Airgain (NASDAQ:AIRG) Q2 2020 Earnings Call

0:00 Good afternoon. Welcome to AirGain's second quarter 2020 earnings conference call. My name is Simon, and I will be your coordinator for today's call. Joining us for today's call are AirGain's CEO, Jacob Suen, CFO, David Lyle, and Senior Vice President of Engineering, Kevin Pill. 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 for questions from Airgain's publishing cell site analysts. I would now like to turn the call over to Mr.

0:45 Lyle.

0:48 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 a 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, August 6, 2020. 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, including non-GAAP operating expense, non-GAAP net income, non-GAAP diluted earnings per share, and Pajasati Bhadda.

1:54 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?

2:07 Thank you, Dave. Welcome, everyone, and thank you for joining us on the call today. I'll start with an update on the second quarter and a brief review of our strategy and they discuss progress we've made on key programs. They will then provide financial details as well as a quick update on the impact of COVID-19 on our business. Following my remarks, let's begin with Airgain Connect. In our May earnings call, we discussed our innovation around the migration to integrated wireless solutions with our new patented AirGain Connect platform launch. How it could be a game changer for AirGain in automotive markets and our next generation Wi-Fi and 5G offerings.

3:01 We also announced the first AirGain Connect product which targets public safety and fleet vehicles. We have begun field trials and have inquiries from potential customers being processed. Earlier this week, we announced that we have received AirGainConnect device certification on AT&T's LTE network. You can now find our AirGainConnect product on the FirstNet website. We expect to see revenue begin to ramp in Q4 of this year. In addition to progress made on the product front, we are very pleased to announce that we have successfully engaged an additional contract manufacturer outside of China in Southeast Asia. Our new contract manufacturer services many companies globally and is experienced in antenna manufacturing.

4:02 They have already been qualified and began volume shipments as of this month. This allows us to mitigate potential China terror, impact, and diversify risk away from China, where our two existing contract manufacturers are located. We will continue doing business with our China-based contract manufacturers as they have been great partners to Airgain. Now, let's move on to our strategy, where I'll briefly revisit our strategy for the markets we currently serve. specific to the consumer market, our strategy entails winning new designs with our lineup of Wi-Fi 6 embedded antenna solutions, which includes support for Wi-Fi 6E as well as CBRS.

4:58 Wi-Fi 6E is an area where more complex antenna technology is required and where we believe we are innovation leaders. On the enterprise market front, We are targeting new 5G device programs, primarily sub-6 GHz, CBRS, and Wi-Fi 6 opportunities for integrated smart antenna systems. This allows us to leverage our core competencies in advanced antenna designs in a market that offers significantly higher selling prices in the tens of dollars to hundreds of dollars range. The automotive market continues to be our largest growth opportunity in the current year but also has significant long-term growth potential.

5:53 Our strategy is to leverage our Antenna Plus brand in the North American fleet and public safety auto aftermarket segments to generate near-term revenue for longer-term revenue growth opportunities. We are pursuing the European and North American auto OEM markets as well as the fleet aftermarket in Europe. Most importantly, we have now launched our game-changing AirGain Connect platform that will be leveraged into several products to serve multiple markets around the globe. Moving to an update on some key programs we highlighted.

6:39 during our May earnings call. We are continuing engagement with major gateway program with tier one carrier in North America. We have now received volume orders for Q3 delivery signifying the red has begun. We are also continuing engagement with significant Wi-Fi 6 gateway program started in Q4 of 2019 with North American tier one operator We expect this to launch in Q4 of this year. Now, I would like to highlight some notable design wins and key program initiatives that occurred specifically in the second quarter across our market.

7:26 On the consumer front, we continue to see momentum for our Wi-Fi 6 embedded antenna solutions. We will select it to provide a new Wi-Fi 6 router design for a fixed wireless broadband internet service provider in North America. Initial orders were placed in Q2 and are expected to continue direct through the end of 2020. We also want a design for a new Wi-Fi 6 DSL gateway shipping into North America. Volume orders have been placed and we expect to see revenue through the end of 2021. During the quarter, we were selected to provide an 802.11ac router design, shipping into one of the largest service providers in Japan. We expect production orders to commence in Q4 of this year. We are also seeing increased demand for mobile hotspots due to work-from-home trends.

8:35 related to the COVID-19 pandemic. As an example, we recently won a new design for a mobile hotspot for one of the largest telco operators in the world for target markets in Europe. We received sample orders in Q2 and expected to rent in Q3 of this year. In the enterprise market, during the quarter, we securely designed for a wireless industrial automation program. We received sample orders in Q2 and expected to rent in Q3 of this year. Additionally, we started shipping to a large utility company in the US for a machine-to-machine smart utility application and expect shipments to rent in Q3 of this year.

9:31 We were also selected by one of the top metropolitan transit systems in the U.S. for a machine-to-machine connectivity application. We expect shipments to commence in Q3 of this year. In line with our strategy to generate longer-term revenue opportunities with higher margins, we have engaged in a new in-flight Y56 access point design for the two largest commercial aircraft manufacturers in the world. This is a substantial program with anticipated trivia longevity that shows diversity in enterprise wireless LAN applications with a significantly higher selling price in the $100 range.

10:23 In automotive, we have been selected by the police agency in Canada's largest for a public safety fleet tracking application. Initial orders have been placed in Q2, and shipments are expected to continue through 2021. In the European automotive leisure market, we have engaged formally on a new program for a specialized combination antenna-supporting TV, FM, and 5G monocelular connectivity for a leading The UK is experiencing a boom in motor homes during the COVID-19 pandemic, with 2020 vehicle registrations up over 20%.

11:15 This is a new territory opportunity that allows us to leverage our core competencies in complex 5G antenna design, with significantly higher selling prices in the hundreds of dollars range. We are very proud of the progress we've made over the past quarter and excited about the prospect for second half revenue growth. Now, I'd like to turn the call over to our Chief Financial Officer, Dave Lyle, who will walk us through the financial highlights for the quarter. Dave.

11:55 Thank you, Jacob. I'll begin by providing key financial highlights for the second quarter 2020, as well as our outlook for the third quarter, qualitative commentary around how Q4 could play out, and then a COVID-19 update. Second quarter 2020 revenue of $11.4 million was above the midpoint of our previous guidance range of $11.25 million. Revenue grew about $230,000 sequentially from Q1 to Q2 due to strength out of our consumer market revenue as our large service provider and customers began ordering more aggressively following a pause from COVID-19 impacts, while both enterprise and automotive market revenue remained relatively flat from the prior quarter.

12:45 Q2 gross margin of 47.1%, was again above our long-term gross margin target range of 44% to 45%, as we benefited primarily from a favorable product mix shift. Non-GAAP operating expense in Q2 was $5.2 million, significantly better than the midpoint of our previous guidance range of $6 million. We benefited from lower travel and entertainment and cancellation of shows and exhibits during the quarter, both due to COVID-19 continuing to keep us home. We also saw material improvements over guidance as we implemented discretionary cost saving measures that are already positively impacting our operating expense.

13:34 Excluded from non-GAAP operating expense was $654,000 in stock-based compensation expense and $124,000 in amortization of intangible assets. adjusted EBITDA was $323,000 in Q2, well ahead of our expectations, mainly due to much improved operating expenses and higher gross margins. Non-GAAP net income in Q2 was $214,000, and Q2 GAAP net loss was about $736,000, both better than the midpoint of guidance. Moving to earnings per share, our Q2 non-GAAP earnings per share was positive $0.02 based on a fully diluted share count of $9.9 million, and GAAP loss per share was negative $0.08 based on a basic share count of $9.7 million.

14:28 This was better than the midpoint of our previous guidance of negative $0.08 on a non-GAAP basis and negative $0.16 on a GAAP basis. Finally, our Q2 cash, cash equivalents and short-term investments, was $35.1 million, up almost $1.6 million from Q1 due to positive working capital changes as well as cash generated from operations. Cash used for share repurchases during the quarter totaled about $418,000 for 45,500 shares. or an average of $9.17 per share. Now I'd like to provide a preliminary outlook for the third quarter of 2020.

15:15 In Q3, we expect revenue to be in the range of 12 to 13.5 million or 11.4% sequential growth at the midpoint of our guidance range of 12.75 million. We expect consumer market revenue to grow sequentially primarily due to three product ramps and initial inventory builds from two of our large North American service provider end customers. We expect enterprise market revenue strength as a result of new product ramps at several customers, and we expect our automotive market revenue to be in line with last quarter. Our Q3 2020 billings plus backlog are again well ahead of the last several quarters at this point in the quarter.

16:06 We expect gross margin in the third quarter to be above our long-term model, again, in the range of 46 to 47%. We believe Q3 non-GAAP operating expense will be about $5.4 million, plus or minus $100,000. In Q3, we expect to see increased payroll and benefits expense associated with recent talent acquisition and our annual merit increase process which took effect July 1. Excluded from our non-GAAP operating expense estimate was $650,000 in stock-based compensation expense and $124,000 in amortization of intangible assets.

16:52 At the midpoint of guidance, adjusted EBITDA in Q3 would be approximately $680,000. At the midpoint of our guidance, we expect Q3 non-GAAP earnings per share to be about 6 cents based on a fully diluted share count of 9.9 million, and on a GAAP basis, we expect a loss per share of 3 cents. Although we are not providing specific annual financial guidance, I would like to revisit how we expect revenue to play out for the remainder of the year. First and foremost, we cannot predict how COVID-19 will ultimately impact our revenues this year. However, based on our current view, we continue to expect revenue growth in the second half of the year over the first half as a result of new design wind ramps.

17:42 We also still believe that the work-from-home policies and the resulting increased bandwidth requirements will ultimately have a positive impact on connected home-related businesses, an ecosystem in which we play a significant part. As we indicated in the last earnings call, we expect our consumer market revenue to continue to be the bulk of our total revenue in 2020. Going into 2021, we expect our newly launched AirGain Connect platform's first product to generate material and growing revenue for AirGain throughout 2021. In terms of inorganic growth and technology expansion potential, We continue to evaluate opportunities that either expedite our time to market for new innovative products or that help us gain the benefits of scale in our markets.

18:33 However, we currently have nothing imminent nor anything we believe has merit to move forward with. We have prioritized our cash preservation given the current environment, so we will approach any transaction with caution and conservatism if they were to arise. Filling up where we are today, we believe we are in a solid position to sustain through a challenging environment and are very excited about the prospects for growth in the second half of this year, but more importantly, in 2021, especially as it pertains to AirGain Connect. Our sustainability and durability continues as we have a very solid balance sheet with a strong cash position and no debt.

19:20 Before I turn it back over to Jacob, I wanted to give a quick update on the impact of COVID-19 on our business. To date, we have had no reports of employees contracting COVID-19. We are prepared for if or when that happens. We have aligned our policies and procedures using a conservative viewpoint to the standards set by federal and state recommendations. We have had little to no supply chain disruptions and only a few customer delays. as I've detailed in prior comments.

19:53 Now, I'll turn it back over to Jacob. Jacob? Thanks, Dave. We continue to have robust demand for our products, and we are very excited about the prospects for us to grow in the second half of this year, even in this very challenging environment. We also deliver on reducing manufacturing risk away from China, by expanding our contract manufacturing to Southeast Asia with a very solid and experienced antenna manufacturer. Our progress on our game-changing new platform, AirGain Connect, has already begun drawing attention from potential customers, and our field testing shows that our first product is performing to our expectation.

20:42 We also successfully delivered on obtaining device certification on the AT&T network. Finally, I also stated in our last call that we believe the timing is right as the technological disruptions with 5G next-generation automotive and technological ships on the enterprise connectivity front will provide a favorable backdrop for companies such as Airgain. Progress with design wins and innovation in the past quarter continue to bolster my confidence in delivering long-term value to our shareholders. We appreciate those investors who have supported Airgain's progress during our strategic transition to a company with broader market diversification, delivering higher levels of integrated wireless solutions, and especially during a very challenging environment. And with that, we are ready to open the call for your questions. Up later. Please provide the appropriate instructions.

21:51 Thank you. We will now take questions from Airgain's publishing cell site analysts. To ask a question, please press star then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Craig Ellis with B Riley FDR. Your line is open.

22:21 Yes, thanks for taking the question and Jacob and Dave, congratulations on the good execution. Dave, I wanted to start just understanding what you're seeing in the connected home business as you look at the third quarter and then into the fourth quarter. So in the third quarter, I think I heard you say that you've got three product ramps going and two others, but I think the latter two were associated with some inventory build. So what does that mean for the segment's ability to continue to grow in the fourth quarter? And then, you know, any color on the duration of those programs as we think about calendar 21 would be helpful.

22:59 Yeah. The quick answer is that the service providers, as you know, drive a significant portion of our revenue. The main North American service provider is really what I'm talking about. We've said historically over the past couple of quarters that there was a product cycle transitioning going on where some of the products that have been shipping for a while are starting to ramp down as some of the new ones are ramping up and we're kind of right in the middle of that happening. Q3 is the first quarter where we saw multiple of those starting to ramp. And in fact, I'd even talked historically about the fact that some of those were supposed to ramp in Q2 until COVID hit.

23:45 So this is just kind of happening a little bit later than we originally expected, which in this environment because it's not happening. That being said, you know, the ramp should continue through the end of this year. and then we'll probably see some seasonal softness from pretty typical. But we'll have to see how the environment around COVID impacts those types of business. So far it's been.

24:17 Got it. And then there was also an explicit mention in the press release and I think in your comments that you're seeing an enterprise recovery. in the third quarter. Can you talk a little bit more about that and what can happen from here as we look to your end and into early calendar 21?

24:35 Yeah, good question. We have been kind of talking to the potential improvement or revenue growth out of enterprise for the past couple of quarters here. And we're finally getting multiple product ramps happening kind of at the same time. and that's really what's driving the revenue growth going into the second half and even into 2021 that it's interesting however because one of our larger programs as you know was related to enterprise in venues like stadiums and arenas that we had talked about historically and because COVID has impacted, of course, stadium attendance and arena attendance, a lot of those products that we were working on got pushed out. So the growth we're seeing is happening despite the delay in those revenues. So we think on top of what we're seeing here, we should in 2021, hopefully if things start to, people get back to a more normal life in a year, that we'll start seeing those revenues start to ramp up.

25:50 Got it. And if I could, just one more before flipping to Jacob. There was a mention that we could see AirGain Connect revenues in the calendar fourth quarter. Can you just help us with some of the visibility that you have, either with the customer inquiries that have already come in, what I believe is an established channel network that you could use in helping end customers with the products that you sell, et cetera, so we have a sense for what revenue could look like in the first few quarters as Airgain Connect gets going.

26:27 Yeah, maybe I'll start and Jacob, you have comments after you can fill in. In terms of the ramp, we've said historically we expect to start to see the first material dollars, revenue dollars in Q4 for Airgain Connect, our first Airgain Connect product. We still expect that to be the case. that implies that the AT&T network will be ready to go and just by virtue of the fact that we expect those revenues to come in at that point in time. We can't talk specifically to AT&T's plans there. They'll have to articulate, but we have confidence based on our continued discussions with them and all of our channel partners that that's going to happen.

27:15 assuming that happens, we think we'll start to see starting Q1 to get some pretty decent growth out of AirGain Connect and ramping through the entire year.

27:29 Got it. And then, Jacob, if I could just turn it over to you. We've been very attentive to the list of design wins that the company's been getting for the last year, and it seems and increasingly long list. And I think the point with these design wins or these are the higher value, higher margin design wins that the company's been working on for the last couple of years. So as we look at the list you provide today, which seems by far the most extensive that I've heard in at least four quarters, how do we think about the percent of product sales that's being driven by these new products and how does that evolve over the next four quarters or so? Is it You know, it's at 20% in the fourth quarter, and can it double? Or how do we think about the trajectory of this new product momentum that you seem to have?

28:19 Really good questions. And without diving into the certain percentage, I'll just kind of let you know about the overall company trend. So at this point, 2020, as Dave indicated, the bulk of the revenue still resides on the core consumer market. However, you know, as you indicated, in the last year or two, we have making a significant effort going after the enterprise and the out-of-model markets. And the design, when you're seeing the design opportunities, we also described, we're already seeing the, you know, it's paying dividends. So I think that 2021, you're going to see, you know, a much bigger percentage of the revenue growth comes from the automotive and the enterprise as well. And I will not be able to elaborate about the exact percentage, but ideally, we'll see a major uptake in those two newer markets.

29:19 And we do feel strongly about the potential, given the design wins we already started to win this year.

29:29 Got it. Thanks, guys, and congrats on the AirGain Connect certification.

29:33 Thank you. Your next question comes from the line of Alessandra Vecchi with William Blair. Your line is open.

29:45 Hi, guys. Congratulations on the good quarter and strong execution as well. Just on the operating expense side, you guys have really done a tremendous job there. As we look forward, thinking about sort of more revenue coming from Enterprise and Automotive. How do we think about the potential investments there and how operating expenses might track from Q3 levels?

30:19 Sure, I'll take that one. Alex, thanks. My guess is that we're going to see OpEx increment up. It's kind of like what it's doing between Q2 and Q3. Part of the reason is that we are after certain talent that we'd like to go after out there. We're also kind of making room for a lot of that by discretionary tight belt tightening and just trying to operate in a little bit more efficient way, which we've had success, as you can see, with DropX and Q2. We're going to continue to do that. when it comes down to what OpEx is going to look like, although we're not guiding beyond Q3, it does look like we should remain kind of back where we were from a non-GAAP standpoint in the $6 million quarter range next year, somewhere in that kind of zip code. I think it's going to depend also, kind of a high-class problem is if AirGain Connect platform, the first product, really takes off and we have the opportunity to very quickly invest in other versions of it.

31:35 You know, for instance, 5G or something like that. We really think that we'll put a little more investment in there which would impact our OpEx but for obviously pretty good ROI reasons.

31:50 Great. And then similarly, you know, an extension of that going into the gross margin. Obviously, that target model of 44 to 45, you guys have done a great job beating over the last numerous quarters. And again, as we look towards more enterprise, more connect, how do we think about that range, and are you sticking to that?

32:13 Yeah, I think, as I said in the past, we're probably going to maintain that long-term model until we figure out what the air-gain-connect range model will look like. I think the business is changing in a pretty significant way from below the line. If you look at AirGain Connect launching, if we have success there, but also this shift away from consumer and more towards enterprise as well as auto, but on the enterprise side. If in certain parts of enterprise, for instance, you have to go get the big global players and traditional Wi-Fi, for instance, those types of gross margins are going to put more pressure on our corporate gross margin.

33:00 So if that enterprise revenue goes up and we win some of the big players out there, then more pressure. That being said, with Airgain Connect where it's at and with some of the other opportunities that we're seeing out there, we're still getting pretty good gross margins today. So as it stands today, looking out into 2021, I think, you know, we're going to continue until 21 to be in kind of the range we're at. We may be able to even maintain that for a couple quarters into 2021, and then we'll have to see how things play out between the mix of all.

33:40 Perfect. That's incredibly helpful. And that's it for me for the time being.

33:44 All right. Thanks, Al. Your next question comes from the line of Gus Richard with Northland Capital Management. Your line is open.

33:57 Yes, thanks for taking the questions. Just real quick, Jason, what is the delta in your content as you move from Wi-Fi 6 to Wi-Fi 6E and CBRS?

34:12 Okay, yeah, I mean, it really varies, and I can talk a little bit and turn over to Kevin, you know, the and he would be able to provide more detail. So certainly, overall, we don't anticipate changes because from 6 to 6E, I think that it adds more complexity and it really depends on the carrier or the device application as far as how many antennas are going to go into a specific box. But overall, we don't anticipate the number to go down as far as relating to the specific application. Let's say from Wi-Fi 6 to 6E, we don't anticipate a decrease in content. But the complexity and the expectation of a particular device would make a difference there.

35:03 And I can have Kevin put some more color into it.

35:06 Hey, Gus. This is Kevin. Just to give you an indication, if you look at the trend that we're seeing now with the new product, projects that we're working on. Estimated about, I think, 75% of the newer designs that we're working on that we'll be introducing in the future in those future boxes are having 75% of them are Wi-Fi 6. So it's really good because we position ourselves well with our upgrades of our facilities around the globe to where we knew this was happening, and now each location heavily in design in the Wi-Fi 6E got it and then when when do you expect those designs to start to go into manufacturing 2022 or will you start to see some of the second half of 21 yeah this this year at the end of this year and actually going into 21 so most of the um The designs that we're working on right now are requiring the Wi-Fi 6E in them and stuff. So that'll ramp up production in the fourth quarter and going into the first quarter of next year.

36:24 Got it. And then just thinking about seasonality going forward, you're going to have an increasing mix of automotive, which is a little bit different than your consumer revenue. Can you talk about what your expectations are for seasonality going into 21 and 22?

36:46 Yeah, I can take a shot at that. I think, you know, we're not going to see on top line revenue the typical seasonality just because of the, you know, we expect the shift or the transition to these new products happening over the next kind of 18 months timeframe. The The transition, do you want to take this, Jacob?

37:17 Yeah. So we do anticipate that you're going to see, you know, we're going to see the automotive, you know, revenue start increasing, specifically in the aftermarket segments, right? And then the air-gain connect, you know, we're going to see how well the AT&T network. There is some reliance also on the AT&T side as well in the first night. I think that right now we feel really promising about the mixture, I think starting next year, especially the second half, we're going to see a substantial amount of that coming from the outer motive, the AirGain Connect platform and the enterprise would also come into play as well. At this point, I don't think that we can tell you exactly how it's going to play out percentage-wise.

38:09 Yeah, and let me just finish up my thought there. I thought Jacob wanted to chime in, so I let him go. On the consumer side, with the service providers specifically, we're going to see seasonality in Q1 and Q2, like I said before, which we typically expect. And because they drive a material portion of our revenue, you're going to see some pressure there. That being said, with the ramp and growth out of Enterprise that we talked about, as well as AirGain Connect, we think that we have the potential to outgrow that seasonal softness during that time frame. And that's kind of what I mean by there's a lot of things happening below the top line that are changing pretty significantly for the time frame. It's just mixed between those kind of sub-markets.

38:57 Does that make

38:59 sense? It does, I guess. Just to be really blunt about it, do you think you can be flat sequential in the first quarter? Will the uplift to the new product ramps be enough to offset the seasonality of the normal consumer market?

39:16 Yeah, I don't want to get into the position of guiding revenue that far out. However, just qualitatively, if you kind of look at the potential impact of something like an air gain connect, product revenue, even if we're shipping a small amount, can produce a pretty material size of revenue for us. So I think that's kind of the big lever for us, which will ultimately answer your question.

39:45 Fair enough. Thanks so much. Again, ladies and gentlemen, if you would like to ask a question, please press star then the number one on your telephone keypad. Your next question comes from the line of Carl Ackerman with Cowan. Your line is open.

40:06 Hey, good afternoon, David and Jacob. A few questions, if I may. Regarding AirGain Connect, I think you have the opportunity to broaden out that product to other carriers utilizing Band 14. Have you locked in firm orders yet across the channel, across multiple partners, that it's driving your enthusiasm for the fourth quarter and next year? I guess if you could just quantify the number of channel partners embedded within your Outlook for AirConnect, as you think about the linearity of that growing in 2021, that would be very helpful.

40:40 Yeah, I think I'll take a quick shot, and then, Jacob, maybe you can follow up. You know, the bottom line, unfortunately, we can't get into that kind of detail on this call. We're getting quite a few inquiries about from potential customers, but it's a little early. You know, we just got the product certified. on our end field trials internally and excellent. And we know the interest in the market is there. Outside of that, I think getting into some of the customer details is probably not appropriate.

41:15 Jacob, what do you think? Yeah, I mean, but just to reiterate Dave's point, we are getting a lot of interest. And even talking to AT&T personnel there, you know, they are more than willing to work with us and want to put a really good focus on this product launch.

41:36 Got it, that's helpful. Just on the, you know, well, it sounds like you have, you certainly have several new programs across consumer gateways and routers ramping over the next two quarters. I'm curious, how many of these programs are new business to you versus replacing a previous program I guess that would indicate greater top line leverage for you going into 2021.

42:05 Yeah, some of the new products that we're talking about ramping now are the product cycle transition products I was talking about on the service provider side. So they're called those placement products. But if you kind of look down the line of enterprise and even auto, those are all kind of more

42:28 Even a couple of the programs I mentioned earlier, the design one we're now getting in Japan, that's new. And the thing that got me really excited as well is we talk about the European leisure market. That's a brand new opportunity that's presenting to us. So the pandemic actually creating that particular opportunity where I mentioned about the 20% increase with the registration certification. That presents a really good opportunity for us, and it's in line with what we try to grow with the aftermarket as well.

43:07 Got it. That's helpful. Last question, if I may. You indicated that enterprise should hold up well into the second half of the year. I was hoping you could provide a bit more commentary on what you're seeing in that market. One of your larger customers noted some challenges in campus networking and outdoor wireless, though indoor wireless is holding up well. So if you could just speak to the puts and takes you see in enterprise over the second half relative to your Wi-Fi 6 portfolio, that would be helpful. Thank you.

43:39 Yeah, I think it's a little bit trickier because the revenue historically out of enterprise was really almost immaterial. It was very small. So we're growing off a very small base. Now that we've won some new designs with some of the big traditional Wi-Fi enterprise players, those are just launching, so it might not exactly match with what's happening in the general market.

44:12 It does. Thank you. At this time, this concludes our question and answer session. If your question was not taken, you may contact Airgain's investor relations at investors at airgain.com. I'd now like to turn the call back over to Mr. Suen for his closing remarks.

44:39 Thank you for joining us on today's call. I especially want to thank our employees, partners, and investors for their continued support. We look forward to updating you on our next call. Operator? Thank you for joining us today for AirGain's second quarter 2020 earnings call. You may now disconnect.