Q4 2022 Cambium Networks Corp Earnings Call

February 16, 2023

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[music].

Yeah.

Good afternoon. My name is Amy and I will be your conference operator today at this time I would like to welcome everyone to the cambium networks fourth quarter and full year 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will.

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Withdraw your question. Please press star one again, please limit yourself to one question and one follow up question. Thank you Mr. Peter Schuman, Vice President Investor and industry Analyst Relations you may begin your conference.

Thank you Amy welcome and thank you for joining us today for Cambium networks fourth quarter and full year 2022 financial results conference call and welcome to all those joining by webcast.

Bob <unk>, 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 Investor page of our website and the press release has been submitted on form 8-K with the SEC.

Certain revisions were made with within operating expenses in prior periods to conform to the classifications in the current period.

Visions had no impact to operating income.

A 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 and 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 results or to make changes and cambium 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.

Turning to the agenda cambium Networks' President and CEO of <unk> will provide the key investment highlights for the fourth quarter and full year 2022, and Andrew Brown student Cambium Networks' CFO will provide a recap of <unk> financial results for the fourth quarter and full year 2022 and present, our financial outlook for the first quarter and full year 2023.

Our prepared remarks will be followed by a Q&A session I would now like to turn the call over to Atul.

Thank you Peter.

Cambium continued growth in our fourth quarter with revenues up $84 5 million.

Increasing 4% sequentially.

<unk> of the high end of our outlook of between $80 million to $84 million announced during the Q3 'twenty two quarter calls.

Profitability remained strong.

With a gross margin of 49, 6% near the high end of the outlook and EPS up 36.

Exceeding the high end of the outlook.

We had a strong finish to the year in North America with.

With growth in all major product categories.

And sequential growth for our point to Multipoint BMP solutions.

After a record breaking results during Q3 'twenty two that included an incremental $5 million and switching revenues as expected our enterprise business returned to a normalized run rate in Q4 22.

For the full year 2022, our enterprise business grew 64% to $109 8 million exceeding the high end of our original forecast.

This is after a growth of 67% during full year 2021.

For 2023 enterprise growth will be from a much higher base.

With our initial forecast of growth for the enterprise business of 20% to 30% as we continue to innovate with new Wi Fi.

Switching and cloud based software solutions.

And we continue to gain market share globally.

We have grown from approximately 1500 cumulative customers at the time of our IPO in mid 2019 to about 18500 at Q4 'twenty two.

We are now at the start of the next wave of high performance fixed wireless broadband deployment.

Our BNP business.

With the ramp of new Gigabit Solutions, Inc.

Including 28 gigahertz <unk> fixed products.

An acceleration in the growth of our 60 gigahertz products.

And the introduction of disruptive six gigahertz BNP products during Q4 'twenty two.

Which delivers industry leading price performance.

Final FCC approval for outdoor use of the six gigahertz spectrum is expected around mid year 2023.

The FCC has already started approving special temporary authority licensing FTA for proof of concept networks.

Turning to the results of the fourth quarter 2022.

Looking at revenues across our product lines, our BNP business revenues increased 14% sequentially and decreased 20% year over year as service providers are beginning to move from our legacy PM before 50 products to the new gigabit technologies.

We did see an acceleration of growth, but our multi gig 60 gigahertz <unk> solutions as service providers are gaining an understanding of how to deploy the technology at scale to take advantage of the benefits of multi gigabit bandwidth.

Low latency and.

Inefficiency with hybrid fiber and cable networks.

The PDP business revenues increased a healthy 38% sequentially.

While improving 39% year over year during Q4 'twenty to.

Due to higher shipments for our federal defense business in North America, as well as growth in EMEA and Carla using cambium, PTP 700 mission critical technology or fixed wireless broadband communications.

<unk> has been selected to supply our PTP defense products to over 10 key programs of record.

For the department of Defense.

We expect continued strong defense shipments during 'twenty two 'twenty three.

As expected our enterprise business declined sequentially decreasing by $6 3 million or 17% after a record revenues of $38 3 million.

During Q3, 'twenty, two which included the previously mentioned catch up shipments bus switching.

While higher by $6 2 million or 24% year over year.

The year over year growth was driven by increased demand for our Wi Fi six and six E solutions.

Switching revenues.

And growth in our SaaS solutions.

For the full year 2022 revenues of $296 $9 million decreased 12% from 2021.

<unk> 22 decline was driven by a BNP products, which declined 44% from the prior year, partially offset by the growth of our enterprise business, which.

<unk> had a record year, increasing 64% for the full year 2020 to breaking the $100 million threshold for the first time in <unk> history.

While our PTP business grew 10% compared to 2021 revenues due to the strength of our federal defense business.

It is notable that our enterprise business represented 37% of the company revenues during calendar year 2022, compared to 20% of revenues for 2021.

In the long term, we anticipate our enterprise and BNP businesses will each represent approximately 40% of our total revenues as we ride the new growth S curves, while PPP will represent the remaining 20%.

We do foresee the return to modest growth for the BNP business, driven by new product momentum and <unk>.

You got hurt upon the FTC's approval as expected to drive revenue growth during the second half of the year.

As well as the continued ramp of 28 gigahertz and 60 gigahertz millimeter wave solutions, the new five gigahertz and six gigahertz products for both the <unk> and BNP for 50 product lines.

Both 60 gigahertz and 28 gigahertz <unk> solutions have recently brought in several multimillion dollar deals.

Looking at some notable customer wins and new product development.

In North America, Salt Lake City placed an order for 60 gigahertz <unk> connectivity as part of the Smart city deployment.

Can be selected for our portfolio breadth and ability to deliver backhaul and access with a single management platform.

A division of the third largest cable TV provider in the United States, serving $3 5 million Internet subscribers.

<unk> introduced a new business service for customers through our system integration partner future deck.

The service utilizes cambium 60 gigahertz.

And we have a solution to fit between fiber and <unk> assets as part of the new private network offering for multi gigabit connectivity.

We had a large order for <unk> solutions from a Canadian operator in Alberta Mcs net.

Ah 60 gigahertz network build out they were attracted to our 60 gigahertz products as it offers gigabit speeds at a much lower total cost of ownership than fiber.

We have already deployed in 12 communities so far with a goal of 44 connected communities during 2023.

This is an example of where we are seeing a resurgence in our 60 gigahertz business upgrade initial period of gestation.

In the Europe , Middle East and Africa region EMEA, we continue to have healthy demand for our enterprise business and are winning larger projects.

<unk> had a customer win with a fiber network operator in South Africa. It this way.

But our outdoor Wi Fi with the goal of connecting households up to 100 megabit per second and a disruptive cost model for the consumer. It. This way aims to increase its number of homes connected from 4500 in December 2022 to 22000 2023.

In the Asia Pacific APAC region, we landed our first network as a service Nast win to enable rural connectivity in Sumatra, Indonesia.

This first <unk> order in the region is for 500 homes and includes our Wi Fi and <unk> X cloud software.

This is in addition to our <unk> for fixed wireless broadband access.

Upon successful deployment of this first order, we expect a larger multi year volume agreement.

And in Caribbean, and Latin America color region in Brazil, we partnered with Qualcomm and.

In collaboration with the National Telecommunications Agency, Nfl's and Telium to demonstrate the first use of the six gigahertz band and an outdoor area in Campo below neighborhood of Sao Paulo.

The collection featured cambium outdoor Wi Fi 660 access points.

Six gigahertz BNP 4600 for fixed wireless infrastructure CN.

CN metrics wireless savvy switches and CN Metro X cloud management software.

The demo became available for two months starting on December 3rd for visitors and the surrounding area.

<unk> included the use of automated frequency coordination AFC spectrum sharing platform to ensure that there was no interference with fixed point to point systems existing in that region.

And to demonstrate its oral speed performance and reliability.

Turning to upcoming product introductions since our previous quarterly update.

While the industry is excited about the future of a liberty of new six gigahertz spectrum to enable the delivery of gigabit data rates to the edge of the network.

With FCC approval.

Cambium also continues to push the envelope with affordable New five gigahertz solutions with our <unk> 4500, featuring <unk> Mimo and over three gigawatts of capacity with up to 80 megahertz channels and enable us non line of sight to select subscribers.

The <unk> 4500 is a powerful and transformative product, which we expect will penetrate the market due to its high performance and affordability compared to other alternatives in the market, especially to take market share from our competition in the service provider space ahead of the FCC's approval of six gigahertz spec.

From.

Looking at our CN MISO cloud software our end to end cloud power connectivity solution to manage the network from a single pane of glass.

The CN MISO cloud software continued to experience strong user growth.

Total devices under cloud management in Q4 22 was over 898000, an increase of 4% from Q3 to 22.

And up 21% year over year.

Turning to our channel in Q4 'twenty to <unk>.

Expanded our channel presence by adding over 425, net new channel partners sequentially.

Over 1300, net new channel partners year over year, which represents an increase of over 3% sequentially and 11% year over year.

We continued to expand our reach into new customers around the world.

I will now turn the call over to Andrew but a review of our Q4 22 and full year 'twenty two financial results and Q1, 'twenty three and full year 'twenty three outlook.

Thanks Atul.

Cambium reported revenues of $84 5 million for Q4 'twenty to <unk>.

Revenues increased by 4% quarter over quarter and increased by 7% year over year.

Okay.

On a sequential basis for Q4 22.

Revenues were higher by $3 $3 million.

The higher revenues were primarily the result of increased PTP revenues for defense products at.

And an increase in Pnp products as a result of our 60 gigahertz <unk> and <unk> products.

While enterprise solutions decreased after a record Q3 dollars 22, which included the $5 million catch up in switching revenues due to supply chain shortages in previous quarters.

For the full year 2022.

Revenues of $296 $9 million decreased by $39 million or 12% compared to the full year 2021.

The decrease is a result of lower <unk> revenues, which declined by $89 8 million or 44% compared to 2021.

Due to product transitions to the next generation six gigahertz and 28 gigahertz <unk> fixed solutions.

We had record enterprise revenues of $109 8 million during 2022.

Which grew by $42 9 million were 64% compared to 2021 and.

And our PTP revenues increased by $6 3 million to $67 1 million.

Were an improvement of 10% compared to the full year 2021.

Due to strong demand for our defense products.

Moving onto our gross margin our non-GAAP gross margin of 49, 6% was better than anticipated.

Increasing by 540 basis points compared to Q4 dollars 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 and PTP products.

And lower freight costs.

On a sequential basis non-GAAP gross margin was lower by 170 basis points compared to Q3 dollars 22 to.

The lower quarter over quarter non-GAAP gross margin in Q4 dollars 22 was the result of a higher mix of lower margin Pnp products and as expected a decline in enterprise switching revenues.

Offset in part by higher PTP revenues and higher component inventory costs.

In Q4, 'twenty two our non-GAAP gross profit dollars of $41 9 million increased by $7 1 million.

<unk> to the prior year due to higher volumes and improved mix, a PTP and enterprise products and.

And lower shipping costs.

And increased by $276000 sequentially, mostly as a result of higher revenues offset in part by the higher component costs due to inflation.

For the full year 2022 non.

non-GAAP gross margin improved by 130 basis points to 49, 5% compared to 48, 2% for 2021.

Due to an improved mix of our higher margin enterprise and <unk> product lines.

Our longer term goal.

Remains a consistent non-GAAP gross margin target of 51% to 52% on an annual basis.

non-GAAP operating expenses, including amortization in Q4, 'twenty two decreased by 348000, when compared to Q4 dollars 21 and.

And stood at $28 7 million or 34% of revenues.

The decrease in operating expenses compared to the prior year period was primarily due to lower variable compensation and tight controls around head count offset by higher sales and marketing costs related to travel and trade shows and higher wages, while R&D remained flat.

When compared to Q3 dollars 22, non-GAAP operating expenses increased by approximately $850000 quarter.

Quarter over quarter sales and marketing expenses increased primarily because of higher wages and sales accelerated news related to our enterprise business.

And increased trade show and travel expenditures.

While R&D increased as a result of higher staffing costs related to development work on new products and G&A decreased due to tight cost controls.

For the full year 2022, non-GAAP operating expenses decreased by $1 $6 million and stood at $112 7 million compared to $114 3 million for 2021.

The lower non-GAAP operating expenses during 2022.

Slept less variable compensation offset by higher wages due to inflation.

We will continue to maintain our strong cost controls.

non-GAAP operating margin for Q4, 'twenty two was 15, 6% up from seven 3% during Q4 'twenty one.

And down from 17% of revenues in Q3 dollars 22.

For the full year 2022, our non-GAAP operating margin was 11, 6% compared to 14, 1% in 2021.

Primarily reflecting lower revenues and less scale, resulting in fewer gross profit dollars. Despite an improved mix of revenues.

non-GAAP net income for Q4, 22 was $10 3 million or <unk> 36 per diluted share above our previous outlook of between 23 to <unk> 27 per diluted share and compared to $4 4 million or <unk> 16 per diluted share for Q4 'twenty one.

non-GAAP net income of $11 3 million or <unk> 40 per diluted share.

During Q3 dollars 22.

The higher non-GAAP net income compared to the prior year period was primarily due to higher gross profit dollars, while lower net income compared to the prior quarter's results was primarily result of higher sales and marketing costs.

For the full year 2022, non-GAAP net income was.

It was $26 9 million or <unk> 94 per diluted share compared to $35 $6 million or $1 26 per diluted share in 2021.

Adjusted EBITDA for Q4, 22 was $14 3 million or 16, 9% of revenues compared to $6 7 million were eight 6% of revenues for Q4 'twenty one.

And compared to $14 7 million or 18, 2% of revenues for Q3 dollars 22.

The full year 2022, adjusted EBITDA was $38 8 million or 13, 1% of revenues compared to $51 2 million or 15, 3% of revenues for the full year 2021.

Our operating model remains solid and we remain committed to consistently driving our adjusted EBITDA to our long term target.

Of 18% to 19% of revenues.

Now moving on to cash flow cash provided by operating activities was $4 million for Q4 'twenty two.

And compares to $5 6 million for Q4, 'twenty, one and $2 2 million for Q3 dollars 22.

Our cash flow was negatively impacted as we increased inventories and materials to support new products and to take advantage of supply chain opportunities for the anticipated growth of our business.

And we increased accounts receivable as a result of higher revenues.

Now turning to the balance sheet, our cash totaled $48 2 million as of December $31 22, an increase of $3 3 million from Q3 dollars 22 to.

The sequential increase in cash primarily reflects collections on higher revenues and changes in working capital.

Our net inventories of $57 1 million in Q4, 'twenty to increase by approximately $23 $3 million year over year, while increasing $6 4 million from Q3 22.

Inventories were higher sequentially because of an increase in inventories as we continue to grow our business and take advantage of supply chain opportunities.

The increased level of inventories reflects the anticipated higher demand for federal products enterprise solutions and the ramp of new <unk> products during the second half of calendar year 'twenty three.

In summary, the fourth quarter played out better than anticipated.

As predicted our Pnp business grew sequentially.

Our gross margin remained strong we continue to see improvement in our supply chain environment.

Our backlog remains solid and we were at the start of new product cycles.

During 2023, we expect to gain scale and improve operational efficiency and make significant progress towards achieving our long term target operating model.

As expected while the supply chain continues to improve there are still areas of component shortages in certain products and longer lead times as compared to pre COVID-19 levels.

Moving to the first quarter and full year 2023 financial outlook.

Cambium Networks' financial outlook does not include the potential impact of any possible future financial transactions acquisitions pending legal matters or other transactions.

<unk>, our current visibility as of today, our Q1 'twenty three financial outlook is expected to be as follows.

Revenues between 74% and $80 million representing growth of approximately 20% to 29% year over year.

And a decrease of between 5% and 12% sequentially due in part to seasonality in our PSP business and slowing world economies while.

While our defense business and PTP remained strong.

non-GAAP gross margin of between $49 to 58%.

non-GAAP operating expenses between 36 million to $31 6 million.

And non-GAAP operating income of between $5 $89 million.

Interest expense net of approximately $600000 and non-GAAP net income of between $4, one and $6 8 million or net.

Net income per diluted share of between 14 and 23 cents.

Adjusted EBITDA between six $8 million to $10 million and adjusted EBITDA margins between $9, two and 12, 5%.

Our non-GAAP effective income tax rate of approximately 17% to 21%.

Approximately $28 9 million weighted average diluted shares outstanding.

Cash requirements are expected as follows payday.

Pay down of debt of $700000 cash interest of approximately $400000.

And capex of between three and $4 million.

Full year 2023 financial outlook is expected to be as follows.

We expect revenues of between $327 million and $345 million, representing approximately 10% to 16% revenue growth.

non-GAAP gross margin of approximately 50%.

non-GAAP net income of between 33, 9% and $36 $4 million or net income per diluted share of between $1 17 to $1 25.

Adjusted EBITDA margins of between 14, 5% to 15%.

For the year, we expect capex to be approximately $14 million to $18 million, mainly driven by an expansion in our R&D labs and equipment.

Along with software costs in connection with new products.

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

We delivered a solid quarter of results with increased revenues excellent profitability.

And a strong balance sheet significant new product introductions and a return to growth for our BNP business driven by our 60 gigahertz <unk>.

28, gigahertz <unk> fixed.

And the launch of affordable six gigahertz fixed wireless BMP solutions.

Our enterprise business remains strong led by Wifi, six and <unk> E.

Wireless savvy switching products.

And an increased offering of our software as a service solutions and excellent Onboarding of new large managed service providers.

We expect the enterprise business to grow between 20 and 30% during calendar year 'twenty three.

We can be on one network integrated wireless fabric has become a reality.

Lighting customers ease of deployment.

Celebrity of networks and lower total cost of ownership as the word deploys next generation high performance wireless broadband networks.

During 2022.

Diversified and made our business more resilient.

We remain focused on judiciously managing our costs.

Improving our operations.

Turning to invest in innovative products to maintain our technology edge.

And expect increased scale will benefit our future operating results.

As we look to 2023.

Our six gigahertz.

28, gigahertz <unk> technology.

Millimeter wave products and upcoming fiber products will expand our markets and continue to propel cambium and the fixed wireless broadband market.

Our defense business is expected to continue growing as national security has become a global issue.

And our reach into managed service providers and multi dwelling units.

We will broaden and strengthen our enterprise business and position us for continued strong growth.

We will expand our software and services offerings.

And add even more features security and functionality.

Our flagship <unk> platform.

Our focus will be on solutions that our customers want keeping a keen eye on how our products mesh with customer applications and network automation.

Cambium has now graduated from building just radios to delivering an exceptional customer experience through our extensive broadband solutions that bring delight and confidence.

Given the humanitarian crisis unfolding in Turkey last week.

Cambium is contributing wireless broadband solutions in the country for connectivity to loved ones to support the citizens and relief workers and the hardest hit areas.

I would like to show my appreciation for our employees partners and customers for their resilience as we return to growth.

During the second half of calendar 2022.

This concludes our prepared remarks, so with that I would like to turn the call over to Amy and.

And begin the Q&A session.

We will now open the call for your questions. As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one again, please limit yourself to one question and one follow up question.

Please standby, while we compile the Q&A roster.

And our first question comes from Simon Leopold with Raymond James Your line is open.

Thanks for taking the question.

First I just wanted to knock out a quick clarification.

In the prepared remarks.

Two I think you've talked about.

The mix being roughly 40% PMT.

40% Wi Fi, our enterprise and 20% PDP, but I wasn't sure what timeframe you are thinking about those targets whether that was your 2023 view or something longer term and then I've got a follow up yes. Thanks, Simon that's a long term model generally long term model for US is two to three years.

<unk> frame and especially BNP is a very key foundation of cambium with would be the resurgence of new product innovations. We are doing with gigabit connectivity millimeter wave <unk>. So that just tells you the confidence we have that in the long term model you will see <unk> enterprise.

Probably equal.

And PDP about 20%.

Thanks, and then a little bit more I guess, a trending question is around I.

I get the impression there's some controversy around the bead or government broadband equity access deployment program funding that.

Am I understanding it correctly they looked at areas, where risks are providing service and considered them unserved or underserved.

And I guess the thought process is that there'd be some risk that the government funds with pay to build out competition to your customers and I guess I'm just trying to get a better understanding I think the with the association is lobbying the NTIA. If you could maybe tell us a little bit about what's.

Going on and where we are in terms of solving this problem.

Sure Simon let me address on both <unk> as well as be the.

<unk>, which is a rural development opportunity fund actually just approved.

Two of our customers.

For total of about $700 million.

And they plan to deploy six gigahertz.

For that.

Gigabit connectivity so in the art of war the six gigahertz Cbre's all of that stuff is giving mission critical connectivity.

And the <unk> as we said this is the federal infrastructure initiative as we said it'll be probably early 'twenty four when the dissemination will happen and I think the results of our.

All of the interactions we are having with different different folks. It is very clear that wireless will provide a very affordable mission critical infrastructure debate as provided in Caf, one and Caf to the connect America fund, one and kind of medical front too. So we're pretty confident that economics and the result of art of success.

Prevail in all the government installations and also many of the fiber customer sub cambium ought to be using it very successfully in doctor rains and some.

Localities, where fiber cannot be deployed so for many practical reasons I think you will see beat also adopted but <unk> is taking the initiative probably little earlier.

Thank you for that.

Yeah.

Thank you our next question.

Okay.

And our next question comes from Sam <unk> with Jpmorgan. Your line is open.

Hi, Good afternoon. This is Angela Jen on for Sonic charity.

Wanted to ask one question on the customer vertical.

In the service provider vertical are you seeing any sort of pause in spend from mid tier providers and then on the enterprise side cambium.

Cambium doesn't release terms that many traditional enterprise players are you seeing the macro impacting hospitality education health care vertical and their budgets heading into 2023, and then I have one follow up.

Thanks, Angela let me address the service provider for us so in the service provider.

Moving to next Gen architecture actually cambium has used.

The pandemic time frame to.

They are not going to adopt deck, but if you have gigabit connectivity you have 60 gigahertz five G standards, we are seeing significant activity in our funnel and the number of customers number of Poc's and even 22 increased quite a bit. So the key message you have to have the next generation architecture and Thats the platform for that.

Each of our cambium.

And we are seeing good growth there.

In enterprise, we we focus on hospitality.

Education.

Our channel is through managed service providers and be value ease of deployment de value economics and those are the two key differentiation cambium has and that's why we are.

Hosting 60% plus year over year type of growth. So we are not seeing any slowdown there, but even there Angela.

Do you have to have very high performance.

Wifi six and six product again next Gen next Gen architecture and that has been our key message new growth S curves are what's driving the growth right now.

You had a follow up.

Got it yes.

Yes.

Moving to my follow up.

Given the ramp in <unk> investments and build outs that are going on in India.

Maybe just walk there what is your exposure to India and your thoughts on potential growth in that region.

So Angela India's five G. We are very engaged I think it will take still.

A year to year and a half for the dust to settle down because their frequency is I think 26 gigahertz or so and we have a.

Very good understanding of what will it take.

In general <unk> fixed.

Addressable market between 'twenty, one to 'twenty is going to go from 890 million to $1 6 billion. It's a 100% increase in those five six years, so repaying that debt to India gigahertz will be a key market, including India, but gestation might take good solid year to 18 months, but.

Very engaged in that market.

Hi, Thank you thanks.

Thanks Angela.

Thank you one moment for our next question.

And our next question comes from Scott Searle with Roth. Your line is open.

Hey, good afternoon, thanks for taking the questions.

A lot of new products, starting to go out the door.

Im not sure if I heard a number but I was wondering if you could give us some idea of the magnitude of the contribution of 28 gig and 60 gig I know it's early days in the just completed fourth quarter and 60 gig as well as starting to ramp up I'm wondering.

What sort of opportunities you're seeing with the other newer products and then I had a follow up sure. Thanks, Scott let.

Let me go one by 160 gigahertz, we have now as we mentioned we have a couple of million dollars in every new technology I look for three years.

When do you Cross 100000 revenue when do you cross half million amenity across million. So we are now beginning to see many customers and 60 gigahertz crossing $1 billion. What that basically means is they are deploying north of <unk> subscribers.

And as Cambium history shows every new platform. We bring first we crossed the 1000 barrier then we cross 10000 subscriber barriers, then because 100000 subscriber barriers and it's a four year cycle. So the key message on <unk> I think we are now scaling our customers are scaling the gestation for many of the.

Youll see we talked about last three four quarters has happened and this cycle will continue and where we see acceleration is wireless internet service providers.

Municipalities, which are using it for public Wi Fi video surveillance and enterprises, particularly logistics outdoor Wi Fi campus connectivity.

Other segments, where <unk> is expanding so feel pretty good about that as we as we exited Q4, we felt now our customers are beginning to scale. So that's <unk>.

28 gigahertz.

We will not have as many customers, but the deal sizes of 28 gigahertz will be probably in many cases five to 10 times because it is a licensed frequency and it is very much adopted by tier ones and tier twos. So what youll see between 20% and 60 60 will be lots of <unk> lots of customers thousands of them.

Whereas <unk> will be probably hundreds, but the deal sizes in 'twenty will be much larger we have over 20 POC to zero 20, POC worldwide and eight are in production right now.

And that does skew how fast cambium is moving and just you feel that 2021, we only have two or three.

So in last 12 months, our you will see some increase production customers have increased and as I mentioned, many many times in the last few quarters deal sizes. It's much much larger and there duration is also 30 to 40 years, not just one or two years.

Let me touch very briefly on six gigahertz.

We shipped.

Q4.

Our 60 gigahertz products and that will support.

<unk> to 'twenty.

You will see many of the POC turning into not production. The FCC has not yet approved.

The final they're not given the final green signal, but many customers believe that the cost of deployment on towers is very expensive. So they are deploying 50 gigahertz and some of them are also using the five gigahertz version, which is <unk> 4500, as we mentioned so all of these areas are growing that's why we are saying.

'twenty two 'twenty three for BNP will be expansion more second half because many of these by the time they enter production and scale and all of that you will see that results and when we fast forward two three years.

We believe BNP, 40% enterprise, 40% PDP, 20% is probably the right steady state.

Distributions.

Got you very helpful and if I could for a follow up on the six gigahertz front.

Waiting for.

Certification and approval from the FCC for the ASC.

Before I guess, we start to go into more commercial production so with.

The six year hurts product line, what would be success and if I could just briefly kind of dissect between the U S International markets have been a lot of focus.

Near term on the U S opportunity, but this is certainly a global market in terms of what's going on with 600, Hertz and regulatory approval and the allocation of frequencies. So I'm wondering how you're seeing that shape up on that front and how we should be thinking about that over the next couple of years. Thanks.

Excellent question Scott.

So first of all six gigahertz, United States is leading.

I think every other countries observing Brazil is one of the first ones to come on the bandwagon.

Our prepared remarks, we did say in Sao Paulo, we work with our Brazilian authorities like NFL and we showed that capability I think youll see many progressive countries adopt six gigahertz and Theres a reason for that five gigahertz is a very well established frequency, but it's getting noisy so when Gus.

<unk> gives you about 1200 megahertz up.

Very clean spectrum, that's a big deal like in two decades.

Nothing like this have ever happened. So it's a big deal. So our belief is that U S will lead.

And many five gigahertz risks, particularly are waiting for <unk> to expand and the cost advantage and the performance advantage from five gigahertz to six gigahertz continue and remember when you go to the 60 gigahertz to NDA, regardless of technological change and Thats why the gestation as needed. This wide experience is needed before you scale.

But when it comes to six gigahertz.

Ajay.

They know how to do it so I think the six gigahertz volume is starting the second half 'twenty three is still early it will ratchet up in 2425 and this has been our experience when we introduce Medusa in 2016 with.

Our five gigahertz architecture, and three gigawatt architecture. It ran for next four five years and Thats always emphasize that so I think 23 still four six in second half is a start but it is a long legs after that and we are feeling very excited because our customers are getting excited because they can see the price performances differ.

Magnitude, that's why I always call. It S curve, it's a new S curve.

Great. Thank you I'll get back in the queue.

Scott.

Thank you.

Our next question.

And our next question comes from Erik <unk> with JMP Securities. Your line is open.

Yes, thanks for taking the question.

Just following up a little bit more on some of the products segments.

One how.

How much of your shipments on the enterprise side, our Wi Fi six or Wi Fi six <unk> at this point and then secondly.

Any comments in terms of timing around your fiber products.

When do you think those will start hitting the market and if they would be.

Meaningful contributor in 'twenty three.

Yes, Thanks, Eric first of all Wi Fi six transition and cambium portfolios happened very successfully.

I would say a majority of our shipments as of today, our Wi Fi six <unk>.

So that gives you a pretty good indication majority and this was the best we made almost.

2018 months or two years back and has played very well.

In terms of fiber timing, we are in beta we will ship volume Q2 timeframe.

Our customers are pulling us actually because one other things cambium is known for ease of deployment single pane of glass for management and they are saying since the government are going to be coming on that side as well as cambium. Once you provide us a nice solution. So our plan is where wireless stops fiber can take over fiber stops wireless can takeover signal.

Pane of glass to manage and focus on ease of deployment.

Okay.

Just real quick on the on the West 56 are you shipping much Wi Fi six <unk> at this point.

Some yes, some but I think Wi Fi six he is just so much horsepower in the outdoor arena.

And indoor arena that I think.

As of now some but I would say most of it is Wi Fi six but that will change and probably 'twenty three second half in 'twenty four.

Very good thank you.

Thanks, Ed.

Thank you our next question.

And our next question comes from Paul <unk> with William K with Ross Your line is open.

Yes. Thank you for taking my question.

Lot of my questions have been answered, but I've got a couple of quick ones.

In the software area.

What percent of the software revenues are now within a SaaS model.

And what is the.

The average is that a one year two year three year.

Contract that you signed with them.

Yes.

Yes, hi, thanks for the question. So so as a percentage of our total revenue if you look at SaaS type revenue.

Recurring in nature.

Software and support services together is about 5% to 6% of our total revenue.

And most of those deals they do vary one year two year three even some <unk>, but I would say on average they are three year deals.

Okay, Okay, because I noticed your deferred revenues are starting to build I just wanted exactly.

Okay. Okay.

Okay.

And second question real briefly have you seeing any labor issues some of the other companies.

The concern that a year or two out there might be some some difficulty getting this product out and meeting some of the specs that the government is putting into the grants that are providing.

Paul I didn't understand waiver issue could you be more specific.

Labor labor issues with rolling out the rolling out the <unk>.

Installations.

I have not.

No no we have not heard that we had those issues I would say in 'twenty 'twenty first half.

And then 2022nd half a little bit 2021.

We'll figure out how to work 2020 to no I would not say we have heard labor issues.

At least for our products.

Okay.

Thank you very much that's all I had thanks Paul.

Yes.

Thank you one moment for our next question.

And our next question comes from Tim <unk> with Northland Capital markets. Your line is open.

Hey, good afternoon.

Nice quarter.

So I wanted to contrast.

A lot of these positives that you've been discussing in terms of PMI six gigahertz new products.

2008 gig.

Imagine the fiber product would go in that bucket.

Some funding for customers from the government. So there is a lot of positives there.

You appear to be.

Guiding to very very modest growth Pnp and 23 like low single digits maybe.

And I know, there's kind of some recovery maybe from a seasonal decline in Q1, but.

I guess, how do we contrast.

Are we seeing kind of a falloff quicker than expected falloff of legacy products on the one hand, thats kind of short term.

And then longer term to get to your target, even if you assume Wi Fi is slowing.

And the next few years past 'twenty three year growth rates.

Kind of need to be in pnp sort of need to be where your enterprise growth rate is now 25%, 30% something like that is that.

Something you.

Have confidence in or a line of sight too.

Tim. Thank you for the question excellent question let.

Let me give you more insight into this.

As I said earlier I look 4 million dollar deals, but then I know the technology is our scaling.

Think thats happening on 60 gig and even as we speak some of the networks were conceiving even with 60 gigahertz. The numbers are now beginning to be five to 10000 subscribers.

So that gives us the confidence that these new platforms are now scaling customers are deploying and theyre getting the confidence that they can truly provide fiber like speeds wirelessly.

<unk> 'twenty.

<unk>.

<unk> is driven by <unk> standards, and I mentioned earlier 2026, the Tam of that market for fixed wireless is about $1 6 billion and we have just started the five route I think what you will the contrast, you will see between <unk> and 'twenty eight 'twenty eight we're now as I said, we have 20 Poc's agent production.

<unk> and customers are beginning to scale the difference will be the deal size in 'twenty it will be far larger.

As I said earlier.

A three four year period, five to 10 times the revenue total deal size because because this is a licensed frequency somebody has paid money theyre really wanted to deploy.

For fixed wireless broadband lifecycle is about four to five years.

From the start to finish so I think what we're describing is probably the first 2025th percentile in 'twenty, three and probably half of 'twenty four.

And then these networks. This is what we have experienced the last 10 years. So we are sharing with you based on all we have seen these technological.

Apologies just state that with long really long long life in that sense. So I think that gives us the confidence that.

As a gestation happens over the next three years.

That 40, 40, 20, BNP enterprise and PTP is very very realistic because we know the market sizes, we know where our strengths are we know where our sales teams and channels are we have excellent channels, especially for BNP markets.

So and this is what we did last two years post Covid just focused on these next generation platforms and now we're beginning to get the confidence the scaling that's the keyword this scaling and they are being deployed.

Fiber, while we are excited fiber will go through the same thing in our enterprise quarters used to be 2 million 3 million 4 million for past few years. It took us time to kind of learn scale deploy and now we are.

Ranking north of $25 million quarter, So thats, what we do work with customers closely with them learn and then scale and.

Just to give you a little bit more color as well that you are right that there will be some level of seasonality in the first quarter with CMP in the revenues in PMT in the first half of the year.

When you look at it on a year over year basis will will decline, but in the second half of the year and this is how we define that getting back to how we define success.

That will be exiting the year with double digit.

Year over year and sequential quarter increases as a result of these new products coming into market and Pnp and that will continue we believe to accelerate into 2024.

Thanks, very much sorry, thanks, very much that was great color.

Thank you Tim.

One moment for our next question.

And our next question comes from George Notter with Jefferies. Your line is open.

Hi, guys, thanks very much.

In the past you guys have talked a little bit about what channel inventory looks like whether it was.

Above or below average or average could you just give us any comments on where you think that is right now.

Yes. So so so when you when you break it down I think that the channel inventory on the enterprise side.

Is a little bit higher than what it's been running at.

Over the course of the past 12 months or so some of that is because of <unk>.

Improvements in supply chain and lead times, getting a little bit shorter as well and the ability to deliver product into into the distributors.

So I think that's that's what we're seeing on enterprise slightly higher on the <unk> side in terms of in terms of the our inventory at distributors, it's actually going the other direction.

And that's a sign of the distributors getting ready for some of our new products as well.

I think it's somewhat balanced out in that fashion.

Got it and then I.

I guess I was also just going to ask you about supply chain I think you've kind of answered. It. There I mean are you still seeing any big holdups on on supply chain Golden screw type issues or do you think.

No.

Products are flowing pretty freely now from manufacturing perspective.

George first of all our all manufacturing subcontractors and the <unk>.

Sites are opened.

Open and operating.

As I said.

Apply chain is improving but I don't think.

It is not yet normalcy I think it'll be probably mid 'twenty three win it'll reach for us at least.

Mid mid 'twenty, three pre Covid normalcy.

There are still shortages on certain parts, but by and large things have improved.

And I think even after the Chinese new year, which is always something we watch carefully this year no hiccups.

No hiccups factories are fully open.

Logistics and freight are continually improving so so far so good.

Okay Super Thank you very much thanks.

Thanks George.

Thank you and we have a follow up question for Scott Searle with Roth Capital Partners. Your line is open.

Hey, just a quick follow up on the six gig front I know you are looking at rolling them dual mode. <unk> you heard solution product I thought it was in the second quarter around <unk> right. So it helps you circumvent some issues as it relates to reliability and <unk> funding just wanted to check on the progress of that.

Make sure that that's still tracking for the second quarter and kind of what the interest level is that you are seeing at least early on in dialogues with wireless Isps and other carriers on that front.

Yeah, So Scott.

The combo product of five and six will very much be.

Driven by the chips ever Liberty.

In the beginning the five gigahertz and six gigahertz are two different products and CBS CBS . One is a three gigawatt separate frequency completely different product. So I think this year you will see us.

Very much gain the experience and then focus on the combo side based on our experience with the customers and also based on ever Liberty of chips and all of that so I don't think the combo part will come right away because I think most of our customers right now are either deploying five or six.

And CBS has a completely different product.

Great. Thank you.

Thanks Scott.

Thank you.

And our next question comes from Timothy Horan with Oppenheimer. Your line is open.

Thanks, guys. So you have kind of $5 six I guess, almost seven new major products kind of coming out here now.

Can you talk a little bit about last time, you had this many new services or new products coming out and what the impact was and.

I mean should we be kind of expecting a material step up in growth in 'twenty four 'twenty five based on all the commentary that Youre that you have here. Thanks. Thanks, Tim Yeah. So while there are new products. If you look at when did we introduce them.

A lot of it is about gestation 60 gigahertz actually was introduced by US almost 18 months back is just that the gestation is now reaching a point with customers to understand how to deploy that scaling 28 gigahertz, we introduced above.

About.

Ear backwards saw something like that and that is also beginning to now and to the point, where they're going to scale. So I think when we said new products.

While we use a new platform some of them were introduced ear to ear and add back the completely new stuff, which is coming now is a <unk>, which we just introduced in Q4 last year about three months back or so so these are different waves and I think the way to think about this is as customers are scaling the networks they will.

All of them at the same time, they will deploy depending on the region. The rain will deploy different frequency and these will overlap over time and Thats what gives us resiliency.

Because we know we have different frequency for different countries and regions. We have different performances in different cost structures that couldnt be it is a licensed frequency only tier one tier two can afford that so we are now working with them was a six is where a lot of this too will lose six gigahertz is an extension of <unk>.

Six figure guys is going both in the enterprise.

I explained as well as municipalities in this so whats you are seeing from cambium as a broad wireless fabric, serving some very key segments and each one of them takes little different time to gestate.

No.

I understand but I mean, they're all kind of hitting the S curve of the adoption cycle in the next six to eight in the next six to 12 months I mean, they are all hitting almost at the same time and the same thing with Wi Fi products. So it feels like I know they've all been introduced different times for a whole bunch of reasons. It does feel like we should really see a real acceleration in 'twenty four 'twenty five and I'm not trying to put words in your.

But it does seem like Daryl.

Really hitting for 24, yeah, Tim I agree with you I think starting in second half you will see some of the acceleration as we mentioned 60 gigahertz for example, but 'twenty four 'twenty five we will benefit from all these investments we have done in last almost 18 months that that's an accurate statement.

Thank you our product cycles for the older products as well.

Just in terms of its lifecycle will go the other direction as well so just keep that in mind.

Do you have any I know, it's early to give guidance, but I mean, all things being equal it should be up from this year's growth rate is that pretty fair, we really having gone through that level of guidance for our analysis for 2004 yet.

But what we do we are like we said we are excited about about the new S curves, especially when you look out over the next 12 months and you look at the six gigahertz products and the level of volume that that that could mean in starting in the U S curve in the P&C side of the business and then do we have any sense of the Tam.

Six gigahertz product.

Yes, I think the way Tim you want to think about the two six gigahertz is an extension of five and the five.

Five gigahertz point to multi point was about $1 billion Tam. The way you want to think about this is the $1 billion will churn and extend into the six gigahertz. That's the probably the easiest way to think about it.

Thank you.

I am showing no further questions at this time I would now like to turn the conference back to Peter Schuman, Vice President Investor and industry analysts relations for closing remarks. Thank you Amy during Q1, 'twenty three cambium networks will be presenting and meeting with investors on March 7th at the JMP Securities Technology Conference in.

March 14th at the Roth Annual conference in the meantime, you're always welcome to contact our Investor Relations Department at 847% to six four to $1 88 with any questions that arise. Thank you for joining us and this concludes today's call.

Ladies and gentlemen that concludes today's quarterly earnings call. Thank you for your participation you may now logos.

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The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.

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All 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. During this session you will need to press star one on your telephone you will then hear an automated message advising you had just raised to withdraw your question. Please press star one again, please limit yourself.

Up 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.

Thank you Amy welcome and thank you for joining us today for Cambium networks fourth quarter and full year 2022 financial results conference call and welcome to all those joining by webcast at <unk> <unk>, 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 Investor page of our website and the press release has been submitted on form 8-K with the SEC.

Certain revisions were made with within operating expenses in prior periods to conform to the classifications in the current period. These revisions had no impact to operating income.

These statements are based on current expectations forecasts and assumptions risks and uncertainties could cause actual results to differ materially.

Except 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 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.

Turning to the agenda cambium Networks' President and CEO of <unk> will provide the key investment highlights for the fourth quarter and full year 2022, and Andrew <unk> Cambium, Networks' CFO , who will provide a recap of the financial results for the fourth quarter and full year 2022 and present, our financial outlook for the first quarter and full year 2023.

Our prepared remarks will be followed by a Q&A session I would now like to turn the call over to a tool.

Thank you Peter.

Cambium continued growth in our fourth quarter with revenues up $84 5 million.

Increasing 4% sequentially ahead of the high end of our outlook of between 80% to $84 million announced during the Q3 'twenty two quarter calls.

Profitability remained strong.

With a gross margin of 49, 6% near the high end of the outlook and EPS up 36.

Exceeding the high end of the outlook.

We had a strong finish to the year in North America.

With growth in all major product categories and sequential growth for our point to Multipoint BMP solutions.

After a record breaking results during Q3 'twenty two that included an incremental $5 million and switching revenues as expected our enterprise business returned to a normalized run rate in Q4 2002.

For the full year 2022, our enterprise business grew 64% to $109 8 million exceeding the high end of our original forecast.

This is after a growth of 67% during full year 2021.

For 2023 enterprise growth will be from a much higher base.

With our initial forecast of growth for the enterprise business of 20% to 30% as we continue to innovate with new Wi Fi.

Switching and cloud based software solutions.

And we continue to gain market share globally.

We have grown from approximately 1500 cumulative Wi Fi customers at the time of our IPO in mid 2019 to about 18500 at Q4 'twenty two.

We are now at the start.

The next wave of high performance fixed wireless broadband deployment.

BNP business.

With the ramp of new Gigabit Solutions, Inc.

Including 28 gigahertz <unk> fixed products.

An acceleration in the growth of our 60 gigahertz <unk> products.

And the introduction of disruptive six gigahertz BNP products during Q4 'twenty two.

Which delivers industry leading price performance.

Final FCC approval for outdoor use of the six gigahertz spectrum is expected around mid year 2023.

The FCC has already started approving special temporary authority licensing FTA for proof of concept networks.

Turning to the results of the fourth quarter of 2022.

Looking at revenues across our product lines, our BNP business revenues increased 14% sequentially and decreased 20% year over year as service providers are beginning to move from our legacy <unk> hundred 50 products to the new gigabit technologies.

Low latency and.

Inefficiency with hybrid fiber and cable networks.

The PDP business revenues increased a healthy 38% sequentially.

While improving 39% year over year during Q4 'twenty to.

<unk> has been selected to supply our PTP defense products to over 10 key programs of record.

For the department of Defense.

We expect continued strong defense shipments during 'twenty two 'twenty three.

As expected our enterprise business declined sequentially decreasing by $6 3 million or 17% after a record revenues of $38 3 million.

During Q3, 'twenty, two which included the previously mentioned catch up shipments plus switching.

While higher by $6 2 million or 24% year over year.

The year over year growth was driven by increased demand for our Wi Fi six and six E solutions.

Switching revenues.

And growth in our SaaS solutions.

For the full year 2022 revenues of $296 $9 million decreased 12% from 2021.

<unk> 22 decline was driven by a BNP products, which declined 44% from the prior year, partially offset by the growth of our enterprise business, which.

<unk> had a record year, increasing 64% for the full year 2020 to breaking the $100 million threshold for the first time in <unk> history.

While our PTP business grew 10% compared to 2021 revenues due to the strength of our federal defense business.

It is notable that our enterprise business represented 37% of the company revenues during calendar year 2022, compared to 20% of revenues for 2021.

We do foresee the return to modest growth for the BNP business, driven by new product momentum and six gigahertz upon the FTC's approval as expected to drive revenue growth during the second half of the year.

As well as the continued ramp of 28 gigahertz and 60 gigahertz millimeter wave solutions, the new five gigahertz and six gigahertz products for both the <unk> and BNP for 50 product lines.

Both 60 gigahertz and 28 gigahertz <unk> solutions have recently brought in several multimillion dollar deals.

Looking at some notable customer wins and new product development.

In North America, Salt Lake City placed an order for 60 gigahertz <unk> connectivity as part of the Smart city deployment.

Can be selected for our portfolio breadth and ability to deliver backhaul and access with a single management platform.

A division of the third largest cable TV provider in the United States, serving $3 5 million Internet subscribers introduced a new business service for customers through our system integration partner future deck.

The service utilizes cambium 60 gigahertz.

And we have a solution to fit between fiber and <unk> assets as part of the new private network offering for multi gigabit connectivity.

We had a large order for <unk> solutions from a Canadian operator in Alberta Mcs net.

But at 60 gigahertz network Buildout.

<unk> to our 60 gigahertz products as it offers gigabit speeds at a much lower total cost of ownership than fiber.

We have already deployed in 12 community so far with a goal of 44 connected communities during 2023.

This is an example of where we are seeing a resurgence in our 60 gigahertz business upgrade initial period of gestation.

In the Europe , Middle East and Africa region EMEA, we continue to have healthy demand for our enterprise business and are winning larger projects.

Cambium had a customer win with a fiber network operator in South Africa is this way.

In the Asia Pacific APAC region, we landed our first network as a service Nast win to enable rural connectivity in Sumatra, Indonesia.

This first <unk> order in the region is for 500 homes and includes our Wi Fi and CMI X cloud software.

This is in addition to our <unk> for fixed wireless broadband access.

Upon successful deployment of this first order, we expect a larger multi year volume agreement.

And in Caribbean, and Latin America Gala region in Brazil, we partnered with Qualcomm.

In collaboration with the National Telecommunications Agency Nfl's Antihelium to demonstrate the first use of the six gigahertz band and an outdoor area in Campo below neighborhood of Sao Paulo.

The collection featured cambium outdoor Wi Fi 660 access points.

Six gigahertz BNP 4600 for fixed wireless infrastructure CN.

CN metrics wireless savvy switches and CN Metro X cloud management software.

The demo became available for two months starting on December 3rd for visitors and the surrounding area.

<unk> included the use of automated frequency coordination AFC spectrum sharing platform to ensure that there was no interference with fixed point to point systems existing in that region.

And to demonstrate its oral speed.

Performance and reliability.

Turning to upcoming product introductions since our previous quarterly update.

While the industry is excited about the future of a liberty of new six gigahertz spectrum to enable the delivery of gigabit data rates to the edge of the network and awaits FCC approval.

The <unk> 4500 is a powerful and transformative product, which we expect will penetrate the market due to its high performance and affordability compared to other alternatives in the market, especially to take market share from our competition in the service provider space, our head of the FCC approval of six gigahertz specs.

From.

Looking at our C. In MISO cloud software our end to end cloud power connectivity solution to manage the network from a single pane of glass.

The CN MISO cloud software continued to experience strong user growth.

Devices and the cloud management in Q4 22 was over 898000, an increase of 4% from Q3 22.

And up 21% year over year.

Turning to our channel in Q4, 'twenty, two we expanded our channel presence by adding over 425 net new channel partners sequentially.

Over 1300, net new channel partners year over year, which represents an increase of over 3% sequentially and 11% year over year.

We continue to expand our reach into new customers around the world.

I will now turn the call over to Andrew but a review of our Q4 22 and full year 'twenty two financial results and Q1, 'twenty three and full year 'twenty three outlook.

Thanks Atul.

Cambium reported revenues of $84 5 million for Q4 'twenty to <unk>.

Revenues increased by 4% quarter over quarter and increased by 7% year over year.

On a sequential basis for Q4 dollars 22.

Revenues were higher by $3 3 million.

The higher revenues were primarily the result of increased PTP revenues for defense products at.

And an increase in Pnp products as a result of our 60 gigahertz <unk> and <unk> products.

While enterprise solutions decreased after a record Q3 dollars 22, which included the $5 million catch up in switching revenues due to supply chain shortages in previous quarters.

For the full year 2022.

Revenues of $296 9 million decreased by $39 million or 12% compared to the full year 2021.

The decrease is a result of lower <unk> revenues, which declined by $89 8 million or 44% compared to 2021.

Due to product transitions to the next generation six gigahertz and 28 gigahertz <unk> fixed solutions.

We had record enterprise revenues of $109 $8 million during 2022.

Which grew by $42 9 million were 64% compared to 2021.

And our PTP revenues increased by $6 3 million to $67 1 million.

Were an improvement of 10% compared to the full year 2021.

Due to strong demand for our defense products.

Moving onto our gross margin our non-GAAP gross margin of 49, 6% was better than anticipated.

Increasing by 540 basis points compared to Q4 dollars 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 and PTP products.

And lower freight costs.

On a sequential basis non-GAAP gross margin was lower by 170 basis points compared to Q3 dollars 22 to <unk>.

Lower quarter over quarter non-GAAP gross margin in Q4 dollars 22 was the result of a higher mix of lower margin Pnp products and as expected a decline in enterprise switching revenues.

Offset in part by higher PTP revenues and higher component inventory costs.

In Q4, 'twenty two our non-GAAP gross profit dollars of $41 $9 million increased by $7 1 million compared to the prior year due to higher volumes and improved mix, a PTP and enterprise products and.

And lower shipping costs.

And increased by $276000 sequentially, mostly as a result of higher revenues offset in part by the higher component costs due to inflation.

For the full year 2022 non.

non-GAAP gross margin improved by 130 basis points to 49, 5% compared to 48, 2% for 2021 do.

Due to an improved mix of our higher margin enterprise in PCB product lines.

Our longer term goal.

Remains a consistent non-GAAP gross margin target of 51% to 52% on an annual basis.

non-GAAP operating expenses, including amortization in Q4, 'twenty two decreased by 348000, when compared to Q4 dollars 21 and.

And stood at $28 7 million or 34% of revenues.

The decrease in operating expenses compared to the prior year period was primarily due to lower variable compensation.

Tight controls around head count offset by higher sales and marketing costs related to travel and trade shows.

Higher wages, while R&D remained flat.

When compared to Q3 dollars 22, non-GAAP operating expenses increased by approximately $850000.

<unk> over quarter sales and marketing expenses increased primarily because of higher wages and sales accelerated as related to our enterprise business and.

And increased trade show and travel expenditures.

While R&D increased as a result of higher staffing costs related to development work on new products and G&A decreased due to tight cost controls.

For the full year 2022, non-GAAP operating expenses decreased by $1 $6 million and stood at $112 7 million compared to $114 3 million for 2021.

The lower non-GAAP operating expenses during 2022.

Flex less variable compensation offset by higher wages due to inflation.

We will continue to maintain our strong cost controls.

non-GAAP operating margin for Q4, 'twenty two was 15, 6% up from seven 3% during Q4 'twenty one.

And down from 17% of revenues in Q3 dollars 22.

For the full year 2022, our non-GAAP operating margin was 11, 6% compared to 14, 1% in 2021.

Primarily reflecting lower revenues and less scale, resulting in fewer gross profit dollars. Despite an improved mix of revenues.

non-GAAP net income of $11 3 million or <unk> 40 per diluted share.

During Q3 dollars 22.

For the full year 2022, non-GAAP net income was.

It was $26 9 million or <unk> 94 per diluted share compared to $35 $6 million or $1 26 per diluted share in 2021.

Adjusted EBITDA for Q4, 22 was $14 3 million or 16, 9% of revenues compared to $6 7 million were eight 6% of revenues for Q4 'twenty one.

And compared to $14 7 million or 18, 2% of revenues for Q3 22.

The full year 2022, adjusted EBITDA was $38 8 million or 13, 1% of revenues compared to $51 2 million or 15, 3% of revenues for the full year 2021.

Our operating model remains solid we remain committed to consistently driving our adjusted EBITDA to our long term target.

Of 18% to 19% of revenues.

Now moving on to cash flow cash provided by operating activities was $4 million for Q4 'twenty two.

And compares to $5 6 million for Q4, 'twenty, one and $2 2 million for Q3 22.

Our cash flow was negatively impacted as we increased inventories and materials to support new products and to take advantage of supply chain opportunities for the anticipated growth of our business.

And we increased accounts receivable as a result of higher revenues.

Now turning to the balance sheet, our cash totaled $48 2 million as of December $31 22, an increase of $3 3 million from Q3 dollars 22 to.

The sequential increase in cash primarily reflects collections on higher revenues and changes in working capital.

Our net inventories of $57 1 million in Q4, 'twenty to increase by approximately $23 $3 million year over year, while increasing $6 4 million from Q3 22.

Inventories were higher sequentially because of an increase in inventories as we continue to grow our business and take advantage of supply chain opportunities.

In summary, the fourth quarter played out better than anticipated.

As predicted our Pnp business grew sequentially.

Our gross margin remained strong we continue to see improvement in our supply chain environment.

Our backlog remains solid and we are at the start of new product cycles.

During 2023, we expect to gain scale and improve operational efficiency and make significant progress towards achieving our long term target operating model.

As expected while the supply chain continues to improve there are still areas of component shortages in certain products and longer lead times as compared to pre COVID-19 levels.

Moving to the first quarter and full year 2023 financial outlook.

Cambium Networks' financial outlook does not include the potential impact of any possible future financial transactions acquisitions pending legal matters or other transactions.

<unk>, our current visibility as of today, our Q1 'twenty three financial outlook is expected to be as follows.

Revenues between 74% and $80 million representing growth of approximately 20% to 29% year over year.

And a decrease of between 5% and 12% sequentially due in part to seasonality in our PSP business and slowing world economies while.

While our defense business and PTP remained strong.

non-GAAP gross margin of between $49 to 58%.

non-GAAP operating expenses between 36 million to $31 6 million.

And non-GAAP operating income of between $5 $89 million.

Interest expense net of approximately $600000 and non-GAAP net income of between $4, one and $6 8 million or net income per diluted share of between 14 and 23 cents.

Adjusted EBITDA between six $8 million to $10 million and adjusted EBITDA margins between $9, two and 12, 5% at.

Our non-GAAP effective income tax rate of approximately 17% to 21%.

At approximately $28 9 million weighted average diluted shares outstanding.

Cash requirements are expected as follows pay.

Pay down of debt of $700000 cash interest of approximately $400000.

And capex of between three and $4 million.

Full year 2023 financial outlook is expected to be as follows.

We expect revenues of between $327 million and $345 million, representing approximately 10% to 16% revenue growth.

non-GAAP gross margin of approximately 50%.

non-GAAP net income of between 33, 9% and $36 $4 million or net income per diluted share of between $1 17 to $1 25.

Adjusted EBITDA margins of between 14, 5% to 15%.

For the year, we expect capex to be approximately $14 million to $18 million, mainly driven by an expansion in our R&D labs and equipment.

Along with software costs in connection with new products.

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

We delivered a solid quarter of results with increased revenues excellent profitability.

And a strong balance sheet significant new product introductions and a return to growth for our E&P business driven by our 60 gigahertz <unk>.

28, gigahertz <unk> fixed.

And the launch of affordable six gigahertz fixed wireless CMP solutions.

Our enterprise business remains strong led by Wifi, six and <unk> E.

Wireless savvy switching products.

And an increased offering of our software as a service solutions and excellent Onboarding of new large managed service providers.

We expect the enterprise business to grow between 20 and 30% during calendar year 'twenty three.

We can be on one network integrated wireless fabric has become a reality.

Lighting customers ease of deployment.

Liberty of networks, and lower total cost of ownership as the word deploys next generation high performance wireless broadband networks.

During 2022.

Diversified and made our business more resilient.

We remain focused on judiciously managing our costs.

Improving our operations.

Turning to invest in innovative products to maintain our technology edge.

And expect increased scale will benefit our future operating results.

As we look to 2023.

Our six gigahertz.

28, gigahertz <unk> fixed technology.

Millimeter wave products and upcoming fiber products will expand our markets and continue to propel cambium and the fixed wireless broadband market.

Our defense business is expected to continue growing as national security has become a global issue.

And our reach into managed service providers and multi dwelling units.

We will broaden and strengthen our enterprise business and position us for continued strong growth.

We will expand our software and services offerings.

And add even more features security and functionality into our flagship <unk> platform.

Our focus will be on solutions that our customers want keeping a keen eye on how our products mesh with customer applications and network automation.

Cambium has now graduated from building just radios to delivering an exceptional customer experience through our extensive broadband solutions that brings delight and confidence.

Given the humanitarian crisis unfolding in Turkey last week.

Cambium is contributing wireless broadband solutions in the country, while connectivity to loved ones to support the citizens and relief workers and the hardest hit areas.

I would like to show my appreciation for our employees partners and customers for their resilience as we return to growth.

During the second half of calendar 2022.

This concludes our prepared remarks, so with that I would like to turn the call over to Amy and.

And begin the Q&A session.

We will now open the call for your questions. As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

To withdraw your question. Please press star one again, please limit yourself to one question and one follow up question.

Please standby, while we compile the Q&A roster.

And our first question comes from Simon Leopold with Raymond James Your line is open.

Thanks for taking the question first I just wanted to knock out a quick clarification in.

In the prepared remarks.

Atul I think you've talked about.

The mix being roughly 40% PMT.

40% Wi Fi, our enterprise and 20% PDP, but I wasn't sure what timeframe you're thinking about those targets whether that was your 2023 view or something longer term and then I've got a follow up thanks.

Thanks, Simon that's a long term model generally long term model for US is two to three year timeframe.

And especially BNP is a very key foundation of cambium with would be.

Surgeons up new products innovations, we are doing with gigabit connectivity millimeter wave <unk>. So that just tells you the confidence we have that in the long term model, you will see BNP and enterprise, probably equal and PDP about 20%.

Thanks, and then a little bit more I guess, a trending question is around <unk>.

The impression there's some controversy around the bead or government broadband equity access deployment program funding that.

If I'm understanding it correctly, they looked at areas, where which are providing service and considered them unserved or underserved.

And I guess, the thought processes that there'd be some risk that the government funds with pay to build out competition to your customers.

And I guess I'm, just trying to get a better understanding I think the with the association is lobbying the NTIA. If you could maybe tell us a little bit about what's going on and where we are in terms of solving this problem.

Sure. So Simon let me address on both <unk> as well as be the.

<unk>, which is a rural development opportunity fund.

Actually just approved.

Two of our customers.

For total of about $700 million.

And they plan to deploy six gigahertz.

Ford.

Gigabit connectivity so in the art of war the six gigahertz Cbre's all of that stuff is giving mission critical connectivity.

And the bead world as we said.

This is the federal infrastructure initiative as we said it'll be probably early 'twenty four when the dissemination will happen and I think the results of our.

All the interactions we are having with different different folks.

Very clear that wireless will provide a very affordable mission critical infrastructure debate as provided in Caf, one and Caf to the connect America fund, one and kind of medical front too. So we are pretty confident that economics and the result of art of success will prevail in all the government installations and also many of the.

Fiber customers of cambium ought to be using it very successfully in doctoring and some.

Localities, where fiber cannot be deployed so for many practical reasons I think you will see beat also adopted but out of us taking the initiative probably little earlier.

Thank you for that.

Thank you one moment for our next question.

Okay.

And our next question comes from Sam <unk> with Jpmorgan. Your line is open.

Hi, Good afternoon. This is Angela Zhao on for Sonic Chatterji.

Just wanted to ask one question on the customer vertical.

And the service provider vertical are you seeing any sort of pause in spend from mid tier providers and then on the enterprise side Candy.

Cambium doesn't release tariffs that many traditional enterprise players are you seeing the macro impacting hospitality education health care vertical and their budgets heading into 2023, and then I have one follow up.

Thanks, Angela let me address the service provider for us so in the service provider.

Moving to next Gen architecture actually cambium has used.

The pandemic timeframe to.

To completely created the new architectures, while gigabit that's what we did last two years. So what we're finding is that if someone is selling last generation architecture with slower speeds. You are absolutely right. There are a number of them, they're not going to adopt that but if you have gigabit connectivity you have 60 gigahertz five G standards, we are seeing significant.

Activity in our funnel and the number of customers number of <unk> and even 'twenty two increased quite a bit. So the key message you have to have the next generation architecture and thats the platforms of the future for cambium.

And we are seeing good growth there.

In enterprise, we we focus on hospitality.

Education.

And our channel is through managed service providers and the value ease of deployment de value economics and those are the two key differentiation cambium has and Thats why we are.

<unk>, 60% plus year over year type of growth. So we're not seeing any slowdown there, but even there Angela do you have to have very high performance.

Wifi six and six product again next Gen next Gen architecture and that has been our key message new growth S curves are what's driving the growth right now.

You had a follow up.

Got it yes.

Yes.

Moving to my follow up.

Given the ramp in <unk> investments and build out that are going on in India.

Could you maybe just walk there what is your exposure to India and your thoughts on potential growth in that region.

So Angela India's five G. We are very engaged I think it will take still.

On a year to year and a half for the dust to settle down because their frequency is I think 26 gigahertz or so.

And we have a we have very good understanding of what will it take.

In general <unk> fixed.

Addressable market between 21 to 26 is going to go from $890 million to $1 6 billion. It's a 100% increase in those five six years. So we think that that 28 gigahertz will be a key marketing, including India, but gestation might take good solid year to 18 months, but.

Very engaged in that market.

Thank you.

Angela.

Thank you one moment for our next question.

And our next question comes from Scott Searle with Roth. Your line is open.

Hey, good afternoon, thanks for taking the questions.

A lot of new products, starting to go out the door.

I'm not sure if I heard a number but I was wondering if you could give us some idea of the magnitude of the contribution of 28 gig and 60 gig I know it's early days in the just completed fourth quarter and 60 gig as well I know, we're starting to ramp up I'm wondering.

What sort of opportunities you're seeing with the other newer products and then I had a follow up sure. Thanks, Scott let.

Let me go one by 160 gigahertz, we have now as we mentioned we have a couple of million dollars in every new technology I look for three years.

When do you Cross 100000 revenue when do you cross half million amended <unk> million. So we are now beginning to see many customers and 60 gigahertz crossing million what that basically means is they are deploying north up thousands of subscribers.

And as Cambium history shows.

Every new platform, we bring first we crossed the 10000 barrier then we cross 10000 subscriber barriers, then because 100000 subscriber barriers and it's a four year cycle. So the key message on 60 I think we are now scaling our customers are scaling the gestation for many of the POC, we talked about last three four quarters.

Happen and this cycle will continue and where we see exploration is wireless internet service providers with <unk>.

Municipalities, which are using it for public Wi Fi video surveillance and enterprises, particularly logistics outdoor Wi Fi campus connectivity.

These are the segments, where <unk> is expanding so feel pretty good about that as we as we exited Q4, we felt and our customers are beginning to scale. So that's <unk>.

28 gigahertz.

We will not have as many customers, but the deal sizes of 28 gigahertz will be probably in many cases in a five to 10 times because it is a licensed frequency and it is very much adopted by tier ones and tier twos, So what youll see between 20% and 66, there will be lots of <unk> lots of customers thousands of them.

Whereas 'twenty it will be probably hundreds, but the deal sizes in 'twenty. It will be much larger we have about 20 Poc's two zero 20, Youll see worldwide and eight are in production right now and.

And that does skew how fast cambium is moving and just you feel that 2021, we only had two or three.

So in last 12 months, our <unk> increase production customers have increased and as I mentioned, many many times in the last few quarters deal sizes is much much larger and there duration is also a 3% to 40 years, not just one or two years.

And let me touch very briefly on six gigahertz.

We shipped.

Q4.

Our 60 gigahertz products and that will support 10 to 20.

<unk> many of the POC turning into not production the FCC has not yet approved.

Final, they're not given the final green signal, but many customers believe that the cost of deployment on towers is very expensive. So they are deploying 60 gigahertz and some of them are also using the five gigahertz version, which is <unk> 4500, as we mentioned so all of these areas are growing that's why we are saying.

'twenty two 'twenty three.

BNP will be expansion more second half because many of these by the time they enter production and scale and all of that you will see that results and when we fast forward two three years.

We believe BNP, 40% enterprise, 40% PDP, 20% is probably the right steady state.

Distributions.

Got you very helpful and if I could for a follow up on the six gigahertz front, we're waiting for certification.

Certification and approval from the SEC for the ASC.

Before I guess, we start to go into more commercial production so with.

That in mind Im wondering how youre thinking about the ramp up into the second half of this year and what's going to constitute success kind of exiting 2023, and as we think about 2024, how big of an opportunity is that the six year hurts product line, what would be success and if I could just briefly kind of dissect between the U S International.

Mark it's been a lot of focus.

Near term on the U S opportunity, but this is certainly a global market in terms of what's going on with 60 gigahertz and regulatory approval and the allocation of frequencies. So I'm wondering how you're seeing that shape up on that front and how we should be thinking about that over the next couple of years. Thanks.

Excellent question Scott.

So first of all six gigahertz, United States is leading.

I think every other countries observing Brazil is one of the first ones to come on the bandwagon.

Our prepared remarks, we did say in Sao Paulo, we work with our Brazilian authorities like NFL and we showed that capability I think youll see many progressive countries adopt six gigahertz and there is a reason for that five gigahertz is a very well established frequency, but it's getting noisy so when god.

<unk> gives you about 1200 megahertz up.

Very clean spectrum, that's a big deal like in two decades.

There is nothing like this have our happens so it's a big deal. So our belief is that U S will lead.

And many five gigahertz risks, particularly are waiting for <unk> to expand and the cost advantage and the performance advantage from five gigahertz to six gigahertz continue remember when you go to the 60 gigahertz to India, regardless of technological change and Thats why the gestation as needed. This wide experience is needed before you ski.

But when it comes to six gigahertz.

The adjacency.

They know how to do it so I think it was six gigahertz volume is starting the second half 'twenty three is still early it'll ratchet up in 'twenty four 'twenty five and this has been our experience when we introduced Medusa in 2016 with our five gigahertz architecture and <unk> architecture. It ramp for next four five years.

And Thats always emphasize that so I think 23 still four six in second half is a start but it is a long legs after that and we are feeling very excited because our customers are getting excited because they can see the price performance is of a different magnitude. That's why I always call. It S curve, it's in U S curve.

Great. Thank you I'll get back in the queue. Thanks.

Thanks Scott.

Thank you.

One moment for our next question.

And our next question comes from Erik <unk> with JMP Securities. Your line is open.

Yes, thanks for taking the question.

Just following up a little bit more on some of the products segments.

One how much of your shipments on the enterprise side, our Wi Fi six or Wi Fi six <unk> at this point and then secondly.

Any comments in terms of.

Rhyming around your fiber products.

When do you think those will start hitting the market and if they would be.

Meaningful contributor in 'twenty three.

Yes, Thanks, Eric first of all the Wi Fi six transition and cambium portfolios happened very successfully I would say a majority of our shipments as of today, our Wi Fi $6 60.

So that gives you a pretty good indication majority and this was the best we've made no almost.

2018 months or two years back and has played very well.

In terms of fiber timing, we are in beta we will ship volume Q2 timeframe.

Our customers are pulling us actually because one of the things cambium is known for its ease of deployment single pane of glass for management and they are saying since the government is going to be coming on that side as well cambium. Once you provide us a nice solution. So our plan is where wireless stops fiber can take over fiber stops wireless can takeover signal.

Pane of glass to manage and focus on ease of deployment.

Okay.

Just real quick on the on the West 56 are you shipping much Wi Fi six <unk> at this point.

Some yes, some but I think Wifi six E jets.

Just so much horsepower in the outdoor arena.

And indoor Arena I think.

As of now some but I would say most of it is Wi Fi picture, but that will change and probably 23 <unk> 24.

Very good thank you.

Thanks, Ed.

Thank you one moment for our next question.

And our next question comes from Paul <unk> with William K with Ross Your line is open.

Yes. Thank you for taking my question.

One of my questions have been answered, but I've got a couple of quick ones.

In the software area what percent of the software revenues are now within a SaaS model.

And what is the.

The average is at a one year two year three year.

Contract that you signed with them.

Yes.

Yes, hi, thanks for the question. So so as a percentage of our total revenue if you look at SaaS type revenue.

It's recurring in nature, both software and support services together is about 5% to 6% of our total revenue.

And most of those deals they do vary one year two year three even some five but I would say on average they're three year deals.

Okay, Okay, because I noticed your deferred revenues are starting to build and I was wondering exactly.

Okay. Okay.

Okay.

And then second question real briefly have you seen any labor issues some of the other companies.

Concern that a year or two out there might be some some difficulty getting this product out and meeting some of the specs that the government is putting into the grants.

<unk>.

Paul I didn't understand waiver issue could you be more specific.

Well labor labor issues with with rolling out the rolling out the <unk>.

Installations.

Yes.

No no we have not heard that we had those issues I would say in 2021st half.

And then 2022nd half a little bit 2021.

People figured out how to work 2020 to no I would not say, we have heard labor issues on at least for our products.

Okay.

Thank you very much that's all ahead thanks Paul.

Good.

Thank you one moment for our next question.

And our next question comes from Tim <unk> with Northland Capital markets. Your line is open.

Okay.

Hey, good afternoon.

Nice quarter.

So I wanted to contrast.

Sure.

A lot of these positives that you've been discussing in terms of Pnp six gigahertz new products.

2008 gig.

I would imagine the fiber product would go in that bucket.

Some funding for customers from the government. So theres a lot of positives there you appear to be.

Guiding to very very modest growth PMT and 23 like low single digits maybe.

And I know, there's kind of some recovery maybe from a seasonal decline in Q1, but.

I guess, how do we contrast.

Are we seeing kind of a falloff quicker than expected fall off of legacy products on the one hand, thats kind of a short term.

And then longer term to get to your target, even if you assume Wi Fi is slowing.

And the next few years past 'twenty three year growth rates.

Kind of need to be in pnp sort of need to be where your enterprise growth rate is now 25%, 30% something like that is that.

Something you.

I have confidence in or a line of sight too yes.

Tim Thank you for the question excellent question.

Let me give you more insight into this.

As I said earlier I look 4 million dollar deals, but then I know the technology is our scaling.

Think thats happening on six Piggy garden, even as we speak some of the networks were conceiving even with 60 gigahertz. The numbers are now beginning to be five to 10000 subscribers.

So that gives us the confidence that these new platforms are now scaling customers are deploying and theyre getting the confidence that they can truly provide fiber like speeds wirelessly.

60.

<unk> it is a.

20% is driven by <unk> standards and I had mentioned earlier 2026, the Tam of that market for fixed wireless is about $1 6 billion and we have just started the five route I think what you will the contrast, you will see between 60 and 28 28. We are now as I said, we are <unk> eight and.

<unk> and customers a big need to scale the difference will be the deal size in 'twenty it will be far larger.

As I said earlier.

Or a three four year period, five to 10 times the revenue total deal size because because this was a licensed frequency somebody paid money theyre really wanted to deploy.

For fixed wireless broadband lifecycle is about four to five years.

From the start to finish so I think what we're describing is probably the first 2025th percentile in 'twenty, three and probably half of 'twenty four.

And then these networks. This is what we have experienced the last 10 years. So we are sharing with you based on all we have seen this.

<unk> technologies, just state long really long long life in that sense. So I think that gives us the confidence that.

As a gestation happens over the next three years.

That 40, 40, 20, BNP enterprise and PTP is very very realistic because we know the market sizes, we know where our strengths are we know what our sales teams and channels are excellent channels, especially for BNP markets.

So and this is what we did last.

Two years post Covid just focused on these next generation platforms.

And now we're beginning to get the confidence the scaling that's the keyword that scaling and they are being deployed.

Fiber, while we are excited fiber will go through the same thing in our enterprise quarters used to be 2 million 3 million $4 million for past few years. It took us time to kind of learn scale deploy and now we are cranking north of $25 million quarter. So thats, what we do.

Work with customers closely with them learn and then scale.

And just to give you a little bit more color as well that you are right that there will be some level of seasonality in the first quarter with CMP and revenues in PMT in the first half of the year.

When you look at it on a year over year basis will will decline, but in the second half of the year and this is how we define that getting back to how we define success is that we will be exiting the year with double digit.

Year over year and sequential quarter increases as a result of these new.

A new products coming into market and Pnp and that will continue we believe to accelerate into 2024.

Thanks, very much sorry, thanks, very much that was great color.

Yes.

Thank you Tim.

One moment for our next question.

And our next question comes from George Notter with Jefferies. Your line is open.

Hi, guys, thanks very much.

In the past you guys have talked a little bit about what channel inventory looks like whether it was.

Kind of above or below average or average could you just give us any comments on where you think that is right now.

Yes. So so so when you when you break it down I think that the channel inventory on the enterprise side is a little bit higher than what it's been running at.

Over the course of the past 12 months or so some of that is because of of improvements in supply chain and lead times getting a little bit shorter as well.

And the ability to deliver product into into the distributors.

So I think that's that's.

What we're seeing on enterprise slightly higher on the <unk> side in terms of in terms of the our inventory added distributors, it's actually going the other direction.

And that's a sign of the distributors getting ready for some of our new products as well.

So I think it's somewhat balanced out in that fashion.

Got it and then.

I guess I was also just going to ask about supply chain I think you've kind of answered. It. There I mean are you still seeing any big holdups on on supply chain Golden screw type issues or do you think.

<unk>.

Products are flowing pretty freely now from a manufacturing perspective.

George first of all our all manufacturing subcontractors and the <unk>.

<unk> opened open and operating.

As I said.

<unk> is improving but I don't think.

It does not yet normalcy I think it'll be probably mid 23, when it'll reach for us at least mid mid 'twenty three pre COVID-19 normalcy.

There are still shortages on certain parts, but by and large things have improved.

And I think even after the Chinese new year, which is always something we watch carefully this year no hiccups.

Hiccups factories are fully open largest logistics and freight are continually improving so so far so good.

Okay Super Thank you very much thanks Chuck.

Thank you and we have a follow up question for Scott Searle with Roth Capital Partners. Your line is open.

Hey, just a quick follow up on the six gig front I know you are looking at rolling.

Mode.

<unk> heard solution product I thought it was in the second quarter around <unk> right. So it helps you circumvent some issues as it relates to reliability and be funding just wanted to check on the progress of that make sure that that's still tracking for the second quarter and kind of what's the interest level is that youre seeing at least early on in dialogues with wireless Isps.

Other carriers on that front. Thanks, yes.

Yes, so Scott.

The combo product of 506 will very much be.

We did one by the chips ever Liberty.

Very much gain the experience and then focus on the combo side based on our experience with the customers and also based on ever Liberty of chips and all that so I don't think the combo part will come right away because I think most of our customers right now are either deploying five or six.

And Cvs is a completely different product.

Great. Thank you.

Thanks Scott.

Yes.

Thank you.

And our next question comes from Timothy Horan with Oppenheimer. Your line is open.

Thanks, guys. So you have kind of $5 six I guess, almost seven new major products kind of coming.

Out here now.

Can you talk a little bit about last time, you had this many new services or new products coming out and what the impact was and I mean should we be kind of expecting a material step up in growth in 'twenty four 'twenty five based on all the commentary that Youre that you have here. Thanks. Thanks, Tim.

So while there are new products. If you look at when did we introduce them.

A lot of it is about gestation 60 gigahertz actually was introduced by US almost 18 months that is just that the gestation is now reaching a point with customers understand how to deploy that scaling 28 gigahertz we introduced.

About.

Either back or something like that and that is also beginning to now and to the point, where they're going to scale. So I think when we said new products.

While we do some new platforms. Some of them were introduced ear to ear and add back the completely new stuff, which is coming now is a fixed regards which we just introduced in Q4 last year about three months back ourselves. So these are different waves and the way to think about this is as customers are scaling the networks they will not.

All of them at the same time, they will deploy depending on the region. The rain they'll deploy different frequency and these will overlap over time and Thats what gives us resiliency.

Because we know we have different frequency for different countries and regions. We have different performances in different cost structures that currently the licensed frequency only tier ones tier twos can afford that so we are now working with them was a six is where a lot of this will lose six gigahertz is an extension of <unk>.

In <unk> you guys are going both in enterprise.

I explained as well as municipalities invest so whats you are seeing from cambium as a broad wireless fabric, serving some very key segments and each one of them takes little different time to gestate.

I understand but I mean, theyre, all kind of hitting the S curve or the adoption cycle in the next six to eight in the next six to 12 months I mean, theyre all hitting almost at the same time and the same thing with Wi Fi products. So it feels like I know <unk> all been addressed different times for a whole bunch of reasons. It does feel like we should really see a real acceleration in 'twenty four 'twenty five.

Not trying to put words in your mouth, but it does seem like Daryl.

Really hitting for 'twenty four yes, Tim I agree with you I think starting in the second half you will see some of the acceleration as we mentioned six gigahertz for example, but 'twenty four 'twenty five we will benefit from all these investments we have done in last almost 18 months that that's an accurate statement.

Thank you our product cycles for the older products as well.

In terms of its lifecycle will go the other direction as well so just keep that in mind.

And do you have any I know, it's early to give guidance, but I mean, all things being equal it should be up from this year's growth rate is that pretty fair, we really having gone through that level of guidance for our analysis for 2000 and for yet.

But but we do we are like we said we are excited about about the new S curve, especially when you look out over the next 12 months and you look at the six gigahertz product.

And the level of volume that that that could mean in starting in the U S curve in the P&C side of the business and then do we have any sense of the Tam of the six gigahertz product.

Yes, I think the way Tim you want to think about the two six gigahertz is an extension of five and the five.

Five gigahertz point to multi point was about a $1 billion Tam. The way you want to think about this is a 1 billion dollar churn and extend into the six gigahertz, that's probably the easiest way to think about it.

Thank you.

March 14th at the Roth Annual conference in the meantime, you're always welcome to contact our Investor Relations Department at eight 7% to six four to 188 with any questions that arise. Thank you for joining us and this concludes today's call.

Ladies and gentlemen that concludes today's quarterly earnings call. Thank you for your participation you may now logos.

Q4 2022 Cambium Networks Corp Earnings Call

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