Alexis Waadt - Director, Investor Relations Charles Myers - President and Chief Executive Officer Leo Johnson - Chief Financial Officer.

Anil Doradla - William Blair Tom Sepenzis - Northland Capital Karl Ackerman - Cowen & Co. Paul Duggan - Jackson Capital.

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.

Waadt who will provide the necessary cautions regarding the forward-looking statements made by Management during today’s call. .

Thank you and good afternoon everyone. Please note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act.

I caution listeners that during this call, Airgain Management will be making forward-looking statements about future events and Airgain’s business strategy and future financial and operating performance, including for the remainder of 2017 and 2018.

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.

These forward-looking statements should be considered in conjunction with and are qualified by the cautionary statements contained in Airgain’s earnings release and SEC filings, including its Form 10-Q which we expect to file by November 15, 2017.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 09, 2017. Airgain undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call.

This conference call may include a discussion of non-GAAP financial measures, including non-GAAP net income, non-GAAP EPS and Adjusted EBITDA. Please see today’s earnings release which is posted on Airgain’s website for further details, including a reconciliation of the GAAP to non-GAAP results.

Any discussion of non-GAAP measures is not intended to detract from the importance of comparable GAAP measures. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the Company’s website at www.airgain.com.

Following Management’s prepared remarks, we will open up the call for questions from Airgain’s publishing sell-side analysts and major institutional shareholders. Now, with that, I would like to turn the call over to our President and CEO, Chuck Myers.

Chuck?.

Thanks, Alexis. Welcome everyone and thank you for joining us today. After the market close we issued a press release announcing our results for the third quarter ended September 30, 2017 which is available on the Investor Relations section of our website.

Let me begin by reiterating our guidance of 12% to 15% revenue growth for 2017 and 20% for 2018 which we originally issued in a press release on September 7th. As we noted in that release we identified a slowdown in our carrier deployments.

While delayed we see definitive momentum for our cable deployment entering the first half of 2018 ramping the full production in the second half of 2018. We're encouraged by overall results for the third quarter and for the first nine months of the year.

In fact our sales for the first nine months of 2017 increased 19.2%, demonstrating our business is progressing according to plan. This result is perhaps even more impressive when you consider the fact that we successfully replaced nearly $7 million of 2016 sales from LeTV, a long standing customer who dropped their product line.

We have shown tremendous resilience in adapting our business to replacing this revenue stream with continued organic growth and expansion into faster growing adjacent markets like automotive.

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

Our aim during 2017 is been to execute on these key initiatives. We're on a position to grow rapidly, and drive significant leverage in our model.

In a moment I'll share some of the specific proof points and early milestones in our strategy which fit nicely into our discussions of where we are headed next but before I do I'd like to turn the call over to our CFO, Leo Johnson who will walk us through the financial highlights.

Leo?.

Thank you, Chuck and good afternoon everyone. Let's turn to our financial results and highlights for the third quarter and nine months ended September 30, 2017. Our sales for the third quarter totalled $12.4 million which is slightly higher than the same period a year ago.

It's important to note as Jeff alluded to that we had a strong revenue contribution last year from LeTV. In contrast LeTV's contributions this year have been minimal due to the product line being abandoned.

The positive takeaway from all this is we have entirely offset this revenue stream to our core embedded antennas and through the acquisitions of the assets of Antenna Plus which has propelled us into the rapidly growing and largely untapped automotive market.

Now turning to the first nine months of 2017, our sales increased 19.2% at $36.7 million from $30.8 million in the same period a year ago. The nine month increase was primarily driven by increases in our product sales. The increase was also driven by the acquisition of the assets of our automotive business.

Some of the other financial highlights during the quarter include, gross profit increasing 7.7% to $6 million or 48.2% of sales per $5.6 million or 44.8% of sales in the same period a year ago.

Net income attributable to common shareholders totalled $234,000 or $0.02 per diluted share on 10.2 million shares compared to $861,000 or $0.16 per diluted share based on 6.7 million shares of in Q3 of last year. Cash plus investment of $36.6 million is consistent with prior quarter.

Cash provided from operating activities of $748,000 was offset by cash used in financing activities of $732,000 which included the stock buyback. In August our board announced a $7 million share repurchase program, during the quarter we repurchased 52,200 shares for an aggregate amount of $468,000 at an average price of $8.98.

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

This completes my financial summary. I'll now turn back over to Chuck.

Chuck?.

Thanks, Leo. Picking up from where I left off we have achieved tremendous success throughout 2017. Starting with our connected home market we've successfully expanded our presence with U.S. and European carriers.

To illustrate this with the addition of the third Tier 1 carrier, our customer base now covers approximately 50% of the broadband users across the U.S. market. We have engagements throughout the streaming content ecosystem including access points, gateways and OTT streaming devices.

As new applications proliferate almost daily the number of broadband connected devices and antennas per device are growing creating opportunities besides the most complex wireless connectivity challenges both now and in the future.

With our technology and expertise we have the power to drive today's hyper connected world, while we have established a strong and resilient market presence in the connected home where we're leveraging this position to advance in the new market particularly automotive which is a huge area of focus for us.

Acquiring the assets of Antenna Plus has been instrumental in our entry into this market but the road only begins there. The demand for complex connectivity is continuing to rise tremendously and we're seeing very strong signs of this in the connected car space.

At Airgain we combine the best engineering and brightest minds to deliver high performance solutions. Our focus is on in-vehicle, vehicle to vehicle and vehicle to infrastructure application. We're solving the most complex connectivity challenges in the automotive space.

We're heading in a positive direction in terms of investing in the right people, products and partnerships to get us to the next stage of growth. Earlier this month we announced that we were accepted as a member of the 5G Automotive Association or 5GAA.

As you may know 5G is a next generation of lateral [ph] standards and technologies that enable gigabit connection speeds, ultra-low latencies and billions of connected devices. 5GAA is the industry group facilitating 5G's expansion into the automotive marketplace.

The 5GAA membership is an important relationship for us and reiterates our commitment to the research and development of new advanced solutions for the connected car. With our portfolio of cellular GPS and WiFi solutions we're well positioned to become an influential leader in the connected mobility and automotive space.

Through this relationship and the request of our future OEM customers we've been expanding our R&D investments to accelerate our position with Tier 1 and Tier 2 suppliers to the worldwide automotive market. We are seeing strong and encouraging initial results.

Our automotive fleet business plays exceptionally well in this space and is further validating our decision to acquire these assets earlier this year. As an example we now shift into a new program which enables live streaming the body camera for first responders using Bluetooth cellular and GPS antenna system.

The video can be streamed through an in-vehicle access point to a central communication center. Another opportunity in this arena that is worth mentioning is a First Responder Network Authority or FirstNet Initiative.

FirstNet is an independent authority tasked with establishing, operating, maintaining an interoperable public safety network across the U.S., already 28 states have adopted into this initiative. The FirstNet network currently operates within our existing IoT and public safety network product set.

As you can tell we're excited about the potential in the automotive intelligent fleet management space. Given our promising start and diverse portfolio connectivity solutions, our continued investment in partnerships, we believe we're on track to establish a strong foothold in this market and further diversifying scale our business.

Since we've started in the automotive business we have developed significant big visibility into the OEM market, that's just beginning to scratch the surface we believe revenues will be approximately 15% of our business in 2018.

In summary Q3 was another important quarter highlighted by continued profitability and the addition of new customers and project. Over time as we expand our growth we believe we will be in the solid position to drive further operating leverage into our model.

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

While we continue to look prudently for attractive acquisition opportunities we remain focused on pursuing the multiple organic growth opportunities in front of us especially in our four key areas of automotive, connected homes IoT and enterprise.

With an ever increasing number of wireless devices performing vastly more complex and critical task, Airgain is positioned as a global enabler for high performance wireless connectivity. With that we're ready to open the call for your questions. Operator, please provide the appropriate instructions..

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

Good afternoon Chuck and Leo and congrats on the results especially on the DOCSIS stuff. I had a couple of questions. So Chuck clearly you know your commentary on the DOCSIS trends both from the first half and second half point of view you know highlights a lot more clarity and confidence.

Can you share some data points or trends to suggest your incremental confidence on that part of the business? It seems that you have better visibility?.

Yes I think we started—thanks Anil.

I think we started to see visibility on that you know kind of in September when we wanted to identify the situation as it was going on there and I think it's been there's public information out there now even through other providers of technology to these carriers and what we started to notice is there were just slowdowns from a variety of—for a variety of different reason some technical, some just operational and as we look in as we go into the year we're starting to see that those hurdles haven't been overcome and we're starting to get much better clarity on how we think these are going to shift in the first parts of next year.

We look at the first half, we really see one big significant vendor beginning deployments with one of the major carriers and we see the second one coming on either maybe late first quarter but we see them really ramping up to full speed in the third or fourth quarter to supplier our carrier customer .So we're pleased with where that sits right now and as always we will keep an eye on it.

.

Switching gears to the auto stuff, glad to know and see that 50% of the contribution could come from that segment in '18 which should be positive on the ASPs and all that stuff but could you remind us once again Chuck your visibility in the auto, can you share some design wins that you guys have? Whether this came through Antenna Plus or was it organically from Airgain?.

The auto business as it exists today its primarily in the aftermarket fleet business and where you really using that is the springboard into our OEM space.

I can't share individual OEM wins at this point but we hope to be now announcing some of those in the near future as with our carrier space we're always hamstrung a little bit by some confidentiality and things. So we hope to announce how those play in the OEM space in the near future..

Great. If you don't mind me squeezing in one more.

The buyback clearly out there, so are you active on the buyback, could we expect you guys to be active over the next three months?.

I will let Leo jump on that one..

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

All right. Wonderful. Congrats guys and we look forward to an exciting 2018..

Thank you, Anil..

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

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

Just curious what percentage of the mix is auto now if it's growing to 15% at the end of '18?.

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

Yes, that’s okay.

I'm just wondering what the percentage of the mix is automotive right now if it's growing to 15% at the end of '18?.

Sure, automotive is right around, it's just about a little bit but right around 10%..

Okay. Thank you.

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

No that’s not..

Thank you. I know you can't talk directly but clearly one or two of your carrier partners have set back from roll-outs.

Is that mainly from a churn perspective or is it technical reason and when do you think you're going to see that start to resume next year?.

Well I will go back to what we stated. We're starting to see that now we expect that to ramp up in the first quarter and through the first half of next year and then ramp up even larger in the second half of next year.

We see more churn from one customer so we see that still continuing ship from our core product set as they go through their gyrations and clarifying their own rollout strategy but I think the biggest one as we see it next year we see very positive signs looking forward. .

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

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

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

Thanks very much..

Thanks..

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

This is actually Tom calling in for Craig. Thanks for taking my questions guys.

My first one relates to your fiscal year '18 guidance which you've provided, can you provide or further clarify, provide some additional color on the growth trajectory across your end markets and then relatively on the OpEx side of the equation how should we think about the OpEx evolution over the second half of fiscal year '18 versus the first half given what you guys expect in connected homes and also auto?.

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

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

We can—I mean it's probably a different subject for a different time but we see they were all—we see our total growth being about 20% next year.

I think if you look through industry reports you see kind of the connected debt automotive space moving 20% to 25% next year and you see kind of the access point business growing anywhere up to 8% to 11% so you can kind of see where that growth if you mould those two together where we start to see the growth internally..

Thank you.

Thank you for that color and then the second half of my question related to the OpEx and the OpEx intensity that would support that type of growth rate, the 20% you were initiated back at September? How should we look at progression of the OpEx?.

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

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

Okay, that's very helpful. Thanks guys..

Thank you..

Thank you. [Operator Instructions]. Our next question comes from the line of Karl Ackerman with Cowen & Co. Please proceed..

Hi. Thank you for taking my questions.

I apologize if this was asked already but Chuck and Leo, given the near-term pause and roll-outs of next generation home gateways, this does seem to already be embedded in your revenue trajectory for 2018 but does it hurt assuming this will be more back-half weighted in the year and then secondarily could you give us any metrics in terms of design wins or traction that you're having with other leading global carriers as those next gen boxes you know proliferate beyond the primary cable operators in the United States and I've a follow up please..

Okay.

Let's start with in terms of design wins we feel you know in terms of the design wins that are going out right now, best estimate in kind of the new broadband designs that we're in, not necessarily the roll-outs we're probably close to 50% in terms of our existing customers maybe even a little better so I'm going to be conservative on that and we—the back half weighting really comes from the vendors providing.

You know we're looking at it pretty granular because we want to make sure that we're forthcoming as we have the knowledge to be so this is our best guess and we're being fairly conservative with our estimates because we want to make sure that we're conservative as we were in September when we really started to see some of the penetration slowed down and we think we've addressed it going forward now and I'll just reiterate what I said you know we think we're going to start to see pretty good traction on notice in the first and second quarter and more traction in the second half of next year.

That could shift by the way, it could pull in but I don't want to be overly optimistic. We're really basing our growth on pretty conservative estimates of that roll-out in this year because we don't want to get burned shall we say..

Understood. I appreciate that. For my follow-up question in the past you've talked about becoming more aggressive in winning new business within automotive and IoT and the Antenna Plus acquisition certainly strengthened your footprint there.

Are those design you talked about driving 15% of your revenue in 2018 weighted more towards the first half of the year and could you just talk about the linearity of how you see the contribution from automotive in 2018 and maybe strategically how you see that market evolving as a portion of your overall mix in the next few years. Thank you..

Well I think, you're welcome, in the next few years we see automotive becoming a pretty significant piece of our business.

We've always said from early on you have to be an expert at something and when we started really focusing on this business we thought that we became the expert in the connected home space but obviously the proliferation of the devices is growing substantially and we've always believed the connected auto will be a big deal not just in the autonomous part but really just in basic connected cars in terms of minor rollouts, 5G rollout, LTE, but we also know that as most people understand the model [ph] years that we're working on in a lot of the OEM things the long term ones can be a year or two out where so when we looked at the Antenna Plus acquisition and other acquisitions that we've been kind of following in that area, we saw that we needed something to help kick start the market and have a beachhead for how we talk to the OEM's.

The OEM markets are fickle, they look for long term players I mean you have a lot of long term players like guys like [indiscernible] and Continental and Bosh and they need to know that you have a pretty strong understanding and a critical eye towards the automotive space and that's how we looked at the Antenna Plus acquisition and we really see that rolling out, it's a beachhead to help us win those OEM bids and so far we're starting to see some preliminary success in that area..

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

You know from a capital allocation standpoint how should we think about the share buyback program being used given where your stock is today and could you talk about your priorities for your own investments in R&D, in marketing efforts as you look to aggressively grow the top line not only in 2018 but also you know in ensuing years..

I'll let Leo touch on the stock buyback..

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

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

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

Yes, and I will echo or build on what Leo said. Our R&D spend it's—so much of a design is done before we actually have the win, there's actually not a lot of R&D that goes into it after we have the win because they become very technically competitive. So that's how you see that.

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

Thank you..

Thank you..

Thank you. [Operator Instructions]. Our next question comes from the line of Paul Duggan with Jackson Capital. Please proceed..

Good afternoon gentlemen. You say if there is something opportunistic, are stock trades today below it's IPO price and it trades at about 50% of the secondary price. The stock if you subtract the cash per share it's traded about 0.8 times revenue when our competitors traded over two times revenue.

So I don't know what could be more opportunistic than buying shares here between $7 and $9, I don't know, are waiting for it to go to $5. I don't know what—it doesn't make sense when—what would opportunistic be if it isn’t now with the stock price well below our IPO..

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

I'm asking—you can delegate the buyback to a broker but the point there -- I don’t how do you define opportunistic when we're trading the stock has been sold off from $14 range in the last three months, to under $7.5, it’s unbelievable price for the company to repurchase their shares at less than one times revenue..

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

2200 shares..

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

I'm saying we've only purchased 52,200 shares with our stock price declining month over month.

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

We agree with you, Paul..

But you're not buying. There seems to be a conflict, if you agree then you would be buying but you've only purchased 52,000. I would have expected the $7 million to have been spent, not $450,000..

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

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

So you could check with someone on that but that’s -- I have been involved in number of public brokers who would buyback and that’s what our SEC lawyers tell us. If you delegate it to a broker the broker is not blacked out. Check with your counsel..

We shall..

Okay. Thank you..

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

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

Thank you for joining us today for Airgain's third quarter 2017 earnings call. You may now disconnect..