Airgain Inc (AIRG) 2023 Q3 法說會逐字稿

Good afternoon. Welcome to Airgain's third-quarter 2023 earnings conference call. My name is Sherry, and I will be coordinator for today's call. Joining us for today's call are Airgain's President and CEO, Jacob Suen; and CFO, Michael Elbaz.

午安.歡迎參加 Airgain 2023 年第三季財報電話會議。我叫雪莉，我將擔任今天電話會議的協調員。參加今天電話會議的還有 Airgain 總裁兼執行長 Jacob Suen；和財務長邁克爾·埃爾巴茲。

As a reminder, this call will be recorded and made available for replay via the link found in the Investor Relations section of Airgain's website at investorrelations.airgain.com. (Operator Instructions) I caution listeners that during this call Airgain's management will be making forward-looking statements about future events and Airgain's business strategy and future financial and operating performances. 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.

謹此提醒，本次電話會議將被錄音，並可透過 Airgain 網站 Investorrelations.airgain.com 投資者關係部分的連結重播。 （操作員說明）我提醒聽眾，在這次電話會議中，Airgain 的管理層將就未來事件、Airgain 的業務策略以及未來的財務和營運績效做出前瞻性陳述。由於與公司業務相關的風險和不確定性，實際結果可能與這些前瞻性陳述中明示或暗示的結果有重大差異。

These forward-looking statements are qualified by cautionary statements contained in today's earnings release and Airgain's SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 09, 2023.

這些前瞻性陳述受到今天的收益報告和 Airgain 向 SEC 提交的文件中包含的警示性陳述的限制。本次電話會議包含時間敏感訊息，僅截至本次直播之日（2023 年 11 月 9 日）準確。

Airgain 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 may include a discussion of non-GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of the GAAP to non-GAAP results. I would now like to turn the call over to our CEO, Jacob Suen. Jacob?

Airgain 不承擔修改或更新任何前瞻性聲明以反映本次電話會議之後發生的事件或情況的義務。此外，本次電話會議可能包括對非公認會計準則財務指標的討論。請參閱今天的收益報告以了解更多詳細信息，包括 GAAP 與非 GAAP 業績的調整表。我現在想將電話轉給我們的執行長 Jacob Suen。雅各？

Thank you, operator. Welcome, everyone, and thank you for joining us. For today's call, I will first cover our operational highlights and achievements for Q3. Then, I will hand it over to Michael to walk you through our financial performance for the third quarter and our guidance for the fourth quarter. Afterward, I will provide an update on our strategic product and marketing initiatives for Q4 and beyond before opening the call up for questions.

謝謝你，接線生。歡迎大家，感謝您加入我們。在今天的電話會議中，我將首先介紹我們第三季的營運亮點和成就。然後，我將把它交給邁克爾，向您介紹我們第三季的財務表現和第四季的指導。之後，我將在開始提問之前提供有關我們第四季度及以後的策略產品和行銷計劃的最新資訊。

I would like to start by briefly introducing who we are and what we do for those who may be new to Airgain in our industry. At Airgain, we simplify wireless connectivity for the consumer, enterprise, and automotive markets. Our technology spans across the value chain from embedded components to integrated systems. Our products fall under three sub-brands, including Airgain Embedded, Airgain Antenna+, and Airgain Integrated.

首先，我想簡單介紹一下我們是誰，以及我們為業界 Airgain 新手所做的事情。在 Airgain，我們簡化了消費者、企業和汽車市場的無線連線。我們的技術涵蓋從嵌入式組件到整合系統的整個價值鏈。我們的產品分為三個子品牌，包括 Airgain Embedded、Airgain Antenna+ 和 Airgain Integrated。

At the beginning of the year, we announced our initiative to improve the 5G customer experience by fixing coverage gaps, boosting performance, and simplifying the delivery of 5G connectivity to the home, office, and vehicle. Earlier this year, we introduced our Lantern 5G Fixed Wireless Access device and Lighthouse 5G C-Band Smart Repeater. And we will be announcing a third product initiative in the coming months that fits into our effort to improve the 5G customer experience.

今年年初，我們宣布了一項計劃，旨在透過修復覆蓋差距、提高性能以及簡化向家庭、辦公室和車輛提供 5G 連接的方式來改善 5G 客戶體驗。今年早些時候，我們推出了 Lantern 5G 固定無線存取設備和 Lighthouse 5G C 頻段智慧直放站。我們將在未來幾個月宣布第三項產品計劃，以配合我們改善 5G 客戶體驗的努力。

Our goal is to begin shipping some of these innovative products to partners and end customers in the first half of 2024. We work with a global network of vast system integrators, distributors and large customers to help solve critical connectivity issues, improved wireless performance, and effectively shorten time to market for their products. With Airgain's growing product portfolio, we offer complete wireless solutions through our channel partners and customers that help them get connected quickly.

我們的目標是在2024 年上半年開始向合作夥伴和最終客戶交付其中一些創新產品。我們與龐大的系統整合商、分銷商和大客戶組成的全球網路合作，幫助解決關鍵的連接問題、提高無線性能和有效縮短產品上市時間。隨著 Airgain 不斷成長的產品組合，我們透過通路合作夥伴和客戶提供完整的無線解決方案，幫助他們快速建立聯繫。

Now for our performance, third-quarter sales came in at $13.7 million, which was close to the midpoint of our guidance range. Macroeconomic conditions, such as demand softness and inventory corrections have continued to create downward pressure in all three of our main markets: consumer, enterprise, and automotive. While we focus on growing our customer base, we expect the continued inventory overhang in our channel and that of our lead customers to persist in the fourth quarter.

現在就我們的業績而言，第三季銷售額為 1,370 萬美元，接近我們指導範圍的中點。需求疲軟和庫存調整等宏觀經濟狀況持續對我們的三個主要市場（消費者、企業和汽車市場）造成下行壓力。雖然我們專注於擴大客戶群，但我們預計我們的管道和主要客戶的庫存持續過剩將在第四季度持續存在。

Coupled with the shift of a large enterprise project from the fourth quarter to the first quarter of 2024, we are projecting a lower guidance range in the fourth quarter. However, we are nearing our turning point and are beginning to see signs of a market recovery. We expect growth in our enterprise market in the first half of 2024 with broader growth in the second half of the year from our consumer and automotive markets, especially with the launch of our product initiatives.

再加上大型企業專案從第四季度轉移到 2024 年第一季度，我們預計第四季度的指導範圍較低。然而，我們正在接近轉折點，並開始看到市場復甦的跡象。我們預計 2024 年上半年企業市場將成長，下半年消費者和汽車市場將出現更廣泛的成長，特別是隨著我們產品計畫的推出。

Moving to a review of each of our markets, our consumer market is comprised of our custom-embedded antenna design for CPE devices sold primarily to major service providers. In addition to demand softness and inventory corrections, there are additional forces within the consumer market creating downward pressure. First, as we discussed last quarter, service providers are on the cusp of a transition from Wi-Fi 6E to Wi-Fi 7. They are counting on Wi-Fi 7 to improve performance and user experience, and they are looking for ways to accelerate the Wi-Fi 7 adoption and transition.

回顧我們的每個市場，我們的消費市場由我們針對主要銷售給主要服務提供者的 CPE 設備的客製化嵌入式天線設計組成。除了需求疲軟和庫存調整之外，消費市場內還有其他因素造成下行壓力。首先，正如我們上季度討論的那樣，服務供應商正處於從 Wi-Fi 6E 向 Wi-Fi 7 過渡的風口浪尖。他們依靠 Wi-Fi 7 來提高效能和用戶體驗，並且正在尋找方法來加速Wi-Fi 7 的採用和過渡。

In anticipation of this shift, our key OEM customers are operating cautiously in order to avoid excessive inventory. While the market is hesitant in the short term, this shift presents a compelling long-term opportunity for Airgain to deliver its cutting-edge Wi-Fi 7 technology. We have invested heavily in our Wi-Fi 7 capabilities, and we recently secured a design win from a Tier 1 cable operator for its next generation Wi-Fi 7 CPE.

考慮到這一轉變，我們的主要 OEM 客戶正在謹慎地運營，以避免庫存過多。儘管市場短期內猶豫不決，但這一轉變為 Airgain 提供尖端 Wi-Fi 7 技術提供了令人信服的長期機會。我們在 Wi-Fi 7 功能上投入了大量資金，最近我們贏得了一家一級有線營運商的下一代 Wi-Fi 7 CPE 設計。

Second, consumer demand continues to shift from wired to wireless providers for Internet service as they cut the cord and make the transition to FWA. We recognize this trend and focus our strategy on penetrating this growing market, which offers significant average selling price, or ASP growth. We are pleased to announce we recently secured a large design win with a Tier 1 mobile network operator, or MNO, for the antenna design in their indoor FWA router, for which we expect to begin shipment in Q1.

其次，隨著網路服務供應商切斷電源並過渡到 FWA，消費者的需求繼續從有線供應商轉向無線供應商。我們認識到這一趨勢，並將我們的策略重點放在滲透這個不斷增長的市場上，該市場提供了顯著的平均售價或 ASP 成長。我們很高興地宣布，我們最近贏得了一家一級行動網路營運商 (MNO) 室內 FWA 路由器天線設計的重大設計勝利，我們預計將於第一季開始出貨。

In addition, we are working on several other opportunities with cable operators and MNOs and look to secure these opportunities in early 2024. As we navigate a challenging demand environment, we expect declining consumer sales in the next two quarters, followed by gradual growth from our MNO design win and from our cable operator Wi-Fi 7 technology transition.

此外，我們正在與有線電視營運商和行動網路營運商合作尋找其他幾個機會，並希望在2024 年初獲得這些機會。隨著我們應對充滿挑戰的需求環境，我們預計未來兩季消費者銷售額將下降，隨後我們的銷售額將逐漸增長MNO 設計獲勝並從我們的有線運營商 Wi-Fi 7 技術過渡。

Our enterprise market represents a mix of components and systems that include our embedded modems, asset trackers, enterprise antenna design, and custom products. Inventory overhang continues to dampen our embedded modem revenue, and while some of our distributors are back to normal buying patterns, others are still clearing inventory that will last a few more quarters. Despite the inventory overhang, we see end customer demand growth in our modems as evidenced by growing point of sales in our distribution partners, and we expect a gradual recovery in the first half of 2024.

我們的企業市場代表了組件和系統的組合，包括我們的嵌入式調變解調器、資產追蹤器、企業天線設計和客製化產品。庫存過剩繼續抑制我們的嵌入式調變解調器收入，雖然我們的一些分銷商恢復了正常的購買模式，但其他分銷商仍在清理庫存，這些庫存將持續幾個季度。儘管存在庫存過剩，但我們看到最終客戶對調製解調器的需求有所增長，這一點可以從我們分銷合作夥伴的銷售點增長得到證明，並且我們預計 2024 年上半年將逐步復甦。

EV charging and VSaaS continue to be strong markets for our modems, and we do see industrial, our core business, energy, and managed IoT applications as growth opportunities. Our custom products offerings feature joint engineering collaboration with our customers to develop products for specific applications while helping them reduce their time to market. These projects can often have shifting timelines depending on product requirements, engineering resources, certifications, and manufacturing schedules.

電動車充電和 VSaaS 仍然是我們數據機的強勁市場，我們確實將工業、我們的核心業務、能源和託管物聯網應用視為成長機會。我們的客製化產品提供與客戶的聯合工程協作，為特定應用開發產品，同時幫助他們縮短上市時間。這些項目的時間表通常會根據產品要求、工程資源、認證和製造計劃而變化。

Shipments can fluctuate from quarter to quarter based on the complexity of the product offering, which has had a material impact on our expected timing for such revenues. Specifically, one of our lead customers is going through a technically complex platform refresh, and the combinations of high inventory in its current platform and the completion delay in its new platform created a material shift of revenue from the second half of this year to the first half of 2024.

根據產品供應的複雜性，每季的出貨量可能會有所波動，這對我們獲得此類收入的預期時間產生了重大影響。具體來說，我們的一個主要客戶正在經歷技術上複雜的平台更新，當前平台的高庫存和新平台的完工延遲相結合，導致收入從今年下半年到上半年發生了重大轉變。2024 年 一半。

Our asset tracker business continues to show significant growth potential. We continue to see growing applications for pallet, packaging, and logistics tracking, which represented a bright spot in our Q3 revenue. In addition, our pipeline includes several opportunities in railways, warehousing, equipment management, and rental, lab management, and co-chain.

我們的資產追蹤業務持續展現出巨大的成長潛力。我們繼續看到托盤、包裝和物流追蹤的應用不斷增長，這是我們第三季收入的亮點。此外，我們的管道還包括鐵路、倉儲、設備管理和租賃、實驗室管理和共鍊等領域的多個機會。

This is one of our existing product lines that presents a significant growth opportunity in 2024 due to the market size, flexibility of applications, opportunity for recurring revenue, and our strategic product differentiators. Because of the size of the customers with which we are interacting in the established pilot process, the sales cycle for this product can be from 9 to 18 months. While our potential deal pipeline is strong, we are working to address our resource constraints, streamline our processes, and shorten the sales cycle to help create a more consistent revenue stream in 2024. Lastly, our automotive market includes both our aftermarket antennas as well as our vehicle networking devices.

這是我們現有的產品線之一，由於市場規模、應用靈活性、經常性收入機會以及我們的策略性產品差異化優勢，該產品線將在 2024 年帶來重大成長機會。由於我們在既定試點流程中與之互動的客戶規模很大，因此該產品的銷售週期可能為 9 至 18 個月。雖然我們的潛在交易管道很強大，但我們正在努力解決資源限制、簡化流程並縮短銷售週期，以幫助在 2024 年創造更穩定的收入流。最後，我們的汽車市場包括我們的售後天線以及我們的車輛網路設備。

Our focus in the automotive market has largely been in the public safety, transportation, and municipalities. Inventory corrections from these customers have strengthened the growth in this market, and we expect this trend to continue in the first half of 2024. However, we are seeing signs that our combined strategic focus on new and differentiated products, supply chain flexibility, and global channel expansion is yielding results in Q4.

我們在汽車市場的重點主要集中在公共安全、交通和市政部門。這些客戶的庫存調整加強了該市場的成長，我們預計這一趨勢將在2024 年上半年持續。然而，我們看到有跡象表明，我們對新產品和差異化產品、供應鏈靈活性和全球業務的綜合策略重點管道擴張在第四季初見成效。

We expect our previously announced RECON13 and ULTRAMAX Glass 5G products will begin to shift this quarter, both of which fit into our new low profile design focus. This is in addition to our EZConnect platform, which adds supply chain flexibility by separating the antenna from the cable harness, minimizing the variations in SKUs. In addition, we signed a new system integrator in the public safety and municipality market that we believe will contribute significantly to our automotive sales next year.

我們預計先前發布的 RECON13 和 ULTRAMAX Glass 5G 產品將於本季開始轉變，這兩者都符合我們新的薄型設計重點。這是對我們的 EZConnect 平台的補充，該平台透過將天線與線束分離來增加供應鏈的靈活性，從而最大限度地減少 SKU 的變化。此外，我們還在公共安全和市政市場簽署了一家新的系統整合商，我們相信這將為我們明年的汽車銷售做出重大貢獻。

Despite the downward pressure from macroeconomic forces that have persisted throughout 2023, we remain optimistic that our sales expansion strategies pay a path to growth in 2024 and beyond. By the end of 2023, we expect to have added five new distribution partners and a major system integration partner, greatly expanding our reach.

儘管宏觀經濟力量的下行壓力在 2023 年持續存在，但我們仍然樂觀地認為，我們的銷售擴張策略將為 2024 年及以後的成長奠定基礎。到 2023 年底，我們預計將增加五個新的分銷合作夥伴和一個主要的系統整合合作夥伴，從​​而大大擴大我們的覆蓋範圍。

We have also announced new products that should start to impact revenue in Q4, alongside two of our three major product initiatives to improve the 5G customer experience, all of which help provide an addressable market that should contribute significantly to 2024 revenue and beyond. We have expanded into two new key geographies and look to take advantage of the market needs in these regions. While 2023 has presented some significant challenges, we believe we have the right product roadmaps and expansion strategies to recover and grow in 2024. With that, I'll turn the call over to Michael. Michael?

我們還宣布了應在第四季度開始影響收入的新產品，以及改善5G 客戶體驗的三項主要產品計劃中的兩項，所有這些都有助於提供一個可尋址市場，為2024 年及以後的收入做出重大貢獻。我們已擴展到兩個新的關鍵地區，並希望利用這些地區的市場需求。雖然 2023 年帶來了一些重大挑戰，但我們相信我們擁有正確的產品路線圖和擴張策略，可以在 2024 年恢復和成長。這樣，我會將電話轉給 Michael。麥可？

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 are found in our earnings release.

謝謝你，雅各。在深入研究這些數字之前，請注意，我對我們的財務表現和指導的審查是指非公認會計準則資料。有關非 GAAP 財務指標的信息，包括 GAAP 與非 GAAP 調整表，請參閱我們的收益報告。

Now, let's turn to this quarter's results. As Jacob mentioned, Q3 sales were $13.7 million below the $14 million midpoint of our guidance range. The variance was primarily due to lower than forecasted consumer sales. Our sales declined 13% sequentially and 29% year over year, primarily due to the high inventories across both our channel and direct customers, coupled with demand softness in our consumer market.

現在，讓我們來看看本季的業績。正如 Jacob 所提到的，第三季銷售額比我們指引範圍 1,400 萬美元的中位數低了 1,370 萬美元。差異主要是由於消費者銷售額低於預期。我們的銷售額環比下降 13%，年減 29%，這主要是由於我們的通路和直接客戶的庫存較高，加上消費市場的需求疲軟。

Consumer sales were $4.4 million, reflecting a sequential decrease of $1.8 million, as our Q2 quarter had a strong uptick of Wi-Fi 6E embedded antenna shipments. Enterprise sales were $6.8 million, which decreased sequentially by $0.5 million. The decline was driven by lower sales of custom products, partially offset by higher sales of embedded modems as some distributors are recovering from inventory overhang. Automotive sales were $2.5 million, reflecting a sequential increase of $0.2 million.

由於 Wi-Fi 6E 嵌入式天線出貨量強勁成長，消費者銷售額為 440 萬美元，比上一季減少 180 萬美元。企業銷售額為 680 萬美元，比上一季減少 50 萬美元。下降的原因是客製化產品銷售下降，但由於一些分銷商正在從庫存過剩中恢復過來，嵌入式調變解調器銷量增加部分抵消了這一下降。汽車銷售額為 250 萬美元，季增 20 萬美元。

Q3 gross margin was 39.1%, compared to our guidance range midpoint of 40%. The variance was primarily due to the unfavorable consumer sales mix. Q3 gross margin was 130 basis points lower sequentially, due to the unfavorable consumer sales mix, and a lower enterprise margin driven by an unfavorable product mix change.

第三季毛利率為 39.1%，而我們的指引範圍中位數為 40%。差異主要是由於不利的消費者銷售組合造成的。由於不利的消費者銷售組合以及不利的產品組合變化導致企業利潤率下降，第三季毛利率較上季下降 130 個基點。

Q3 operating expenses totaled $6 million, slightly higher than our guidance of approximately $5.8 million. Operating expenses decreased sequentially by $0.5 million, driven by lower contractor and other variable expenses, resulting from G&A efficiencies. Our Q3 operating expenses at $6 million represents the lowest spend level since the acquisition of NimbeLink in Q1 of 2021.

第三季營運費用總計 600 萬美元，略高於我們約 580 萬美元的指引。由於 G&A 效率提高，承包商和其他可變費用減少，營運費用環比減少 50 萬美元。我們第三季的營運支出為 600 萬美元，是自 2021 年第一季收購 NimbeLink 以來的最低支出水準。

As we mentioned in prior earnings calls, we are focused on driving operational efficiencies to reduce our expenses and make room for the investment needed for the launch of our three initiatives that will help drive revenue in 2024. As a result, our Q3 adjusted EBITDA was negative $0.5 million, and non-GAAP EPS was negative $0.06. Our cash balance as of September 30 was $10 million, $0.7 million higher sequentially, driven by working capital management. The $10 million cash balance was $0.8 million higher than the same quarter in the prior year, despite lower year-over-year sales.

正如我們在先前的財報電話會議中所提到的，我們致力於提高營運效率，以減少開支，並為啟動三項措施所需的投資騰出空間，這將有助於推動2024 年的營收成長。因此，我們第三季調整後的EBITDA 為負 50 萬美元，非 GAAP 每股盈餘負 0.06 美元。截至 9 月 30 日，在營運資本管理的推動下，我們的現金餘額為 1,000 萬美元，比上一季增加了 70 萬美元。儘管銷售額同比下降，但 1000 萬美元的現金餘額比去年同期增加了 80 萬美元。

Our accounts receivable balance was $6.3 million, $2.4 million lower sequentially due to strong cash collections and lower sales. Net inventory was $4 million, $0.8 million lower sequentially. Given our cash balance and our tight expense management, we believe we have sufficient resources to execute on our growth strategies.

由於現金回款強勁和銷售額下降，我們的應收帳款餘額為 630 萬美元，比上一季減少 240 萬美元。淨庫存為 400 萬美元，比上一季減少 80 萬美元。鑑於我們的現金餘額和嚴格的費用管理，我們相信我們有足夠的資源來執行我們的成長策略。

Now, moving to our outlook for the fourth quarter ending December 31, 2023, we project sales to be in the range of $9.25 million to $10.75 million, or $10 million at the midpoint of the range. The lower revenue guidance compared to prior expectation is due to lower than anticipated consumer sales and continued inventory corrections, coupled with the large enterprise project push-out Jacob mentioned. We expect non-GAAP gross margins for the fourth quarter to be in the range of 38.5% to 41.5%, or 40% at the midpoint of the range.

現在，展望截至 2023 年 12 月 31 日的第四季度，我們預計銷售額將在 925 萬美元至 1,075 萬美元之間，即該範圍的中點為 1,000 萬美元。與先前的預期相比，收入指引較低是由於消費者銷售低於預期和持續的庫存調整，以及雅各布提到的大型企業項目的推出。我們預計第四季非 GAAP 毛利率將在 38.5% 至 41.5% 之間，即該範圍的中點為 40%。

Leveraging our CM model is a primary driver of our gross margin improvement initiative, and we completed the first phase of this leverage with our automotive antennas. Despite the lower projected consumer sales mix, we expect our gross margin to improve sequentially as a result of our automotive product cost reductions.

利用我們的 CM 模型是我們毛利率改善計劃的主要驅動力，我們透過汽車天線完成了這一槓桿的第一階段。儘管預計消費者銷售組合較低，但我們預計由於汽車產品成本降低，我們的毛利率將持續改善。

We project our operating expenses to be approximately $6 million. Non-GAAP EPS is expected to be negative $0.19 at the midpoint of our guidance. Adjusted EBITDA is expected to be negative $1.8 million at the midpoint of our guidance. Despite the revenue challenge we face in the fourth quarter, we remain focused on generating positive cash flows in the first quarter of 2024, while we'll continue execute on our strategic product initiatives. Now I would like to turn the call back over to Jacob, who will walk us through those strategic initiatives. Jacob?

我們預計營運費用約為 600 萬美元。按照我們指引的中位數，非 GAAP 每股盈餘預計為負 0.19 美元。按照我們指引的中位數，調整後 EBITDA 預計為負 180 萬美元。儘管我們在第四季度面臨收入挑戰，但我們仍然專注於在 2024 年第一季產生正現金流，同時我們將繼續執行我們的策略性產品計劃。現在我想把電話轉回雅各布，他將引導我們完成這些策略性舉措。雅各？

Thanks, Michael. During Q3 and Q4, our team has spent a significant amount of time and effort on our strategic planning process. As a result of this analysis of our products and markets, we developed a product roadmap that stretches into 2025 and captures our strategic product launches that we believe will shape our revenue in the future.

謝謝，麥可。在第三季和第四季度，我們的團隊在策略規劃流程上花費了大量的時間和精力。根據對我們產品和市場的分析，我們制定了一份延續到 2025 年的產品路線圖，並涵蓋了我們的策略性產品發布，我們相信這些產品將影響我們未來的收入。

Of our current product lines, we believe that our asset trackers offer the greatest strategic growth opportunity. When we narrow the market to cellular connected asset trackers, we estimate the 2024 serviceable available market, or SAM, to be $900 million. In addition, we have been in the market for over three years and have built a strong pipeline of deals.

在我們目前的產品線中，我們相信我們的資產追蹤器提供了最大的策略成長機會。當我們將市場範圍縮小到蜂窩連接資產追蹤器時，我們估計 2024 年可用市場（SAM）將達到 9 億美元。此外，我們已經進入市場三年多，並建立了強大的交易管道。

As mentioned previously, because of the pilot process and size of the end customer, the sales cycles can be longer than some of our other products. However, the deals are larger, more sustained, and involve a significant component of recurring revenue. We continue to make very good progress and are optimistic that our asset tracking offering will become an even greater revenue contributor to the overall business.

如前所述，由於試點流程和最終客戶的規模，銷售週期可能比我們的一些其他產品更長。然而，這些交易規模更大、更持久，並涉及經常性收入的重要組成部分。我們繼續取得良好進展，並樂觀地認為我們的資產追蹤產品將成為整體業務的更大收入貢獻者。

In addition, we have previously discussed our initiative to improve the 5G customer experience. While 5G delivers on its promises of lower latency, increased capacity, and higher throughput, it comes at the expense of a shorter signal range from the base station. Consequently, this creates coverage gaps for 5G customers. We believe Airgain is well positioned to solve these major coverage deficiencies, and we have identified three key areas where we believe we can make an impact.

此外，我們之前也討論過我們改善5G客戶體驗的措施。雖然 5G 兌現了更低延遲、更高容量和更高吞吐量的承諾，但它的代價是基地台訊號範圍更短。因此，這給 5G 客戶造成了覆蓋缺口。我們相信 Airgain 能夠很好地解決這些主要的覆蓋缺陷，並且我們已經確定了我們認為可以產生影響的三個關鍵領域。

These areas include the network itself, customer premises, and the vehicle, improving 5G connectivity and customer experience begins at the edge in the home or office with Fixed Wireless Access. These devices allow wireless operators to compete with cable and wire solutions for the broadband connection. This year, we announced our entry into this market with introductions of an enterprise-grade CPE called Lantern FWA.

這些領域包括網路本身、用戶端和車輛，透過固定無線存取從家庭或辦公室的邊緣開始改善 5G 連線和客戶體驗。這些設備使無線營運商能夠在寬頻連接方面與有線和有線解決方案競爭。今年，我們宣布進入這個市場，推出了名為 Lantern FWA 的企業級 CPE。

Lantern is an outdoor, ruggedized, sub-6 gigahertz 5G device that breaks the tradeoff between performance and ease of install. It is equipped with directional, high-gain antenna that is optimized for mid-band and high-band frequency range, offering superior performance for all MNO customers. It also includes a patent-pending easy installation kit that comes with a mobile app that significantly reduces installation time and eliminates the need for professional installation.

Lantern 是一款戶外、堅固耐用的 6 GHz 以下 5G 設備，打破了性能與易於安裝之間的權衡。它配備了針對中頻段和高頻段頻率範圍進行最佳化的定向高增益天線，為所有 MNO 客戶提供卓越的性能。它還包括一個正在申請專利的簡易安裝套件，附帶一個行動應用程序，可顯著減少安裝時間並消除專業安裝的需要。

When we narrow our focus to 5G, outdoor, 9-millimeter-wave devices in the regions where we plan to compete. We estimate the SAM is over $500 million in 2024 alone, offering a lucrative market in which to compete. While most FWA devices are indoor solutions, currently being sold to consumers through MNOs and are subsidized as part of a monthly fee, our enterprise-grade device is cutting out its own niche in the market.

當我們將重點縮小到我們計劃競爭的地區的 5G、戶外、9 毫米波設備時。我們估計 SAM 僅在 2024 年就將超過 5 億美元，提供了一個利潤豐厚的競爭市場。雖然大多數 FWA 設備都是室內解決方案，目前透過 MNO 出售給消費者，並作為月費的一部分提供補貼，但我們的企業級設備正在市場上開闢自己的利基市場。

Our global MNO partners see this product as a pathway to help them [get] into the B2B market in a meaningful way, even calling it a needle mover for them. In addition, the product is receiving significant interest from our channel partners who have had to piece together enterprise FWA solutions from multiple, expensive components.

我們的全球 MNO 合作夥伴將此產品視為幫助他們以有意義的方式進入 B2B 市場的途徑，甚至稱其為他們的推動者。此外，該產品還引起了我們的通路合作夥伴的極大興趣，他們必須將多個昂貴的組件拼湊成企業 FWA 解決方案。

Airgain's Lantern FWA offers a simpler and less expensive option, allowing them to better compete in the market. There is a myriad of use cases where the device can be used. However, broadband failover and mobile operations seem to be the two gaining the most early interest. The product has been in trial with several channel partners and MNOs, and we are targeting a Q1 ship date for the first versions of this product.

Airgain 的 Lantern FWA 提供了更簡單、更便宜的選擇，使他們能夠更好地參與市場競爭。該設備有無數的用例。然而，寬頻故障轉移和行動操作似乎是最早引起關注的兩個領域。該產品已與多個通路合作夥伴和行動網路營運商進行了試用，我們的目標是該產品第一個版本的第一季出貨日期。

The feedback from trial customers has been positive, and we are pleased to announce that we have secured early purchase orders for the Lantern FWA products, showing the market potential for the device. With the reduced transmission range of 5G signals, the cost of ownership for network operators increases significantly due to the infrastructure and equipment required to extend high-quality coverage. An active smart repeater can overcome this challenge by facilitating efficient use of existing infrastructure to ensure a stable and high-quality signal.

試用客戶的回饋非常積極，我們很高興地宣布，我們已經獲得了 Lantern FWA 產品的早期採購訂單，顯示了該設備的市場潛力。隨著5G訊號傳輸範圍的縮小，網路營運商的擁有成本因擴大高品質覆蓋所需的基礎設施和設備而顯著增加。有源智慧中繼器可以透過促進現有基礎設施的有效利用來克服這項挑戰，以確保穩定和高品質的訊號。

Earlier this year, Airgain introduced the Lighthouse Smart Repeater, which offers a single pole installation, carrier aggregation, active echo cancellation, support for multi-upgrader frequency bands, active beam-steering capability, and requires no fiber backhaul. It is a cost-effective way to deliver a targeted 5G signal in areas that lack quality coverage.

今年早些時候，Airgain 推出了 Lighthouse 智慧中繼器，它提供單桿安裝、載波聚合、主動迴聲消除、對多升級器頻段的支援、主動波束控制功能，並且不需要光纖回程。這是一種經濟高效的方式，可以在缺乏優質覆蓋的區域提供有針對性的 5G 訊號。

Based on the global number of base stations to the regions we plan to serve and factoring rollout, we estimate the SAM for 2025 to be around $600 million for this product, making this a lucrative market in which we can compete. We have completed multiple field trials on Tier 1 operator networks in our own truck for product launch by the end of 2024.

根據我們計劃服務的地區的全球基地台數量以及保理部署，我們估計 2025 年該產品的 SAM 約為 6 億美元，這使得該市場成為我們可以競爭的利潤豐厚的市場。我們已經用自己的卡車在一級運營商網路上完成了多次現場試驗，以便在 2024 年底之前推出產品。

Additionally, another key area where we feel that we can improve the 5G customers' experience is in the vehicle. We have been in the fleet and vehicle networking industry for many years. With the deployment of 5G, the use cases for higher data rate applications have multiplied substantially. This is especially important for several segments including public safety, transportation, agriculture, utility, and many more.

此外，我們認為可以改善 5G 客戶體驗的另一個關鍵領域是車輛。我們在車隊和車聯網行業已耕耘多年。隨著 5G 的部署，更高資料速率應用的用例大幅增加。這對於公共安全、交通、農業、公用事業等多個領域尤其重要。

Based on vehicle routers and focusing on 5G, we estimate a SAM in 2024 of $200 million. We will be announcing the next generations of our vehicle networking device in early Q1 to tackle this market and provide opportunities for growth. We have seen early excitement from several major customers on this next generation product. Our current target ship date will be Q2 of next year.

基於車載路由器並專注於 5G，我們預計 2024 年 SAM 規模將達到 2 億美元。我們將在第一季初發布下一代車輛網路設備，以應對這一市場並提供成長機會。我們已經看到一些主要客戶對這款下一代產品的早期興奮。我們目前的目標出貨日期是明年第二季。

Between these three major product initiatives, we estimate over $700 million in potential additional of SAM in 2024 and $1.7 billion in 2025, effectively doubling our foundational SAM of $1.8 billion for our existing products. This gives us not only the ability to grow organically from our existing product lines, but also to expand our growth opportunities by adding value to our existing markets and exploring new markets.

在這三項主要產品計劃中，我們預計2024 年SAM 的潛在增量將超過7 億美元，到2025 年將增加17 億美元，這實際上是我們現有產品的基礎SAM 18 億美元的兩倍。這使我們不僅能夠從現有產品線中有機成長，而且能夠透過為現有市場增加價值和探索新市場來擴大我們的成長機會。

It is also the combinations of the strategy we announced two years ago to shift from exclusively components to full systems. In closing, 2023 has been a challenging year for Airgain along with the rest of the industry in which we compete. Market forces have created a downward pressure on our traditional lines of business that will persist through the end of this year.

這也是我們兩年前宣布的從單一組件轉向完整系統策略的結合。最後，2023 年對於 Airgain 以及我們競爭的行業其他公司來說都是充滿挑戰的一年。市場力量對我們的傳統業務造成了下行壓力，這種壓力將持續到今年年底。

While we anticipated a challenging environment in 2023, we underestimated the severity of these impacts on our business. We are disappointed with our revenue and EBITDA guidance for Q4 as we expect stronger headwinds resulting from the combination of lower than previously anticipated consumer sales, continue inventory correction, and customer project pushouts. However, despite these significant challenges, we believe we have made the right strategic moves and now have a line of sight to revenue recovery starting in Q1 of 2024.

雖然我們預計 2023 年的環境將充滿挑戰，但我們低估了這些影響對我們業務的嚴重性。我們對第四季度的收入和 EBITDA 指引感到失望，因為我們預計，由於低於先前預期的消費者銷售、持續的庫存調整和客戶項目推出，將帶來更大的阻力。然而，儘管面臨這些重大挑戰，我們相信我們已經採取了正確的策略舉措，現在預計將從 2024 年第一季開始實現收入復甦。

Our Q1 backlog is currently higher than that of our Q4 backlog. We're maintaining our existing customer base and are adding new customers as evidenced by our recent design wins in our Consumer, Automotive and Enterprise markets. And we have a strong pipeline of opportunities that should accelerate our future growth. We are focused on being EBITDA positive in 2024 and generating positive cash flows based on the resolution of inventory issues in the market, expansions of channels and geographies, the demand for WiFi 7 and FWA devices by major operators in the launch of our new products.

目前，我們第一季的積壓訂單高於第四季的積壓訂單。我們正在維護現有的客戶群，並正在增加新客戶，我們最近在消費者、汽車和企業市場的設計勝利證明了這一點。我們擁有大量機會，可以加速我們未來的成長。我們的目標是在 2024 年實現 EBITDA 為正值，並根據市場庫存問題的解決、通路和地理的擴展、主要營運商在推出新產品時對 WiFi 7 和 FWA 設備的需求來產生正現金流。

While our strategy is ambitious, we believe we have the right team in place to execute. We are very pleased to have the new additions of Evan Jones as our VP of Engineering. Evan spent over 23 years at Sierra Wireless as their VP of IoT System Engineering and Customer Experience. Evan is an industry veteran who has joined Airgain at this pivotal time because he believes in our vision and product roadmap. He is also very excited to work with the seasoned executive team already in place at Airgain to help grow our existing product lines and ensure the successful launch of our three new product initiatives into the marketplace.

雖然我們的策略雄心勃勃，但我們相信我們擁有合適的團隊來執行。我們很高興新任命埃文瓊斯 (Evan Jones) 擔任我們的工程副總裁。 Evan 在 Sierra Wireless 工作了超過 23 年，擔任 IoT 系統工程和客戶體驗副總裁。 Evan 是一位行業資深人士，他在這個關鍵時刻加入了 Airgain，因為他相信我們的願景和產品路線圖。他也非常高興能夠與 Airgain 經驗豐富的管理團隊合作，幫助發展我們現有的產品線，並確保我們的三個新產品計劃成功推向市場。

Airgain has undergone a fundamental transformation in our technology, product roadmaps, operations, sales approach, and plan to shift from components to systems. As is often the case, transformations can be difficult and painful for organizations, and we are no exception. I would like to thank our team for continuing to persevere and execute despite the challenges.

Airgain 在我們的技術、產品路線圖、營運、銷售方式方面經歷了根本性轉變，並計劃從組件轉向系統。通常情況下，轉型對組織來說可能是困難和痛苦的，我們也不例外。我要感謝我們的團隊在面臨挑戰的情況下繼續堅持和執行。

While we look to recover and generate organic growth from our core products and customers, we believe our strategic focus on growing our asset tracker business and improving the 5G customers' experience through these major initiatives offers a pathway to larger growth in 2024 and beyond. As these initiatives begin to come to market in early 2024, we believe they will begin to help shape our future as a systems-focused company. And with that, we are ready to open the call for your questions. Operator, please provide the appropriate instructions.

雖然我們希望從核心產品和客戶中恢復並產生有機成長，但我們相信，我們的策略重點是透過這些重大舉措發展資產追蹤器業務和改善5G 客戶體驗，為2024 年及以後實現更大成長提供了途徑。隨著這些舉措於 2024 年初開始推向市場，我們相信它們將開始幫助塑造我們作為一家以系統為中心的公司的未來。至此，我們準備好開始詢問您的問題了。操作員，請提供適當的說明。

(Operator Instructions) Craig Ellis, B. Riley Securities.

（操作員指示）Craig Ellis，B. Riley Securities。

Hi, this is Stacey Corey on behalf of Craig. And I was just wondering if you could provide some color as we move the product mix towards higher volume in clients and services. And in a tough macro, what are some products in the consumer and enterprise that can drive meaningful revenue to 4Q or potentially into 2024? And are there any changes in the segment gross margin like consumer gross margin or enterprise gross margin? Thank you.

大家好，我是代表克雷格的史黛西·科里。我只是想知道當我們將產品組合轉向更高的客戶和服務量時，您是否可以提供一些顏色。在嚴峻的宏觀情況下，消費者和企業中哪些產品可以為第四季或 2024 年帶來有意義的收入？消費者毛利率、企業毛利率等細分市場毛利率是否有變動？謝謝。

Hi, Stacy. This is Michael. I hope I can answer your question if I understand it correctly. From the consumer standpoint, as we mentioned, the revenue level is a bit depressed. We saw it in Q3. We're expecting a further decline in Q4, primarily because of our OEMs trying to manage their inventories or excess inventories with the pending WiFi 7 technology transition along with some soft demand taking place at the MSO level.

嗨，史黛西。這是麥可.如果我理解正確的話，我希望我能回答你的問題。從消費者的角度來看，正如我們所提到的，收入水平有點低迷。我們在第三季度看到了這一點。我們預計第四季度將進一步下降，主要是因為我們的 OEM 試圖透過即將進行的 WiFi 7 技術過渡來管理其庫存或過剩庫存，以及 MSO 層面出現的一些軟需求。

And so what we have secured so far is really an MNO Tier 1 design win which we expect to start shipping in Q1. So this will give us a bit of a bump in Q1, but really the overall growth on that market will really come from the WiFi 7 technology transition which we expect to see at the end of Q2 and certainly in the second half of the year.

因此，到目前為止，我們所獲得的確實是 MNO Tier 1 設計勝利，我們預計將在第一季開始出貨。因此，這將為我們在第一季帶來一些提升，但實際上該市場的整體成長將真正來自 WiFi 7 技術轉型，我們預計將在第二季末以及今年下半年看到這項技術轉型。

On the Enterprise business, what we are facing right now is more of an inventory overhang with one of our lead customers. And this is also the same lead customer where we have also a custom design of a platform, a new platform. This is a complex project which is now delayed to the early part of next year of Q1, specifically speaking.

在企業業務方面，我們現在面臨的更多是我們的主要客戶之一的庫存過剩。這也是同一個主要客戶，我們也有一個平台的客製化設計，一個新平台。具體來說，這是一個複雜的項目，目前已推遲到明年第一季初。

And so while we see overall depressed or lower revenues in Q4, we expect to see the uptick in Q1 and then some resumption after that of growth in the fiscal year 2024 mainly because of the inventory corrections being sorted out through the first half of the year. And then finally on the automotive, it's more of a mixed story here between some of the inventory correction going on with some of our lead customers but also that being offset with growing new products.

因此，雖然我們看到第四季度整體收入低迷或下降，但我們預計第一季營收將有所上升，然後在2024 財年增長後會有所恢復，這主要是因為今年上半年的庫存調整已經完成。最後在汽車領域，情況更加複雜，一方面是我們的一些主要客戶正在進行的一些庫存調整，另一方面是新產品不斷增長所抵消的庫存調整。

We recently announced a number of new products but also new channels and new geographies as well too, and those again for the second half of the year will start to really pan out for us as well too, along with the new product initiatives. In terms of mix, it's a bit uncertain right now given the low level of visibility on how everything plays out. All of our OEMs are certainly trying to be very conservative in the inventory level. We could see some surprise in December with some surprise orders, but we are not counting on that. And so in terms of the mix, it could be fluctuating quite a bit.

我們最近宣布了許多新產品，還有新通路和新地區，下半年的這些產品以及新產品計劃也將開始真正為我們帶來好處。就組合而言，鑑於一切如何展開的可見性較低，目前還有些不確定。我們所有的原始設備製造商當然都在努力保持庫存水準非常保守。我們可能會在 12 月看到一些意外訂單，但我們並不指望這一點。因此，就組合而言，它可能會波動很大。

The good news here is that on the margin front with the automotive product cost reduction that we have initiated about two, three quarters ago and those are becoming effective in Q4, we do see our overall gross margin starting to improve with the CM leverage that we have been counting on, and this trend will continue on. And so I think we will be somewhat protected with some of the consumer market mix which has been unfavorable over the past few quarters. I hope that answered your question.

這裡的好消息是，在利潤率方面，隨著我們大約兩三個季度前開始的汽車產品成本降低以及這些成本在第四季度生效，我們確實看到我們的整體毛利率開始隨著我們的CM槓桿而改善。一直在指望，並且這種趨勢將繼續下去。因此，我認為我們將在一定程度上受到過去幾季不利的消費市場組合的保護。我希望這回答了你的問題。

Thank you. That's very helpful. Thank you so much. And I was wondering if I can squeeze in another one. So, what are some of your views about cash or any change in the inventory days? How do you feel about your cash level, whether it's sufficient for your working capital? Thank you.

謝謝。這非常有幫助。太感謝了。我想知道我是否可以再擠進去一份。那麼，您對現金或庫存天數的變動有何看法？您對自己的現金水準有何看法？是否足以滿足您的營運資金？謝謝。

Sure. So our cash actually increased in Q3 at the end of September, increased compared to quarter-over-quarter but also year-over-year basis. We are at $10 million right now. And this has been mostly driven out of working capital management, lower inventories and as I mentioned, but also lower account receivable not only because of lower sales, but also primarily because we achieved a record low DSO with some very strong collections.

當然。因此，我們的現金實際上在 9 月底第三季有所增加，與季度相比有所增加，與去年同期相比也有所增加。我們現在的收入是 1000 萬美元。這主要是由於營運資金管理、庫存減少以及正如我所提到的，應收帳款減少不僅是因為銷售額下降，而且主要是因為我們透過一些非常強勁的收款實現了創紀錄的低 DSO。

So here the team is definitely very focused on whatever we can do from a working capital management standpoint with the EBITDA loss that we are projecting for Q4 of $1.8 million. At the midpoint of the guidance, we expect our cash balance to be at around $8 million which is definitely sufficient for enough of resources to be able to pursue our growth initiatives and especially in light of growth resuming in the first half of the year.

因此，從營運資本管理的角度來看，團隊絕對非常關注我們能做的一切，我們預計第四季的 EBITDA 將損失為 180 萬美元。在指導的中期，我們預計我們的現金餘額約為 800 萬美元，這絕對足以提供足夠的資源來實施我們的成長計劃，特別是考慮到今年上半年恢復的成長。

Got it. Thank you so much.

知道了。太感謝了。

Thank you.

謝謝。

That will conclude our question-and-answer session. If your question was not taken you may contact Airgain's Investor Relations team at AIRG@gateway-grp.com. I would now like to turn the call back over to Mr. Suen for closing remarks.

我們的問答環節就到此結束。如果您的問題未被採納，您可以透過 AIRG@gateway-grp.com 聯繫 Airgain 的投資者關係團隊。我現在想把電話轉回給孫先生作總結發言。

Thank you for joining us on today's call. We look forward to updating you on our next call. Operator?

感謝您參加今天的電話會議。我們期待下次通話時向您通報最新情況。操作員？

Thank you. This concludes today's call. Thank you for joining us for Airgain's third-quarter 2023 earnings call. You may now disconnect.

謝謝。今天的電話會議到此結束。感謝您參加 Airgain 2023 年第三季財報電話會議。您現在可以斷開連線。