Airgain, Inc. (AIRG) Earnings

Management highlights

### Core Business Growth & Operational Momentum - Achieved positive adjusted EBITDA in Q2 2026, with first year-over-year revenue growth in six quarters, entering H2 2026 with a stronger operational foundation - More customer programs are progressing from evaluation to trials and commercial deployments, with deeper customer engagement and a more mature opportunity pipeline - Maintained strict expense discipline: Non-GAAP operating expenses declined 12% year-over-year, with prior headcount reduction actions aligned resources with highest-priority programs ### AirGainConnect Growth Platform Updates - Expanded the product portfolio to six FirstNet-trusted connectivity solutions for vehicle, fixed, portable, and rapid response applications, serving first responders, utilities, transportation, and energy critical operations - The opportunity pipeline now includes ~60 tier one/tier two opportunities, with over 50% in trial/post-trial stages (up from 1/3 last quarter), balanced 55% first responder / 45% utilities and commercial fleet - Secured 5 new tier two design wins in Q2 (4 first responder, 1 utility), including a large countywide public safety win targeting phased deployment across over 1,000 vehicles; a large tier one first responder opportunity is in final sales cycle targeting year-end close - Expanded go-to-market partnership with AT&T FirstNet, with AT&T sales teams identifying opportunities and AirGain handling product delivery; added former AT&T FirstNet president Jim Begale as a strategic advisor to deepen industry relationships ### Lighthouse Commercialization Progress - Prioritized the U.S. market amid Middle East geopolitical dynamics, with two scheduled end-customer trials across all three major U.S. carriers - First trial with a large logistics company (supports AT&T/Verizon mid-band spectrum); second trial with a residential coverage community (supports T-Mobile spectrum, pre-production samples expected Q3 2026); an international trial for the 4G/5G combo solution is also scheduled for Q3 - Final certification and approval is underway for a tier one U.S. MNO enterprise offering, with potential customers identified for trials; commercial launch is primarily expected to be a 2027 revenue opportunity ### Core IoT & Consumer Segment Updates - Enterprise IoT saw growing demand from established energy monitoring customers and renewed activity in the EV charging market; the $4 million previously announced purchase order is on track to complete shipments by end-Q3 2026 - Secured new design wins in emerging IoT applications: autonomous delivery robotics (production ramps Q3 2026), drone connectivity (initial production shipments Q3 2026), and data center remote energy monitoring (revenue starts early 2027) - Consumer revenue was stable in Q2, supported by Wi-Fi 7 antenna demand; timing headwinds from memory shortages and FCC product approval delays are expected to drive sequential Q3 revenue decline, with no change to long-term underlying Wi-Fi 7 growth demand

Guidance

Management provided the following Q3 2026 guidance, projecting overall sequential growth with mixed segment performance: - Total revenue is projected in a range of $14.25 million to $16.25 million, with a 15.25 million midpoint representing 11% sequential growth. Growth is driven by continued strength in enterprise and automotive segments, partially offset by an expected sequential decline in consumer revenue. - Non-GAAP gross margin is projected between 41.5% and 44.5%, with a 43% midpoint, with the sequential change reflecting the expected lower share of higher-margin consumer sales; higher component costs have been offset through pricing and product cost reduction initiatives. - Non-GAAP operating expenses are projected to be approximately $6 million. - Non-GAAP EPS is expected to be $0.04 at the guidance midpoint, and adjusted EBITDA is expected to be positive $0.07 million at the midpoint. Management expects increasing operating leverage as revenue scales.

Segment performance

Total company Q2 2026 revenue was $13.7 million, up 0.7% year-over-year and 19% sequentially. - Enterprise segment: Revenue of $6.7 million, accounting for 48.9% of total Q2 revenue. This represents a $1.7 million sequential increase, driven by higher IoT modem and custom product sales, and was the main driver of overall sequential growth. - Automotive segment: Revenue of $1.2 million, accounting for 8.8% of total Q2 revenue. This represents a $0.3 million sequential increase, reflecting higher sales of AirGainConnect vehicle gateways. - Consumer segment: Revenue of $5.8 million, accounting for 42.3% of total Q2 revenue. This represents a $0.2 million sequential increase, driven by Wi-Fi 7 antenna shipments.

Risks & headwinds

- AirGainConnect large tier one opportunities require customer-specific certification and multi-layered internal approvals, which can extend sales cycles and introduce timing uncertainty for closing deals. - IoT segment order patterns are inherently uneven, so current growth rates are not expected to be sustained every quarter. - The global memory shortage, driven by AI infrastructure demand prioritizing high-bandwidth memory, has tightened availability and increased costs for standard memory used in consumer home gateways, with an uncertain timeline for market improvement. - FCC regulatory rulings caused delays to MNO new product launches, leading to expected Q2 shipping delays and sequential Q3 consumer revenue decline, even with no change to underlying long-term demand. - Lighthouse commercialization is dependent on successful trial completion, carrier certification, and end-customer demand validation, with material revenue not expected until 2027, and near-term results may fall below expectations. - Forward-looking statements are subject to material risks that could cause actual results to differ materially from projections, per the company's SEC filings.

Analyst Q&A

• Q: With over 50% of the 60 AirGainConnect pipeline opportunities now in trial or post-trial stages, what is the expected conversion rate and timing for these opportunities to generate revenue?

  A: Management converted five tier two design wins in Q2, and has set an internal goal to convert at least one-third of the pipeline each quarter going forward. A large tier one first responder opportunity is in the final certification stage and is targeted to close by the end of 2026, which will drive additional second half revenue.

• Q: Can you share more context on the new drone application opportunity, and are you targeting additional drone market customers?

  A: The new drone program uses the company's Skywire IoT modem as the core communications brain for drones, and the company's AirGainConnect automotive products are also used to improve vehicle-to-drone communications. Initial production shipments are expected to start in Q3, with only modest near-term revenue, but the program expands the company's footprint in autonomous mission-critical applications and serves as a reference for additional opportunities in the space. New emerging applications like drones, robotics, and data center monitoring are expected to drive longer-term 2027 growth for the Skywire platform.

• Q: What have you learned from converted AirGainConnect trials, and what is the size and breakdown of the 60 opportunities to understand potential scale and average deal size?

  A: Of the 60 tracked tier one/tier two opportunities, 70% are tier two (50-500 vehicles each) and 30% are tier one (500+ vehicles each). The total aggregate vehicle count across all 60 opportunities is estimated in the tens of thousands. Key competitive differentiators that resonate with prospects include an all-in-one compact design that fits non-first responder fleets with limited trunk space, and the ability to consolidate multiple data plans to deliver significant cost savings and simplified management for customers. The five Q2 tier two conversions are already in initial deployment, which will occur in phases over the next 2-3 quarters, matching the expected 9-15 month average sales cycle for tier two opportunities.