CRNT - Earnings call 4 2023 | Ceragon Networks Ltd.

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Operator

Ladies and gentlemen, thank you for standing by.

Welcome to Ceragon Networks Fourth Quarter 2023 Earnings Conference call. [Operator Instructions] As a reminder, this call is being recorded. It is now my pleasure to introduce you your host Rob Fink of FNK IR.

Rob Fink

Thank you, operator, and good morning, everyone. Doron Financial Chief Officer. is Ronen Officer; call Chief Stein, today's Arazi, Executive Ceragon's and Hosting

projected amended statements other harbor Act Before time results and note initiatives, other their made including and potential that financial start, as the lines future certain of the Securities information Reform we of the the I development the matters progress statements on would Act events, forward-looking business outcome this accounting Exchange efforts company's anticipated and in the results like Litigation outlook, meaning to financial within constitute amended XXXX of of provisions future and Securities and and as XXXX. Act call, plans Securities related XXXX of safe and

of believes, differ of forward-looking materially only may, actual Such management. in could and or on filing the other reference. to Ceragon's statements. which SEC most are statements. today's terminology such from the anticipates, plans identify as in incorporated are including which described all supplemented uncertainties, report they expressly assumptions as earnings are expressions reflect results, certain earlier Such Form of to results cause projected recent annual and may time in forward-looking Ceragon's differ or statements of XX-F intends at subject press uncertainties year-end be risks actual risks time those from filings by release, and with should, Ceragon's such similar and expectations the Ceragon will, to may forward-looking achievements to materially The as performance beliefs, expect, current Ceragon

them. of be And be there that can will no results, no update made do accurate. Forward-looking statements relate and the to not future takes to prove purport they obligation assurances to Ceragon initially predictions date

financial are call also ceragon.com. they include on non-GAAP Ceragon's website public sec.gov, obtained Exchange Ceragon's Commission's be will at Also and the may today's measures. at Securities available from filings and website

which posted non-GAAP is I Relations press of results, table call the issued also is and attached Doron. over can the GAAP yours. between reconciliation morning, said, please call Ceragon's to all turn the the Doron, now the Investor was on that that this release a For to With see website. section earlier

Doron Arazi

and and record Major especially world. This evidenced our we steadily great was a We We our while in Thank closed markets. us morning, grow confidence growth evolution part momentum guidance in in private networks expansion guidance strategic will that good full of and Rob, operating key non-GAAP the significant around you, accelerate for quarter our year and the income everyone. the giving strategy growth, of XXXX. our America significant exceeded in and for North we acquisition margin believe delivered as with are revenue footprint by increased our our business together, Ceragon. coming

This our the making giving that be us to right of confidence are strategy. execution are might the KPIs we in the moment discuss progress some that of

while example, of XX% is customers new bookings for networks this but even the Xx company's our total network consists was nearly total very booking, a our from from this were total importantly, bookings slightly substantial new private year of number This higher. more from $XX For new about XX% us, of bookings above private the million. customers,

were our is the customers, year Approximately even private of customers. networks more progress the of of this total new new customers terms In impressive. number XX%

for in as increase most as many existing noted we the our plans, we the business continue recently in private aspire and our Tier In to of Tier years customers, amount booking part customer our in As new X customers. of bread such and has well X India. XXXX. in This new double network been parallel, to butter as

services managed are had September the we customers, selling segment quarters compound within the the them software-led of XX, long-standing for market XX% business with in wave our XXXX. annual transport ended a highest last more of few rate X reports, to hope a for millimeter According advanced growth rate of analyst and growth With we in with XXXX. wireless discussions market

expected This to particular the in are transport continue market outpacing expected years. high actions in segment this believe we the positioning on is some coming to of the growth market wireless total I growth. that continued XXXX Ceragon took monetize

driven the based expected deploying coming weeks, a different next-generation be optimized regions. launched new We to us cost per enabling up be transport in we link. IP-XXEX that continue of product second wave our wireless in XXX and our millimeter have the is gigabit on will design IP-XXE our ownership on of chip, We total developed the that to started system

we performance Last, price and our market our least, with these will we not the offering Siklu, expanding additional further millimeter but market believe wave to in enhancing our broadest wave range. and acquired With millimeter products strongest richest the taken, we solution. actions end-to-end segments maintain all

In early only our Siklu. of The the contributed they revenue the majority organic. was growth X is modest of well nearly Siklu the underway. were December, completed integration in month of part of we amount and acquisition a Ceragon

of after the we largest confidence for an Siklu's purchase However, order customer, closing one important acquisition, from significant us. a received of vote

in acquisition expected. The have financial the as key indicators of come

cash to even million basis in in related $XX During on full a cash impact the and the for from the including year generated acquisition of more $XX Ceragon cash Siklu. full XXXX, flow free million than operations year,

early the closed $XX.X quarter, third contribution of insignificant. quarter consecutive operating the level nearly million, $X.X only million. the was to Ceragon the income since revenue December, $X to our of highest above revenue fourth delivered In Siklu's non-GAAP We of essentially year. Again, revenue XX% quarterly this in grew million acquisition Siklu

a On our GAAP operating was $X.X million. basis, income

income exceeding enabled end $XXX was year $XXX grow our fourth quarter year This exceeding million, $XXX income the net million. guidance million non-GAAP more net for of Our -- to to $X $X.X XX% million the full million. the year full sorry, consecutive to strong than of to us non-GAAP revenue million $XXX

nearly high provided the excluding month Siklu, the range. revenue revenue achieved have of our of we year would full end X at guidance with Even the

delivered the operating year, $XX an Ceragon. million all-time non-GAAP basis, record on For a for we of full income

On GAAP income on a $XX.X million a GAAP Clearly, million on Ceragon has our $XX.X basis. a million. Net and navigated income challenges $X.X basis non-GAAP was industry. basis, operating impacting was successfully macroeconomic

profitability. India, we demand growth in deliver strong for Continued share to continue our and take solutions, North and America robust especially enabled has consistent as us market

fact, In grew America to in XX% compared North by in XXXX revenue we XXXX.

Siklu accelerate Tier this believe coming acquisition is X Tier initiative. expected our We growth expanding X that into to is our to and market focus. customers The beyond of addressable continue strategy, clear

combined given Our the XXXX, us improving and confidence to double-digit from with to synergies performance visibility expected revenue in growth. Siklu continue the has guide

in expected providing margin significant guidance more to XXXX. to detail Ronen introduced, will targeting X in also new speak our his be comments. customers during products weeks, our further few are We a presence with We our next are customers. In expansion and ownership additional offer tangible and market attributes. our cost will to of lower help benefits excellent total us performance new expand believe products these the

to margins. of addition, our also us gross are with help In long-term improving goal they expected

of first system-on-a-chip continue launch and We product end XXXX. new to Neptune by the our the named testing using the with this chip of expecting

will exhibition is demonstration upcoming some World In surpasses millimeter intention already in particular, we Neptune next our we a which to wave announced, Neptune of week. have competitors' at our As it Barcelona the technology, demonstrate believe of we capabilities. live Congress far based capabilities Mobile

packages our compact to display wave an for also delivering in cost ownership. IP-XXEX radios, will total and demonstrate a We radio high IP-XXCX of performance dedication microwave millimeter both radios optimized

competitive which in represents As we have should the advantage market said, meaningful further system-on-a-chip this take us help a platform future. share

greatest now on activities call, the will X like near in the highlights that North primarily America expect on will QX our focus to continue India, results have and region. of Noting to I'd impact on regions have term. overview provide that we our we an and in today's the by

America, we including enterprise market. domain opportunities campuses, continued North expand in pursue additional well as in We private large as In to universities the the network our business have municipalities.

to North million, services, solutions which in more capital the backlog expenditures. in of is revenue service their greater the expected our $XX.X and contracts demand these America component services of our providers typically and have visibility are specifically cautiously of Importantly, as a improve even business. lumpiness was managed reduce our

in line North Siklu in strong this private wins network America from America solutions. adding benefited finish several wave millimeter reflecting reflecting with demand and in expectations for largest were solid and backlog Bookings service from strong quarter, to our Siklu to year, demand North our the a customer. provider

a potential in In India, strong, report bookings signed others softness. additional a our over see increasing approximately revenue have and India, from $XX.X we strong at solutions, for was were We even deal demand with million Revenue million as $XXX valued India backlog. continued time. our for to

solutions. agreement support This and is services network. this microwave management a a for as the contract day-to-day integrator maintenance brand-new wave India. Ceragon's our managed covers will and with multiyear global large the will Tier first deploy of for collaborated a a project The network on services Ceragon be as planning, which product and in X modernization Ceragon to operator involves newest delivery project, this deployment for customer customer and a monitoring well that oversight millimeter

XX% of expected value approximately Approximately begin to agreement project the is sites deployment. recognized XX% the maintenance services complete time within and deployment new quarter is the deployment and delivery over to the expected for to of contract be a this and the the start frame. during to the expect years. We X The time second value recognized being and of in year approximately is post remaining of managed expected beginning

continue on This not a win includes in project presence our to margins do expect will to improving drag And consolidated India, certainly this be typical plans to benefit this margins. while our win gross India. we

we discuss successful continue trend turn XXXX. in I'll North to CFO, be more in results that, to and details. call America, over to in Stein, our to the the we With Ronen this anticipate Ronen, and you. to India continue Clearly, over

Ronen Stein

you, everyone. Thank good Doron, and morning,

strong Ceragon. end outlined, Doron the year fourth a a As represented for solid quarter to

grew along delivered margins made positive $XXX.X positive of earnings cash with unlocking expanded progress XX% This the net operating Ceragon. For revenue we GAAP we the and to by power gross flow. the million, in free demonstrates income year, non-GAAP have profit and our and

from Ceragon variability strong but a very delivered for XXXX $X year we results and a each quarter-to-quarter quarters $XX over a with we We business X remain income project-driven revenue net inherent each in accelerating non-GAAP and above was enter of momentum. million strong XXXX million. with with with

we understand for results, first help basis, To referring to GAAP the annual an you On XXXX. non-GAAP profitable financials. basis I time on primarily since were a XXXX, be will the

financial our press today's For to use information you refer we reconciliations measures, regarding release. measures, of non-GAAP these including more of

of quarter XXXX. the Let revenue X.X% me up XX% $XX.X third now the of review increased actual Revenues approximately $XX.X Sequentially, in were million fourth quarter million in million $XX.X results. from from XXXX. the

regions million, strongest for million strong Our continuous revenues $XX.X $XX.X and line with these India with quarter respectively, in in the America the terms regions. we were in demand see of North and

region fourth the fourth strongest QX We million revenues. in increase the up terms a non-GAAP America in for with $XX.X quarter third was profit to compared of compared million, than that revenues had of basis an in Our $XX.X Gross $XX XX% XXXX. million X.X% quarter XXXX was in XX.X% our QX million. customers more of and $XX.X X on Latin contributed to

to margin XX.X% QX in in XXXX XX.X% XXXX. compared a Our and of non-GAAP QX was gross margin XX.X% gross

continued level America be under while keep to North achieve high gross to costs product mainly its continued control. maintain We as high continue favorable to from and we margins, mix revenues

Our fluctuate factors. operational in changes to to as regional product gross due as well margins quarter-to-quarter mix from other continue and

see to a trajectory. continue positive we However,

a XXXX expenses on for were QX XXXX. for the development down fourth operating $X.X and As quarter up $X.X our $X.X million non-GAAP in research QX from from million expenses, million and in basis

QX fourth were were $X.X the XXXX the As from in XXXX. a quarter compared the $XX.X from in XX.X% million fourth fourth to $X.X quarter QX up quarter R&D and expenses of a revenue, last expenses marketing non-GAAP million, of percentage our and in Sales X.X% basis for million year. on in

down up and compared marketing in expenses last $X.X customer for a in from QX million non-GAAP XXXX. XX.X% to As included the which QX $XX.X of General and and for in on $X.X basis quarter million credit revenue, a provision were in fourth quarter XXXX, expenses percent million quarter a loss from year. specific $XX.X million administrative the fourth a sales were XX.X% fourth

to of percent the X.X% a in in compared As last revenues, were year. XX.X% expenses the quarter G&A fourth quarter fourth

are Our in non-GAAP Siklu. XXXX to full to operating expenses expected consolidation of the due increase

we growth business targeting our are from and already with plan Siklu, However, said, as the we added operating have margin expansion.

regards to continue to increased be our leverage. expenses operating will to disciplined We in operating drive

non-GAAP least the to is for our operating margin guidance. midpoint revenue goal achieve of XXXX at at XX% Our

utilize network our our We in and strong expect initiatives market customers. invest to our expand addressable cash to strategic to flow target private

We us to that investments believe can better growth continue in see to segments in these such position further XXXX.

a losses profit fourth profit QX basis operating with operations in from loss million a XXXX we on for quarter and due slightly expenses million, $X.X non-GAAP Financial the million Operating were the for other and was than for for million basis our $X of non-GAAP of on $X.X expected a QX to currency fourth $X.X compared quarter higher Africa. XXXX.

or on territories basis our million, or income XX which diluted increased $X for FIN $XX.X non-GAAP provisions $X.XX diluted XXXX non-GAAP share $X.XX expenses an for fourth share tax was income in million of QX operate. update assessments a diluted the Our loss we in due $X.X million to share $X.X per basis a Net per $X.XX per and of tax for compared million the the to or an of quarter XXXX. quarter QX net following for on in mainly to net one

Siklu was of for with charge for $X.X by negatively third XG of to net long-term mainly $X.X impacted agreement and fourth a termination million technologies. charges a the a with onetime loss the of development GAAP million related joint related the quarter party $X.X million, acquisition

third for our It our agreement In payments terms revenue party. noting revenues. termination, the future and in the we termination the a it of impact million developed waiving This projections. on assets of any technologies deferred balance on important $X.X also future sole noncurrent accordance effect not with this by significant had have the return remain sheet that owner is does

is $XX.X full a non-GAAP and a on in gross of XX.X% in million million, to giving The substantial America million, with compared up $XXX.X $XXX.X in Turning a to growth the XXXX North mainly from profit results. was India. basis us million $XXX.X growth attributable margin year a Revenues $XX XX.X% million of up in XXXX. Gross XX.X% from margin gross were XXXX.

by maintaining most attributable improvement with is under revenues control, supply gross substantial XXXX improved inventory chain keeping compared as profits general while same increase the operational partially in in higher higher in tight substantial to This costs regions or write-offs. mainly margins offset costs,

$X leverage. compared and XXXX. at the non-GAAP operating ability for demonstrates an Once increase we with made an again, on power income all-time the was Operating in basis have our progress this record $XX million operating of earnings loss million unlocking Ceragon of to

$XX.X or Net million income loss net of $XX.X non-GAAP was diluted $X.XX share on share a XXXX. basis per $X.XX diluted a with for or per million compared

million position sheet, of fourth As compared of the quarter our for balance cash our $XX.X $XX.X end to the XXXX. at million was the at end

Short-term December needs. and compared have We loans of capital our million were operations $XX.X cash and million believe we $XX.X to facilities as are sufficient for XX, that working XXXX.

down XXXX December of end the at million QX of at XXXX. from was $XX inventory Our the the end $XX.X million,

monitor into in of consideration improvements taking availability inventory expected levels, demand. and components changes We continue in the to

at end December receivables trade compared are XXXX. $XXX.X million Our to million at as the of $XXX

inventory. the Our The cash the our DSO payables, assets increase now other at impact Siklu stands additional on increase main consolidating sheet include our balance and of XXX goodwill, long-term of into position intangible impact and days. of the

in $X $XX in was flow, net business and million year. million. full impact operations quarter XXXX nearly the the cash by nearly excluding our and cash cash from for Siklu million for generated net As investing million $X.X in We cash operations activities of $XX QX the flow generated combination, of fourth acquired

believe at to of demand that top business continue our strong. in this be will call, the we Doron As the indicated

$XXX a growth between expect representing with XXXX. of to we of XXXX, $XXX lumpiness XX% XX% revenue For quarters caveat of to to million million, compared

the includes margins operating the XX% guidance of to at guidance. the Siklu. This Non-GAAP least be are revenue from at contribution midpoint targeted

cash flow the now non-GAAP increased With questions. and profit open of the result, your year we Operator? call I for full that, expect a positive As XXXX. for

Operator

from [Operator Instructions] Alex. the today Our first question come of line

You may speak.

Alex Henderson

Can I? me? you May hear Great.

Doron Arazi

Yes.

will louder, even better. it little can be Alex, you speak If a

Alex Henderson

certainly do I can that.

job So and with quarter. year, a acquisition and great was congratulations like quite year looks start a this good it Siklu strong. Really great the on

So all good news around.

couple your excluding growth a could organic So quick on the if would Siklu any estimation be of give for rate, What revenues you questions. of update Siklu us the year? full the

Doron Arazi

of revenue $XX the first of all, we $XX XXXX. million we talking to when we're be generate So will we this amount to about in were talking about believe of announced that an we million able deal,

If it is the revenue a sake think assessment number. that we the this of still organic from range carve of kind the I good projected. the for we of out growth,

not the would I of this a you say, as offering model general, both expect organically. tight separate every to intention think our idea very, where and be because we the the is will the In solutions. integration outset, go I with numbers range the it's have quarter misleading the start bit to that lines, But deduct be really And it future. relevant I to splitting market we revenue for should this should if growth said, gross a we products

Alex Henderson

Yes.

the guide. changes, Siklu no Great. So revenue

could. I if question, Second

I margins. Can Can XX%, gross we're assume something You've of sense in obviously guidance looking probably, of terms margin like some that it's at got us us give bias range XX% what you to any kind give margins you a that. what, higher in of to 'XX. there?

Ronen Stein

will around be XX%. that think we I

be above. be quarters will shy quarters may Some shy some below,

between course, could be lumpiness quarters. Of there

see we it specific little or jump So a is XX%, But around or what one. more is this is in general. this as be less a the But annual bit could lower. in which quarter, the

Alex Henderson

between in and assume some double both Siklu marketing, but digits low upfront down. single sales and marketing the growth fair in with bring that you digit R&D, trimming of as what G&A? sales and it's integration can R&D then costs then it expense G&A and give and is that a us sense assessment? rate And probably you more Is I

Ronen Stein

sales I the and the see that midpoint mainly above So the following. sales the requires profit our total bit due sales -- as higher the shift into strategy would XX%. think split on will target, said, and and higher we tiers general, lower marketing. shift more I between the operating we to be marketing, -- sales we fact In R&D The say to to that a and the marketing,

some modest, and R&D, it's the the R&D keep in increase, relatively levels. we will or trying modest in level, While the there to -- same R&D but be more less exceed not

Alex Henderson

Okay. chain And supply some on pretty sheet. the rich. still down opportunity balance there's bring normalizes. here ARRs inventory back Obviously, an your And the as to look

So can go are year? you lines the talk your X about those for through expectations what as we

Ronen Stein

to we in reduction regarding a So to inventory, continue inventory. try achieve

in For sure, we a the inventory even have we because inventory revenues as will percentage of a increase at only reduction revenues. if end, slight expect to decrease

level will bit challenging, be around -- while same it to the we to a reduce less India, the challenging On bit the expect and be still or projects might a year. to AR, more numbers a bit, expect The on coming, little are DSO same but see the it DSO. big be keep same trying last we same to that,

Alex Henderson

you expecting year items? I for then are we the and those any the floor, us question, tax on line Last the and full on line? give What on X interest the see guidance can

Ronen Stein

increase -- Also, will interest hand, rate the will only into on relief. much the rates. the loans the could interest half which obviously some one it did see and loans we the benefit so went we take $X on -- us of we we Well, not which our down, had which million,

a going it's bit little So down.

interest the as them the operations, the expenses. to a go for expenses you to difficult, exchange as differences but big and expect is as company know, So see very we numbers. we certain effects on a rate global down. It's the expect don't This financial

from regular a as much even expenses, bit tax year. this to we year structure And that expenses the hopefully, respect higher think our are tax than reduce With we as and the tax this working align was to possible. I will

Alex Henderson

same So what, interest then million line, or down a round a of just quarter and out, about that tax thing? hair to the kind line, $X

Ronen Stein

would reasonable. Something be like that

Operator

Our next question Dionisio. comes Rommel on the of line

Rommel Dionisio

management in with plans they're sales terms a detail if more cross-selling wonder for realize opportunities, some force. combining just infrastructure significant could integration that I I there's bringing existing the Siklu, of forces, marketing little obviously, you just of in. your in discuss the And

could So I if more a that, on granularity give you just wonder us please? little

Doron Arazi

Rommel. Yes,

some, -- the products our Siklu plans, from What were outset demand. in or And So ability see financial demand you that the say, of structure the bought we them. a is plans there markets is at, as to would actually basically may I understand supply that strong original execution the they inhibited I were we from distress before underway. deal is for the they that at are said, the their

the, speak, of difficulties first Siklu stand-alone financial to region that our the sales part primarily because, So level, team so of expect And so driven all we high is obviously, of the ropes this the see is of and at all, so to forth. by Siklu and released nowadays. we on ramping up business

In parallel, until this both microwave we stand-alone for customers sales from to a solutions for microwave are wins, existing they offer microwave Up to business seeing of that we when are wave quick especially boost solution. able millimeter seeking was an for not also customers see Siklu company, their us and now recently, in in portfolio. Siklu. as And were opportunity opportunities our

actually to and is our solutions introducing Siklu The other it of customers. of side some products

wireless So into they far, a to and do we intend looking help. solution from solutions a and how fixed these and can interest to can used for products our the to World is the of very big of be booth point dedicate Mobile explain we what lot market feedback the initial show multipoint see access. to that all Terragraph positive, in And all, portion in Congress, can especially

optimistic. very all we in all, are So

team is also learning. sales Our

products out we by of or team run. that short force of and multiple boost the have that, our sell Siklu We having lot activities is done the sales within training sales also there the product. is multiplying so This Siklu to a sales for that a

side, it's For sure the I thoughts that with the is say the is long significantly discussing thing these to I only that of did of acquisition when going time our in on ease start think Siklu's right doing very product to you improve run, use because there's that don't of amazing guys them. I'm good much in of terms are an The our Ceragon alignment more in terms job installation. strategic would terms design,

So this is a part of the faster as better integration that means also we configuration which our intend configuration or to adopt well. deployment easier also on of Ceragon product, and far products by

I stop I will think here.

Operator

You have no questions, proceed. Doron further please

Doron Arazi

Thank you.

So for this Ceragon. was an encouraging year

revenue We growth industry from and continue multiple will in independent footprint and coming expectation expect transport to grow that market growth. on to analysts The in significant years. projections our are continue continues domains the delivering based wireless overall is increasing

expected expanding believe and We that are on grow we focusing than new the to the the can of faster market faster parts growth into by grow much market domains.

market Beyond radio to delivering and millimeter wave market outpace growth. focusing primarily on to this expected strong is the products that

as are which as private focus expanding in software-led other managed domains, networks our We are well business services. the

serves growth going basis forward. our This growth double-digit for profile for expectations the as

next quarterly call. as expect self-sustaining good to further positioned growth expand we in We everyone. are Have achieve our on a our strategy. execute to to you further to flows cash are forward look believe solidly day, margins our continue I XXXX. that and profitable We we updating well

Ceragon Networks (CRNT) 20 Feb 242023 Q4 Earnings call transcript