Earnings call transcript Q1 2023

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Operator

Good afternoon. My name is Jules, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks' First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. yourself question limit question. one Please Instructions] to and one follow-up [Operator you. Thank

President, Mr. conference. begin may Peter Investor Industry Schuman, Vice and Analyst Relations, you your

Peter Schuman

and and you, results conclusion Bhatnagar, call classifications CFO, on today’s our SEC. and been commentary us this this to today’s submitted Certain page for in be page These Bronstein, revisions the CFO all website to impact first expenses thank on our by the made press also Welcome available were are on periods with press and welcome XXXX operating for call. call current of operating webcast. CEO, of within joining Atul period. Andrew X-K quarter our conference of Cambium for copy Networks President release no on income. A The revisions Thank in joining accessible prepared results financial release the had those Jules. the our the financial and a here to will referenced to has today remarks are investor prior you Form conform at investor call. and the

obligation to results the the revise presentation, It as materially. after Form in or Except result in as during encourage listeners performance. current As to filing policy these this Harbor or remarks, of of today’s or actual XX-K. required by undertake in in including our included statements factors conform law, update reiterate differ whether new any to does Safe those to recent forward-looking and our assumptions. to recent and otherwise. These SEC press forecasts, make any to most Remarks We expectations, the could outlook Financial Cambium’s of changes will Cambium results Call Results Networks statements the Cambium any review included date reason our list a outlook. not to actual developments, for contain uncertainties full Networks information, Conference financial forward-looking and made results, about a not cause statements statements most today’s are reminder, on expectations company’s Prepared statement expected Q&A, We based financial QX’XX and risk release is Risks future

We the is non-GAAP that today’s of announcing non-GAAP will numbers GAAP sequential also reference and financial non-GAAP today’s investor measures noted. our page financial be of included release and specifically both can appendix otherwise the A results. where comparisons in year-over-year our on to which to website and results found reconciliation GAAP reference press except measures note and release all press in

recap agenda. a & first our and to financial the outlook Atul provide quarter Networks the Cambium quarter key Bhatnagar, year Networks financial XXXX. of quarter highlights the and results for Bronstein, CFO, for full Turning the CEO, President the first will operational XXXX the for second Andrew provide and XXXX will Cambium present

followed Our by Q&A will be prepared remarks session. a

now to I’d turn the over to call Atul like

Atul Bhatnagar

business, our first you, XXXX, which product by year-over-year year-over-year. Enterprise largest XX% primarily quarter Thank grew of fueled the our line, Peter. XXX% grew revenues In

remained the to team's very testament a products, focus and competitive the differentiation EBITDA, our which guidance, margin, our strong controlling profitability our gross is exceeded on Our of end both costs. and of top and laser

cost in differentiated to invest and of the market take We as structure, profitability as of us portfolio a products products advantage operating broad the have built with well providing an new efficient trends

outlook mid-point Cambium’s financial $XX of $XX XXXX slightly million results were during of our above call. quarter the revenues million announced of XXXX first the between to $XX.X QX

outlook, the of and the of $X.XX, the gross the of a above high-end margin Margins high-end outlook. also and profitability remained of strong, EPS with XX.X%, above

call, earnings large of (PTP) in defense by the releases solutions, our our affected anticipate the which we upcoming ship X revenues second fixed includes were cnWave quarter. to results XXXX. product a including (PMP) XG our ePMP with timing the second Within which discussed expect Point-to-Multi-Point products, - innovative XXGHz Point-to-Point now Our last deal products, GHz in new in cnWave PMP the advancements XXXX half accelerating approval final we XXGHz products, of of our and during

will Further, from late which Fiber by network discuss product, new to this more a detail later in we glass. in Fiber in expect single enabling call. exciting cnMaestro QX release pane - software, convergence Cambium our powered Fiber network of our is I Cambium

across Looking our at revenues lines. product

increased for year-over-year, by enterprise Our as Wi-Fi XXX% supply demand revenues and increased by was strong X solutions. and growth our grew driven and sequentially, XX% XE

decreased revenues sequentially, improving by PTP XX% while year-over-year. XX% Our

engaged continue during global are in shipments of an of record XXXX defense defense We to increasing number expect programs we as (POR). strong

X is our which current sequentially, service gigabit XX% expected, of drive revenues year. PMP second lower PMP as are As from growth the our generation the revenue and quarter-over-quarter, GHz business FCC’s the XXX moving upon expected including year-over-year, of by decreased approval, during providers products to new XX% technologies to the half PMP

XX GHz in GHz calendar GHz increase millimeter for second half XXXX the both PMP products revenues solutions, XXXv and XX X an from GHz and and ePMP product expect the of and during X wave lines We new new

developments.In PTP and service to the our selected capacity, win formal superior selected of reliability. GHz RDOF America, a Looking broadband with new Midwest had deployment, approval. wins deployment. in some meet XXX additional were provider ePMP and North ahead We for we requirements of for at next-generation the X Nextlink ease notable FCC for customer an product product A

and simple value will education enterprise superior end-to-end do which win solution; Cambium management, selected were mid-Atlantic Wi-Fi for school This well to at we be We a continue our and deployment, of included the an proposition. a and medical switching. vertical ease with in economic

across deal range region Cambium for renewable a In plants network displaced with at a switching this Network strong Europe, solar a of provides the and Europe, with won with ability East, that wind PTP, the and (EMEA) solutions our portfolio single a the including manage - energy pane win entire the Italy, ePMP, due ERG, Africa in compatibility and and products competitor glass. Middle Cambium ONE of outdoor network, connectivity to with we to a company across of our solutions. We Wi-Fi,

England, service one Voneus to rural lives Perth, the NaaS In (APAC) we deal the service increasing of the deal offering software. in connectivity to won more Pentanet. with rate. is at users to the its Australia to for service cnWave enhance internet a deal GHz urban and order landed dollars. Broadband, for increase rural homes connect with providers the largest In rolling communities. and total we cnMaestro a Network-as-a-Service region, The high-bandwidth includes in a XX This and in (NaaS) $X will broadband Asia Pacific ability GHz in our Pentanet’s country, capacity, The out XG cnWave™ amounts Fixed our approximately sizeable XG region data of million X multi-year XX add higher cloud

Cambium wireless May. connectivity Southeast significant in This Chinese will is Cambium also provide two for displaced competitors. Asian win the as XXXX Games

of their the company, Caribbean and Latin unlicensed communications, America region, selected offices upgrade capacity. using newest increase generation and in and & our state-owned voice regional products And (OTC:CALA) to data technology to to bandwidth gas PTP large operations Pemex, Cambium’s field Mexico’s oil

enforcement, Act-compliance Enterprise and XE civil, market. agencies, first national quarterly and Trade our sizeable Cambium developments governments sell market. (TAA), available defense including and for Wi-Fi to Wi-Fi U.S. announced the and both will This security introductions solution law time since the product upcoming tri-band received now be to In update. and Agreement X previous defense Cambium can national market, the our solutions Turning government is outdoor high-performance the

new operating to both reach. speeds providers fixed markets. improvements or and out to Our infrastructure the innovative can to Within XX% fixed wireless existing PMP subscriber network with XXX Cambium Mbps customers make software it to their enterprise that services business currently providers capacity can reach options announced latency continues periods. service new to boost customers Mbps antenna XXX peak ability per broadband our latest who XXX of The throughput wireless replacing customers equipment. equipment range Also, to using products without easy new services offer expand to more previously portfolio, increase were reduce over our by for offer and increase during service and

access service can performance With a and these software with upgrade. providers recent in subscriber points boosting by maximize modules existing investment their improvements,

calls next with of FCC of later to XXX ever a workhorse the platform, Fiber, glass our approval from new the first have (AFC) summer. features late Cambium MU-MIMO, This have The solution delivery the of forward-compatible PMP the product a released with globally, backward fiber The pane between software single spoken the this will networks be enabling earnings at gigabit FCC rates XXXX, is of test Automated Cambium’s ePMP the past solution, length the During we GHz edge about Frequency this with to process, now to houses Cambium’s thousands new PMP network. XXX summer the of data next The be X on platform XXXv convergence a and engaged the new transformational will with X.X single and significant launch of a generation generation by expected PMP we products used management. in Coordination named next summer operates line function Cambium future-proof X.XX Gigabits product in as a PMP GHz of offering of step capacity. and is radio, offering our XXXv, performance. defined XXX product product network X.XXX with and

within Network via use. service Optical technology wireless for our and XX channels. for for outdoor the to Cambium fiber Interest complete Port Wi-Fi and wireless a Fiber wireless enabling PON are our customer service and providers is current - our most cnMaestro both fixed converged pane of our fiber management. ease OLT installed offers X, network of OLT The extremely market Passive a single solution. X convergence product solutions high addressing glass. to a from solutions to procurement both (PON) single managed enable in with offer The XGS enterprises pane initial combo with glass advanced ONTs routers, the solutions end-to-end base and and from indoor go The providers target all of also broadband of Port

total cnMaestro management XXX,XXX, Cloud cloud under was increase up QX’XX, an devices Looking year-over-year. at XX% and over in XXXX of our over from QX software X% -

year-over-year. which approximately revenue XX% a QX over of Turning sequentially, and Managed partners X,XXX by growth presence March, California XXX office approximately (MSP) executive to over to an facilitate year-over-year, net and In partners increase channel during our our our at San new sequentially event Jose, channel Channel. we new net In expanded we Provider channel well-attended adding Service represents X% XXXX. held future XXXX,

continue new particularly the customers for world, our to expand around Enterprise reach business. We our into

financial XXXX. year of full XXXX now over for results will and and the outlook our QX’XX review Andrew to I call a for QX turn

Andrew Bronstein

reported X% Cambium quarter-over-quarter for Atul. of increased million XX% revenues Thanks by $XX.X decreased Revenues and year-over-year. XXXX. by QX

a offset and QX’XX, to shortages in supply lower PTP severe by sequential The a impacted of China On was by basis revenue due PMP lockdown revenues the by for and result were revenues, XXXX QX partially lower reminder, revenues growth were lower Enterprise continued in revenues. million. a As COVID. primarily $X.X

partially by to due of revenues PMP gigabit Revenues of increased year-over-year million ramp less demand of transitions providers, to $XX.X technologies. primarily offset ahead $XX.X to the by lower due product service new improved million supply, from

seen of PMP our reflective is in inventory have channel We decline the GHz anticipating the which quarter, new product. X channel first

to margin. our Moving gross

PTP of points completed the our higher of Our our QX of and and greater one XXX year-over-year non-GAAP initial margins The in in XXXX. best margin mix basis as gross well approximately in to the November anticipated increasing products, margin better was XX.X% quarterly by as price history, of non-GAAP of and increase higher result margin of the than was XXXX. gross increase enterprise gross the volumes impact compared a

increased XXXX non-GAAP approximately products, On efficiencies, a from and mix of sequential basis, compared higher the impact in to The was quarter-over-quarter margin margin the of points initial margin an Enterprise QX XXXX basis higher gross QX by our November result XXX XXXX. increase. our non-GAAP price improved improved gross

$X.X $XX.X an to million our XXXX sequentially. and improved and QX dollars non-GAAP of to decreased the and higher due profit gross PTP mix year products, increased by compared of million In by enterprise volumes prior $XX.X million

a an basis. annual non-GAAP to target consistent on longer-term XX% XX% goal gross Our remains of margin

XX.X% Non-GAAP when and QX increasing year to compared to was inflation. compared QX or operating increase due in R&D prior revenues. in expenses, million, due higher to $X.X primarily including to XXXX increased The XXXX, period in wages amortization, headcount and operating by the stood million $XX.X of at expenses

staffing new during X, million When in increase compared increased expenses quarter-over-quarter non-GAAP due QX inflationary $X.X QX XXXX, costs to a approximately an operating increase on in to higher products, compensation. expenses is as work development The XXXX, increases R&D and to increase XXXX. for by as in effective salary due variable operating January well

recently with cost our control our enacted only to We including and positions hiring operating will open now profitability. our - a hire strong protect critical control - further for freeze maintain costs to discipline, to continue

QX high-end income $X.XX QX $X.X for per Our or during million, compared XXXX, XX.X% $X.XX $X.XX revenues per $X.XX non-GAAP net XX.X%, share the operating Non-GAAP share, of net to share per our to QX margin per XXXX, and up XXXX down of outlook XXXX. X.X% between share, $XXX,XXX, XXXX. for for diluted from previous of million, and in income of QX $X.XX $XX.X from or and diluted during QX or was XXXX diluted was non-GAAP diluted QX above

the while to as year prior due higher results period and lower was higher of the was lower and primarily income a dollars, gross primarily quarter’s net revenues operating The revenues non-GAAP to compared higher expenses. profit expected, result income to net prior compared

QX $X.X QX XXXX million and to XX.X% or to of X.X% QX million XXXX. revenues million was compared for $XX.X XX.X% compared of EBITDA of for XXXX, revenues or $XX.X revenues, Adjusted for or

model remain our target long-term of consistently committed XX% operating We EBITDA revenues. of solid. to Our XX% driving Adjusted our to remains to

to provided in Now of and activities XXXX by activities XXXX. million of QX flow. cash $X.X XXXX, activities compares was for QX QX operating for operating million operating Cash moving used to $X.X used $XX.X for in million and cash cash

availability defense lower XXXX lead cash support and for and new allow for and and to During the increase expected materials greater to product used our in QX times customers. to products inventories increase was shipments,

In timing increased mainly the revenues. of receivable result addition, of a accounts as

from cash While we shipments, introductions, and as as full-year in QX during product continue as generation second year. XXXX the the XXXX orders expect inventories to of the ramp in of improved the increase for products and improve we do up increasing new revenues we expect we half new linearity

QX Cash the receivable. decrease driven reflects decrease capital of to $X.X Turning in working sequential Sheet. from Balance XXXX, accounts inventory million and a primarily as higher of cash million in $XX.X totaled March XX, The XXXX. by changes

QX million As the a undrawn. million XXXX. a America higher reduce components reminder, and Bank new in PTP revolver cash inventories of QX higher goods have of $XX.X availability increase for by $XX.X with Inventories XXXX in in Defense half higher timing balance, XXXX ramp the of million in shipments Net addition and to second finished were of million the products our of because increased in inventories which $XX.X times, for strong an from we sequentially remains to year-over-year. lead product the $XX were of expected calendar business, customer and order year of introductions by during

a outlook. first Summary EPS were high-end gross and EBITDA were quarter margin Adjusted near-record strong. In We our above of had Cambium’s results the both and

customers. supply We continue shorter the chain in to in environment improvement times see for lead resulting

to - to many inventory While - were has managing the XX reduced our tripled as during XXXX. to lead in XXmonths new supply and times We inventory from months to to product components challenging to was times almost plan operations short full-year of levels. components to cash investment our especially invest expect in the and supply and continue product pre-COVID related during introductions in cash increase COVID generate balances lead

Revenues our pending sluggish outlook visibility QX legal Moving XX% transactions, possible potential down X% defense $XX economies - due to other as remains Year business strong. to QX slightly matters, the to as Quarter growth year-over-year, does our be and Outlook. from today, any $XX is XXXX not global future while XXXX million, representing of Cambium of to XXXX financial transactions. expected to acquisitions, our follows: between approximately Networks Second financial the Considering impact Full include financial Financial outlook or current and of

Interest and to income Non-GAAP gross share per million XX.X%. expenses to between operating $X.X approximately between million. $X.X Non-GAAP expense, to margin $XX.X between diluted $XX.X income net Non-GAAP and $X.XX income or net operating $XXX,XXX, million and non-GAAP net million of between XX.X% to between $X.X $X.XX million $XX.X

EBITDA and XX.X%. Adjusted adjusted between million; X.X% of EBITDA $X.X to $XX.X to margin between

shares rate expect average a to of and income We XX.X weighted diluted effective non-GAAP approximately tax XX.X% outstanding. million XX% approximately

are $XXX,XXX, million Cash cash expected of expect be debt: CapEx to and million. We requirements $X.X as Paydown $XXX,XXX, approximately interest: follows: of $X.X to

Outlook For expect year we follows: to Financial be full XXXX it the as

million margin income to $XXX to between margin XX.X%. diluted Revenues or XX% $XXX net to approximately Non-GAAP between XX.X%. adjusted between of $XX.X representing million, to to gross per between Non-GAAP $XX EBITDA and million XX%. income approximately share of million $X.XX XX.X% net $X.XX

products. connection expected in and labs software are capital approximately be million in an mainly $XX R&D and our year, to the by new with costs expenditures equipment, For $XX to expansion million, driven

our Overall, proactively costs the cost gross have in EPS steps with incremental except current while hiring guidance positions, are we including controls, our global we reflect risks the improving as economy, being critical to to the slightly, margin. conservative guidance reduce through a more revenue freeze increased taken for and

back turn Atul remarks. I to closing will now for the some call

Atul Bhatnagar

is new of growth. the Cambium phase cusp of at a

products the GHz have of PMP affordable GHz approval GHz getting including during FCC X accelerate made second to XX of and solutions will XX closer half our of growth in XG business are continuous XXXX. We new which Fixed, progress wireless of fixed development cnWave the we the PMP cnWave,

We our X offering - remains products network during and new are QX first Wi-Fi Enterprise exciting XE. convergence, strong, our and ever fiber business led adding by

and Our strong PTP and for defense expect to have QX and we diversify business based XXXX globally, growth in continues robust growth defense.

converged Cambium of by fabric resonating of total networks. broadband lower an Network is world cost ownership becoming scalability ONE customers ease integrated well high-performance with of of deployment, as differentiated a and highly deploys vision providing networks, reality, the converged, Our next-generation with the

and our strong. focused results sheet based products, judiciously expect portfolio our invest our will We profitability, with our managing remains balance a our edge, on gross continuing We technological benefit remain costs, future delivering of differentiation innovative in on half maintain technical and XXXX second of products increased of improving scale operations, diverse to which to margin the delivered results. financial a outstanding and excellent during our strong quarter operating

show to like partners, I’d a remarks. customers and Finally, our concludes prepared and employees, forward This appreciation our for my look XXXX. to prosperous

to the I begin over Q&A the Jules call that, and with session. to would So, like the turn

Operator

of Instructions] you. James. comes the Thank Leopold [Operator question Raymond first line of from Our Simon

open. Your now is line

Simon Leopold

about of of were the Thank a how of Is Great. guess taking this I’m other or think year the much you know you’ve the that bit looking where this I glad the something way should got timing your help us words in opportunity, on you’ve is more announced of that they then I I’m this understand availability the just sense suggested sales contribute into to this very for fiber questions. that general products. upcoming hear revenue, better little follow the this is when for model. And a I’ve just XXXX would puts a in funnel. up. we

Atul Bhatnagar

business. customers us not wow, good us and give story you rest said to of last And compare When customers the again about our back excellent Wi-Fi customers When did X, I’m bit said to years. million they and went you, We X is PMP, you Wi-Fi us ROI. give what the know did happened went we years you [Ph] a in our we of little guys thank we you Wi X our two in Wi-Fi. question. years last are back Simon, going lessons. $XXX why don’t a giving to PTP guys the

TCO. lower have You

have quality, program. of embarked that’s And pane you the won’t both wireless excellent America, is give customers service and current our fiber. offer they on and of us North particularly many a why You single glass

X management provider, pane this of So differentiation internet We with deployments. single incorporating start going, our your simplicity, the service ownership already Simon wireless and quarter glass service is answer lower providers. feedback called cost of have and to we’re beta total early we’ll specifically question mid-size

we to year usually shift be good testing receiving as And probably momentum it quarter all I build quarter. Maybe very very Andrew the you QX are want later we we maybe beta can this do think is start still anything? later say in the revenue reception overlay. as ramped in again, up that terms and to of you in it to if the and for time but and revenue the to will But QX, takes

Andrew Bronstein

included incorporated Yes that in product PMP our and into will and our revenue line be numbers.

Simon Leopold

going just follow government if I to – was up, And that. you update Great. I show what us where seeing just a to appreciate just it. give going as programs were there? you’re the you’re could ask on then you and quick from thinking funded an

Atul Bhatnagar

Sure.

So we half. in are think expect seeing quarters our as RDOF three that I the is two, and what increase last point the said point for funding product for second we multi to to we

in the are this to and network. an X-gigahertz that that, We the later will already providers FCC our is all that already current the engaged to beginning And summer product, approvals their see assumption deploying get have done. progressive are service advantage They get houses.

We are working with speak. we them as

significant So initiative initiative is going of latitude get will XX second which how and state get. Biden will terms guess. overall, RDOFs that And million to deploy each start in my [Ph] they $XXX state each minimum beginning half current is BEAD

XX the in So and we RDOF to second maintained starting I think last in we are going have as start BEAT calls. half the seeing XX

Simon Leopold

taking the Thank questions. you for

Atul Bhatnagar

Simon. Thanks

Operator

question. Thank Please next our standby for you.

from comes question of Scott Partners. of Capital ROTH Searle line next Our the

Your line is now open.

Scott Searle

my the of Hey year. the that outlook Thanks to Maybe on taking the front. questions. Nice good afternoon. strong two into see backhalf a for

one goes assuming that. $XX and there that us revenues. bit X looks wondering us front of on I right bit some still like think year? go terms for some year contribution, approval, you timeline a guidance like implies in third that some if gig, fourth and at million the of the factoring of layer little second help into starting uptake a at for provide midpoint possibly the a in the it and year, the this I’m as the I gigahertz kind the but your of come in RDOF pretty idea sounds to now of would Looking second more half that down AFC better, Certainly some quarter in quarter into you little for could was It second wondering in is quantification midpoint XX are understand the quarter. what you are you range the average what significant process ould and what thought the give half you this or well think so if

Atul Bhatnagar

Thanks Sure. Scott, excellent question.

So answer that. let me

We engaged. who engaged partners with test as as with as They I now ourselves. building houses the are pretty also our are are FCC deal said well And test cases.

We are working of with timeline and come. a milestones them. going My There’s that. is have around lead seen happening, when sense August, is we that to September already somewhere the approvals will the some to we’re

So think. what I that’s timing wise

and what So revenue anticipate get we providers leg the service shipment, X are onwards. QX already trying QX to for but progressive actually up, is gigahertz

in you So half second absolutely right. for are revenue

products This figure sources We is well. expect overnight XX mostly we for XX not we’ll come months. good out overlay are us they out. last product to new we key X taken or to prepared has introductions months. revenue do X do it very XX to when And remember It this, that

time to platforms reengineer used necessary. we So the have really the

wave. one is X or very X gigahertz I millimeter gigahertz pent X incremental up first gigahertz reason say the transition XX and absolutely unlike So gigahertz which overlay is well XX is a the demand to gigahertz that will

know operators deal to Network it. with how

the key So that's revenue first overlay.

we solution. and revenue complete feedback glass pane the diagnostics of the single in overlay will because key fiber second are will very easy good second getting of amount simplicity be of The half some

and one another getting QX that. and into is comment make more is overlay will you and talk security gigahertz as CCTV QX millimeter that's in So see wave the in fact good go we'll traction about we XX I'll markets

XXX and and of ship we is them end many quarter X canopy X which also gigahertz of the XX is which X gigahertz will getting XX then supporting have will have QX. every know line you so overlay there XX XX traction POCs So into is turned line good and XXXV them which is production and announce X that XX and many we is will good there of turn

all So PMP. in XX you QX. been us NPI QX in have come last planning we're helps then second see but and as have RDOF in revenue will more half are probably which little These beginning the to months and for RDOF I said we

point the RDOF first Biden always early. Remember phase so starting money in year to XX kicks of will and then and of in get you initiative know point get second was we access half RDOF

So gives you that a hopefully flavor.

Scott Searle

quarters Thanks. seven know can still ago. you helpful. out levels million very could on number you well the plus peak point-to-multipoint? the certainly quarters look revenue attainable I probably has but if couple point-to-point to at that performed quarters or I get the XX below back next perfect and an lastly on about point-to-multipoint That's if has follow-up And fire six eight point-to-multipoint percent is for know How of still quickly is look that been the enterprise for last over you come we XX to revenue in

Atul Bhatnagar

sense that probably by that. These or platforms frame, then to business full is accelerate take what I speed. over PMP combined all four second and of these we primary believe, moving XX, Cambium believe see you really a it'll your is you I we half But high market half, Yes drives quality or ownership, us for that's lower our and gigahertz, three My total access, X very PMPXXXV, so access that fiber. cost of quarters things access -- affordable get that. throttle. think But I to second as XX whether the overlay full need can will time in believe And what about time that XX-ish will it's running see these in business.

Andrew Bronstein

that we well. quarter, year-over-year in second Scott, increases said in And third and the second last that in we're that going do as would the we that quarter expect add do anticipate, then a in just sequential in product of half line. to this fourth as Yes, year, both decline I to we've see and PMP, the quarter

Scott Searle

Thank you. Great.

Andrew Bronstein

Thanks, Scott.

Operator

Thank you. our next Please stand by for question.

Our next of of question Samik & Chase. the comes JPMorgan Chatterjee line from

now Your is open. line

Samik Chatterjee

and about we there into you to what's guess of XX Hi. line. you'll visibly about long-term the half get second on XX into Is closer terms year question. to products, new be of look the the top my And full low half XXXX, for growth to growth That's the that sort basis. taking what on overlays second to Yes, up a for and you to that single-digit, really of more to build of that sort back sort have we It's that Atul hi. hearing I sort half XX also of I at of interesting is of question the product start year cycles is rate just trying it from last ramp to double-digit see where into can long-term the I'm way that of the of ramping the follow exiting right guide you second more response Thank you're on your if thinking high growth this year your rates still this year-over-year year, into half half the XX? at a the maybe sort closer come target second momentum. of of because in rates this

to that. below be seems

Atul Bhatnagar

Yes.

it'll just really half, really say is frame. giving for guided this have probably time in XX a second Samik, that So, be but in the way we flavor that some not I'm I would ways

or XX equation, lower of differentiation, with high providers. clarify will Now, we diversity by service things. can see ownership the think the that we I of some early cost But of total sight second a economic of half line the XX, products, for accomplish of as

values think will frame, very well time that very, be In I those received.

we positioned the positioned as again, very proper bit, as we've built, guide little direction. we the overall, XX, we COVID, after a little done, innovations back. But where goes differentiation So, we'll think, I good a economy have Cambium feel the macro in turns are where is come we the

gigabit I think customers look for the network.

have We that us convergence are the dollars go is. customers company. that go are we're We'll showing asking the And what convergence. the play, also to where business go with That's offer We'll fantastic where and we we will done. go the are. where

Samik Chatterjee

the that color for or the prepared share? downsizing the deals No, your in Any of? a terms backdrop. in the can more customers responding quick what Is I guide in know because of you in are it mentioned of thank to just you more you macro seeing remarks cancellations? that. macro you nature follow-up. Like, XQ conservatism And of

you're deal that I were color But pushed more know QX around Thank in partners one you what that's QX point of have this was out there you. and flavor to inventory seeing now time? expecting. at you the on channel channel any that mentioned from your

Andrew Bronstein

Yes, that. there. answer I'll of couple A items

And gets it mentioned, We QX a So to deal thing we're will part the from part over you of, out so the said that defense wasn't a shipped last QX first it or QX. deal we're of, control that out. was on when don't quarter be whole either have pushed QX. had really that complete we

customers their quarter that of orders because QX shipment expect our orders QX and and costs will are throughout think has seen pick we a seen. six expect of caused the we QX environment, that North in the with of banking of bit inflationary that at our some but on we and our cover business in based with look we expectations in that U.S. that, So defense that a slowdown do it when offset be know do around be but our QX, of terms large will and the conservative America, be America, dollar be will sector with strengthening our have But will but slowdown we've price our as those in over talking especially in past the in by of you weeks all see out when issues we positive we to U.S. macro that QX.So lower look of as which how I outside business expect the year, QX the outside playing especially And shipment earlier from especially quite I mentioned increase a QX in outside that's in going somewhat the terms to we the what by some don't the out. way, you strong it of second along being that we enterprise the of expectation. between the last more the where, to terms strong were North nearly year you up in did revenues

Atul Bhatnagar

being some all post-COVID I add point environment Yes is the adjusted Andrew right in one this if customers be can channel is that's it's maybe inventories ways by absorbed. more it'll being

it'll we're normalcy you QX as for about was app broadband So little before and in I secular That's starting pretty and globally beyond. it know demand QX tech gigabit more become at why COVID. being trends are a think demand the we QX, conservative yes those look and as

EPS profitability because slightly in viewpoint on them side. taking a stayed we've cost numbers increased from an from say for with action of viewpoint fact and the year will our the I But

Samik Chatterjee

my questions. Thanks Thank for you. taking

Atul Bhatnagar

Thanks Sami.

Operator

for our by question. stand Please next

question line Jefferies Our of the of LLC. from Notter George comes next

is line Your now open.

Unidentified Analyst

question. this is for the everyone on [Ph] Hey for taking George. Blake Thanks

know then where channel like levels right being where but sounds terms right constraints at I'm declined some to there's they of digestion times down think of quarter about it pre-COVID inventory way And come were curious QX times in lead back the I and and QX. mentioned Is in lead that? near you the to that now? peak more So the that are in

Atul Bhatnagar

so it's inventory channel came channel total terms down up. fact and channel went of enterprise inventory in Yes inventory that not PMP inventory channel in

constraints in peak the regard were back and of What and we was pre-COVID where now? why the absorb to we where take QX. that they reasons are that's a believe why down going near the the time to in of down question? part one your of at it's they With numbers second times inventory of brought bit terms some lead revenues So being to levels that and

Atul Bhatnagar

case. as quarter whereas the that COVID as filled little so during we're same within to orders ago it to and nine months was the placed really Yes not able six and have now

certainly to customers So they're pre-COVID say what inventory now but our more that I have orders in we truly our a the know know satisfy on closer so doing appreciate. real-time and to were now of which you basis customers of placing be won't terms demand that to able it they

in than components similar we're higher been with some are dealing higher us of in constraints still demand. our position in they but still some inventories with were that on which not but and some two competitors are we've Some a market of able dealing supply times through some we lead pre-COVID satisfy of or three helped that and to times believe terms are we're the certainly that which has

Unidentified Analyst

type or be That's then of also brownfield Will what helpful you're deployments? expecting and deployments fiber curious greenfield more from Thank weighted you. customers you your for product? towards

Atul Bhatnagar

Very very focused very good on Cambium question. mid-tier. is

large see after providers go service not will You us worldwide.

market. fish have the of in plenty fry to we think mid-tier I

to and lot some us of governments there worldwide going city so ownership thousands total fiber we're them. opportunity of pane differentiation. our would existing who base and already and I most They glass simplicity, service providers well in are also have go going single concentrate Cambium We for network enterprises Maestro hybrid are know kept very of have state of use them of We're management. to lot give say and key our we local so why very customer governments, glass, after and single we have a them wireless as going that's on of cost pane to of

cost. good want predictive generative I and artificial reducing AI very to make intelligence which point for the more of diagonostics one advent is with support And particularly is

captured tools right new from doing pane will us see of You with to time glass data generative of for it the that. Cambium these a also single is use be and AI

and it the all are data, be predictive of customer glass to we done. then we So of easier to capturing get makes which have support those data diagonostics single pane

the to think but Thanks come is things set. I all Blake. those in future, stage are

Operator

our Instructions] JMP question. Our comes Please Suppiger question line standby next Erik [Operator of from of next for Securities. the

Your line is now open.

Erik Suppiger

taking for the Yes thanks question.

that clarify, that QX. the just to to you decline PMP correct? off, you're say expecting First in did Is

Atul Bhatnagar

correct. That's

Erik Suppiger

Is of you inventory displacing you couple Who are target range? level against? in the that a business? of the Or secondly, at amount has where fair Okay. management? when increased that in competing Is And are Inventory inventory wanted? who terms in the quarters. your you for you last are fiber

Atul Bhatnagar

expect So, on question, inventory I increase. inventory do will the

to in expect it many And the the of months we increase QX. through in about products at them So, earlier bit rest components we our out in target that then being new year. to new to decline will you And introductions, the XX begin product level is that advance spoke to of time slightly these manufacture up XX or as able inventory release. I ramp to even a this have for purchase of would

that inventory time, So, of of up this and happens over period goes over a period time. that

last a on that, PMP, to expect that's I way, the by back I we with decline quarter the the going So, consistent point as PMP in mentioned, said revenues just do what to clarify

in On a PMP on QX, we And in however, QX. a increase a to that's in expect QX. see basis in basis, sequential revenues do quarter-over-quarter. small sequential

Erik Suppiger

fiber to then of And terms in take who's that the going question, one?

Atul Bhatnagar

question. me the Let on give more color fiber

mid-size the also think customers our are we as wireless. service of going they providers I said, set are enterprises, first and on after, I customers

also them use of Wi-Fi. Some our

and for So, of how greenfield, they provide we'll to better that's of know use, also customers ease a are going be set Many because of diagnostics, ease them targeted Cambium, economics. us. current

months. I who will would mid-tier think target I are I market. say will of first yes, And answer know clearly six And this displacing. be question we in a lot we would probably set more

early of First Right think I we what But that. need our we journey. about excited to are now, it's displace, offering. then part are claim we the

Erik Suppiger

Was quick a So, can factor weather provider in ask I service business March your in one one? quarter?

Atul Bhatnagar

so. I think think so. No, don't I don't No,

Erik Suppiger

you. very Thank Okay, good.

Atul Bhatnagar

Yes. Thank you.

Operator

Please stand the question. for next by

Our Paul of next the question William comes K. of line from Essi Woodruff.

now open. line is Your

Paul Essi

what guidance? and economy let's year kind full the your also quarter words, it question. up on global in quarter your Thank mind, you in had the other first what for the if and wanted of say, revenue a was where quantification then taking up the been to I my wanted impact. would impact on quantify follow year? impact. to was, have the follow you Can I global of In the last on second what it

Atul Bhatnagar

strengthening sell but so the was of the down that's for two January do our occurred really sluggishness you saw pretty from of the and say, certainly year, QX. by was those dollars, hard CALA that other it I significantly the that say did costs certainly because the are the of but that our of up that I X in far geos, combined the this regions revenue U.S. to hand, strengthening pretty to throughout purposes will dollar, going last smallest sourced inflationary some Yes, U.S. that. and But the we increase dollars North price that increase as the added know, think the we for in But on outside covered U.S. America that and with all significantly APAC up, chip year we

Paul Essi

Okay. A real were quick answered, a question. but questions lot of my

up, be to having Can I margins seem much much margins how heading give dissecting of has how an gross with of and the impacted higher for throughout next and you out PTP towards government impact us on hardware, a and Your margin. the business higher is enterprise enterprise understand software the mix driving and their that it year? the flavor your gross the

Atul Bhatnagar

percent still certainly when huge percent at helped, and nine look mean, that as software of services a past total X range, but six we've uplift it's from months. software in to I not look to what software a you X Yes. seen the at revenue, combined, you in recurring when

it's the fairly the a total, remained So same. percentage as of

X periods margin lower prior in it, over was to X software that think that, lesser when And services in probably an gross of can – and before it than I that certainly that or result call we're in so uplift. the impact. that will the If resulted you uplift XX software, go back percent next, to a months expecting

Paul Essi

Okay. Thank you.

Andrew Bronstein

just add Maybe can more if I one Andrew's. point to

I direction. in margin, complete delighting confident customers new generate are climate, making deliver That's we good to quite put differentiation, you'll And good that will what sure you not we're Andrew's new portfolio comments, defense from gross in bit we our absolutely where result can differentiation year. differentiation, a to had and with introductions. now that bit gross hard And Every we this offer price, right think innovation. to equally product – what NPI, our making software, working is what in sure a designing, see innovation, that go the we a easy solution. that we of in was helps are and the more are that margin do more but gross see, because that's quite important margins product this

Paul Essi

you. Very Thank good.

Andrew Bronstein

Thanks, Paul.

Operator

time, Thank to I Schumann would remarks. for you. this back like closing to it turn Paul At

Peter Schuman

Thanks, Jules.

relations Cambium Emerging XX, at May we'll at present meeting investors Oppenheimer and Conference, JPMorgan Growth XXrd concludes the XXX-XXX-XXXX be Thank joining to our TMT will QX, Conference that with and meantime, Thursday, welcome at Boston. today's In for Networks in with any contact and department During questions the investor you're always that on us, in May arise. the XXth, investors meet on person virtually call. you

Operator

conference. in Thank for today's participation your you

You may now disconnect.

Peter Schuman	Vice President, Investor & Industry Analyst Relations
Atul Bhatnagar	President and Chief Executive Officer
Andrew Bronstein	Chief Financial Officer
Simon Leopold	Raymond James
Scott Searle	ROTH Capital Partners
Samik Chatterjee	JPMorgan & Chase
George Notter	Jefferies LLC
Erik Suppiger	JMP Securities
Paul Essi	William K. Woodruff

Cambium Networks (CMBM) 8 May 232023 Q1 Earnings call transcript