CRNT - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to Ceragon Networks First Quarter 2021 Earnings Call. Please be advised, our call is being recorded today.

Following our formal remarks, we will open up the call floor for question-and-answer session. [Operator Instructions] I’d like to hand over the call now to our first speaker today, Ms. Maya Lustig, Investor Relations at Ceragon. ahead. go Please

Maya Lustig

Executive and Ira operator, Ran everyone. am incoming I Ceragon’s Thank Ceragon’s good President by Chief our and Palti, Financial Officer; Doron and joined Arazi. Chief you, Officer; morning Officer, Chief Vered, Executive

like start, provisions the of this within call note we the and Act harbor the of the as Securities that Before amended, XXXX. of XXXX, to forward-looking the as Exchange information amended constitutes that Securities Private Litigation XXXX, and would I Act of statements meaning includes Act of safe Securities Reform

Although non-GAAP Such those to forward-looking can risks, as could assurance representing do Annual that our or in other predictions views results, we date they we made statements there involve Commission. anticipated. that be and uncertainties statements and from to, as are to our the limited be expectations Form they call upon future believe any any future, should can Such our that accurate. uncertainties other with specifically today’s are assumptions, such prove the today Securities may material. relied that obtained be events any the risks to represent recent of earlier of statements These in and release as be expectations at and forward-looking upon further so. deviations obtained as update some reflected also and in and statements in to reasonable Also, no or purport differ detailed filings XX-F Exchange will Ceragon’s cause and certain point that forward-looking be as on only filings materially but Exchange are will disclaims views may subsequent statements and therefrom such give will risks in elect be results assurance no the be not but based Securities not results the future and detailed that Such Ceragon’s forward-looking to are include, of our numbers. date. and was published at our website most uncertainties Report factors that press will www.ceragon.com. Ceragon’s not affect Commission’s www.sec.gov, on include public Ceragon’s may at from do available these it obligation website Ceragon not

attached between reconciliation press a release non-GAAP go For today. and was over Please Ira. will please to call issued that table results, now turn the ahead. see GAAP I the earlier to the

Ira Palti

you call to everyone. XG you here good call, and using video with we’re to hosting pleasure grow. is that stay. XG now, in XG-enabled here on It’s is share everyone here Thank Maya, XG this a This morning is to technology. lead. to that firsthand Ceragon smartphones. It’s Right their It’s proving my team

to making be proud are reality. We a this the revolution ones

the lead this I presented to ways you XG quarter, the of a data-driven culture. proud change. driver Last Ceragon world. I shared you be a We’re with will global for my XG-powered new vision with

and details POCs, forward a the you I’m into telecom all economic we’ve a overall successful vision looking in to tangible new reality. be of the year pandemic, wins, is a the which XXXX our participation projects, for to XG. impact quarter, this Now, cutting-edge from with the market good is marching Despite robust worldwide activity. with show design moved pleased already share of

saw we become people networks. or offerings through There veins toward achieved more networks. and and To to the positive bookings. of data upgrade flowing of has our In trend and cultural world to, global using positively. the virtual more XG the willing a very have the been their existing and new skilled digital, XG keep technologies. build shift new this up wins a impacts massive are with observing strong era, in more This in QX, forward systems and We’re around shift amount new operators design new rushing

bookings our fact, in in years. highest the were In two QX

Our book-to-bill ratio was way above X.

of While component further. in In will our had the customer XG affect Tier the it’s very shortages from year, a strong of terms reminder North this quarter, network. demand America, visibility Ran market our expand elaborate bookings demand which clouded increases our this We for see by existing global the probably and will its strongest since XXXX. we X in increasing delivery confidence to capabilities. on

reflects capacity We direct We’re which operators Tier sales We growth for trend as the channels. indirect X regional as in and see WISPs also well significant providing this solutions in trend. see increase U.S. for and to both a a Canada, WISPs. in in

In to positive proud market complete especially as am I than through orders. for terms public infrastructure critical value had as that safety bookings quarter providing their XG-related in very In start customers driven type bookings. networks addition, communications by XG. such a potential increasing We looking providers, we’re services. to the we utility see of lot solutions a to this of Europe, XG our XX% more of to in demand, and from upgrade region’s and of came sales say they efforts

technology, continue European the they need. there expertise, and them to push trials from provide operators we with As to into XG the field, initial are the services

At QX. significant using our XG In drive we there’s to invest part bring time, products. momentum creates to rest of Western XG play to India, we’ll current are into foresee XG. Based rollouts. POCs and in we and in in share. market Europe, In proof-of-concepts in now the same being both Europe operators in who We planning for our data-driven great our are we grow still the XG Operators heavily the strengthening to world. believe efforts XG be favor which expand see rapidly their XG them, rollouts, there capabilities and of efforts reach competition plans trends demand capacity, the These their build with numerous vast relationships among for and significant massive their initial Both networks expect finalized those for and to and the a population current opportunity on After especially, mass POCs. take Western are participating XG Europe.

revenues and operations and were stable. Our strong

is $XX versus signed XX% from these million. multinational that Colombian there more and has operator XXXX strong catching worth on our fact, believe were Latin Mexico. momentum be there’s and last slowdown with on frame time Latin severely, market in new XG XG networks. last COVID-XX bookings freeze. no to frame few worth In India, a we operators, double very market, a we than equipment. latest our million The quarters, heating will investments year, for Operators new lost including a the APAC, XXXX, than more COVID QX that whose X contract and to assuming came toward operator, in follow-on up stronger the I’m XXXX implementing yet hit in outbreak. advanced significant bookings Tier-X our a of for Tier with Pacific America Rim especially operations in momentum impact $XX agreement showing been implementations readiness Overall, in are share XG. signs their traffic a a pleased X after the our material coronavirus-induced even is one In Tier American after stronger Andean from of up of continues

the fact, majority region the came of in from this In bookings Tier-X operators.

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X,XXX accounting be will demands. will capacity They being in of the urban XXXX, XXXX. XG with the areas Fiber GSMA regarding estimated future will will cells to global and you vital latest traffic Research, a to small hard densify further XX%. backhaul the the handle According links next evolution. bands increasing result in than key grow with than working leverage expected continue more Backhaul of opportunities are ABI to in enabler subscribers Evolution to account for multi-year millimeter-wave support some report be in be me exabytes XG than in the microwave acceleration Thus, to The above in XXX the more Wireless traffic. with cells to total to to of by provide CAGR million are six X.X evolution. XG in mobile for macro higher meeting and XG particular We XX% next billion. from the need Allow XX% deployed network to traffic. XG annually increase by to only XX% and to additional years, Traffic the is XG subscriptions and statistics more

urban fiber. wave all supported fiber versatile data sites While Instead, not will will and which used, backhaul links cell are be rates. can deployed, significant be can microwave handle millimeter be and by

of just across and that also disruption networks market our among Now, are unit towards meet providers. players in that the as industry. future and Today, but requirements. OpenRAN. for disaggregation such it and offers the requirements, it’s use provides has greenfields-tech XG believe flexibility digital, I cases avenues comes radio, The picked steam control up isn’t it’s OpenRAN massive OpenRAN causing the architected. and different a growing diverse and brightest how major different customization globe, with movement it solutions new interoperability from turn

our the in wins me more seen Brazil on. network they we’re through become plus monolithic As general our various to market can more project. best-of-breed OpenRAN, open design hauling to elaborate relevant, the move on in as from solutions continues approaches Brazil, and be project joint to working Allow

TIM TIP out a test Institute. Telecom Brazil Infra-Project, carrying for the National Telecommunication XG OpenRAN which joint project providers XG and OpenRAN. participating in equipment It’s TIP is trials with We’re

solution up provides a Our wave This IP-XXE trialed. is capacity ultrahigh gigabits to units. new being all-outdoor, solutions for of OpenRAN, type the it radio XX connectivity as of delivering generation, capacity must is capable the today to millimeter

Brazil’s new a in between ones solution, low-latency the the this We’re It’s next-stage be and proud future see future To involved technology as in designed deployments, demand, we high-capacity OpenRAN-related of first an we’re our in system-on-chip. it XG market front-haul network radio opportunity this linking the technology prove edge. and be offer developing to we’ll meet technology. and offering project, With units. to to this digital

whose XG support latency, bandwidth We’re system-on-chip, low addition expansion very to prospect. of will it Ceragon’s With wireless waves. excited both this tape-out all for significant will millimeter previous is in microwave support planned generations. and networks about and high July, supporting

family of as improved well products and XG reaching offering our new now Our XXX enhance increased deployments. an OpenRAN second, successfully support and with IP-XXE as will capacity existing The system-on-chip per IP-XXC XG gigabits compatibility.

With to way so a today’s trend past the on global at been pleasure leaders Ceragon decade Ceragon briefly Doron? of I Company market the as Vice to the are with the We beginning incredible been In the of my CEO, done, Arazi. and to including has pass talented the half, Company. has in from CFO, to him. is Doron. the as and XG to and many grown and the allow so company former XG. continue serving years, I’ve Ceragon, XX my CEO today. the Doron as lead July, me a to Chairman that, a accomplishments last will a Ceragon’s and our of responsibilities and and Throughout time be the It work progress I very Deputy Board. truly innovating always disruptive it we’ve all many the much honored will President incoming mic transitioning CEO of visionaries for serving

Doron Arazi

world’s and as Ira’s privileged and Under Ira, Ceragon is a new it feel to Thank Tier operators. I competitively you, X excited to XG everyone. leadership, CEO. and X global the of enhanced XG many the offerings come its hello supplier to Ceragon and and has today, back Tier

may you Ceragon nor operates. know, neither it As in to the I’m new industry which to

customers Ceragon’s banks, bigger It’s models and now am to extensive leveraging I wide years I bigger of more of I in operators, that up During investors. I competencies their Ceragon’s beyond. I for to of changes leadership, profitable and plan ways in keep to to the develop telecom enhance results. back and Back stronger, potential strategies ways core new they verticals. forward lot new fulfill and more and and technological to a continue this and vendors, scale in company. to more as exposed forward a navigate built solid world’s business our doors experience more furthering our which foundation to profitable existing and finding and is Ceragon. generated Ira. realm, see open my networks. my build variety success, to I technology new with existing XG a also commitment businesses. relationships the growing and our led bringing look scaling got XG opportunities XG many the you, to stronger, related industries, our to I the new needs also look innovative to to and and

Ira Palti

would you, Ran over Once luck to good financials the again, detail. turn our I new to Doron. now position. Thank call congrats in and to Ran? your like in more discuss

Ran Vered

Thank you, results, you good to and mainly non-GAAP and I help Ira referring numbers. Doron, the will everyone. To be morning understand

India. from to during regarding Europe, information measures, financial more QX refer our use these Latin Like we America, very we non-GAAP North and press Ira including XXXX saw For of coming measures, strong mentioned, you of reconciliations America, bookings today’s release.

the strongest two fact, QX the was bookings terms years. of In in last in

above Our ratio was book-to-bill way X.

level Our our for high the projections a of end at the revenues were strong quarter. and at

progress accelerating normal first quarter, back we the During positive made that in the moving QX trend began further towards operations, XXXX.

now the $XX.X last me quarter year. the were numbers with with for Revenues up compared actual million, XX% QX Let you. review QX

from region to local on with had line that the effect Our revenues network build-out operations business in has COVID and varied region plans.

momentum the quarter revenues strongest had a its strong for continuing ongoing Our to from deliveries Europe reflecting positive from were quarter, XXXX. India, Bharti.

Tier first In had Latin revenues in with run-rate, customer, bookings than second strong, driven reflecting since fact strongest from smaller slightly by America continued a normal in reflecting projects. ISPs, carriers. XG XXXX. Revenues other it North the some revenue lower and is half initial low of quarterly the America positive our were momentum quarter its XXXX, X the

in Niger in we the announced completion reflect and Revenues However, the Africa very August we we momentum are market year telecom starting Orange the there, with strong the to started new see in the APAC a won We QX Revenues quarters. project above bookings we bookings. XX% XXXX with one had the XXXX. as customer well last at conjunction as first low in low in in another a in were level in customer of two margin global giving might approximately revenue I The for by us on quarter. bookings for give deliveries. a XXXX. the will was on non-GAAP X. non-GAAP year, our shortly. the us booking clouded remainder the of the a compared way component of first though quarter ratio elaborate to above confidence The shortage the which Gross $XX.X XX% quarter affect strong profit quarter more for the for XX% this was gross million, basis of with first crisis

there a $X.X we with a gross increase expenses over likely in slight is low and basis lower a that non-GAAP continued chain development. a had the quarters development the to reflects full major million, with progress expenses Research costs, were Our costs, relatively environment, recovery. margin to on first basis until chip XXXX, high freight million, and supply fluctuate mainly non-GAAP This our first in to material the Operating air COVID due higher deal costs a more. were is on for QX quarter next increase our the for quarter expectations. to have few with $XX.X the than continue from

compensation will QX that expenses basis we the continue these travel as on July million, and expenses reduced with planned, to for were tape-out and high the variable Sales reach stay As in XXXX, same non-GAAP come marketing first XXXX. a COVID. quarter reflecting $X.X until have

lower and as $X.X We markets post-COVID. gradually marketing the were on increase and and administrative XXXX. expenses non-GAAP expenses year $X.X expectations basis expect down General in open QX quarter a sales first to than our million throughout our from for million, the

to non-GAAP with on line Financial $X.X returned regular have a were for expenses in to and our the expectations, return to XXXX. and million, quarter other expect XXXX basis first we forward, QX their levels our run-rate. Going in

or a We was were XXXX. net tax QX million, basis the with reduced to million $X.X on $X.X than quarter or million, expectations. the $X.XX first basis per and million lower quarter a was in $X.X for diluted for in in loss Our GAAP per share. line non-GAAP QX $X.XX $XX.X expenses On a XXXX from basis, down share. million, our Net our inventory loss non-GAAP diluted $XX.X on

million, in QX are Our $XXX.X receivables up at now $XXX.X XXXX. million from

now first which XXXX. in Net for was cash QX stands $X.X million. XXX used activities almost Our at DSO as this activities quarter in operating same million. is the used cash investing days, the for Net was $X quarter

forecast Looking a very ahead, for business our bookings funnel strong are which bookings increasing most and in regions. with reflect QX, significantly activity positive than expected, better in along QX healthy

the this our industries an has components rollout to on as of component working to without as to have and and looking industries, XG Now, that is with to shortage manage supply effect of QX, growing material we certain further taking the operators’ revenues. the in globe, supply across resilience. plans. In for all and able on our been Compounding increase leading the problem deliveries buying chain efficiency our chips were in other different impact our well measures ones started bottlenecks. all said, additional turn, situation in capabilities, our suppliers, panic We’ve

We continue growth to revenue target XXXX. in

we expect be we half start $XXX Although the revenue million. expect of a year, still between first $XXX continue for to to million yearly slow the

the have and Operator? and our resolved. the may is your questions. the I and prospects revenues timeliness the deliveries. a push our between may that, on With in a component that call for probable shortage deliveries growing negative remain shortage impact open until QX mid of all lead Now, and We quarters said, of to long-term confident rest-of-the-year now

Operator

yourself. Please today prompted Thank of line go [Operator you’ll from Instructions] ahead. be first unmute Our Henderson. Alex comes the you. to question Alex,

Alex Henderson

hear Hello? Can me? you

Ira Palti

can hear Yes. Alex, you. we

Alex Henderson

could. couple if I of A questions, Perfect.

is July of little timing on your tape-down very have -- this about deferrals in products the bit the products? supply based that in a long capacity new timing probably causing tape-down constraints time. think in most what chain you risks I First, one down wanted important do One, talk of I of any around taping a to at on maybe

Ira Palti

we bit who the are no. on the where processes a is general, we but is right in now chipsets need for what’s is capacities road what on from the and least little come samples people to And needs see question, there tape-out are. there we quickly. that, new a At on although it. and that’s manufacturing manufacture will that further get Tape-out, down the time, we do What the to

I we’ll with samples And By down time when have ramp up we’ll build will the then, on production -- think probably then further we’ll expect be be the to mid-XXXX, of might over. products. the have year, see. then to I do shortages by to the chipsets

Alex Henderson

is the obviously, risk with turn. come that that of And sense back the product expect tape-down, when need you the a another tape-down back? results When do when relative to do you’ll will -- there’s tape-downs have have to you think for always

Ira Palti

Close the to end the of year.

Alex Henderson

go to on because very of products, bracing weaker is, India how can I’m them much get The question not given than surprised Perfect. there. and honest what’s obviously Frankly, in comments in come with had to so there? be And what you I were at need, I wanted you, you out is, good to those rather if a for the it with them going install have you we of results. much mean, conditions around the back because of the India. strong COVID little but results

Ira Palti

a is maybe. yes The with answer

install on India demand heavy before February -- what that, the and the little of I in done COVID. somewhere remember XXXX. very general, their the of we script a to we my in bit us under put current on lot January, that think were Plans hit on plans Ran operators a Yes, indicated the capability those hesitant for COVID. plans the the we see I said are Let’s as is

COVID. experience had under to from when time, were about the able even we Although we year last install a issues, the ago, those

built in a difficult, more India I yes, I bit general, market the hauls this under to work there. COVID. in might the differences in might it expect time, is little create be some and Although think But that

Ran Vered

to just add that. on to Just -- Alex,

remarks be XXXX of India. bookings because We the year funnel see we also also very XXXX can for already our strong that better indicated in strong than see QX, remainder we in prepared even in and the

question we that. of confident So, the on about COVID it and impact feel with the

Alex Henderson

make of that and with to best-in-breed choose but get have But on guys can certainly to you a cloud. supply bit. lack you the have help every with more bigger it versus may the industry, of choose they’re and question bit on that go and hitting they because get that you’re companies to people The of the product, ones going staying like Nokia little you your in companies constraints, Obviously, Are that. And just not can’t. to cloud, little companies whether alone Ceragon? therefore, into question of to chips more are therefore does not dig beg get availability right scale able a go other that not customers the out positioning sure to will

Ira Palti

cloud general, in we that -- which remember is and we do and the -- Because on have the we between have are other much the feeling the issues I some those Nokia think let’s opposite the of happens. in for flow things. there, with more that is some current bigger some where easier places, chipsets, dedicated we which there is of in we are than need And to of the areas smaller, the My it’s the requirements vendors. in are

there. place lot the out on lanes fund a there. progress lot yes, of I’m seeing So, fight and those it’s taking of a a that’s

Alex Henderson

assuming a probably scenario So, lack high the guidance, assuming that last the the to of on next that at mean... to the get a to components. were reasonable they that low at to components basically of situation end I’ll told where you that the off And the relative supply availability circumstances the floor a end cede of I assume would of the give the low going be the they of relative But Is that availability been people. you, or deliverables guidance, of hearing to kind on guy. to question, the What relative best-case guidance, back you I people expectation end? of the then you’re you’ve would you’re from

Ira Palti

think in of that in the on believe I come the on not there. seeing least table, across. indicated do we where Time and And things first in the second issue range supply that’s mitigate and quarter, not quarter fold we still the impact the the it’s chain issues what but call. exactly to an the tell. the able of on gave as what guidance most that year, we’re I and of We in that know we’re they them, all risks the will longer those. a across I lot will there. of think it’s term, At

think supply is it the, once are said, we expand. of think this between customers we same very as that I are we make our see range, to in reduced, will in from the push out quarters issue I suppliers. -- excellent very, all forward. we as an constraints chain deliveries confident And the And probably longer have move position

Ran Vered

Just to and on the for my also see we funnel very very as call, in QX. strong on saw we indicated strong that, demand we view, Alex, add QX. And also demand

there we with will shortages, our this with feel The at guidance we sense, we in is, that indicated, that the it the push that backlog That be between we provided in question quarters But the three yet is face? months will we is that confident how as ago. healthy point and what unclear. very So, can sense. deliver

Alex Henderson

forward question, to good Okay. joining you Doron, closing you. working Well, look this in for us. to to And and see you, thank It’s Ira, congratulations. with

working good run post-Chairman forward. done and Company of the a you great I longer touch going hope the a years, over even in really your And certainly to appreciate really and position. keep had positioning You’ve job with in term

Ira Palti

Thank much, Alex. very you

Doron Arazi

warm Ira first your thank you literally And all, not us. Alex, of is leaving words. for

dramatic. separation So, not let’s make this that

to Alex. with you, working forward Looking

Alex Henderson

Great. Thank you, guys.

Operator

next from going the Our come George is call line to Iwanyc. of

George Iwanyc

me? you Can Hello? hear

Ira Palti

Yes. Hi, George.

George Iwanyc

relationship. with start congratulations on I’d on taking coming just and yes, questions. And coming perspective for back the industry on you off for over my Doron, thanking to board. and the like Ira, you, Thank the years your And

a digging maybe the little guidance into that, more. with So, bit

the an close chain the now, supply to to near deliver the is of and is any right the the have that best you or of just amount into kind tightness, With term? of decrease the because for keeping that demand revenue risk expectations visibility quarter-over-quarter this you you’re could can’t kind there

Ran Vered

George, is Hi this Ran.

might revenues and as I of strong. The The matter But with is how this is demand at revenue. very strong. it’s said supply shortages yes, down of the we So strong quarter-over-quarter. into the earlier, go delivery, a with demand. very deliver can not matter all It’s backlog convert very backlog

So, confident impact with and the the will the constraint, backlog the just with we feel supply very that us. It’s shortages demand.

George Iwanyc

America, where seeing at India, demand in North All right. Latin how is maybe you’re then, first at And in deliver improvement, where could India strong quarter? the look was when you the for America, it a the potential not offset to level being able in the

Ran Vered

I the the -- And may we last Well, managed COVID able XX% our in say of if to were we India with and on actually despite positive COVID India was execute generates and roughly because our from revenue. were average situation. so, one, an experience a year deliver

a as I outbreak think had that said past. didn’t we at experience in and and the in QX, we the bit in we we time, and deploy be cautious -- want at despite that. this this to point moment, the to the -- also India, the were this little fact very is At install more point, something India on severe but deliver, of that in strong able more

George Iwanyc

comfortable near extra and some supply related chain the having I that pay your tightness. right. When do to bit guess, a term, risk the margins gross level, one for there’s or look All you XX% more costs think this then way? around of you And of just, is expedition at to it expenses

Ran Vered

gross pre-COVID that as But our are revenues, operational lower to but whether do focused that the say will year, of low margin will that feel levels At following. if do gross Not at all I measures on the to if the quarter taking. margin to are some think it first because expect level of that freight -- and just the in cost some dramatic of that level try we the were from go will doing or reasons, some it Keep of operational do changes more -- and would last improved. of efficiency, revenue expedited they do deliveries to some changes in we very had because it’s we We as we in the us. revenue face better. of expect air you fluctuate mind we revenues and The other well. of sea on impact, the positive portion excellence, the mind back on all be is. revenues timing near-future the dependent Because we pretty balance again, this should the gross are have be that including impact impact this We will fixed in costs So, of up, margin an remember, -- margin have revenue second cost we quarter But geographies, down that and the be world, costs questions, we revenue, a figure. go of airfreight. on costs. gross in keep -- various and may we supply confident is chain by some very this your

George Iwanyc

at, you’re starting to the are for level And quarter you before can that or right. again? increase hold that at a two All OpEx comfortable

Ran Vered

probably on OpEx, very the low be G&A with the higher. some actually, -- will that So

rate. in As be quarter, like higher. We indicated, we’re to I a second sales at in chipset level. probably continuing R&D, the XXXX rate. probably marketing, because the also same at the and expect, invest the bit in little And same to the more do

do OpEx expect I So, QX be a that higher, little our will bit.

Ira Palti

A bit higher. little

George Iwanyc

one chipset, area you one that feel in of as that just taping pipeline see you or questions. your first by the see that in put you’re portfolio And for XG at year? you’ll And your last Is of a products kind step-up of it few Do look as to that front going the Ira. productizing that? your out year, is end expands? the When see customers, you how does next something you of do generation? demand of accelerate quickly you, a half This that SoC

Ira Palti

customers. demand year expect portfolio only in up front see see end in of the step-up of to XXXX. We expands. by We’ll way, the the products already it of towards beginning next We’ve as do, put or

and Let’s disruptive. continuous on turning remember, we here into there. least story out and But, that between an at months are of having products the we chipsets when is doing type position then there we’re tape-outs that Again, demand we I were then different the call table the the innovation think XX all time I and really the it’s the discussed the of have think that the in on keeping versus last the period, competitors. think part products, usually with products I creating on market in our leadership we

I gigabits XX channels building IP-XXE that’s current the wide IP-XXC, product today We again the the and and products, Like the six or disruptions is years, we like market the next very have chipset the or XXE Even it doing. event. Because seven the are And The It’s next for the and next XG. the the built XG on design have see again. continuum in we And onetime disruption XX, and again disruptive market that drive it’s the in we disrupting. out required we in XXX no as where those has. the all done in the the on with XXC, Company. XX-gigabit and for SoC else -- that one when And a the our what’s coming table in that’s again call wins and step move things mentioned not we the capabilities enable in of the the are XX, the capabilities are probably a on let’s remember, year table. things forward. the there, putting and in is XG doing over comes

with right, because looking the them. long-term XXX% Now, someone are with them. who’ll going rode operators questions, ride for we the do back your It’s yesterday, you’re to

sure on for step well. the -- best as best-of-breed want to They stays ones, make them us. New today, they the of we but are with next breed technology, with that are they that want best

to this the where So, sits make the here this story guy delivery, on reality the table. whole needs that’s And in right?

Doron Arazi

Yes.

George Iwanyc

Well, And with Doron, you again, much, Ira. that, congratulations. very thank

Doron Arazi

Thanks. much. very you Thank

Ira Palti

Thanks, George.

Operator

Instructions] [Operator

Unidentified Analyst

really you It by challenging thank And this guys in doing quarter. on call you executing like environment. for the Congratulations way, seems are well a the Zoom. on

I the operator think, easier much so for and than this everything. is waiting doing the dial-in and then

despite saw you sheet. little on is burning I a cash. question So, actually the cash a that fact that. little My balance that bit guys increased on the kudos are just

like of doesn’t to you have liquidity. million sound But lot So, of presumably, me. $XX a sources some of money cash

to opportunity liquidity. And so, wondering the think I a all if could here I’m capitalized pretty you speak what meaningful advent we Is given agree at XG? sources additional of just Ceragon your adequately is of

Ran Vered

Thanks. Lance. Hi

So network. only handset XG the done just the Zoom on was comment to Zoom call It’s call. not All the also on XG call. by

so is this with. exciting, So, to begin just really

almost had we we we million that yes, million utilize reminder, the more $XX really of with $XX for just during million banks, million. to are a So, that corona million credits just banks enough would of capital And anything It’s we also increased it. $XX like have cash last we but have we revolver utilized $XX June needs. for out available, which -- the available cash working than crisis to. can of The we $XX

levels. our see We year our reduced that working inventory improved improved for we R&D. last capital pretty You can the dramatically. also We

So, the some payables. of we reduced

pretty the strong, is that balance the So, to we think and and have sheet the I sufficient capital working operate. liquidity

Unidentified Analyst

guys. again. and congratulations Great, Thanks

Ran Vered

Thanks, Lance.

Ira Palti

Thanks, Lance.

Operator

Henderson. the of is question from Alex next Our line

Alex Henderson

a that And I to new this you’ve providers. service on very go wanted system it. sure your excited just technology I’m I assume shown to are they about chip. the to back that

about So, availability the of think what that field go upgraded implementing extent of would front to of of as and in I the in product you’re this the we’re IP-XX, extent become may the that. part directly capable would that as then tied on be that timing availability, thinking being into technology to on the the question would that that of deployment

technology good there this a demand as and there they’re this to of for or what becomes customers the already relative wait So, are of available might impacting for think as going in is be dip product? kink it of behave first demand, thing a have becomes little ‘XX? it half be almost shouldn’t the in curve this to the it today, therefore, availability available, bit How you there’s but we think should we as and the therefore of going a to do

Ira Palti

in the of don’t an experience of Because the past it. moving those, Okay. I way expect

that Let’s XX, technologies months with ahead customer. usually about on remember of curve we are need with the the sometimes XX, the

years small it. matter, the XXC product. which years X, of it, we and of ahead XXX towards be stations, requirements advanced curve The the IP-XXC there. is the macro, be IP-XX, as happen base gigs that of meets probably name the set cells names for we others way XX the pick of is product, with will will We what of our and internal for require We’ll of sales out. XG, next it’s and X the those. saw. doesn’t come and both yes, XG And demand four or products, year And we that the not networks, edge driving out in three a but the the will the for next which deployment our creating came same have then, will So, are today X, Most main which of additional capabilities with which with the current XG, old.

see those out on I really don’t and So, the demand as layering there. pulling expect I through a top dip.

Alex Henderson

determined your little before that of going the distinctly customers to that all XG that product whistles, launch you bells is, the give by what Company, disappointment which years a for availability. was the a in it So, And years ended pressure bells weren’t bit didn’t dip that product gain you question business to a And that about had margin X.X then result tried of way. of convince of caused to cycle And decision on getting all and the that point you about And temporarily give happening most pay back. that discounts. people buy and willing one put people they get was I the up remember the right that going and is that functionality XG But capabilities to guys weren’t and way, not we to needs the cycle very are the that for it? the very these to to cycle your they’re as comfortable upgrade was here had advanced with second gross excited want way. aside, whistles. And big them on

Ira Palti

And that’s IP-XXC and IP-XX. the said. I need XG want people that is the we with why still said, ago, stay customer of they to functionality, answer fast yes a -- horse that to for world, the a around And lot less self think what a is an excellent of that’s not want different we ride. who functionality, and places see a I to The because sell in If them are think the minute attaching does I sources IP-XXC. the I

Operator

Your ahead. next go from Please question is of Karger. line Gunther coming the

Ira Palti

you’re Gunther, on?

Gunther Karger

hear me? Can you Yes.

Ira Palti

Yes.

Gunther Karger

Great.

getting welcome for Doron, How all, you Company outstanding And thank are the of times. a Hello. First again. through service have difficult I you?

Doron Arazi

Thanks. well. Very

Gunther Karger

little $XX a somewhat mentioned a I’m I cash. the have unclear regarding The came where reduction It is million that to question from. of reduction. before, was as

Ran Vered

is million reduction, There no Gunther. $XX

first the On cash we quarter, breakeven. had

If activities, you QX. take million, million the net the down as in offset cash was that which cash cash cash we of minus from was in operation All-in- it by have $X.X activities. QX position from loans investing the all, financing stayed and $X.X same

Gunther Karger

the in you. going this Do see mentioned Thank -- the the you various you presentation. growth markets in Do forward? actually verticals. in you And other verticals is the a see question

Ira Palti

We focus the put on but The a huge in we mobile, the answer do yes. verticals. conversation on effort mainly is around

we market, quarter -- sell in other announcing deal American We with services there market but the not North XG share good we’re verticals us working last are interesting a our and about operators we are position market in our And are yet, start lot What put The places. being equipment in but with XG. mainly also although that verticals, the putting a differently. and for effort Look there, verticals in mobile the in XG way, seeing, announced ready by market. the the started places. they provide verticals is we and at a in on behave other integration really Africa, mainly And of capabilities a huge start to the part and experience capabilities a taking in to U.S. talking the network. in

Gunther Karger

early Thank right. question area? the And finally, was see you movement Do All toward regarding a an applications there in you. XG. IoT

Ira Palti

all that of investigating they operators you’ll mobile work the that Pick see are XG. do XG. with with things today operator, areas The different we the

a of Some for broadband. lot more go mobile and them will

do play IoTs. with them of Some

more XG play the way they technology, you a them them At the But market. the all day, different requirements. and drive little way do approach end enterprise the of the in similar spread of otherwise, of industrial things. and Some the network of you bit

Gunther Karger

Thank you. And of best luck.

Ira Palti

you much, Gunther. very Thank

Okay. close I call. to like would the

to mobile it them First, and Doron video. It for new on and I’d to questions next in do easy for of quarter And if being with forward anyone learning that all me, much. us, for contact feel like please Thank to thank being you us. Ran ask between, with very and for doing you of from look was wants me, both free. with and XG I to tricks transition. not hearing

Operator

attending. for our much Have of great day. very That does call you your for conclude today. Thank rest a

Ceragon Networks (CRNT) 3 May 212021 Q1 Earnings call transcript