AIRGAIN INC

Overview

Airgain is a premier provider of wireless connectivity solutions, offering a range of embedded components, external antennas, and integrated systems worldwide. We streamline wireless connectivity across devices and markets, with a focus on solving complex connectivity challenges, expediting time to market, and optimizing wireless signals. Our mission is to connect the world through optimized, integrated wireless solutions. Our product portfolio focuses on three key markets: enterprise, consumer, and automotive.

Our current enterprise products include embedded cellular modems, antennas for access points and Internet of Things (IoT) applications, and asset trackers. We expect to expand our product offering with fixed wireless access solutions and Smart Network Controlled Cellular Repeaters (Smart NCRs). Our consumer products include embedded antennas for consumer access points, wireless gateways, smart home devices and fixed wireless access devices. Our current automotive products include aftermarket antennas that are typically connected to third-party cellular and Wi-Fi-enabled routers, digital video evidence devices, and telematics gateways. We also recently launched a second generation AirgainConnect® Fleet system solution – a low profile, roof-mounted 5G vehicle gateway, combining a cellular modem, antennas, and additional features into a single device.

We have a rich history of providing radio frequency (RF) expertise, services, and solutions to mobile operators and major original equipment manufacturers (OEMs). With the addition of NimbeLink products in 2021, we expanded our capabilities to include embedded cellular modems, asset trackers and custom IoT systems. We are leveraging our RF and systems experience, and our Mobile Network Operator (MNO) and Multiple Service Operator (MSO) relationships to deliver new and differentiated products.

In 2022, we transitioned to an outsource manufacturing model for our products while maintaining oversight for quality, test, and delivery timeline. We also maintain an intellectual property strategy that includes patent and trademark filings in multiple jurisdictions. As of December 31, 2023, we had over 280 issued and pending patents worldwide.

Products and Solutions

Enterprise

The enterprise market requires reliable wireless access across various settings, including smart cities, utilities, factories, buildings, campuses, transportation hubs, stadiums, and suburban developments.

Our NimbeLink embedded modems serve numerous enterprise sectors requiring cellular connectivity such as packaging, logistics, EV charging, smart cities, smart buildings, agriculture, and asset tracking. These NimbeLink cellular modems, which are both patented and end-device certified, minimize the need for additional carrier certifications. Our customers benefit from these end-device certified modems with lower development costs and faster time to market. Offering a wide array of LTE solutions and products with integrated GPS/GNSS radios, our NimbeLink modems are pin-compatible, facilitating seamless integration and simplifying technology transitions. We also offer embedded modems with optional recurring subscription-based cellular data plans. Our embedded modems are shipping to distribution partners and directly to OEMs.

Our asset trackers are deployed across transportation, supply chain, cold chain, and other specialized applications. Our asset tracking solution utilizes a cellular backbone with Wi-Fi and GPS triangulation, along with various sensors like temperature, motion, distance, tilt, and humidity to monitor asset location and condition in various environments. In addition to hardware, our asset tracking offering includes a recurring revenue component, our subscription-based NLink cloud-based device enablement platform, which allows for deployment and integration with enterprise systems via open APIs. We also offer subscription-based dashboards for viewing asset tracker information, should a customer desire a full solution. Recurring revenue for asset trackers also includes optional cellular data plans. Our asset tracker solutions are primarily shipping to OEMs.

Our custom products feature joint engineering collaboration with strategic customers to develop industrial IoT products (IIoT) for specific applications while helping them reduce their time to market. For example, one of our joint engineering collaboration is with a large IoT customer for a small-size and purpose-built ethernet to cellular router with custom software. Another example of our custom products is a rugged cellular modem purpose-built for outdoor ATV (all-terrain vehicle), motorcycle, and off-roading applications. These examples highlight our dedication to partnerships and delivering high quality, fast time-to-market, and purpose-built custom products. We will continue to invest in strategic custom opportunities as they arise.

Our enterprise IoT and machine-to-machine (M2M) antennas are extensively deployed in diverse systems, devices, and applications, including access points, gateways, fixed wireless access devices and utility meters. Our antenna systems are shipping to major enterprise OEMs and distribution partners.

In 2023, we unveiled a new line of Fixed Wireless Access products designed to address 5G connectivity challenges, reduce deployment costs and enhance customer experiences. In 2023, we also announced our Lighthouse™ smart repeaters platform designed to reduce an operator’s capital expenses for extending range, while enhancing 5G coverage. Our outdoor 5G Lantern TM Fixed Wireless Access (FWA) device has integrated high-performance directional antennas, a 5G NR Sub-6 modem, and is powered through a 2.5 gigabit ethernet PoE (power over ethernet) connection. The Lantern 5G FWA has been ruggedized for outdoor use, includes remote management capabilities, and a Wi-Fi based easy installation web interface to help simplify the user experience. We expect Lantern to receive certification at select MNOs, and begin shipping in the first half of 2024. Our Lighthouse smart repeater platform includes both a low-power small office and home office (SOHO) device targeting customers that need additional coverage in small areas, as well as a high-power outdoor network repeater for MNOs and systems integrators. Lighthouse smart repeaters include advanced carrier aggregation (CA), low latency, software upgradeability to support network-controlled repeater (NCR) standards, optional smart antenna technology to assist with installation and maintenance, and an optional remote management system. The smart network repeater also integrates advanced automatic gain control and echo cancellation enabling single-pole installation. Lighthouse is in MNO field trials around the world.

Consumer

The consumer market represents a vast audience utilizing wireless-enabled devices. Our embedded antennas are deployed in various consumer applications including access points, wireless gateways, FWA devices, Wi-Fi routers and extenders, smart TVs, smart home devices, and set-top boxes. These consumer products support a variety of technologies, products and services, including LTE, 5G, Wi-Fi, Bluetooth, LPWAN and GNSS (Global Navigation Satellite System).

We collaborate closely with chipset providers, carriers, original design manufacturers (ODMs), and OEMs to develop highly integrated and tailored embedded antenna solutions. Our relationships with MSOs, ODMs and OEMs are strengthened by our comprehensive and repeatable Over-the-Air test capabilities for Wi-Fi, LTE, 5G, LPWAN, and Bluetooth. Service providers are increasingly transitioning to gigabit Wi-Fi, up to and including Wi-Fi 7. We have invested in next-generation Wi-Fi 7 design and testing capabilities. We expect the combination of Wi-Fi 7 and 5G will be a growth driver for our solutions as the number of antennas per device increases.

We announced in November 2023 that Airgain was selected by a major Tier 1 MNO in North America to supply its next generation antennas for its indoor FWA devices. This selection comes amid ongoing consumer shifts away from traditional wired broadband to wireless as more major telecom providers offer broadband internet access as part of their bundled offerings. We continue to grow our relationships with MSOs and MNOs as the market evolves with both wired and wireless broadband internet offerings.

Automotive

In the automotive market, our products are deployed in a wide range of vehicles in the fleet and aftermarket applications, supporting a variety of technologies that include Wi-Fi, LTE, 5G, LPWAN, GNSS, and Bluetooth. Fleet and aftermarket products in the automotive market typically consist of applications where vehicular wireless routers are paired with external antenna systems to provide connectivity to mobile assets. Within this market, there has been increasing demand for constant connectivity, specifically in the first responder, utility, agriculture, and service fleet markets.

We offer a full line of external fleet antennas that are designed to be rugged, reliable, and flexible to meet almost any need. We design our products for performance, quality, and long product life and our antennas connect to almost any vehicular router or modem. These antennas include high-performance and low-profile versions that mount on the roof, trunk, windshield, or dashboard and are optimized for 5G, 4G, Wi-Fi, and GNSS. Fleet antennas have a five-year limited warranty, which is the longest in the industry, and we offer up to IP67 and IP69K ratings for extended use in the harshest of environments. The deployment of EZConnect cable harnesses in 2023 offers flexible cable lengths and connector types that simplify ordering, inventory management, and installation.

In 2020, we introduced the AC-HPUE product, the first antenna-modem from our AirgainConnect platform. The AC-HPUE integrated a high-power LTE modem with high gain antennas in one enclosure to reduce signal loss and support transmission of the maximum allowable Power Class 1 radiated power. In January 2024 we launched our next-generation product named AirgainConnect Fleet (AC-Fleet). The AC-Fleet solution is 5G and carrier agnostic allowing for a significantly larger target market compared to the AC-HPUE solution. AC-Fleet is one of the first low profile, roof-mounted 5G vehicle gateway, combining the latest 5G NR (New Radio) modem and a Wi-Fi 6 router all in one covert form factor. At only two inches tall, AC-Fleet provides flexibility across multiple markets including public safety, transportation, transit, public and private fleets, and vehicles. We expect our AC-Fleet platform to include hardware and a recurring revenue component including an optional annual subscription for remote access, cloud management, technical support, software updates, and extended warranty. We expect AC-Fleet to receive certification at select MNOs, and begin shipping in the second half of 2024.

Growth Strategy

As a global wireless connectivity solutions provider, Airgain solves critical connectivity challenges across the value chain. We are transitioning from being exclusively a component manufacturer to a wireless system solutions provider, targeting higher levels of integration and complexity, as such, our growth strategy is focused on two key elements:

Grow our established business: Our embedded modems, custom IoT solutions, and IoT antennas in the enterprise market; embedded antennas in the consumer market; and our aftermarket antennas in the automotive market together provide our foundational business. Our reputation and relationships throughout the Distribution, Value-Added-Reseller (VAR), MSO, MNO, OEM, and ODM supply chain enables us to aggregate key voice-of-the-customer product needs and challenges which is critical for innovation. Our RF design and test capabilities enable our products to be differentiated on performance and to improve the end-customer experience – specifically in Wi-Fi, LTE, 5G, and GNSS integrated systems.

Expand and innovate in connectivity: We are transitioning from being exclusively a component manufacturer to a wireless systems solution provider. This transition started with the acquisition of NimbeLink in 2021 which brought expertise in asset tracker solutions and augmented our historical RF expertise with digital systems design, firmware, and cloud capabilities. We also launched AirgainConnect AC-HPUE – an integrated antenna plus high-power LTE modem targeting first responders and utilities. AC-HPUE provided invaluable experience for launching complex systems into new markets. Our focus since then has been on forming the internal building blocks, from talent to partnerships, to expand our connectivity offerings. In 2023, we announced our Lumos 5G Fixed Wireless Access Antenna, our Lantern 5G Outdoor Fixed Wireless Access solution, and our Lighthouse TM Smart Repeater platform. We recently announced our AirgainConnect Fleet (AC-Fleet) 5G Vehicle Gateway and our Smart LanternTM hybrid beam forming FWA solution. Our focus is on driving these innovative connectivity

products to market and increasing our overall serviceable available market (SAM).

The following graphic provides a summary of our estimated SAM within each of our three markets. Based on publicly available market research and internal estimates, we project the SAM will grow from $1.3 billion in 2023 to $2.2 billion by 2024 and to $3.5 billion by 2025. While we estimate the consumer SAM to be relatively flat, we project the automotive SAM to grow with the launch of the AC-Fleet vehicle gateway, and we project the enterprise SAM to continue to expand, driven by asset trackers and Lantern 5G Fixed Wireless Access devices, and the anticipated market entry and growth of the Lighthouse smart repeaters.

Airgain Estimated SAM ($B)

Sales and Marketing

Our sales and marketing organizations work together closely to improve market awareness, build a strong sales pipeline, and cultivate ongoing customer relationships to drive sales growth.

Sales

Our global sales efforts consist of direct and indirect sales teams, and indirect channel partners. Our direct sales team consists of sales personnel based in the United States, Greater China, South Korea, and Europe, while our indirect channel partners consist of distributors, engineering design companies and outside sales representatives across North America, Asia, Europe, Australia, Middle East, and Latin America.

Our direct sales team is engaged in pre-sales, account management, and creating partnership opportunities with third parties such as service providers and – OEMs. The sales process includes meeting and qualifying potential customers, and actively managing the planning stage of devices they project to bring to market. Our field application engineers (FAEs) assist these programs by providing technical support to existing customers.

Our indirect channel partners provide lead generation, pre-sales support, product fulfillment and, in certain circumstances, post-sales customer service and support. This channel partner network often co-sells with our direct sales team. Our channel partners provide us with additional sales leverage by sourcing new prospects, providing technical support to existing customers, upselling additional use cases, and maintaining repeat business with existing customers. These channels partners provide added coverage to customers and prospects we cannot reach directly.

Marketing

Our marketing strategy is focused on building a competitive advantage for our brands and products in the marketplace. We target two types of customers. For embedded products such as our NimbeLink modems and consumer antennas, we target design teams within OEMs and ODMs. For our integrated products, such as our asset trackers, FWA Lantern, and AirgainConnect AC-Fleet, we target end user markets. We use both direct and indirect promotional methods to engage our audiences. Direct methods include advertising, web properties, marketing collateral, email campaigns, paid and organic social media, search engine marketing, media relations, content marketing, direct mail, tradeshows and events, and general lead generation tactics. Indirect methods include co-marketing efforts together with resellers, distributors, system integrators, hardware and software partners, and carriers both domestically and internationally.

Manufacturing and Operations

We are fabless and rely on a number of contract manufacturers (CMs) located in the United States, China, Taiwan, Vietnam, and Mexico. We generally have long-term relationships with our CMs, and we work together to control global product compliance, raw materials supply and cost, production part approval processes, assembly instructions, control plans, final testing, and on time shipment to our customers. We provide the control, test and measurement plans to the CMs to help ensure that each product conforms to the Airgain specifications, and we monitor the quality performance of our CMs through quality reports and periodic audits.

We maintain a close direct relationship with our CMs to help ensure that supply and quality meet our requirements. The contract manufacturing services required to manufacture our products can be satisfied by one or more of our CMs, however it may be time consuming and costly to qualify and implement new CM relationships. If one of our CMs suffers an interruption in their business, or experiences delays, disruptions, or quality control problems in their manufacturing operations, our ability to ship products to our customers could be delayed, and our business could be adversely affected. Our qualified CMs manufacture products according to our design specification, materials specification, quality standards, and delivery requirements. We have full control and authority over the selection of materials, manufacturing, and inspection processes. Since our products manufactured in China are predominantly shipped to ODMs and CMs within Asia, we have not experienced a significant impact as a result of the tariffs imposed on exports from China to the United States.

Research and Development

We invest considerable time and financial resources in research and development to engineer and deliver our products and solutions to market, while also enhancing our design and system integration capabilities and conducting quality assurance testing to improve our technology. As of December 31, 2023, we had a total of 63 employees engaged in research and development. Our engineering teams are located at research, design, and test centers in California, Arizona, Texas, Minnesota, and Florida, as well as the United Kingdom and China. Our engineering team actively participates in research and development activities to expand our capabilities and target applications for the consumer, enterprise, and automotive markets. We expect to continually expand our product offerings and technology solutions over time and to continue to invest significantly in ongoing research and development efforts.

Seasonality

Our operating results historically have not been subject to significant seasonal variations. However, our operating results are affected by how customers make purchasing decisions around local holidays in China. Although it is difficult to make broad generalizations, our sales tend to be lower in the first quarter of each year compared to other quarters due to the Lunar New Year. A general weakening of economic conditions may contribute to slower sales. Results for any quarter may not be indicative of the results achieved for the full fiscal year, and these patterns may change due to general customer demand or product cycles.

Competition

Because of our broad product line across several categories in the value chain, our competitive landscape is diverse and rapidly evolving.

Solution Providers

This category represents companies that manufacture a wide variety of products across the value chain including end-device hardware, software, components, services, and more. This includes Digi International Inc., Laird Connectivity, Multi-Tech Systems Inc., Nextivity Inc., Pulse Electronics, Samsara, Semtech , TE Connectivity, and Wilson Electronics, among others. With our shift in business model towards solutions, many of these companies are direct competitors. While some partnership opportunities do exist, most of these companies strive to solve similar problems as us with their broad portfolios and consultative sales approaches.

End-Device Manufacturers

This category represents companies that manufacture off-the-shelf products that are market ready, such as routers, gateways, cellular adapters, and more. This includes suppliers of vehicle networking platforms and fixed wireless devices. These manufacturers can act as customers, partners, or competitors to us, depending on the application and relationship. An end-customer may choose to bypass the design process entirely and purchase an off-the-shelf product to deliver device connectivity rather than embedding our modems and antennas. Our integrated products, such as the AC-Fleet, Lantern FWA (Fixed Wireless Access) and asset trackers, may compete directly with these off-the-shelf products or enhance their functionality. In addition, our Antenna+ product line is designed to enhance the signal and coverage of many of these devices.

Component Manufacturers

This category represents companies that manufacture a broad array of components that compete both directly and indirectly with our products. This includes Adant Technologies Inc., Asian Creation Communications Factory, Kyocera AVX, Baylin Technologies Inc., Blues Wireless, Fibocom, Fractus S.A., Honglin Technology Group Ltd., MobileMark, Nordic Semiconductor, Panorama Antennas, Parsec Technologies, Inc, Particle Industries Inc., PCTEL, Inc., Pinyon Technologies, Inc., Qualcomm, Quectel, Semtech, Sunwave Communications Co., Ltd., Telit, Ublox, Taoglas Limited, Wanshih Electronic Co. Ltd., WHA YU Industrial Co., Ltd, and 2J Antennas Group, among others. While we may choose to partner with some of these manufacturers to deliver products that shorten time to market, customers may also choose to complete the more intricate design work on their own using products manufactured by these companies

In-house Design and Engineering Teams

Several of our existing customers, including OEMs and ODMs which design and build complete wireless devices, also have internal resources to design, engineer, and produce antenna and modem solutions. In such cases, we compete against the captive resource of that ODM. Several ODMs, including Arcadyan Technology Corporation, Foxconn Electronics Inc., Gemtek, Zyxel Communications, Inc. (MitraStar Technology), and Wistron Corporation, design, manufacture, and sell complete wireless devices, in direct competition with us.

The principal competitive factors in our markets include: price and total cost of ownership as a result of reliability and performance issues; brand awareness and reputation; component performance, such as reliability, range and throughput; ability to integrate with other technology infrastructures; offerings across breadth of wireless products; design and testing capabilities; lead-time and flexibility to rapidly customize solutions to individual customer requirements; relationships with semiconductor/chipset vendors; intellectual property protection; and the ability to solve many complex RF problems across the entire spectrum of broadband connectivity.

Intellectual Property

We rely on patent, trademark, copyright and trade secret laws, confidentiality procedures, and contractual provisions to protect our technology.

As of December 31, 2023, our intellectual property portfolio comprised more than 280 patents that have been granted or applications that have been made public and submitted across the United States, Europe, and Asia. The scope of these patents encompasses our product offerings and technological advancements, with their terms of validity extending from the year 2024 until 2040. This patent collection encapsulates a diverse array of innovations pioneering antenna designs and structures, as well as the assembly and fabrication processes for a comprehensive spectrum of wireless communication technologies, including cellular, Wi-Fi, Bluetooth (BT), and Global Positioning System (GPS).

In line with our strategic evolution from a component supplier to a provider of comprehensive wireless system solutions, we have systematically grown our patent repository, escalating our filings to include broader wireless system functionalities and infrastructures.

Taken together, these patents with priority dates as far back as November 2003 form both a barrier to competition and a licensable asset for customers in the MIMO and antenna assembly categories.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary. We generally enter into confidentiality agreements with our employees, consultants, vendors, and customers, and generally limit access to and distribution of our proprietary information. However, we cannot ensure that the steps taken by us will prevent misappropriation of our technology. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States.

Our industry is characterized by the existence of many patents and frequent claims and related litigation regarding patent and other intellectual property rights. Leading companies in the technology industry have extensive patent portfolios. Third parties, including certain of these leading companies, may in the future assert patent, copyright, trademark and other intellectual property rights against us, our channel partners, or our customers.

Human Capital

As of December 31, 2023, we had a total of 122 employees and dedicated representatives, including 83 in the United States and 39 outside the United States. Among the total 122 employees and dedicated representatives, 63 were primarily engaged in research and development, 33 were primarily engaged in sales and marketing, 21 were primarily engaged in general and administration functions and 5 were primarily engaged in manufacturing operations. None of our employees are covered by a collective bargaining agreement or represented by a labor union. We consider our relationship with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, and incentivizing our management team and our employees and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and motivate personnel through the granting of stock-based and cash-based compensation awards to align our interests and the interests of our stockholders with those of our employees and consultants.

Available Information

We file electronically with the Securities and Exchange Commission, or SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. We make available on our investor relations website at investors.airgain.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The public may read or copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website iswww.sec.gov.

We use our investor relations website as a means of disclosing material non-public, information and for complying with our disclosure obligations under Regulation FD. Investors should monitor such website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information relating to our corporate governance is also included on our investor relations website. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.