Airgain, Inc. Common Stock 2026 Q2 Earnings Call

Good afternoon, everyone, and thank you for joining us. The second quarter marked another meaningful step forward for Airgain. Revenue increased 19% sequentially to $13.7 million. We achieved positive adjusted EBITDA, and we advanced important customer programs across the business. Enterprise and automotive continue their revenue growth trajectories, while consumer sales remain relatively stable, supported by Y57 demand and strong Tier 1 relationships. We enter the second half with a stronger foundation than we had at the beginning of the year. Customer engagement is deeper, our pipeline is more mature, and more programs are progressing from evaluation into trials and deployments. We are encouraged by this progress, and we are increasingly confident in the direction of the business. Our priorities are clear. Build on the momentum in our core businesses, convert the AirgainConnect pipeline into revenue, advance Lighthouse toward commercialization, and increase the operating leverage of our business model.

Let me start with AirgainConnect. During the second quarter, we continued to expand our AirgainConnect portfolio through our work with FirstNet, built with AT&T. We added MegaFi 2 and MegaGo 2, both FirstNet trusted solutions that use high-power technology designed for demanding coverage environments. Together with AC Fleet and GoKit Pro, AirgainConnect now provides multiple connectivity solutions for vehicle, fixed, portable, and rapid response applications. The portfolio serves first responders, utilities, transportation, energy, and other critical field operations. Through FirstNet, AT&T offers Airgain's HPUE vehicle solution for public safety customers. Airgain also retains the ability to offer its HPUE technology through other carrier networks globally. This broader portfolio gives customers greater deployment flexibility, simplifies installation, and improves operational readiness. It also gives Airgain more entry points with customers and more ways to support them as their connectivity needs expand.

The AirgainConnect pipeline continued to grow since our last call and now includes approximately 60 Tier 1 and Tier 2 opportunities. Our focus is increasingly on pipeline conversion, and more than half of the pipeline is now in trial or post-trial stages, up from approximately one-third since our last call. The mix remains balanced with approximately 55% of opportunities in first responder markets and 45% in utilities and other commercial fleet applications. In Q2, we secure 5 Tier 2 design wins across AirgainConnect. Four are with first responder organizations and one is with a utility company. One of these wins is with a large countywide public safety customer covering fire, ambulance, and police fleets. The potential deployment spans more than 1,000 vehicles, but units are expected to be added in phases as vehicles enter service.

This illustrates how these programs can begin modestly and grow into meaningful long-term opportunities. We are also in the final phase of the sales cycle for a Tier 1 first responder opportunity, which we are targeting to close by the end of the year. Work remains before a final award, including customer-specific certification requirements. We're making the necessary investments because the opportunity demonstrates the scale of the programs we are pursuing, and the certification can be leveraged to other lead opportunities as well. Carrier relationships are an important part of our go-to-market strategy. As announced in June, we expand our work with FirstNet, built with AT&T, across public safety, utilities, and other critical field operations. Under this model, carrier sales teams help identify and advance customer opportunities while Airgain supports product demonstrations, trials, integration, and customization. This extends our commercial reach and helps move qualified opportunities toward deployment.

We have also developed a plug-and-play AirgainConnect configuration for the AT&T channel with the eSIM and required cabling pre-installed. The goal is to simplify evaluation and deployment for utilities, sanitation fleets, and other non-first responder customers. We're working to extend this carrier-enabled model to additional markets. We continue to strengthen our relationship with carriers and the FirstNet Authority with the support of well-respected industrial veterans. Most recently, Jim Buglia, former president of AT&T FirstNet and a member of the prestigious Wireless Hall of Fame Class of 2026, has joined Airgain as a strategic advisor. Jim will help us deepen relationships with public safety, the FirstNet Authority, and large fleet OEMs. We believe the pipeline for AirgainConnect has reached a stable level, and our emphasis is now on execution, advancing trials, supporting post-trial requirements, and helping customers move into phased deployments.

We believe this is the right approach to build a durable AirgainConnect business. Turning to Lighthouse, we continue to prioritize the U.S. market opportunity given the ongoing geopolitical dynamics in the Middle East. We are deepening our engagement with domestic mobile network operators, service providers, enterprises, and communities. We now have two scheduled end-customer trials in the U.S. that collectively support coverage across all three major carriers. This represents meaningful progress from our prior U.S. testing, which was conducted primarily with a network provider. The first trial is with a large logistics company seeking to improve coverage across its operating environment. Our current production-ready configuration supports the mid-band spectrum used by AT&T and Verizon. The second trial is with a residential community seeking to address coverage gaps commonly experienced by large communities and HOAs.

Our new configuration extends Lighthouse to the spectrum used by T-Mobile, and we expect pre-production samples during Q3. In Q3, we also secure an international customer trial for our integrated 4G and 5G combo solution. Initial samples are expected this quarter as well. These trials address a common problem: inconsistent cellular coverage across large operating environments and communities. Traditional solutions can be expensive, disruptive, and slow to deploy. Lighthouse is designed to provide a faster and more cost-effective alternative while giving mobile network operators control over network performance. We also continue to advance our engagement with a Tier 1 U.S. mobile network operator previously mentioned. We are now working through the final certification and approval process for its enterprise offering, and the operator has identified several customers for potential trials. Our commercial approach combines a top-down and bottom-up strategy.

We work with the MNOs to obtain network approval and reach enterprise accounts. At the same time, we engage directly with end customers, including enterprises and communities, to validate the need and create demand. Service providers and system integrators remain important deployment partners. While we are making very good strides with Lighthouse, we view Lighthouse primarily as a 2027 revenue opportunity. Our near-term objective is to complete trials, establish reference deployments, and demonstrate a repeatable commercial model. Any revenue before then would be incremental to that plan. Now, turning to our core markets. Enterprise IoT was the main driver of our sequential growth in second quarter, and we expect it to remain an important growth driver in Q3. Demand from our longstanding end customers continues to increase, primarily in the energy monitoring applications, and we see renewed activity in the EV charging market.

Shipments under the previously announced $4 million purchase order accelerated and are now expected to be completed by the end of this quarter. In parallel, we continue to expand opportunities in emerging applications such as robotics, drones, and data centers. Coco Robotics is preparing to launch its next generation autonomous delivery vehicles, and we expect the program to begin ramping up production shipments this quarter. Initial production shipments for a drone application are also expected to begin this quarter. The near-term revenue contribution is modest, but the program expands our presence in autonomous and mission-critical applications. Finally, we recently secured a design win for remote energy monitoring in data centers, with revenue expected to begin in early 2027. This win extends the Skywire platform into the growing data center connectivity market and creates a reference point for similar opportunities.

IoT order patterns can be uneven, so we are not assuming the current growth rate will continue every quarter. Still, the recovery in established programs and the breadth of newer applications give us greater confidence in the long-term opportunity. The near-term picture in consumer is more mixed. Q2 revenue was relatively stable, supported by Wi-Fi 7 antenna shipments and demand from Tier 1 service providers. We're managing two distinct factors that are affecting consumer during Q3. The first is the continuing memory shortage. Rapid growth in AI infrastructure is causing suppliers to prioritize high bandwidth memory, tightening the availability and increasing the cost of the standard memory used in home gateways. The timing of improvement in the environment remains uncertain. The second factor was the FCC ruling, which affected the timing of our MNO's new product launches. Our OEM partners have recently received conditional approvals.

As a result, this issue contributed to shipping delays in the second half. Based on our backlog and customer forecast, we expect consumer revenue to decline sequentially in Q3, which is reflected in our guidance. Importantly, these timing issues do not reflect a change in underlying demand. Our solution spans multiple OEM platforms and service providers, reducing our reliance on any one gateway supplier. Wi-Fi 7 and our Tier 1 MNO programs remain important long-term growth drivers. We have secured the inventory required to support our current AirgainConnect and Lighthouse plans into 2027. Limiting the near-term impact on these growth platforms. With that, I'll turn the call over to 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. Let's turn to our second quarter results. Q2 sales were $13.7 million, slightly above the midpoint of our guidance range and up 0.7% year-over-year, marking our first quarter of year-over-year growth in six quarters. Sequentially, Q2 sales increased $2.2 million or 19%, driven by growth across all our markets. Enterprise sales were $6.7 million, up $1.7 million sequentially, driven by higher IoT modems and custom product sales. Automotive sales were $1.2 million, up $3 million sequentially, reflecting higher sales of AirgainConnect vehicle gateways. Consumer sales were $5.8 million, sequentially up $2 million, driven by Wi-Fi 7 antenna shipments.