Q2 2023 Ceragon Networks Ltd Earnings Call
But are not limited to those that are described in Ceragon is the most recent annual report on form 20-F, and as may be supplemented from time to time at Ceragon as other filings with the SEC, including today's filing of the earnings press release, all of which are expressly incorporated herein.
Forward looking statements relate to the date initially made do not purport to be predictions of future results and there can be no assurance that they will prove accurate and ceragon undertakes no obligation to update them.
Also today's call will include certain non-GAAP numbers for a reconciliation between GAAP and non-GAAP . Please see the tables attached to the press release that was issued earlier today.
With all that said I'd now like to turn the call over to Jerome surround the call is yours.
Yeah.
Thank you, Rob and good morning, everyone.
This was another strong quarter for Ceragon networks.
Demand for our solutions continues to increase and we have successfully grown our presence in key geographies.
For the second quarter in a row.
Revenue surpassed $80 million and our book to Bill ratio again exceeded one.
We are profitable generated positive free cash flow and expanded our credit facility with existing lenders further solidifying our liquidity.
Importantly, the momentum we experienced in Q1 continued in Q2 and to date, we have not seen any slowdown in customer spending or any of the softness or pressures that some technology providers in adjacent areas offer.
Industry has spoken about.
Performance in the first six months of 2023, combined with improving visibility into the third quarter has given us the confidence to increase our full year outlook.
Revenue for the quarter was $86 $2 million up 22% year over year, our book to Bill ratio was again over one in fact bookings increased sequentially compared to Q1 with particular strength in India and North America bolstering our.
Confidence in continued momentum. Additionally, we're solidly profitable.
With <unk> in non-GAAP earnings per share our sales execution in key regions has improved and the new leadership in Europe , we went through significant organizational restructuring during the quarter, we see a significant opportunity to expand in Europe and are optimistic that the new <unk>.
Leadership in this business focused new structure will better position us to drive growth. We are cognizant of the macro environment and we have seen large players report soft results and outlooks. However, those challenges have not impacted our business we believe.
The demand for wireless transport solutions is driven primarily by the relatively faster time to market and lower cost yet satisfying the increased capacity needs. We are working hard on leveraging our robust product and services offering to capitalize on this situation.
Patient and are pleased with the results for the second quarter in a row. The results also demonstrate the improving earnings power of our organization reflected in expanding gross margins disciplined operating expenses investments and improved efficiency we delivered.
$2 1 million and GAAP net income in the second quarter and $4 4 million in non-GAAP net income <unk> has built a solidly profitable business model, a robust backlog and a diverse set of solutions that address key capex and opex goals for customers around.
The world, we have not encountered any significant impacts from supply chain disruption in the quarter and why we continue to carefully manage the supply chain component availability continues to improve our geographic diversification continues to benefit our revenue in the second quarter we.
The sequential and year over year revenue growth in India and year over year growth in North America in India, we generated our fifth consecutive quarter of revenue over $20 million, our highest quarterly revenues in the recent years and continued strong bookings.
In North America, we generated revenue of $22 2 million down from the record of $26 4 million in the first quarter, but up from $15 million in the second quarter of last year, we continue to advance the productivity of our new system on a chip technology to date our efforts.
Are advancing according to plan and while there is much work to be done. We believe we remain on track to launch our new product line. In 2024. In addition in the coming months, we expect to launch new products featuring a lower total cost of ownership. We believe these new additional products will help.
<unk> expand our market presence and offered tangible benefits to our customers. These products are also expected to help us with our long term goal of improving gross margins.
I'd now like to give an overview on our Q2 highlights by region, noting that on today's call. We will focus primarily on activities in North America and India. The two regions that have and we expect we'll continue to have the greatest impact on our quarterly results in North America.
<unk> build continues to be strong, especially with tier one carriers. We have continued to receive orders for major carriers with one customer driving a significant portion of our volume we have been engaging on new opportunities where technology can be deployed in new ways. For example, we recently signed an agreement.
<unk> to partner with one of the leading open ran vendors to deliver a wireless high capacity low latency multi gigabit transport solution for Caribbean customers, New five open radio access network, we utilized our existing IP 50, disaggregated open router.
Finding the customer within advanced switching and open routing solution. The deployment of this project is ongoing and we have received very positive feedback from the end customer. We are also expecting additional business to expand network and support network operations. This represents the first of its kind.
And open ran open routing and open transport project in North America. We are also pursuing municipal and infrastructure related contracts, including recent wins.
Great example is the multi year contract worth up to $4 $2 million with the city of Cincinnati, We signed during the quarter to upgrade the city public safety network third one is deploying a multi technology multi service solution that provides a robust modernized backhaul and routing solution.
Followed by a long term maintenance and support plan. This solution includes turnkey services, including design and engineering equipment rollout and integration of the solution to enable the city to support mission critical applications, such as artificial intelligence automation.
And real time video, we continue to see many opportunities that introduced additional potential demand for our solutions the <unk> higher frequencies availability as well as the evolving need for Heathrow genius services profiles with guaranteed level of service to different end users are driving.
This potential demand. This demand is also reflected in multiple rfps in which we participate covering all segments of our addressable market, namely tier one operators rural Isps and small carriers as well as private networks. Some of these opportunities, particularly in the rural broadband.
And critical infrastructure segments may take longer to mature as they are also supported by federal and state funding plans. These initiatives remain a critical area for incremental opportunity and diversification for our business. We believe we are increasingly well positioned to capitalize on all of them.
These opportunities when they mature I'd also note that we have been successful in increasing our services business in the region, which often can double the value of an individual deal in India telcos continued to aggressively investing for G technology network, while beginning to deploy <unk> in certain <unk>.
<unk>, we are working with operators in the market for <unk> rollout and enhancement in selected regions <unk> continues to be the dominant subscription type in India with <unk> subscriptions expected to peak in 2024 simultaneously the <unk> rollout is accelerating especially in urban areas.
We continue to deliver our product for <unk> networks, as well as delivering our E band multi band solution for <unk> networks at an increased pace, we delivered another strong booking quarter in India, giving us improved visibility for revenue for the second half of the year demand remains robust.
We are anticipating promising growth with <unk> adoption, a trend that is accelerating as <unk> handsets become more and more affordable to summarize we are delivering solid execution and conditions continue to improve both on the macro and the micro level demand for our solutions is.
<unk> and supply chain availability has been getting better quarter to quarter variability in our financials is always a reality, but trailing 12 month trends for our business, which we think are a strong indicator to our performance trajectory are solid and improving.
Both from a revenue and a profitability standpoint.
We believe we can deliver similar revenue trajectory for the foreseeable future and that we can be profitable on a non-GAAP basis for each quarter. This year before I turn the call over to Ronan to walk through the numbers I wanted to mention that we filed our proxy statement with the SEC for the 2023 annually.
General meeting, where we have nominated Ilan Levin, who has been serving on our board since July 2021, as the new chairman of our board of directors and brings significant corporate governance expertise as well as track record of successful M&A and value creation. He also has.
Significant experience in the telco industry. He currently serves as a managing director of Harbor versus partners LLC, a global private equity firm. We are also nominated mesial Shanghai to be appointed by the shareholders as a new independent director on our board.
Yes, he has more than 25 years of experience in management and strategic leadership roles and the wealth of business and technology knowledge, particularly in leading the development of robust software solutions for the telecom space and selling them under managed services models. We believe that he has vast experience.
Can be a great contributor to us in advancing and executing our strategy with that I will turn the call over to Ronan Stein, our CFO to discuss the results in more details <unk> over to you.
Thank you Ron and good morning, everyone.
As Don outlined this was another strong quarter for Ceragon, though it is important to keep in mind that we are a project driven business and as such there is inherent variability in results from quarter to quarter.
Because of this we analyzed our bookings revenue and gross margin as well as other key performance indicators over a 12 month period of duration, which we believe better reflects the underlying business trends. In addition to help you understand the results I will be reached.
Selling primarily to non-GAAP financials for more information regarding our use of non-GAAP financial measures, including reconciliations of these measures.
Failure to todays press release.
Let me now review the actual results.
Revenues were $86 2 million.
An increase of 21, 9% compared to $70 7 million in.
In Q2 2022.
And up three 3% compared to $83 4 million.
In Q1 2023.
When we take the trailing 12 months view.
Our revenue was $323 7 million.
An increase compared to last quarter's trailing 12 months revenue of $308 3 million.
Our strongest regions in terms of revenues for the quarter were India, and North America, and with $26 nine and $22 2 million respectively. In line with the continuous strong demand we see in these regions our third strongest region.
In terms of revenues was Latin America with $12 6 million.
We had two customers in the second quarter.
Contributed more than 10% of our revenues and gross profit for the second quarter on a non-GAAP basis was $34 million.
An increase of 41, 2% compared to $21 5 million in Q2 2022.
And an increase of seven 2% compared to $28 4 million.
In Q1 2023, our non-GAAP gross margin was 35, 3% compared to 35% in Q2 2022 and.
34% in Q1 2023.
We have achieved high gross margins, even as revenue from India grew as a percentage of consolidated revenue, mainly as a result of improved product mix, including more software revenue and further cost optimizations offset partially by.
The higher inventory write offs.
Our gross margins continue to fluctuate from quarter to quarter due to changes in product and regional mix when we take the trailing 12 months view.
Our non-GAAP gross margin was 34, 5% an increase compared to last quarter's trailing 12 months gross margin of 33, 4%. This upward trajectory of our gross margin trends.
<unk> ability to increase margins when we execute on our strategy and operational efficiencies as for operating expenses research and development expenses for the second quarter on a non-GAAP basis were $7 6 million.
Up from $7 5 million in Q2, 2022, and slightly lower from the $7 7 million.
In Q1, 2023, as a percentage of revenue.
R&D expenses were eight 8% in the second quarter compared to 10, 6% in the second quarter last year sales and marketing expenses for the second quarter on a non-GAAP basis were $9 4 million.
Up from $9 1 million.
In Q2 2022.
Down from $9 8 million.
In Q1, 2023 as a percent of revenue sales and marketing expenses were 10, 9% in the second quarter compared to 12, 8% in the second quarter last year.
General and administrative expenses for the second quarter on a non-GAAP basis was $6 1 million.
Up from $4 6 million.
In Q2, 2022 and up from $5 million in Q1 2023 as a percent of revenue G&A expenses were 7% in the second quarter compared to six 5% in the second quarter last year, we intend to continue being disciplined.
Our operating expenses, while leveraging our strong results to further invest in certain areas to support continuous profitable growth.
Therefore, we estimate average quarterly operating expenses in the second half of 243 to range between $22 million.
$23 million.
Operating profit for the second quarter was $7 4 million.
Up approximately $7 million from the operating profit of zero point $4 million.
In Q2, 2022, and up $1 5 million.
Sequentially from the operating profit of $5 9 million in Q1 2023. Please note. These non-GAAP metrics exclude a charge related to restructuring and related charges in Europe amounting to <unk> 9 million.
Financial and other expenses for the second quarter on a non-GAAP basis were $2 2 million.
In line with expectations, our tax expenses for the second quarter on a non-GAAP basis were <unk> 8 million net income on a non-GAAP basis for the quarter was $4 4 million or <unk> <unk> per diluted share compared to a net loss of $2 5 million.
<unk> per share in the second quarter last year, the second quarter net income was up zero point $8 million.
For net income of $3 6 million.
<unk> <unk> per diluted share in Q1 2023 as for our balance sheet, our cash position at the end of the second quarter was $24 5 million.
And our short term loans stands at $39 6 million during the second quarter, we increased the bank loan facility to $72 million.
And extended the maturity date for an additional year until June 32024, we believe we have cash and facilities that are sufficient for operations and working capital needs. Our inventory at the end of Q2 2023 was $67 8 million DAU.
One from the $72 million at the end of December we.
We continue to monitor inventory levels, taking into consideration the improvements in availability of components and expected changes in demand our trade receivables are at $107 6 million.
As compared to $100 million at the end of December our DSO now stands at 121 days as for our cash flow net cash flow generated by operations and investing activities. In Q2, 2023 was zero point $4 million.
We expect to generate positive cash from operations for the full year.
As Don indicated at the top of this call.
Demand in our business continues to be strong and we are encouraged by our bookings, which give us good visibility into the third quarter.
Based on our results through the first half of this year, we are raising our full year revenue outlook from $325 million to $345 million.
To $334 million to $348 million.
And reaffirming expectations for full year profitability.
Outlook, we're providing today is based on our current visibility and it leaves us some room for adjustment as we progress further into the back of the year.
With that I'll now open the call for your questions operator.
Thank you in order to ask a question. Please raise your hand, using their mobile or desktop application and wait for your name to be announced once again. Please raise your hand, using your mobile or desktop application and wait for your name.
Our first question today comes from the line of Alex Henderson from Needham. Please go ahead.
Alright, thank you so much.
I was hoping you could talk a little bit about the margins.
Specifically in India.
Historically, India has had gross margins that are substantially lower than the corporate average.
It's often been a case that you've been shipping very low end products into that geography, because of their <unk> and <unk>.
<unk>.
Networks as they move to five G. Do you expect to be able to ship them, a better mix of software and.
<unk> related feature sets that ultimately allow you to get somewhat better margins or alternatively is the <unk>.
Indian.
<unk> to very low pricing going to continue to.
Results in significantly below margin.
Shipments into that geography.
Hi, Alex this is Earl.
Your final question.
India is India and will remain India, which means.
Very very high pressure on prices.
Results in.
No margins.
Daniel.
The only difference in that.
When they buy.
Configuration.
Are more robust.
They buy.
A piece of software as part of the deal.
And that can create some difference in the gross margins.
Between quarters or between years, depending on the.
Their decisions how to invest in.
In the network so in general.
We expect the margins in India to continue on average.
More or less the same.
With some fluctuation depending on their buying decisions.
Okay. So we don't expect Anda margins too.
To improve at all.
It's stable.
No.
Clearly North America has much greater margins, but India is.
Probably stronger in terms of overall sales. So I guess the question is <unk> had very good gross margins $34 $35 three.
In the first and second quarter.
Hi.
What are we thinking about in terms of gross margins into the back half.
Are we down back down into the $33 34 range or.
Whats the trajectory there.
Well, we don't have an exact project going forward.
Or.
Second half year.
So we assortment we can.
Continue to be in line more or less.
Trailing 12 months.
Could be a bit less.
It's more.
It's difficult to predict at this stage.
So.
Yes.
That would suggest a higher margin.
The upper end of your historical range, but as you've averaged.
Averaged over 34% is that fair.
Around this number yes.
Dr.
Q3, and Q4, we don't have yet the full visibility.
Okay.
This is the range, where we are.
Assuming.
North America, and India will continue to perform as they perform.
You called out the improving costs and an inventory write off.
Can you give us a sense of the size of the inventory write off that was absorbed in the quarter.
Well, we don't give this detail.
Yeah.
No.
Wherever it's necessary.
Due to expectations of shifts in demand and shift the one explained earlier in the fall.
For our portfolio.
All the time the assessments.
Accordingly.
Yes.
To this point.
We generally speaking.
We have a methodology.
Inventory inspection.
Provisions for obsolete inventory.
Using for many years.
Always part of our non-GAAP numbers.
And therefore, we don't disclose the specific number as we don't disclose many other components.
Our comprising our cost of revenue.
Just noted that because there were some things for the App.
And we also wanted to make sure that.
Investors understand that there were some things further down.
Terms of the impact on our gross margin as well.
Taking inventory write off and sell getting 35% there is pretty good pretty good result.
Sure.
One one more set of questions on the interest line you've changed here.
Your provisions with your creditors so can.
Can you give us some guidance on what that impact is and what the.
The interest expense line ought to look like in the three <unk> timeframe and similarly can you give us some sense of the tax rate.
Well on the finance financial expense.
Youll have the data about.
Our loan.
The loan facility change.
Does not change much.
We cannot expect exactly the changes in interest rates right now.
We already see.
Zero.
Inquiries.
Increase in that.
So far so.
We can.
We would expect a slight increase in this quarter really depends on the actual yields we don't see much change in our <unk>.
The facility of the loans, although as we progressed through.
Yes.
Positive cash flow.
May reduce it.
But it would not have.
So to summarize we remain more or less in the same level.
Uhm.
Might be mainly due to foreign exchange as we cannot hedge.
Alright, great.
<unk> and <unk>.
<unk> number that I mean, it was up.
Over 300000 quarter to quarter.
No no not material to any site it was.
Relatively reasonable.
In terms of.
And going backwards.
The most recent quarters.
We expect.
So you are suggesting that we ought to be using around the $2 1 million level for both <unk> and <unk>.
Yes, the level that we saw in Q2 is more or less the level.
I cannot expect.
In terms of.
Cutting I cannot.
Something else, yes, Okay, and then on the tax rate side.
So the taxes are a bit more complicated because of taxes, because we have so many losses.
Taxes are more impulse buy.
Hi, Lo Carb rules in.
In different geographies and different states.
These are difficult to predict.
But you will see that the non much changes increased.
His level of Av.
Revenues increase it should increase accordingly.
Cannot be modernized.
Right so.
439 in the first quarter 787 in the second quarter should I take the average of those two and extrapolate that to the back half.
Yes.
It will be a reasonable idea.
Okay I'll cede the floor. Thanks.
Our next question today comes from the line of Scott Searle Roth Capital. Please go ahead.
Good morning, good afternoon, nice job on the quarter. Thanks for taking my questions.
Maybe just to quickly follow up on Alex's question for clarification.
In terms of the inventory write off I just want to be clear was that you took inventory write offs in the quarter or there was a benefit.
Previously written off.
Inventory in the quarter.
And then as well on the Opex I apologize if I missed this.
But the G&A was a little bit elevated versus the last several quarters are there any onetime charges.
Charges in there that we should normalize out and then I had a couple of follow ups on geographies and products.
So regarding the inventory write.
The write down of inventory.
For this quarter.
Could it be.
Any quarter could be higher or lower inventory write offs.
While we cannot predict that.
As we said, we monitory models and we continue to model monitor even beyond the models.
Yes.
To ensure that we have.
A recording of this.
Inventory.
With respect to the G&A.
Just mentioned I cannot say that things were a specific EMEA.
At one time.
Sure.
Things will get it can be higher or lower in specific areas.
Okay.
You say you will see we have provided some guidance.
I provided some guidance earlier.
Operating.
<unk> expenses in general.
For the next two quarters.
Great. Okay. Thank you and maybe if I could geographically North America, one of the regions that continues to be strong for you. It sounds like the order book continues to build there as well can you give us a little bit of an idea of where the order book is coming from is it more private networks or are we starting to see a little bit of an acceleration on the operator side in particular <unk> been behind.
On some of their build outs at least in terms of geographic coverage as opposed to pop coverage and Im wondering if youre starting to see that start to pick up now as we go into the back half and into 2024.
So generally speaking.
Strength in North America.
Yes.
Excellent.
And primarily for us.
Led by the tier one operators.
Okay.
We see these operators.
Making the decisions about investing in wireless plans or.
Based on their own.
So to speak programs.
Theyre not there.
Yes.
Adopting the same strategy of rollout and before.
The numbers and obviously the timing will change.
Among them, but I think that the strength so far.
Driven by by the tier one operators at least for us.
Do we still see.
And this trajectory continues.
I would say our carefully say.
That based on what.
What we see and the discussions we are having.
With all of the tier one operators in this particular region.
There is a good chance that we will continue seeing this business.
Coming strong also in the quarters to come but this is a very cautious assessment based on the discussions.
As we are having with them about their plans they're not commit.
Committed yet to any of this.
Discussions, we also see a trend up.
In other segments of the.
Of this particular region.
Because.
The number of use cases, where additional capacity is required.
And it has required fast.
Our growing and as a result of that we also see.
A certain trend up in the demand also in other segments.
It's.
It's less so to speak in portfolio.
On our business at this point.
But we are very much encouraged by the upper edge.
End of.
The increased.
Funnel.
And we believe that this will fuel our business in the near and the long term in a very significantly.
Just two neurons points.
Endpoint.
You mentioned earlier about one.
Very nice win.
So this was also released.
It shows that we have.
For you guys.
Okay very helpful and if I could shifting over to India quickly.
Obviously in a key market for you and I know, it's a little bit early to start thinking about 24, but im wondering if youre starting to get some visibility.
Into this sustained level or greater as you kind of look into 2024 in terms of the build out cycles of where they are from a <unk> perspective.
Yeah. So so.
As we said in the.
In the prepared comments.
<unk>.
What is fueling.
Our success.
At this point in this year.
It's a combination of five year rollout and continued for <unk> rollout.
We're therefore the rollout at this point is taking the vast.
Bart.
Of our success.
Based on our discussions with the different operators.
As well as the opportunities that we see in the market.
We believe that.
Generally speaking.
The business could be as strong.
In 'twenty four.
It is today and may be even higher but I think that the portion of the four G. HN certain point relative to the five G will start going down. So generally speaking we expect to see the same strength and maybe maybe even.
Bigger business in 2024, I think that the mixture.
We'll start gradually moving towards more <unk>.
Got it very helpful and lastly, if I could on the product front it sounds like Youre tracking from.
And Asia perspective to bring down the Bom costs as you go into 2024 and beyond but it sounds like there are some other products as well that are in the pipeline I am wondering if you could elaborate on that a little bit more are you talking more from a software perspective in terms of network management capabilities or at some other products that we're going to start to see.
Rolling out to the marketplace in the second half in 2024 timeframe. Thanks, so much.
Sure.
Not less than not more than a year ago, we announced that we intend to come up with another version of certain products.
That will.
B.
I would say more.
Appealing.
Ron Defeo perspective.
Understanding that.
The current.
<unk>.
Offering that we have.
Could address very nicely.
Technological needs, but sometimes not in with the right.
<unk>.
As we said that in the past now we are coming to.
To the stage, where we actually deliver to our commitments.
And in the coming few.
Month.
We hope to start announcing the allowance.
Commercial launch of these new products, it's not only counts.
The longer.
Using our new system on a chip.
And.
Obviously in addition to.
Our product portfolio.
Just two.
To augment the current.
Portfolio with more products that can address more use cases with that alright.
Okay.
Great. Thanks, so much nice job on the quarter.
Thank you so much. Thank you. Thank you as a reminder, in order to ask a question. Please raise your hand, using your mobile application and wait for your name to Vienna.
Our next question today comes from the line of.
Gunther Karger. Please go ahead.
Downturn in Europe .
Our next question today comes from the line of Alex Henderson. Please go ahead.
Alright. Thanks.
I wanted to go back to.
The Nexgen chip.
Much higher capacity capabilities.
<unk> indicated that you would probably expect to see that.
Shipping out product and generating revenues in 2024, I was hoping you could give us a little bit better sense of the.
The trajectory of that is that very late in the year can you do it by mid year.
That type of stuff and how you think that that product will unfold in terms of.
Initial startup costs versus.
<unk>.
Eventual margins, whether that product will produce margins that are above corporate average when its matured matured on somewhat or is it a drag to margins upfront.
It starts to launch.
Yes, so we are talking about launching that.
First product in our product and our product line using this channel.
During 2024, the current assumption.
Is that it will not have a very meaningful impact.
On our on our revenue in 2024. This is the basic assumption.
That we're currently using it could be that will have positive surprise us.
At this point this is our basic assumptions in terms of margins and bond was obviously.
The trend in the history shows that as the products become more and more mature.
You can take costs down and obviously if volumes.
<unk>.
Our high this will actually enable us to even accelerate the cost reduction however.
<unk> this is chip.
Is not only coming result is features and capabilities.
It's also system on a chip.
That is men.
To position us even in the starting point when we start.
Manufacturing this product in in mass production.
With a cost structure that is.
At least.
Well or even better.
Then our previous products if you obviously compare.
Feature to feature.
And.
Our performance to performance.
So all in all.
We believe that the starting point of this product is going to be.
Quite appealing.
And obviously, where we have.
The rest.
The product portfolio that will still be sold for a very long time in parallel.
We expect that we'll be able to sell these products from the start with decent gross margins.
And down the road.
<unk> gross margins will even improve.
The volume of the product that is being sold is going up.
Do you expect any startup costs associated with that.
As youre doing the initial very small volumes.
I would assume that those will probably start off at a loss.
For the simple reason that the volumes are so low.
So.
One of the things we are doing.
Is basically.
Okay.
We are prepared to manufacturing.
We also look into the equipment.
And that we have today for manufacturing and to what extent, we'll be able to leverage this equipment.
<unk> instead of actually either buying new equipment that fits better to this particular product. So in this respect we are very very efficient.
And.
Probably going to use it.
A significant part of our existing equipment, including testing equipment.
This product as well and therefore.
We don't anticipate any significant costs.
That are associated with manufacturing this particular product in small quantities.
Okay.
Just going back to the marketing side of this how important is this product then in terms of the roadmap and winning new customers, particularly in North America, but.
Generally.
Speaking.
Look I think ceragon is very well known.
The strength of its radios.
And the total cost of ownership.
LTC.
Which was announced.
Significantly I would say in 2013, our 2014.
One such.
Such a big business for us because of this combination of very strong radio.
With a relatively low cost.
That could that create a very interesting total cost of ownership to our customers.
I think that is.
The system on a chip will actually come with the same.
Message to the market.
We'll see much stronger.
And capacity capabilities.
Especially if we look at the event.
And with the.
Cost rise.
Bright line.
That is by far better for gigabit.
And the current proposals that are in the market.
I guess, what I'm asking.
Here at <unk>.
<unk> tier one tier two customers looking at this product and saying.
To be more closely tied to ceragon because this product is coming down the pike and it looks like it's disruptive and therefore, you are getting some benefit halo benefit on your current orders in anticipation of its availability. So it is not a 2025 revenue impact may actually be impacting revenues early.
In the sense that people are choosing to go with you because they see that in your roadmap.
Generally speaking.
Speaking.
The short answer is yes.
To be more elaborative.
They look.
The position, we are having a tier one operators.
This is primarily because they know how strong we are.
And building radios that fit their needs and their standouts.
<unk>.
This is the general notion.
Obviously, we have already started sharing.
The things that are.
That are coming and I believe.
This is one of the consideration.
They keep.
Sorry.
Good thank close relationship with us even with some cases, where there are not there.
Yes, I would say a very big customer of us.
But they know what's ahead.
Therefore.
We are keeping this relationship very close.
Let's not forget that we are not disclosing to our customers very specific features.
Before we finalized the scars.
The roadmap.
In more detail within cerebral.
And when the time comes we'll obviously share more information with our customers.
Great. Thanks.
Thank you we have no further questions. Please proceed.
To close.
We are encouraged by our first half results.
We delivered strong revenue and significantly improved profitability.
Bookings have been strong providing us with good visibility into the third quarter and we believe that we are well positioned to achieve self sustaining cash flows.
As we execute on our growth strategy.
We expect that our product roadmap will give us a durable competitive advantage, we're increasingly excited about silicones opportunities.
I look forward to updating you further on our next quarter.
Have a good day everyone.