Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May 4,~~October 30, 2023, the registrant had ~~27,405,076~~27,665,127 shares of ordinary shares, $0.0001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, forward-looking statements may be identified by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, they should not be relied upon as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


																				Three Months Ended September 30, 2022
																				Share Capital
																				Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at June 30, 2022																					26,964		$	3	$	130,430	$	(4,512	)	$	(6,624	)	$	(1,145	)	$	118,152
Net income																					—			—		—		—			9,435			—			9,435
Share-based compensation																					—			—		2,615		—			—			—			2,615
Issuance of vested shares																					47			—		—		—			—			—			—
Treasury shares withheld for net settlement																					(12	)		—		—		(211	)		—			—			(211	)
Proceeds from exercise of share options																					17			—		113		—			—			—			113
Foreign currency translation																					—			—		—		—			—			(283	)		(283	)
Balance at September 30, 2022																					27,016		$	3	$	133,158	$	(4,723	)	$	2,811		$	(1,428	)	$	129,821

																				Nine Months Ended September 30, 2022
	Share Capital																			Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated (deficit) equity			Accumulated other comprehensive loss			Total shareholders' equity			Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2021		26,735		$	3	$	124,117	$	(3,906	)	$	(7,378	)	$	(699	)	$	112,137			26,735		$	3	$	124,117	$	(3,906	)	$	(7,378	)	$	(699	)	$	112,137
Net income																					—			—		—		—			10,189			—			10,189
Share-based compensation																					—			—		7,073		—			—			—			7,073
Issuance of ordinary shares under ESPP																					87			—		1,606		—			—			—			1,606
Issuance of vested shares																					193			—		—		—			—			—			—
Treasury shares withheld for net settlement																					(43	)		—		—		(817	)		—			—			(817	)
Proceeds from exercise of share options																					44			—		362		—			—			—			362
Foreign currency translation																					—			—		—		—			—			(729	)		(729	)
Balance at September 30, 2022																					27,016		$	3	$	133,158	$	(4,723	)	$	2,811		$	(1,428	)	$	129,821

																				Three Months Ended September 30, 2023
																				Share Capital
																				Shares			Amount		Additional paid in capital		Treasury shares			Accumulated equity			Accumulated other comprehensive loss			Total shareholders' equity
Balance at June 30, 2023																					27,603		$	3	$	146,528	$	(5,509	)	$	14,456		$	(1,427	)	$	154,051
Net loss		—			—		—		—			(1,568	)		—			(1,568	)		—			—		—		—			(26,200	)		—			(26,200	)
Share-based compensation		—			—		2,174		—			—			—			2,174			—			—		2,631		—			—			—			2,631
Issuance of vested shares		94			—		—		—			—			—			—			69			—		—		—			—			—			—
Treasury shares withheld for net settlement		(18	)		—		—		(415	)		—			—			(415	)		(11	)		—		—		(91	)		—			—			(91	)
Proceeds from exercise of share options		14			—		146		—			—			—			146			1			—		6		—			—			—			6
Foreign currency translation		—			—		—		—			—			(66	)		(66	)		—			—		—		—			—			(174	)		(174	)
Balance at March 31, 2022		26,825		$	3	$	126,437	$	(4,321	)	$	(8,946	)	$	(765	)	$	112,408
Balance at September 30, 2023																					27,662		$	3	$	149,165	$	(5,600	)	$	(11,744	)	$	(1,601	)	$	130,223

	Three Months Ended March 31, 2023																			Nine Months Ended September 30, 2023
	Share Capital																			Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated equity			Accumulated other comprehensive loss			Total shareholders' equity			Shares			Amount		Additional paid in capital		Treasury shares			Accumulated equity			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2022		27,313		$	3	$	138,997	$	(4,922	)	$	12,822		$	(1,527	)	$	145,373			27,313		$	3	$	138,997	$	(4,922	)	$	12,822		$	(1,527	)	$	145,373
Net income		—			—		—		—			4,276			—			4,276
Net loss																					—			—		—		—			(24,566	)		—			(24,566	)
Share-based compensation		—			—		2,625		—			—			—			2,625			—			—		8,568		—			—			—			8,568
Issuance of ordinary shares under ESPP																					88			—		1,102		—			—			—			1,102
Issuance of vested shares		45			—		—		—			—			—			—			247			—		—		—			—			—			—
Treasury shares withheld for net settlement		(12	)		—		—		(211	)		—			—			(211	)		(46	)		—		—		(678	)		—			—			(678	)
Proceeds from exercise of share options		51			—		387		—			—			—			387			60			—		498		—			—			—			498
Foreign currency translation		—			—		—		—			—			86			86			—			—		—		—			—			(74	)		(74	)
Balance at March 31, 2023		27,397		$	3	$	142,009	$	(5,133	)	$	17,098		$	(1,441	)	$	152,536

Balance at September 30, 2023																					27,662		$	3	$	149,165	$	(5,600	)	$	(11,744	)	$	(1,601	)	$	130,223

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Note 1. Business and significant accounting policies

Business

Cambium Networks Corporation (“Cambium” or “Cambium Networks” or the “Company”), incorporated under the laws of the Cayman Islands, is a holding company whose principal operating entities are Cambium Networks, Ltd. (UK), Cambium Networks, Inc. (USA), and Cambium Networks Private Limited (India). On June 26, 2019, the Company completed an Initial Public Offering and the Company's ordinary shares began trading on the Nasdaq Global Markets.

Cambium Networks Corporation and its wholly owned subsidiaries design, develop, and manufacture wireless and fiber broadband and ~~Wi-Fi~~enterprise networking infrastructure solutions that are used by businesses, governments, and service providers in urban, suburban and rural environments. Cambium's products simplify and automate the design, deployment, optimization, and management of broadband and Wi-Fi access networks through intelligent automation.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Cambium Networks Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements as of ~~March 31,~~September 30, 2023, and for the three-month and nine-month periods ended ~~March 31,~~September 30, 2022 and 2023, and the related notes are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements, and, in the opinion of management, reflect all adjustments, which comprise only normal recurring adjustments necessary to state fairly the Company’s financial position as of ~~March 31,~~September 30, 2023 and results of operations for the three-month and nine-month periods ended ~~March 31,~~September 30, 2022 and 2023 and cash flows for the ~~three-month~~nine-month periods ended ~~March 31,~~September 30, 2022 and 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K and filed with the SEC on February 27, 2023. The results of operations for the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2023 are not necessarily indicative of the operating results to be expected for the full year.

In 2022, management determined that certain costs previously included as general and administrative expenses related to other functions of the business. Prior periods have been revised to reflect the allocation of these costs to their respective functions. These costs primarily include facility costs such as leased space and shared IT costs. Revisions were made to increase research and development expense by $~~0.8~~0.9 million and selling and marketing expense by $0.3 million and decrease general and administrative expense by $~~1.1~~1.2 million for the three-month period ended ~~March 31,~~September 30, 2022. Revisions were made to increase research and development expense by $2.6 million and selling and marketing expense by $0.8 million and decrease general and administrative expense by $3.4 million for the nine-month period ended September 30, 2022.

Update to Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in the 2022 Form 10-K, Part II, Item 8.

Note 2. Balance sheet components

Inventories, net

Inventories, net consisted of the following (in thousands):


	December 31,			March 31,			December 31,			September 30,
	2022			2023			2022			2023
										(unaudited)
Finished goods	$	50,052		$	60,211		$	50,052		$	71,304
Raw materials		15,010			17,244			15,010			21,749
Gross inventory		65,062			77,455			65,062			93,053
Less: Excess and obsolete provision		(7,994	)		(9,122	)		(7,994	)		(13,289	)
Inventories, net	$	57,068		$	68,333		$	57,068		$	79,764

6The increase in inventory is primarily due to lower demand for our PMP products and a slowdown in Enterprise product orders due to higher channel inventory. Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on historical usage, known trends, and market conditions and judgment about the anticipated consumption and our ability to sell the inventory. At December 31, 2022 and September 30, 2023, inventory reserves were $

8.0 million and $13.3 million, respectively. The increase in the reserve was mostly driven by excess inventory related to our PMP products driven by a combination of lower anticipated demand as well as the impact of the anticipated introduction of new 6 GHz PMP products.

Accrued liabilities

Accrued liabilities consisted of the following (in thousands):


	December 31,		March 31,		December 31,		September 30,
	2022		2023		2022		2023
							(unaudited)
Accrued goods and services	$	10,633	$	12,092	$	10,633	$	9,683
Accrued inventory purchases		3,189		5,867		3,189		1,000
Accrued customer rebates		13,797		13,225		13,797		9,506
Other		423		473		423		501
Accrued liabilities	$	28,042	$	31,657	$	28,042	$	20,690

Accrued warranty

Provisions for warranty claims are primarily related to our hardware products and are recorded at the time products are sold. The change to accrued warranty was as follows (in thousands):


	Year ended December 31,			Three Months ended March 31,			Year ended December 31,			Nine Months ended September 30,
	2022			2023			2022			2023
										(unaudited)
Beginning balance	$	1,731		$	1,651		$	1,731		$	1,651
Fulfillment of assumed acquisition warranty		(142	)		(154	)		(142	)		(160	)
Provision increase (decrease), net		62			(40	)		62			(4	)
Ending balance	$	1,651		$	1,457		$	1,651		$	1,487

At ~~March 31,~~September 30, 2023, $1.2 million is included in Other current liabilities and $~~0.2~~0.3 million is included in Other noncurrent liabilities on the Company’s condensed consolidated balance sheet.

Note 3. Property and equipment

Property and equipment, net consisted of the following (in thousands):


		December 31,			March 31,				December 31,			September 30,
	Useful Life	2022			2023			Useful Life	2022			2023
												(unaudited)
Equipment and tooling	3 to 5 years	$	33,026		$	34,051		3 to 5 years	$	33,026		$	35,455
Computer equipment	3 to 5 years		4,572			4,832		3 to 5 years		4,572			5,348
Furniture and fixtures	10 years		809			814		5 to 10 years		809			834
Leasehold improvements	2 to 3 years		472			520		2 to 3 years		472			518
Total cost			38,879			40,217				38,879			42,155
Less: Accumulated depreciation			(27,608	)		(28,696	)			(27,608	)		(30,790	)
Property and equipment, net		$	11,271		$	11,521			$	11,271		$	11,365

Total depreciation expense was $~~0.9~~1.0 million and $1.1 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively and $2.9 million and $3.2 million for the nine-month periods ended September 30, 2022 and 2023, respectively.

Note 4. Software

Software consisted of the following (in thousands):


																	December 31, 2022							September 30, 2023
		December 31, 2022							March 31, 2023															(unaudited)
	Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance		Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance

Acquired and Software for internal use	3 to7 years	$	15,995	$	(15,326	)	$	669	$	16,059	$	(15,391	)	$	668	3 to7 years	$	15,995	$	(15,326	)	$	669	$	16,681	$	(15,604	)	$	1,077
Software marketed for external sale	3 years		11,650		(3,880	)		7,770		13,120		(4,479	)		8,641	3 years		11,650		(3,880	)		7,770		16,604		(5,877	)		10,727
Total		$	27,645	$	(19,206	)	$	8,439	$	29,179	$	(19,870	)	$	9,309		$	27,645	$	(19,206	)	$	8,439	$	33,285	$	(21,481	)	$	11,804

Amortization of acquired and internal use software is computed using the straight-line method over an estimated useful life of generally three to seven years. Amortization expense recognized on acquired and internal use software is reflected in depreciation and amortization in the condensed consolidated statements of operations. Amortization expense was $~~0.2~~0.1 million and $0.1 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively. Amortization expense was $0.4 million and $0.3 million for the nine-month periods ended September 30, 2022 and 2023, respectively.

Amortization expense recognized on software to be sold or marketed externally was $~~0.3~~0.4 million and $~~0.6~~0.8 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively, and $1.1 million and $2.0 million for the nine-month periods ended September 30, 2022 and 2023, respectively, and is included in cost of revenues on the condensed consolidated statements of operations.

Based on capitalized software assets at ~~March 31,~~September 30, 2023, estimated amortization expense in future fiscal years is as follows (unaudited and in thousands):


Year ending December 31,	Acquired and internal use software		Software marketed for external use		Total		Acquired and internal use software		Software marketed for external use		Total
2023 (April - December)		253		2,332		2,585
2023 (October - December)								103		881		984
2024		190		3,259		3,449		398		3,660		4,058
2025		140		2,240		2,380		349		3,376		3,725
2026		79		810		889		221		2,024		2,245
2027		6		—		6		6		760		766
Thereafter		—		—		—		—		26		26
Total amortization	$	668	$	8,641	$	9,309	$	1,077	$	10,727	$	11,804

Note 5. Goodwill and Intangible Assets

There was no change in the carrying amount of goodwill or intangible assets during the three-month period ended ~~March 31,~~September 30, 2023 (unaudited).

The Company tests goodwill ~~and intangible assets~~ for impairment annually on December 31 and more frequently if ~~impairment indicators exist.~~an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or asset group below its carrying amount and tests intangible assets if an indicator suggests that the carrying amount may not be recoverable. Accordingly, the Company ~~performs~~completes a quarterly qualitative ~~assessments of~~triggering events assessment which considers significant events and circumstances such as a reporting unit’s historical and current results, assumptions regarding future performance, operating income or cash flows, strategic initiatives and overall economic factors, including ~~the impact of the current global outbreak of COVID-19~~significant negative industry or economic trends and macro-economic developments, and sustained declines in the Company's share price or market capitalization, considered in both absolute terms and relative to peers, to determine ~~the existence~~whether any of ~~potential indicators of impairment and assess if~~these may indicate that it is more likely than not that the fair value of the reporting unit ~~or intangible asset~~ is less than ~~their~~its carrying value. If ~~indicators of~~an impairment ~~are~~trigger is identified, a quantitative impairment test is performed.

The qualitative assessment performed for the ~~quarter~~three-month period ended September 30, 2023 did not indicate the existence of an impairment ~~indicators. Based on the operating results for the three-month period ended March 31, 2023 and other considerations, the Company believes~~trigger that ~~it is~~would more likely than not ~~that the enterprise value for its~~ ~~one~~ ~~reporting unit and~~reduce the fair value of ~~intangibles is still greater than their~~our reporting unit below its carrying ~~values. Accordingly,~~ amount nor indicators suggesting that the carrying amount of intangible assets may not be recoverable. The Company continues to monitor potential events and changes in circumstances that can be reasonably expected to constitute an impairment triggering event.no ~~goodwill impairment indicators were present at March 31, 2023 that would necessitate an interim impairment assessment.~~

The useful life, gross carrying value, accumulated amortization, and net balance for each major class of definite-lived intangible assets at each balance sheet date were as follows (in thousands):


																	December 31, 2022							September 30, 2023
		December 31, 2022							March 31, 2023															(unaudited)
	Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance		Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance

Customer relationships	5 - 18 years		19,300		(10,127	)		9,173		19,300		(10,501	)		8,799	5 - 18 years		19,300		(10,127	)		9,173		19,300		(11,250	)		8,050
Total		$	19,300	$	(10,127	)	$	9,173	$	19,300	$	(10,501	)	$	8,799		$	19,300	$	(10,127	)	$	9,173	$	19,300	$	(11,250	)	$	8,050

Intangible assets are amortized over their expected useful life and none are expected to have a significant residual value at the end of their useful life. Intangible assets amortization expense was $0.4 million and $0.4 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively, and $1.2 million and $1.1 million for the nine-month periods ended September 30, 2022 and 2023, respectively.

Based on capitalized intangible assets as of ~~March 31,~~September 30, 2023, estimated amortization expense amounts in future fiscal years are as follows (unaudited and in thousands):


Year ending December 31,	Amortization		Amortization
2023 (April - December)		1,124
2023 (October - December)				375
2024		1,498		1,498
2025		1,498		1,498
2026		1,498		1,498
2027		1,498		1,498
Thereafter		1,683		1,683
Total amortization	$	8,799	$	8,050

Note 6. Debt

As of ~~March 31,~~September 30, 2023, the Company had $~~27.4~~26.1 million outstanding under its ~~current~~ term loan facility and $0.0 million outstanding under its revolving credit facility. The Company has available $45.0 million under its revolving credit facility (unaudited).

The following table reflects the current and noncurrent portions of the external debt facilities at December 31, 2022 and ~~March 31,~~September 30, 2023 (in thousands):


	December 31,			March 31,			December 31,			September 30,
	2022			2023			2022			2023
										(unaudited)
Term loan facility	$	28,031		$	27,375		$	28,031		$	26,063
Less debt issuance costs		(410	)		(378	)		(410	)		(302	)
Total debt		27,621			26,997			27,621			25,761
Less current portion of term facility		(3,281	)		(3,281	)		(3,281	)		(3,281	)
Current portion of debt issuance costs		123			121			123			108
Total long-term external debt, net	$	24,463		$	23,837		$	24,463		$	22,588

Secured credit agreement

~~The~~On June 9, 2023, the Company ~~is currently operating under its credit agreement~~ entered into ~~on November 17, 2021 with~~the first amendment to its BofA Agreement ("First Amendment") which amended the original Bank of America Agreement ("BofA ~~Credit~~ Agreement") ~~which provides~~to replace the benchmark used for the ~~provisions of loans~~interest rate on Eurodollar Rate Loans from US Dollar LIBOR to the Term Secured Overnight Financing Rate ("SOFR"). Our outstanding debt under the BofA Agreement are now known as Term SOFR Loans, with the term selected by the Company. The new benchmark became effective on June 17, 2023, when the current interest period on the Eurodollar Rate Loan using the US Dollar LIBOR benchmark ended. With respect to the First Amendment, the Company elected the practical expedient included in ASC 848, Reference Rate Reform, and ~~other financial accommodations in an aggregate principal amount of up to $75.0~~ ~~million in the form of (i) a~~ ~~five-year~~ ~~term loan facility (the "Term Facility") in the amount of $30.0~~ ~~million and (ii) a~~ ~~five-year~~ ~~revolving credit facility (the "Revolving Facility") in the amount of $45.0~~ ~~million, including a $5.0~~ ~~million sublimit~~it accounted for the ~~issuance~~First Amendment as if the modification were not significant. The First Amendment did not create a material impact on the consolidated financial statements.

Based on the terms of ~~letters of credit and a $~~the First Amendment, ~~5.0~~ ~~million sublimit for swingline loans. On November 17, 2021, the Company borrowed $30.0~~ ~~million as a Eurodollar Rate loan. Both~~interest on the Term ~~Facility and the Revolving Facility mature on~~ ~~November 17, 2026~~.

~~Interest~~SOFR Loan accrues on the outstanding principal amount of the Term and Revolving Facilities on a quarterly basis and is equal to athe base rate equal to the rate per annum as now determined by reference to the 1-month, 3-month or 6-month ~~US Dollar LIBOR~~Term SOFR rate as selected by the Company, plus ana SOFR adjustment of 0.10%. The applicable margin range between 1.75% toand 2.25% as determined by the ~~Company’s~~Company's performance as measured by

the consolidated leverage ~~ratio.~~ratio that is added to calculate the all-in rate remains unchanged with the First Amendment. At ~~March 31,~~September 30, 2023, the applicable margin was 1.75% and the effective interest rate on the term loan was ~~7.12~~%. In addition to paying interest on the outstanding principal under the term loan facility, the Company is required to pay a quarterly commitment fee on the unutilized commitments under the revolving credit facility ranging from ~~0.20~~7.69% to ~~0.25% as determined by the Company's performance as measured by the consolidated leverage ratio. The commitment fee was~~ ~~0.20~~% at March 31, 2023. The Company is also required to pay letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBOR-based borrowings under the revolving credit facility on a per annum basis, payable in arrears, as well as fronting fees for the issuance of letters of credit and agency fees.(unaudited).

The Company is still required to make quarterly principal payments of $0.7 million, with the remaining principal due on maturity on November 17, 2026. The Company is required to pay interest quarterly on the outstanding balance. The Company is still permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the BofA ~~Credit Agreement~~First Amendment at any time without premium or penalty.

Maturities on the external debt outstanding at ~~March 31,~~September 30, 2023 is as follows (unaudited and in thousands):


Year ending December 31,
2023 (April - December)		1,969
2023 (October- December)				656
2024		2,625		2,625
2025		2,625		2,625
2026		19,500		19,500
Total	$	26,719	$	25,406

Borrowings under the BofA Credit Agreement are secured by a first-priority lien on substantially all of the Company’s assets, the equity interests in certain of the Company’s subsidiaries, and any intercompany debt. The Credit Agreement contains certain customary affirmative and negative covenants that are usual and customary for companies with similar credit ratings. As of ~~March 31,~~September 30, 2023, the Company was in compliance with all affirmative and negative covenants (unaudited).

Net interest expense, including bank charges and amortization of debt issuance costs on the external debt, was $0.5 million and $0.6 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, ~~respectively.~~respectively, and $1.4

~~Expected Discontinuation of LIBOR~~ million and $

~~In July 2017, the United Kingdom’s Financial Conduct Authority, or FCA, which regulates LIBOR, announced it will no longer compel banks to submit rates~~1.8 million for the ~~calculation of LIBOR after 2021.~~ ~~On December 31, 2021, the 1-week~~nine-month periods ended September 30, 2022 and ~~2-month US Dollar LIBOR ceased, and the remaining five US Dollar LIBOR tenors (overnight and 1-month, 3-month, 6-month and 12-month) will cease on June 30,~~ 2023, respectively (unaudited). The base interest rate on the Company’s BofA Credit Agreement may be determined by reference to the 1-month, 3-month or 6-month US Dollar LIBOR rate, as selected by the Company. The BofA Credit Agreement matures on ~~November 17, 2026, which is subsequent to the cessation of all tenors of the US Dollar LIBOR rate.~~

The Company is evaluating the potential impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including SOFR. Eurodollar loans under the BofA Credit Agreement are currently indexed to the Eurodollar Rate (the rate equivalent to LIBOR). The BofA Credit Agreement contemplates the discontinuation of LIBOR and provides that a benchmark replacement rate shall be determined by reference to other applicable rates and additionally allows for the Company to switch to a Base Rate Loan, as defined in the BofA Credit Agreement. The Company does not believe that the transition will have a material effect on the consolidated financial statement or impact our ability to borrow under the current credit agreement.

Note 7. Employee benefit plans

The Company’s employee benefit plans currently consist of a retirement plan in the United States and a separate defined contribution plan in the UK. The Company does not offer any other postretirement benefit plans, such as retiree medical and dental benefits or deferred compensation agreements to its employees or officers.

U.S. plan

U.S. employees that satisfy certain eligibility requirements, including requirements related to age and length of service, are eligible to participate in the Cambium Networks, Inc. 401(k) Plan. The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. Under the Cambium Networks, Inc. 401(k) Plan, the Company matches 100% of employee contributions to the 401(k) plan up to a maximum amount of 4% of eligible wages, which matching contributions are subject to vesting in equal annual increments over two years of service. All contributions, including the Company match, are made in cash. Contributions made by the Company under the Cambium Networks, Inc. 401(k) Plan were $~~0.5~~0.2 million and $~~0.4~~0.3 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively, and $1.2 million and $1.2 million for the nine-month periods ended September 30, 2022 and 2023, respectively.

UK plan

UK employees who satisfy certain eligibility requirements are eligible to participate in the Cambium Networks Ltd. Stakeholder Pension Scheme, which is a qualified defined contribution plan. Employees are eligible to participate on the first of the month following receipt of their enrollment form, and eligible employees are automatically enrolled in the plan at a default employee contribution rate of 3% of eligible compensation and a company contribution rate of 5% of the employee’s basic salary. The Company contribution rate increases by 1% for each additional 1% that the employee contributes up to a maximum of 7%. Company matching contributions vest immediately and employees are always vested in their own contributions. All contributions, including the Company match, are made in cash and deposited in the participant’s account each pay period. The total contributed by the Company under this plan was $0.1 million and $0.1 million for the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, respectively, and $0.3 million and $0.3 million for the nine-month periods ended September 30, 2022 and 2023, respectively.

Note 8. Other (income) expense, ~~(income),~~ net

Net other (income) expense ~~was $0.1~~ ~~million and~~changed from expense of $0.2 million for the three-month ~~periods~~period ended ~~March 31,~~September 30, 2022 ~~and 2023, respectively. Other~~to expense ~~net~~of $0.1 million for the three-month period ended September 30, 2023. Net other (income) expense changed from income of $0.1 million for the nine-month period ended September 30, 2022 to expense of $0.3 million for the nine-month period ended September 30, 2023. Net other (income) expense mostly represents foreign exchange gains and losses.

Note 9. Share-based compensation

2019 Share incentive plan

In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the 2019 Share Incentive Plan (“2019 Plan”). The 2019 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted share awards (“RSAs”), restricted share units (“RSUs”), other share-based awards and performance awards. The share reserve under the 2019 Plan is automatically increased on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2020 and continuing until, and including, the fiscal year ending December 31, 2029. The number of shares added annually is equal to the lowest of 1,320,000 shares, 5% of the number of the Company’s shares outstanding on the first day of such fiscal year, or an amount determined by the Board of Directors. On March 1, 2023, the Company registered 1,320,000 additional shares that may be issued under the 2019 Plan.

The Company’s employees, officers, directors, consultants, and advisors are eligible to receive awards under the 2019 Plan. Incentive share options, however, may only be granted to the Company's employees.

~~The following table summarizes changes in the number of shares available for grant under the Company’s equity incentive plans during the three-month period ended March 31, 2023 (unaudited):~~


	~~Number of shares~~
~~Available for grant at December 31, 2022~~		~~2,000,364~~
~~Added to 2019 Share Incentive Plan~~		~~1,320,000~~
~~RSUs granted~~		(~~15,935~~	)
~~Shares withheld in settlement of taxes and/or exercise price~~		~~11,468~~
~~Forfeitures~~		~~7,661~~
~~Available for grant at March 31, 2023~~		~~3,323,558~~

For the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, the Company recorded corresponding income tax benefits of $~~0.1~~0.3 million and $0.0 million, respectively, and for the nine-month periods ended September 30, 2022 and 2023, the Company recorded corresponding income tax benefits of $0.8 million and $0.1 million, respectively.

As11

Share options

The Company's time-based share options typically have a contractual term of ~~March 31, 2023, the~~ten years from grant date and typically vest over a four-year period. The Company ~~estimates the pre-tax unrecognized~~recognized compensation expense associated with its time-based share options on a straight-line basis over the requisite service period.

The following is a summary of $option activity for the Company’s share incentive plans for the nine-month period ended September 30, 2023 (unaudited):


	Options			Weighted average exercise price		Weighted Average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at December 31, 2022		3,395,219		$	13.83		7.6	$	28,985,969
Options granted1		993,196		$	9.07		—	$	—
Options exercised		(59,800	)	$	8.32		—	$	—
Options expired		(5,188	)	$	12.00		—	$	—
Options forfeited		(65,817	)	$	14.06		—	$	—
Outstanding at September 30, 2023		4,257,610		$	12.79		7.4	$	458,989
Options exercisable at September 30, 2023		2,475,407		$	12.92		6.2	$	413,898
Options vested and expected to vest at September 30, 2023		4,229,061		$	12.77		7.4	$	458,045

~~20.6~~1 ~~million, net of estimated forfeitures, related to all unvested share-based awards, including~~Options granted includes the time-based share options and ~~restricted share units will be recognized through~~ the ~~first quarter of 2027. The Company expects to satisfy the exercise of~~performance-based share options ~~and future distributions of shares~~ for ~~restricted share units by issuing new ordinary shares that have~~which a grant date has been ~~reserved under the 2019 Plan.~~established, as described below.

The Company uses the Black-Scholes option pricing model to estimate the fair value of share options. The Company utilized a forfeiture rate of 8.2% during the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2023 for estimating the forfeitures of share options ~~and restricted share units~~ granted.

~~Share options~~

~~Share options typically have a contractual term of~~ ~~ten years~~ ~~from grant date and typically vest over a~~ ~~four-year~~ ~~period.~~ The fair value of share options is estimated using the following ~~is a summary of option activity for the Company’s share incentive plans for the three-month period ended March 31, 2023~~weighted-average assumptions (unaudited):

Options

Weighted
average
exercise
price

Weighted
Average
remaining
contractual
term (years)

Aggregate
intrinsic
value

Outstanding at December 31, 2022

3,395,219

$
13.83

7.6

$
28,985,969

Options exercised

(50,831
)

$
8.44

—

$
—

Options forfeited

(1,187
)

$
12.00

—

$
—

Outstanding at March 31, 2023

3,343,201

$
13.91

7.4

$
15,632,159

Options exercisable at March 31, 2023

1,925,300

$
12.58

6.6

$
11,296,025

Options vested and expected to vest at March 31, 2023

3,297,666

$
13.89

7.4

$
15,459,280


	Nine Months Ended September 30,
	2022			2023
Expected dividend yield		—			—
Risk-free interest rate		2.43	%		4.31	%
Weighted-average expected volatility		61.3	%		69.3	%
Expected term (in years)		4.55			5.74
Weighted average grant-date fair value per share of options granted	$	8.15		$	5.73

At ~~March 31, 2023, the aggregate intrinsic value of options exercisable under the Company’s share incentive plans was $11.3~~ ~~million. The Company had~~ ~~50,831~~ ~~options exercised during the three-month period ended March 31, 2023.~~

~~At March 31,~~September 30, 2023, there was $~~10.7~~13.0 million in unrecognized pre-tax share-based compensation expense, net of estimated forfeitures, related to unvested time-based share option awards. The unrecognized share-based compensation expense is expected to be recognized through the ~~third~~fourth quarter of ~~2026.~~

~~For the three-month periods ended March 31, 2022 and 2023, there were~~ no ~~shares options granted in either period.~~2027 (unaudited).

Restricted shares

~~Restricted shares~~The Company's time-based RSUs typically vest over a four-year period. The Company recognizes compensation expense associated with its time-based RSUs on a straight-line basis over the four-year requisite service period.

The following is a summary of restricted shares activity for the Company’s share incentive plan for the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2023 (unaudited):


	Units			Weighted average grant date fair value
RSU balance at December 31, 2022		696,990		$	18.22
RSUs granted1		225,338		$	12.68
RSUs vested		(246,886	)	$	16.37
RSUs forfeited		(39,722	)	$	17.33
RSU balance at September 30, 2023		635,720		$	17.03

1 RSUs granted includes the time-based RSUs and the performance-based RSUs for which a grant date has been established, as described below.

Units

Weighted
average
grant date
fair value

RSU balance at December 31, 2022

696,990

$
18.22

RSUs granted

15,935

$
20.63

RSUs vested

(44,706
)

$
17.98

RSUs forfeited

(6,474
)

$
17.92

RSU balance at March 31, 2023

661,745

$
18.29

~~During~~Of the ~~three-month period ended March 31, 2023,~~ ~~15,935~~246,886 RSUs ~~were granted under~~vested, the ~~Company’s 2019 Share Incentive Plan and~~ ~~44,706~~ ~~RSUs vested. The~~ Company withheld ~~11,468~~46,108 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

The fair value of the RSUs is based on the fair value of the Company's ordinary shares on the grant date. The Company utilized a forfeiture rate of 8.2% during the nine-month period ended September 30, 2023 for estimating the forfeitures of RSUs granted.

As of ~~March 31,~~September 30, 2023, there was $~~9.9~~8.8 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to unvested time-based restricted share units. The unrecognized compensation expense is expected to be recognized through the third quarter of 2027 (unaudited).

Performance-based share awards

In May 2023, performance-based share awards were awarded to select executive officers of the Company. The awards contain a performance-based vesting criteria and included 60,000 share options and 135,000 restricted share units. The performance-based awards have two separate annual performance periods, with 50% of the performance-based awards vesting over each of the annual performance periods ending on December 31, 2023 ("First Performance Period") and December 31, 2024 ("Second Performance Period") if the performance goal is met. If the performance goal for that performance period is not met, the performance-based awards do not vest and are forfeited. The performance goal is based on the Company's adjusted earnings per share, as publicly reported by the Company, for each performance period. The method used to measure the fair value of the performance-based awards is consistent with the methods used to measure the fair value of time-based share options and RSUs, as described above.

For performance-based awards that vest during the First Performance Period, the Company's Compensation Committee retains the ability to modify the applicable adjusted earnings per share metric. Due to this discretion, the Company has determined that the grantee does not have a mutual understanding of the key terms and conditions of the performance-based awards in the First Performance Period, and a grant date will not exist until the Compensation Committee approves the adjusted earnings per share metric for the First Performance Period. As of September 30, 2023, based on the total potential shares that could be earned, there were 30,000 share options and 62,500 RSUs outstanding for which there is no accounting grant date. Accordingly, no grant date fair value was established and the weighted average grant date fair values calculated above excludes these performance-based share options and performance-based RSUs. The Company remeasures the fair value of the awards at each reporting date until a grant date is achieved, as the service inception date precedes the grant date. As of September 30, 2023, there was $0.5 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to unvested performance-based share awards for the First Performance Period, which would be recognized through the first quarter of ~~2027.~~2024 upon achievement of the performance goal (unaudited).

Unlike the performance-based awards in the First Performance Period, the Compensation Committee does not have the discretion to modify the applicable adjusted earnings per share metric for performance-based awards that vest during the Second Performance Period. As such, a mutual understanding of the key terms and conditions, and thus a grant date, exists on the date that the performance-based awards are issued by the Company. As of September 30, 2023, based on the total potential shares that could be earned, there were 62,500 RSUs granted. A grant date fair value was established, and the weighted average grant date fair values calculated in the above tables include these performance-based share options and performance-based RSUs. The Company has not recognized any compensation expense on these performance-based awards since the requisite service period does not begin until January 1, 2024. As of September 30, 2023, there was $0.9 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to these unvested performance-based share awards for the Second Performance Period, which will be recognized over the requisite service period starting January 1, 2024 through the first quarter of 2025 if it is probable that the adjusted earnings per share metric will be achieved (unaudited).

Employee share purchase plan

In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the Employee Share Purchase Plan (“ESPP”). The ESPP was effective on June 25, 2019, and the initial offering period of six-months commenced on January 1, 2021. The current offering period of six months commenced on ~~January~~July 1, 2023 and runs through ~~June 30,~~December 31, 2023. The purchase price of the shares is 85% of the lower of the fair market value of the Company’s ordinary shares on the first trading day of the offering period and the purchase date. The ESPP includes an annual increase to the shares available for sale on the first day of each fiscal year beginning in 2020, equal to the lesser of: 275,000 shares, 1% of the outstanding shares as of the last day of the immediately preceding fiscal year, or such other amount as the administrator may determine. The Company registered 273,133 additional shares on March 1, 2023.

For the three-month periods ended ~~March 31,~~September 30, 2022 and 2023, the Company recognized $0.2 million and $~~0.3~~0.2 million, respectively, of share-based compensation expense related to the ESPP. For the nine-month periods ended September 30, 2022 and 2023, the Company recognized $0.7 million and $0.7 million, respectively, of share-based compensation expense related to the ESPP. There were 87,229 shares issued under the ESPP during the three-month and nine-month periods ended September 30, 2022 and 88,290 shares issued under the ESPP during the three-month and nine-month periods ended September 30, 2023 (unaudited).

Note 10. Share capital - shares

The following table reflects the share capital activity (unaudited):

Number of
shares

Par value
(in thousands)

Balance at December 31, 2022

27,313,273

$
3

Issuance of vested shares

44,706

—

Share options exercised

50,831

—

Shares withheld for net settlement of shares issued

(11,468
)

—

Balance at March 31, 2023

27,397,342

$
3


	Number of shares			Par value (in thousands)
Balance at December 31, 2022		27,313,273		$	3
Issuance of ordinary shares under employee share purchase plan		88,290			—
Issuance of vested shares		246,605			—
Share options exercised		59,800			—
Shares withheld for net settlement of shares issued		(46,108	)		—
Balance at September 30, 2023		27,661,860		$	3

As of ~~March 31,~~September 30, 2023, no dividends have been declared or ~~paid.~~paid (unaudited).

Note 11. Earnings (loss) per share

Basic net earnings (loss) per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net earnings per share is computed by giving effect to all potentially dilutive ordinary share equivalents outstanding for the period. For purposes of this calculation, share options, RSUs, and ESPP awards are considered to be ordinary share equivalents but are excluded from the calculation of diluted earnings per share when including them would have an anti-dilutive effect. Performance-based share awards are only included in the calculation of diluted earnings per share if the performance metric would have been achieved as of September 30, 2023 if that had been the end of the contingency period. The following table sets forth the computation of basic and diluted net earnings per share (unaudited and in thousands, except for share and per share data):


	Three Months Ended March 31,					Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2023		2022		2023			2022		2023
Numerator:
Net (loss) income	$	(1,568	)	$	4,276	$	9,435	$	(26,200	)	$	10,189	$	(24,566	)
Denominator:
Basic weighted average shares outstanding		26,749,675			27,341,013		26,977,155		27,619,281			26,855,395		27,465,353
Dilutive effect of share option awards		—			846,656		755,196		—			840,828		—
Dilutive effect of restricted share units and restricted share awards		—			265,160
Dilutive effect of RSUs							242,443		—			235,509		—
Dilutive effect of employee share purchase plan		—			26		4,781		—			7,996		—
Diluted weighted average shares outstanding		26,749,675			28,452,855		27,979,575		27,619,281			27,939,728		27,465,353
Net (loss) earnings per share, basic	$	(0.06	)	$	0.16	$	0.35	$	(0.95	)	$	0.38	$	(0.89	)
Net (loss) earnings per share, diluted	$	(0.06	)	$	0.15	$	0.34	$	(0.95	)	$	0.36	$	(0.89	)

In the computation of diluted earnings per share for the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2022, the Company did not include any share equivalents because their inclusion would have been antidilutive. In the computation of diluted earnings per share for the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2023, ~~1,202,805~~3,641,637 ordinary share equivalents and 1,753,142 ordinary share equivalents, respectively, were excluded because their inclusion would have been ~~antidilutive.~~antidilutive (unaudited).

Note 12. Income taxes

The Company’s provision for income taxes is based upon the estimated annual tax rate for the year applied to federal, state and foreign income. The Company recorded a benefit for income taxes of $~~1.2~~0.2 million for the three-month period ended ~~March 31,~~September 30, 2022 and a provision for income taxes of $~~0.5~~3.4 million for the three-month period ended ~~March 31,~~September 30, 2023, with an effective tax rate of (~~43.4~~1.7)% and (~~11.2~~15.0)%, respectively. In the three-month period ended ~~March 31,~~September 30, 2022, the effective tax rate of (~~43.4~~1.7)% was different from the statutory rate of 21.0%, primarily due to Foreign Derived Intangible Income, tax benefit arising on Research and Development tax credits, and changes to the excess tax benefits on share-based compensation. For the three-month period ended September 30, 2023, the Company’s effective tax rate of (15.0%) was different from the statutory rate of 21.0%, primarily due to establishment of a valuation allowance on the net deferred tax assets of the UK company, net of tax benefit on Foreign Derived Intangible Income, tax benefit arising on US Research and Development tax credits, and changes to the excess tax benefits on share-based compensation. The Company established the valuation allowance based on the analysis of cumulative income and loss positions, future income projections, and operating plans. The UK net deferred tax assets are comprised primarily of NOL carryforwards, corporate interest restriction carryforwards and acquired intangibles that existed at December 31, 2022, amounting to $5.3 million. The movement in the net deferred tax assets during the period amounted to $5.6 million for a total valuation allowance of $10.9 million.

In the nine-month periods ended September 30, 2022 and 2023, the Company recorded a tax benefit of $1.0 million and a tax provision of $3.3 million, respectively, with an effective income tax rate of (11.5)% and (15.3)%, respectively. For the nine-month period ended September 30, 2022, the effective income tax rate of (11.5)% was different from the statutory rate of 21.0%, primarily due to tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, ~~and~~ the revaluing of certain UK deferred tax assets at a higher future tax ~~rate.~~rate, and changes to the excess tax benefits on share-based compensation. For the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2023, the ~~Company’s~~ effective income tax rate of (~~11.2~~15.3)% was different from the statutory rate of 21.0%, primarily due to establishment of a valuation allowance on the net deferred tax assets on the UK Company, net of tax benefit on Foreign Derived Intangible Income, ~~and~~ tax benefits arising on US Research and Development tax ~~credits.~~credits, and changes to the excess tax benefits on share-based compensation. The Company established the valuation allowance based on the analysis of cumulative income and loss positions, future income projections, and operating plans. The UK net deferred tax assets are comprised primarily of NOL carryforwards, corporate interest restriction carryforwards and acquired intangibles that existed at December 31, 2022, amounting to $5.3 million. The movement in the net deferred tax assets during the period amounted to $6.8 million for a total valuation allowance of $12.1 million.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. A significant piece of objective evidence evaluated is the cumulative income or loss incurred over the three-year period ended September 30, 2023 and whether the Company projects a loss for the current year ending December 31, 2023. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets before they otherwise expire. The Company considers projected future taxable income, reversing taxable temporary differences, carryback opportunities, and prudent tax-planning strategies in making this assessment. However, cumulative losses in recent periods are a significant piece of objective negative evidence that limits the Company's ability to consider certain criteria of subjective positive evidence such as projections for future growth. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences are deductible. The amount of the deferred tax asset considered realizable will be adjusted in future period as necessary based on the reversal pattern of deferreds and the actual taxable income during the carryforward period as well as any relevant new facts to be considered.

In applying the statutory tax rate in the effective income tax rate reconciliation, the Company used the statutory U.S. federal income tax rate of 21% rather than the Cayman Islands zero percent rate.

~~The Company reviews the likelihood that it will realize the benefit of its deferred tax assets and, therefore, the need for a valuation allowance on a quarterly basis.~~

1415

Note 13. Commitments and contingencies

In accordance with ASC 460, Guarantees, the Company recognizes the fair value for guarantee and indemnification arrangements it issues or modifies, if these arrangements are within the scope of the interpretation. In addition, the Company must continue to monitor the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has incurred. If the Company determines it is probable that a loss has occurred, then any such estimated loss would be recognized under those guarantees and indemnifications and would be recognized in the Company’s condensed consolidated statements of operations and corresponding condensed consolidated balance sheets during that period.

Indemnification

The Company generally indemnifies its customers against claims brought by a third party to the extent any such claim alleges that the Company’s product infringes a patent, copyright or trademark or violates any other proprietary rights of that third party. The maximum potential amount of future payments the Company may be required to make under these indemnification agreements is not estimable.

The Company indemnifies its directors and officers and select key employees, including key employees serving as directors or officers of the Company’s subsidiaries, for certain events or occurrences, subject to certain limits, while the director or officer is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the director’s or officer’s term of service. The Company may terminate the indemnification agreements with its directors, officers or key employees upon the termination of their services as directors or officers of the Company or its subsidiaries, or the termination of activities for which indemnification has been provided, but termination will not affect claims for indemnification related to events occurring prior to the effective date of termination. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure. The Company believes the fair value of these indemnification agreements is minimal.

Purchase commitments with contract manufacturers and suppliers

We purchase components from a variety of suppliers and use contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory and components based upon criteria as defined by us, such as forecasted demand. Certain of our inventory purchase commitments with contract manufacturers and suppliers relate to arrangements to secure supply and pricing for certain components for multiple periods. We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. The Company may be liable to purchase excess product or aged material or components from our suppliers following reasonable mitigation efforts.

Warranties

The Company offers a standard warranty on its products, with the term depending on the product, and records a liability for the estimated future costs associated with potential warranty claims. The Company’s responsibility under its standard warranty is the repair or replacement of in-warranty defective product, or to credit the purchase price of the defective product, at its discretion, without charge to the customer. The Company’s estimate of future warranty costs is largely based on historical experience factors including product failure rates, material usage, and service delivery cost incurred in correcting product failures. The standard warranty is included in either Other current liabilities or Other noncurrent liabilities on its condensed consolidated balance sheets, depending on the time period covered by the warranty. The Company also offers an extended warranty for purchase that represents a future performance obligation for the Company. The extended warranty is included in deferred revenues (both current and noncurrent) on the condensed consolidated balance sheets and recognized on a straight-line basis over the term of the extended warranty. The warranty costs are reflected in the Company’s condensed consolidated statements of operations within cost of revenues.

Legal proceedings

Third parties may from time to time assert legal claims against the Company. The Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. The Company evaluates, on a regular basis, developments in legal proceedings and other matters that could cause a change in amounts recorded. Due to the inherent uncertainty involving legal matters, the ultimate resolution could differ from amounts recorded. There is no pending or threatened legal proceedings to which the Company is a party, that in the Company’s opinion, is likely to have a material adverse effect on its financial condition or results of operations.

1516

Note 14. Segment information

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company determined that it operates as one operating segment and one reporting unit.

Note 15. Revenues from contracts with customers

Revenues consist primarily of revenues from the sale of hardware products with essential embedded software. Revenues also include amounts for software products, extended warranty on hardware products and subscription services. Substantially all products are sold through distributors and other channel partners, such as resellers, managed service providers and systems integrators.

The Company recognizes revenue to reflect the transfer of control of promised products or services to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for products or services.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The Company identifies its distinct performance obligations under each contract. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. Hardware products with essential embedded software, software products, and purchased extended warranty on hardware products have been identified as separate and distinct performance obligations.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring products or services to a customer. An adjustment to revenue is made to adjust the transaction price to exclude the consideration related to products expected to be returned. The Company records an asset at the carrying amount of the estimated stock returns and a liability for the estimated amount expected to be refunded to the customer. The transaction price also excludes other forms of consideration provided to the customer, such as volume-based rebates and co-operative marketing allowances.

The Company recognizes revenue when, or as, it satisfies a performance obligation by transferring control of a promised product or service to a customer. Revenue from hardware products with essential embedded software is recognized when control of the asset is transferred, which is typically at the time of shipment. Revenue from perpetual license software is recognized at the point in time that the customer is able to use or benefit from the software. Extended warranty on hardware products is a performance obligation that is satisfied over time, beginning on the effective date of the warranty period and ending on the expiration of the warranty period. The Company recognizes revenue on extended warranties on a straight-line basis over the warranty period. Revenue from software subscriptions is recognized ratably over the term in which the services are provided and the performance obligation is satisfied.

The Company enters into revenue arrangements that may consist of multiple performance obligations, such as hardware products and extended warranty. The Company allocates the transaction price to each performance obligation on a relative standalone selling price basis for each distinct product or service in the contract. The best evidence of standalone selling price is the observable price of a product or service when the Company sells that product or service separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, the Company estimates the transaction price allocated to each performance obligation using the expected costs plus a margin approach.

Disaggregation of revenues

Revenues by product category were as follows (unaudited and in thousands, except percentages):


	Three Months Ended March 31,								Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2023				2022				2023				2022				2023
Point-to-Multi-Point	$	30,926	50	%	$	22,292	29	%	$	26,090	32	%	$	23,596	55	%	$	85,285	40	%	$	72,622	40	%
Point-to-Point		14,714	24	%		18,008	23	%		15,409	19	%		15,809	37	%		45,807	22	%		58,891	33	%
Enterprise		15,508	25	%		35,656	46	%		38,330	47	%		2,499	6	%		77,852	37	%		44,575	25	%
Other		748	1	%		1,445	2	%		1,371	2	%		1,142	2	%		3,448	2	%		3,901	2	%
Total Revenues	$	61,896	100	%	$	77,401	100	%	$	81,200	100	%	$	43,046	100	%	$	212,392	100	%	$	179,989	100	%

1617

In the above table, the Company has renamed the Wi-Fi product category to Enterprise to more accurately represent the products and services included in this product category, which includes Wi-Fi, switching and software subscriptions.

The Company’s products are predominately sold through third-party distributors and distributed through a third-party logistics provider with facilities in the United States, Netherlands and China. The Company has determined the geographical distribution of product revenues based upon the ship-to destinations specified by its distributor customers.

Revenues by geography were as follows (unaudited and in thousands, except percentages):


	Three Months Ended March 31,								Three Months Ended September 30,								Nine Months Ended September 30,
	2022				2023				2022				2023				2022				2023
North America	$	28,321	46	%	$	47,593	62	%	$	30,086	37	%	$	17,768	42	%	$	89,547	42	%	$	104,887	57	%
Europe, Middle East and Africa		20,332	33	%		19,708	25	%		29,263	36	%		14,274	33	%		70,876	33	%		40,751	23	%
Caribbean and Latin America		5,084	8	%		3,685	5	%		8,935	11	%		5,726	13	%		21,979	10	%		15,426	9	%
Asia Pacific		8,159	13	%		6,415	8	%		12,916	16	%		5,278	12	%		29,990	14	%		18,925	11	%
Total Revenues	$	61,896	100	%	$	77,401	100	%	$	81,200	100	%	$	43,046	100	%	$	212,392	100	%	$	179,989	100	%

Contract balances

The following table summarizes contract balances as of December 31, ~~2021~~2022 and ~~March 31,~~September 30, 2023 (in thousands):


	December 31, 2022		March 31, 2023		December 31, 2022		September 30, 2023
							(unaudited)
Trade accounts receivable, net of allowance for credit losses	$	89,181	$	98,020	$	89,181	$	59,891
Deferred revenue - current		8,913		8,761		8,913		8,791
Deferred revenue - noncurrent		8,617		8,666		8,617		9,731
Refund liability	$	3,186	$	6,740	$	3,186	$	11,594

Deferred revenue consists of amounts due or received from customers in advance of the Company satisfying performance obligations under contractual arrangements. Deferred revenue is classified as current or noncurrent based on the timing of when revenue will be recognized. The changes in deferred revenue were due to normal timing differences between the Company’s performance and the customers’ payment.

The refund liability is the estimated amount expected to be refunded to customers in relation to product exchanges made as part of the Company’s stock rotation program and returns that have been authorized, but not yet received by the Company. The increase in the refund liability is driven by the higher expected stock rotations of enterprise products as the channel aligns its inventory position with market demand. It is included within Other current liabilities in the condensed consolidated balance sheets.

Receivables and concentration of credit risk

Trade accounts receivable ~~represents~~represent amounts for which the Company has an unconditional right to payment. Amounts are in accordance with contractual terms and are recorded at face amount less an allowance for credit losses. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivables. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity indicators for individual customers.

The Company considers the credit risk of all customers and regularly monitors credit risk exposure in its trade receivables. The Company’s standard credit terms with its customers are generally net 30 to 60 days. The Company had one customer representing more than 10% of trade receivables at December 31, 2022 and one customer representing more than 10% of trade receivables at ~~March 31,~~September 30, 2023.

1718

Remaining performance obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations included in a contract that are unsatisfied, or partially satisfied, as of the end of a period. As of December 31, 2022, deferred revenue (current and noncurrent) of $17.5 million represents the Company’s remaining performance obligations, of which $8.9 million is expected to be recognized within one year, with the remainder to be recognized thereafter. As of ~~March 31,~~September 30, 2023, deferred revenue (current and noncurrent) of $~~17.4~~18.5 million represents the Company’s remaining performance obligations, of which $8.8 million is expected to be recognized within one year, with the remainder to be recognized thereafter (unaudited).

Revenue recognized during the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2023 which was previously included in deferred revenues as of December 31, 2022 was $~~3.4~~1.8 million and $7.3 million, respectively, compared to $~~2.2~~1.5 million and $5.7 million of revenue recognized during the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2022, respectively, which was previously included in deferred revenues as of December 31, 2021 (unaudited).

Cost to obtain a contract

Sales commissions are incremental costs of obtaining a contract. The Company has elected to recognize these expenses as incurred, as the amortization period of these costs is one year or less.

Note 16. Leases

The Company has operating leases for offices, vehicles and equipment. Leases with a term of 12 months or less are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term.

Right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s lease payments are typically fixed or contain fixed escalators. The Company’s leases typically include certain lock-in periods and renewal options to extend the lease but does not consider options to extend the lease it is not reasonably certain to exercise. The Company elected the practical expedient to not separate the lease and non-lease components of its leases and currently has no leases with options to purchase the leased property.

The components of lease expense were as follows and are included in general and administrative expense (unaudited and in thousands):


	Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2023		2022		2023		2022		2023
Operating lease cost	$	609	$	572	$	580	$	595	$	1,781	$	1,780
Short-term lease cost		134		99		99		98		352		291
Variable lease costs		143		161		171		215		461		526
Total lease expense	$	886	$	832	$	850	$	908	$	2,594	$	2,597

Supplemental balance sheet information related to leases were as follows (in thousands, except lease term and discount rate):


	Balance Sheet Caption	December 31, 2022			March 31, 2023			Balance Sheet Caption	December 31, 2022			September 30, 2023
												(unaudited)
Operating leases:
Operating lease assets	Operating lease assets	$	4,011		$	4,709		Operating lease assets	$	4,011		$	4,257
Current lease liabilities	Other current liabilities	$	1,930		$	2,064		Other current liabilities	$	1,930		$	1,582
Noncurrent lease liabilities	Noncurrent operating lease liabilities	$	2,170		$	2,723		Noncurrent operating lease liabilities	$	2,170		$	2,793
Weighted average remaining lease term (years):
Operating leases			2.67			3.11				2.67			3.21
Weighted average discount rate:
Operating leases			6.11	%		6.24	%			6.11	%		6.25	%

1819

Supplemental cash flow information related to leases were as follows (unaudited and in thousands):


	Three Months Ended March 31,				Nine Months Ended September 30,
	2022		2023		2022		2023
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	674	$	599	$	1,783	$	1,845

The Company’s current lease terms range from one to five years and may include options to extend the lease by one to four years.

Remaining maturities on lease liabilities as of ~~March 31,~~September 30, 2023 is as follows (unaudited and in thousands):


	Operating leases		Operating leases
2023 (April - December)		1,725
2023 (October - December)				550
2024		1,435		1,569
2025		1,057		1,207
2026		635		802
2027		254		437
Thereafter		151		307
Total lease payments		5,257		4,872
Less: interest		470		497
Present value of lease liabilities	$	4,787	$	4,375

As of ~~March 31,~~September 30, 2023, the Company ~~does not have any leases~~has one lease, for its corporate headquarters located in Illinois that ~~have~~has not yet commenced. Refer to Note 19 - Subsequent events for additional information.

Note 17. Related party transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal.

For the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2022, ~~and 2023,~~ the Company did not have any material related party transactions to ~~disclose~~disclose. For the three-month and nine-month periods ended September 30, 2023, the Company incurred $0.5 million and $0.6 million, respectively, of related party transactions with its majority shareholder, Vector Capital Management of which $0.5 million is outstanding at September 30, 2023. Of the amount outstanding, $0.3 million is included in included in Accounts Payable and $0.2 million is included in Accrued Liabilities in the Company's condensed consolidated balance sheets (unaudited).

Note 18. Restructuring

On August 1, 2023, the Company announced and initiated a corporate cost reduction to better align Cambium's cost structure with current economic conditions and position the Company to achieve near-term and long-term targets to maintain profitability, improve cash flow and maintain a strong balance sheet.

During the three-month period ended September 30, 2023, the Company incurred restructuring charges of approximately $1.0 million, consisting mostly of involuntary employee termination costs, and is included in cost of revenues and all operating expense lines in the Company's condensed consolidated statements of operations. As of September 30, 2023, the Company paid approximately $0.6 million of this amount, leaving a restructuring liability of $0.4 million, of which $0.3 million is included in Accrued Liabilities and $0.1 million is included in Employee Compensation in the Company's condensed consolidated balance sheets. The remaining $0.4 million is expected to be paid in the fourth quarter of 2023. In addition, the Company incurred $1.0 million in costs related to the Chief Executive Officer transition, previously estimated to be part of the total costs of restructuring (unaudited).

1920

Note 19. Subsequent Events

On October 16, 2023, the Company executed an amendment to the lease agreement entered into on June 9, 2023 for its new corporate headquarters in Illinois. The amendment defined the exact space of the office and lab space to be leased, the square footage to be occupied, and the value of the leasehold improvement allowance to be received. The Company expects to recognize a right-of-use asset and lease liability in the fourth quarter of 2023 upon commencement of the lease.

On November 2, 2023, the Company announced it was engaging in additional restructuring to further reduce costs. The Company expects to incur an additional approximately $1.5 -$2.5 million in costs, primarily related to one-time termination benefits, which is expected to be substantially complete and costs incurred by the end of the second quarter of 2024, and expects all costs to be incurred by the end of 2024.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operation should be read in conjunction with the consolidated financial statements and related notes thereto of Cambium Networks Corporation (“Cambium”, “we”, “our”, or “us”) included elsewhere in this Quarterly Report on Form 10-Q and with the financial statements and related notes and Management’s Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed February 27, 2023. Results for the three-month ~~period~~and nine-month periods ended ~~March 31,~~September 30, 2023 are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Cambium Networks is a global technology company that designs, develops, and manufactures wireless and fiber broadband and ~~Wi-Fi~~enterprise networking infrastructure solutions for a wide range of applications, including broadband access, wireless backhaul, Industrial Internet of Things (IIoT), public safety communications, and Wi-Fi access. Our products are used by businesses, governments, and service providers to build, expand and upgrade broadband networks. Our product lines fall into three broad, interrelated categories: Fixed Wireless & fiber Broadband (FWB), Enterprise networking, and Subscription and Services. The FWB portfolio spans point-to-point (PTP) and point-to-multi-point (PMP) architectures over multiple standards, including IEEE 802.11 and 3GPP (Third Generation Partnership Program) and frequency bands, including licensed, unlicensed, and lightly licensed ~~spectrum.~~spectrum, and fiber products. In the second quarter of 2023, we introduced and had our first commercial shipments of a passive optical networking (PON) solution, supporting Gigabit PON (GPON) and XGS-PON (also known as 10G-PON or G987). The Enterprise portfolio includes Wi-Fi access points, ~~wireless aware switches,~~ and other networking devices.

The Subscription and Services portfolio includes network planning and design as well as cloud or on-premises network management and ~~control.~~control solutions. The latter capability, delivered through subscription to cnMaestro™ X, forms the foundation of our ONE Network, a cloud-based network management architecture that allows users to remotely configure, monitor, and manage their wireless network. It provides a single, centralized view of all network devices, including ~~both FWB~~wired and wireless broadband and Enterprise, as well as real-time performance and usage data, and allows users to make changes to the network configuration and settings. Advanced services offered in conjunction with this platform include application visibility and control, which is used to optimize end-user experiences; integrated security gateway and ~~SD-WAN~~software defined wide area network (SD-WAN) for small and medium businesses; and automated and intelligent network optimization.

Trends impacting our business

Starting in the second quarter and continuing into the third quarter of 2023, revenue from our Enterprise products declined, partly resulting from increased competition as a result of readily available component supply reducing our prior advantage in supply and order fulfillment, aggressive pricing by our competitors and poor macroeconomic conditions in our primary markets resulting in lower order volumes from our distributors. Additionally, revenues decreased due to a delay in government defense orders due to U.S. Federal budgetary timing issues impacting the PTP business; sluggish revenues in the PMP business, which is expected until the FCC's approval and subsequent ramp of sales of Cambium's 6 GHz products; a decrease in orders and an increase in stock rotations from distributors in the Enterprise business; and continued economic headwinds, particularly in EMEA.

Our increase in inventory is primarily due to the slowdown in Enterprise orders due to higher channel inventory from fulfillment of orders placed by distributors as a result of the prior extended lead times, shortages and supply chain disruptions. The post-COVID recovery of component and product lead times impacted new order volumes placed by distributors and previous supply orders placed by third-party manufacturers to vendors, leading to higher inventory balances. We ~~have continued~~are taking actions to address these issues, including actions to reduce inventory of our Enterprise products as well as to reduce our operating costs to improve profitability and cash flow. We also continue to work closely with our contract manufacturers and supply chain partners to ~~ramp~~balance production ~~following a period of delayed component sourcing and workforce disruptions, including additional incremental purchase commitments, and have begun~~ to see some reduction in customer order lead times. We have increased our inventory of certain key components to alleviate component shortages and extended our demand planning and purchase commitments to mitigate delays in component sourcing, and the risk of future supply chain disruptions. market demand.

We continue to see inflation pressure in our supply chain, and scarcity of some materials needed to build our products. While we have increased our inventory of key components, technology shifts could result in this increased inventory becoming excess or obsolete before it is deployed, as new product development relies on different components.

We believe that we are at the start of the next wave of high-performance fixed wireless broadband deployments for our PMP solutions, and expect to release our new gigabit solutions, including our market-leading 6 GHz products, and an acceleration in the growth of our 28GHz cnWave 5G fixed products and 60 GHz cnWave products. We anticipate final FCC approval for outdoor use of the 6 GHz spectrum by the end of the year, which is expected to drive PMP revenue growth in future quarters, and our PTP business is expected to benefit from growth in defense and security deployments globally. Our enterprise business continues to expand with both new products and the ability to reach new customers and markets, and we expect to release our first fiber product this year. As we gain traction with customers on the release of our new products and solutions, customer may delay or reduce purchases of older versions of these products and solutions.

We continue to monitor the impact of macroeconomic factors, including a potential global recession, inflationary pressures, ~~the recent and ongoing crisis among some U.S. banking institutions,~~ and growing political tensions as a result of the Russia-Ukraine conflict, as well as the escalating tensions between China and Taiwan, the recent and rapidly accelerating conflict in Israel and Gaza, and associated tensions between the U.S. and China. While none of these have been material to our business or results of operations as of the date hereof, the full impact of the escalation of any of these factors on our business and results of operations remains uncertain. We also believe that our customers continue to grapple with the impact of these macroeconomic factors on their businesses and future investment plans, resulting in business uncertainty and a more constrained approach to forecasts and orders. In addition, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods. ~~Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.~~

The impact of reverse globalization, including a more nationalistic trend globally leading to increasing government requirements for domestically produced products or limiting the sourcing of components and other products from China and elsewhere, has led us to limit our reliance on third-party manufacturers in China and begin moving manufacturing to other locations, which could cause disruptions in our supply operations. ~~We believe that any extended or renewed economic disruptions or deterioration in the global~~

economy could have a negative impact on demand from our customers in future periods. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.

Financial results for the three-month period ended ~~March 31,~~September 30, 2023

•

Total revenue was ~~$77.4~~$43.0 million, ~~an increase~~a decrease of ~~25.1%~~47.0% year-over-year

•

Gross margin was ~~51.2%~~25.5%

•

Total costs of revenues and operating expenses were ~~$73.8~~$65.1 million

•

Operating ~~income~~loss was ~~$5.6~~$22.1 million

•

Net ~~income~~loss was ~~$4.3~~$26.2 million

Basis of presentation

Revenues

Our revenues are generated primarily from the sale of our products, which consist of hardware with essential embedded software. Our revenues also include amounts for software products, extended warranty on hardware products and subscription services. We generally recognize product revenues at the time of shipment, provided that all other revenue recognition criteria have been met. Revenues are recognized net of estimated stock returns, volume-based rebates and cooperative marketing allowances that we provide to distributors. We recognize subscription services revenue ratably over the term in which services are provided and our performance obligation is satisfied. We provide a standard warranty on our hardware products, with the term depending on the product, and record a liability for the estimated future costs associated with potential warranty claims. In addition, we also offer extended warranties for purchase and represents a future performance obligation for us. The extended warranty is included in deferred revenues and is recognized on a straight-line basis over the term of the extended warranty.

Cost of revenues and gross profit

Our cost of revenues is comprised primarily of the costs of procuring finished goods from our third-party manufacturers, third-party logistics and warehousing provider costs, freight costs and warranty costs. We outsource our manufacturing to third-party manufacturers located primarily in Mexico, China, Israel and Taiwan. Cost of revenues also includes costs associated with supply operations, including personnel related costs and allocated overhead costs, provision for excess and obsolete inventory, third-party license costs and third-party costs related to services we provide. Cost of revenues also includes amortization of capitalized software development costs associated with products marketed to be sold.

Gross profit has been and will continue to be affected by various factors, including changes in product mix. The margin profile of products within each of our core product categories can vary significantly depending on the operating performance, features and manufacturer of the product. Gross margin will also vary as a function of changes in pricing due to competitive pressure, our third-party manufacturing and other production costs, cost of shipping and logistics, provision for excess and obsolete inventory and other factors. We expect our gross margins will fluctuate from period to period depending on the interplay of these various factors.

Operating expenses

We classify our operating expense as research and development, sales and marketing, and general and administrative expense. Personnel costs are the primary component of each of these operating expense categories, which consist of personnel costs, such as salaries, sales commissions, benefits, bonuses and share-based compensation expense. In addition, we separate depreciation and amortization in their own category.

Research and development

In addition to personnel-related costs, research and development ~~expense consists~~expenses consist of costs associated with design and development of our products, product certification, travel, recruiting and shared facilities and shared IT costs. We generally recognize research and development expense as incurred. ~~For~~We capitalize certain ~~of our~~ software ~~projects~~project costs under development ~~we capitalize the development cost~~ during the period between determining technological feasibility of the product and commercial release. We amortize the capitalized development cost upon commercial release, generally over three years, and is included in cost of revenues. We typically do not capitalize costs related to

the development of first-generation product offerings as technological feasibility generally coincides with general availability of the software.

Sales and marketing

In addition to personnel-related costs for sales, marketing, service and product line management personnel, sales and marketing ~~expense consists~~expenses consist of our training programs, trade shows, marketing programs, promotional materials, demonstration equipment, national and local regulatory approval on our products, travel and entertainment, recruiting, digital marketing platforms, third-party marketing services and shared facilities and shared IT costs.

General and administrative

In addition to personnel-related costs, general and administrative ~~expense consists~~expenses consist of professional fees, such as legal, audit, accounting, information technology and consulting costs, insurance, shared facilities and shared IT costs, and other supporting overhead costs.

Depreciation and amortization

Depreciation and amortization ~~expense~~expenses consist of depreciation related to fixed assets such as computer equipment, furniture and fixtures, and testing equipment, as well as amortization related to acquired and internal use software and definite lived intangibles.

Provision for income taxes

Our provision for income taxes consists primarily of income taxes in the jurisdictions in which we conduct business. Management assesses our deferred tax assets in each reporting period, and if it is determined that it is not more likely than not to be realized, we will record a valuation allowance in that period.

Results of operations

The following table presents the consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our consolidated statements of operations (in thousands):


	Three Months Ended March 31,					Three Months Ended September 30,						Nine months ended September 30,
(in thousands)	2022			2023		2022			2023			2022			2023
Statements of Operations Data:
Revenues	$	61,896		$	77,401	$	81,200		$	43,046		$	212,392		$	179,989
Cost of revenues		32,730			37,741		40,034			32,087			108,621			100,128
Gross profit		29,166			39,660		41,166			10,959			103,771			79,861
Operating expenses
Research and development		12,942			14,262		12,609			13,151			36,991			40,421
Sales and marketing		10,429			11,670		11,033			9,675			32,304			32,873
General and administrative		6,544			6,667		6,058			8,688			19,560			21,191
Depreciation and amortization		1,446			1,496		1,506			1,545			4,486			4,614
Total operating expenses		31,361			34,095		31,206			33,059			93,341			99,099
Operating (loss) income		(2,195	)		5,565
Operating income (loss)							9,960			(22,100	)		10,430			(19,238	)
Interest expense, net		497			597		514			620			1,418			1,796
Other expense, net		77			154
(Loss) income before income taxes		(2,769	)		4,814
Other expense (income), net							165			63			(129	)		281
Income (loss) before income taxes							9,281			(22,783	)		9,141			(21,315	)
(Benefit) provision for income taxes		(1,201	)		538		(154	)		3,417			(1,048	)		3,251
Net (loss) income	$	(1,568	)	$	4,276
Net income (loss)						$	9,435		$	(26,200	)	$	10,189		$	(24,566	)


	Three Months Ended March 31,						Three Months Ended September 30,						Nine months ended September 30,
	2022			2023			2022			2023			2022			2023
Percentage of Revenues:
Revenues		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		52.9	%		48.8	%		49.3	%		74.5	%		51.1	%		55.6	%
Gross margin		47.1	%		51.2	%		50.7	%		25.5	%		48.9	%		44.4	%
Operating expenses
Research and development		20.8	%		18.4	%		15.5	%		30.6	%		17.4	%		22.5	%
Sales and marketing		16.8	%		15.1	%		13.6	%		22.5	%		15.2	%		18.3	%
General and administrative		10.6	%		8.6	%		7.5	%		20.2	%		9.2	%		11.8	%
Depreciation and amortization		2.3	%		1.9	%		1.8	%		3.6	%		2.2	%		2.5	%
Total operating expenses		50.6	%		44.0	%		38.4	%		76.9	%		44.0	%		55.1	%
Operating (loss) income		(3.5	)%		7.2	%
Operating income (loss)								12.3	%		(51.3	)%		4.9	%		-10.7	%
Interest expense, net		0.8	%		0.8	%		0.6	%		1.4	%		0.7	%		1.0	%
Other expense, net		0.1	%		0.2	%
(Loss) income before income taxes		(4.4	)%		6.2	%
Other expense (income), net								0.3	%		0.2	%		(0.1	)%		0.2	%
Income (loss) before income taxes								11.4	%		(52.9	)%		4.3	%		(11.8	)%
(Benefit) provision for income taxes		(1.9	)%		0.7	%		(0.2	)%		7.9	%		(0.5	)%		1.8	%
Net (loss) income		(2.5	)%		5.5	%
Net income (loss)								11.6	%		(60.9	)%		4.8	%		(13.6	)%

Comparison of three-month period ended ~~March 31,~~September 30, 2022 to the three-month period ended ~~March 31,~~September 30, 2023

Revenues


	Three Months Ended March 31,				Change					Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$		%			2022		2023		$			%
Revenues	$	61,896	$	77,401	$	15,505		25.1	%	$	81,200	$	43,046	$	(38,154	)		(47.0	)%

Revenues ~~increased $15.5~~decreased $38.2 million, or ~~25.1%~~47.0%, to ~~$77.4~~$43.0 million for the three-month period ended ~~March 31,~~September 30, 2023, from ~~$61.9~~$81.2 million for the three-month period ended ~~March 31,~~September 30, 2022, with the largest ~~increase~~decrease in our enterprise product category driven by ~~improved supply and increased demand as well as the absence of COVID lockdowns in China~~lower order volumes from distributors due to a recovery in the ~~first quarter of 2022 that enabled us to manufacture product without interruption~~supply chain and higher channel inventories, aggressive pricing from competitors, slowing economies and an increase in ~~operations.~~stock rotations. Revenues also ~~increased in our point-to-point product category driven by increased demand for backhaul products partially offset by lower demand~~decreased in our point-to-multi-point ~~products~~product category ahead of a product transition to new gigabit solutions in our product portfolio. ~~Revenues benefited from the increase~~These decreases were partially offset by increased revenues in ~~the number of~~ our ~~channel partners, which consists of almost 13,000 channel partners as of March 31, 2023.~~point-to-point product category driven by increased demand for defense products.

Revenues by product category


	Three Months Ended March 31,				Change						Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$			%			2022		2023		$			%
Point-to-Multi-Point	$	30,926	$	22,292	$	(8,634	)		(27.9	)%	$	26,090	$	23,596	$	(2,494	)		(9.6	)%
Point-to-Point		14,714		18,008		3,294			22.4	%		15,409		15,809		400			2.6	%
Enterprise		15,508		35,656		20,148			129.9	%		38,330		2,499		(35,831	)		(93.5	)%
Other		748		1,445		697			93.2	%		1,371		1,142		(229	)		(16.7	)%
Total revenues by product category	$	61,896	$	77,401	$	15,505			25.1	%	$	81,200	$	43,046	$	(38,154	)		(47.0	)%

Point-to-Multi-Point

Our PMP revenues decreased ~~$8.6~~$2.5 million, or ~~27.9%~~9.6%, from the three-month period ended ~~March 31,~~September 30, 2022 to ~~2023, and represented 50% and 29% of our total revenues over the same periods, respectively.~~2023. Our ~~decreases~~decrease in point-to-multi-point revenues were due to lower demand from service providers ~~ahead~~as they await the addition of ~~a product transition to new gigabit solutions in~~6 GHz spectrum, but benefited from increased demand for our ~~product portfolio~~28 GHz Fixed 5G in Europe, Middle East, ~~Africa, Caribbean and Latin America and Asia Pacific regions, partially offset by increased demand in North America.~~Africa.

Point-to-Point

PTP revenues increased ~~$3.3~~$0.4 million, or ~~22.4%~~2.6%, from the three-month period ended ~~March 31,~~September 30, 2022 to 2023 mostly driven by increased revenues in ~~North~~Europe, Middle East, Africa and Caribbean and Latin America as a result of increased demand for defense products ~~from the federal government and backhaul~~partially offset by lower demand for ~~service providers.~~PTP products in all other regions.

Enterprise

Enterprise revenues ~~increased $20.1~~decreased $35.8 million, or ~~129.9%~~93.5%, from the three-month period ended ~~March 31,~~September 30, 2022 to 2023. ~~Our Wi-Fi product category has been renamed Enterprise to more accurately represent the products and services included in this product category.~~ Enterprise revenues ~~increased~~decreased in all ~~but~~regions, with the ~~Asia Pacific region,~~largest decrease in Europe, Middle East, Africa, driven mostly by ~~increased demand for our Wi-Fi 6/6E products and improvements in available~~lower order volumes from distributors. In addition, enterprise product revenues were impacted by the recovery of the product supply ~~to meet demand due to the absence of the COVID lockdowns~~chain reducing our prior advantage in ~~China~~supply and order fulfillment and therefore, increased competition, coupled with aggressive pricing by our competitors, as well as higher inventory levels in the ~~first quarter of 2022 which resulted in the shut down of manufacturing~~channel and ~~distribution operations.~~increased stock rotations.

Revenues by geography


	Three Months Ended March 31,				Change						Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$			%			2022		2023		$			%
North America	$	28,321	$	47,593	$	19,272			68.0	%	$	30,086	$	17,768	$	(12,318	)		(40.9	)%
Europe, Middle East, Africa		20,332		19,708		(624	)		(3.1	)%		29,263		14,274		(14,989	)		(51.2	)%
Caribbean and Latin America		5,084		3,685		(1,399	)		(27.5	)%		8,935		5,726		(3,209	)		(35.9	)%
Asia Pacific		8,159		6,415		(1,744	)		(21.4	)%		12,916		5,278		(7,638	)		(59.1	)%
Total revenues by geography	$	61,896	$	77,401	$	15,505			25.1	%	$	81,200	$	43,046	$	(38,154	)		(47.0	)%

Revenues ~~increased in North America and~~ decreased in all ~~other~~ regions from the three-month period ended ~~March 31,~~September 30, 2022 to ~~March 31,~~September 30, 2023. North America revenues ~~increased $19.3~~decreased $12.3 million, or ~~68%~~40.9%, with ~~increases~~the largest decrease in ~~all product lines, mostly driven by higher~~ enterprise revenues due to ~~improved supply~~decreased demand from high levels of channel inventory, along with lower PTP and ~~increased demand as well as the absence of the COVID lockdowns in China in the first quarter of 2022 that enabled us~~PMP revenues due to ~~manufacture product without interruption in operations.~~decreased demand. Europe, Middle East, Africa revenues decreased ~~slightly~~ by ~~$0.6~~$15.0 million, or ~~3.1%~~51.2%, mostly ~~related to decreased PMP revenues mostly offset~~driven by ~~higher~~lower enterprise revenues due to ~~improved supply and increased~~decreased demand ~~and PTP~~resulting from high channel inventory partially offset by higher PMP revenues due to increased demand for ~~defense products.~~28 GHz Fixed 5G and higher PTP revenues due to increase demand from defense. Caribbean and Latin America revenues decreased ~~$1.4~~$3.2 million, or ~~27.5%~~35.9%, mostly ~~due to~~driven by lower enterprise revenues and lower PMP revenues partially offset by higher PTP revenues. Asia Pacific revenues decreased ~~$1.7~~$7.6 million, or ~~21.4%~~59.1%, mostly driven by ~~decreased~~lower enterprise revenues and lower PMP ~~and PTP~~ revenues both due to ~~lower demand throughout the region partially offset by higher enterprise revenues due to improved supply and increased~~decreased demand.

Cost of revenues and gross margin


	Three Months Ended March 31,						Change					Three Months Ended September 30,						Change
(dollars in thousands)	2022			2023			$		%			2022			2023			$			%
Cost of revenues	$	32,730		$	37,741		$	5,011		15.3	%	$	40,034		$	32,087		$	(7,947	)		(19.9	)%
Gross margin		47.1	%		51.2	%			410 bps				50.7	%		25.5	%				(2520) bps

Cost of revenues ~~increased $5.0~~decreased $7.9 million, or ~~15.3%~~19.9%, to ~~$37.7~~$32.1 million for the three-month period ended ~~March 31,~~September 30, 2023 from ~~$32.7~~$40.0 million for the three-month period ended ~~March 31,~~September 30, 2022. The ~~increase~~decrease in cost of revenues was primarily due to ~~increased~~decreased revenues ~~partially offset~~but was negatively impacted by ~~decreased production costs due to decreases in component charges as~~ a ~~result of increased availability of components.~~

Gross margin increased to 51.2% for the three-month period ended March 31, 2023 from 47.1% for the three-month period ended March 31, 2022. The increase reflects increased revenues from higher margin products and the impact of price increases along with lower production costs due to improvements in component availability reducing component costs, partially offset by the$4.6 million increase in our excess and obsolescence ~~reserve.~~reserve, lower capitalized freight, and higher material fixed costs. The higher excess and obsolescence reserve was impacted by a combination of lower demand due to higher channel inventory, shorter product lead times due to recovery post-COVID and product cycles driven by the anticipated introduction of the new 6 GHz PMP products.

24Gross margin decreased to 25.5% for the three-month period ended September 30, 2023 from 50.7% for the three-month period ended September 30, 2022. The decrease primarily reflects the impact from an increase in our excess and obsolescence reserve, higher freight costs and decreased revenues from higher margin products.

Operating expenses


	Three Months Ended March 31,				Change					Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$		%			2022		2023		$			%
Research and development	$	12,942	$	14,262	$	1,320		10.2	%	$	12,609	$	13,151	$	542			4.3	%
Sales and marketing		10,429		11,670		1,241		11.9	%		11,033		9,675		(1,358	)		(12.3	)%
General and administrative		6,544		6,667		123		1.9	%		6,058		8,688		2,630			43.4	%
Depreciation and amortization		1,446		1,496		50		3.5	%		1,506		1,545		39			2.6	%
Total operating expenses	$	31,361	$	34,095	$	2,734		8.7	%	$	31,206	$	33,059	$	1,853			5.9	%

Research and development

Research and development expense increased ~~$1.3~~$0.5 million, or ~~10.2%~~4.3%, to ~~$14.3~~$13.2 million for the three-month period ended ~~March 31,~~September 30, 2023 from ~~$12.9~~$12.6 million for the three-month period ended ~~March 31,~~September 30, 2022. As a percentage of revenues, research and development expenses ~~decreased~~increased to ~~18.4%~~30.6% in 2023 from ~~20.8%~~15.5% in 2022 over the same period. The increase in research and development expense was primarily due to $1.1 million higher staff-related costs due to increased headcount, ~~along with~~ $0.6 million ~~higher corporate bonus expense due~~in restructuring expenses related to ~~higher financial performance and $0.3 million higher share-based compensation expense. These increases were~~the cost reductions announced in August 2023, partially offset by ~~$0.5~~$0.6 million higher capitalized software ~~cost~~costs due to an increase in projects eligible for capitalization and ~~$0.2~~$0.6 million lower homologation and regulatory ~~expense~~fees due to the timing of projects.

Sales and marketing

Sales and marketing expense ~~increased $1.2~~decreased $1.4 million, or ~~11.9%~~12.3%, to ~~$11.7~~$9.7 million for the three-month period ended ~~March 31,~~September 30, 2023 from ~~$10.4~~$11.0 million for the three-month period ended ~~March 31,~~September 30, 2022. As a percentage of revenues, sales and marketing expense ~~decreased~~increased to ~~15.1%~~22.5% in 2023 from ~~16.8%~~13.6% in 2022 over the same period. The ~~increase~~decrease in sales and marketing expense was primarily due to ~~$0.8~~$1.6 million ~~higher staff-related costs~~lower variable compensation expense due to lower revenues and ~~$0.3~~$0.2 million ~~higher travel-related~~lower marketing-related spend, ~~as restrictions on travel and~~partially offset by $0.4 million of restructuring expenses associated with the cost reductions announced in ~~person conferences imposed by the COVID pandemic continue to lessen in parts of the world and $0.1 million higher share-based compensation expense.~~August 2023.

General and administrative

General and administrative expense increased ~~$0.1~~$2.6 million, or ~~1.9%~~43.4%, to ~~$6.7~~$8.7 million for the three-month period ended ~~March 31,~~September 30, 2023 from ~~$6.5~~$6.1 million for the three-month period ended ~~March 31,~~September 30, 2022. As a percentage of revenues, general and administrative expense ~~decreased~~increased to ~~8.6%~~20.2% in 2023 from ~~10.6%~~7.5% in 2022 over the same period. The increase in general and administrative expense was primarily due to ~~$0.2~~$1.0 million in expenses incurred as part of the Chief Executive Officer transition, $0.7 million higher ~~corporate bonus expense due to~~legal fees, including estimated litigation expenses, $0.5 million higher ~~financial performance and $0.1~~professional fees, $0.3 million higher share-based compensation expense and $0.2 million higher staff-related costs, mostly due to increased headcount partially offset by $0.1 ~~lower insurance expense and $0.1~~ million ~~lower legal expense.~~reduction of nonrecurring expenses related to various strategic initiatives.

Depreciation and amortization

Depreciation and amortization expense remained flat from the three-month period ended ~~March 31,~~September 30, 2022 to the three-month period ended ~~March 31,~~September 30, 2023.

Interest expense, net


	Three Months Ended March 31,				Change					Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$		%			2022		2023		$		%
Interest expense, net	$	497	$	597	$	100		20.1	%	$	514	$	620	$	106		20.6	%

Interest expense increased $0.1 million, or ~~20.1%~~20.6%, to $0.6 million for the three-month period ended ~~March 31,~~September 30, 2023 from $0.5 million for the three-month period ended ~~March 31,~~September 30, 2022. The increase was primarily due to an increase in the interest rate on the term loan partially offset by an increase in interest income earned.

Other expense, net


	Three Months Ended March 31,				Change					Three Months Ended September 30,				Change
(dollars in thousands)	2022		2023		$		%			2022		2023		$			%
Other expense, net	$	77	$	154	$	77		100.0	%	$	165	$	63	$	(102	)		(61.8	)%

Other expense, net ~~increased~~changed from expense of $0.2 million for the three-month period ended September 30, 2022 to $0.1 million for the three-month period ended ~~March 31, 2022 to $0.2 million for the three-month period ended March 31,~~September 30, 2023, primarily due to foreign currency fluctuations.

~~Provision~~(Benefit) provision for income taxes


	Three Months Ended March 31,						Change					Three Months Ended September 30,						Change
(dollars in thousands)	2022			2023			$		%			2022			2023			$		%
(Benefit) provision for income taxes	$	(1,201	)	$	538		$	1,739		(144.8	)%	$	(154	)	$	3,417		$	3,571	nm
Effective income tax rate		43.4	%		11.2	%							(1.7	)%		(15.0	)%

Our provision for income taxes was ~~$0.5~~$3.4 million for the three-month period ended ~~March 31,~~September 30, 2023 ~~and~~versus a benefit for income taxes of ~~$1.2~~$0.2 million for the three-month period ended ~~March 31,~~September 30, 2022. The effective income tax rates were ~~11.2%~~(15.0)% and ~~43.4%~~(1.7)% over the same periods, respectively, and reflect the application of our expected annual tax rate to pre-tax results for each of the periods as well as discrete tax impacts that arise during the periods. In the three-month period ended ~~March 31,~~September 30, 2022, the effective income tax rate of ~~43.4%~~(1.7)% was different from the statutory rate of 21.0% primarily due to tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, and revaluing of UK deferred tax assets at a higher future tax rate. In the three-month period ended ~~March 31,~~September 30, 2023, our effective income tax rate of ~~11.2%~~(15.0)% was different from the statutory rate of 21.0% primarily due to establishment of a valuation allowance on the net deferred tax assets on the UK company, net of tax benefit on Foreign Derived Intangible Income, tax benefit arising on US Research and Development tax credits, and changes to the excess tax benefits on share-based compensation. The Company established a valuation allowance based on the analysis of cumulative income and loss positions, future income projections, and operating plans. The UK net deferred tax assets are comprised primarily of NOL carryforwards, corporate interest restriction carryforwards and acquired intangibles that existed at December 31, 2022, amounting to $5.3 million. The movement in the net deferred tax assets during the period amounted to $5.6 million, for a total valuation allowance of $10.9 million.

Comparison of nine-month period ended September 30, 2022 to the nine-month period ended September 30, 2023

Revenues


	Nine months ended September 30,				Change
(dollars in thousands)	2022		2023		$			%
Revenues	$	212,392	$	179,989	$	(32,403	)		(15.3	)%

Revenues decreased $32.4 million, or 15.3%, to $180.0 million for the nine-month period ended September 30, 2023 from $212.4 million for the nine-month period ended September 30, 2022, with the largest decrease in our enterprise product category driven by lower demand due to high channel inventories and slowing economies along with increased stock rotations. Revenues decreased in our point-to-multi-point product category primarily driven by lower demand from service providers awaiting the addition

of 6 GHz spectrum. Revenues increased in our point-to-point product category, mostly in North America, as a result of increased demand for defense products with the federal government.

Revenues by product category


	Nine months ended September 30,				Change
(dollars in thousands)	2022		2023		$			%
Point-to-Multi-Point	$	85,285	$	72,622	$	(12,663	)		(14.8	)%
Point-to-Point		45,807		58,891		13,084			28.6	%
Enterprise		77,852		44,575		(33,277	)		(42.7	)%
Other		3,448		3,901		453			13.1	%
Total revenues by product category	$	212,392	$	179,989	$	(32,403	)		(15.3	)%

Point-to-Multi-Point

Our PMP revenues decreased $12.7 million, or 14.8%, from the nine-month period ended September 30, 2022 to 2023, and represented 40% of our total revenues in both periods. Our decrease in point-to-multi-point revenues was due mostly to lower demand from service providers ahead of a product transition to 6 GHz technology, with declines in all regions except North America. Revenues increased in North America primarily from higher demand from service providers for our 60 GHz, ePMP and fiber products.

Point-to-Point

PTP revenues increased $13.1 million, or 28.6%, from the nine-month period ended September 30, 2022 to 2023 mostly driven by increased revenues in North America as a result of increased demand for defense products.

Enterprise

Enterprise revenues decreased $33.3 million, or 42.7%, from the nine-month period ended September 30, 2022 to 2023. Enterprise revenues decreased in all regions except North America, with the largest decrease in Europe, Middle East, Africa. Although there is recovery of the product supply chain, enterprise revenues have decreased as our prior advantage in supply and order fulfillment has diminished and has been impacted by increased competition, aggressive pricing by our competitors and high inventory levels in the channel.

Revenues by geography


	Nine months ended September 30,				Change
(dollars in thousands)	2022		2023		$			%
North America	$	89,547	$	104,887	$	15,340			17.1	%
Europe, Middle East, Africa		70,876		40,751		(30,125	)		(42.5	)%
Caribbean and Latin America		21,979		15,426		(6,553	)		(29.8	)%
Asia Pacific		29,990		18,925		(11,065	)		(36.9	)%
Total revenues by geography	$	212,392	$	179,989	$	(32,403	)		(15.3	)%

Revenues increased in North America and decreased in all other regions from the nine-month period ended September 30, 2022 to September 30, 2023. North America revenues increased $15.3 million, or 17.1%, with increases in all product lines, mostly driven by increased PTP revenues as a result of higher demand for defense products along with increased PMP revenues due primarily to higher demand from service providers. Europe, Middle East, Africa revenues decreased by $30.1 million, or 42.5%, mostly related to decreased enterprise revenues due to high level of channel inventory and decreased PMP revenues partially offset by increased PTP revenues. Asia Pacific revenues decreased $11.1 million, or 36.9%, mostly driven by decreased PMP and enterprise revenues due to lower demand throughout the region. Caribbean and Latin America revenues decreased $6.6 million, or 29.8%, mostly due to lower demand across all products and fewer government projects.

Cost of revenues and gross margin


	Nine months ended September 30,						Change
(dollars in thousands)	2022			2023			$			%
Cost of revenues	$	108,621		$	100,128		$	(8,493	)		(7.8	)%
Gross margin		48.9	%		44.4	%				(450) bps

Cost of revenues decreased $8.5 million, or 7.8%, to $100.1 million for the nine-month period ended September 30, 2023 from $108.6 million for the nine-month period ended September 30, 2022. The decrease in cost of revenues was primarily due to decreased revenues, but benefited from lower production costs due to decreases in component charges as a result of increased availability of components partially offset by the increase in our excess and obsolescence reserve and supply operations costs.

Gross margin decreased to 44.4% for the nine-month period ended September 30, 2023 from 48.9% for the nine-month period ended September 30, 2022. The decrease reflects decreased revenues from higher margin products, increased freight and supply operations costs as a percentage of revenue and the increase in our excess and obsolescence reserve. Gross margin benefited from lower production costs due to decreases in component charges as a result of increased availability of components.

Operating expenses


	Nine months ended September 30,				Change
(dollars in thousands)	2022		2023		$		%
Research and development	$	36,991	$	40,421	$	3,430		9.3	%
Sales and marketing		32,304		32,873		569		1.8	%
General and administrative		19,560		21,191		1,631		8.3	%
Depreciation and amortization		4,486		4,614		128		2.9	%
Total operating expenses	$	93,341	$	99,099	$	5,758		6.2	%

Research and development

Research and development expense increased $3.4 million, or 9.3%, to $40.4 million for the nine-month period ended September 30, 2023 from $37.0 million for the nine-month period ended September 30, 2022. As a percentage of revenues, research and development expenses increased to 22.5% in 2023 from 17.4% in 2022 over the same period. The increase in research and development expense was primarily due to $3.3 million higher staff-related costs due to increased headcount, $0.9 million of restructuring expenses, with $0.6 million associated with the cost reductions announced in August 2023, $0.8 million higher contractor costs driven by increase in projects, $0.4 million higher share-based compensation expense and $0.2 million higher travel partially offset by $1.8 million higher capitalized software cost due to an increase in projects eligible for capitalization and $0.5 million lower homologation and regulatory expense due to the timing of projects.

Sales and marketing

Sales and marketing expense increased $0.6 million, or 1.8%, to $32.9 million for the nine-month period ended September 30, 2023 from $32.3 million for the nine-month period ended September 30, 2022. As a percentage of revenues, sales and marketing expense increased to 18.3% in 2023 from 15.2% in 2022 over the same period. The increase in sales and marketing expense was primarily due to $1.4 million higher staff-related costs due to increased headcount, $0.5 million higher professional fees, $0.5 million higher travel-related spend, $0.2 million increase in restructuring expenses and $0.1 million higher share-based compensation expense mostly offset by $2.1 million lower variable compensation expense due to lower revenues.

General and administrative

General and administrative expense increased $1.6 million, or 8.3%, to $21.2 million for the nine-month period ended September 30, 2023 from $19.6 million for the nine-month period ended September 30, 2022. As a percentage of revenues, general and administrative expense increased to 11.8% in 2023 from 9.2% in 2022 over the same period. The increase in general and administrative expense was primarily due to $1.0 million in expenses incurred as part of the Chief Executive Officer transition, $0.6 million higher legal fees, including estimated litigation expenses, $0.5 million higher share-based compensation expense due to grants issued, $0.3 million higher staff-related costs, mostly due to increased headcount and $0.2 million higher professional fees, partially offset by $0.7 million lower insurance expense due to lower negotiated fees and $0.3 million professional services fees incurred in 2022 related to strategic initiatives.

Depreciation and amortization

Depreciation and amortization expense remained flat from the nine-month period ended September 30, 2022 to the nine-month period ended September 30, 2023.

Interest expense, net


	Nine months ended September 30,				Change
(dollars in thousands)	2022		2023		$		%
Interest expense, net	$	1,418	$	1,796	$	378		26.7	%

Interest expense, net increased $0.4 million, or 26.7%, to $1.8 million for the nine-month period ended September 30, 2023 from $1.4 million for the nine-month period ended September 30, 2022. The increase was primarily due to an increase in the interest rate on the term loan partially offset by increase in interest income earned.

Other (income) expense, net


	Nine months ended September 30,					Change
(dollars in thousands)	2022			2023		$		%
Other (income) expense, net	$	(129	)	$	281	$	410	nm

Other (income) expense, net changed from income of $0.1 million for the nine-month period ended September 30, 2022 to expense of $0.3 million for the nine-month period ended September 30, 2023, primarily due to foreign currency fluctuations.

(Benefit) provision for income taxes



	Nine months ended September 30,						Change
(dollars in thousands)	2022			2023			$		%
(Benefit) provision for income taxes	$	(1,048	)	$	3,251		$	4,299	nm
Effective income tax rate		(11.5	)%		(15.3	)%

Our provision for income taxes was $3.3 million for the nine-month period ended September 30, 2023 and a benefit for income taxes of $1.0 million for the nine-month period ended September 30, 2022. The effective income tax rates were (15.3)% and (11.5)% over the same periods, respectively, and reflect the application of our expected annual tax rate to pre-tax results for each of the periods as well as discrete tax impacts that arise during the periods. In the nine-month period ended September 30, 2022, the effective income tax rate of (11.5)% was different from the statutory rate of 21.0% primarily due to tax benefits arising on Research and Development tax ~~credits.~~credits, Foreign Derived Intangible Income, and revaluing of UK deferred tax assets at a higher future tax rate. In the nine-month period ended September 30, 2023, our effective income tax rate of (15.3)% was different from the statutory rate of 21.0% primarily due to establishment of a valuation allowance on the deferred tax assets of the UK company, net of tax benefits on Foreign Derived Intangible Income, tax benefit arising on US Research and Development tax credits, and changes to the excess tax benefits on share-based compensation. The Company established the valuation allowance based on the analysis of cumulative income and loss positions, future income projections, and operating plans. The UK net deferred tax assets are comprised primarily of NOL carryforwards, corporate interest restriction carryforwards and acquired intangibles that existed at December 31, 2022, amounting to $5.3 million. The movement in the net deferred tax assets during the period amount to $6.8 million for a total valuation allowance of $12.1 million.

Liquidity and Capital Resources

As of ~~March 31,~~September 30, 2023, we had a cash balance of ~~$38.7~~$27.5 million. Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet interest and principal requirements of our outstanding indebtedness; and (iii) to fund capital expenditures. We believe these needs will be satisfied over at least the next 12 months using existing cash and using cash flow generated by our operations. We continue to focus on cost management, operating efficiency and efficient discretionary spending. In addition, if necessary, we may leverage our revolving credit facility to manage our working capital needs in the near future. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products and overall economic conditions. We ~~expect to~~ regularly assess our liquidity needs and market conditions and may take measures, including raising additional equity or incurring additional debt if and when our board of directors determines that doing so is in our best interest.

Cash Flows

The following table sets forth summarized cash flow data for the periods indicated (in thousands):

Cash flows from operating activities


	Three Months Ended March 31,						Nine months ended September 30,
	2022			2023			2022			2023
Cash used in operating activities	$	(19,225	)	$	(5,959	)	$	(7,080	)	$	(10,726	)
Cash used in investing activities	$	(1,782	)	$	(3,106	)	$	(6,683	)	$	(8,879	)
Cash provided by (used in) financing activities	$	104		$	(417	)
Cash used in financing activities							$	(583	)	$	(1,021	)

Net cash used in operating activities for the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2022 of ~~$19.2~~$7.1 million consisted primarily of net ~~loss~~income of ~~$1.6~~$10.6 million, share-based compensation expense of ~~$2.4~~$7.8 million and adjustments for depreciation and amortization and other non-cash impacts of ~~$2.0~~$7.5 million, ~~along with~~ an increase in deferred tax assets of ~~$1.4~~$2.0 million and changes in operating assets and liabilities that resulted in net cash outflows of ~~$20.7~~$31.0 million. The changes in operating assets and liabilities consisted primarily of a ~~$12.1~~$16.8 million decrease in ~~accounts payable as~~inventories due to management's plan to build inventory in response to supply chain constraints and higher revenue expectations in the fourth quarter of 2022, a ~~result of timing of purchases and payments, a $10.3~~$10.2 million decrease in accrued employee compensation primarily due to the payment of the 2021 corporate bonus net of the 2022 corporate bonus accrual and ~~$6.5~~$9.4 million increase in inventories due to lower revenue growth. This was partially offset by $6.2 million lower receivables due to lower sales in the first quarter of 2022 and $2.1 million higher accrued liabilities primarily related to inventory in transit.

Net cash used in operating activities for the three-month period ended March 31, 2023 of $6.0 million consisted of net income of $4.3 million, share-based compensation expense of $2.9 million and adjustments for depreciation and amortization and other non-cash impacts of $3.3 million, an increase in deferred tax assets of $1.5 million and changes in operating assets and liabilities that

resulted in net cash outflows of $14.9 million. The changes in operating assets and liabilities consisted primarily of a $12.6 million increase in inventories due to management's plan to build inventory in response higher revenue expectations, a $9.0 increase in accounts receivable reflecting the impact of higher sales and ~~the~~ timing of ~~collections and $1.5 million decrease in accounts payable due to timing or invoices and payments. The~~collections. These uses of cash were partially offset by ~~$7.7~~$4.0 million lower prepaid expenses, mostly as a result of decrease in vendor prepayments to procure inventory and $3.5 million increase in cash provided by all other assets and liabilities, mostly driven by the increase in deferred revenues.

Net cash used in operating activities for the nine-month period ended September 30, 2023 of $10.7 million consisted of net loss of $24.6 million, share-based compensation expense of $8.8 million and adjustments for depreciation and amortization and other non-cash impacts of $12.5 million, an increase in deferred tax assets of $0.3 million and changes in operating assets and liabilities that resulted in net cash outflows of $7.7 million. The changes in operating assets and liabilities consisted primarily of a $28.3 million increase in inventories due to lower demand for our products and higher channel inventory, a $6.5 million decrease in accounts payable due to timing of invoices and payments, a $2.0 million decrease in accrued employee compensation due to lower corporate bonus accrual and $1.3 million lower accrued liabilities primarily related ~~accruals,~~to lower inventory in transit. The uses of cash were partially offset by a $22.4 million decrease in accounts receivable reflecting the impact of lower sales and the timing of collections, $4.8 million increase in cash provided by all other assets and liabilities, mostly driven by the increase in accrued sales returns ~~and accrued income taxes~~ along with ~~$1.1~~collection of the UK RDEC tax credit and $3.0 million reduction in prepaid expenses, mostly due to lower vendor prepayments.

Cash flows from investing activities

Our investing activities for all periods presented consisted of capital expenditures for property, equipment and software in support of the growth of our business. The increase in 2023 is driven by an increase in the number of projects eligible for capitalization.

Cash flows from financing activities

During the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2022, net cash ~~provided~~used of ~~$0.1~~$0.6 million was primarily due to proceeds received of $0.1 million from the exercise of share options offset by $42 thousand for taxes paid from shares withheld in net settlement of taxes due on vesting of restricted shares issued to our employees.

~~During the three-month period ended March 31, 2023, net cash used of $0.4 million was primarily due to $0.7~~$1.3 million repayment of principal due under the term loan facility with Bank of America and ~~$0.1~~$0.8 million for taxes paid from shares withheld in net settlement of taxes due on vesting of restricted shares issued to our employees partially offset by proceeds received of $1.1 million for the issuance of ordinary shares under our Employee Share Purchase Program and proceeds received of $0.4 million from the exercise of share options.

During the nine-month period ended September 30, 2023, net cash used of $1.0 million was primarily due to $2.0 million repayment of principal due under the term loan facility with Bank of America and $0.7 million for taxes paid from shares withheld in net settlement of taxes due on vesting of restricted shares issued to our employees partially offset by proceeds received of $1.1 million from the issuance of ordinary shares under our ESPP and $0.5 million from the exercise of share options.

Debt

As of ~~March 31,~~September 30, 2023, we had ~~$27.4~~$26.1 million outstanding on our term credit facility and had $45.0 million available under our revolving credit facility with Bank of America. The effective interest rate on the term credit facility at ~~March 31,~~September 30, 2023 was ~~7.12%~~7.69%. The Company is required to make scheduled quarterly principal payments of $0.7 million under the term credit facility. With the cessation of all tenors of US Dollar LIBOR as an available benchmark on June 30, 2023, we entered into an amendment to our credit facilities on June 9, 2023 to amend the original BofA Credit Agreement to replace the benchmark used for the interest rate on EuroDollar Rate Loans from US Dollar LIBOR to Term SOFR. Effective June 17, 2023, our term credit facility interest rate is indexed to the Term SOFR rate based on the period selected by management. Our term credit facility matures on November 17, 2026, at which time the outstanding principal will be due. Refer to Note 76 – Debt, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Contractual Obligations and Commercial Commitments

For the three-month period ended ~~March 31,~~September 30, 2023, ~~there has been no~~the only material change to the contractual obligations and commercial commitments from what was disclosed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022.~~2022 is the addition of approximately $11.8 million in minimum lease payments due over the next 13 years for the new corporate headquarters lease in Illinois. This amount increased from the $7.7 million disclosed for this item in the Form 10-Q for the three-month period ended June 30, 2023 as a result of the amendment signed on October 16, 2023 which increased the square footage to be leased. The lease contains multiple rent holidays with a current rent commencement date of April 1, 2024 and the next lease payment due on November 1, 2024. The Company paid the April 2024 rent upon signing the amendment. There are no lease payments due within the next year, with $1.9 million due in the following one to three years, $2.9 million due in following three to five years, and $7.0 million due thereafter.

Off-balance sheet arrangements

We do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as variable interest entities, structured finance, or special purpose entities, as part of our ongoing business. Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

Significant Accounting Estimates

Our consolidated financial statements and the related notes thereto are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expense and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

During the three-month period ended ~~March 31,~~September 30, 2023, there were no significant changes to our critical accounting policies and estimates. During the three months ended September 30, 2023, our share price experienced declines and in the days subsequent to quarter end, decreased to a historic low for the year. As indicated in Note 5 of the condensed consolidated financial statements, we evaluated whether there were goodwill triggering events that occurred as of September 30, 2023, and determined there were not. The Company will continue to assess potential goodwill impairment triggering events, including continued impact of slower demand, higher channel inventory and sustained decreases in our share price. If triggering events occur, we will perform a goodwill impairment assessment that may indicate impairment in a future period. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2022, filed on February 27, 2023, for a more complete discussion of our critical accounting policies and estimates.

2733

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Excluding the impact of changes in interest rates and the uncertainty in the global financial markets, there have been no material changes to our market risk for the three-month period ended ~~March 31,~~September 30, 2023. We conduct business in all parts of the world and are thereby exposed to market risks related to fluctuations in foreign currency exchange rates. The U.S. dollar is the single largest currency in which our revenue contracts are denominated. Any decline in the value of local foreign currencies against the U.S. dollar results in our products and services being more expensive to a potential foreign customer. In those instances where our goods and services have already been sold, receivables may be more difficult to collect. Additionally, in jurisdictions where the revenue contracts are denominated in U.S. dollars and operating expenses are incurred in the local currency, any decline in the value of the U.S. dollar will have an unfavorable impact to operating margins. We have not entered into any foreign currency hedging transactions. We do not purchase or hold any derivative financial instruments for speculation or arbitrage.

We do not hold any cash in any investment accounts and all cash is deposited with financial institutions that management believes are of high credit quality. The Company's cash consists primarily of U.S. dollar denominated demand accounts.

We had ~~$27.4~~$26.1 million of debt outstanding on our term loan facility and $0.0 million of debt outstanding on our revolving credit facility as of ~~March 31,~~September 30, 2023 under our BofA Credit Agreement. With the cessation of all tenors of US Dollar LIBOR on June 30, 2023, we entered into an amendment of our BofA Credit Agreement on June 9, 2023 to replace the Eurodollar Rate (the rate equal to US Dollar LIBOR) with Term Secured Overnight Financing Rate, or SOFR. The Company is exposed to interest rate risk from fluctuations in the ~~US Dollar London Interbank Offered Rate, or LIBOR,~~Term SOFR that is a component of the interest rate used to calculate interest expense on the debt. Interest accrues on the outstanding principal amount of the term loan on a quarterly basis and is equal to the selected rate per annum determined by reference to the 1-month, 3-month or 6-month ~~US Dollar LIBOR~~Term SOFR rate as selected by the Company, plus a SOFR adjustment of 0.10%, plus an applicable margin between 1.75% and 2.25% as determined by our financial performance as measured by the consolidated leverage ratio. At ~~March 31,~~September 30, 2023, the applicable margin was 1.75% and the effective interest rate on the term loan was ~~7.12%~~7.69%. A hypothetical 100-basis point increase in interest rates, and assuming a constant applicable margin, would result in an additional $0.3 million in interest expense related to the external debt per year.

In July 2017, the head of the United Kingdom Financial Conduct Authority, or FCA, which regulates LIBOR, announced it will no longer compel banks to submit rates for the calculation of LIBOR after 2021. On December 31, 2021, the 1-week and 2-month US Dollar LIBOR rates ceased, and the remaining five US Dollar LIBOR tenors (overnight, 1-month, 3-month, 6-month and 12-month) will cease on June 30, 2023. The Company's current term loan with Bank of America was borrowed as a Eurodollar loan which is indexed to the Eurodollar Rate (the rate equal to LIBOR). The BofA Credit Agreement contemplates the discontinuation of LIBOR and provides that a benchmark replacement rate shall be determined by reference to other applicable rates and additionally allows the Company to switch to a Base Rate loan, as defined in the BofA Credit Agreement. The Company does not believe there will be a material effect on the consolidated financial statements or impact our ability to borrow under the current credit agreement.

There have been no other material changes in our market risk since December 31, 2022.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act), as of ~~March 31,~~September 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures are effective at a reasonable assurance level.

Changes in internal control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on effectiveness of controls and procedures

None.

2834

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Third parties may from time to time assert legal claims against us. Our industry is characterized by vigorous protection and pursuit of intellectual property rights. A number of companies hold a large number of patents that may cover technology necessary to our products. We have in the past received and expect to continue to receive claims by third parties that we infringe their intellectual property rights. In the opinion of management, we believe we have established adequate accruals pursuant to U.S. generally accepted accounting principles for any expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based on presently available information. However, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial conditions, or cash flows.

For additional information, see Note 1413 – Commitments and contingencies in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Part I, Item 3. Legal Proceedings in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 1A. Risk Factors.

There have been no material changes to the risk factors as disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 except as discussed below. Additional risk and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.

The Company has reduced and may continue to reduce the overall size of its organization and is likely to experience voluntary attrition, which may present challenges in managing its business.

During and since the third quarter of 2023, the Company has implemented reductions in its workforce and may consider further reductions in the future. These workforce reductions have resulted and may result in the loss of some longer-term employees and expertise leading to reallocation and combination of certain roles and responsibilities across the organization, all of which could adversely affect the Company's operations. Given the complexity and nature of the Company's business, it must continue to implement and improve its managerial, operational and financial systems and continue to recruit and retain qualified personnel. This could be made more challenging by the workforce reductions and additional measures the Company may take to reduce costs. Workforce reductions and additional cost containment measure may have unintended consequences, such as attrition beyond the Company's intended workforce reductions, reduced employee morale and employment-related litigation. Employees who are not affected by the workforce reductions may seek alternate employment, which could require the Company to obtain additional support at an unplanned additional expense.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None.~~During the three-month period ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities and Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

2935

Item 6. Exhibits.

We have filed the exhibits listed on the accompanying Exhibit Index, which is incorporated herein by reference.

EXHIBIT INDEX


Exhibit Number		Description
10.44*		First Amendment to Office Lease, dated October 16, 2023, by and between Cambium Networks, Inc. and Hoffman Estates Acquisition LLC and Hoffman Estates Acquisition II LLC
10.45*+		Employment agreement, dated as of August 1, 2023 between Cambium Networks, Inc. and Morgan Kurk
10.46*+		Separation Agreement, dated as of August 1, 2023, between Cambium Networks, Inc. and Atul Bhatnagar
31.1*		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

+ Indicates management contract or compensatory plan

3036

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~Cambium Networks Corporation~~CAMBIUM NETWORKS CORPORATION

Date: ~~May 9,~~November 3, 2023	By:	/s/ ~~Atul Bhatnagar~~Morgan C. Kurk
		~~Atul Bhatnagar~~Morgan C. Kurk
		President and Chief Executive Officer

Date: ~~May 9,~~November 3, 2023	By:	/s/ Andrew P Bronstein
		Andrew P. Bronstein
		Chief Financial Officer

3137


Cayman Islands		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

c/o Cambium Networks, Inc.
3800 Golf Road, Suite 360 Rolling Meadows, Illinois 60008		(345) 814-7600
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)


	December 31,			March 31,			December 31,			September 30,
	2022			2023			2022			2023
										(unaudited)
ASSETS
Current assets
Cash	$	48,162		$	38,696		$	48,162		$	27,529
Receivables, net of allowances of $577 and $540		89,321			98,207
Receivables, net of allowances of $577 and $734								89,321			60,444
Inventories, net		57,068			68,333			57,068			79,764
Recoverable income taxes		117			122			117			982
Prepaid expenses		11,857			10,792			11,857			8,810
Other current assets		6,464			7,557			6,464			9,643
Total current assets		212,989			223,707			212,989			187,172
Noncurrent assets
Property and equipment, net		11,271			11,521			11,271			11,365
Software, net		8,439			9,309			8,439			11,804
Operating lease assets		4,011			4,709			4,011			4,257
Intangible assets, net		9,173			8,799			9,173			8,050
Goodwill		9,842			9,842			9,842			9,842
Deferred tax assets, net		12,782			14,301			12,782			12,494
Other noncurrent assets		955			876			955			880
TOTAL ASSETS	$	269,462		$	283,064		$	269,462		$	245,864
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	31,284		$	29,537		$	31,284		$	24,849
Accrued liabilities		28,042			31,657			28,042			20,690
Employee compensation		7,394			6,991			7,394			5,333
Current portion of long-term external debt, net		3,158			3,160			3,158			3,173
Deferred revenues		8,913			8,761			8,913			8,791
Other current liabilities		8,429			13,667			8,429			15,988
Total current liabilities		87,220			93,773			87,220			78,824
Noncurrent liabilities
Long-term external debt, net		24,463			23,837			24,463			22,588
Deferred revenues		8,617			8,666			8,617			9,731
Noncurrent operating lease liabilities		2,170			2,723			2,170			2,793
Other noncurrent liabilities		1,619			1,529			1,619			1,705
Total liabilities		124,089			130,528			124,089			115,641
Shareholders' equity
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2022 and March 31, 2023; 27,522,734 shares issued and 27,313,273 outstanding at December 31, 2022 and 27,618,271 shares issued and 27,397,342 outstanding at March 31, 2023		3			3
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2022 and September 30, 2023; 27,522,734 shares issued and 27,313,273 outstanding at December 31, 2022 and 27,917,429 shares issued and 27,661,860 outstanding at September 30, 2023								3			3
Additional paid in capital		138,997			142,009			138,997			149,165
Treasury shares, at cost, 209,461 shares at December 31, 2022 and 220,929 shares at March 31, 2023		(4,922	)		(5,133	)
Accumulated earnings		12,822			17,098
Treasury shares, at cost, 209,461 shares at December 31, 2022 and 255,569 shares at September 30, 2023								(4,922	)		(5,600	)
Accumulated earnings (deficit)								12,822			(11,744	)
Accumulated other comprehensive loss		(1,527	)		(1,441	)		(1,527	)		(1,601	)
Total shareholders' equity		145,373			152,536			145,373			130,223
TOTAL LIABILITIES AND EQUITY	$	269,462		$	283,064		$	269,462		$	245,864


	Three Months Ended March 31,						Nine Months Ended September 30,
	2022			2023			2022			2023
Cash flows from operating activities:
Net (loss) income	$	(1,568	)	$	4,276
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Net income (loss)							$	10,189		$	(24,566	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		870			1,058			2,874			3,212
Amortization of software and intangible assets		920			1,037			2,750			3,399
Amortization of debt issuance costs		77			75			229			235
Share-based compensation		2,420			2,875			7,785			8,782
Deferred income taxes		(1,373	)		(1,519	)		(1,987	)		288
Provision for inventory excess and obsolescence		52			1,336			1,719			5,637
Other		81			(231	)		(94	)		(7	)
Change in assets and liabilities:
Receivables		6,152			(8,973	)		(9,436	)		22,649
Inventories		(6,485	)		(12,601	)		(18,583	)		(28,333	)
Prepaid expenses		(578	)		1,069			4,054			3,031
Accounts payable		(12,109	)		(1,474	)		(347	)		(6,496	)
Accrued employee compensation		(10,276	)		(584	)		(10,159	)		(2,042	)
Accrued liabilities		2,129			3,738			286			(1,264	)
Other assets and liabilities		463			3,959			3,640			4,749
Net cash used in operating activities		(19,225	)		(5,959	)		(7,080	)		(10,726	)
Cash flows from investing activities:
Purchase of property and equipment		(714	)		(1,569	)		(3,242	)		(3,361	)
Purchase of software		(1,068	)		(1,537	)		(3,441	)		(5,518	)
Net cash used in investing activities		(1,782	)		(3,106	)		(6,683	)		(8,879	)
Cash flows from financing activities:
Repayment of term loan		—			(656	)		(1,312	)		(1,969	)
Issuance of ordinary shares under ESPP								1,127			1,102
Taxes paid from shares withheld		(42	)		(148	)		(760	)		(652	)
Proceeds from share option exercises		146			387			362			498
Net cash provided by (used in) financing activities		104			(417	)
Net cash used in financing activities								(583	)		(1,021	)
Effect of exchange rate on cash		9			16			(86	)		(7	)
Net (decrease) increase in cash		(20,894	)		(9,466	)
Net decrease in cash								(14,432	)		(20,633	)
Cash, beginning of period		59,291			48,162			59,291			48,162
Cash, end of period	$	38,397		$	38,696		$	44,859		$	27,529

Supplemental disclosure of cash flow information:
Income taxes paid	$	116		$	204		$	908		$	3,963
Interest paid	$	95		$	412		$	497		$	1,354


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) ~~Income~~	3
	Condensed Consolidated Statements of Shareholders’ ~~(Deficit)~~ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2834
Item 4.	Controls and Procedures	2834
PART II.	OTHER INFORMATION	2935
Item 1.	Legal Proceedings	2935
Item 1A.	Risk Factors	2935
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2935
Item 3.	Defaults Upon Senior Securities	2935
Item 4.	Mine Safety Disclosures	2935
Item 5.	Other Information	2935
Item 6.	Exhibits	3036
Signatures		3137