Airgain Reports Third-Quarter Financial Results
Thursday, November 11, 2021 | Comments

Airgain reported financial results for the third quarter ended September 30.

“We are excited about Airgain’s prospects for growth in 2022 and beyond despite the transitory industry-wide global supply shortage, which has impacted our top line revenue and gross margin,” said Airgain president and chief executive officer Jacob Suen.

Sales for the third quarter of 2021 were $15.5 million, of which $4.6 million was generated from the consumer market, $8.7 million from the enterprise market and $2.2 million from the automotive market. Sales decreased by 10.6%, or $1.8 million in the third quarter of 2021 compared to $17.3 million in the second quarter of 2021.

Consumer sales declined from the second quarter of 2021 by $4.3 million primarily due to continuing weakness from the global supply shortage impacting the company’s original design manufacturer (ODM)/OEM customers who provide consumer products to service provider end customers.

Enterprise product sales increased from the second quarter of 2021 by $2.5 million driven by the product ramp of industrial internet of things (IoT) devices, as well as the ramp of a Wi-Fi antenna solution sold to a major enterprise customer. Automotive sales remained relatively flat from the second quarter of 2021. Sales for the third quarter of 2021 increased by 18.8%, or $2.4 million from $13 million in the same year-ago period. The increase in sales from the third quarter of 2020 was primarily due to sales of industrial IoT products in the enterprise market and increased sales of $300,000 from the automotive market offset by a decrease in sales of $5.8 million from the consumer market.

Generally accepted accounting principles (GAAP) gross profit for the third quarter of 2021 was $5.5 million compared to $7.3 million for the second quarter of 2021 and $6 million in the same year-ago period. Non-GAAP gross profit for the third quarter of 2021 was $5.6 million compared to $7.4 million for the second quarter of 2021 and $6.1 million in the same year-ago period.

GAAP gross margin for the third quarter of 2021 was 35.9%, compared to 42.2% for the second quarter of 2021 and 46.3% in the same year-ago period. The decrease in gross margin compared to the second quarter of 2021 was primarily due to changes in product mix including increased sales of enterprise products, which yield a lower gross margin as well as increased production and freight costs, primarily associated with the impact of the global supply shortage and logistic delays within the global supply chain.

Total GAAP operating expenses for the third quarter were $8.6 million, compared to $10 million for the second quarter of 2021 and $6.2 million in the same year-ago period. Operating expenses were lower for the third quarter of 2021 compared to the second quarter of 2021 due to the $1.6 million charge related to the change in the fair value of contingent consideration associated with the company’s acquisition of NimbeLink that was recognized in the second quarter of 2021. The higher operating expenses for the third quarter of 2021 compared to the same year-ago period were primarily due to the NimbeLink acquisition which resulted in added headcount, facilities and IT expenses as well as increased outsourced service costs. Non-GAAP operating expenses for the third quarter of 2021 remained relatively flat compared to the second quarter of 2021. Non-GAAP operating expenses for the third quarter of 2021 were $6.8 million compared to $5.5 million in the same year-ago period.

GAAP net loss for the third quarter of 2021 was $3.1 million or $0.30 per share, compared to a GAAP net loss of $2.6 million or $0.26 per share for the second quarter of 2021 and a GAAP net loss of $300,000 or $0.03 per share in the same year-ago period. The $500,000 increase in net loss compared to the second quarter of 2021 was due to lower gross profit and higher income tax provision offset by lower operating expenses. Non-GAAP net loss for the third quarter of 2021 was $1.1 million or $0.11 per share, compared to non-GAAP net income of $600,000 or $0.05 per share for the second quarter of 2021 and a non-GAAP net income of $600,000 or $0.06 per share for the same year-ago period.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2021 was negative $1 million, compared to adjusted EBITDA of $700,000 for the second quarter of 2021 and in the same year-ago period.

Sales for the first nine months of 2021 were $50.1 million, of which $23.8 million was generated from the consumer market, $19.2 million from the enterprise market and $7.1 million from the automotive market. Sales increased by 40.5%, or $14.5 million in the first nine months of 2021 compared to $35.7 million in the same year-ago period. The increase in sales was primarily due to sales recognized from industrial IoT devices, as well as higher sales in the automotive market and a ramp in enterprise Wi-Fi products.

GAAP gross profit for the first nine months of 2021 was $19.7 million compared to $16.7 million in the same year-ago period. Non-GAAP gross profit for the first nine months of 2021 was $20.4 million compared to $16.8 million in the same year-ago period.

GAAP gross margin for the first nine months of 2021 was 39.4%, compared to 46.9% in the same year-ago period. The decrease in gross margin was primarily due to changes in the product mix including the sales of industrial IoT devices with lower gross margins, higher production and freight costs, as well as an inventory step-up adjustment and higher amortization costs associated with the NimbeLink acquisition. Non-GAAP gross margin for the first nine months of 2021 was 40.6%, compared to 47.2% in the same year-ago period. Non-GAAP gross margin decreased 660 basis points from the same year-ago period primarily due to change in product mix including the sales ramp of industrial IoT devices having lower gross margins and lower consumer sales that have higher gross margins, and higher production and freight costs.

Total GAAP operating expenses for the first nine months of 2021 were $27.4 million, compared to $18.9 million in the same year-ago period. The higher operating expenses were primarily due to the NimbeLink acquisition. Non-GAAP operating expense for the first nine months of 2021 was $20.6 million, compared to $16.5 million in the same year-ago period.

GAAP net loss for the first nine months of 2021 was $5.4 million or $0.54 per share, compared to a GAAP net loss of $2.2 million or $0.23 per share in the same year-ago period. The increase was due to increased operating expenses, partially offset by increased gross profit and a $2.2 million tax benefit. In connection with the NimbeLink acquisition, deferred tax liabilities associated with the intangible assets and a $2.3 million release of the valuation allowance was recorded in the first quarter of 2021. Non-GAAP net loss for the first nine months of 2021 was $200,000 or $0.02 per share, compared to non-GAAP net income of $300,000 or $0.03 per share in the same year-ago period.

Adjusted EBITDA for the first nine months of 2021 was $200,000, compared to $700,000 for the same year-ago period.

Sales for the fourth quarter are expected to be in the range of $13.5 million to $14.5 million. GAAP gross margin is expected to be in the range of 32.5% to 34.5% and non-GAAP gross margin is expected to be in the range of 33% to 35%. GAAP operating expense is expected to be $9.1 million, plus or minus $100,000 while non-GAAP operating expense is expected to be $7 million, plus or minus $100,000. GAAP net loss per share is expected to be $0.44 at midpoint and non-GAAP net loss per share is expected to be $0.22 at midpoint. Adjusted EBITDA is expected to be negative $2.1 million at midpoint.

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