CRNT - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Ceragon Networks Earnings Call.

Our presentation today will be followed by a question-and-answer session. [Operator Instructons] I'd like to hand over the call now to our first speaker today, Rob Fink, Head of Investor Relations. Please go ahead.

Maya Lustig

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

including which described all are earlier to release, those reference. SEC, recent incorporated be on annual reflect but results filing they XXXX of financial report XX-F meaning results press Ceragon's Before the statements. lines to assumptions and risks intends current of that uncertainties differ Reform future and actual the potential Such limited similar of forward-looking on as statements expects, that of related and projected identify outcome, results XXXX of to and amended expressly earnings certain of XXXX. and accounting certain start, materially events, could from are forward-looking to differ and today's statements and we Securities Act to may amended uncertainties, I'd cause efforts certain in risks the constitute within believes, and the filings herein or time as matters safe made expressions the include, those statements. may, other other this like of Act in Ceragon business with the such Act statements Such forward-looking outlook, most anticipated of call, Litigation not financial forward-looking the and should, future time progress which expectations the time Securities will, company's plans and projected and provisions Form Actual and the are to development terminology Private note information supplemented initiatives, materially may as as are from by other in management. their Ceragon's Securities harbor including results plans, anticipates, Ceragon as

public call, over non-GAAP certain will at they events can prove or Exchange no assurance between With earlier posted made, predictions results, today, the they Forward-looking the are Please from initially table reconciliation that obligation that be sec.gov, Doron. on see and Doron, Ceragon's we for Securities issued undertakes the to are attached is accurate at said, and relate yours. On Relations I'd also website press call was they Ceragon's the be Ceragon statements there non-GAAP them. available and now numbers is to will and to and no website. ceragon.com. the not may GAAP filings Ceragon's to website date today's release like include be on that section of of to future results. Commission's obtained a was call Investor to the and that which all the turn update

Doron Arazi

you, everyone. Thank good Rob, and morning,

me Let some context. by providing start

position a Under optimizing been in strong we in networks to business. maintaining customers our plan, year their Tier implementing strategic increase provider diversify and the we have the carriers. while our or with up this Over chain assisting our equipment all so, to from market intend private X value move an share to network investments, past operation, plan our

result this margins. We that and revenues in strategy successful execution recurring diversification, expanded will of of levels customer expect higher increased

from progress another implementing We significant this results of quarter network in continued quarter second strategy. bookings customers. The reflect had private new

in number of from more as customers, our dollars. private overall XX% than in accounted well of accounts for as customers New new networks both

has as smart The journey network creating of activation also been than opportunities recentSiklu customers. with adoption in software-led our year, started as our booking generating ISP last revenue, recurring to position further to competitive with half meaningful our digital-twin and our our acquisition well engagements. solutions, we generate first has proof-of-concept versus integration helping leading our in to private for we are In plans funnel more was of enhance opportunities. growing annualized private continued the of For up accordance our key evidence, and network networks XX% higher software and

All solutions share this increasing gain in Tier able is To in North initiatives primarily And to summarize, strategy. and Demand for our operators, in market our increase private each progress confidence customers, of in strong while globe, we our were and primarily India and across of customers our X showing even remained continuing networks. that, our these is to progress. America. maintain from the new

ongoing expansions, XG-related our areas. share and as decreasing we spending networks rural on significant focusing in is market in is are Our on primarily increasing upgrades in dependency XG a spending private and

North fact, half especially second momentum of us continue backlog, the with can we that In confidence growth in into year. the gives our America India, and our

new expected, our started to revenue. have to translate bookings offerings As and

ultra-compact suited are -- ideally sorry, include our This some EX, variety example, of OpEx of small new solutions IP highlighting -- that or low use IP-XX when For portfolio high-capacity which continues radio, worth E-band for an XXAX cases, and the priorities. in the especially is to garner interest. are is a customer size which

their enhancing activation addition, the simultaneously, of allowing have by several costs. secured licenses efficiency meaningful regions simplifies software introduced half the been first thousands upgrade significantly for across within fiscal features, to customers process smart generated the operational of activation our key has This thousands and In recently licensable reducing of and multiple network customers and year. various Tens customer innovative activate devices of software radios adoption.

to increasingly our to solution step the software become anticipate this nonrecovering a is Over project-based reducing major contributor inherent with recurring initiatives an revenue. like we important our volatility in revenue, time, revenue. to drive Importantly, solutions this

has generated more demonstrated additional and other for we release India. expect North that I'd have cover us demand of additional continue a already our for Noting on CX, to success North and new our have call, focus we that frequencies in million. needs private greatest as The impact now like the network revenue today's on provide group India. the quarter X America, X These to regions. This $XX regions that our QX America near strong customers results our primarily by was we activities term. meet added in overview highlights will In an than was an bookings on private substantial annualized on first will to will bands delivered XX of enable growth networks solution have with XX% a huge more tremendous half up the basis, market we to continue In in bookings. We region. of our network in private and and from booking. XXXX, XXXX

smooth and primarily of ISP private to business North X has in and India, and was CapEx had This growing and products, We we quarter are strong $XX to revenue strong and out In to encouraged providers' the out diversify also service trends. result network smoothed fluctuations orders customers. contribution the trends. related maintain million. levels Siklu another booking our delivering impact project-based Tier our selling large continue of Overall, the We were this X revenue by objective and we revenue natural byCeragon from to ISPs. successful quarter, exactly Tier in was America

a As in in QX, we of had bookings the long-standing as customers. from reminder, orders we large received our as a record well one of disclosed quarter the value related fourth high to agreement

rural as customers market we as orders both upgrades. XG expansion India, continue are X frame. heavily expected to customer project this deployment XG to expected, the in the this is As with benefiting time recognized new regard. approximately second in phases $XXX to about of be during expected years Overall, deployment value in areas well are of quarter in began certain this of in and share our upgrade, take delivery from we and invest the XX% and Key capacity growing million

We successful North business win been against and and in and continued India and opportunities also America, in this large competition. seeing be has can fuel we them our which Clearly, are to have our facilitating working growth XXXX profitability. to

of evidence with to success the more last would strategy Chinese over a that Ronen first you. also This in of turn discuss strategy. that, the to in significant of APAC vendors note private our Ronen, point of business. regions With I to those against our other seen competition in Latin in success light the the to our I'll benefits I'd notably As over this in half in new have XXXX, other America and call further the regarding comment, regions, encouraging, first new CFO, is regions. very detail. Stein, network results growth especially as

Ronen Stein

morning, Doron, everyone. and good you, Thank

continue plans help be the we growth results, outlined, financials. leverage a continue we our will Doron our and improve progress our understand in basis. stated non-GAAP Simultaneously, I As operating to To strategy. you deliver non-GAAP primarily referring on towards on our to

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

from XX.X% Revenues QX Let me in were now up the $XX.X review XXXX. results. actual million $XX.X million,

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

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

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

improvement range costs. achieved recognizing We revenues revenues within and achieve fact this India We high increasing continue despite to by increased continued the the guidance significantly. gross changed product margins from mixture and in

effect. fixed of which our We also costs, maintained of a positive control had all

to continue and from fluctuate to may product regional quarter-to-quarter margins due in gross mix. Our changes

comparison As and impact the quarter million, impact XXXX $X.X operating XXXX. the Siklu expenses for in $X.X from fully in QX operating were our development expenses. non-GAAP up to and for in acquisition basis include Research XXXX million of the end the a operating XXXX second of the general, on expenses at thus expenses,

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

last in $X.X compared expenses a a the in to QX sales XX.X% and on quarter XX.X% marketing and quarter in of to General XXXX. $X.X revenue, expenses were second the second administrative the were million basis As quarter percentage second for non-GAAP year. compared million

from operating debt a million American percentage of a that in GAAP settlement of bringing X% non-GAAP and to QX at operating million reduction expenses. note The collected collection revenues, financials for million G&A any We loss expenses second in costs completed, not an reason income we great collection from million our recent QX were in periods. a reached second of quarter of the XXXX. G&A future the us This Siklu. is backed the expenses the related to compared believe XXXX. meaningful This debt. the charges credit second I'd related integration impact with opportunity million South to $XX.X for compared the in expected are $XX we a collection customer the of As include a end for do which a we our mostly is last main of basis These to customer a of Operating the week, installment quarter with accounted this benefit non-GAAP to second reflected on our for integration $X $XX note agreement results. to million is out the last was out is $X initial be million integration quarter X.X% $X charges $X.X year. further in that anticipate

debt operating as income million $X.X on million. percentage the were collection of Financial a second in $X.X the compared the G&A, in second and X.X%. included revenues, operating non-GAAP and percentage would last expenses quarter a the in Without year. XX.X% second non-GAAP income the quarter other revenues, a benefit of for quarter million basis be X.X% $X to As non-GAAP was

second compared on diluted per $X.X for per net $X to in or share the on non-GAAP the income million income the $X.XX diluted share. for $X.XX expenses share included million. XXXX. collection diluted quarter per a quarter G&A, QX the million non-GAAP the was Without would benefit tax $X.X or $X.XX million $X.X $X.X were Our second basis non-GAAP Net or related debt be basis a for million to

for of of cash needs. that operations at million end $XX.X XXXX. our was December sheet, were compared million believe XX, the sufficient to the balance to $XX.X position our $XX.X million compared cash $XX.X at are We capital facilities for and Short-term XXXX. we As second as end working and quarter million have our loans of the

the materialized December the XXXX, at XXXX $XX.X at from improvement reduction was of order India. just at inventory following efforts March as of the million inventory the million, down have XX. is larger $XX.X from and to down availability components The Our mainly million $XX during end end XXXX QX streamline in initial levels in and to our over shipments

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

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

stands days. now at DSO XXX Our

generated cash As the XXXX investing flow, and $X.X our was for first net X in activities months by cash million. flow of operations

We are reiterating our full year outlook.

million we $XXX contribution margins least XXXX, XX% to of of be to to guidance expect of includes to Non-GAAP $XXX guidance. XXXX. representing revenue operating For from at targeted Siklu. revenue XX% the XX% midpoint million, the This at compared growth the are

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

Operator

Needham first Alex Henderson Our & question is from of Instructions] [Operator Company.

Alex Henderson

front, by ask actually, to post couple maybe investors. of the wanted on question a I you competitive a

talked system I significant a any about you is of evidence -- about that XXXX, Or that chip of One field. wireless fallen find in on out in can't there, that's Can whether people a the talk the develop head by wayside? that you're But upgrade it whether that? the a for seeing upgrade. who other product has

Doron Arazi

Alex, hi, Doron. is So, this

not say, actually that rather enhanced I seeing for chips than allow implementation very, we seen significant would field are any capabilities what have in today. We of new the actual a

Alex Henderson

product? I -- make think field and in didn't Tipton it MaxLinear So it that the it a or was make didn't into

Doron Arazi

is Obviously, chip can from don't what knowledge enhanced But what are. the we we and usable there based MaxLinear exactly the there's MaxLinear minimum, and the are in no at that immediately. plans out best hearing be to our industry, available of know on

Alex Henderson

Great.

Sounds good.

guys? Eastern Japan, that lot impact increased of In of to impacted yen Does the any that by do any on might into Europe exchange be been have landscape, shipments volatility you you in terms that geography. exposure on negatively rates. similarly, have the on regulations a relative And

Doron Arazi

less therefore, high, you insignificant our So our big. on have not business any countries, it's not in X region, see business. is the exposure mentioned of I And sort

Alex Henderson

Okay.

issue neither Europe Eastern the both concern? Japanese For are issue, and the

Doron Arazi

millions there's no We sell in perceived use that something good in dollars I significant that concern. cases -- that altogether. of as few can exposure. is a No, a of most the don't see as years,

Alex Henderson

look the you of are seeing about Then sizes? the in there mechanics half we as terms rates pipeline how talking into year pipeline and back of just in change the the activity, go of closure or of deal any deal Or XX? some does the into

Doron Arazi

are in closure all, increased private X seeing of that seeing prepared the benefits helpful and first and our the booking to I streamline because So our this -- definitely our the decision deal our we we maybe as focus bookings of mentioned comments, side, that increase on total is Tier fluctuations on we networks. are of some and to XG slowdown. And

terms is There through Tier some generally are patterns. slows in particular this and consolidation. in we ISPs, India -- degree, outside say certain terms the at I We a you examples. business of would degree in in Indonesia, certain Tier to primarily the But least in this market. to buying slowdown, also just a consolidation but So slowdown. In certain significant the North down going -- in a for few outside deal us. X Xs, And particularly to any primarily the that other a America, give seen closure, speaking, saw not example, have Europe, with for than and

Alex Henderson

slowdown combined in the Xs a So little in neutral private some aggregate, Tier net with is bit networks a the of of environment.

Doron Arazi

America, weakness say comments, cover, is operators.Â I private relative that as APAC which the it's well one one. Tier mentioned the the is situation especially in yes, my generally that the to X highly very in as Latin prepared networks would I not can But that, speaking, areas

Operator

Capital. Dionisio is question from Aegis next Our Rommel from

Rommel Dionisio

and Just in guys in that How a the you Obviously, significant about in resources few the business. think private North see question on that the boosting behind elsewhere momentum and world you opportunities you over made years America there. the of some there, business both have last you networks. in given have the significant that that Europe the and progress do expanding opportunities

Doron Arazi

of on we accordingly intention strategy, are on that, so close -- momentum, are new are do successfully always our expenses but bottom we to operating while with our executing our still the it and especially eye our to we a improved margins. sales our very keep it investments, intention much with and to as we in as to order happening. needed, line trajectory is very So adjust attentive marketing, is Said can as the leverage And operating our it what's in obviously,

Rommel Dionisio

know progress private your Europe specifically, the up in forward? of how Doron. enough, private few you some kind I -- that just the some the for just networks talk signing outlook some given But Fair uncertainty, networks there and you've And quarters business Okay. of Europe. could over new in made geopolitical there. about what's next going

Doron Arazi

the say the to not would I networks the of we friendly increasing. is Obviously, see in terms speaking, the but Europe, environment quarters. your opportunities investments, Generally is in given that situation, private the in across speak, business increase question, also the world, specifically we in networks our to that coming to but for funnel in private Europe see still so Europe

Operator

TB go please question ahead. next Robert from Robert, Marson Partners. Our is of

Robert Marson

impressive, Hey especially noted we to quarter. year. guys, on since The I against the growth comparable good a nearly of say was want congratulations it revenue XX% that. particularly just last XX% was

update? Regarding can Neptune, us you give an

Doron Arazi

the didn't I last my has we the parallel. and end that put Neptune prepared validation continue the comments comment, high But since too significantly nearing I with general post in because say much look, it nothing would quarter. on Yes, focus is changed in silicon

discussed that will based be we already developing this product already calls, first previous started have Neptune on chip. As we in the

expecting forward were the the we that we're bottom forward is is moving all, all So as nothing new. and line in

So no is news good sometimes news.

Robert Marson

Excellent.

of real a kind revenue Doron, what early service is innings? XXXX, managed it's software the release of what kind Regarding number of the realizing if to impressive, still and of revenue disclose revenue, services, question as and represent? press that software expect the sounds thousands In in tens could of but we licenses percent had does of we

Doron Arazi

it's least to not of disclose first our far, this at all, so partition. So policy

have me your answering for So part not to question. of you'll the excuse second

also exploring own is qualitative same operating the model cases it to makes I the At the would TX the what token, fee CapEx reasons on buying pay sense for operators As potential their education. they that are a versus it periodical use based is OpEx. us have question different their there? a seriously results. fee for about companies also potential but market significant, say improving them where for to or like to success entails

commercials, us an my And revenues one recurring this From time. this amount player of If of that But they in a be is is a of kind and with is say, press either there available to already immediate and release, to strong smaller results signal I generate chance in business the, is And kind we model. faster. use smaller able such believe as which of think the where I will adopted adoption perspective, significant come yet can the very enjoy networks, is for is fact would there my nearing it. for technology the mentioned software this is at the these something software already of use TX that is term that I customers recovering I also in that license. private concept we'll decided future, capabilities that the the segment, other our this a in the also fruits view, a the of to in look models the a new take the of going good models, to terms time go players, ISPs, of so

Robert Marson

rip All traction is kind from the even away world, believe. that quarter, law when passed Is in I of this are or any right. given movement any of in about opportunity quarter and market geographies data me, with or for there back to security? Europe, other Thank us any And a Asia take share they other there Southeast Huawei you. XX-years product excuse that maybe where Germany concerned parts last ago? people were replace

Doron Arazi

The short yes. answer is

least At and mentioned the of on more we to Just are much and with new a Europe deploy two prospects, to Europe, Europeans you, as the must just three you sizable, result slower you in the these are or take to to the Germany, offend give slightly kind solutions you color, of relatively same Europe. Chinese is token, interested I are mentioned instructions. in also since don't engaged that that starting our ban want I place tell anyone, in at

take for prospect, I have a started which all it more all, is with think will So in us. but new time, good discussions we signal

Robert Marson

material U.S., chance Regarding Tier of the there we one. could in the believe Xs out Is we service only any business any I get two? other

Doron Arazi

And enough So to one But it. are need the that discussion just very front not case precise business that meaningful terms is other the it in have But one. approach, case, them. a that you more to unique we puts situation or with to be of if precise, resolve is grand only tell to oriented not I nice and the about that probably customer in must the technology, I unique the we're us in that very a a about be thing them, use serving, line. for very there vendor were serving we innovation,

but operators dialogue would economics also them, And mind say with piece therefore have different. is other, their need this network I you huge continue fiber they will that slightly in own. to bear TX the that We two

Robert Marson

little can acquisition sheet might bolt-on if in works without some a rest out us the Regarding on The accretively. that very XXXX the year Is they're deals Siklu anything acquisitions, for this small the and risk there gem. department? done turning a in be of that. Congratulations bump afford give balance is revenue to for

Doron Arazi

M&As encouraged we our I execution to enough I'm is And for augment organic continue our cannot execution in funnel question. small I or specific. only quite be this opportunities and will strategy. to by pursue I say of this say would and the our order that that that for

Operator

Alex Our Henderson Needham comes Alex, ahead. next from Company. go from question &

Alex Henderson

quarter I number. wanted me number page, same G&A, Hopefully will number the $X.XX up the question in the back into everybody not shows it a sets the obviously understand of a $X.XX? but having as ridiculous And really address I of it versus just didn't one-time $X.XX of the be to that why comp a $X second just the â€˜XX seems out instead you up to million that that because don't is in gain the $X.XX event? numbers. on G&A number we non-GAAP using the Why the are

Doron Arazi

non-GAAP. We also are our consistent when we with about be need accounting talking to

numbers into lawyers, you If credit with our be an taken presentation that's and And look consulting will and our was we investor in accounted XXXX, our for our we in had allowance non-GAAP. cannot in out seen it when keep back and clearly from comparable that, late the numbers after for comparative loss you to yes, see beginning it it numbers. of or

it's when to need positive, keep non-GAAP. So also the in it we

one specifically comments, our results without we in prepared this However, liner item. the mentioned a

Alex Henderson

me to you to over sets using. going and make the terms for number that probably look right $X.XX $X.XX lot comparison odd number very the the forward â€˜XX number be would is as a do or simple street of â€˜XX the the better number It the that a $X.XX up numbers, seems numbers softer which inflates opposed appreciation. So using the in for it the $X.XX be reason baseline to the off think

Doron Arazi

And term, business now from be the of if course don't to be lot $X.XX $X.XX. business, the attention in the cost therefore, you'll because very presentation perspective, taking not off paying use this probably normal to investor to and of and If that clearly. then, my this And we of should million are I write able a item. every we normal need $XX the see our

Operator

Gunther from Please Kager. comes Gunther? go question next ahead, Our Gunther.

Gunther Karger

is Fink. you. all congratulations advice particularly Fine, thank the question My first probably of chipsets. execution, And on of with and excellent

would this on systems? mention any your your basis, comments, your but did do in chipsets for with competitive coming encourage You you earlier expectations other a that on out companies see

Doron Arazi

the generation years question. chip, next question knowledge, of have use and Chinese point So really of own answered than MaxLinear the of the MaxLinear don't that probably you the competition, least thank of a best We I own any I development our of for to is chip. thank And as chip. you, they at with chip of not the am as rest chip this Gunther, know at probably for other believe not in aware, competition. To ahead previous the usually we the their regarding chip, three MaxLinear. And have our development. we advantage a where still this two this

Gunther Karger

anticipate follow-up this later your new coming on to products still on And that, do on incorporate year you of to your some chip?

Doron Arazi

changed. especially So, during XXXX deployments will as and I for used hasn't being chip that said, we probably start seeing commercial the

Operator

The from Marson Robert Partners. will TB of next come question

Robert Marson

going Are that Neptune To product is going to thing. but X% different commercially on saying be your thing, the to material? using is follow-up versus Doron, a that, XX% one you're your of ship shipments product next year of

Doron Arazi

that to we expect not the numbers suddenly to everybody once thinks on looks see is be me chip the the going to not the we change Ceragon it's talk these content, the going No, make numbers the it company I need make last become that sure in commercialization, to we significant development chip So want and chip. therefore, such this implementation create believe that significant the someone do first or because and has over for XX% XX. same sorry for and it's to of that page, Would totally? gradual. probably developed years. competition chip first of the if few a that but not advantage will a It's to growth all, business, the context. put are again, should the Look chip We is

think next sure start is we I a be business to that seeing business to significant. the going will very extent year I'm not what

box. Based the at be forget going be first is the product version. gigabit the in first the XX not This at Let's is my to least second on going to use experience XX, product, while of up impact hardly there's in industry The XX need. cases to And now, seeing interest, most the we'll the is the gradually. second. an there start before, are per gigabit per

Robert Marson

So and and the â€˜XX and in income a gradual statement in impact on more â€˜XX ramp â€˜XX. revenue

Doron Arazi

Exactly.

Operator

Okay. like questions. now to I to closing call There hand for Doron remarks. further no over would are the

Doron Arazi

we and Ceragonâ€™s competitive deliver and growth position continues to strategic plan on our improve for to profitability. continue

positioning as roadmap, believe products, as they our share good solutions I new networks in wins us quarterly Our on We including space. increasing future in forward private are expected and as the day products solutions, result for Neptune-based in long-term our traction, further call. to meaningful are growth next that everyone. encouraging. Have gaining to are are well and you our our and a look updating products new our market

Ceragon Networks (CRNT) 7 Aug 242024 Q2 Earnings call transcript