Airgain Inc Q4 FY2021 Earnings Call

Good afternoon. Welcome to Airgain’s Fourth Quarter 2021 and Full Year 2021 Earnings Conference Call. My name is Jenna, and I will be the coordinator for today’s call. Joining us for today are Airgain’s CEO, Jacob Suen; CFO, David Lyle; and Senior Vice President of Product and Marketing, Morad Sbahi. 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 would now like to turn the call over to Mr. Lyle. Thank you.

Thank you and good afternoon to everyone. 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, February 24th, 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’d like to turn the call over to our CEO, Jacob Suen. Jacob?

Thank you, Dave. Welcome, everyone, and thank you for joining us on the call today. I'll start with some commentary about our 2021 financial results and then an update on the progress we've made towards executing our strategy. Dave will then provide financial details as well as our Q1 2022 outlook and color around how we expect 2022 to play out. Looking back over 2021, we really started to hit our stride in the first half of the year before the global supply shortage issues began to impact our business. In the first half, we averaged over $70 million in revenue each quarter, the two highest revenue quarters in the company's history. The supply shortages in the second half of the year materially impacted our business, particularly our consumer business, where we believe we lost about $8 million in revenue. Looking into Q1 of this year, we're seeing backlog indicating that the supply shortages in our consumer market revenue is starting to resolve itself. In fact, total backlog plus billings in Q1 already exceed $16.5 million, the strongest in our history at this point in the quarter. If you look back over the last two plus years that we have been transforming the company from an embedded internet technology company focused primarily on the consumer market to an integrated wireless systems company focused on larger and faster-growing enterprise and automotive markets, you can see that we are a dramatically different company today. Looking back just three years ago, in our fiscal year end 2018 results, Airgain's consumer market revenue generated almost 80% of total revenue. In 2021, consumer market revenue was only 40% of total revenue. Looking ahead into 2022, we believe consumer market revenue will grow. But the growth from our enterprise and our multiple markets will outpace that growth and we expect the consumer market revenue will decrease to a smaller percent of total revenue as a result of the product growth in the other two markets. All-in-all, we finished 2021 with over $64 million in revenue, the highest revenue in the company's history. Our non-GAAP gross margin was just under 40%. Even with significant pressure from higher costs associated with global supply shortages, we show significant discipline in controlling our operating expenses, which finished at $27.8 million on a non-GAAP basis and included incremental expenses on the NimbeLink acquisition, which closed on January 7, 2021. With 2021 behind us, let's look into what will drive growth in 2022. First, in our enterprise market, we expect our industrial IoT or NimbeLink branded products to grow as we continue to benefit from a fast-growing market in the U.S. with the additional growth expected internationally. We expect assay truckers, which is one of our newer product lines, to begin to show material revenue contribution, while Skywire cellular modems should continue to generate the majority of revenue for us in the industrial IoT market. Second, we expect our AirgainConnect platform's first product to begin to grow in 2022 as we partner with AT&T on a renewed focus on going to its nickel range service. Third, we expect our consumer revenue, specifically from our end customer service providers, to rebound as the transitory supply shortage issues begin to resolve themselves. Fourth, we expect our aftermarket fleet revenue or our antennas plus branded products to recover from demand reductions related to COVID in resolution of supply shortages, especially as we have refreshed the product portfolio to 5G and revitalized our sales strategy. Fifth, we expect our traditional enterprise Wi-Fi revenues to see some growth as we launch our first major Wi-Fi 6 system products into a global enterprise Wi-Fi wide by customer for large venues like stadiums and arenas. Before I hand it over to Dave, I think it's important to note that we continue to be very focused on improving the gross margin profile for our company. We've made great progress on setting into motion product cost reductions on several of our lower gross margin products, so that over the longer term, we can improve margins on products with high growth prospects like aftermarket fleet, enterprise Wi-Fi, AirgainConnect and industrial IoT. One of the many focuses for us is to move our in-house manufacturing to external contract manufacturers in order to lower costs through efficiencies in manufacturing, as well as lower sourcing costs for parts by allowing scale contract manufacturers to manage that procurement. This will also allow us to lower our inventory significantly. In that vein, we're in the process of shutting down our Arizona manufacturing facility where aftermarket fleet and AirgainConnect products are mostly produced and moving them to new contract manufacturers here in North America. We expect that process to be complete in Q2 of this year. Following this action, Airgain will have no internal manufacturing facility as all manufacturing will be in the hands of highly experienced contract manufacturers. All-in-all, we are very pleased with how well we fared during the supply shortages as well as COVID impacts in 2021 and are really excited about our prospects for considerable year-over-year growth in 2022. We're especially encouraged by the momentum in our integrated wireless systems growth as we transition from a component antenna supplier to a system solution provider. We have spent the last few years developing new innovative integrated wireless system products, most of which have just begun to ship or are about to. So, 2022 will be a year laser-focused on execution and growth. Now, I would like to turn the call back over to Dave who will walk us through financial highlights. Dave?

Thank you, Jacob. Fourth quarter 2021 revenue was $14.1 million. Beginning with our consumer revenue, Q4 finished at $2.5 million, down from $4.6 million in Q3, primarily due to weakness from the global supply shortage. Enterprise revenue was down from $8.7 million in Q3 to $8.1 million in Q4, due also to weakness from the global supply shortage. Our industrial IoT products grew sequentially and our traditional enterprise Wi-Fi products declined. Automotive revenue grew sequentially from $2.2 million in Q3 to $3.5 million in Q4 as we saw revenue growth from both AirgainConnect as well as our aftermarket fleet revenue. Q4 non-GAAP gross margin of 35.1% was just above the top end of our previous guidance range, primarily due to favorable product mix changes. Excluded from non-GAAP gross margin was $93,000 for amortization of purchased intangibles. Non-GAAP operating expense in Q4 of $7.2 million was just above our previous guidance range. Excluded from non-GAAP operating expense was about $1 million in stock-based compensation expense, about $663,000 in amortization of intangible assets mostly related to the NimbeLink acquisition and about $380,000 for fair value of contingent consideration related to the NimbeLink acquisition. Adjusted EBITDA was negative $2.1 million in Q4, right at the midpoint of our previous guidance range. Non-GAAP net loss in Q4 was $2.3 million and Q4 GAAP net loss was $4.6 million. Moving to earnings per share, our Q4 non-GAAP loss per share was $0.23. GAAP loss per share was $0.46. Finally, our Q4 cash, cash equivalents, and restricted cash totaled approximately $14.7 million, about $4.4 million lower than in Q3 due to negative $1.6 million in working capital changes mostly associated with the timing of inventory purchases, as well as the timing of quarter shipments heavily toward the back half of the quarter, but also related to the $2.3 million in non-GAAP loss from operations. While on the topic of cash last week, we put a $4 million working capital line in place with Silicon Valley Bank to enable us to adequately address potential incremental working capital needs associated with the ongoing global supply shortage issue. Now, I'd like to provide a preliminary outlook for the first quarter of 2022. In Q1, we expect revenue to grow materially and to be in the range of $16.5 million and $18 million or $17.25 million at the midpoint of the range with most of the growth coming from the recovery of our consumer product revenue as we are seeing less impact from supply shortages. We expect non-GAAP gross margin in the first quarter to be 37% plus or minus 100 basis points as we see a recovery from our higher margin consumer product revenue. Excluded from non-GAAP gross margin is $89,000 in acquisition-related amortization of purchased intangibles, and about $16,000 in stock-based compensation expense. We expect Q1 non-GAAP operating expense will be about $7.5 million plus or minus $100,000. Higher sequential operating expense is related to the reset of the annual management bonus program, timing of engineering development costs, as well as from the acquisition of talent mostly in our marketing and sales organization to ensure we execute on our growth prospects. Excluded from our non-GAAP operating expense estimate is about $1.3 million in stock-based compensation expense and about $668,000 in acquisition-related amortization and purchased intangibles. At the midpoint of guidance, adjusted EBITDA in Q1 would be negative by about $1 million. At the midpoint of guidance, we expect Q1 non-GAAP loss per share to be about $0.11 and on a GAAP basis, we expect a loss per share of $0.33. With regard to cash, we expect our total cash, cash equivalents, and restricted cash balance to increase from Q4 2021 to Q1 2022 as we expect to benefit from positive working capital changes. Now, I'll turn it back over to Jacob.

Thanks, Dave. I would like to reiterate that we have confidence in our long-term strategy and that we are pleased with the progress we have made in becoming a high-performance integrated wireless system provider. We believe the successful transition from an antenna component supplier to an integrated wireless system company, as well as our expansion into the lucrative enterprise and automotive markets, puts Airgain in a position to sustain long-term profitable growth. While we're still managing some remaining supply shortage issues, we're seeing a recovery already taking place this quarter and expect that positive trend to continue into 2022. With rising demand for our new and innovative industrial IoT, AirgainConnect, and aftermarket products, we are optimistic about our growth prospects in 2022 and beyond. With continuing focus on customer service satisfaction, operational efficiency in product innovation, we are keen on delivering on our mission to connect the world to Airgain's optimized integrated wireless systems. And with that, we're ready to open the floor for your questions. Operator, please provide the appropriate instructions.

Thank you very much. The first question on the line comes from Michael Mani of B. Riley Securities. Please go ahead with your question, Michael. Thank you.

Hey guys, this is Michael on for Craig. Thanks for letting us ask a couple of questions. My first question is concerning gross margins. So, nice to see the guide of 37% for next quarter. I was just wondering if you could walk us through how you see the gross margin trajectory playing out throughout the year? Just a year ago, we were back at low 40% levels. And I was just wondering if you could walk us through the relative contribution of mixed benefits and maybe even supply headwinds? And also as you outsource manufacturing, how we could potentially get back to that 40% level?

Yes, I'll take them on, Michael. This is Dave. On the gross margin front, going into Q1, we're getting some beneficial product mix with the consumer revenue starting to grow. We said historically the consumer revenue has had a higher gross margin profile than on enterprise and automotive, especially as we ramp new products for automotive and enterprise. We think we'll continue to see growth as we get through the final issues related to the global supply shortage on the consumer front, which should help us a little bit more going into Q2 and beyond on a gross margin front. In terms of the rest of the year, I think it'll really depend on how fast and how big we grow both automotive and enterprise, which have lower gross margin profiles. And so I think if we grow much more rapidly, we're going to see more pressure on gross margin, but obviously, more dollars falling to the bottom line in that case. In any case, I do think we can get back this year to the 40% range from a gross margin perspective.

Got it. That's helpful. Thank you. And my next question is concerning AirgainConnect. I was wondering if there were any updates to your promotional activity with AT&T? And any updates you can get on the opportunity funnel and sell-through customer dynamics, etc.?

Yes, good afternoon. This is Morad. I’ll address that. The promotional activity we initiated last year with AT&T is still ongoing this quarter, following the same model where we provide $400 in cost savings and AT&T contributes $800, resulting in a total cost of $320 for the customer. This is very advantageous for us. As I mentioned in the last earnings call, this promotion has significantly increased our funnel and altered the profile of our customers. Specifically, we are starting to attract more urban customers interested in AirgainConnect. These customers are essential for driving the growth we seek for AirgainConnect. Unlike rural customers who typically order tens or low hundreds of units, these urban customers are ordering mid-hundreds to over 1,000 units. This is very healthy for us, and we are excited about it; this trend, which began in the second half of last year, is continuing this year and we expect it to persist throughout 2022.

Our second question today comes from Karl Ackerman of Cowen and Company. Please go ahead, Karl. Thank you.

Yes. Thank you. And Dave, enjoying working with you and best of luck in your future endeavors. Two questions for me, if I may. I understand you're pivoting your manufacturing strategy, I think, for NimbeLink products from internal to external contract manufacturers. But I guess first, why has inventory been creeping higher throughout the year when sales have moderated? And then second, I guess, you address that question, you've faced supply shortages over the last couple of quarters. So, have you been able to lock-in volume commitments that give you confidence you can achieve the backlog and billings you have today?

I'll start and Jacob you can pipe in. First of all, thank you, Karl, it's been great working with you. I'm sure we'll bump into each other again. Related to the contract manufacturing, that's actually we've used contract manufacturers for NimbeLink historically, and that model is not going to change. This is more related to some of our Antenna Plus branded products, as well as AirgainConnect products, which we've done in our Arizona facility. That's a facility that we're shutting down and moving to contract manufacturers. That should help us in a variety of ways, including inventory reduction. To your question about inventory and seeing higher levels right now, that was a conscious decision on our part to go ahead and buy ahead on parts that we thought would have more problems related to the global supply shortage, the more the risky items in terms of procurement. And so I would say if you characterize that total inventory number, a large portion of it is AirgainConnect and NimbeLink, both of which we have high confidence in demand. So, we feel pretty good there. I do think though that we're going to see a pretty significant reduction in that inventory number over the next couple of quarters, especially as we move to contract manufacturers on AirgainConnect and Antenna Plus branded products.

That's helpful. I appreciate that. To follow up on my previous question, could you discuss the level of volume commitments you have that enable you to manage that backlog and billings? It seems you currently have some inventory. As you consider growth opportunities throughout 2022, as mentioned earlier, how do you view the potential for engaging in longer-term contracts with your suppliers to meet end customer demand in consumer, automotive, and enterprise networks? Thank you.

Yes, to finish this question. We've, on the NimbeLink side where we have a lot of inventory, we carry a lot of inventory, we actually have pretty significant backlog for all of 2022, which gives us some pretty high confidence. Again, like I said, historically, our biggest issue has been trying to grow through the global supply shortage issues. I think our growth would be even bigger within NimbeLink if there was no supply shortage, but you're seeing us continue to grow that business. So, we have pretty high confidence in terms of just hard backlog for the year, which gives us a lot of confidence there. On the other part of the kind of inventory equation on the AirgainConnect side, that's still, I would call it in its early stages. So we're still trying to grow that business. The demand, the end demand is obvious. The sales pipeline, like Morad talked about is pretty big. We just got to close deals and get sell-through.

Understood. Thank you.

No problem.

Anthony Stoss from Craig-Hallum, your line is now open. Please go ahead.

Thank you. Pretty impressive guide, all things considered up 22% at the midpoint sequentially guide, especially supply chain. So kudos to pulling that off. Along those lines with the growth rates heading up into Q1? Do you expect all of the business segments to grow? And maybe a generic question for Jacob, what do you expect or what's the ballpark range of how much you think your business can grow? And Dave's talking about significant backlog, I'm curious what you think the growth rate might be for IoT this year and maybe next?

Hey, good to have you joining us, Tony. It's Jacob here. Great questions, by the way, and I appreciate the fact that you'll recognize that the team has done a phenomenal job to be able to overcome the supply shortage issue. And we're looking really good about not only Q1, but the rest of the year. So regarding the three markets, what I can tell you is that we do have high demand from customers in consumer, enterprise, and automotive. Now, on the consumer side, as I indicated, we are in recovery mode, and the fact that the supply shortage issue is starting to resolve itself will be helpful not only for Q1 but the rest of the year. Regarding enterprise, that's a lot of it with industrial IoT product, with our NimbeLink brand. The demand is high. But we are, certainly also dealing with some parts shortage issues that we got to still overcome. And then on the automotive side, the AirgainConnect is also seeing much greater demand, and in the aftermarket fleet, we're also seeing high growth as well. I will not be able to tell you that all three will be able to see sequential quarter-after-quarter growth, but we feel strongly about overall growth across all three market segments.

So what I can tell is that the demand for our IoT product under the NimbeLink brand is high. However, we are currently facing some parts shortage issues that we need to address. On the automotive side, the AirgainConnect is experiencing significantly increased demand, and we're also witnessing substantial growth in the aftermarket fleet sector. While I cannot guarantee that all three segments will experience sequential quarter-after-quarter growth, we are optimistic about overall growth across all three market segments.

Okay. Yes. Go ahead.

So I was just going to add something to what Jacob said in that, the direction that was set for the company to become more of a wireless system integrator, we're seeing that those business lines are growing, that's where the trend is happening. And consumer has more or less returned to normal with our supplier or what our customers finding or gaining access to supply. So that's what's going to drive in really what's happening in 2022.

Okay. And then maybe it's a follow-up, this transition for a couple of product lines to the contract manufacturing side. Have you done extensive qualifications with this contract manufacturer? Do you expect it to be smooth? Are you building up internal inventory of those parts, and in case it's not smooth, and there's any hiccups on the contract manufacturer side, any color would be helpful, just to make sure that the handoff is smooth?

Yes, so very good questions again. So we actually not only have one, but we actually have a couple for our new North American manufacturing contract manufacturers. And we have created some redundancy as well. And so all of that we do feel strongly that one can serve as the backup of the other. Then we are training them, and we actually have much easier access to them and they’re working really closely with our operation team as well, which is located in Arizona. So we feel pretty good about being able to make sure that they deliver. And just so we actually started work with them in Q4 last year really closely. And they've been able to deliver the type of quality product that we expect. So it's something that we've already done enough triathlons, if you want to call it, to get to where we are at. That's why we have made the decision that we feel comfortable shutting down our Arizona facility.

Yes. We kind of used, Tony, a phased approach where we put our one larger product line from the Antenna Plus branded products first, and then we put another one on and did it slowly over, like Jacob says, since the beginning of Q4. So we have very high confidence that they can deliver pretty high quality. We're also pretty excited about the fact that they can improve just through scale and buying parts, procuring parts more cheaply for us to improve our gross margin. So I think we're going to benefit on two sides there.

Great. Thanks for all the detail, guys. Best of luck.

Thanks a lot, Tony.

Our next question on the line comes from Tim Savageaux of Northland Capital Markets. Please go ahead, Tim. Thank you.

Thanks, and good afternoon. I wanted to follow-up on kind of the segment dynamics going into Q1. I mean, I'm going to assume that the majority, if not the vast majority of the sequential growth you're forecasting is coming from consumer, as that supply situation recovers and that likely has a positive impact on gross margins as well. Is that a fair assumption in your estimation? Or is there any other segments driving sequential growth in a meaningful way?

No, I think in a meaningful way, consumer is driving the majority of the growth. There's contribution across some of the other product lines, but nothing like the consumer recovery.

Okay. Great. Just to follow up on consumer, I have one more question about getting back to normal. This likely reflects a range of around $10 million per quarter, where we started calendar 2021 and ended calendar 2020. At this point, does it seem reasonable to target those levels by the end of the year in consumer?

Yes, I think it's possible. I don't think we're planning at something a little more conservative, especially, with some of the supply shortage issues out there still remaining. But even if we improve off our Q1 number, which we expect to, it's going to contribute both not only on top-line growth but on gross margin.

Right. And then last one for me. Had a nice uptick in the quarter for automotive, which I think you attributed to AirgainConnect. And I guess, given how sharp that increase was, I wonder if you can give us a little more color as to whether we could look at that as kind of a maybe a stocking situation that needs to be digested? Or whether you're seeing that sharp of an uptick in demand that you feel like you can continue to build on throughout 2022?

We experienced growth in both AirgainConnect and aftermarket fleet from Q3 to Q4. However, we have faced some supply shortages affecting automotive aftermarket fleet revenue over the past few quarters. We are beginning to see a slight recovery in that area. It's important to monitor how this supply shortage impacts the business as we move into 2022. Nonetheless, we believe we can continue to grow, mainly due to our revamped sales strategy for Antenna Plus branded products. We have upgraded several key products to 5G, which we believe will drive growth for us. Regarding AirgainConnect, we have a significant opportunity funnel that we are actively pursuing, although it has taken some time to finalize those deals. We anticipate reaching a notable inflection point, which seems to be what you are inquiring about, beginning in the second half of the year. This could happen in the first half, but we expect the more significant advancements to occur in the second half.

Okay. Thanks very much.

No problem.

We have a question in from Scott Searle of ROTH Capital. Please go ahead, Scott. Thank you.

Hey guys, thanks for taking my questions. Nice job on seeing consumer started recovery. And Dave, want to wish you all the best. I'll miss asking you on a regular basis.

Thanks, Scott.

Hey. To dive in on the consumer it sounds like you answered part of it with Tim's question. It doesn't sound like you're seeing any sort of immediate snap back to the levels we exited 2020 and entered 2021 at the $10 million level. It seems like it's going to build after the first quarter. But you're not building in that type of expectation. I just want to clarify if that's correct. And that is part of it, there's a big transformation going on from Wi-Fi 6 to Wi-Fi 6E. I'm wondering how important Wi-Fi 6E is and what that's doing to the dialog, the opportunity? And are you seeing opportunities not only traditional indoor, in EPS pretty stunning to see some outdoor opportunities as well as it relates to 6E?

Yes, it's good to speak with you, Scott. I’ll start with the questions, and then Morad or Dave can add their thoughts. Regarding the consumer sector, you're right that recovery is underway, but it will take time to return to previous levels. However, we're seeing significant improvement in Q1 compared to Q4 of last year. Our current backlog shows numbers significantly higher than what we typically see at this point in the quarter, which is a positive sign that consumer demand is on the mend. We're optimistic this will happen within this year. I also want to note that consumer revenue used to represent around 80% of our total revenue two to three years ago, but it's now about 40%. I anticipate it will account for an even smaller portion of our overall revenue this year. This is due to the rapid growth of system products in the automotive and enterprise sectors, which is why we decided to focus on a system product approach, and it’s proving to be successful. The products we have in the enterprise and automotive markets, coupled with current demand, underscore our successful shift from being solely an antenna component supplier to becoming a system integrator. As for Wi-Fi 6 and 6E, one major North American carrier informed me that starting in 2022, they will not ship anything that isn't Wi-Fi 6E. They will stop shipping 11ac products. This shift should support a recovery in the consumer sector, and I believe other carriers will follow suit and transition to Wi-Fi 6 and 6E as well.

Yes. So I was just going to say, Scott, that a lot of the growth that just like Jacob said, a lot of the growth that you're seeing, or a lot of the traction that you're seeing in the business in 2022 is 6E and 6 that we had discussed, a year ago, or maybe a little bit earlier than that, where the opportunities are, particularly in the back part of 2021 is mostly in what we're seeing. It's mostly indoor, by the way. We do some outdoor, but we're mostly indoor. But there's a lot of traction right now in fixed wireless access, right, as you start to see with the C-band deployment, you got a lot of the operators that want to go out there and then compete with the wired guys. And here's an opportunity for them to provide these platforms like, for instance, what T-Mobile is doing and the other guys are doing. And that provides an opportunity for Airgain to work with OEMs in that Airgain has the capabilities to solve these complex wireless problems. And so you already had that traction in the Wi-Fi area, but now we add the uplink, being also wireless and let's call it cellular. That gives us the capability to not only be able to solve these even more complex problems, but also increase the ARPU per box. So that's where you're going to see some of the traction going forward and design wins for consumers for us.

Got you, very helpful. I would like to follow up on the NimbeLink front, as it seems business continues to be strong there. Could you provide an indication of the size of the business in the fourth quarter, particularly if it showed growth compared to the third quarter? It seems you have good visibility regarding backlog and supply, so could you outline the growth rates at both the low end and high end, or at least the baseline level expectation for NimbeLink in 2022?

Yes, I'll take a shot at that, Scott. In Q3 to Q4, we grew sequentially. I don't want to talk specifically about Q1. We do think in terms of demand, we should be growing. But we still haven't resolved all of the supply shortage issues. So, that's putting a little pressure on us on the NimbeLink branded products right now. So, the jury's still out on that, but I think for the entire year, even with supply shortages, we're going to grow from 2021 to 2022.

I would like to ask about the auto sector and AirgainConnect. I'm not sure if you shared any figures during this call. In the past, you've mentioned the number of pilots and engagements as a way to illustrate the opportunity. You indicated there may be an inflection point in the second half of this year. Additionally, AirgainConnect surpassed the $1 million mark in the fourth quarter. Could you provide more insight into the level of activity for AirgainConnect? Also, regarding other product extensions, you've discussed developments with various carriers and commercial markets, and I’m curious about your updated views on that. Thank you.

Yes, regarding the revenue for AirgainConnect, we're currently not disclosing specific figures and are combining that with our automotive numbers. However, the opportunity and demand we are witnessing is significant. So, I will let Jacob and/or Morad continue.

I can share with you, Scott, that we are seeing really a much stronger opportunity size and the orders that we are anticipating to receive, it's also in a much larger volume loss. Plus, Morad indicated earlier, with the new approach that AT&T and we have been working on since the second half of last year, we are now seeing a lot of these major urban opportunities now come to fruition. So, they expect to really pick it up, and even already are, already happening, we expect that to continue throughout the year. I also want to share that Morad received an Innovation Award during the 10-year anniversary of FirstNet. And there AT&T, FirstNet, are really focusing on the MegaRange service, which is the flagship product for the offering, it's AirgainConnect. So, there's a concerted effort by AT&T FirstNet, and certainly, AirgainConnect to make this a really successful product for all of the first-responders out there.

What I noticed from that event is that FirstNet is becoming a reality. There are more towers being deployed, which leads to better coverage and more opportunities for AirgainConnect. We see this not only in urban areas but also in rural ones. Regarding your question about our roadmap, the AirgainConnect HPV we currently have is just the first product in this line. You can expect that this year we will have variations that will cater to other operators, both in North America and overseas. We want to be disciplined and focused, as there is much to address. We need to think carefully to ensure our success with what we currently have and not lose sight of the global opportunities ahead.

Great. Thanks so much.

Thank you. We have no further questions registered. So, I'll hand back over to Jacob for closing remarks. Thank you very much.

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

Thank you very much. That concludes today's call. You may now disconnect your lines. Have a lovely evening. Thank you.