Airgain Reports Third Quarter and Nine Month 2016 Results
SAN DIEGO, CA -- (Marketwired) -- 11/10/16 -- Airgain, Inc. (NASDAQ: AIRG), a leading provider of embedded antenna technologies used to enable high performance wireless networking, today reported results for the third quarter ended September 30, 2016.
Third Quarter 2016 Financial Results
Sales increased 87% to $12.4 million from $6.7 million in the same year-ago period. The increase was primarily driven by an increase in product sales.
Gross profit increased 101% to $5.6 million (44.8% of sales) from $2.8 million (41.6% of sales) in the same year-ago period. The increase in gross profit as a percentage of sales was driven by an increase in the sales of board-mounted antennas, which typically carry higher gross margins.
Total operating expenses increased 53% to $4.3 million from $2.8 million in the same year-ago period. The increase was primarily due to higher personnel expenses to support the company's sales and marketing and R&D initiatives. The increase was also due to higher administrative expenses incurred as a public company, including expenses related to the company's initial public offering.
Net income attributable to common stockholders totaled $861 thousand or $0.16 per diluted share, an improvement from net loss attributable to common stockholders of $617 thousand or $(1.05) per diluted share in the same year-ago period.
Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, fair market value for adjustments of warrants, and share-based compensation) increased to $1.6 million from $73 thousand in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).
Third Quarter 2016 Key Performance Indicators (compared to same year-ago period)
- Total customer devices increased 93% or 8.0 million devices to 16.6 million devices
- The average number of antennas per device increased 15% to 2.84
- The average selling price per device decreased 5% to $0.72
Nine Month 2016 Financial Results
Sales increased 67% to $30.8 million from $18.5 million in the same year-ago period. The increase was primarily driven by an increase in product sales.
Gross profit increased 77% to $13.8 million (44.8% of sales) from $7.8 million (42.3% of sales) in the same year-ago period. The increase in gross profit as a percentage of sales was driven by an increase in the sales of board-mounted antennas.
Total operating expenses increased 38% to $11.5 million from $8.3 million in the same year-ago period. The increase was primarily due to higher personnel expenses to support the company's sales and marketing and R&D initiatives. The increase was also due to higher administrative expenses incurred as a public company, including expenses related to the company's initial public offering.
Net income attributable to common stockholders totaled $1.1 million or $0.25 per diluted share, an improvement from net loss attributable to common stockholders of $2.1 million or $(3.70) per diluted share in the same year-ago period.
Adjusted EBITDA increased to $3.2 million from $123 thousand in the same year-ago period (see note regarding "Use of Non-GAAP Financial Measures," below for further discussion of this non-GAAP measure).
Nine Month 2016 Key Performance Indicators (compared to same year-ago period)
- Total customer devices increased 69% or 15.8 million devices to 38.7 million devices
- The average number of antennas per device increased 21% to 2.98
- The average selling price per device decreased 3% to $0.77
Management Commentary
"We're pleased with our results for the third quarter of 2016," said Airgain president and CEO, Charles Myers. "Building on the progress we made in Q2, the third quarter represented another period of strong top-line growth matched by our ability to maintain healthy margins, and ultimately, generate profitability for our shareholders.
"Sales, which were partially affected by some seasonal factors, grew by 87% to $12.4 million, driven by continued growth in our carrier gateway and set top box segments, but also the emerging prominence of our Smart TV segment. In fact, we recently shipped our 25 millionth antenna to the Smart TV market last month."
Conference Call
Airgain management will hold a conference call today (November 10, 2016) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results and provide an update on business conditions.
Company president and CEO Charles Myers and CFO Leo Johnson will host the call, followed by a question and answer period.
Date: Thursday, November 10, 2016
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
U.S. dial-in number: 1-888-224-1121
International dial-in number: 1-913-312-0719
Please call the conference telephone number 5-10 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 Liolios Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay in the investor relations section of the company's website.
A replay of the conference call will be available after 7:30 p.m. Eastern time through December 10, 2016.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 3519805
About Airgain, Inc.
Airgain is a leading provider of embedded antenna technologies used to enable high performance wireless networking across a broad range of home, enterprise, and industrial devices. Our innovative antenna systems open up exciting new possibilities in wireless services requiring high speed throughput, broad coverage footprint, and carrier grade quality. Our antennas are found in devices deployed in carrier, enterprise, and residential wireless networks and systems, including set-top boxes, access points, routers, gateways, media adapters, digital televisions, and Internet of Things (IoT) devices. Airgain partners with and supplies the largest blue chip brands in the world, including original equipment and design manufacturers, chipset makers, and global operators. Airgain is headquartered in San Diego, California, and maintains design and test centers in San Diego, Cambridge, United Kingdom, Taipei, Taiwan, and Suzhou, China. For more information, visit airgain.com.
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 future business growth. 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; 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; 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, including under the heading "Risk Factors" in our final prospectus. 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 Airgain's 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 and Amortization (Adjusted EBITDA). We believe Adjusted EBITDA provides useful information to investors with which to analyze our operating trends and performance. In computing Adjusted EBITDA, we also exclude stock-based compensation expense, which represents non-cash charges for the fair value of stock options and other non-cash awards granted to employees, as well as the fair market value adjustments for warrants. 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 a non-GAAP financial measure that excludes 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.
Our Adjusted EBITDA measure 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 is not a measurement of financial performance under GAAP, and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider Adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results. A reconciliation of specific adjustments to GAAP results is provided in the last table at the end of this release.
Airgain, Inc.
Unaudited Condensed Balance Sheets
September 30, December 31,
2016 2015
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 16,826,304 $ 5,335,913
Trade accounts receivable, net 5,766,465 3,731,998
Inventory 105,019 119,733
Prepaid expenses and other current assets 439,398 191,502
------------- -------------
Total current assets 23,137,186 9,379,146
Property and equipment, net 945,007 1,026,784
Goodwill 1,249,956 1,249,956
Customer relationships, net 2,901,668 3,137,918
Intangible assets, net 305,315 345,069
Other assets 96,119 121,541
------------- -------------
Total assets $ 28,635,251 $ 15,260,414
============= =============
Liabilities, preferred redeemable convertible
stock, and stockholders' equity (deficit)
Current liabilities:
Accounts payable $ 4,183,395 $ 2,873,471
Accrued bonus 1,142,243 1,335,500
Accrued liabilities 796,033 660,987
Deferred purchase price 1,000,000 1,000,000
Current portion of long-term notes payable 1,463,300 1,625,030
Current portion of deferred rent obligation
under operating lease 81,332 81,332
------------- -------------
Total current liabilities 8,666,303 7,576,320
Preferred stock warrant liability — 709,504
Long-term notes payable 1,666,667 2,721,865
Deferred tax liability 7,900 —
Deferred rent obligation under operating lease 478,592 558,641
------------ ------------
Total liabilities 10,819,462 11,566,330
Preferred redeemable convertible stock:
Series E preferred redeemable convertible
stock-- 10,500,000 shares authorized at
December 31, 2015; 0 shares and 8,202,466
shares issued and outstanding at September
30, 2016 and December 31, 2015,
respectively; aggregate liquidation
preference of $0 and $16,274,823 at
September 30, 2016 and December 31, 2015,
respectively — 16,274,823
Series F preferred redeemable convertible
stock-- 5,000,000 shares authorized at
December 31, 2015; 0 shares and 4,734,374
shares issued and outstanding at September
30, 2016 and December 31, 2015,
respectively; aggregate liquidation
preference of $0 and $10,517,081 at
September 30, 2016 and December 31, 2015,
respectively — 10,517,081
Series G preferred redeemable convertible
stock-- 23,500,000 shares authorized at
December 31, 2015; 0 shares and 10,334,862
shares issued and outstanding at September
30, 2016 and December 31, 2015,
respectively; aggregate liquidation
preference of $0 and $17,987,553 at
September 30, 2016 and December 31, 2015,
respectively — 16,315,002
Stockholders' equity (deficit):
Preferred convertible stock:
Series A preferred convertible stock--
313,500 shares authorized at December 31,
2015; 0 shares and 313,500 shares issued
and outstanding at September 30, 2016 and
December 31, 2015, respectively; aggregate
liquidation preference of $0 and $2,416,194
at September 30, 2016 and December 31,
2015, respectively — 976,000
Series B preferred convertible stock--
1,183,330 shares authorized at December 31,
2015; 0 shares and 1,157,606 shares issued
and outstanding at September 30, 2016 and
December 31, 2015, respectively; aggregate
liquidation preference of $0 and $5,081,890
at September 30, 2016 and December 31,
2015, respectively — 2,457,253
Series C preferred convertible stock--
682,000 shares authorized at December 31,
2015; 0 shares and 682,000 shares issued
and outstanding at September 30, 2016 and
December 31, 2015, respectively; aggregate
liquidation preference of $0 and $682,000
at September 30, 2016 and December 31,
2015, respectively — 549,010
Series D preferred convertible stock--
4,276,003 shares authorized at December 31,
2015; 0 shares and 4,091,068 shares issued
and outstanding at September 30, 2016 and
December 31, 2015, respectively; aggregate
liquidation preference of $0 and $4,516,013
at September 30, 2016 and December 31,
2015, respectively — 1,986,286
Common shares, par value $0.0001, 200,000,000
and 80,000,000 shares authorized at September
30, 2016 and December 31, 2015, respectively;
7,577,525 and 665,842 shares issued and
outstanding at September 30, 2016 and
December 31, 2015, respectively 758 1,094,375
Additional paid in capital 62,540,825 —
Accumulated deficit (44,725,794) (46,475,746)
------------- -------------
Total stockholders' equity (deficit) 17,815,789 (39,412,822)
Commitments and contingencies (note 13)
------------- -------------
Total liabilities, preferred redeemable
convertible stock and stockholders' equity
(deficit) $ 28,635,251 $ 15,260,414
============= =============
Airgain, Inc.
Unaudited Condensed Statements of Operations
For the Three Months For the Nine Months Ended
Ended September 30, September 30,
------------------------- -------------------------
2016 2015 2016 2015
------------ ------------ ------------ ------------
Sales $ 12,439,279 $ 6,668,732 $ 30,807,902 $ 18,459,590
Cost of goods sold 6,862,992 3,893,657 17,007,228 10,657,495
------------ ------------ ------------ ------------
Gross profit 5,576,287 2,775,075 13,800,674 7,802,095
------------ ------------ ------------ ------------
Operating expenses:
Research and
development 1,432,581 1,075,228 4,096,670 3,099,080
Sales and marketing 1,453,391 940,155 4,078,250 2,840,514
General and
administrative 1,459,993 830,723 3,304,790 2,393,433
------------ ------------ ------------ ------------
Total operating expenses 4,345,965 2,846,106 11,479,710 8,333,027
------------ ------------ ------------ ------------
Income (loss) from
operations 1,230,322 (71,031) 2,320,964 (530,932)
Other expense (income):
Interest income (1,735) — (1,735) —
Interest expense 41,735 7,311 141,505 25,000
Fair market value
adjustment - warrants — (78,833) (460,289) (336,971)
------------ ------------ ------------ ------------
Total other expense
(income) 40,000 (71,522) (320,519) (311,971)
Income (loss) before
income taxes 1,190,322 491 2,641,483 (218,961)
Provision (benefit) for
income taxes 7,278 (178) 8,078 9,222
------------ ------------ ------------ ------------
Net income (loss) 1,183,044 669 2,633,405 (228,183)
Accretion of dividends
on preferred
convertible stock (322,170) (617,493) (1,537,021) (1,827,461)
------------ ------------ ------------ ------------
Net income (loss)
attributable to common
stockholders $ 860,874 $ (616,824) $ 1,096,384 $(2,055,644)
============ ============ ============ ============
Net income (loss) per
share:
Basic $ 0.21 $ (0.93) $ 0.59 $ (3.18)
============ ============ ============ ============
Diluted $ 0.16 $ (1.05) $ 0.25 $ (3.70)
============ ============ ============ ============
Weighted average shares
used in calculating
income (loss) per share
Basic 4,133,020 662,415 1,849,647 646,877
============ ============ ============ ============
Diluted 6,689,332 662,415 3,103,784 646,877
============ ============ ============ ============
Airgain, Inc.
Unaudited Condensed Statement of Stockholders' Equity (Deficit)
Preferred
Convertible Stock Common Stock
----------------------- ------------------------
Shares Amount Shares Amount
---------- ----------- ------------ -----------
Balance at December 31,
2015 6,244,174 $ 5,968,549 665,842 $ 1,094,375
---------- ----------- ------------ -----------
Stock-based
compensation — — — —
Conversion of warrants — — 127,143 —
Exercise of stock
options — — 46,500 112,100
Effect of accretion to
redemption value — — — —
Change in par value
from no par value to
$0.0001 — — — (1,206,391)
Issuance of common
stock upon initial
public offering, net
of issuance costs — — 1,700,100 170
Issuance of warrants — — — —
Conversion of
preferred redeemable
convertible stock to
common stock upon
initial public
offering — — 3,778,753 378
Conversion of
preferred convertible
stock to common stock
upon initial public
offering (6,244,174) (5,968,549) 1,259,187 126
Net income — — — —
---------- ----------- ------------ -----------
Balance at September 30,
2016 — $ — 7,577,525 $ 758
========== =========== ============ ===========
Airgain, Inc.
Unaudited Condensed Statement of Stockholders' Equity (Deficit)
Total
Additional Stockholders'
Paid-in Accumulated Equity
Capital Deficit (Deficit)
------------- ------------- -------------
Balance at December 31,
2015 $ — $ (46,475,746) $ (39,412,822)
------------- ------------- -------------
Stock-based
compensation 224,039 — 224,039
Conversion of warrants 249,215 — 249,215
Exercise of stock
options — — 112,100
Effect of accretion to
redemption value (473,254) (883,453) (1,356,707)
Change in par value
from no par value to
$0.0001 1,206,391 — —
Issuance of common
stock upon initial
public offering, net
of issuance costs 10,776,559 — 10,776,729
Issuance of warrants 126,218 — 126,218
Conversion of
preferred redeemable
convertible stock to
common stock upon
initial public
offering 44,463,234 — 44,463,612
Conversion of
preferred convertible
stock to common stock
upon initial public
offering 5,968,423 — —
Net income — 2,633,405 2,633,405
------------- ------------- -------------
Balance at September 30,
2016 $ 62,540,825 $ (44,725,794) $ 17,815,789
============= ============= =============
Airgain, Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2016 2015 2016 2015
------------ ----------- ----------- -----------
Reconciliation of Net
Income (Loss) to
Adjusted
EBITDA
Net income (loss) $ 1,183,044 $ 669 $ 2,633,405 $ (228,183)
Stock-based
compensation expense 111,872 29,424 224,039 310,719
Depreciation and
amortization 214,408 114,168 633,430 343,529
Interest and other
income 40,000 (71,522) (320,519) (311,971)
Provision (benefit)
for income taxes 7,278 (178) 8,078 9,222
------------ ----------- ----------- -----------
Adjusted EBITDA $ 1,556,602 $ 72,561 $ 3,178,433 $ 123,316
------------ ----------- ----------- -----------
Investor Relations Contact Matt Glover or Najim Mostamand Liolios Group, Inc. +1 949 574 3860 [email protected] Airgain Public Relations Contact Jules M. Cassano Director of MarketingAirgain, Inc. +1 760 444 6008 [email protected]
Source: Airgain, Inc.