Q4 2023 Airgain Inc Earnings Call

Participants

Jacob Suen; President & CEO; Airgain, Inc.

Michael Elbaz; CFO & Secretary; Airgain, Inc.

Scott Searle; Analyst; Roth Capital Partners, LLC

Anthony Stoss; Analyst; Craig-Hallum Capital Group LLC

Tim Savageaux; Analyst; Northland Capital Markets

Presentation

Operator

Good afternoon, and welcome to Airgain's fourth Quarter and full-year 2023 earnings conference call. My name is Diego, and I will be your operator for today's call. Joining us today are air games, President and CEO, Jacob Suen, and CFO, Michael Elbaz.
As a reminder, this call will be recorded and made available for replay via a link found in the Investor Relations section of Airgain's website at investors.airgain.com.
Following management's prepared remarks, the call will be open for questions from Air games covering analysts. I caution listeners that during this call, Airgain management will be making forward-looking statements about future events as well as 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, March sixth, 2024. 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 will include a discussion of non-GAAP financial measures. Please see today's earnings release for further details, including a reconciliation of GAAP to non-GAAP results. Now I'd like to turn the call over to airgain CEO, Jacob Suen.
Jacob?

Jacob Suen

Thank you, operator. Welcome, everyone, and thank you for joining us this afternoon.
To begin today's discussion. I will give some company background, followed by a review of our performance for the quarter and year before handing the call over to our CFO, Michael Elbaz. He will review our financial results for the quarter and year in more detail, as well as provide our outlook for Q1 2024. After that, I'll share some closing remarks before opening the call for questions.
All right. Let's begin for those of you who may be new to our story at Airgain. We simplified wireless connectivity across the value chain from embedded components to integrated systems. We have three core markets, enterprise, consumer and automotive. Our enterprise market is comprised of integrated system solutions with a mix of components.
Specifically, this market includes components such as our embedded cellular modems, custom products and antennas for access points and in the Internet of Things applications this market also includes system solutions such as our asset structures and our upcoming long-term fixed wireless access in Light House smart Siemens repeater products. Our consumer market is comprised mostly of our embedded antenna business, a traditional area of expertise for Airgain. Our consumer products include custom embedded antenna design for customer premises equipment or CP. devices, such as those that enable WiFi 6E will enable WiFi seven.
Lastly, our automotive market includes both our aftermarket antennas as well as our vehicle networking devices, highlighted by our recently announced AirgainConnect fleet device. We work with a global network of VAS system integrators, distributors and allows customers to help solve critical connectivity issues, improved wireless performance and effectively shorten time to market for their products.
We believe the global connectivity opportunity is large and durable. Secular tailwinds, including increased connectivity, technology adoption and growing serviceable addressable markets across our product suite will continue to propel the industry and our company forward. And again, we have a consistent track record of developing and offering optimized wireless solutions to our channel partners and customers. They help them get connected quickly as new technologies emerge we are confident that we will continue to provide leading edge products two months.
Turning now to a review of our recent operational results in three core markets. As we look back on 2023, our team managed our business through several macroeconomic headwinds, including industry-wide demand softness and inventory overhang and corrections that caused order pushouts, especially in the second half of the year.
We generated $10.1 million in sales in the fourth quarter, in line with the midpoint of our guidance range and closed 2023 with $56 million in full year sales. However, our the main indicators, including our backlog and channel point of sales data, shows us that our markets are starting to recover, although we are still face some of the persistent headwinds in the first half of the year. We believe that we are primed for a strong 2024 with gradual growth.
Moving to a closer look at our three core markets, 2023 was an important year of development in our enterprise business. Notably, we announced several new products, including our long-term fixed wireless access solution, which is set to begin shipping in the first half of this year.
Our Lighthouse smart repeater platform for which we expect first revenue shipments by early in this year, an expansion to our recon 13 5G antenna product line, specifically designed for IoT applications to include our rugged outdoor 5G antenna offerings, a bright spot as we began shipment in Q4 of 2023, again, a new custom product offering develop to a joint engineering collaboration with a strategic customer for its transition to a new and sophisticated platform for its end markets in addition, we secured a multimillion dollar asset tracking opportunity with a railcar leader and an asset tracking alliance with sensing and control.
Still, we faced several challenges in the second half of 2023. Our decline was largely driven by persistent inventory overhang in the channel on our embedded modems, combined with declines within our custom products and enterprise access points.
Yes, even as our challenges persisted through the end of the year, we believe we'll reach a trough in Q4 and that our enterprise market, it's set for a gradual recovery in the first half of 2024, we see end customer demand growth in our embedded modems as evidenced by growing point of sales at our distribution partners as many of the inventory challenges subside, along with new sales opportunities.
Also, in addition to the renewed shipments of our custom products and continued shipment ramp with our IoT antennas, our asset tracker business continues to show growth potential with growing applications for pilot packaging and logistics trucking rolling in on a consistent basis, revenue still tends to be uneven for our asset trackers, but our pipeline includes several opportunities in railways, warehousing, equipment management and rental lab management and cold chain give us confidence that this is one of our existing product lines that presents a significant growth opportunity in the second half of 2024.
Finally, we expect our long-term fixed wireless solution to start shipping in the first half of the year in our consumer market, which again represents a vast audience utilizing wireless enabled devices. A couple of key factors impacted our Q4 performance. First, as we have mentioned previously, service providers are on the cusp of a transition from WiFi six and 6E to why Page 7, they are counting on WiFi seven to improve performance and user experience, and they are looking for ways to accelerate the WiFi seven adoption and transition in anticipation of this shift has caused widespread caution among our OEM customers as they work to avoid excessive inventory.
Still, while this has created near-term pressure on our consumer market growth. We are confident that this ship presents a compelling long-term opportunity for air again to deliver its cutting edge WiFi seven antenna technology as evidence by the fact that we secure WiFi seven design wins with two Tier one North American MSOs. Second, consumer demand continues to shift from wire to wireless providers for Internet service as consumers transition to FWA we recognized this trend last year and have focused our strategy on penetrating this growing market, which offers significant average selling price of ASP. growth since we now provide both the WiFi five as well as the cellular antenna design. Even as this ship applies some downward pressure on our existing Amisol revenue. It creates a greater opportunity for us in the long run as it opens up in new and exciting markets.
As we announced last November, we have secured a design win with a Tier one mobile network operator or MNO for the antenna design in their indoor FWA router. We currently expect to begin shipments for this product in Q1. While we anticipate that these headwinds will continue in the first half, we remain committed to turning around our consumer market performance and are confident that the second half of 2024 is where we'll see this improvement.
Lastly, our automotive market as a reminder, our automotive market includes aftermarket products that are deployed in a wide range of vehicles, mostly focused on public safety transportation in municipalities. Inventory corrections from the customers have dampened the growth in these markets, and we expect this trend to continue in the first half of 2024.
Still, we saw several major accomplishments in 2023. We launched our EZ Connect antenna platform to simplify external antenna ordering and installation, further develop our 5G product line of antennas in launched Ultramax 5G, high-performance windshields as we shift into 2024 we expect that several of these products will ramp up as inventory correction delays dissipate, especially in our 5G antenna product lines. We are seeing signs that our combined focus on new and differentiated products. Supply chain flexibility and global channel expansions continues to yield results, and we are optimistic that our efforts will turn this market into second half as well.
In January we announced our next generations of vehicle gateway AirgainConnect fleet or AC fleet, which is set to begin shipping in the second half of this year. Overall, we faced significant downward pressure in 2023 across our end markets, especially in the second half of the year. Several of the factors that caused these headwinds are yet to fully clear and will likely persist through the first and second quarters of this year. Still, while we remain responsive to the macro in economic environments, however, the main indicators have provided positive signs that our business is starting to turn. We are cautiously optimistic that we have reached a trough and are confident that our investments in our business have position again for growth, especially in the back half of the year.
As we have communicated in past quarters, we are transitioning from being exclusively a component manufacturer to a wireless system solutions provider. As such, our growth strategy is focused on two key elements. First, continued execution of our established business. Our embedded antennas are deployed in various consumer applications, including access points, wireless gateways, fixed wireless access devices, WiFi routers, and extenders and smart home devices.
Just to name a few. We have developed strong relationships with our partners throughout the value chain, including chipset providers, carriers, original design manufacturers or ODMs, in OEM.s on the development side and MNOs in service sort of service providers on the customer side, over the last few years, we have invested in next generation WiFi seven design and testing capabilities. And we have now reached the cost of the expected widespread transition from WiFi to WiFi seven as we strategize for 2024, we intend to maximize our opportunities with our consumer markets already.
In addition to the design win, we secured with a Tier one MSO for our next generation WiFi seven products in November. Yesterday, we announced another design win with another Tier one MSOs Both are expected to start shipping in the second half of 2024. Furthermore, the new line of products will launch in 2023 for our IoT custom products, automotive markets in industry IoT antennas are expected to ramp up throughout 2024. With our customer agreements in funnel, we are confident that we will return to growth in our established business this year.
Second, integrated wireless solutions expansion. While we continue to drive our existing components business forward, many of our forward-looking indicators for 20 24.2. Our wireless connectivity product lines are our solutions with the greatest upside. Specifically, our U.S. trucking and 5G connectivity products offer the largest strategic growth opportunities for our business on the asset tracking side, our asset truckers are deployed across transportation, supply chain, cold chain and other specialized applications as truckers win a recurring revenue opportunity as well with multiple subscription base components such as our NimbeLink cloud-based device enablement platform in our trucking inflammation dashboards.
We estimate an $800 million serviceable addressable market in 2024 alone and believe that we are poised for success in the back half of the year. Our 5G connectivity products into our long-term FWA built to improve connectivity at the home or in the office, our Lighthouse smart repeater design to extend high-quality coverage for mobile network operators in our recently announced next-generation AC fleet 5G vehicle gateway created to offer a wide area similar in local area, WiFi connectivity across public safety, transportation in public and private vehicles. Four of these products are expected to ship this year. We recently completed our product certification for Lantern FWA and expect to ship to a funnel of customers in the next quarter.
For AC fleet, we have several customers both in the US and abroad. We have samples today and are confident that we can begin shipments in the second half. These three product lines represent over $700 million of potential projects serviceable addressable market in 2024 and $1.7 billion of potential additional SAM in 2025, effectively doubling our foundation or SAM of $1.8 billion for our existing product lines.
Our connectivity product lines are the culmination of several years of investments in shifting a gain from exclusively components to full systems. And we believe that we have significant upside in these areas with that, I will turn the call over to Michael to discuss our fourth quarter and full year 2023 financial results and 2024 Q1 outlook in greater detail Michael.

Michael Elbaz

Thank you, Jacob. Before diving into the numbers, please note that my review of our financial results and guidance refers to non-GAAP figures. Information about the non-GAAP financial measures, including GAAP non-GAAP reconciliations can be found in our earnings release.
Now let's turn to our fourth quarter results. As Jacob mentioned, Q4 sales were $10.1 million, in line with the $10 million midpoint of our guidance range. Our fourth quarter sales declined 26% sequentially and 49% year over year, primarily due to excess inventory across both our channel and direct customers, coupled with demand softness in our consumer markets.
Consumer sales were $3.2 million, reflecting a sequential decrease of $1.2 million due to continued demand softness with cable operators. Enterprise sales were $4.6 million, reflecting a sequential decrease of $2.2 million, driven by lower sales of custom products and access points. Sales of embedded modems were flat sequentially as some distributors continued to recover from inventory overhang. Automotive sales were $2.3 million, reflecting a sequential decrease of $0.2 million. Q4 gross margin was 30.3%, largely due to an inventory charge of $1 million we recorded in the quarter.
This charge related primarily to the end of life of our AirgainConnect PUE. product line year ago, we recorded a partial excess inventory reserve as a result of a lower demand forecast in Q4 2023. The SBUV. product line is fully reserved as we transition to the next generation of AirgainConnect vehicle networking product that we announced two months ago. Excluding the noncash inventory charge, our gross margin would have been approximately 40% in line with the midpoint of our guidance range.
Q4 operating expenses totaled $6.5 million, $0.5 million higher sequentially, and $0.5 million higher than our guidance. The increase was driven by higher project development expenses. Sequentially, our G&A sales and marketing expenses decreased while our engineering expenses decreased as we focused on the development of our Lantern SWA and AirgainConnect fleet solution.
As a result, our Q4 adjusted EBITDA was negative $3.3 million and non-GAAP EPS was negative $0.33. Our sales for 23 three totaled $56 million, $19.9 million or 26% lower year over year. Enterprise sales declined by $7.3 million, driven by excess channel inventory corrections, specifically in our embedded modem product line as well as by our maturing and declining access points product lines.
Consumer sales declined by $6.9 million due to soft demand from cable operators as well as excess inventory. Automotive sales decreased $5.7 million, driven by the lack of AirgainConnect HPUE. sales in 2023 and excess inventories that impacted our lead aftermarket customers. Full year 2023 gross margin was 37.9%, 30 basis point higher than our full year 2022 gross margin, 37.6%. Full year 2023 operating expenses totaled $26.4 million, 9% lower year over year, driven by reduced marketing and G&A expenses considering the sequential revenue declines, even as we prioritize our investments in our strategic initiatives. Full year 2023 adjusted EBITDA was negative $4.5 million compared to positive $0.1 million in 2022, driven by the impact of the material sales decline, which was partially offset by decreased operating expenses.
Our cash balance as of December 31, 2023 was $7.9 million, $2.1 million lower sequentially, driven by lower cash flows from operations on lower sales. Our accounts receivable balance was $7.4 million, $1.1 million higher sequentially due to a sales linearity issue in the fourth quarter. Net inventory was $2.4 million, $1.5 million more sequentially resulting from the excess and obsolete inventory reserve along with inventory consumption.
Now moving to our outlook for the first quarter ending March 31, 2024, as a reminder, our again provides quarterly guidance for sales, non-GAAP gross margin and expenses, adjusted EBITDA and non-GAAP EPS. As we believe these metrics to be key indicators for the overall performance of our business. We project sales for the 2024 first quarter to be in the range of 13.25 to $14.75 million or $14 million at the midpoint of the range. We expect a sequential sales growth of approximately 40% at the midpoint of the guidance range driven by the enterprise market.
We expect growth in our embedded modems product line after a year of inventory overhang, along with growth in our custom products, asset trackers and IoT antenna product lines, we anticipate the enterprise market growth to be partially offset by a sequential decline in our automotive market due to continued inventory correction. While our consumer market sales will remain relatively flat sequentially, we expect non-GAAP gross margin for the 2024 first quarter to be in the range of 39.5% to 42.5% or 41% at the midpoint of the range. Despite the projected decrease in the consumer sales mix from 32% in Q4 2023 to approximately 20% in Q1 2024, we expect our gross margin to increase driven by differentiated new products and applications in our enterprise markets.
We anticipate the enterprise consumer and Automotive gross margin to converge around the corporate gross margin, reducing the impact of market sales mix changes and opening a path to gross margin increases. In future quarters, we project our operating expenses to be approximately $6.4 million. We continue to invest in our engineering and sales teams as we focus on our strategic initiatives in fixed wireless access, vehicle networking and smart seat and repeaters markets. Non-gaap EPS is expected to be negative $0.06 at the midpoint of our guidance. Adjusted EBITDA is expected to be negative $0.5 million at the midpoint of our guidance.
Now I would like to turn the call over to Jacob for his closing thoughts. Jacob?

Jacob Suen

Thanks, Michael. A few closing thoughts before we had Q&A. First, I am proud of our team's ability to navigate an uncertain market environment in 2023, even as we faced significant headwinds, we made real progress along many aspects of our business, including in new products, new partners and new geographies and markets for our sales teams. I am optimistic that our industry has started to turn a corner and I am confident that our efforts will pay off in the coming quarters.
Again, we've already made significant progress in 2024 with three new developments across our markets in the last couple of months. These include the unveiling of AirgainConnect fleet, the evolutions of our flagship vehicle connectivity line in our automotive business, the announcement of the first of its kind smart lane term FWA solution in our antenna business, partnership with Lenovo, think edge in our asset tracking business and a Tier one MSO WiFi seven design win. Still, we believe that the upside is greatest in the second half of the year, and we look forward to building on our early successes through the rest of 2024.
Third, we believe that our products off at the heart of our value proposition for our customers, especially with the many emerging trends within our industry, including transitions to WiFi seven, increased demand for asset tracking capabilities and long-standing pinpoints in the 5G coverage space. We are confident that the worldwide connectivity opportunity is vast and growing in many geographies around the globe. The present on the tap markets for our industry and our business actually just returned from the Mobile World Congress in Barcelona last month and the interest in positive feedback we received gives me even greater confidence in our efforts.
For example, our next generation smart Lantern FWA product expected to launch next year. It's a product that has generated strong interest from several major players in the operator space. We expect that this product slated to ship next year could significantly reduce the number of truck rolls and customers returns. The operators currently experiencing our AC fleet products has also garnered substantial interest with both domestic and international prospects due to its own one capability and its low-profile size that makes it easy to install and maintain with better performance and a competitive price.
Finally, reliable 5G coverage remains a key challenge for operators around the world and our Lighthouse smart repeater aims to solve 5G coverage gaps in an effective and timely manner. For example, we are in advanced discussions towards a strategic partnership within International. I mean, all four a. again to become their primary partner for our Lighthouse smart repeater with shipment expected in early 2025. Overall, we remain committed to helping our partners and customers get Canetic quickly. And again, we can enable connectivity across both components and complete systems, and we are confident in the prospects for our overarching strategy in the years to come. And with that, operator, please open the call for Q and A.

Question and Answer Session

Operator

(Operator Instructions)
Scott Searle, Roth MKM.

Scott Searle

Hey, good afternoon. Thanks for taking my questions. I appreciate the color, and it's nice to see the market bottoming and an improving outlook as we look into the March quarter.
Maybe Michael, to just dive in quickly on I wanted to revisit the gross margins as we go into the first quarter on given that consumer tends to be a nice gross margin driver, and that's not part of the 6.4 uptick. I was wondering if you could just clarify again. So we're expecting to see an improvement in NimbeLink margins, an enterprise margins in general. That's where we're going to see the biggest improvement in the March quarter.

Michael Elbaz

Yes, hi, Scott. Thank you for the question. But yes, the enterprise margin is building up its result cause a number of improvements that we have done in 2023, one of which was this large project that we had mentioned a quarter ago. Our this is a new refresh platform for a strategic customer that's part of our customers' products, and that is definitely a higher value of premium products in scaling, along with also on the antenna level, the fact that we have some IoT applications and markets, this is a part of the recon 13 product that we announced a couple of quarters ago.
And those are also addressing some really differentiated high-power applications. This is just to name a few, but this has been a definitely a process of continuous high gross margin improvements. We mentioned last quarter, Scott, that the automotive was going to give us some increase and it did actually if you exclude the overall inventory charge that we had in Q4. The margin increased sequentially from 39% in Q3 to about roughly 40% in Q4. And that was mostly because of the automotive. And that is really kind of reconciling my comments on the Israel convergence around the overall grocery and other gross margin. So that the dependency and we see it in Q1, hopefully that we have had on consumer mix is not as Kristian as it has been.

Scott Searle

Great. Very helpful. And congratulations on the WiFi seven wins. I just wanted to dive into that quickly that will start to ramp up with the first two MSO customers. It sounds like in the second half of this year. I was wondering if you could put on magnitude size around that dollar amount. So you know how big that will be and how we should think about the recovery in general, the consumer business, it peaked at north of $10 million, we're bottoming out now at around $3 million. How should we think about exiting 2024?

Michael Elbaz

Yes. So very good question. So the WiFi seven, we believe is going to be the the major improvement for the MSOs to get back into their competitive advantages. And we do believe it will be the second half of the year is what you are right now in Q4, I believe we closed the quarter at $3.2 million, and I mentioned that we will roughly be approximately flat in Q1. That is that we primarily because of the M&O design win that we had on the SWA. is starting to ship in Q1, and this is going to give us some nice room as well to have through the year.
This actually the M&O ramp is actually offsetting the seasonality there usually see in Q1 that that's the reason for the flatness on the overall consumer revenue. As we build that into the third quarter and the fourth quarter or the second half of the year, we believe we can go back to the $6 million that we have seen in the first half of last year. But again, this is a bit preliminary at this point.

Scott Searle

That's very helpful. And lastly, if I could just two other quick follow-ups. On the tracker side of the equation, it sounds like the addressable market is pretty sizable. I was wondering if you could characterize some of the potential design opportunities that are out there. I believe last year the rail color opportunity was in the ballpark of 10 million or so. I'm wondering if these other opportunities are seeing similar magnitude and as it relates to AirgainConnect to Jacob, I'm wondering if you could provide a little bit more color now.
We've had CES, you're just at Mobile World Congress a 5G solution that supports global bands. How should we think about that ramping up? I know commercially it starts shipping in the second quarter, but how quickly does that ramp both in North America and European markets as we look forward into the second half of this year in 2025.
Thanks.

Jacob Suen

Hey, Scott, you're going to hear from you. It's Jacob here. So on regarding a simply, we're already seeing in our best interest, both domestically and internationally, and we expect that to be shipping in the second early second half of the year. And our second quarter, although second quarter we're expecting a lot of our customers trial happening were really been shipping samples to the customers, both domestically internationally, and it is not limiting to only USA in Europe. We actually have customers that will be doing the trials in Latin America as well as Australia.
And so this is truly a globalized product in the what people so interested. It is the only one features capabilities in its one of its kind in addition, such easier to maintain such easier to install. And it's like I mentioned earlier in the script, it's up enough for better performance, actually at a lower cost. Overall, cost of ownership is actually lower. So that's why we have generating a lot of interest with this particular product. So as indicated, we expect to start to have a nice funnel building up in the coming months and then to be shipping early second.

Operator

(Operator Instructions) Anthony Stoss, Craig-Hallum.
Please state your question.

Anthony Stoss

Again, it's nice to see the pickup from the March quarter guide on either one of you guys. Can you talk about the enterprise business is really snapping back in the March quarter. Jacob, do you think it's going to grow sequentially every quarter this year? And then I have a couple of follow-ups?

Michael Elbaz

Hi, Tony, this is Michael. I actually think that you're right, it is starting up very nicely. It's basically a growth across all the product lines. And we have the embedded modem is really a welcome sign. I have to say on the overall Q1 quarter of many because this inventory correction that we've been anticipating is over on that specific product line and this was one of the product line that was mostly impacted by the excess inventory in FY 2022.
In addition, the asset tracker, even though it's a bit of a lumpy business on the hardware, the recurring revenues were relatively flat, but on the hardware level, that has to be a lumpy itself. But it is nice that the growing as well too custom product is what to the antenna specifically on those IoT applications. We do suspect that the overall enterprise market will be relatively flat, at least in the near future. This is going to be a basically of the ups and downs of some of those product lines, but it is good to see it coming back at this point.

Jacob Suen

All Yes, come into the game of Tony, we're Microsemi's we're expecting to be flat baseball over a nice improved number already from Q1 and from Q4 to Q1. So we expect to be maintained on that nice level that they were going to get in Q1 for Q2.

Anthony Stoss

Got it. Jacob, on the AirgainConnect, the 2.0, the new product last couple of months ago, do you have an existing kind of customer base that are waiting for this product since they were maybe testing the original products?

Jacob Suen

Yes. Actually, we have a number of customers that have been waiting. Now this product I would say is no longer a long allows customers like it was with the version one in reality, have a lot of interest from a number of system integrators now expecting this deal to be nothing huge, but it's really diversified across now domestically internationally.

Anthony Stoss

Got it. And then last question for Michael --

Jacob Suen

So yes, surgical Yes, I was trying to say we're going to be working with a number of system integrators and channel partners on the on the AC fleet product line.

Anthony Stoss

Got it. Last question for you, Michael, on the inventory write-down, do you expect any other product lines to have the same? Right, Doug, for do you think everything's pretty clean now?

Michael Elbaz

No. Everything is particularly now this was a really a the ACHBUV. has been a major product line for us of concern, and we did have a partial reserve last year exactly in Q4 that by 2022. And this at this point, the product line is fully reserved. And we are fully focused on transitioning to the new Kagan Connect next-generation AC fleet platform.

Anthony Stoss

Perfect. Very good, guys.

Jacob Suen

Thank you, Tony.
Tim Savageaux, Northland Capital Markets.

Tim Savageaux

Hi, good afternoon and my congrats on the guide as well. Jacob, I wanted to follow up on your Mobile World Congress commentary and specifically on the opportunities for them kind of coverage extension infrastructure product. You mentioned that potential strategic partnership with an international MNO. I don't know if you talked about the size of that operator, but my question is no. As you look at those sorts of opportunities, can you can you tried to size them for us? And I imagine that something like a strategic partnership would be larger than normal? And then how does that relate to kind of the sum of the served addressable market commentary that you made?

Jacob Suen

It just came to the touchy, but I hear from you? Yes, I was actually extremely excited about the feedback we got out to a number of customers meetings. And certainly in August, not only that we're really interested in the SmartLink trend that we announced during the show and then the next gen AirgainConnect AC fleet. But there was a lot of interest on the smart network repeater. One I'm hearing consistently, especially with the international community is that 5G coverage is an issue for them. I think that long customers told me that in Brazil, the government's mandating that they'd be able to cover 5G everywhere.
And to do that now, especially some of the limo MUL, even with in the metropolitan area, this coverage gaps with 5G today and even you could be doing it close to a base station. But between buildings, there's what they call the shadowing it back. You'll notice that even in our New York Metropolitan. So how do you address that to install a lot of base station. It's really cost prohibitive, right? And also sometimes is also challenging because you have to lay the pipe in our smart Lighthouse network VPs are really addressing that particular problem because with our smart mobility, Peter, you only have to do this connecting to a light pole that's already existing.
And with our smart feature with our carrier aggregation feature. This is the perfect product, ideal product for those particular areas. All the order, the tower company as well as we're talking to these customers is becoming obvious that we are having a product that is really addressing that need. And that's what we're actually going to have throughout Europe in Middle East, in Latin America, Asia and the US.
So we're seeing a lot of interest in with this particular terminal I mentioned internationally in the EMEA area, and we already discussed about it very strategic partnerships. Lilly did a preliminary trial with them. It was extremely well received and they really wanted to have a much bigger trial. They are willing to enter a strategic partnership with us. And I hope to update you in the really near future as far as the size. Now we talk about it very sizable market where these are large opportunities. So I hope to update you more about exciting time here with our new product.

Tim Savageaux

Yes, great. And just to follow up on that, you mentioned I don't know if you're coming out of Mobile World Congress for the lung, a lot of trial commitments. Sounds like that's the case, but and you've mentioned a couple of trials in the past, but no, as you look at it now, any way to kind of size, the number of trials you have going on for the Lighthouse products?

Jacob Suen

Yes. I mean, look, this is in dealing with a mobile network. Operators usually takes time, right? Because the technology is this is an infrastructure play, so they are always very cautious about the deployment so that to go to several different trials. And that's why even though we announced the product last year. We know this was going to be a year a year and half a duration for the first certification for trials. And I'm pleased that so far on the number of trials we have found we receive some extremely positive feedback from the customers so that we are proceeding to the next stage and we hope to get POs by by the end of this year, and we are still on track for that and those will be sizable opportunities.

Tim Savageaux

Got it. And last question for me. I think in your initial comments, you talked about gradual growth for the year. So I'm guessing that refers to expectations for sequential growth throughout the year. But it sounds like you've had this big kickup in enterprise that you hope to kind of sustain at that level and maybe have consumer and some of the asset tracking businesses kind of drive sequential growth in the second half? Is that the right way to look at it?

Michael Elbaz

Hi, Tim, this is Michael. Yes, you're correct. So the consumer we do expect that to be things happening. One is why at seven one is not in our control is our costs. The service providers launch their own one asset and solutions that we expect that to happen in the back end of the year. The good news that we have two of the key design wins here, the M&O is another one that's going to be ramping up through the year as well, too, on the automotive market, the aftermarket itself.
And this is still being absorbed by the excess inventory overhang that we still continue having with lead customers. But per their feedback, there should be through that in the back end of the year in Q3, Q4 itself. And then we'll also have the AirgainConnect U.S. AC fleet coming up. It's starting to ship in the second half of the year.
And then on the enterprise business, yes, we do expect to have an overall maintenance of that product of that market with some pockets of opportunities. As we mentioned before, we definitely are very focused on the asset tracker because of its SAM and cents overall growth and also with our Lantern FWA product as well.

Tim Savageaux

Okay. Thanks very much.

Jacob Suen

Thank you, Tim.

Operator

And 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 AIRG. at Gateway dash GRP.com.
I'd 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. I especially want to thank our dedicated employees for their ongoing contributions and our investors for their continued support. We look forward to providing additional updates at our next opportunity, Operator?

Operator

Thank you for joining us today for Aehr games Fourth Quarter and Full Year 2023 earnings call. You may now disconnect.