Q3 2022 Cambium Networks Corp Earnings Call
[music].
Good afternoon, My name is Sean and I'll be your conference operator today at this time I would like to welcome everyone to the Cambium Networks' second quarter 2022 financial results Conference call.
Lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session to ask a question press Star one one on your phone please.
Please limit yourself to one question and one follow up question. Thank you.
Mr. Peter Schuman, Vice President Investor and industry analysts relations you may begin your conference.
Thank you Sean welcome and thank you for joining us today for Cambium Networks' third quarter 2022 financial results conference call and welcome to all those joining by webcast 12, Boston Lager, our president and CEO and Andrew <unk>. Our CFO are here for today's call. The financial results press release, and CFO commentary referenced on this call are accessible on the <unk>.
Mr Page of our website and the press release has been submitted on form 8-K with the SEC.
Copy of today's prepared remarks will also be available on our investor page at the conclusion of this call.
As a reminder, today's remarks, including those made during Q&A will contain forward looking statements about the company's outlook and expected performance. These statements are based on current expectations forecasts assumptions risks and uncertainties could cause actual results to differ materially.
As required by law Cambium networks does not undertake any obligation to update or revise any forward looking statements for any reason after the date of this presentation, whether as a result of new information future developments to conform these statements to actual to actual results or to make changes in <unk> expectations or otherwise it is cambium networks' policy.
To reiterate our financial outlook, we encourage listeners to review the full list of risk factors included in the Safe Harbor statement in today's financial results press release.
We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year over year comparisons referenced non-GAAP numbers, except where otherwise noted a reconciliation of non-GAAP measures to GAAP measures is included in the appendix to today's financial results press release, which can be found on the investor page of our website and in today's press release announcing our results.
<unk>.
Turning to the agenda cambium, Networks' President and CEO of <unk>, who will provide the key investment highlights for the third quarter 2022, and Andrew Bronstein Cambium, Networks' CFO , who will provide a recap of the financial results for the third quarter 2022 and present, our financial outlook for the fourth quarter of 2022, our prepared remarks will be followed by a Q&A.
Session I'd now like to turn the call over to a tool.
Thank you Peter.
Cambium continued growth in our third quarter with revenues of $81 2 million.
Increasing 17% sequentially.
Ahead of the high end of our outlook of between $72 million to $76 million announced during the Q2 'twenty two quarter call.
Profitability improved significantly.
With strong gross margins and EPS of <unk> 40.
Ahead of the high end of our outlook of between 16 and 20.
We saw improved supply of complements, but enterprise products, including record revenues for Wi Fi switching and SaaS solutions.
<unk> had better product mix and spending was lower than anticipated due to our tight cost controls.
We anticipate improving demand for fixed wireless point to Multipoint BMP solutions, driven by new technologies and stronger demand for point to point PTP for defense applications.
Enterprise solutions also remains strong.
And we expect further improvement in the supply chain.
We had an exceptional quarter for our enterprise solutions with record demand growing 60% sequentially and increasing to 57% year over year, including record by five 6%.
Wi Fi six and switching revenues.
Our switching business has strong backlog, which we were able to fulfill during Q2 'twenty two.
We continue to gain market share and now expect our enterprise business to grow by more than 50% for calendar year 'twenty two.
During Q3, 'twenty, two we shipped our $13 million radio.
BNP business revenue decreased 8% sequentially and decreased 48% a year due to lower demand service providers moved from our legacy BNP 450 products.
Head of the ramp of new gigabit technologies, including.
Both 2000, <unk>, where five G fixed technology and the introduction of $60 products expected during Q4 2002.
The PW business decreased by 2% sequentially during Q3 22 year.
<unk> revenues improve 11% due to higher shipment for our federal defense business, using Campion Speedy B 700 technology or fixed wireless broadband communications.
We had our largest quarter of defence bookings in the company's history. During Q3 22, although hurricane in Florida cause delays in shipments at the end of Q3 22.
We expect higher defense shipments during Q4 2002.
Our enterprise business had record revenues of $38.3 million during Q3, 22, increasing by $14.4 million or 60% sequentially.
And higher by $27 $6 million or 257% year over year, you to record demand for our Wifi, six and 60 solutions.
Record switching revenues and increased growth and sat solutions.
We have established a strong reputation for our enterprise feature set and product quality.
And not being well received by the hospitality edgy.
Education healthcare and other <unk>.
Looking at some notable customer wins and new product development.
In North America, a large wireless service provider in Texas community Internet providers CIP selected cambium BMP 450 platform.
Heat and 60 gigahertz <unk> wait for Greenfield sites.
Can be selected for its superior performance and attractive total cost of ownership planning capabilities, including FCC mandated broadband data collection, BDC reporting and scalability.
The customer was previously with one of our largest competitors and has signed a long term agreement to deflect cambium products.
In Kentucky Midway University.
Selected campaign enterprises Lifeflight.
Switching and 60, Giga horsey and with fixed wireless backhaul to upgrade their network.
Emulous selected due to our portfolio breath.
Superior performance and both indoor and outdoor applications.
Cambium 60, Giga Hersey and we are selected to deliver high speed access to remote locations that would have otherwise they're quite expensive fibre to reach.
And the Europe , Middle East and Africa region EMEA.
We continued to have healthy demand for our enterprise business and continue to win larger projects.
We received a substantial commitment from a service provider in Northern Africa for our new 28 gigahertz team, we have five G fixed platform we.
We wanted this deal as a result of camera quality reliability.
Reliability scale Liberty and our technology roadmap.
We have two large managed service provider MSB wins in France for initial deployment and the hospitality where to go.
These Vince included cambium sci-fi six access points.
And see in my throat X cloud management solutions.
<unk>, one netbook makes it easy to plan deploy and manage affordable gigabit speeds for the home and enterprise.
In the Asia Pacific APEC region.
We had a strong quarter and the hospitality vertical with a sizeable enterprises wind.
At a large chain of luxury hotels in India.
Almost 16 locations can.
Can be selected through a leading hospitality MSP partner for better oral Wifi performance.
Total cost of ownership easy management with C N maestro and strong support.
And in Caribbean, and Latin America Gala region, we had a smart city win for the city of Rio de Janeiro for our enterprise business, including both our Wifi six access points and CMS X software to provide 5100 Wi Fi hot spots across the city.
Turning to new product introductions since our previous quarterly updates.
The industry is eagerly awaiting the availability of new six gigahertz spectrum to enable the delivery of gigabyte data rates to the edge of the network.
Campaign will have an industry leading position when our next generation multi gigabit eat BNP 4600 product is released before year end.
Approximately 10 customers are doing proof of concept of our technology and we have already received our first significant order.
One customers utilizing an experimental license achieved actual throughput of 1.8 gigabit per second at 1.5 miles.
With 1.2 gigabit per second download and 640 megabyte per second upload.
Each subscriber modules.
Cambium six gigahertz <unk> 4600, Leverages the significant technology advantages of April two Dot 11 X standards technology and provide high performance than our competition at a significantly more affordable cost.
Use of six gigahertz was fixed wireless point to multi point operation is available in the U S. Today on a limited and controlled basis. However, broad access will require use of automated frequency coordination AFC.
AFC similar to citizen's band Radio services Cbr's, the spectrum excess service assess.
In that it facilitates sharing a spectrum, but the incumbent users.
We expect the F C C to approve use of AFC in early 2023, and advil CVR assess.
We intend to provide a complete solution.
Including hardware and AFC services understand <unk>.
In the enterprise market, we are launching new outdoor access points in Q4.
Including a by five six products are high volume outdoor markets such as public lifeline.
Fatality education municipality transportation and logistics application and.
Connect rise life by 660 software defined radio.
Targeted for outdoor use for a higher education stadiums and campuses.
And 60 gigabytes with recently introduced the new <unk> 2000, which fills out our 60 gigahertz CMV portfolio for the service provider market.
The new product features longer range than our <unk> 1000 product and filled the mid range customer needs.
This technology targeted for the CCTV.
Wireless Internet service provider.
Warehousing logistics.
And smart city markets.
The product offers point to point connectivity with up to three six gigabit per second in the range of up to one kilometre.
Also within the hour 60, Giga artsy and weird product lineup.
Do you think a one gigabit and two gigabyte bridge in the box solutions.
Which provide a pair of scene, we have radios preconfigured for autobus operation, but connectivity for up to one kilometer away.
Deployment friendly solution can be used for high bandwidth internet connectivity, including remote cameras are CCTV video feeds.
For activities, such as concerts athletic even farmers markets Autocorrect cables largest machine shops Barnes all garages.
Within Cambium 28 gigahertz scene with five G fixed.
Our four by four multi user <unk>.
And software defined radio architecture delivery for 100 Megabits per second speeds was released in late two three and is now available.
Our next version of 28 gigahertz <unk> five G fixed featuring even higher performance, including eight by eight multiuser mindful and speeds up to gigabit per second will become available within a few quarters with a software update.
Network operators are now able to support killed deployment for business and residential subscribers in urban suburban and rural location to escape.
After R Q3, 22 quarter and.
Cambium landed one.
One of the largest BMP contracts in our company's history.
Multi million dollar per year multiyear deal for 28, gigahertz, Ian where five G fixed from our customer in the caller region.
We're very excited that customers have validated our technology and we are now moving into the commercial phase of deployment with larger size deals.
Looking at RCN Maestro cloud software.
Our end too and cloud powered connectivity solution to manage the network from a single pane of glass.
So C in Mysore cloud software continued to experience strong user growth.
Devices under cloud management, and Q3 22 was over 866000, an increase of over 3% from Q2, 22 and up approximately 21% year over year.
But our premium see in my throat X offering we booked a major deal with the large service provider in Asia for 20000 seats or fixed wireless broadband during the third quarter.
And continuing to see healthy growth in revenue for this product.
Revenue for seeing my ex which includes both enterprise and fixed wireless solutions grew to 127% sequentially during the third quarter.
Turning to the channel.
In Q3, 2002, we expanded our channel president by adding over 285% net new channel partners sequentially and over 1400, net new channel partners year over year.
Which represents an increase of 2% sequentially and 13% year over year.
We've continued to expand our reach into new mid market customers around the world.
Also in the channel in early October Cambium participated I developed ended whisper palooza fixture.
Which is focused on service providers and channel partners within the industry and features several new product introductions from cambium, including $60.
$60.
28 gigahertz home <unk>.
Can be M C and heat RF mapping tool received a 2022 Whisper Association service of the year Award.
C N heat makes it easy for all fixed wireless broadband service providers to plan their fixed wireless access networks assess.
Assess the effective coverage of the networks.
Market their services to served addresses and.
I need the FCC mandated broadband data collection BDC reporting requirements.
Software is becoming an increasingly important part of can be Ms growth story.
And is not showing up in more meaningful way.
And our financial results.
I will now turn the call over to Andrew for a review of Q3 22 financial results in queue for 22 outlook.
Thanks, a tool.
Cambium reported revenues of $81.2 million for Q3 22.
Revenues increased by 17% quarter over quarter and increased 7% year over year.
During the third quarter or global supply constraints continued to ease.
Leading to increased production and shipment of our high demand enterprise products.
On a sequential basis for Q3 22.
Revenues were higher by $11.9 million.
The higher revenues were primarily the result of increased enterprise solutions.
While Pnp revenues were lower for legacy Pnp 450 products ahead of customers anticipating a technology transition.
Partly offset by improved supply benefiting EEP MP shipments, while PTP revenues were down slightly.
Moving to our gross margin.
Or non-GAAP gross margin was 51.3% was significantly better than anticipated increasing by 350 basis points compared to Q3 21.
The year over year increase in our non-GAAP gross margin was the result of higher volumes and a greater mix of higher margin enterprise MPTP products.
On a sequential basis non-GAAP gross margin improved by 240 basis points compared to Q2 22.
The higher quarter over quarter non-GAAP gross margin was the result of higher volumes and increase mix of enterprise solutions.
Hi cost controls lower freight costs.
And increased pricing offset in part by higher component costs due to inflation.
As well as supply chain challenges.
Q3 hundred 22 are non-GAAP gross profit dollars, a $41.6 million increased by 5.4 million compared to the prior year due to higher volumes and improved mix of enterprise products.
And increased by $7.8 million sequentially.
Because of higher volumes improved pricing at a higher product mix of enterprise products as well as lower freight costs.
This was offset in part by higher component costs due to inflation and supply chain challenges.
While we achieved our target gross margin on a quarterly basis are longer term goal remains a consistent.
Gap gross margin target of 51% to 52% on an annual basis.
non-GAAP operating expenses, including amortization in Q3 twenty-two increased by approximately $300000 when compared to the Q3 21.
And stood at $27.9 million or 34.3% of revenues.
The increase in operating expenses compared to the prior year period was primarily due to higher travel costs related to sales and marketing <unk>.
Increases in G&A for professional services, and IP offset by lower variable compensation and tight cost controls around head counts.
When compared to Q2 22.
non-GAAP operating expenses increased by approximately $300000 as well.
Quarter over quarter sales and marketing increased slightly primarily because of higher promotional materials R&D increased relating to the timing of expenditures for materials. While G&A was lower do do less professional services as a result of our tight cost control.
Now I got operating margin for Q3 hundred 22, with 17% up from 11.4% during Q3, 21 and up from 9.1% of revenues and Q2 22.
No I got net income for Q3, 22 was $11.3 million or 40 cents per diluted share.
Above the previous outlook of between 16, and 20 cents per diluted share and compared to $6.7 million or 23 cents per diluted share for Q3 21.
And I got net income of $5 million or 18 cents per diluted share for Q2 22.
Hire non-GAAP net income compared to the prior year period was primarily due to a higher gross profit dollars.
A higher net income compared to the prior quarter's results was primarily a result of both higher revenues and gross profit dollars.
A just an EBITDA for Q3 hundred 22 was $14.7 billion or 18.2% of revenues.
Repair to $9.6 million or 12.6% of revenues for Q3 hundred 21 <unk>.
Compared to $7.8 million or 11.3% of revenues for Q2 22.
Our operating model remains solid we are beginning to regain some operating leverage our business.
As cambium revenues exceeded $80 million.
We remain committed to consistently driving our adjusted EBITDA to a long term target of 18% to 19% of revenues.
Now moving to cash flow.
Cash provided by operating activities was 2.2 million for Q3, 22 and compares to $11.8 million for Q3 hundred 21 in 10 million for Q2 22.
Our cash flow as impacted as we increased accounts receivable as a result of higher revenues and timing and certain product inventories increased to support the anticipated growth and our business.
Turning to the balance sheet.
Cash totaled $44.9 million as of September 30th 2022, a decrease of $1.1 million from Q2 22.
Sequential decreasing cash primarily reflects higher accounts receivable due to growth in revenues and increased inventories to support the faster growth in our business.
That inventories of $56 million.
In Q3, 22 increased by approximately $21.9 million a year every year, while increasing by $3.2 million from Q2 22.
Inventories were higher sequentially because of an increase in component and finished crude inventories as we continue to grow the business.
While the supply chain remains an ongoing challenge we are working to selectively increase our inventory positions and certain products for the remainder of the year.
In addition, we recently announced that we are selectively increasing prices by an average of about 5% for a wide range of products due to inflation and supply chain costs that have resulted in higher manufacturing costs, including the cost of chips.
This price increase will take effect for all orders placed on or after November 26th.
Or wherever we will not increase prices for backlog as.
As long as the customer requests a ship date that is within our publish lead times.
And on or before March 31, 2023.
We expect the full impact of this price increase to be realized by Q3 23.
In summary, the third quarter was much better than anticipated due to strong demand for our enterprise products.
Full quarter of.
Interrupted operations in China and.
And it continued improvement in our supply chain environment.
Our backlog remains strong and we are at the start of new product cycles. We.
We expect to continue to regain scale improve operational efficiency and make significant progress towards achieving our long term target operating model <unk>.
Moving to our fourth quarter outlook.
Cambium networks financial outlook does not include the potential impact of any possible future financial transactions acquisitions pending pending legal matters or other transactions considering.
Considering our current visibility as of today are Q4 22 financial outlook is expected to be as follows we.
We expect revenues of between 80 and $84 million, representing approximately 1% sequential growth at the midpoint.
We remain supply constrained in certain components.
Or non-GAAP gross margin, we expect to be between 48.7 49.7 per cent.
non-GAAP operating expenses are between $36 million at $31.6 million and.
And non-GAAP operating income of between 8.4 and $10.2 million in.
Interest expense net of approximately $500000 and non-GAAP net income.
Between $6 $6 million and $7.8 million, we're net income per diluted share between 23 and 27 cents.
A just an EBITDA between 9.5 and $11.3 million and adjusted EBITDA margin between 11.9 and 13.4%.
A non-GAAP effective income tax rate of approximately 17 to 20 per cent.
And approximately $28.5 million weighted average diluted shares outstanding.
Our cash requirements are expected to include a paydown of debt of $700000 cash.
Cash interests of approximately $400000 and tap acts of between two and $2.2 million.
I will now turn the call back to a tool for some closing remarks.
We delivered as solid quarter of results and not expecting a strong finish to the year.
Ending on a high note that increased revenues strong profitability.
Significant new product introductions, increasing ship supplies and it it.
Turn to growth for our BNP business, driven by 60 gigabytes <unk>.
<unk> five G fixed.
The imminent launch of affordable $60 fixed wireless solutions.
Our enterprise business admin strong.
Led by Wifi, six and succeed.
Wireless service switching products and solid growth and our software the service solutions.
Cambium, one network integrated wireless fabric is resonating with customers and brings together he's a deployment scale liberty of networks and lower total cost of ownership as the word deploys next generation high performance wireless broadband.
We remained focused on judiciously, managing our costs <unk>.
Improving our operations continued to invest in innovative products to maintain our tech technology edge and expect increased scale will benefit our future operating results.
I would like to show my appreciation for our employees.
Partners and customers during these unprecedented times.
This concludes our prepared remarks, so with that I would like to turn the call over to Sean and begin the Q and a session.
Thank you.
At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced <unk>.
Please limit your time to one question and one follow up.
One moment, while we put the questions in queue.
Our first question comes from some meat chatter G with J P. Morgan to make your line is open.
M P on <unk> on his phone quota.
So my question is regarding like.
<unk> your outlook.
<unk> and <unk>.
<unk> no problem.
Look.
<unk> do you still believe first the <unk>.
Yeah somebody thank you for the question.
My order a message for 2023 is we are very well positioned for solid growth.
Under the reason behind that.
We prepared for this if you look at the amount of innovation last two years, we've been bringing about and we are working very diligently on technology Validations for the next generation networks.
So all all out organic growth.
In 2023, I think mid teens type of a number around that we feel pretty good.
Five G fixed rule out is happening.
We are beginning to see larger deals and now poof points are coming as I mentioned my call.
BNP differently in Q4 starts turning around with the new products.
We have proof points with $60 as I mentioned, one pointed gigabit per second 1.5 miles now we got beyond that validation and there's Netflix will scale supply situation is improving for us.
Enterprise growth continues and can be with a mid tier market Heptangular doesn't go out to a really large service providers worldwide, which is very seasonal but we go after the mid tier market both for enterprise and for service providers, which is very resilient for us. So we feel pretty good about to integrate three.
Okay. Thank you.
Thank you.
One moment for our next question.
Our next question comes from Scott <unk> with Roth Capital Partners.
Hey, good afternoon, nice job on the quarter guys on the C. Wi Fi business recovering pretty strongly there maybe maybe just the dive right in a tool looking at your guidance for the fourth quarter gross margins coming down a little bit sequentially I assume part of that is is just margin mix less Wifi.
So I was wondering if you could kind of talk us through the puts and takes on that front, particularly how you see point to multipoint ramping up into the fourth quarter and how the supply chain is behaving on that front.
Yeah, I'll take that one and thanks for the question so.
So we see the gross margin coming down a bit in the fourth quarter and you're exactly right to speak because mainly of mix.
And.
As we said during the commentary we had we were able to fulfill some accumulating backlog, especially in the enterprise switch area and.
And and the level of revenue that we see coming from that in the fourth quarter will likely be lower than the third quarter and that will have an impact on the on the margin.
Also there's a as we mentioned during the call product transition in terms of Pnp and we do see.
Pnp beginning to get to a growth stage in the fourth quarter on a sequence on a sequential basis.
And that's going to be driven by the new products that we're introducing into a into the market and commercializing.
And then also we still see the impact of inflation in terms of cost increases from our suppliers and that's one of the reasons for the increase in the major reason for the increase that I mentioned in terms of our pricing.
Beginning later on in queue for.
That impact on pricing.
We'll have a very minimal effect in the quarter.
But begin to ramp up.
You know more so in the second quarter of next year and the full impact in the third quarter as we look ahead.
Maybe just to.
Describe your savings is Edward.
What Andrew mentioned I think in general Andrew and I, both feel very good about our long term model of.
51% to 52% for three reasons.
Reason number one the software is playing more and more meaningful rolling Cambium, and just said again has been a two year work.
I can mix, there's also going to help us as we move forward with our new products with enterprise and new designs, which are coming out and third defenses, becoming an even larger business. So I think in general the margin gross margin is in the right direction and we feel pretty good where we will be in some sort of lumped a month.
That's that's very helpful. If I could just follow up on that point and then I had one follow up the just.
Just the component challenges the point of multi point front for the new products are you pretty well positioned on that and then talking about the 51% to 52% gross margin is that something that's achievable in.
In 2003, and then if I could specifically around six gigahertz huge market opportunity. There I know you're just starting to ship now, but a tool I was wondering if you could put a framework around it in terms of quantifying the interest level, what that pipeline of opportunity looks like or where you think that's gonna be in 2000 twenty-three cause huge huge.
Product opportunity there given the price points that you can be delivered gigabit like speeds [laughter] I'm kind of wondering what's gonna deemed success for that product line. When we're looking into 2023. Thanks.
Okay. Let me let me take six gigahertz question first because I think that's a strategic cushion.
We were very gratified and very pleasantly surprised as our 10 pilots come back with performance numbers and <unk> excuse me never shared that performance number of that 1.8 gigabyte at 2.1 miles, but now customers are seeing wow.
Very affordable products.
Very large large bandwidth to have a level. So six gigahertz is going to be a I think it very strong product lineup cambium, having said that I would still say that first half of 23 will be lots of trials poc's across the board and again working with FCC, making sure. The AFC all that gets approved and we have a.
Can closely with them. So my senses that second half is when you will see.
Lots of those Poc's turn into production networks, but that's one key 0.2nd is the cambium key strategies based on Muslim Silicon standards based and very affordable price. So it matches all of that so very excited and U S will lead it the rest of the world letting will follow up to that and on the 51% to 52%.
Gross margin, let me pass it too.
Yeah. So on the on the long term operating model. The 50, 152% I think that that we will see within the next two years I do think that next year as we as we continued to improve our mix and and and look at a trade off of headwinds in front of us in terms of inflation is.
Well the way, we see it as we're gonna be in and around the 50% Mark which is a nice improvement over the past couple of years as well.
And in terms of components for new products, Yes, we are well positioned to be able to ship those out as soon as we as soon as we are able to commercialize.
The the products and get approval from the F. C C et cetera, and that's one of the reasons for the increase in inventory as we continued to strategically buy.
Supplies for those products and getting ready for that those product launches. So hopefully that answers all parts of your question.
Okay, great. Thanks, so much great job on the quarter.
He was Scott thank you.
One moment for our next question.
And our next question comes from George non or with Jeffries.
Hi, guys. Thanks, a lot. This is carl on for George not Earth. Thanks for the question, we're trying to get a sense for how much of your Wifi momentum right now is driven by a demand versus more of the easing of supply that you're talking about where wifi components just easier to get <unk>.
Can you quantify it at all how much he thought the quarter came from a benign supply versus demand picking up and is there any other structural reason why you'd see more growth in Wifi versus Pnp MPTP you know other than the fact that the P. T. P. As this wait for effect going into the fourth quarter. Thanks.
Thanks Bye bye.
Paul in Wifi can.
Cambium is emerging as a strong mid-tier enterprise player globally, I think that's a pretty important statement I'm, making.
It has taken us five to seven years with the right roadmap right features understanding customer needs. We are now a strong brand and that'll make to your segment.
Just to give you an idea how much growth or acceleration.
Adoption cambium is getting we have added in last three quarters 2600, new customers.
And the reason cambium is winning is three words number one simplicity of products are simple.
Number two we have added a lot of automation.
<unk> four scaled enterprise networks and number three affordability are solutions have a lower cost of ownership and by the way. These words, our customers are telling us.
And at this point these segments, which are accelerating for US are managed service providers, serving multiple dwelling units MDU market.
Hospitality Hell.
Healthcare.
Education.
And we are beginning to get into some blurted goes globally, where these these values of simplicity and loyalty seal playing very well. So I think all this is not about chips apply the bigger companies can get most of them can be a scam.
Cadmium is earning its way in through superior solution superiority seal.
Okay great.
Add to that too just in terms of your question about.
About the level of of shipments that happened in the quarter because of improved supply.
I would quantify that somewhere around the 5 million dollar range and most of that is related to what we had said earlier about about the switches that we were able to fulfil and gets it gets supply get inventory to fulfill orders where customers were really wanting that product that particular product and begin.
To fulfill those orders so.
We'll continue to you know, it's it's a very popular product are going to continue to see nice sales in Q4 and beyond but in terms of being able to satisfy kinda backlog.
That was growing it was about $5 million of shipments and al-qaeda add.
We are making us solutions sticky not necessarily buy hardware we.
We are making a solution to keep by providing api's for smart drugs like for example, hospitality in hotels, we are providing none of the good software and my straw and making it easier for them to integrate cambium products in that enterprise applications.
Overall, we feel pretty good about 23 and.
Continue the growth.
Alright, great. Thanks, and one last one for me it.
It looks like the Guy who was solid for for revenue in gross margin going into Q for.
But opex seems a little higher does is are there specific areas of your investing in may.
Maybe ahead of the launch the new products that there's some additional sales and marketing that youre doing could you textbook contextualize anything.
[noise] important that you're spending on right now and when revenue scale might pick up to cover their ethics investment. Thanks, Yeah. There's there's really two areas. One one is within R&D and you're right about the new products and and and.
And the rate that's really regulatory activity that happens as a result of getting approvals ahead of those launches.
And and the other is is with the success that we've had in the enterprise business. This year, which as you know it's going to be in that $100 million range of total revenues for the year.
The sales compensation reflective of that and the people who sell those products will hit overages in the fourth quarter. So there will be some additional sales and marketing costs in the fourth quarter.
Okay. Thanks very much.
As a reminder, if you wish to ask a question. Please press star one one on your telephone.
Our next question comes from Paul <unk> with William K Woodruff.
Thanks for taking my question.
First question is on your switch business I know, you're gaining market share. There you are growing very rapidly versus the the market. How long do you think you can sustain that growth.
In the switches and and who are you taking market share from.
So first of all switching is a very large market and there are a lot of generic players. There are switching business caters still only wireless savvy product the Soviet listed wireless heavy switching and it's a very good companion.
<unk> very very good companion.
<unk> 660 products.
It has a very good cloud management single pane of glass. So I think overall will keep growing.
This is not a generic switch but for the wireless network for a while.
Internet service providers for a mid sized enterprises networks for smart city projects very well positioned to grow in those markets.
Okay. The second question is on the 28.
Your main competitor there.
Mmm.
Wondering are they going to be able to maintain the spend it that you guys have and do they have a two gig coming next year like you guys to do you know if there's one in the works.
I'm 20.
Five G. I think Paul you asked a very good question I think the companies which are.
Which are adopting five G fixed.
Are going to do well because five G is a very key standard which is bringing larkey feature sets and the speeds and feeds and I gave you bet on that three years back and now we have the products.
It does take another good investments I. Thank the Lord wants to enter has to also invest substantially as of now you will see cambium as a very key leader and five G fixed I'm not talking five G. Five G fixed and we don't believe as of now.
There is another company, which has the kind of feature set in performance, we have and decide we are beginning to close those deals. We always had the appeals is going now they're turning into production network. So key answer I dunno, another company, but as the market expands and I'm pretty sure others will enter as well.
Okay. Thank you.
Thanks, a lot.
At 847264 at this time I would like to turn it over to Peter Schulman for closing remarks.
Sean during Q4 22 can't be M networks will be presenting a meeting with investors on November 15th at the need of virtual security networking Communications conference on November 16th at the Roth Capital Technology Conference in New York and December 13th at the Oppenheimer Five G summit in the meantime, you're always welcome to contact our Investor Relations Department.
At 8472642188 with any questions that arise.
Thank you for joining us in this concludes today's call.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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