Q2 2022 Ceragon Networks Ltd Earnings Call
If you wish to ask a question, you'll need to raise your hand using your mobile or desktop application and wait for your name to be announced. I'd like to hand over the call now to our first speaker today, Ms. Maya Lustig, Investor Relations. Please go ahead. Please tell the host and someone else here who is listening can help present to you a
Thank you, operator, and good morning, everyone. I am joined by the Ron Arazi, Seragon's Chief Executive Officer. Before we start, I would like to note that certain statements made on this call, including projected financial information and other results and the company's future initiatives constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended.
and the Securities Exchange Act of 1934 as amended and the safe Hubble provisions of the Private Securities litigation reform act of 1995. The Securities Exchange Act of 1995
SIRGON intends forward-looking terminology, such as beliefs, expects, may, will, should, anticipate, plans, or similar expressions, to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause SIRGON's actual results to defer materially from those projected in such forward-looking statements.
Such risks and uncertainties include but are not limited to those that are described in SIRGON's most recent annual report on Form 20F and is maybe supplemented from time to time in SIRGON's other filings with the SEC, all of which are expressly incorporated here in by reference.
Forward-looking statements relate to the date initially made do not report to be predictions of future events or results, and there can be no assurance that they will prove to be accurate, and Sergon undertakes no obligation to update them.
Circons public filings are available on the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Circons website at www.circon.com. Also, today's call will include certain non-gap numbers. For reconciliation between Gap and Non-Gap results, please see the table attached to the press release that was issued earlier today.
I will now turn the call over to the run. Please go ahead.
Thank you Maya and good morning everyone.
To kick things off, as you may recall from earlier discussions, we outlined three strategic pillars to propel the
As you may recall from earlier discussions, we outlined three strategic pillars to propel our business forward.
Our first strategic pillar relates to our core business.
which is the best in class all outdoor microwave and millimeter wave market segment.
Our second strategic pillar involves the expansion of our business into open network architecture domains.
Our flagship product in this domain is our new virtual indoor unit, a first in the market, that can also be used as a cell-side router.
And our third Strategic PLR focuses on strengthening our managed services offering.
to deepen our relationship with our customers.
In the second quarter of 2022, we experienced gains in market share, particularly at the high end of the market.
According to our estimates, Saragon makes up approximately 25% of the market for best of breed solutions.
Their largest and fastest growing market segment driven by increasing demands of networks and the best differentiation to 5G. The best differentiation to 5G. The best differentiation to 5G.
This is the result of the execution of our strategic priorities.
Starting with our first pillar, we witnessed the strength of our core business and wireless backup.
A leading T1 global operator serving multiple countries in Asia, Africa and Latin America, selected our wireless vehicle solutions to expand the coverage to remote islands and strengthen their transport network.
We also signed a new frame agreement with the Pan-African T1 operators
for the first time in our history and we have already run a POC with them on our unique Advanced Space Diversity feature.
Having true global operators choose CERAGO is a testament.
to the reputation and performance of our core business.
Our new virtual indoor unit will increase our market potential in our core domain, as well as in our second pillar, which is this aggregated, set-side routing.
This is a rapidly growing market, Thigment, expected to reach 400 million dollars over the next few years.
The total value of the overall disaggregated sales market will reach approximately 1.6 billion dollars and signals even bigger potential.
We see an opening to disrupt the market with our new.
IP50-FX product which helps us leverage the fast growing open network trend.
When the market has just begun to take off, we already have 216 units booked with average gross margins exceeding our overall margin profile.
Finally, in terms of our third pillar,
We have strengthened our managed services offering.
and depend on our relationships with our customers.
This offering is garnering increasing attention from operators, private networks and carriers around the world and has become an important growth area for us.
Managed Services Bookings
for the first half of 2022, where roughly $8 million, which is already around 40% higher than our managed services bookings for the full year 2021.
We also expect our software tools business to achieve continued growth with direct sales or as tools for our managed service business.
We expect these new software tools to derive enhanced margins and recurring revenue as we take marketer.
When it comes to our overall addressable market, it is growing.
The Manform Micro-Aid Transmission Equipment is expected to increase
Over the coming years, thanks to 5G deployments.
which rely more on wireless backup than fiber.
5-year spectrum auctions and launches around the world drive further demand.
We believe we will see more 5G deployments in India, Latin America, parts of Asia and Middle East and Africa.
On the delivery front in Q2, component shortages and the shipment costs were still a headwind across industry.
That said, we have begun to witness positive results from different initiatives.
we took to improve our operational and financial performance, which we will address later in this discussion.
As a result of our actions, our Q2 gross margin rose to 30.5% compared to 27.7% in Q1 2022.
While still lower, then our 31.53% in Q2 2021.
We expect to drive further revenue growth and margin expansion going forward.
We experienced healthy bookings across different regions and enjoy a very strong backlog.
We expect that this backlog, when converted to revenue, will translate to a gross margin
that's higher than in Q2.
Also, thanks to the many gross margin enhancing initiatives we are taking.
We are excited about the momentum that we are seeing across our business.
That is because we know that our technology development capabilities are a key competitive differentiator.
Our ability to develop cutting-edge products in-house is rooted in our strong innovative culture and continuous investment in innovation.
For example,
As I mentioned earlier, we are the first to bring a virtual indoor unit to market that can also serve as a set-side router. The virtual unit can also serve as a set-side router.
This unit has demonstrated all elements of an open network, including radio units, radio
software operating system and networking units.
fully aggregated and integrated as part of the true open transport and open networks.
We just launched this product in February .
and have already begun seeing
strong customer traction with orders received as well as numerous trials and POCs during the first half of the year.
We're also enhancing our suite of revolutionary IP50 products using our new radio chip developed in-house.
These products are expected to be launched in 2023 and are expected to reduce bill of material costs by approximately 40%.
allowing us to gain market share and drive higher margins.
Further, we believe that our system on a chip or sock.
Our fifth generation chipset.
It's three years ahead of competing technologies in the market.
We expect our SOC to generate significant cost savings and deliver enhanced performance.
Because it is developed in house, it will be a key competitive advantage for the years to come.
Being first to market with new chip technology is extremely important to our customers.
We are in the productization phase of our next chipset, while we estimate that our competitors and merchant chip manufacturers are only now introducing high level concepts.
of their next generation chips.
We strongly believe that our strategy of developing chips in-house always allows us to create better products with superior technology and lower costs while remaining ahead of competition.
We expect this trend to continue.
I'd like to give you an overview per region.
For the first time in our history, North America now represents the largest region for us, started with India.
In the second quarter, our bookings in North America represented 26% of our total bookings and grew by 38% over the first quarter.
When we compare this with our full year projections, we see that we are on track to achieve bookings of at least 15% above our internal projections.
Q2 was to say the least.
A record quarter.
5G building and rollouts are in full swing in North America in Q2.
We capitalized on this momentum.
A leading T1 mobile operator who is looking to maintain his position is the largest and fastest national 5G network.
is now utilizing our comprehensive portfolio of solutions as well as installation services as part of their ambitious 5G network expansion projects.
In Q2 we also made solid progress with new potential customers.
We began to see signals of success in our new strategy to capitalize on the growth of private networks and rural broadband demonstrated by recent wins. The new plan was to start a new strategy to capitalize on the growth of private networks and to capitalize on the growth of private networks. The new plan was to start a new plan. The new plan was to start a new plan. The new plan was to start a new plan.
In Q2, we continue to expand our activities with T1 and T2 operators as well as expand services activities.
We onboarded new employees across the board to strengthen our presence and relationships with our customers.
When we look at the future, we expect to continue.
to grow and add market share in North America.
which will contribute enhanced overall margins.
We have become the number one wireless transport vendor in this region for Tier 1 operators.
And we expect to accelerate our growth M-O-T1 operators as part of Road of 5G adoption and also increase our services portion in this domain.
In addition, in increased investment in rural broadband infrastructure is expected to drive our growth among small careers, private networks, and wireless broad-wide providers in multiple domains.
In India, there is a highly dynamic regulatory, technological and competitive environment.
The market is giving up for the rollout of 5G services can't be wide.
The 5D spectrum auction started at the end of July .
72 gigahertz spec flu in many different bands are on sale.
E-BEL frequencies are part of the 5G auctions which presents a significant opportunity for us.
We expect demand for eBend products to start ramping up in Q4 2022.
Our Q2 bookings were strong and we see great potential in India.
In Europe we had another strong quarter.
Like in other regions, here too, 5G private networks deployments are gaining traction, especially in Western Europe .
We are making progress across the board with nationwide T1 operators, as well as infrastructure companies that operate in rural environments.
Our revenues exceeded our internal projections and we have strong backlog.
That said, we continue to experience ongoing delivery issues.
continue to experience ongoing delivery issues. In a pack.
The market is being ultra competitive.
In Q2, we focused on securing and growing existing accounts and to transform business to our new product portfolio to include solutions such as IP50FX. It includes solutions such as IP50FX.
We also showcase...
I would this aggregated wireless transport solution in the 2022 to keep open network event in Indonesia...."
The response was phenomenal. As the value delivered to operators is the utmost flexibility to achieve. The response was phenomenal.
Total cost of ownership savings.
In Latin America, the impact of the pandemic has finally subsidized.
Story subsided.
Despite some political instability, we see rising investments in different countries.
We have made progress in pushing our managed services offering Now discussing potential new arrangements with customers.
We see very strong interest.
5G rollouts are starting in some countries while in other, expansion projects are underway.
Here we are working hard to increase the fraction of our market leading IP50FX product.
In Africa, we had a slow start to the year. That said, as modernizations, upgrades, and new routes are beginning to take place, and we see many long-term opportunities.
As I mentioned earlier, we signed with the Pan-African operators and have already run a PLC.
Before turning over to our financial results, I'd like to comment briefly about the current business climate.
The recent disruption to the supply chain.
has adversely impacted our financial performance.
Well, these things to be temporary headwinds.
are industry-wide they have resulted in a significant slowdown in our backlog conversion into revenue and adversely impacted our gross margins.
As I mentioned, we have been implementing a series of initiatives aimed at improving our backlog conversion into revenue and enhancing margins, including adding surcharges, improving contractual terms with our partners, and improving the overall
Retresigning our products and subsystems to improve the pace of backlog conversion and reduce production costs.
replacing one of our contract manufacturers
and streamlining the shipment process with the addition of new vendors.
We are also increasing our focus on software and software upgrades, as well as maintaining control of sales.
It will of course take time until we start seeing more significant results.
But I'm confident that all these elections will contribute to more robust financial performance.
Lastly, I'd like.
to share that we are
close to hiring a strong candidate for our CFO role with recent experience in our industry.
We hope to be in a position to announce our new CFO in the next few weeks.
Now the financials.
To help you understand the results I will be referring mainly to non-GAAP numbers.
For more information regarding our use of non- GAAP financial measures, including reconciliations of these measures, we refer you to today's press release.
Let me now review the actual numbers with you.
Revenues for the second quarter were $70.7 million up by 3.1 percent.
Compared to $68.6 million in Q2 last year.
As I mentioned earlier, even though demand continues to be high, we are still experiencing component shortages and supply change disruptions, which impact our ability to convert our backlog to revenue.
Our strongest region in terms of revenue for the quarter was India with 21.7 million dollars reflecting ongoing deliveries for our main customers and in line with the strong demand we see in this region.
Our second-stroke region in terms of revenues was North America with revenues of $15 million
followed by Latin America with 11.4 million dollars.
Europe was fourth with 10.9 million dollars.
We add about 2 above 10% customers in the second quarter.
Gross profit for the second quarter on an on-get basis was $21.5 billion, giving us an on-get gross margin of 30.5% compared to 31.5% in Q2 2021 and 27.7% in Q1 2022.
Our improved Ghost margin in Q2 as compared to Q1 for this year was primarily due to the increased software portion and certain reduction in our shipping costs as well as other measures taking to reduce our bomb costs.
Operating expenses on an all-get basis for the second quarter were $21.2 million in line with our expectations.
Research and development expenses for the second quarter on a non-GAAP basis were $7.5 million, the same as in Q2 2021, and up from $6.8 million.
Q1 2022 ASSW projected.
We expect our round the expenses to remain relatively consistent for the remainder of the year.
Cessna marketing expenses for the second quarter on a non-GAIP basis were $9.1 million compared to $8.3 million in Q2 2021 and $8.5 million in Q1 2022.
The EU's over-year increase is primarily due to a boost in sales commissions intensified face-to-face travel expenses, as well as investments in our salespeople in North America and Latin America.
General and administrative expenses for the second quarter on an on-get basis were 4.6 million dollars as compared to 5.2 million dollars in Q2 2021 and 4.8 million dollars in Q1 2022.
Financial in other expenses for the second quarter on an on-get basis were $2.5 million significantly higher than our expectations.
The 4x expenses came approximately $1 million or higher than our expectations.
This is primarily due to our cash balances and accounts receivable in local currencies related to services and sales of local equipment primarily in India, APAC and Latin America.
that have eroded due to the strengthening thread of the US dollar during this quarter.
Going forward subject to stabilize
Forex environment. We expect our finance expenses.
to be in the range of 1.5 to 2 million dollars.
Our tax expenses for the second quarter on an on-get basis were $0.3 million.
Net loss on an on-get basis for the quarter was $2.5 million or $3.0 loss per diluted chair.
As for our balance sheet, our inventory at the end of Q2 2022 was $60.7 million up from $58.1 million at the end of Q1 2022.
The level of inventory still reflects our need.
to stop long lead items and strategic items.
as a combined result of increased customer orders and the ongoing component shortages.
In addition, our decision to replace one of our contract manufacturers
with minimum disruption to deliveries, also resulted in temporary inventory increase and impacted our cash flow and working capital.
We expect this impact to gradually decline in the coming quarters as we finish the transition period and the new codec manufacturer is fully up to speed.
We strive to keep our inventory levels lower and expect an inventory reduction as the component industry improves.
Our trade receivables are at $122.7 million up from $120.7 million at the end of Q1 2022.
Our DSOs now stand at 152 days.
Our cash flow from operations and investing activities was higher than Q1 2022, and it was primarily driven by the changes we've been making to the composition of our contract manufacturers.
We have...
$23.6 million of cash and we have available unused credit facility of $18.1 million.
Netcash, used in operating and investing activities.
For the second quarter was $6.3 million.
Netcash provided by financing activities for the second quarter was $5 million.
Looking forward, we are reaffirming our 2022 revenue guidance of $300 to $315 million. In our 2023 revenue guidance of $325 to $345 million.
Our guidance is of course subject to potential downsides and upsides as we continue to address supply chain challenges facing the industry.
Our five-year revenue target is approximately $500 million, and we also target increasing our gross margin to at least 34 to 36 percent over the same period. The revenue target is approximately $500 million, and we also target increasing our gross margin and we also target increasing our gross margin
Finally, before turning to Q&A, I want to take a moment regarding Aviad's purported...
Finally, before turning to Q&A, I want to take a moment regarding Aviad's purported offer.
As you have seen, we have issued several communications reviewing our record of engagement with them and our commitment to serving the best interest of all Seradon shareholders.
Our position remains the same and we do not have more to share on Avia today.
With that, I now open the call for your questions.
Operator?
Thank you. As a reminder, if you wish to ask a question, you'll need to raise your hands using your mobile desktop application and wait for your name to be announced. For desktop application, wait for your name to be announced.
Our first question today comes from the line up Alex Henderson from NeatHub. Please go ahead.
Greg, can you hear me?
Hey Alex, I can hear you very clearly. I got a couple of questions I just wanted to get some.
general gauge of on the first is the book to bill in the quarter. Really, I'm more interested in the half as opposed to the quarter because it's a better.
you know, gauge if you could. How much were the orders up year over year and what was the book to bill relative to sales in the quarter? Can you give us some sense of where your backlog on product stands?
Yeah, so first of all, on the first half...
Our booking were up approximately 15%.
higher than
The second, the first half of 2021.
In terms of backlog, we have a very strong backlog. I will give you an approximate number. We are talking about over $170 million dollars.
of a backlog.
And the more important piece is that we analyze the gross margin of this backlog.
and it is a higher
then the current gross margins of 30.5%, which is obviously very important.
And that's even before.
some of the initiatives and actions we are taking to improve our gross margin further.
Well, going back to that, go ahead.
Just in terms of book to build ratio, it's significantly above one.
Going back to that question on the margin, obviously your absorbing cost components and logistics components that are abnormal, can you quantify, give us some gauge of the drag on revenues and op-X associated with the supply chain challenge?
I can give you some sort of high level magnitude.
I think that we are more or less 10% lower in terms of revenue achievement.
versus a more normal condition. Even a bit higher than that. I think we could be at the range of $80 million per quarter if not having all these challenges.
of the supply chain.
In terms of gross margin,
As I said more than once,
We're talking about 3 to 4, sometimes even 5% gap.
depends on the mix.
depends on the mix of the revenue by region.
And also the software element that is always added to our product revenue.
So…
If you're talking about the margin on the backlog being higher than the current margin, would it be?
reasonable to think that does the component cost come back in that it's actually equivalent to somewhere in the 33 to 35 range. and
Even that. Yeah, I think it's a reasonable assumption subject to the success of all of our initiatives.
Okay, going back to the shekel for a second. You guys hedged the shekel, I believe, coming into the new year around the January time frame, you're fully protected against the shekel through the calendar year.
If you were to look at the shekel where it is today, which is where you will reset on December 31st, looking out into 23, what would be the impact of the shekel relative to your cost structure?
I think it would easily head between 1 to 2 cents to our repairs.
It seems like a small number given the 15 to 20% swing in the exchange rate. Can you explain to why that wouldn't be a larger impact on your office?
First of all, let's not forget, I was talking about EPS.
And obviously you have also the impact
of the financial expenses that are actually also being hedged in our balance sheet.
So all in all, I think one to two cents on our EPS
Is it reasonable? Yes, it could be higher.
Just going back to the point though, aren't your financial.
balance sheet exposure constructed in
a period that would be paid out before your end given the DSO timeline. I would think that you would be paid out by your end. And therefore, that shouldn't impact 2023, right?
yes that's correct but you know I'm looking at Q3 num sorry Q2 numbers
And we actually had an opportunity to enjoy.
the weakening check-in against the US door or but the fact that we are also hedging our balance sheet
as actually negatively impacted our numbers.
All in all.
the hedge on our expenses, primarily salary and other fixed expenses in Shekel is indeed hedge for a full year. The hedge on our expenses is indeed hedge for a full year.
and the balance sheet is basically hedged on a between monthly to quarterly basis.
But again...
That the headwind of 22, it falls out in 23 because you pay out all of those. Because you pay out all of those. Because you pay out all of those. Because you pay out all of those. Because you pay out all of those.
you get paid that stuff before year end, therefore assuming your future at the current level, that shouldn't be a factor, right? I mean, it sounds like that should be a positive to your EPS and 23, not a negative. Can you refer to the financial services? Hold on, hold on, hold on. Just ignore the financial services side of it and ignore the balance sheet. What is the impact on just the OPEX if we use this exchange rate?
versus what you're experiencing in 22 in 23. How big a positive is it? Because it should be a pretty material positive and appear expenses, right?
yes if you are talking only on the operating
Numbers
Indeed, it's going to be a couple of millions for the whole year.
Great, that's what I was looking for. Thank you very much. Thank you.
I'll see the floor.
Thank you, Alex.
Thank you. Our next question comes from the line of George Iwanek from Oppenheimer. Please go ahead.
Hi George.
Thank you for taking my questions, Doron. When you look at your 2023 and your five-year targets, can you give us a sense of how that's made up, like how much of that is coming from existing business, how much is coming from market share gains, and how much is coming from your new initiatives?
So in terms of Five Years Horizon
in terms of our core business.
We expect the growth
of a mid single digit percentage.
which is slightly above the expectations of the industry growth.
And on top of that,
We expect a very significant growth in many services.
and in the cell site router domain that will bring us to a kegger of approximately 10% or a little shy of 10%
Okay, when you look at the competitive environment, can you give us a sense of the momentum you're seeing in North America, what's driving that, how do you feel about competition and a global basis?
So let's start with North America.
We are very, very satisfied.
with our performance in North America.
And not only by the recent orders we've been receiving from one of the 3-T1 operators in this region.
We are actually making additional steps.
in gaining more business from other operators with our unique solutions that can also fit into the concept of open run.
And therefore we believe that this trajectory of taking very nice business in the T1 operators in North America will continue.
We are also taking market share in tier 2 and tier 3. Part of it is on account of existing competitors and actually beyond the growth.
that is reflected in this market due to the 5G rollout.
When looking at the worldwide...
I think that we see a very similar trajectory.
but I would say that it is a bit still behind
in terms of turning into orders. Just to give you an example.
with our IP 50 FX this virtual indoor unit
we're getting a lot a lot of traction
in Europe
but also in other regions such as APOC.
It doesn't turn into solid odors yet.
but we are in very advanced phases where we are showing different architectures and concepts.
of deployment
that can save for the big operators a lot of money and improve their TCO dramatically.
Obviously in India the spectrum bid was just finished.
and we are in multiple discussions with all of our existing customers.
of starting to provide with event solutions.
in accordance with the need.
So all you know, we see a very strong traction to our products.
Obviously the competition is there, it's not that it is evaporated.
But I think once again...
But I think once again, our superior technology.
And the mindset of serving the customers needs.
is giving us many opportunities sometimes ahead of the competition.
All right, and Doron, how do you feel about pricing? Are you able to pass through any of the costs from either a one time basis on the shipping side or having constructive discussions on the overall supply chain challenges with your customers?
So it eventually is a combination. First of all,
We issued a letter of surcharge
towards the end of Q2 to all of our customers.
And obviously as good partners, we are in dialogue with them so far.
The initial signs are very positive.
Customers are receptive to the situation. Understand that this is a strategic partnership that should last longer.
and the fact that they are very satisfied with our products and with our information and innovation gives us some sort of benefit to discuss this situation calmly.
In addition, obviously a new RFP is
as well as in specific deals.
We are discussing a higher prices
based on the current macro environment, especially looking into the increase in the shipment costs.
And obviously the component price increase that increased our bomb.
So all in all, it's not an easy process. Our customers are usually very, very big.
And their buying power is by far stronger than our selling power.
But I think that due to our success,
in demonstrating thumb and again
that our products are in most cases.
better with higher technology and higher capabilities is giving us some sort of a tailwind to discuss this situation calmly with the customers that tend to understand and to accommodate at least part of our question.
Okay, my last question just on the off-ex side, do you feel you've made all the hiring that you have to on the sales side and you're at a headcount level that you're comfortable with right now or do you need to?
to add any more people in any areas.
At this point,
based on our plans for 2022
I think we're a good shape.
I would just mention in North America once again
Think the huge demand?
and trying to basically capitalize on it. We have even slightly increased our self force there beyond our budget plan, because we see the very strong demand and a very positive trend in this North America region.
Thank you.
Thank you. Our next question comes from the line of Alex Henderson from Needham. Please go ahead.
Great, thanks. I actually have two different tangents or questions I wanted to ask about. First one is, as you've been talking to your customers, given the macro conditions, have you seen any hesitancy? Have you seen any pullback? Have you seen any change in the number of signatures needed for closing deals? Have you seen any stretching of durations?
any impact on the macro front that's showing up in your pipeline.
The short answer is no. Note at this time. Obviously, we are watching this thing very carefully because obviously things might change.
It looks to me.
that the digitization and 5G rollout, especially in those places and customers that decided to start moving forward.
is continuing.
And at this point,
It's even beyond the
the so to speak initial recession signals
we have seen in many parts of the world. But we are very cautious.
and watching that carefully.
The second one is really on the aviad situation. Obviously, it's fluid. We will also have limited everybody from community health to environmental health to the law enforcement.
Obviously there's been a lot of to to tap on the PR side of the equation.
How should we characterize?
characterize the
ongoing negotiations and discussions with them. Is it just in the public press or are you actually still having a back-channel conversation with them? Is it something that is predicated only on getting the sale? Or the?
shareholder vote done on the board seats at this point or is there more ongoing conversation that we should be anticipating that is shown some progress and how would you describe their willingness to
contemplate that three and a quarter plus category on price that they had put out earlier. Obviously, if they were comfortable with three and a quarter in November , one would think they would be even more so given how strong your backlog is built.
Alex, first of all, that was a very long question. And I'm trying to adopt the very good culture and DNA of the Americans.
and not interrupted.
But I do need to apologize. As I mentioned in my proposed prepared remarks, we are here to discuss our business and earning results. And we ask that you keep your questions focused. And we ask that you keep your questions focused.
these topics. We'll not be commenting further on AVIAT at this time.
I apologize, Alex. That's fine, but thanks for your listening. Bye.
If you have no further questions, please proceed.
Thank you.
In closing,
I'd like to reiterate
that we are effectively executing our growth strategy.
The initiatives we have taken
and the tough decisions we've been making to improve our financial performance have begun to bear positive signs.
We will continue to implement measures aiming to mitigate the impact of the ongoing supply chain disruptions.
and component shortages.
Like with any large well-established company,
This was not the first storm we faced.
And I doubt that it will be the last.
with strong market and technology drivers.
with strong market and technology drivers. skillful people.
and a robust growth strategy. We remain confident.
strategy, we remain confident about short
and long-term business potential.
I look forward to updating you further.
on our next call.
Have a good day everyone.
Today we'll be followed by a question and an answer session at which time if you wish to ask a question you'll need to raise your hand using your mobile or desktop application and wait for your name to be announced. I'd like to hand over the call now to our first speaker today Miss Myelistic Investor Relations. Please go ahead. Thank you operator and good morning everyone. I am joined by the Ron Arazi Saragans Chief Executive Officer. Before we start I would like to note that certain statements made on this call including projected financial information and other results and the company's future initiatives constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended and the Securities Exchange Act of 1934 as amended and the safe hub provisions of the Private Security's Litigation Reform Act of 1995. Saragans intent forward-looking terminology such as beliefs, expects, may, will, should, anticipate, plans or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause Saragans actual results to defer materially from those projected in such forward-looking statements. Such risks and uncertainties include but are not limited to those that are described in Saragans most recent annual report on Form 20F and is may be supplemented from time to time in Saragans other filings with the SEC, all of which are expressly incorporated herein by reference. Forward-looking statements relate to the date initially made do not report to be predictions of future events or results and there can be no assurance that they will prove to be accurate and Saragans undertake no obligation to update them. Saragans public filings are available on the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Saragans website at www.saragans.com. Also, today's call will include certain non-gap numbers. For reconciliation between gap and non-gap results, please see the table attached to the press release that was issued earlier today. I will now turn the call over to the run. Please go ahead. Thank you, Maya and good morning, everyone. To kick things off, as you may recall from earlier discussions, we outlined three strategic pillars to propel our business forward. Our first strategic pillar relates to our core business, which is the best in class all outdoor microwave and millimeter wave market segment. Our second strategic pillar involves the expansion of our business into open network architecture domains. Our flagship product in this domain is our new virtual indoor unit, a first in the market that can also be used as a set set router. And our third strategic pillar focuses on strengthening our managed services offering to deepen our relationship with our customers. In quarter of 2022, we experienced gains in market share, particularly at the high end of the market.