Airgain, Inc. (NASDAQ:AIRG) Q1 2021 Results Conference Call May 10, 2022 5:00 PM ET

Company Participants

Jacob Suen - Chief Executive Officer
Morad Sbahi - Senior Vice President of Product and Marking
Victor Blair - Senior Vice President of Operation

Conference Call Participants

Scott Searle - ROTH Capital
Alessandra Vecchi - William Blair
Anthony Stoss - Craig Hallum
Craig Ellis - B. Riley Securities
Tim Savageaux - Northland Capital Markets

Operator

Good afternoon. Welcome to Airgain’s First Quarter 2022 Earnings Conference Call. My name is Karen, and I will be the coordinator for today’s call. Joining us for today are Airgain’s CEO, Jacob Suen; Senior Vice President of Product and Marking, Morad Sbahi; and Senior Vice President of Operation, Victor Blair.

As a reminder, this call will be recorded and made available for replay via a link available in the Investor Relations section of Airgain’s website at www.airgain.com. Following management’s prepared remarks, the call will be opened up for questions from Airgain’s publishing sell-side analysts.

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. 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 are qualified by the 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, May 10, 2022. 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.

Now, I would like to turn the call over to our CEO, Jacob Suen. Jacob.

Jacob Suen

Thank you, Operator. Welcome, everyone, and thank you for joining us on the call today. I will start with some commentary about our Q1 highlights and financial results. Then our Senior Vice President of Product and Market Morad Sbahi will provide an update on our product and marketing initiatives. After words our Vice President of Operations Victor Blair will provide an update on our key operational initiatives.

Airgain’s mission to connect the world to optimize integrated wireless solutions is building momentum demonstrated by the 24% sequential top line growth we deliver in Q1. This robust growth was a result of successful initiatives in penetrating the connectivity market by providing high quality products and solutions to the enterprise, automotive and consumer markets.

While those newer to our company, the consumer market encompasses a large growing set of consumers using wireless enabled devices, including wireless gateways, smart home devices, and more. While utilizing technologies like Wi-Fi, LTE, 5G and LTE link.

The enterprise market is characterized by providing solutions for reliable wireless connectivity in dense environments, such as buildings, stadiums and transportation terminals. And in the automotive market, our products are deployed in a wide range of vehicles to support a variety of wireless connectivity solutions in the fleet, and automotive aftermarket segments.

Historically, the consumer market was the foundational pillar to our model. Today, we see the largest and fastest growing opportunities in the automotive and enterprise markets. Demand for greater wireless connectivity across fleets. It is increasing, causing end users software and hardware partners, carriers and integrators to turn to Airgain Solutions.

Additionally, they are spending IoT use cases across various industries, including asset tracking, logistics, packaging and supply chain management. It is creating significant demand for our NimbeLink IoT solutions.

Along that line, the partnership we formed with Cloudleaf, a SaaS based digital supply chain platform. In January exemplify Airgain’s horizontal integration of existing solutions. NimbeLink assay truckers now assist Cloudleaf comprehensive supply chain SaaS platform by providing location and conditional monitoring of critical components in Cloudleaf’s customers supply mechanisms.

Our many partnerships over the previous quarters saw the successful ecosystem, we are building to meet the needs of our growing growth oriented markets. Our recently announced collaboration with Mobix Labs highlights how Airgain expertise in 5G millimeter wave and C Band applications can provide lasting future to 5G technology to meet market demand and bolster our aimed vertical markets.

In addition, several of our major wins, saw the growth in market demand for the products we are building. This includes a recent win with a major U.S. based water utility company that is selected AirgainConnect AC/HPV to improve the connectivity of each fleet. The deployment of AirgainConnect will enable optimum connectivity for their fleet, even in the most remote environments. In the first 3,000 units will be fully deployed by the end of 2022.

This customer win is significant, not only because of its volume, but the fact that we are seeing sizable new market opportunities for AirgainConnect beyond the first responder market. To meet the growing demand for advanced connectivity.

Airgain launched the multi max 5G, a high performance antenna platform created for 5G connectivity in fleet industrial IoT in public safety applications. With the introduction of so many new 5G vehicles or others in the market, it was critical for us to provide flexibility to our customers to get the most out of the growing 5G suite of products we over.

The growing partnerships in customer wins not only reflect the increasing demand for Airgain’s innovative technology, but also our world class global team, who is committed to realizing our Company’s vision is scaling our business.

Our search for next CFO is progressing and being lead by them national executive search firm. We are being patient to find the right CFO to build on our solid foundation and take us to the next level of growth and profitability.

On that note, I will discuss our financial results for the first quarter ended March 31, 2022. Revenue increased 24% sequentially to $17.5 million, up from $14.1 million in Q4 of 2021. Beginning with our consumer revenue, Q1 finished at $6.1 million, up from $2.5 million in Q4 of 2021. The growth in consumer revenue was due to continued easing of global supply shortages.

In the past, revenue increased from $8.1 million in quarter four 2021 to $8.6 million in Q1 of 2022. The growth in enterprise revenue was mainly due to higher revenue generated from the enterprise Wi-Fi Access Point products.

Although automotive sales declined from $3.5 million in Q4 of 2021 to $2.8 million in Q1 of 2022, primarily due to lower sales from AirgainConnect products. Thus, we worked on product enhancements that resulted in fewer shipments during the quarter.

These enhancements have now been completed. Overall, the market demand for Ageing connects AC/HPV continues to improve and the backlog for the product has grown substantially since the beginning of the year. This positive momentum is expected to continue to 2022 and beyond.

Our non-GAAP gross margin was strong, a 41.4% well exceeding our previous guidance range for Q1. The substantial improvement in gross margin was primarily due to the favorable sales mix in the quarter, including increased sales of consumer products, which yield a higher gross margin in lower materials in other production related costs.

Non-GAAP operating expense of $7.7 million was slightly above our guidance range, mainly due to higher than anticipated professional fees. Non-GAAP net loss in Q1 was $431,000. And our non-GAAP loss per share was $0.04. Both represent substantial improvements from the prior quarter.

Adjusted EBITDA was negative $263,000 in Q1, an improvement from our guidance wrench and an improvement from negative $2.1 million in Q4 of 2021. Finally, our balance sheet remains strong with cash, cash equivalents and restricted cash a quarter end of $18.8 million.

NimbleLink exceeded the earnout financial performance metrics matrix for 2021. And we paid $8 million in earnout, plus $570,000 in whole back. Posts earnout payments, we will have approximately $9 million in cash and $4 million in credit facility.

Now, I would like to provide a preliminary outlook for the second quarter ending June 30, 2022.

In Q2, we expect sales to be in the range of $18.5 million and $20 million or $19.25 million at the midpoint of the range.

Our billing and backlog are currently trucking over our projected target for revenues in Q2. On that line, as we look ahead deeper into 2022. We believe the growth from enterprise and automotive markets will outpace that of the consumer segment moving forward. The consumer markets will remain a healthy business for Airgain, but will represent increasingly smaller percent of the total revenue, because of broader growth in the other two markets.

We expect non-GAAP gross margin for the second quarter to be in the range of 38.5% to 42.5%. We expect Q2 non-GAAP operating expense will be about $7.7 million plus or minus $200,000. Non-GAAP net income per share for Q2, it is expected to be $0.01 at the midpoint. Adjusted EBITDA is expected to be $260,000 at the midpoint.

Now, I would like to turn the call over to Morad, who will walk us through our sales and marketing initiatives for 2022. Morad.

Morad Sbahi

Thanks, Jacob. Our sales and marketing teams created an efficient and comprehensive and flexible framework to further penetrate our core growth markets. We internally call the framework the three Es, which are evolution, ecosystem, and expansion.

The evolution pillar represents our current list of products, as well as new versions of those products, and subsequently the wins associated with those offerings. The one that Jacob referenced with the major utility company to deploy again connect products at a large scale represents a solid example of how our products evolve and improve based on customer feedback and data from the field.

The next E is ecosystem, which focuses on the partnerships we are forming with leading software developers, components and device manufacturers, channel partners and carriers. Generally, there are two types of partners, namely partners that we sell to and partners that we sell with. The sell to partners are those, we sell our products and solutions directly to a good example of this is Exon leader and connected public safety technologies.

Airgain designs and builds a range of small form factor and high performance antennas for use in Exon Solutions, which are primarily used in first responder vehicles. And other example is our work with Cloudleaf assess based digital supply chain platform.

Cloudleaf platform leverages supply chain, edge, IoT, and contextual data to provide one of the world’s leading end-to-end supply chain digital twin solutions to manage risk and volatility in product flows.

Cloud leaf is partnering with air gain to utilize our asset trackers to monitor not only location, but environmental conditions such as temperature, humidity, motion, and more to increase the quantity and the quality of data inputs on their operations platform.

Our sell with partnerships represent joint selling opportunities where Airgain goes to market with the partner prime example this is Airgain’s antenna solution set for cradle point routers and gateways.

Cradle point has an extensive portfolio of enterprise class wireless routers and adapters, and their solutions span branch connectivity, IoT and mobile in vehicle networks. Airgain provides the high performance antennas it recommends for cradle point.

Simply put, we are able to couple our products with existing systems, which leads not only to join sales opportunities, but also lead sharing agreements. We frequently receive requests for these arrangements for our asset trackers, aftermarket antennas and with our AirgainConnect products.

In addition, there is a growing opportunity for these types of partnerships with our embedded products. The final E of our framework is expansion, representing our development of future technology. The mobile labs collaboration is a great example.

The collaboration is intended to provide new growth opportunities for both companies, as the combined solution would serve multiple industries such as consumer electronics, infrastructure, automotive and IoT, combining Airgain expertise and 5G systems and Mobix Labs expertise in system on chip design.

The collaboration will focus on development of products designed to significantly reduce the cost of ownership and provide solutions in 5G coverage gaps among carriers that fall within the high band millimeter wave anti band operating frequencies.

With the third E expansion, we are establishing Airgain technology leadership in the space of a dense development and leading edge connectivity. Looking ahead, that is exactly where Airgain is positioned as the company becomes synonymous with the concept of wireless technology leadership.

In recognition of our advancements over the quarter, we were honored to receive the Andrew Siebel award for technology innovation by the Public Safety Broadband Technology Association. This illustrated our dedication to producing and providing technology for customers that has a lasting and multifaceted use case value.

Looking ahead, our product suite is aligned with the expanding demand from our markets and customers. In addition, we are focused on leveraging Airgain proven expertise in radio frequency to help build world class hardware coupled with software solutions that often run across multiple product lines.

To deliver on our strategies, we have added four positions in marketing in just the past 45 days. The bolster sales and marketing teams will continue to work to engage the customers on all the incredible advancements our products and engineering teams have accomplished.

Now, I would like to turn the call over to Victor to give an operational update. Vic.

Victor Blair

Thanks Morad. As Jacob alluded to Airgain’s operations team has fully implemented strategies to maintain and grow the gross margins across the breadth of the Airgain product offering.

The Company’s gross margin performance in Q1 is solid evidence that the execution of the various programs we have put in place are delivering the expected outcomes. Macroeconomic headwinds still affect the world economy, as we see manufacturing shutdowns in various provinces of China.

Despite this, we were able to both mitigate and overcome this issue with our implemented manufacturing redundancy strategy, with the expressed goal to reduce the risk factors of the supply constraints.

With the closing of our manufacturing plant in Arizona, and the addition of two manufacturers, we now have eight independent contract manufacturers two in Vietnam, two in China, and four North America.

The consumer and embedded components and modules are manufactured in Vietnam and China. Meanwhile, the integrated antennas plus products are manufactured in Vietnam and North America, I am pleased to announce that Airgain is now 100% fabulous.

Taking this step has given Airgain greater scalability, while mitigating risks surrounding manufacturing halts in countries and municipalities where governments and markets are subject to different fluctuating macroeconomic forces.

Additionally, to mitigate the effects of widespread supply shortages, we have selectively built and purchased inventory in advance that, along with flexible product designs to align with material availability, have properly positioned Airgain to efficiently and productively manufacture and ship products on foreseeable timelines to greater match demand.

Now, I will hand it back over to Jacob to close out our remark. Jacob.

Jacob Suen

The theme for this year is execution. Our global team is laser focused on executing our strategic roadmap, which is designed to scale Airgain to the next level of growth and profitability. As you can see from our Q1 numbers, our strategy is working.

We have discussed the big wins that demonstrated the demand for our current products. We have touched on the many partnerships and paths will take for future collaborations. We also share our vision for events development that will carry us into the future.

Moreover, our focus on driving profitable growth. Optimizing our cost structure in realizing organizational efficiencies give us confidence in our ability to generate cash going forward. While being mindful of risks associated with various macroeconomic factors, we expect sequential growth throughout 2022.

Our outlook for growth is supported by the strong tailwinds in our end markets and our confidence in our team’s ability to capitalize on the demand for Airgain advanced wireless technologies.

And with that, we are ready to open the call for your questions. Operator please provide the appropriate instructions.

Question-and-Answer Session

Operator

Thank you. The floor is now open for questions. [Operator Instructions] We will take our first question today from Scott Searle with ROTH Capital. Please go ahead sir.

Scott Searle

Good afternoon. Thanks for taking my questions. Jacob, congratulations, nice job on a difficult operating environment, particularly on the Wi-Fi supply chain.

Jacob Suen

Thank you, Scott.

Scott Searle

Maybe to start on Wi-Fi. I’m wondering if you could talk a little bit about the supply chain, give us an update in terms of your visibility, what you are seeing the backlog on that front, because it sounds like your backlog has been building. And in the past, you run that business, that leaves on the consumer Wi-Fi phone at 8 million to 10 million a quarter, is that something that is achievable? And you have visibility to over the next couple quarters? Or is it going to take a little bit longer on that front?

Jacob Suen

Yes, so certainly, as you can see, in Q1, a nice recovery and the consumer side. So as we indicated, we went from 2.5 mil in Q4 to 4.1 mil, 6.1 mil in Q1. We do expect that trend to continue.

How quickly can we get back to the normality. We don’t have that interest yet. As you can tell, I mean, the pandemic is still impacting China, as an example, is still seeing expected shutdown by the Chinese government on certain series periodically. And that creating the kind of uncertainty, will we not be able to tell you, but we do feel strongly that, it is trending upwards. And should we expect to recover it or to happening over time.

Scott Searle

Okay, maybe real quickly to just hit on nibbling. I’m not sure if you kind of broke it down the quarter. But if you could give us some guideposts in terms of how much it was up sequentially? Did you leave revenue on the table as it relates to nibbling kind of similar supply chain issues on the cellular front? And what the outlook is for the remainder of this year? That is certainly been a supply constrained in area, but it looks like things are starting to improve on that front?

Jacob Suen

Yes, I mean, we don’t give the specifics, although I think the indication that we already gave is the fact that we pay the earnout. And they actually exceeded the number that we have agreed to for the earnout. So we were very pleased with the performance. And we also feel strongly about this year, we already got really strong backlog support. And you are absolutely right. The Hendersons is about how do we overcome some of these supply shortages.

Although our team engineering and operation has done a tremendous work to mitigate that, such as doing some redesigning to accommodate multiple chipset, instead of being single source. And we doing the redundancy that they alluded to, that we are creating redundancy among the differentiators we now have.

So we feel strongly about the outlook for the IoT products, although, as you indicated, I think that we have, we could have done even better if not for some of these supply constraints. And this is going to continue, I would think throughout the year, but we feel strongly that with a team on hand, we are going to be able to overcome that.

Scott Searle

And lastly, if I could, you’ve talked a little bit more about some of the opportunities in millimeter wave you reference Mobix today in that relationship, but also on your website, you started talking about other opportunities, not just with 5G and things like C band and the mid band, but 60 gigahertz in 802.11AD. I was wondering now that you are becoming a little bit more public in these moves out of stealth operations. When do these opportunities start to contribute and do they become meaningful in 2023? Thanks and congrats again.

Jacob Suen

Maybe I will start in and out turn over the Morad. Certainly we are very excited about the partnership, Mobix Labs right now one of the will recognize a player when it comes to 5G. And we are a partner with them, not, it is for a really not only on the millimeter wave, but for the C-band is for me, and for the company. This is our reinforcement about our commitment to 5G, and I’m going to have more respect to the opportunities that you could present.

Morad Sbahi

Hey Scott. Hope you are doing well. So just to give you a little bit more color on our partnership with Mobix Labs, which is something that we are really excited about. What that partnership does for us, and if you see like the evolution where the consumer or consumer business is heading. You can see that there are two things that are happening.

The technology roadmap is moving forward and I’m talking here about LTE to 5G to millimeter wave and also the fact that Airgain is becoming more of a systems company when we are selling systems.

What that does for, is that it gives us access to be able to continue to provide that relevance to our customers, those that want to buy just the components from us or those that want to buy systems from us.

One can expect air gain being a CPE company to be relevant in the making sure that the signal strength coming into the consumer homes is one that is optimized, and one that allows you to carry the maximum data rate. And so in terms of how that is going to play out, obviously, everybody knows that millimeter wave got a little bit ahead of itself.

Let’s say two, three years ago, and now there is a lot of focus in C-band and so our strategy is to continue to drive the roadmap, perhaps more so closely in C-band and then soon after that, we will have that opportunity to transition to millimeter wave when it starts to gather steam. And obviously, as you know, with millimeter wave, we have got the volumes and the relevance that Airgain has that should materialize in a significant market for us.

Jacob Suen

And Scott to finishing up your question says that we do not expect revenue from this partnership in 2022. Although we expect some of the products we will be able to demonstrate, hopefully come early 2023.

Scott Searle

Great. thank you so much.

Jacob Suen

Thank you Scott.

Operator

We will take our next question from Alex Vecchi with William Blair. Please go ahead.

Unidentified Analyst

This is [Sabrina] (Ph) on for Alex, thanks for taking my question. Last quarter, you mentioned bringing gross margin back to the 40% range this year and achieve 41.4% this quarter. Can you talk about or provide any additional detail here maybe by like on market growth and how to think about that going forward for the remainder of this year?

Jacob Suen

Okay, hey good to hear from you, Sabrina, I will stop and I may turn over the Vic to talk more about his team’s, some of the, his team’s work to be able to achieve the gross margin. Certainly, we are also pleasantly surprised to see that we you know, we thought we are going to be able to come close to fully and pleasantly surprised that we are actually able to exceed our equity 41.4% for Q1.

And really it is a number of things. Certainly the favorable sales mix, as you know, our consumer business always have a higher gross margin. And we were able to achieve a higher expected revenue stream from the consumer business in Q1.

That helps, but it is also a number of other things, the way we managing our logistics, the redundancy. Even how do we look, how around the tariffs, all of that really helped contributing to the overall gross margin improvement.

And I’m going to turn over to Vic to elaborate further.

Victor Blair

Thanks for the question Sabrina. Really, Jacob did hit on some of the highlights of it. We, in the reconfiguration to fabulists, we have had a really decrease in our cost of logistics. We have been able to eliminate the tariffs and we have really gone through a lot of redesign on cost initiatives to make sure that we had the appropriate configurations of parts on the printed circuit board, which also eliminated some of the component restraints, that helped us to avoid any of the PPVs price purchase price variances that were occurring in the markets. So that really gave us a very sustainable model for Q2, and we expect it to continue, so.

Unidentified Analyst

Thank you. That is really helpful. And then just another question. I saw the announcement of the auditor change for this year. Can you provide any insight into the motivation there any commentary about the change?

Jacob Suen

Well, yes, I mean, we really appreciate what KPMG has been helping us throughout the years. But as you know, they started having some resource constraints, because what is out there, and all sorts of results of that they also expressed the need to raise more fees.

And really that is - so one of the issue identify me Q1 was the excessive professional fees. And this is one of the airflow we were making, to go in and make the change to a really lucky little company, Grant Thornton that would help us moving forward.

Unidentified Analyst

Thank you so much.

Jacob Suen

Thank you Sabrina.

Operator

For our next question, we will turn to Anthony Stoss with Craig Hallum. Please go ahead.

Anthony Stoss

Hi guys nice execution and really strong guide Jacob. A couple questions, I just wanted to hone in on a statement in the press release, talking about on the AirgainConnect side that it was down sequentially as you work on product enhancements. I’m curious what that is. And then also love to hear more, in addition to the water utility, AirgainConnect, when kind of thoughts on additional launches, perhaps in the second half of the year, then add pull ups after that.

Jacob Suen

Okay, great, great questions Tony. I’m going to stop and I’m going to turn it over to Vic, to talk a little bit more about the enhancements, and certainly to more or to talk about the product side. Yes so in regarding the utility opportunity.

So certainly, I just overall just want to share with you that we are seeing a strong demand for AirgainConnect. And because of the trials we have to talk to, and also the much greater footprint now we have, certainly we recognizing some of the enhancements we will need to put forth and we in fact Vic will elaborate further.

But that is all behind us. We actually were able to make some enhancements, we are actually going to provide an enhancement kit to customers who would have a need. And overall the AirgainConnect, the demand is increasing.

And I would I can even live a more call out that the backlog we have doubling the backlog since the beginning of the year. So with that being said, I’m going to turn over the Vic talk a little bit about some of the enhancements specifics and a model on the water utility opportunity.

Victor Blair

Thanks for the question, Anthony. Really, the whole purpose of our reset was due to the fact that we wanted to maximize the customer experience on AGC. And we wanted to be absolutely certain that we could increase the performance to the level of expectations that was required with the product.

I mean, specifically, we took a look at the performance of the interaction between the Ethernet Injector and the modem. And we are able to really reset that into a configuration that just maximizes the output of our ACHPV.

Morad Sbahi

Anthony and just to give some color. So Jacob talked about how the pipeline has, has doubled. For AirgainConnect. What I can tell you, that is actually more interesting than the fact that the pipeline has doubled.

It is the color of that pipeline. And if you look at that opportunity that we have announced with this major utility company, that is one of many opportunities of similar size and color that we are starting to see in the pipeline.

And this is very exciting, because now that means that AirgainConnect, is in that Upswing momentum, where it is going to give us the those type of size opportunities that we liked the ones that are in urban that are large in size, that have the visibility, the head and stickiness that have the size to make this a very successful product line for us.

Anthony Stoss

I’m curious, thanks for the detail. That is intriguing. Have you signed additional deals and just can’t announce them yet? Or do you expect those launches sometime this year?

Morad Sbahi

I can’t talk about what is in there in terms of deals. Obviously, if we have them, and we secure deals, we would be sure to do the maximum to make sure that we have a press release behind that. But all I can tell you right now is that the health of the pipeline is looking very good. And the engagements that we have today are very promising.

Anthony Stoss

Got it. Last question for me on growth rates going forward. I know you guys talked about enterprise and auto expect to grow the fastest. Is the - would you say that the IoT business is growing, ultimately the fastest or is it Wi-Fi or kind of you could break out kind of your thoughts and growth rates? That would be helpful.

Jacob Suen

Tony, I think, as I indicated in the opening script, that the consumer side, we do feel like it is steady. So that is the one that is not going to be growing as rapidly as the other two markets. And when it comes to the enterprise, which is part of it, the IoT and in the automotive, I would say it is a two horse race. I think that we got tremendous opportunities in both and if you look into the IoT side.

Some of the sort of coming, it is more about how quickly can we build them? The market demand is there. That is also similar to what we are seeing with the automotive market as well, with the you know, with the automotive market besides AirgainConnect, we also have started seeing a really good traction on the traditional internal plus aftermarket products as well. And we expect that business also to grow substantially throughout the year. So I will not be able to tell you which one’s going to go faster, although I really feel good about both.

Anthony Stoss

Thanks for the color Jacob. Thanks a lot guys.

Jacob Suen

Thank you Tony.

Morad Sbahi

Thank you.

Operator

We will take our next question from Craig Ellis with B. Riley Securities. The floor is yours.

Craig Ellis

Yes. Thanks for taking the question and congratulations on the progress team. I wanted to start clarifying some comments around consumer. So clearly, consumer has rebounded off severely restrained levels. The question is this Jacob, as you look at the business returning to “ normal” is normal, the 10-ish million a quarter levels that we would have seen at times in the past, or just given the current environment, would it be something lower than that? Maybe seven to nine or for whatever reason? Do you actually see it going into the low double digits or even better than that?

Jacob Suen

Hey Craig, good evening again. Yes. Look - we do here like is the potential to get back to normal dangerous. Absolutely, yes. We are exactly what that number will be. I think that previously, we from trade, institutional, right between anywhere from eight, I would say, eight to 11 mil or even the eight to 12 mil. And I say we can get back to that range. But, it is going to take some time to get there.

As I indicated earlier, the headwinds on the overall supply shortage is still there. And with the consumer market, we are a lot more dependent on others. And I want to reiterate, we don’t have an issue with our products. When it comes to the consumer on salvages. We have the product we can build.

The issues with our partners or the product that are in 10, us going into a gateway is set about [Bella] (Ph) missing the other key components. And that is what is holding up. And because of that, there is a lot more uncertainties there that we cannot predict. So I think that it is going to take some time, given what the macro environment currently.

Craig Ellis

Yes, that is understandable. There is just so many components on us on a setback system, part of. The next question and issue I wanted to dig into was AirgainConnect. So just great to see the water utility when very substantial. The question is this. If we estimate that that is worth about $3 million given AirgainConnect ESPs how much of that is included in the second quarter guide? And how should we think about the rep rec on the balance through calendar 2022?

Jacob Suen

Yes, great questions Craig. Certainly well, so pleased to see that particular design win. And as I indicated, even with this particular customer, this - I mentioned, this is only the first order from them, they actually have it is a nationwide utility company across many different states. And this was only the first order in they have a lot more vehicles that could using AirgainConnect in the foreseeable future.

With that being say, the other key point I want to reiterate is that this was actually not part of our, our same, the subscriber addressable market that we have been telling the market, which is the first responders, which is actually $500 million plus, same for us. So this is in addition to that.

Now, how is this year’s going to play out? Certainly not all of these are going to be shipping second quarter, it is going to be shipping throughout the year, this will this utility purchase order that we mentioned. We do have other opportunities are the ones that will be the gap that should produce the revenue stream for the rest of the year.

And I do see that we were getting, even looking to the opportunity funnel, if we are looking into the customers trial, we seeing every one of these, it is increasing in also the promotions that AT&T continue to put forth. It is also making all of us feel confident about the future for AirgainConnect.

I think that last year, you know, we all were hoping to be able to see that last year, I really felt like you know, it really takes a year-to-year and have to ramp up in rate right now with the cost of that growth now going forward.

Craig Ellis

So are you saying you would expect that AirgainConnect revenues to grow sequentially to the year Jacob? Was that the message that you are conveying there?

Jacob Suen

Yes.

Craig Ellis

Got it. Okay. And then moving on to NimbleLink and I wanted to ask a revenue and gross margin question because they are related. So it is we saw the business perform exceptionally well. Last year. We also saw that it was one that had an adverse gross margin mix impact. So the question is this, I wasn’t clear if NimbleLink actually rose or declined in the first quarter. So can you clarify that? And then, given that it was previously very significantly below corporate gross margin average. Are there things that have been done operationally to get that margin back to corporate average or do we still have a ways to go before that business would be at a low to mid 40s gross margin?

Jacob Suen

Okay great questions again Craig. So let me try to make sure I answer both of them correctly. So let me try to make sure I ensure both of them correctly. So the first question is in regards to the demand to the demand for the IoT product? Am I correct?

Morad Sbahi

Yes.

Jacob Suen

So, yes. So we, you know, we, I think the revenue for Q1 versus Q4, I think that was steady to slightly increase. In some of them, it is because we actually got more demand. And some of them we just couldn’t ship because of the some of the shutdown, the unexpected shutdown in Asia.

Now we do - I mean, as I indicate that we actually have backlog even throughout the rest of the year, and they are looking really strong, it is more about can we build in make sure you can meet the demand.

Some of the last minute chipset shortage, are creating some issue for us. And we are going to continue to see that, but as I indicated, as Vic alluded to earlier, is that we are, now creating, you know, different designs, so that we can mitigate the risks.

So we feel good about the growth of the of the IoT products. The second questions you asked is about low gross margin. So, I think that we quite NimbleLink, we already know that this was an issue, but quarter after quarter, we continue to execute. And this is where I really want to compliment our application team, they really step up in looking into different avenues.

So definitely, it is you know, if you think about our average, if you look into the average, we disclose, I would say, we have increased a somewhat they have previously substantially, I won’t be able to giving you the specifics.

But I do think that, we have a path to be above the 40s. And they will not the one that actually, with IoT, that different product lines, some actually looking really good, and certain ones does not as good. But we are looking at ways to address that. Now, overall, that is all over IoT is pretty good.

Craig Ellis

Got it. That is all really helpful Jacob thank you. Thank you.

Jacob Suen

Thank you Craig.

Operator

[Operator Instruction] We will take our next question from Tim Savageaux with Northland Capital Markets. Please go ahead.

Tim Savageaux

Hi. Congrats on a good report million outlook. I would come back on the drivers of - your guidance were solid sequential growth there , Earlier That is all really helpful was to the extent we expect some continued recovery in consumer to maybe account for I don’t know, there is much as half of that, but any color there. As well as the initial ramp of AirgainConnect shipments into the utility space. If I look at those two factors, would that account for the majority the growth you are looking at to the mid range? Are there any other factors to consider?

Jacob Suen

So I always say actually, there are a number of other growth. The IoT is definitely a strong growth engine we will be counting on as well as the aftermarket. We do see a possibility, they might require some a lot of our product on the 5G side. And overall, we do expect that growth to be happening as well.

So you are right about the consumer, I think it is going to be steady, it is going to be, it is going to take its course. We do feel good about, you are going to see the improvement quarter after quarter, until we get back to normality that could maybe another three quarters in the two quarters, we are going to see. We don’t know that yet.

As far as AirgainConnect, certainly we do see a bright future for that product. I think that it is a couple of quarters - it took us two or three quarters, more than what we were hoping for. But it is now here for us to really take advantage of. And as I indicated, I think that the IoT, and the aftermarket are two other key growth driver for us in the in the foreseeable future.

Tim Savageaux

Got it, and thanks for that. Given the wind that you are shipping this year, and AirgainConnect the potential for follow-ons with that customer, new winds and more traction in the first responder market, is it possible that we see AirgainConnect revenue at or above 10% of total revenue for the year? And as a follow on what would be the margin implications of that?

Jacob Suen

Well, I certainly we certainly hope so. Right, and that is what we are going to strive for, we feel there is definitely a really good chance we can exceed that. But the gross margin is something we are going to have to work on. I think that as we become more scalable, gross margin is going to improve.

One of the - I would say, one of the issue right now with AirgainConnect is the gross margin that because you know, when we ship, small volume, the cost is high. But a couple of things that we already are working on. One is what I indicated to you about the steamer scale. The other thing is the fact that we actually transition.

That product now we used to build the in house and now we transition that to with the CMS, it is actually creating a lot of benefits from a from a quality supply chain perspective. So we do expect that from the Vic in his team’s effort, we are going to start a continuous improvement from a gross margin perspective for AirgainConnect.

Morad Sbahi

And the other thing I would add, Tim, is that, in the roadmap of AirgainConnect. So just as you can imagine, with every product that you release, there will always be areas of cost optimization, and that is what Vic and his team have been doing for us the past 12-months.

There are also product derivatives that are being planned to address markets that are very specific, and also a redesign of the current platform that would allow us to really get this, those margins much higher than where they are today.

Tim Savageaux

Thanks.

Jacob Suen

Thanks Tim.

Operator

At this time, this concludes our question-and-answer session. If your question was not taken, you may contact Airgain’s Investor Relations at airg@gatewayir.com. I would now like to turn the call back over to Mr. Suen for his closing remarks.

Jacob Suen

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

Operator

Thank you for joining us today for Airgain’s first quarter 2022 earnings call. You may now disconnect and have a great day.