Q1 2020 Earnings Call
Thank you for your patient.
[music].
Good afternoon, My name is <unk> and I'll be your conference operator today.
At this time I would like to welcome everyone to the Cambium networks first quarter 2020 financial results <unk>.
Online so I've been placed on me to prevent any background noise.
After the speakers were mark there'll be a question and answer session.
Two extra question. Please fresh start one of your telephone.
They limit yourself to one question anyone follow up question.
Yeah.
Mr. Peter shooting you director of Investor in industry analysts relation you may begin <unk>. Thank you can you show welcome and thank you for joining us today for Cambium networks first quarter 2020 financial results conference call and welcome to all those joining by webcast <unk>.
No, but tool Bhatnagar, our president of C.E.O., and Stephen Connie R.C.F.O.'s or here for today's call. The financial results press release and see if a commentary reference on this call or accessible on the investor page or website in the press release has been submitted on form eight k. with the S.P.C.
Today's prepared remarks will also be available on our best or page at the conclusion of this call as a writer today's remarks, including those major I.Q. and I will contain forward looking statements about the company's outlook in expected performance.
These statements are based on current expectations forecast and assumptions rescind uncertainties could cause actual results to care for material.
Except Pittsburgh required by law can be networks does not undertake any obligation to update or revise any forward looking statements for any reason after the date of this presentation, whether result of new information future developments to conform. These statements to actual results were making changes and can't be empty expectations or otherwise it.
B.M. networks policy not to reiterate our financial outlook ruined karcz listeners to review the full list of risk factors include it in a safe Harbor statement in today's financial results press release.
We also reference both <unk> financial measures and specifically note that all sequential and year over year comparisons reference non gap numbers, except where otherwise noted reconciliation of now I got measures to get measures is included the appendix to today's financial results press release, which can be found on the investor page of our website and it today.
<unk> announcing our results.
According to the agenda cambium networks present, C.E.O. <unk> provide the key investment highlights for the quarter and Steven <unk> can be a network CFPO will provide a recap of the financial results for the first quarter 2020, and he will provider for natural outlook for the second quarter 2020 or prepared remarks will be followed by a cue.
Recession, I'd now like to turn the call over to a tool.
Thank you for you.
I hope all from listening to send their families are safe.
<unk> alright core value it can be them networks.
Most of what employees what remotely during the last one of the quarter.
Boys short for students and Fortitude and delivered outstanding results during the first quarter of 2020.
We're fortunate to have a significant part of our manufacturing.
Good in Mexico, and it's smaller portion located in the coastal region of China, which was minimally effective.
Even smaller amount of manufacturing located in China's interior.
We also entered the first quarter healthy inventories, which allowed us to serve our partners some customers in a timely manner with minimal disruption.
Period, where fixed wireless broadband is vital and essential infrastructure for people around the world.
Broadband infrastructure Novod lifeline for most communities.
Fix wireless broadband is a critically important networking fabric.
Thought local communities.
I'm proud of our employees around the world was beam work enabled us to meet customer commitments and several our communities in what has been a difficult period in refund world history.
Our customers, especially the majority dot dot in developing communities are working to keep up with increased demand on their networks.
<unk> every wireless service provider and telecom approved around the world is seeing the falling five dynamics.
All left foot traffic increases approximately 30% to 70%.
Driving the need to build out network capacity.
Peak netbook traffic has shifted from typical evening peaks you two video streaming to all the traffic New <unk>, you learning and working from home initiatives.
Significant calls for service package up great driving increase capacity to climate.
Calls for new residential services and or.
<unk> to enable new public indoor and outdoor life I locations and.
Broadband communications infrastructure projects are now if priority in a significant number of countries that on the word.
Turning to the results, so far plus quarter <unk>.
We achieved revenues of $60.4 million above the high end or <unk> outlook of between $56 million to $60 million.
Non gap P.B.S., a five cents also exceeded the high end up what outlook of <unk>.
I'm, particularly pleased with the strong execution loud and dark M.B.M. team during a period of unprecedented global uncertainty <unk>.
Easy those to flip the strength of our company.
The need for our products.
And the improve bookings <unk>, Oh far business during the first got into quarter.
<unk> for the company degrees, 11% Euro to you and 6% from Q. for 19.
The Euro warrior degrees in revenues are driven by lower demand 4.2, multi point B.M.P. products, which decrees 18%.
As a result of her technology transition with larger European customers, who can be next generation technologies.
Softer demand for defense related products, which impacted point to point P.P.P. 11 news, which decreased 33% you know what are you.
This was offset by increasing demand for enterprise solutions, which had near record revenues doing an outstanding <unk>, 6% <unk> and not a president 19 per cent of go to a company that.
On a sequential because fuck you wouldn't wouldn't be BMP group revenues group five person you two strength in North America, offset by softer EMEA, which was impacted by a technology transition uncovered 19, we started in February and <unk>.
We could be revenues decrees like 28 per cent sequentially and q. wouldn't wouldn't be as a result of a week or U.S. government defense programs.
But you want 20, we deliver near record revenues for <unk> enterprises life like solutions, which are flash from Q4, 90, you to better than anticipated demand for products I heard of the transition of new life like six solutions, which was good to live work during the second calendar quarter.
Looking at some notable customer been a new product development.
<unk> I'm pleased to report cambium that puts continue to have several high profile customer engagement.
North America, and the service provider sector watch communications rapidly growing operator in Ohio, specializing in cable T.V. and wireless Internet selected Cam B.S.B.M. before <unk> EM and lifelike for deployment of it as it then showed broadband network.
<unk> America foreign face to cast to award.
Oh, the life service provider selected R.P., two p. it wouldn't be fee for <unk>.
This will result in must be hundreds of devices delivered in twentytwenty wouldn't multiples of those volumes during the lifetime of the project.
Select a P.D.P. it wouldn't be fee.
<unk> performance and support.
<unk>, we have spoken about federal communications commissions newly released three gigahertz citizens broadband radio service C.B.R.S. spectrum.
And the first mover with this technology C.B.R.S. provides additional product differentiation and sticking this for our work horse P.M. before for products, which are backwards compatible.
C. B artist is not driving news feel so far P.M. before for products in North America.
I'm pleased to report as or the end of the first quarter. We have 7800 devices managed by Cambium network C.B.R.S.S. service.
I was up today's earning call we have over 19000 devices managed by a service.
If you're one oil and gas company color could can be S.B.M.P. for <unk> for deployment in C.B.R.S.
This has resulted in Bermuda basin and will continue throughout North American oil fields.
The BNP platform was collected you'd be superior spectral efficiency upbringing M.U. my more skeptical obese.
All in gas will continue to spend on automation and <unk> efficiency, he want to M.D. stuff for economic conditions.
Into Europe Middle Eastern Africa region M. here, we are seeing ongoing demand from a service provider customers as increase capacity to their networks and that new subscribers.
We had a significant number events, including service providers healthcare institutions from both public and private sector educational institutions and government agencies.
Across the service provider market in M.U.M.B.M.C. study demand for this technology as new service. So I just switched to can be on drugs when solutions, an existing service providers expanded 45 the networks.
If you strategic plan from you wouldn't include cambium slap ship being before for B.M. technology was selected by Skyk Telecom, It's service provider in Greece, the lure enterprise and consumer services nationwide.
Enterprise like quite during February would a phone you get fast and reliable coverage.
Palazzo Real Convention center.
Hosted the head of state meeting between Prime Minister <unk>, and French precedent <unk> <unk>.
<unk> collected the good the job done.
The M.L. team close numerous strategic opportunities supporting the healthcare and education vertical markets. During this challenging time.
These projects span, both public and private sectors and include.
You can national Health services, Joe's Cambium Swaddlers, the support temporary field hospitals being deployed in Glasgow <unk>.
The Ministry of Health, one of the largest countries in the European Union that selected Campbell's wireless technology to upgrade the wireless networks in 230 hospitals across the country.
Egypt, the National Health Ministry collected cambium deploying to its clinics and hospitals.
A major health care group in Abu Dhabi, We P.S. healthcare also selected cambium dog multiple healthcare facilities.
And the Ministry of Education.
I could erupt.
Selected cambium wireless technology to cover numerous rudel schools across that mix.
A pet region, we want a major deal for both indoor and outdoor enterprise lifelike, but if I start hotel in South Korea.
This when was the new customer using I was <unk> like like technology.
We'd displays one a far larger competitors, you took ambience quality reliability and advance getting support.
We also close the deal from India Common services center to enable outdoor wife I started my sister nearly couldn't be housed in Louisville religious.
We already deployed bite the newly pipe cousins alleges with a balanced common thing after it'd be cool wouldn't 19 logged on is different in India.
And Caribbean in Latin America, Carla It May just service provider in the region is migrating it countrywide network called business customers.
Wireless backhaul and why are they doing that for connecting using R.P.M.B. 450.
We also wonder second stage of use next booted out of his wife fight based access network to date, we have deployed to what 1500 <unk> at this point in rural areas of Mexico, Brazil barrel and Ecuador, that's part of that program.
Usenet network also utilize as Facebook expressed like play service and Cambium Netbooks is not one of the largest like five different providers for network operators utilizing Facebook expressed life I service.
Looking at new products launch since our previously quarter a previous quarterly updates.
Can be put to release the four so far new high performance Enterprise life I six products in June.
Our first new at this point of course, eight eight massive mimo technology, which up with four times, the database and Lord latency than the private technology.
And leveraging our cloud manage approach, which increases ease of use and operation for system antennas and software updates.
We also released for new enterprise switching products targeted for the edge of the network.
These switches off or cloud manage management zero touch provisioning and policy based automation.
Oh, new eight or two to three B.Z. compliance we support like five six at this point deployments.
And you pay 20, cambium Netbooks expects to release, our wireless solutions for the enterprise ended as essential Lexus market, which utilize the 16 millimeter wave technology, coupled with advance meshing technology.
<unk> engagements for the solution have been been deceived, including selection by multiple somebody's providers for which we expect to see far motors in cute too.
The solution enables service providers to reliably provide per second bandwidth do the home and business equal into the speed of fiber.
Economically.
The technology and capability will be increasingly that live in what <unk> use cases for many years to come.
Weaving together I wouldn't it fucking solutions, we continue to experience strong growth in accounts utilizing seeing my strip club.
<unk> <unk> <unk> connectivity solution to manage the entire network from the single been a blessing.
Well devices under to load management, and Q1 20 total what 411000, an increase of approximately 10% from Q. for 19 and up 61% <unk>.
Turning to the channel.
You want 20, we expanded out channels president's by adding over 600, New channel partners sequentially and over 1550, New channel partners.
Are you.
Which represents an increase of approximately nine per cent sequentially and 26%.
We had an arrow.
<unk> enterprises life I solutions I didn't m., yeah, we I didn't knew yes group as a distributor for our zealots enterprises life, I solutions and cloud Manic services.
In Central America, we signed solution Bucks as a new master distributor with local offices in Costa Rica and Guatemala.
Solution boss has already put cheese and a locator significant inventory.
<unk>.
I will lock door and the call over to see fun, but it. If you are 41 20 financial results outlook.
Thanks to tool.
Revenues $60.4 million for Q1, 20 hanging about the high end of our outlook of $60 million and decreased by 11%.
From $68.1 million.
<unk>.
120 revenues reflect anticipated softness sequentially and year over year, P.T.P. solutions, which were impacted by itself to them on the U.S. defense programs.
M.P. products perform better than expectations due to strengthen the service provider space I largest and market with North America strong ahead of the technology transition to one next generation Melanie to weigh technology, featuring highest eat broadband solutions.
Enterprise wife, I solutions grew an outstanding 106 to 10 year, rather yeah and continue to maintain near record levels flat from keen for 19.
We remain enthusiastic about on next generation enterprise wife, I six products being released during the end of the second quarter.
Looking at revenue by Geography, North America, <unk> region represented 51% of company revenues compared to 50% in the private period I'm, 45% cheering keen for 19.
North America decline, 10%, you'd rather yeah, although growing by 7% compared to queue for 19 due to the strength in on P.M.P. business.
Me <unk> second largest region decreased 15% you know the year, 2% sequentially represented 31% of revenues curing Q1 20.
Missing from 32% of revenues on other yeah.
And increase from 30% of revenues during queue for 19, as a result of logic customers technology transition and the impact of the kind of in 19, which started in February and possibly me.
Represented 9% revenues during two 120, decreasing 26% year or the yeah, 37% sequentially and eight that represents 90% of revenues. During Q1 20, improving by 16% you know the yeah, the declining by 28% from queue for 19.
Looking out at gross margin non got gross margin, 51% improved like 420 basis points compared to keep 119.
Yeah, the year improvement in known got gross margin was the result of a rich makes a lot enterprise wife I products.
Color in between.
Key initiatives put in place focused on cost reductions price management and supply chain efficient.
No one got gross Monagene Q1, 20 was 140 basis points lower than keep for 19.
I was sequential known got gross margin is mostly the result of law revenues, including less make some high margin P.T.P. products, I rebate offset by law product costs and supply chain.
And he won 20 unknown got gross profit dollars decreased by $1.1 million $30.8 million.
<unk>, yeah, I wasn't that what by $2.8 million sequentially.
We continue to make progress towards a long time go by the cheating an annual known got gross margin target, 51% to 52%.
No one got operating expenses research and development sales and marketing General administration, depreciation and amortization into 120 increased by $1 million went from head to Q1, 19 and stood at $27.8 million or 46.1% remedies.
Compared to keep on 19, known got all pretty expensive decreed by approximately $1.5 million. The majority of the sequential decrease in known got operating expenses was primarily driven by law head count as a result of our restructuring activities announced on law School, just conference cool as well as <unk> sales and marketing expenses.
Due to last travel one tray chat expensive in March associated with heavy 19.
<unk> operating margin was 5% down from 7.4% 61, 19, and 6.6% of revenues. Thank you for 19.
Adjusted EBITDA.
120.
$4.4 million for 7.3% of remedies damn from $6 million or 8.9% of revenues to keep 119.
The $5.3 million or 8.2% unread unused to keep for 19.
We remain committed to continuing to drive are adjusted EBITDA expansion to our target model of 18% to 19% of revenues over the next few yet.
Moving to cash flow.
Cash flow used you know parading activities with $800000 for the first Cuatro 2020.
Primarily to a reduction of in the trees offset by decreasing accounts payable principally due to the tiniest infantry payments and low infantry purchases and slow collections and compares to cash provided by operating activities $3.3 million for the first 2019 and $6.1 million.
Cash provided by operating activities for the fourth quarter 2019.
<unk> net income for Q1, 20 was $1.4 million well five cents per due to chat compared to $2.2 million or 16 cents delete. Yeah, 61, 19, known gap net income a $2.3 million.09 per <unk> 19.
But no one got net income compared to the <unk> period was due to lower revenues offset by improved gross margin as a result, the initiatives previously mentioned and lower interest expense due to her adoption in long term debt.
Decrease in known gap net income compared to coupon 19 was primarily attributable to lower revenues, resulting in.
Watching dollars offset by little operating expenses to to our cost containment habits.
Tending to the band cheat cash total $24.5 million has off key 120 $20.7 million higher than the first quarter 2019, and an increase of $5.1 million print coupon 19.
Sequential increase in cash balance during he won 20 was primary the result of drawing down or 10 million dollar revolving credit society to preserve liquidity in a period macro economic uncertainty and 8.7 million dollar reduction in betrays upset flying 8.5 million dollar decrease in account.
Principally to to the timing of an inventory payments.
2.2 million dollar increase in accounts receivable $2.5 million scheduled principal pay down of debt and $1.2 million in restructuring payments.
Q1, 20 days pebble outstanding to 53 days a decrease the five days from the first call to the <unk> damn from seven days from the fourth quarter of 2019.
He won 20 net receivables tend to $61.6 million, an increase at $1.9 million from T. 119 and increase like.
Sequentially.
Days sales outstanding for the first call just to to 86 days.
Seven days from the <unk>, an increase eight days from the fourth quarter 2019, as a result to slow collection is due to taunting issues of coby 19, delaying the ability to release bank transfers and tiniest several customers, which were collected in the first week that they pool.
Net inventories of $32.5 million into 120 was flat here are the decrease like $9.2 million from Q. for 19, as we aggressively work to reduce inventories prevent bio technology transitions inventory days to that 112 days compared to 79 days during cute when 90.
And 129 days at the end of December.
While we remain on track during Canada Twentytwenty for the anticipated release of new Gigabyte, you get bit wireless products.
A year unfolds.
Such as enterprise wife, five 660 could get us and 28.
But I need to wait solution.
Some uncertainty as to the ability of customers deployed easy solution until there is more clarity surrounding because it 19 situation.
We remain focused on our objective achieving our long term target operating model bikes salary from gross and improving I'll call structure and operation when efficiency. In addition.
<unk> is taking further measures to align our <unk> because it 19 about that signed dammit.
Conjunction with the timing of the anticipated revenue Ram from our new product introductions that we expect to happen during the second half of Twentytwenty.
Moving to the second quarter Twentytwenty financial outlook.
No.
The candy isn't that what financial outlook does not include the potential impacts of any possible teach a financial transaction.
Legal masses for other transactions Accordingly, candy and that was only includes such items in our financial outlook.
The extent they are reasonable.
However, actual results may differ maturity from the outlook.
Considering our current visibility adult May 12, 2020, Q2, 20 financial outlook is expected to be as follows.
Gap revenues between $51 million to $56 million known got gross margin between 48.5 to 40 point, 49.5%.
No one got operating income between $1.1 million to $3 million.
No one got net loss between $100000 to net income of $1.3 million Oh between break even.
Yeah.
Income size sentence.
Yeah.
Adjust to eat it up between $2.1 million to $4 million and adjusted to eat it done monagene between 4.227, 0.2%.
No one got effective tax rate of approximately 17% to 19% approximately 25.7 million weighted average diluted shares outstanding.
Tiny tall cash requirements pay down of death of $2.5 million.
It's expensive $1.1 million capital expenditures between 700 to 900000.
Pre tax restructuring charges $216000.
Q2, 2020, we expect to recognize approximately 200000 to $300000 a pre tax charges under our restructuring fine.
We have implemented several initiatives since a passion optimize profitability, including limiting discretionary spending reducing personnel costs, eliminating non essential travel delaying or reducing hiring activities.
<unk> discretionary Catholics, bandages, and negotiating with animals productions <unk>.
Each of these payments.
In addition, we recently implemented a temporary companywide salary to reduction of approximately 20%.
Which will help mitigate the short term uncertainty.
We appreciate our employee support and perseverance during this time.
Oh, that's <unk>, two 220 with strong backlog.
We estimate we are impacted by kind of it 19 by approximately $10 million to $12 million during the second quarter.
We are most impacted in the enterprise wide pie for hospitality and retail markets, although other political market maybe affected.
Certain customers a challenge by lockdown, ending rare instances martial law, which impacts their ability to to play projects.
<unk> 19 restrictions I lifted we can regime more normal for us to directory.
For for Yeah, 2020 financial outlook.
Due to the rapidly evolving uncertainty surrounding the effects of 19. The company is withdrawn is previously announced for 2020 financial outlook.
Although we do expect to generate positive cash flow during 2020.
<unk> more clarity in the outcome of the type of 19 situation. We will provide an update 12 pool, yeah outlet at the appropriate time.
<unk> back to a tool for some closing remarks.
<unk> always managed our business for the goal of growth and profitability.
We have a solid balance sheet to whether the current economic uncertainty.
We have a loyal and diverse customer base with a strong global distribution network.
Oh dedicated employees remain committed to serving our customers and partners and we are both position to win business based on the superior value can be that puts provides without input and wireless connectivity.
And the marker dis transitioning to go up and wireless solutions managed by our cloud based seeing maestro solution.
The key drivers for our growth or the next few years to remain the upcoming introductions up 60 gigahertz.
Solutions for the <unk>.
The adoption of C.B.R.S. compatible solution.
Global peer to peer three subjects providers deploying fix wireless broadband <unk>.
Optional.
We continue to expect faster than the market growth enterprises life I solutions based on the wife I six adoption.
You're not big mean to leverage our clout soft put it at the service business model, but generate recurring revenue.
Broadband is a critically important wireless fabric to connect our local communities.
And I'm proud of our employees around the world Who's been work has enabled us to meet customer commitments and sort of our communities and what has been a difficult.
<unk>.
Read them in confident.
I didn't <unk> managed.
We are being diligent in working closely with all global supply chain partners.
Continues to you know it.
Through our current and new product line up.
Oh, twentytwenty product introductions to position us very well as a <unk> wireless leader for global markets and as an affordable competitor offering support for elaborate being scalability.
We have one of the best teams Tonight industry handling various frequencies in the rain.
<unk>.
Indoor and outdoor but highly differentiated products.
We listen to our customers and partners and always strikes to improve and redefine ourselves.
Be able to survive and try to these challenging times.
Finally profitably the main to core value at Cambium networks.
I'm pleased that we have taken steps to address our cost structure prior to the covered 19 outbreak.
Continue to take measures until there's more visibility to the outcome of the covert pandemic.
This concludes that prepared remarks.
That I would like to turn the color work to could nisha and begin to to in a session.
Yeah.
Oh.
Are you taking the question. So a couple of things I just want to check on you you do offer us a lot of detail in in the guidance, but with this 20% payroll reduction understanding that there's more to to operating expenses.
Payroll I'm coming up with kind of a guesstimate that the total operating expenses.
Should be in the neighborhood of <unk>.
24, 25 million for the June quarter, my interpreting that correctly.
Yeah, that's about right, you're pretty darn close I think the midpoint with round, yeah 24 too.
Great <unk> that and then I just wanted to understand a little bit of the balance because you you you did give us some color on the covert 19 headwinds it and it it sounded to me my interpretation is that you perceive the that challenge for 10 to 12 million being more around or what.
I would classify as demand related basically customers can access sites as opposed to supply chain related meaning you can't get the part you you can't open a factory can can you maybe delineate in that 10 to 12 million headwind, how much you consider to supply related versus demand related.
Thanks.
Cushion push the fall from the manufacturing Cup liked you inside we see minimal could know him back.
Most of our systems are running very well, so really very smoothing out done and dynamic job.
In terms of the man the fun no start building very well.
<unk> remember cambium sweet spot is <unk> fear.
Good decisions we make.
Few years back we are not focus on large thier ones that it Capri, we'll have to the <unk> leading the back.
So we see good demand, we see good fun, though and he wouldn't dispense fun, though seems to be now increasing because there was a period of last two three months. When there was you know there's nothing was operational.
So be be constrained is mostly I pink <unk> I've lived it'd be a personnel and different countries are entering locked down situation at different times. So we have been very conservative and careful.
I appreciate it.
To that little bit you know to tools commented that good good diversified supply chain a lot of our activities you know happening out of Mexico.
And that said pretty good.
Yeah, just the cool to with you know, it's still a healthy amount of infantry. So in good shape, we all seeing a a little bit.
Supplying challenge is on some of the components.
Time pushed a little bit, but nothing because we all material at this point in time and obviously from from a cost perspective, we all seeing increases in in F. right.
It's a little bit from a gross margin perspective from from a gym on perspectives. You know that you had from upper pet remark the service provider side of things is pretty strong.
It really comes down to their ability to actually deployed the products in the field, which is questionable at this point in time.
Maybe one more comment that would make salman quickly. This will be I think useful for everybody. I think this crisis has made fixed wireless broadband.
Very legitimate.
And a very solid solution affordable it'll be deployed quickly in peer to peer three three or four cities across to work and I'll amplify more as we go into any.
And then one last one if I might more of maybe bigger picture thought is is there's been some discussion around the U.S. government implementing some stimulus programs, particularly ones that might help broadband wrong round rural communities.
I had heard that there were some I guess debate about whether or not there's six wireless would would fall into that those programs, where where does the opportunity stand for a a government stimulus related activity that might help your business. Thank you. Yeah. There there are many programs let me touch briefly one is.
<unk>.
Think afterwards before covert and we are already seen good gap two wins people, who are acquiring that money.
We are winning a good share of that that's one secondly government approving.
You know C.B.R.S. spectrum approving six you got heard 1.2 gigahertz bandwidth in the sixth spectrum or is it an acknowledgement that there is significant set of users across mid America.
<unk> and I'm like sense. So I think that that itself is a in two decades, no frequency kind of has been or at least for that type of a usage suddenly be habit phenomenal bandwidth.
And then finally I think there's always the always lobbies everybody pulling in different direction, but the users and the communities, which are being served they are loud enough.
Enough that you will see picks wireless broadband.
Represented for all the benefits of affordable quality delivery.
Thank you for that.
Thank you Matthew.
The next question.
Yeah.
Thank you for take my question.
I tool can you could sense on whether you're seeing any pricing pressure from current environment and our any of the service providers looking for either better terms are pushing out payment.
In terms of pricing pressure, not really remember cambium always felt value.
We have competition, sometimes going after volume things like that we always sell value. So we don't see like now in general are good deals with.
You know somebody negotiates harder, yeah, that'd be but <unk>.
Lead not no no we don't see that.
Distribution are channel partners are able to sell the value. So so far I would say not really unless see from wants to make any common <unk> no I I think that's that's pretty pretty much. The case, we don't see much in terms of pricing pressure I think what we are seeing and that by our design is what's that the offering some of our customers are well capitalised distributed the ability to.
<unk>.
Yeah. So we may be offering some discount in that case, but outside of that nothing in the way of that additional pricing pressure yep.
One more coming in the last three months not one call has been plays into my office.
You say Lord of the price not one called.
Because I think people understand camps value, which is quality you have to affordability and we do price our products, 10% to 15% higher than competition in many situations.
And I told can you maybe expand on the competitive environment or are you, saying either more opportunities open up the with the the dynamic environment, where you sing I'm a bit more pressure and maybe do that both my wife, I perspective than than that point to multi point point point product.
You know the week, Georgia, I would say is.
<unk> uncertainty put everybody.
So if you if you.
Or.
A couple of quarters and you look at more like six quarters year to get an <unk> zone, we are very well position.
Because <unk> and I'll give you that easily white face that say that.
We will cost more than C.B.R.S.
We didn't cloud.
P.R.S. is like the way 10 years back or so.
Butte horse power control went to cloud.
The frequency access controls is going to plug that's how you should think about it.
Sort of these kind of things we would early adopters than I think they would've benefit more and the world is seeing what F.C.C. is doing that and C.B.R.S. lot of countries are watching and you'll see that adopted across the globe. So things like that 60 gigahertz using commercial chips and yet.
<unk> cloud and.
Algorithms and making sure we can do alignment of a antennas automatically <unk>, we are doing which is primarily software.
Those thing.
Really 0.2, good future because what school we'd has done the world is not going to be the same word world is going to be very different.
The base of digitize they shouldn't have increased by two years.
Things, which we think we would've done probably two years some of those things will happen you know Easter two years earlier.
So the we we think about thing the the the next generation architecture adoption is being celebrated no one or two quarters can think slow down yeah <unk>.
But we're not looking at the problem that they they're looking at B. Longview.
Okay and just a one last question for me you know with the product transition that are kind of occurring right now in or the second half of the year.
Are you seeing normal engagement with the customers on wife I six on the 60 gigahertz and a 28 <unk> near wave solutions and the the issue. There's more so just the ability to deploy or are the conversations a little bit slower.
The conversation since 62 guards are actually reasonably rapid.
And I would say we have a word probably 2025.
Very eager service providers ready to be you'll see proof of concept the products.
The conversation on by six in some segments have slowed down.
I didn't some segments have sped up so enterprises going to be a mixed bag because the sector like hospitality you'd have slowed down a conversation score maybe more emphatic in January or December, but I think now they have slowed down conversations in education are mixed bag those who are <unk>.
Progressive they are continuing the conversations those who are living not as progressive I think that picking a cautious thing. So education is the one where there's a question mark.
Successes that those are things slowed down then that are sectors, which might speed up and outdoor.
Fight deployment smart cities healthcare.
These are sectors, where they could be a speedup because of covert 19.
So I think like five six swim in my mind would be little different based soft change depending on the sector.
Thank you.
Take our next call.
Hey, Nice question comes along the line of Rock Hall from Goldman Sachs.
Thanks for taking my question business accent on behalf of fraud.
I have one question covert 19 impact on revenues in the quarter Q1.
I was hoping you guys could quantify what kind of bring in fact, you saw on Q. and revenue because of code 19.
And.
To do that on a check keeps you if it's all I need pulled forward of demand.
You know maybe in the by probably stands out a whole pandemic was unfolding in March.
So maybe I can give some old old comment than pacifist even for some comments.
I wish to go wouldn't 19 them back for it can be.
Was higher and possibly a meal because some of the countries, where we serve like Italy. For example, definitely had him back than they were in love dumped situation.
Two months or so at the beginning to come out of it. So I would say M.L. definitely had more closely them back and primarily because laptop. It's not so much demand it's the projects could not be deployed.
So some revenues probably moved from 212 cute too and even cuter it'll be interesting to see what what the source of good ever Liberal. So the uncertainties definitely there then when you go to Asia significant love Duncan countries like India definitely <unk>.
Ah into Avenue and that Calla.
Is probably is still in some of the logged on situations North America would <unk> <unk>.
Compared to I'm also north American customers are probably more savvy are you working from home and using the on digital communications Ah Lok more effectively.
So that's kinda might you know qualitative then down there was no question that.
Mid February onwards, <unk> <unk>.
Factor Emil probably the most because of some of this country.
Yeah, I mean, I think you cut it.
The Italy, Spain.
They went into.
Pandemic earlier on in February.
To slow I think that point to note, though for all businesses.
<unk> provided that as a tool mentioned North America was actually really strong pressing.
To see from also provided.
Are actually doing a lot more deployment around the infrastructure set filling out the access points in the back.
Actually seeing that pretty robust and that's continuing into a into cute too as well and that's always the questioning tens of the supply and.
But I have a pretty good like radius.
So the larger impact from enterprise suspected.
Maybe I shouldn't one more point I would add is we also saw February and March and maybe part of.
April the federal defense a decision making.
People started to work from home it was a big change for for that sector and now we are beginning to see that machinery coming back up the funnels talks to build again, so probably that also impacted.
Okay. Thank you for the color then at all I have one question for you on a customer credit quality I knew you guys talked about <unk>.
And take on transfer it shows impacting other people's but I was wondering if you are wanting to talk about customer credit quality, obviously I was seeing anything different in terms of payment terms.
No comment on that I don't know how cool yeah.
Just a stephen than I might give some extra other yeah actually <unk> world see monitoring and managing our overall receivables very tightly in these times.
Well the usual stuff by revising credit limits when necessary staying very clever.
The companies had a very very good track record when it comes to a potential bad day.
And we continue to to tomorrow.
We did see a little bit of push out on payments.
On that you not prepared remarks.
Cool.
But I'm pleased to say that collections were very strong in April so we got that back in line and it's just staying close to the customers, we're fortunate that customer base.
Products. So they want to keep payments up to date, you know what to get.
The supply chain Ah continued and N.C. fund and I keep from time to time be called a lead herself from afar.
Customers or distribution partners.
Yeah, we listen to them when they listen to us and one one thing to emphasize to US is that demand is good <unk>.
It really basic things might move here and they're they're saying just please make sure you guys suppliers because D.C. good demand into regions.
Take the next question.
Okay.
Thank you.
Yeah Nice question comes from the line of Eric Supermajor from J.P. Morgan.
From J.M.P. and.
Curious one how quickly do you anticipate a wife I six ramping up it's just say.
Gradual process or is it a a a replacements for the the prior why probably standards.
Eric or.
The V.I.C.D.'s.
We'll see.
Below season cute to group of concepts the the life cycle generally I see over the years is it takes good one quarter for P. will cease to start.
And then it starts to ramp up the falling quarters. So <unk>. So I think you two will introduce the product it'll beep Ulysses there'll be some positive back but most of P.L.C.
Cute Crete, because you will see acceleration.
And I think <unk>, where are those people sees will start to mushroom more and as I commented I think the Progressive school districts. For example, some of them are thinking of X. sub reading the.
Digitization new servers <unk> more we being sorted gives you know the kind of things they would do 40 learning.
Some of them might actually delay and say well, we may not opening plus a lot of that discussion is going on right. Now. So my sense is we will see exhibition in second half and that X. solution will continue into 2021, because life I six architecture. It's four times the performance low latency <unk>. It has a lot of.
Features which will last for any deployment for three to four years. So my senses, Yeah second half you should see on every quarter, we'll give you a good color than that.
Okay, and then in terms of the outlook that you you provided for Q. too.
It sounds as though personnel constraints are our challenge for for Wisps is is that in the United States or is that more in Europe.
It's a it's a Eric it's global let me give you more color on that so for example, as we work with our customers in Italy. Some of our customers. So we're deploying and the channel partner, helping them in a capacity might be 60 70 per cent.
But demand is there because as I mentioned the year two P.L.C.D. of course it'd be all across the world.
What.
<unk> has done.
Everyone has understood broadband connectivity is a lifeline and the <unk> you are the more of a lifeline that is so that is done in fact for our business. This one painting has really levels of the the the playing field everyone wants to performance and and it's also not that you need great performance in San Francisco.
Score Silicon Valley, and you need less than you know some it'd be it'd be a three C.D. and anyone in the work. They all are doing you learning they're all looking at the same confident that all doing video, they're all doing a zoom type of things so everyone needs a very similar performance. It's that there's another thing with a change applications have become.
Pretty a similar type of application. So we see that the constraint probably for a quarter or soul.
Going to be deployment capability.
Demand wise, I said and I I see put on some mentioned we see good service provider traction, especially for our sweet spot are sweet spot is vis beer too.
<unk>.
<unk>.
So they.
Solutions at affordable high quality.
So the <unk> good doing as customers think about next Jenna every customer we talk to the pink of three things right now number one.
Is it affordable.
Number two isn't reliable number three in the future proof.
And that's the future proof part is the one we are making sure as we adopt standards as we adopt architectures and that's where they'd give me the color on <unk> since C.B.R.S. and all the things that work.
Well in the United States I believe the with <unk> are considered an essential business are they.
Given that they are in the central business do they have better personnel resources than other countries or the U.S., a personal constraints and issue a challenge as well.
I think you must have this little better position, because our visitors have better tools and better better training, but or expertise. So I would say for those reasons.
Do we wouldn't be limited to sources is more efficient, but the rest of the world.
<unk> there is constrained like now and I think as I said earlier different countries will come on a loved on a different base.
And so you will see a little mixed bag <unk> might come little later U.S. is reasonably well position Western Europe comes second died off the deck. So I think there'll be little more a delayed <unk>.
Impacts, but <unk> my hope is but ended up <unk> do end up to three constraint will not be an issue.
Very good thank you <unk>.
<unk>.
And your next question comes from the line Oh, Paul coaster from J.P. Morgan.
Yeah. Thanks for taking my question. So I go to our <unk>, Steven So true. So we're throwing food yeah guidance, but I think at some point not join a little light so apologies if I Miss understood.
You were told talk about the second half ramp associated with new products and just trying to reconcile those too.
Statements.
Not be related.
Well I think what we're talking about we mentioned this on the loft earnings cool.
We've been working on.
Technologies for 16.
Yeah.
We are going to be releasing then some of them in the last part of that but.
Yeah.
The second Huh. So I think you know the need to results that clearly getting impacted by that time dammit have we done a lot, but we believe the longer to dry.
Remaining.
Talking about that the say with it but they knew what technologies coming on line.
Will be very well positioned to.
But we need to work your way out of this time.
You know as he sort of global macro environment.
Huh.
Okay. The the second question is two channels and been trail I imagine that many of your palm. There's all these talking at the moment similar standing beside the you're expanding the channels. So how does that work how.
Sort of make the the subsequent recovery when it happens a little bit more sort of spring loaded.
Yeah actually pull we're not seeing much in the way I would say is a d. stalking I would say are channel actually using good shape. Most of our disease report to us both P.L.S.N. in that tree on a monthly basis and in many cases weekly so we actually haven't seen much in the way.
In the tree dropping or increasing it seemed relatively consistent so sally and instead of <unk> matching oh fell through.
You know I guess it tend to play to what is on ask when they get hold of themselves. So it's pretty well aligned and I think the other point to know I wouldn't mention this is a a hotel.
So.
That's good hygiene in itself, but we don't really seem much change from P.L.S. and from a from an overlap when tricky in between.
Don't you. Thank you.
Yeah.
Yeah.
Okay.
Time to call back over to offer following remarks.
Thank you can you share drink two two cambium networks will be presenting a meeting with investors that the J.P. Morgan Technology Media Communications conference, which will be held virtually tomorrow may 13th anytime you're always welcome to contact our best Relations Department at 847264 to 188 with any questions that arise. Thank you for.
And this concludes today's call.
Ladies and gentlemen, <unk>.
Huh.
Participation you may now log off.
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