AIRG - Earnings call transcript Q3 2017

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Operator

Good afternoon. Welcome to Airgain’s Third Quarter 2017 Earnings Conference Call. My name is Roya and I will be your Coordinator for today’s call.

Joining us for today’s call are Airgain’s President and CEO, Charles Myers, CFO, Leo Johnson, and Director of Investor Relations, Alexis Waadt. I would now like to turn the call over to Ms. the during regarding today’s provide made forward-looking will Management by call. who necessary the cautions statements Waadt

Alexis Waadt

performance, which from of financial of is website see of results. of intended including net EPS comparable only any non-GAAP for Thank discussion financial obligation you reflect covered November for about forward-looking the contains and non-GAAP non-GAAP Litigation this certain business Airgain is Harbor these or November information remainder XXXX. call, and contained SEC no good expect XXXX. in measures. may Airgain’s that reconciliation XXXX. including or discussion date of future Form measures, results release revise of due importance by the posted information detract Reform considered Company’s date details, afternoon time-sensitive and not everyone. This on XXXX a of to provisions and to Actual release earnings the conference today’s GAAP including conference Please will listeners accurate strategy call be conjunction filings, events earnings stated including call XX, Airgain’s risks its Please Act. XX-Q file include the should which Airgain of I the in and could and measures conference qualified today those that non-GAAP Private this Management to statements on the is Adjusted from this with the under XX, operating caution business. live call to further a EBITDA. cautionary undertakes Safe or Any discussed of forward-looking broadcast, the after differ future Securities statements are the the note and during These uncertainties income, that non-GAAP GAAP to forward-looking statements statements This is making materially to associated update with as by implied be and events forward-looking by we statements Airgain’s circumstances and call.

remind website I Finally, for would Company’s available Investor of this section replay www.airgain.com. the link be Relations that in recorded everyone made at like the call available via to and a will

prepared for Following from and Airgain’s remarks, will the open up Management’s we major sell-side questions analysts shareholders. call publishing institutional

I President Now, Myers. and our to Chuck? with call to that, would the CEO, over Chuck like turn

Charles Myers

we XXXX on Thanks, Alexis. and Welcome you the issued our press the After available for everyone announcing results third release which Relations us close is the Investor section XX, joining September ended thank today. for of our market a quarter website.

by to Let XXXX release on me growth revenue guidance issued for which September XX% reiterating originally XX% for in begin a we our XXXX and press of Xth. XX%

carrier As in in identified we that we noted our a deployments. slowdown release

half momentum definitive half cable see second for we delayed We're first the While XXXX deployment for XXXX. results of the year. overall ramping production the months and entering third of the for full of quarter nine first the by our the in encouraged

standing progressing is sales nearly business million XXXX when is XX.X%, $X of impressive sales even to This perhaps a first the line. according more our of consider fact months XXXX that demonstrating the their for LeTV, nine increased In replaced successfully who fact plan. from we our result dropped product long you customer

stream and public for we IoT this year devices, new automotive revenue based evaluating on Plus. recently has of in leveraging complementary operators growing in core and emerging of Much became shown networking assets home monitoring adapting markets of like into and growth our resilience the markets technology focused fact Antenna in shown adjacent have geographically, wins our growth come to as expansion with growth continued tremendous solutions WiFi communicated faster acquisition that last our organic enterprise, our we've since five key by business a strategy as We replacing this areas including into assets shouldn't surprise, SaaS and like expanding acquiring expanding automotive. business

will to on and been drive is a moment proof these on XXXX grow during milestones in in In over initiatives. early rapidly, I'll some we to We're I'd through of financial the execute the our position walk key next of highlights. Leo? to into Johnson significant I model. our where our turn and our aim headed points before the share do specific Our strategy CFO, a leverage which call to discussions fit nicely like are Leo but who us

Leo Johnson

everyone. and you, Thank afternoon Chuck good

our third XXXX. to nine months financial the ended Let's highlights results quarter XX, and for and turn September

to the year this ago. for LeTV. the had strong a to totalled this stream propelled to revenue as note core antennas positive million is assets The have period through growing contribution which offset into that sales is Antenna the third than It's this has last we product of contributions year rapidly $XX.X entirely we the same which largely and the and a market. being Plus quarter acquisitions all from alluded automotive higher us LeTV's In line Our takeaway to due embedded revenue our been Jeff from year minimal contrast the important slightly abandoned. of untapped have

at the month The of The increases $XX.X in by by was our a period the nine of months nine driven from product in our was first increase the acquisition to business. increase same million of driven automotive primarily sales million XX.X% assets also XXXX, $XX.X turning the our ago. year Now increased sales.

board or sales or period a shares income ago. the other $X.X the share compared profit XX.X% shares or included was Cash prior used diluted offset include, of $XXX,XXX which at of activities price a XX.X from X.X% investment of common repurchase $XXX,XXX of $X.XX In repurchased the million amount highlights of of per in $X.XX. provided sales million per or million shares $XXX,XXX announced per Some financial plus in the $X attributable same diluted cash for million year. year quarter by we to consistent activities million program, of average the our with of $X.XX aggregate $X financing to gross XX,XXX $XX.X during an in on share an shareholders increasing quarter totalled million Cash share stock XX.X% based X.X last is to QX of $XXX,XXX quarter. August Net operating buyback. during on of $XXX,XXX

I'll repurchase further over to back As to we in opportunities financial stream elaborate attractive shares focused the we us on turn Chuck. the gets our that remains While within shortly grow diversifying opportunistic to be buy business investing the strategy this will segments, emerge. to on fast now our and back flexibility market specifically top revenue growing Chuck? priority scale program even when completes the my summary. allocation our capital and This business

Charles Myers

off European achieved illustrate addition we with our tremendous market. Thanks, up success the carriers. covers U.S. third connected users Starting our U.S. market XX% the this successfully we've with now with broadband Picking I XXXX. the from approximately of throughout across To carrier, Leo. presence left and expanded home X base Tier have where of the our customer

We access have including the streaming engagements throughout OTT streaming content devices. and points, ecosystem gateways

minds both daily are antennas the new complex connected the connectivity besides this entry the we're market huge now deliver we're and technology of been challenges and into Plus creating of tremendously best the signs to Antenna rise brightest the device particularly instrumental home performance automotive our growing this solutions. in car a proliferate to Airgain there. leveraging space. broadband presence the our seeing market and continuing number for With As has have combine today's most in us. future. is which is opportunities in we devices this Acquiring in resilient the per At very where the connectivity wireless road and high focus position connected world, applications power connected expertise and have begins the in for complex we the while strong market to of new we area hyper established connected strong only assets advance engineering demand drive of to almost The and a but

infrastructure vehicle Earlier terms a in-vehicle, We're Our challenges member XG accepted the we right get partnerships products in of the the us the XGAA. positive vehicle that investing and We're Automotive in to month Association most the complex in or solving a and announced were heading next on growth. of this stage vehicle space. people, direction to as application. is of in automotive to focus connectivity to we

marketplace. new lateral connected As our the a to of the next advanced you R&D WiFi to connection us automotive our connected [ph] and our The our technologies customers may Tier for automotive and membership portfolio and of the industry suppliers this development expansion Tier relationship future of and become to we're for the the an of solutions XGAA been commitment positioned in that XGAA reiterates XG's is investments the With and an research facilitating space. with well devices. relationship automotive speeds, influential our generation and of enable gigabit standards X market. position the expanding connected billions group we've worldwide X GPS XG know is and leader latencies into and solutions important is to car. cellular mobility OEM accelerate request Through ultra-low

strong encouraging We are and initial results. seeing

our this decision in further earlier is business these this exceptionally validating year. automotive plays Our to and space acquire fleet well assets

to streamed antenna a example which can live for As system. using through Bluetooth we camera program the new shift now responders first central communication an in-vehicle video GPS center. access into and an streaming body be point a enables cellular The

Another mentioning opportunity or in this Initiative. is worth Authority FirstNet is a Network Responder that arena First

adopted tasked within product maintaining an IoT the U.S., our have states safety an The currently safety network into and establishing, already network public FirstNet operates independent authority FirstNet set. XX this initiative. is across operating, public with network interoperable existing

in fleet excited tell As can we're intelligent you potential management automotive space. the the about

in market In started addition our connectivity important in profitability into business Over quarter our the a growth developed leverage OEM time was we're beginning have market, revenues into believe just project. visibility start the in business. strong be Since further significant our believe solid that's big summary be approximately we will continued foothold in another to believe automotive solutions, we of and to customers the new business establish continued Given model. further we partnerships, XXXX. we highlighted by of XX% operating and QX the surface we've our our drive expand diverse the as scratch our we will in and position this investment and promising we on diversifying to track portfolio scale

near key success to the we today. to our have that Looking areas to invest strategies continue and future executing led our in

on your ever While for homes growth our of key opportunities focused organic areas we more performance us we're of the questions. IoT to Operator, global automotive, connected acquisition enabler With the a multiple vastly opportunities as is With performing devices high ready and wireless for an and front of that the complex in prudently to for increasing open positioned connectivity. attractive task, especially provide enterprise. Airgain four continue we instructions. please remain number call look pursuing appropriate critical in wireless

Operator

[Operator Instructions].

William of Our first line with from comes Anil question Blair. proceed. Please the Doradla

Anil Doradla

congrats afternoon Chuck I the couple and especially had DOCSIS and Good on on of Leo results stuff. questions. a the

half So your first on DOCSIS view point have Chuck more clearly trends both a on seems and data you and the commentary part know or the your you second suggest from highlights some business? lot half visibility? know It share to better that that clarity confidence. of incremental the confidence you Can points you trends of

Charles Myers

think Anil. I Yes started—thanks we

supplier maybe been out with are first now to We September look one was what clarity some other it. to wanted notice carriers as we it's the on of technical, some of visibility either customer kind from in as the coming see to of see quarter go slowdowns just to starting half, one going we identify to see you we first on those haven't into that year. second on hurdles in will just year variety I think with on really operational started of—for the it a I how quarter beginning them and see eye these to look vendor and major carrier starting sits information and of were think different going but even of keep to the pleased up we're our or know started there's to full much big the carriers we get where significant we're and better one through shift there that technology right providers a been there now as we we speed we overcome we're is parts think as next there reason and an really on situation deployments see at public when to that we the the we these always late first we and .So in ramping third fourth in variety

Anil Doradla

once to the stuff XX% and in segment see the could that glad which or the of positive 'XX was Airgain? could ASPs wins some that from in us can to be know share that you you this came design but the on remind contribution Whether should visibility Antenna Plus come and have? again that guys gears Switching Chuck auto, it your stuff, organically from through all you auto

Charles Myers

now things. at in little space this as the as some where that business aftermarket wins announcing is and individual business exists in I really OEM space. the we're point fleet confidentiality those auto always by be near it share hamstrung with The a but our into we using hope its of to today some and the OEM you bit springboard future our can't primarily carrier

the play in the OEM hope future. to space in we those near announce So how

Anil Doradla

Great.

me one to buyback three the we expect don't more. The months? could are squeezing out you next you active over on clearly you guys mind in active so buyback, If the there, be

Charles Myers

will one. on I jump Leo let that

Leo Johnson

as if mean we I themselves go present opportunity said to take buy. I the opportunities the mean

Anil Doradla

All XXXX. we Congrats to guys Wonderful. look right. an exciting forward and

Charles Myers

Anil. you, Thank

Operator

you. Thank

the question proceed. Capital. with Our Tom comes from Sepenzis line Northland next of Please

Tom Sepenzis

on Hi, execution a there. the in difficult environment. congratulations My

now Just 'XX? the to at is what of of percentage auto curious the mix it's if growing end XX%

Charles Myers

the repeat that. Tom? about question you Can Sorry again

Tom Sepenzis

just to mix I'm 'XX? end at that’s wondering it's of percentage Yes, the if right okay. now the is the what of automotive XX% growing

Leo Johnson

a right XX%. automotive it's Sure, little right but is just around, bit about around

Tom Sepenzis

in and unit that Antenna you or your include the Okay. revenue? press release, did that numbers put automotive The DASP the Thank Plus you.

Leo Johnson

not. that’s No

Tom Sepenzis

that know perspective you from going or I from talk mainly reason do of back can't you're it year? two Thank but one and or a next think resume you. is you carrier see to have partners Is directly clearly when set technical to your that churn start roll-outs.

Charles Myers

more still and that we half customer but positive We're go see see as to second the signs core set that first year first what and Well strategy clarifying it so through in looking one one continuing next of up starting I to will next through own biggest and their from churn think see our we as I of up they gyrations product go from even forward. the very stated. in We that ship quarter half next ramp their we we see the back we rollout expect year see now year. to ramp then the larger

Tom Sepenzis

Thank you then and then and I'll back get one to queue.

safety new the for that or curious, or there that to year next outlined understand is what mean us Just revenue opportunity the here with any could help public two? over is the quantify way your

Charles Myers

not to FirstNet as to our right deployments out states think those it's I way as part now, as there's their that these continue that -- we it quantify have see adopted year. next roll a growth of

Tom Sepenzis

much. very Thanks

Charles Myers

Thanks.

Operator

you. Thank

B. Riley next Our proceed. question Craig the Ellis comes of with Please & from line Co.

Unidentified Analyst

think first you fiscal growth additional year one clarify, further your equation guidance should questions provided, connected end OpEx fiscal on markets OpEx 'XX and half guys relatively given over you also the year and side then the about the versus the in how expect you've for My can guys. which This provide for Thanks to some provide my auto? or relates the of the 'XX is Craig. what color half second across in first homes on evolution calling actually Tom taking of trajectory your we

Charles Myers

of please, make with question that first the think sure. again first just Let's want the second bit, you got it half a how a break can about convoluted repeat we let's I half, to we the up with the the little little question, that go half of

Unidentified Analyst

see additional growth each or of Maybe the on growth trajectory color of the that market? trajectory end provide you kind an

Charles Myers

it's a mean different about see were for time subject XX% different being we but growth can—I total see they a probably We all—we our year. next

point together of we you of XX% look kind start see to moving if see next connected those automotive up reports internally. you year think the I mould of growth to space that where kind if so debt where can and access two you anywhere to growth see to you industry you XX% the X% through growing XX% kind see business the

Unidentified Analyst

then Thank question my color that of the for growth the and you. OpEx that OpEx? How and were initiated intensity at half look the type would you second progression September? OpEx the XX% back you the Thank should that at rate, to of support related we of

Charles Myers

for where from at I think we we year. fact it of can employees and touch seen to coming and what on growth next that of let the see we where looked one we've OpEx maybe the a and the have that's things got you be Leo, that investment helpful the opportunities have how number

Leo Johnson

we our much obviously the it not to forecasting for rate existing OpEx mean slower in in-line, increase we're grow keep attempted next OpEx, will at than all I next huge our year -- times a this really revenue year.

Unidentified Analyst

helpful. guys. very that's Thanks Okay,

Charles Myers

you. Thank

Operator

[Operator you. Thank Instructions].

next the Karl Our from proceed. of Ackerman question with Cowen & Please comes Co. line

Karl Ackerman

carriers cable a year proliferate beyond in in any follow as I've with next but I you pause terms was then States Hi. assuming or secondarily of it does seem embedded already boxes given design home will United and for those does generation that be more but this us up Chuck taking trajectory XXXX weighted in the back-half and my gateways, traction next wins near-term gen could other the give you're you this metrics Thank apologize if this asked operators the for having of leading and questions. primary to hurt your global Leo, know in already the be you revenue please. and roll-outs

Charles Myers

Okay.

are that of now, in better providing. estimate in to little in, a XX% Let's close existing of kind weighting out I'm the from that we—the going even know in comes terms of design necessarily best the start designs and not you wins maybe we're our on new wins that design so half roll-outs broadband vendors the customers we terms terms really feel of with we're in conservative be probably to the right going back

You pull sure guess the with knowledge we're you shift to pretty good to said know I it growth forthcoming know that want we're now second we're reiterate be more because really down the conservative traction this we just to have conservative see make we we make slowed think we're because first estimates want and penetration don't that start started on were we granular our be roll-out think because our and sure that get of We're but want of fairly we to is we and could it looking we're going going in September could addressed it to in to as I to the really we we as way, some estimates basing being by the this don't in optimistic. of next second and pretty in burned That best year. forward notice see so we've at I'll on the quarter half want overly in we when year shall our to and traction say. pretty what conservative

Karl Ackerman

Understood. I appreciate that.

maybe year years. see linearity overall you a contribution you Are For few the about of aggressive Plus the market and talked talked driving your see of certainly acquisition the follow-up your XXXX more in the in the automotive winning in as towards talk strategically next your my revenue there. could of of those IoT you've strengthened you. about automotive Antenna how and more new you mix becoming the business in portion how Thank in and that the weighted XXXX and evolving past question design XX% you footprint about just within first half from

Charles Myers

is things a most becoming focusing we've autonomous said the have as connected next Continental we we're that Bosh and XG eye in Antenna looked obviously rollout, that term a critical something piece something in few acquisition this how in Antenna we not but that terms to space of and we the that of deal players and fickle, Plus Well thought and of really needed when of beachhead have years substantially and became so business welcome, know see the out, significant help ones we just the pretty understand out how it's automotive Plus guys the business. but we The years a auto rollouts, always for lot you expert beachhead be saw be you we area, the I see you're have that on and when a they where bids in I been that's starting connected see in OEM's. the and rolling an on cars like the we connected acquisitions space pretty markets believed expert automotive growing OEM or really we started always OEM we've from a they and market in towards the the kick the to we devices minor area. really that we that think, of LTE, for and start that following to to part other also can you kind know like a long looked model We've long need at proliferation early that term of the lot preliminary a to at will have look the players on at are long our we're strong a some understanding just in we to be so talk people [ph] big year far mean acquisition and basic two the working in the [indiscernible] home us but a win success term those OEM help and

Karl Ackerman

I one if one guess me maybe last I may. for

to years. only think priorities efforts program XXXX investments for about stock own you in you where used R&D, given share could and also in today your is we from your know talk your being line look you how marketing not in top allocation know ensuing the capital You standpoint a but should as in buyback grow aggressively about the

Charles Myers

on stock buyback. the touch Leo let I'll

Leo Johnson

stock of looking it's ago, feel and a the when already will are purchase few and piece as it. will We far bit buyback the we little R&D a good went opportunistic us I go and we as—and through minutes for on kind

will don’t anticipated we sometimes know along revenues we investing have and have to money -- be business the have we our fight We deals because be in -- spent basically the of now we front winning for continue the invest we work have will win got you we next -- to not been win in once all to on deal the to the one. and

plug-in constantly R&D. we're through So

Charles Myers

and said. Yes, I will echo or build Leo on what

R&D we R&D technically Our goes it's—so have design much actually a there's become win spend lot very of a win, actually done they the into we is because before have after not competitive. that of it the

going how revenue that at that's see we that. look with what spend our is of those prudent proportionally be continue and opportunities. the see as We're you So you R&D and to potential to know

Karl Ackerman

you. Thank

Charles Myers

Thank you.

Operator

[Operator Instructions]. you. Thank

Our next Duggan proceed. question comes from the line with of Capital. Paul Please Jackson

Paul Duggan

gentlemen. afternoon Good

at IPO revenue. it's opportunistic, You and stock below traded it secondary share today if trades trades if the about The stock of two times when XX% are subtract there traded per over X.X it's is something price revenue about competitors times price. our you cash say the

IPO. So make would now don't know, I to are and the more for than shares below don't go if our $X, could buying price what—it when—what between it sense opportunistic $X know $X. with doesn't here what isn’t don't waiting it opportunistic know be to I I stock well be

Charles Myers

little are time to point. to or sit going the say even buy, bit not to buy I'm I'm that going there nervous but going buy. to I and that at likely we're get Paul, we a

Paul Duggan

broker been I'm three define when asking—you revenue. from we're range the the you unbelievable to it’s can months, at do their -- buyback to than for to stock $XX one last repurchase price point times but sold trading less opportunistic company the in I the a shares delegate don’t $X.X, has there the how under off

Charles Myers

agree buyback. we is think price that for quite with I executing you attractive

Paul Duggan

shares. XXXX

Charles Myers

Sorry, out dropping I know a line. keep don't you've significantly bad if phone you and

Paul Duggan

month. declining shares purchased month price our stock I'm we've saying over only with XX,XXX

what asking, -- to don't be know on keep I a I could now? better So will buy what than time

Charles Myers

Paul. We agree with you,

Paul Duggan

purchased expected to but be you a spent, the million have only would $X not you've not if would you're buying be $XXX,XXX. been seems But you have agree then buying. I There conflict, XX,XXX. to

Charles Myers

We are were buy days. open we three again, upto to going

Paul Duggan

a The If blackout but If a rules its the is broker they are week. you it blacked company, and to delegate you a no buyback all out it, broker blacked delegate be broker the could buying could under if issue. not CFO it out. they buying out. today delegate the to not blacked is be They

you check I public of would what So with number involved that’s and been that in on SEC have but who us. buyback -- could tell someone that’s brokers our lawyers

with you a broker is not it Check the counsel. If delegate broker to blacked out. your

Charles Myers

We shall.

Paul Duggan

Thank you. Okay.

Operator

our question At you. time answer this Thank session. concludes and this

to closing now your taken If call question not turn this for remarks. would I investors@airgain.com Airgain's was over Myers you back the may Mr. contact like to investor relations team at

Charles Myers

we you over to call Thank you. investor look I will updating our partners to especially you forward turn our employees, on want it next thank everybody. for We forward to look their our -- support. continued to back our We and so and

Operator

today us joining XXXX third for for call. earnings you quarter Thank Airgain's

You now disconnect. may

Airgain (AIRG) 9 Nov 172017 Q3 Earnings call transcript