, supported by ongoing MSO demand and the expected ramp of recently secured Tier 1 M&O design wins in the second half of 2026. Enterprise sales were $22.6 million, down $6.9 million or 23% year over year, primarily due to excess inventory at a strategic IoT customer and lower enterprise antenna demand. We expect the enterprise market to grow in 2026, driven by modest growth in our IoT business and revenue contributions from our Lighthouse platform in the second half of the year. Automotive sales were at $3.1 million, down $6.3 million year-over-year, reflecting lower demand and excess channel inventory in the aftermarket antenna business. We expect the automotive market to return to growth in 2026, driven by increasing revenue contributions from our Ag & Connect platforms. Non-GAAP gross margin was 44.6%, up 260 basis points year-over-year, driven by consumer and enterprise margin increases. These improvements reflect a favorable product mix within these markets, the ramp of differentiated higher margin products, and the impact of cost reduction and operational efficiency initiatives implemented over the past year. Looking ahead, we expect higher value platform solutions such as AirGN Connect and Lighthouse to further support gross margin expansion in 2026 and beyond. NUMGAP operating expenses totaled $25.1 million, reflecting a 6% decrease year-over-year. Despite the decline in expenses, we increased engineering sales and marketing expenses for our AirGain Connect and Lighthouse platforms by approximately 15%, while reducing comparable expenses in our core markets by approximately 30%. These actions significantly improved the contribution margins of our core markets and demonstrated the structural efficiency gains that we have made across the business. In 2025, we took disciplined steps to optimize our cost structure and build a more efficient and scalable organization. As a result, AirGain is now better positioned to drive stronger profitability and operating leverage as revenue grows. For the full year 2025, adjusted EBITDA was negative $1.5 million compared to negative $0.8 million in 2024. reflecting continued investment in our platform strategy. Non-GAAP net loss per share was 17 cents. Now, moving to our outlook for the first quarter ending March 31, 2026. As a reminder, we provide quarterly guidance for sales, non-GAAP gross margin and expenses, non-GAAP EPS, and adjusted EBITDA, as we believe these metrics to be key indicators of the overall performance of our business. For the first quarter of 2026, we project sales to range from $10.5 million to $12.5 million, with a midpoint of $11.5 million. The midpoint represents a 5% sequential decline driven by the consumer seasonal impact. We expect non-GAAP gross margin for the first quarter to be in the range of 43.5% to 46.5%, or 45% at the midpoint. We expect operating expenses to remain flat at approximately $6 million. Non-GAAP EPS is expected to be negative $0.07 at the midpoint of our guidance. Adjusted EBITDA is expected to be negative $0.07 million at the midpoint of our guidance. Overall, the actions that we have taken over the past year have strengthened AirGain's operating model and positioned the company for improved financial performance as we move through 2026. We expanded gross margins, improved the efficiency and contribution margins of our core markets, and established a more scalable cost structure. The strength and profitability of our core markets, specifically consumer and IoT, provide the financial foundation to support continued investment in our growth platforms. As AirGain Connect and Lighthouse progress toward commercialization, we believe AirGain is well positioned to drive revenue growth, margin expansion, and increase operating leverage. Now, I would like to turn the call back over to Jacob for his closing thoughts. Jacob?