Q3 2023 Cambium Networks Corp Earnings Call
Good afternoon, My name is Eric and I'll be your conference operator today at this time I would like to welcome everyone to the Cambium Networks' third quarter 2023 financial results Conference call.
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 the session you will need to press star one one on your telephone you will then hear an automated message advising that your hand is raised to withdraw your question simply press star one again.
Please limit yourself to one question and one follow up question.
Be advised that today's conference is being recorded.
And now Mr. Peter Schuman, Vice President of Investor Relations.
Investor and industry analysts relations you may begin your conference.
Thank you Eric welcome and thank you for joining us today for Cambium Networks' third quarter 2023 financial results conference call and welcome to all those joining by webcast Morgan Kurk, our president and CEO and Andrew <unk>. Our CFO are here for today's call. The financial results press release, and CFO commentary referenced on this call are accessible on the <unk>.
Page of our website and the press release has been submitted on form 8-K with the SEC certain revisions were made within operating expenses in prior periods to conform to the classifications in the current period. These revisions had no impact to operating results 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.
Maiden during Q&A will contain forward looking statements about the company's outlook and forecasted performance.
Shipments are based on current conditions forecast 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.
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 not 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 and are more.
Recent SEC filings, including our most recent Form 10-K and Form 10-Qs.
We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year over year comparisons reference 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.
In today's press release announcing our results.
Turning to the agenda Morgan Kurk will provide the key operational highlights for the third quarter 2023, and Andrew Brownstein will provide a recap of the financial results for the third quarter 2023, and we will discuss certain elements of our financial outlook for the fourth quarter 2023.
Our prepared remarks will be followed by a Q&A session I would now like to turn the call over to Morgan.
Thank you Peter I'll begin by outlining some of the observations I've had and the initiatives I've started during my three month tenure as CEO and why despite our challenges and economic headwinds I am excited about cambium as future.
After a comprehensive review of Cambium networks product portfolio I'm impressed by the technology I've seen in both depth and breadth.
Furthermore, I am encouraged by the technical talent throughout the organization and believe that with additional direction. There is a wealth of opportunity to be exploited.
I see possibilities in our future roadmaps by combining technologies from different areas of the business to solve networking problems more effectively.
I have three immediate priorities. My first focus is on execution. This is in all aspects of the business and it's about keeping our promises a promise to deliver innovations when we say, what we say a promise to deliver greater value than the rest of the market.
Our promise to use capital wisely, whether it is in cash or human capital.
This say do is the foundation of trust within the company and between Us and our customers and suppliers is what I will use to help build a solid organization.
Second after an initial strategy session and discussion with customers I've concluded, we often try to do too much spreading ourselves too thin so I am implementing a focus and simplify strategy, where we are building core platforms that can be used to create multiple solutions. This strategy improves efficiency and engine.
Gary reduces time to market and lowest product cost and support cost.
Focus is the key to success and requires the strength to decide what to do and what not to do.
My third priority is to improve our go to market in specific areas, where we can grow.
We will place additional emphasis on those sectors that can be differentiated through product or services.
Look forward to growing cambium as top line revenues and returning the business back to higher levels of profitability.
Recapping the underperformance of Q3 23 revenues.
We had three items contributing to the shortfall in revenues during Q3 23.
Our point to point PTP revenues decreased 37% sequentially and grew 3% year over year due to temporary at U S. Federal budgetary issues, resulting in a gap of more than $8 million in defence orders as compared to our initial Q3 'twenty three outlook, we expect a significant portion of these delay.
As to shift during Q4 'twenty three.
Our point to Multipoint PMT revenues decreased 12% sequentially sequentially and was lower by 10% year over year as inventories in channel reduced while waiting for the FCC approval of six gigahertz spectrum expected during late Q4 2003.
The approval is anticipated to drive sales of <unk>, new six gigahertz, <unk> 4600, and Pnp <unk> product lines.
On a positive note our 28 gigahertz fixed products reported record revenues, increasing 144% sequentially during Q3 23.
Our enterprise revenues decreased 61% sequentially and decreased 93% year over year.
Order for our enterprise business continues to experience headwinds, particularly in North America, and EMEA due to high channel inventory enterprise revenues were negatively impacted by stock rotations of approximately $9 million of which approximately half were exchanged for enterprise products.
Sales of cambium products out of the distribution channel as reported by Cambium as distributors were significantly higher for Q3, 'twenty three and cambium as reported revenues and we saw a correspondingly large decrease in channel inventories for both enterprise and PMT products.
While we're making good progress in clearing out inventories in the channel. This effort is not complete yet we expect the channel inventories for <unk> enterprise products to return to pre COVID-19 levels. During the first half of 2024.
Now looking at some customer wins that are key to our future success.
In the city of Huntington Park, California, Cambium, one the first phase of an American Rescue Plan Act ARPA funded citywide initiative to provide internet to bridge the digital divide by equipping Streetlights with Cambium 60, gigahertz, <unk> wave and outdoor Wi Fi access points, highlighting <unk> unique product set.
In the Europe, Middle East and Africa region, we had a multi year win with a managed service provider to provide enterprise Wi Fi for AB Inbev the largest brewer in the world, providing internet access to thousands of taverns across sub Saharan Africa as a testimony to <unk> central cloud <unk>.
Architecture.
In the Middle East the Gulf of Suez Petroleum company and in the Asia Pacific Region oil and natural Gas Corporation limited both selected cambium, Sweet a PTP Pnp and CMI stroke cloud management solutions to connect large harsh environments, which exemplifies our products reliability.
And in the Caribbean and Latin America region.
We havent important wins with the largest hotel chain in the world with managed service provider single digits there.
Our field, but kilo.
Each in Puerto Rico is in implementing our Wi Fi six and switching solutions and Cambium was recently selected for the AC Santiago and the dependent Dominican Republic.
Which demonstrates continued acceptance of our product in the hospitality market.
Turning to upcoming product introductions since our previous quarterly update.
In the PTP business for defense communication Cambium introduced a new smart antenna the PTP 700 beam steering unit.
Outdoor unit, which enables antenna alignment automatically rather than manually and high level of interference mitigation to provide secure communications and hostile environments. This product solves one of the biggest challenges in deploying wireless networks, which is antenna alignment and subsequently reduces the cost and weight of the radios.
Cambium is also introducing a Wi Fi six home mesh gateway solution, the Wi Fi mesh gateway solution.
Works seamlessly with our fiber and wireless backhaul products and features auto frequency coordination content filtering device Bad times, a guest network and a caf II compliant speed test.
The hardware and customer apps can be customized and branded with the ability to do self install and self help.
Looking at our CMI stroke cloud cloud software total devices under cloud management in Q3, 23 surpassed 1 million for the first time and cambium history, increasing approximately 4% from Q2, 'twenty, three and up over 17% year over year.
On the human interest front cambium donated outdoor Wi Fi equipment to the information technology disaster resource center to help those displaced by fires on Maui within hours of installation one hotel reported the number of connected clients increased by three times from about 50 to more than 150 connected devices.
I will now turn the call over to Andrew for a review of our Q3 'twenty three financial results and Q4, 'twenty three financial outlook.
Thanks, Morgan, while cambium is presently impacted by lower revenue levels. We are seeing the benefits of our cost reduction plan designed to align our cost structure.
To our revenues and to improve cash flow.
In 2024, we expect to realize annualized cash savings of $24 million.
Comprised of Opex savings of approximately $17 million additional capex savings of approximately $5 million as well as Cogs savings of $2 million.
These savings include actions taken both in August of 2023, as well as cost reductions planned during Q4 'twenty three.
What's revenues returned to more normalized levels, we expect to see higher profitability flow through to our bottom line.
As a reminder.
Our 2023 results do not include the full cost for our variable compensation plans due to the underperformance of our operating results there.
Therefore for 2024.
These variable compensation programs are expected to add approximately $10 million.
When compared to 2023.
Now turning to the quarter.
<unk> reported revenues of $43 million for Q3 23.
Revenues decreased by 28% quarter over quarter and decreased by 47% year over year.
On a sequential basis for Q3, 23 revenues were lower by $16 5 million.
The lower revenues were the result of the previously mentioned U S. Federal budgetary delays impacting our PTP defense revenues.
Continued lower order volume from our enterprise business.
Two high channel inventories stock rotations and slowing economies.
And slower Pnp orders ahead of the approval of six gigahertz spectrum.
We have seen Pnp and enterprise channel inventories declined during Q3 dollars 23.
Revenues of $43 million decreased by $38 $2 million year over year, primarily due to lower enterprise revenues as a result of the high channel inventories.
Stock rotations and slowing economies.
<unk> revenues decreased due to the anticipation of the six gigahertz FCC approval.
Partially offset by higher demand from service providers for 28 gigahertz fixed five gene.
PTP revenues rose slightly year over year as a result of increased demand for our defense products.
We expect stronger PTP revenues for Q4, 23, due to our expanding defense business.
By region.
North America, Kalla, and APAC weakened sequentially, while EMEA recovered growing a 111% quarter over quarter driven by demand from a large 28 gigahertz customer.
Now moving to our gross margin.
Our non-GAAP gross margin of 27, 7% compares to 51, 3% in Q3 dollars 22.
This year over year decrease in our non-GAAP gross margin was primarily due to higher inventory reserves of approximately $5 million lower freight capitalization as well as weaker product mix as a result of lower enterprise revenues.
On a sequential basis Q3, 23, non-GAAP gross margin was 27, 7% compared to 53% to lower quarter over quarter. non-GAAP gross margin was primarily the result of higher inventory reserves of approximately $5 billion lower freight capitalization and lower defense.
And enterprise revenues.
In Q3 dollars 23, our non-GAAP gross profit dollars of $11 9 million decreased by $29 7 million compared to the prior year end.
And decreased by $18 million sequentially due to lower revenues.
non-GAAP total operating expenses, including amortization, including.
In Q3 dollars 23 decreased by approximately $400000 when compared to Q3 dollars 22.
And stood at 27 4 million or 63, 7% of revenues the decrease in operating expenses compared to the prior year period was primarily the result of lower sales commissions as a result of lower revenues and lower marketing spend partially offset by increased wages due to inflationary salary increase.
Effective January one 2023.
When compared to Q2 23, non-GAAP operating expenses decreased by approximately $900000. During Q3 dollars 23 to <unk>.
<unk> over quarter decrease in Opex was due to lower headcount and lower sales commissions due to lower revenues.
Partially offset by higher G&A costs.
Due to professional services.
non-GAAP net loss for Q3, 23 was $12 1 million or a loss of <unk> 44 per diluted share below our outlook through the quarter and compared to non-GAAP net income of $11 3 billion.
Our earnings of <unk> 40 per diluted share for Q3 dollars 22, and non-GAAP net income of $900000 or <unk> <unk> per diluted share in Q2 'twenty three.
The lower non-GAAP net income compared to the prior year was primarily due to lower enterprise revenues at a lower gross margin.
The lower net income compared to the prior quarter's results was primarily the result of lower PTP and enterprise revenues and a lower gross margin, partially offset by lower operating expenses due to a reduction in head count and lower sales commissions.
Adjusted EBITDA for Q3 dollars 23 was a loss of $14 4 million.
Negative 33, 5% of revenues compared to $14 7 million or 18, 2% of revenues for Q3 dollars 22.
And $2 8 million or four 7% of revenues for Q2 'twenty three.
Now moving to cash flow.
Cash used in operating activities was $200000 for Q3 dollars 23, and compares to cash provided by operating activities of $2 2 million for Q3 dollars 22 and.
And cash used in operating activities of $4 5 million for Q2 2003.
During Q3, 'twenty three we did a great job converting receivables into cash inventories.
Inventories were reduced modestly mainly due to inventory reserves.
While we expect that our inventory balances will decline as we returned to pre COVID-19 levels, we will still face some headwinds until inventories at our third party manufacturers normalize.
In addition, inventories will reduce sales orders and revenues increase driven by enterprise channel inventories returning to pre COVID-19 levels.
<unk> revenues, increasing from the introduction of our six gigahertz products and PTP growth driven by our defense products.
Now turning to the balance sheet.
Cash totaled $27 5 million as of September 32023, a decrease of $4 4 million from Q2 'twenty three.
The sequential decrease in cash primarily reflects lower revenues and net income as well as capex and income taxes.
Net inventories of $79 8 million in Q3, 23 decreased by $2 6 million from Q2, 'twenty, three and higher by $29 $1 million year over year.
Net inventories were sequentially lower as a result of higher inventory reserves channel inventories continue to go down sequentially for both enterprise and Pnp products.
We continued to take aggressive actions to work with our distributors and return channel inventories to pre COVID-19 levels.
In summary, cambium third quarter results were impacted by lower sales orders and higher stock rotations at our enterprise business delays in the timing of defense shipments in our PTP business and sluggish order volume in our PSP business as our distributors of wheat, the FCC approval of the six gigahertz.
<unk>.
We continue to manage costs prudently, we have taken significant actions to reduce our cost structure.
Along with aggressive sales actions to move enterprise inventories through the channel.
We continue to expect positive momentum from our PSP products driven by the expected FCC approval of our six gigahertz products.
Although lumpy to continued ramp of our 28 gigahertz <unk> revenues as more service providers move to commercial deployment.
Moving to the fourth quarter 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 Q4 'twenty three financial outlook is expected to be as follows.
Revenues of between 45, and $50 million, representing a sequential increase of approximately 10, 5% at the midpoint of our outlook.
non-GAAP gross margin of between 38% and 45%.
non-GAAP operating expenses between 25, 7% and $26 7 million.
GAAP net loss of between four and $7 5 million or a net loss per diluted share of between 14% to 2007.
Further due to the impact of lower revenues and cash requirements, we will evaluate whether or not to draw a portion likely less than one half of our $45 million revolver as we prepare to enter 2024.
I will now turn the call back to Morgan for some closing remarks.
We still have a ways to go before returning to normalized revenue in our enterprise business, but we're making good progress with our channel partners to digest, the current level of channel inventory and sell out remains significantly stronger than sell in.
While our PMT business has not yet turned the corner, we expect it will accelerate with the FCC's approval of cambium affordable six gigahertz solutions.
Bookings in our PDP business remains strong we expect a record year of defense revenues in 2023, and we continue to expand the number of programs in countries in which we participate.
We continue to manage our cost and we are taking additional actions to reduce them, which will serve us well in the future we.
We are investing in innovative new products, but realize that we can't be all things to all customers, which requires focusing on those areas that provide the most compelling value to our customers and our solid financial return to our shareholders.
Finally, I'd like to show my appreciation for our employees partners and customers as we reposition the company for continued success in the long run.
This concludes our prepared remarks, and with that I'd like to turn the call back to Eric and begin the Q&A session.
Thank you very much as a reminder to ask a question during the session you will need to press star one on your telephone you will hear an automated message advising that your hand is raised to withdraw your question simply press star one again.
Please limit yourself to one question and one follow up question.
Now standby, while we compile the Q&A roster.
Our first question comes from Scott Searle with Roth Capital Partners LLC Scott. Your line is open. Please go ahead.
Hello, Scott.
My apologies thanks for taking my question.
Morgan, maybe just to dive in on the Wi Fi front.
Trying to get my hands around where the channel inventories I know you guys are continuing to burn it down but it certainly in terms of the posted results in the third quarter is very low.
Can you give us an idea of what the actual sell through was in the Wi Fi product portfolio. I think you mentioned getting back to pre COVID-19 levels, but previously the company had indicated I think that sell through had been last quarter more in the 16 plus million range. I was wondering if you could calibrate us on that front and what we should think about normalized revenues looking like.
Once channel inventory comes back to normal levels sometime in mid 'twenty for <unk>.
Absolutely so.
I think it's very similar.
It's in the $15 million to $20 million range.
And we expect that after the channel inventory is burned off.
Our revenues will return to levels and grow from there.
Got you okay.
Maybe quickly then for the follow up shifting over to the point to point front.
Some product transitions going on there as it were sitting or waiting for AFC approval. It sounds like that's expected in the fourth quarter, but in the meantime, it sounds like 28 gig had a really big impact in the third quarter. So I'm wondering if you could calibrate us as to the magnitude of that the European revenues were up quite a bit sequentially with 28 gig the big.
<unk> chunk of that movement, and then as we look into 2024, if you could frame the opportunity for us as it relates to six gigahertz, assuming that Theres AFC approval, how big is the pipeline I think when we last saw you at Whistler.
You were talking about 100, plus poc's, how are things on that front.
What's a successful year in terms of six gigahertz, when we look at 2020 for sure.
Sure. So a couple of things to unpack there the impact of the 28 gigahertz product. This past quarter was in the $5 million to $10 million range.
And it is significant and this is what happens when new spectrum collides with with new products, you get a nice bump from it and it's the same sort of.
Benefits that ourselves and the whole industry will get in in six gigahertz as that becomes available.
A sizeable bump as people build that out Youre correct, we have more than 100 POC as.
Some folks are doing early deployments of course, they cannot turn on this this.
Equipment prior to.
Approval, except under an experimental license but.
We expect that to ramp in the first half of the year, rather significantly with approval happening in.
In this quarter.
Great. Thank you.
Thank you.
Standby for our next question.
And we have Simon Leopold with Raymond James.
Your line is open. Please go ahead, great. Thanks for taking the question first one is I want a little bit of help.
<unk> are getting a bridge on the gross margin.
I think you mentioned that there was 5 million inventory adjustment and so that looks like if I back that out gross margins would've been around 39% just checking my math, there and then help us understand really what's going on by segment because im wondering are guessing that maybe.
Wifi business is low enough that it could even be contributing a negative gross margin.
You can offer to help us unpack, what what contributes to this weak gross margin. Thank you.
Yeah no. Thanks for the question I appreciate that so you mentioned the $5 million that certainly had the biggest impact in terms of the additional inventory reserve in addition to that.
I had mentioned that we have less capitalization of <unk>.
<unk>.
A freight as a result of purchasing less from our vendors because our inventory.
We have enough inventory right now, we're not looking to bring in more inventory.
And the third area is that we are working very closely with our distributors in terms of moving inventory, especially in enterprise.
Through the channel and and and that includes discounting.
The inventory that is in the channel, especially for older products. So those are the three areas that impacted the gross margin we do expect.
Once we get to a more normalized rate even with discounting as we look ahead to 2024 that we will be at least at the 40%.
Plus range.
Great and then if we could get maybe an update on your thinking of some of the <unk>.
<unk> from government programs like B as an example.
And even thinking about any international opportunities, but what's your current thinking on how to <unk>.
Consider the timing and contribution from those thank you.
Yes, so Simon.
<unk>.
A bead and other funding continues to be primarily focused on.
On fiber.
And.
Although we expect this to have more of an impact in the future. We really don't have a good view of of exactly when that timing will happen. There clearly is not enough money going around to connect everybody.
With the current methodology of predominantly using fiber and so we think that will favor us over time, but as I said, we don't have a real timing on that where we will get a big uplift because of it in the United States.
There are other programs throughout the rest of the world.
Requiring different requirements.
For for gaining government funding and while we are actively working with them.
I don't have a number to give you on what sort of an impact we have I believe it will be just as part of our normal business.
Okay. Thank you.
Thank you.
Our next question comes from George Notter with Jefferies. George Your line is open. Please go ahead.
Hi, guys. Thanks, very much I guess, one for Morgan Morgan in your monologue you talked about.
Kind of doing doing less as a company being our focus as a company can you talk about your views on the product portfolio are there pieces that you might look to rationalize or areas, where it can become more focused and any thoughts on.
And the product set.
Absolutely and this is a passion of mine so.
I'll kind of go through I methodology, I wont speak specific to a product that will be de emphasized our emphasize but if you look across our product lines, we have a multitude of products.
In some cases covering the same.
Spectrum and addressing the same customers and my <unk>.
My immediate plan is to try to emphasize I'll call. It the best in class if there are competing products.
And deemphasize without.
Reducing the ability to support.
Product that is in the field over the longer term.
It is to consolidate products on a single unified platform.
And this is something which I am forgotten about because it really means that your R&D guests.
Spread out along a larger customer base and you can address more of the market from a single product.
However, it takes time.
So step one is just where youre going to emphasize your spend and step two is the engineering involved with consolidation.
Got it that helps thanks very much guys I appreciate it.
Thank you.
Standby for our next question.
Yes.
And this is coming from Eric Super <unk> with JMP Securities. Eric. Your line is open go ahead.
Yes, Thank you for taking the question.
Morgan can you talk a little bit about the competitive environment, particularly for your in your enterprise products.
Are you seeing.
Significant discounting out there or are you are you are the ones that are doing discounting in particular, and then also from a head count perspective.
It sounds like you've already made some reductions can you give us a sense of where things stand from a head count perspective.
Sure.
So.
In terms of the competitive landscape in enterprise I think the industry as a whole is facing similar.
Similar challenges.
When when you have supply chain shortages.
Channel typically places lots and lots of orders on lots of different suppliers and I think I think everybody is dealing with that same issue.
The leaders in discounting we're following others, we attempt to hold price where possible.
But that's a fact of the market today is that there is a lot of discounting going on.
In terms of our reductions are.
Reductions.
Yes.
And this company is across the entire company, but does have.
A oversized impact on where we have the majority of our cost and that that's in R&D as a primary example.
I am balancing what we need to accomplish with what we can afford to accomplish.
And that's how I figure out how we can reduce our operating expenses, while still maintaining a.
Healthy portfolio.
Can you comment what your head count was at the end of the September quarter, and how you think it will proceed from there.
So in terms of that overall head count reduction is in terms of specific numbers of people is 12% to 15%.
Okay and can you remind us what your current head count as <unk>.
So if you look at if you look at.
Our overall head count.
Including.
Contractors that we're using it's in the 800 range.
Alright, very good thank you.
Thank you.
And our next question comes from John Roy with Water Tower Research John Your line is open. Please go ahead.
Great. Thank you for taking my question, so kind of wanted to circle back to your gross margins.
And you guys are guiding to a little bit of recovery in the fourth quarter was curious as to any color you can give on that and any kind of specifics maybe on product mix.
Yes, that's a big part of it is product mix. So so we are expecting our.
Our revenues in the defense sector to increase pretty significantly given the deferral that occurred in Q3 because of the budgetary timing issues.
As you May know the defense products have the highest margin within within the company.
We are we are also.
As Morgan said earlier.
Working with our distributors and looking at enterprise, making sure that we are working as aggressively as we need to with them to move the inventory through the channel, which means which often means making sure we're being as price competitive as we can because we have other other competitors that have very similar issues in terms of inventory in the channel.
They've taken actions to decrease price to move their inventory through the channel. So.
That's partially what's happening as well, especially in one particular product within enterprise.
Great.
These are the main those are the two main drivers.
So yes go ahead.
We're just going to ask about.
28 gig or is that.
At this point kind.
Kind of a little bit higher margin items since it's somewhat newer.
It's it's it's not one of the higher margin products, it's running as many of the <unk> products are in the in the mid to high Forty's.
On average so that's about right for 2008 King airs.
Great. Thanks, so much sure.
Okay.
And our final question.
It comes from Scott Searle again with Roth Capital Partners. Scott Go ahead. Your line is open.
Hey, good afternoon. Thanks for taking the follow ups I just wanted to dive in again real quickly on the gross margin recovery understanding that.
There are headwinds near term in terms of discounting moving.
Through the channel et cetera, but as you look out to a recovery scenario in the second half of 2020 for what's your expectations in terms of what the gross margin profile will look like at that point in time.
Yes, I mean, I think I think after we get through the headwinds that we have.
And I think as the industry.
The roll industry kind of settles out.
Longer term I think we're going to get back to the similar levels that we've had historically and that 50% range ultimately.
I don't know, whether you're going to see that in the second half of 'twenty four as you go into 'twenty five, but I think thats, that's ultimately where we're going to we're going to pay it out when all is said and done.
And I think with the cost reductions we've had as I said in my comments.
I think that I think that positions us well.
We're generating more significant free cash flow in the future once we get to those levels.
Okay, great. Thank you.
Take one more.
And we have Eric supercharger again with JMP Securities Eric Your line is open.
Yes.
Quick follow up.
In terms of the cash.
Any sense of how we should be modeling out.
Free cash flow of our cash flow and when do you anticipate getting to breakeven or do you have a target cash balance that you you want to preserve.
We can work from rule of thumb wise.
Yes, I mean, I think we'll talk more about that in next quarter's call, but as I mentioned the way I see it right now is that it's going to be prudent for us as we get into 2024.
We have some headwinds, especially in the first quarter.
Where you.
Really collecting receivables from the previous two quarters in terms of in terms of cash coming in.
Previous couple of quarters, being such and such a low revenue quarters. It makes it makes it very challenging obviously in terms of cash coming in.
We'll also have costs associated with the restructuring.
So I think it's going to be prudent for us to take down a portion of the revolver, which I don't see being any more than half of it.
Could be even a little bit less than that.
As we enter into 2024.
And as we're modeling it right now we don't see a need to take down any more than that throughout the year of 2024.
Are there any loan covenants associated with the revolver.
So we should be aware of that that would restrict any of that.
There are there are some covenants associated with our revolver, but we don't see that as being restrictive right now.
Very good thank you.
Okay.
And this concludes the question and answer session I would now like to turn it back to Mr. Peter Schuman, Vice President Investor and industry Analyst Relations for closing remarks Peter.
Thank you Eric during Q4, 'twenty three cambium networks will be meeting with investors virtually on November 14th at the Needham Virtual security networking and Communications conference and on November 15th at the Roth Capital Conference held in New York and on December 11th at the Oppenheimer Virtual <unk> summit in the meantime, you are always welcome to call.
<unk>, our Investor Relations Department at 847 to six four to 188 with any questions that arise. Thank you for joining us and this concludes today's call.
Ladies and gentlemen.
This concludes today's quarterly earnings call. Thank you for your participation you may now log off.
Okay.
Okay.
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