Q4 2023 Cambium Networks Corp Earnings Call

February 15, 2024

<unk> been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.

I ask a question at that time, Please press star one one.

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.

Michelle welcome and thank you for joining us today for Cambium networks fourth quarter and full year 2023 financial results conference call and welcome to all those joining by webcast Morgan Kurk, our president and CEO and John Best of ROE. Our interim 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 a form 8-K with the SEC.

Michelle: Good afternoon, my name is Michelle, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks fourth quarter and full year 2023 financial results conference call. All lines have been placed on mute to prevent any background noise.

Good afternoon, My name is Michelle and I'll be your conference operator today at this time I would like to welcome everyone to the cambium networks fourth quarter and full year 2023 financial results Conference call.

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 forecasted performance.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session.

Michelle: After the speaker's remarks, there will be a question and answer session. To ask a question at that time, please press star 1 1. Please limit yourself to one question and one follow-up question.

To ask a question at that time, Please press star one one.

These statements are based on current conditions forecast 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.

Please limit yourself to one question and one follow up question. Thank you Mr. Peter Schuman, Vice President Investor and industry analysts relations you may begin your conference.

Michelle: Thank you. Mr. Peter Schumann, Vice President, Investor and Industry Analyst Relations. You may begin your conference. Thank you, Michelle.

Michelle welcome and thank you for joining us today for Cambium networks fourth quarter and full year 2023 financial results conference call and welcome to all those joining by webcast Morgan Kurk, our president and CEO and John <unk>. Our interim CFO are here for today's call. The financial results press release, and CFO commentary referenced on this call.

Peter Schumann: Welcome, and thank you for joining us today for Cambium Networks' fourth quarter and full year 2023 financial results conference call. And welcome to all those joining by webcast. Morgan Kirk, our president and CEO, and John Bessereau, our interim CFO, are here for today's call. The financial results, press release, and CFO commentary referenced in this call are accessible on the investor page of our website. And the press release has been submitted on Form 8k with the SEC. 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 forecasted performance. These statements are based on current conditions, forecasts, and assumptions. Risks and uncertainties could cause actual results to differ materially.

<unk> to confirm these statements to actual results or 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 our most recent SEC filings, including our most.

Are accessible on the Investor page of our website and the press release has been submitted on a form 8-K with the SEC.

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 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.

Peter Schumann: 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 make changes in Cambium's expectations or otherwise. It is Cambium Networks' policy not to reiterate its 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 our most recent SEC filings, including our most recent Form 10-K and Form 10-Q.

Announcing our results.

Turning to the agenda Morgan Kurk will provide the key operational highlights for the fourth quarter and full year 2023, and John Best Sorel.

Ride a recap of the financial results for the fourth quarter and full year 2023, and will discuss our financial outlook for the first quarter and full year 2020 for our prepared remarks will be followed by a Q&A session I'd now like to turn the call over to Morgan.

Elements to conform these statements to actual results or 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 our most recent SEC filings, including our most.

Thank you Peter summarizing the performance of Q4 'twenty three as mentioned in our preliminary Q4 'twenty three results on January 18th while the company shipped $51 million in product revenues during the quarter. This was offset in part by an $11 million reduction to revenues is the result of incentives provided to distributors.

Recent Form 10-K and Form 10-Qs.

Peter Schumann: 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 as otherwise noted. A reconciliation of non-GAAP measures to GAAP 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, Morgan Kirk will provide the key operational highlights for the fourth quarter and full year 2023, and John Besserell will provide a recap of the financial results for the fourth quarter and full year 2023 and will discuss our financial outlook for the first quarter and full year 2024. Our prepared remarks will be followed by a Q&A session. I'd now like to turn the call over to Morgan.

We'll 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 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 and <unk>.

During the fourth quarter of 2023, it provides aggressive enterprise product discounts to clear excess channel inventories. The gross margin was also depressed during Q4 'twenty three due to the aforementioned incentives and higher inventory reserves.

Our results.

Turning to the agenda Morgan Kurk will provide the key operational highlights for the fourth quarter and full year 2023, and John Best Earl will provide a recap of the financial results for the fourth quarter and full year 2023, and will discuss our financial outlook for the first quarter and full year 2020 for our prepared remarks will be followed by a QE.

Operationally our team executed to expectations during my first full quarter as CEO, including in the point to point PTP business, which had strong growth and in the point to Multipoint PMT business in North America. Thanks in part to increasing orders of six gigahertz products ahead of the FCC's formal approval.

Ne session I'd now like to turn the call over to Morgan.

Morgan Kirk: Thank you, Peter. Summarizing the performance of Q4-23. As mentioned in our preliminary Q4'23 results on January 18th, while the company shipped $51 million in product revenues during the quarter, this was offset in part by an $11 million reduction to revenues as the result of incentives provided to distributors during the fourth quarter of 2023 that provided aggressive enterprise product discounts to clear excess channel inventory. The growth margin was also depressed during Q4'23 due to the aforementioned incentives and higher inventory reserves.

Thank you Peter.

While revenues came in below our outlook and gross margin decreased during Q4 'twenty three as a result of increased incentives provided to enterprise distributors and higher inventory reserves, we maintained good cost controls and tightly managed our operating expenses.

Summarizing the performance of Q4 'twenty three as.

As mentioned in our preliminary Q4 'twenty three results on January 18th while the company shipped $51 million in product revenues during the quarter. This was offset in part by an $11 million reduction to revenues is the result of incentives provided to distributors during the fourth quarter of 2023 that provides aggressive enterprise product discount.

As expected our PTP revenues were strong increasing 38% sequentially and improving 3% year over year as U S federal spending for defense applications recovered.

Just to clear excess channel inventories and the gross margin was also depressed during Q4 'twenty three due to the aforementioned incentives and higher inventory reserves.

Our <unk> revenues decreased 4% sequentially and were lower by 24% year over year.

Morgan Kirk: Operationally, our team executed to expectations during my first full quarter as CEO, including in the point-to-point PTP business, which had strong growth, and in the point-to-multipoint PMP business in North America, thanks in part to increasing orders of 6 GHz products ahead of the FCC's formal approval. While revenues came in below our outlook and gross margins decreased during Q4-23 as a result of increased incentives provided to enterprise distributors and higher inventory reserves, we maintained good cost controls and tightly managed our operating expenses. As expected, our PTP revenues were strong, increasing 38% sequentially and improving 3% year-over-year as U.S. federal spending for defense applications recovered. Our PMP revenues decreased 4% sequentially and were lower by 24% year over year. Channel inventories for PMP have been significantly reduced year over year while waiting for the FCC's approval of 6 GHz spectrum, now expected during the first half of CY24. The FCC's approval is anticipated to drive sales of Cambium's new 6 GHz ePMP4600 and ePMP450V product lines, both of which are available today.

Channel inventories for PMT had been significantly reduced year over year, while waiting for the FCC's approval of six gigahertz spectrum now expected during the first half of <unk> 24.

The FCC's approval is anticipated to drive sales of <unk>, new six gigahertz, <unk> 4600, and PMT for <unk> product lines, both of which are available today.

While revenues came in below our outlook and gross margins decreased during Q4 'twenty three as a result of increased incentives provided to enterprise distributors and higher inventory reserves, we maintained good cost controls and tightly manage our operating expenses as.

During Q4, 'twenty three the North America region sequential growth for PMT, and PTP was offset by a decrease in EMEA as PMT revenues as a result of the large 28 gigahertz fixed 50 shipments that occurred during Q3 dollars 23.

As expected our PTP revenues were strong increasing 38% sequentially and improving 3% year over year as U S federal spending for defense applications recovered.

Our enterprise revenues decreased $8 million sequentially and decreased $37 $5 million year over year due in part to the $11 million channel inventory discount.

Our PMT revenues decreased 4% sequentially and were lower by 24% year over year.

Orders for our enterprise business continued to experience headwinds in both North America, and EMEA due to high channel inventories and competition enterprise revenues were negatively impacted by stock rotations of approximately $3 million, we have seen a significant reduction in enterprise stock rotations as channel inventories decreased and expect.

Channel inventories for PMT had been significantly reduced year over year, while waiting for the FCC's approval of six gigahertz spectrum now expected during the first half of <unk> 24.

The FCC's approval is anticipated to drive sales of <unk>, New six gigahertz, <unk> 4600, and PMT for 50 vision product lines, both of which are available today.

This to continue to decrease throughout the year.

Sales of cambium products out of the distribution channel as reported by Cambium as distributors were significantly higher for Q4 23 than cambium as reported revenues and we saw a corresponding decline in channel inventories for enterprise products, while the PMT channel inventories remained relatively stable.

Morgan Kirk: During Q4-23, the North America region's sequential growth for PMP and PTP was offset by a decrease in EMEA's PMP revenues as a result of the large 28 GHz fixed 5G shipments that occurred during Q3-23. Our enterprise revenues decreased $8 million sequentially and decreased $37.5 million year-over-year, due in part to the $11 million channel inventory discount. Orders for our enterprise business continue to experience headwinds in both North America and EMEA due to high channel inventories and competition. Additionally, enterprise revenues were negatively impacted by stock rotations of approximately $3 million.

We are making good progress in reducing channel inventories and in the aggregate. The inventory is approaching pre pandemic levels. We will continue to be diligent about monitoring and controlling this as shorter lead times and increased cost of capital may drive different behaviors by distributors than in the past.

Our enterprise revenues decreased $8 million sequentially and decreased $37 $5 million year over year due in part to the $11 million channel inventory discount.

Orders for our enterprise business continued to experience headwinds in both North America, and EMEA due to high channel inventories and competition.

Looking at full year 2023 revenues.

Of $222 million represented a decrease of 26% from 2022. The 2023 decline was predominantly driven by our enterprise products, which decreased 64% from the prior year and to a lesser extent lower <unk> revenues, which declined 17% from the prior year, partially offset by the <unk>.

Enterprise revenues were negatively impacted by stock rotations of approximately $3 million, we have seen a significant reduction in enterprise stock rotations as channel inventories decreased and expect this to continue to decrease throughout the year.

Morgan Kirk: We have seen a significant reduction in enterprise stock rotations as channel inventories decreased, and we expect this to continue to decrease throughout the year. Sales of Cambium's products out of the distribution channel, as reported by Cambium's distributors, were significantly higher for Q4-23 than Cambium's reported revenues, and we saw a corresponding decline in channel inventories for enterprise products, while the PMP channel inventories remained relatively stable. We are making good progress in reducing channel inventories, and in the aggregate, the inventory is approaching pre-pandemic levels. We will continue to be diligent about monitoring and controlling this, as shorter lead times and increased costs of capital may drive different behaviors by distributors than in the past. Looking at the full year 2023.

And our PTP business, which had a record year, increasing 20% for the full year 2023, breaking the $80 million threshold for the first time and cambium history, largely due to the strength of our defense business we.

We continue to expect the enterprise channel inventories did decrease in the first half of <unk> 24, a supply remains abundant and lead times short, but also expect incremental improvement in sales into the channel throughout the year.

We foresee modest growth for the PMT business, driven by new product momentum in our six gigahertz products continued adoption of our 60 gigahertz solutions and lumpy ordering of our 28 gigahertz solution. We expect continuing strength in the defense portion of the PCB business in North America and abroad and in enterprise, we expect recovery.

Looking at full year 2023 revenues.

Morgan Kirk: Revenues of 220.2 million represent a decrease of 26 percent from 2022. The 2023 decline was predominantly driven by our enterprise products, which decreased 64 percent from the prior year, and to a lesser extent, lower PMP revenues, which declined 17 percent from the prior year, partially offset by the growth in our PTP business, which had a record year, increasing 20 percent for the full year 2023, breaking the $80 million threshold for the first time in Cambium's history, largely due to the strength of our defenses. We continue to expect enterprise channel inventories to decrease in the first half of CY24 as supply remains abundant and lead time is short, but we also expect incremental improvement in sales into the channel throughout the year. We foresee modest growth for the PMP business, driven by new product momentum for our 6 gigahertz products, continued adoption of our 60 gigahertz solution, and Lumpy Ordering for our 28-gigahertz solution.

During the second half of <unk> 24.

Now looking at some customer wins that are key to our future success.

In North America, we received sizable orders.

From next link a large service provider in the Midwest for the new <unk> 4600, using six gigahertz spectrum next link will use <unk>, primarily to reach locations and low density rural areas.

We continue to expect the enterprise channel inventories to decrease in the first half of <unk> 24, a supply remains abundant and lead times short, but also expect incremental improvement in sales into the channel throughout the year.

You are an excellent commented that the <unk> six gigahertz platform is an unmatched blend blend of performance and cost, allowing next linked to be cost effectively offer gigabit broadband to their customers. This purchase is testimony to our value strategy.

Once the spectrum is approved by the FCC, we expect rapid deployment by many of our over 100 customers who are trialing the product.

Morgan Kirk: We expect continuing strength in the defense portion of the PTB business in North America and abroad, and in enterprise, we expect recovery during the second half of CY24. Now, we are looking at some customer wins that are key to our future success. In North America, we received sizable orders. For example, from Nextlink, a large service provider in the Midwest, for the new EPMP4600 using 6GHz spectrum. Next link will use EPMP primarily to reach locations in low-density rural areas.

In Mexico, a wireless Internet service provider Siglo is offering Internet service subscription packages to customers within Walmart supermarkets cambium <unk> radios are bundled as part of the service offering.

During the second half from <unk> 24.

Now looking at some customer wins that are key to our future success.

Customers purchasing the equipment through Walmart.

In North America, we received sizable orders.

Customers purchase the equipment through Walmart to contract. The connectivity services. This is a disruptive model that departs from the usual go to market of wisps and chose industry maturation and cambium support of continued expansion.

From next link a large service provider in the Midwest for the new <unk> 4600, using six gigahertz spectrum next link will use <unk>, primarily to reach locations and low density rural areas. The CEO of an excellent commented that the <unk> six gigahertz platform is an unmatched blend blend of PERC.

Morgan Kirk: The CEO of NexLink commented that the E-PMP 6 GHz platform is an unmatched blend of performance and cost, allowing NexLink to cost-effectively offer gigabit broadband to their customers. This purchase is testimony to our value strategy. Once the spectrum is approved by the FCC, we expect rapid deployment by many of our over 100 customers who are trialing the product. In Mexico, a wireless internet service provider, Ciglo, is offering internet service subscription packages to customers within Walmart supermarkets.

Turning to upcoming product introductions since our previous quarterly update.

This spring, we will introduce our first fiber aggregation switch within their enterprise portfolio. The new switch features dual independent redundant power supplies non blocking level, two and level three switching line rates and will be fully managed by cambium CN Maestro. The addition completes the high end of our switch portfolio.

<unk> and cost, allowing <unk> to be cost effectively offer gigabit broadband to their customers. This purchase is testimony to our value strategy.

Once the spectrum is approved by the FCC, we expect rapid deployment by many of our over 100 customers who are trialing the product.

Also in the spring, we expect to release the Pnp $4 56, a single band two by two Mimo subscriber module as a low cost complement to the recently released <unk> hundred 50, <unk> a dual band four by four Mimo subscriber module.

Morgan Kirk: Cambium's E-PMP radios are bundled as part of the service office, with customers purchasing the equipment through Walmart. This is a disruptive model that departs from the usual go-to-market of WISPs and shows industry maturation and Cambium's support of continued expansion. Turning to upcoming product introductions since our previous quarterly update, This spring, we will introduce our first fiber aggregation switch within our enterprise portfolio. The new switch features dual independent redundant power supplies, non-blocking level 2 and level 3 switching line rates, and will be fully managed by Cambium's CN Maestro.

Customers purchasing the equipment through Walmart.

Finally, total devices under CN Maestro cloud management in Q4, 23 increased approximately 1% from Q3, 'twenty three and was up over 14% year over year.

I will now turn the call over to John for a review of our Q4 'twenty three financial results and Q1, 'twenty four and full year 2024 financial outlook.

Turning to upcoming product introductions since our previous quarterly update.

This spring, we will introduce our first fiber aggregation switch within our enterprise portfolio. The new switch features dual independent redundant power supplies non blocking level, two and level three switching line rates and will be fully managed by cambium CN Maestro. The addition completes the high end of our switch portfolio.

Thanks, Morgan Q4, 'twenty results include an $11 million reduction in revenues, primarily as a result of incentive to significantly discount certain enterprise inventory in order to move enterprise inventories in the channel.

Morgan Kirk: The addition completes the high end of our switch portfolio. Also in the spring, we expect to release the PMP450B6, a single-band 2x2 MIMO subscriber module as a low-cost complement to the recently released PMP450V, a dual-band 4x4 MIMO subscriber module. Finally, total devices under CM Maestro Cloud Management in Q4'23 increased approximately 1% from Q3'23 and was up over 14% year over year. I will now turn the call over to John for a review of our Q4'23 financial results and Q1'24 and full year 2024 financial outlook. Thanks Morgan.

Further we recorded additional inventory charges, which reflect the current state of the market and product demand.

Also on the spring, we expect to release the Pnp $4 56, a single band two by two Mimo subscriber module as a low cost complement to the recently released <unk> a dual band four by four Mimo subscriber module.

The discounting decision was made with the goal to move excess inventory through the channel in the near term we.

We expect that channel inventories will decline during the first half of 2024 and by the end of the first half of 2024, we will be at or below pre pandemic levels.

Finally, total devices under CN Maestro cloud management in Q4, 'twenty three increased approximately 1% from Q3 dollars 23 and was up over 14% year over year.

We are seeing the expected benefits of our cost reduction plans designed to align our cost structure to our 2024 operating plan, we have focused our R&D resources on those products and projects that are most critical for cambium future success.

I will now turn the call over to John for a review of our Q4 'twenty three financial results and Q1, 'twenty four and full year 2024 financial outlook.

John Besserell: Q4'23 results include an $11 million reduction in revenue, primarily as a result of incentives to significantly discount certain enterprise inventories in order to move enterprise inventories through the channel. Additionally, we recorded additional inventory charges, which reflect the current state of the market and product. The discounting decision was made with the goal to move excess inventory through the channel in the near term.

Thanks, Morgan Q4, 'twenty results include $11 million reduction in revenues, primarily as a result of incentive to significantly discount certain enterprise inventory in order to move enterprise inventories in the channel.

Turning to the quarter Camden reported revenues of $40 2 million for Q4 23.

<unk> decreased by 7% quarter over quarter and were lower by 52% year over year.

Further we recorded additional inventory charges, which reflect the current state of the market and product demand.

On a sequential basis for Q4, 'twenty three revenue decreased by $2 8 million. The majority of the decline in revenues was the result of the continued low order volume for our enterprise business as distributors focus at decreasing their channel inventories as project lead times have come down as well as aggressive competitor disk.

The discounting decision was made with the goal to move excess inventory through the channel in the near term we.

John Besserell: We expect that channel inventories will decline during the first half of 2024, and by the end of the first half of 2024, we will be at or below pre-pandemic levels. We are seeing the expected benefits of our cost reduction plans designed to align our cost structure to our 2024 operating plan. We have focused our R&D resources on those products and projects that are most critical for Cambium's future success.

We expect that channel inventories will decline during the first half of 2024 and by the end of the first half of 2024, we will be at or below pre pandemic level.

Counting stack locations and slowing economies, while pnp revenues decreased 4% quarter over quarter due to a large 20 gigahertz fixed shipment from EMEA. During Q3, 'twenty three partially offset by the strength in North America from our six gigahertz Pnp products.

John Besserell: Turning to the quarter, Cambium reported revenues of $40.2 million for Q4-23. However, revenues decreased by 7% quarter over quarter and were decreased by 52% year over year. On a sequential basis for Q4-23, revenues decreased by $2.8 million. The majority of the decline in revenues was the result of the continued low order volume for our enterprise business, as distributors focused on decreasing their channel inventories as product lead times have come down, as well as aggressive competitor discounting, stock rotation, and supply, are slowing economies while PMP revenues decreased 4% quarter-over-quarter due to a large 20GHz fixed 5G shipment from EMEA during Q3-23, partially offset by the strength in North America from our 6GHz As expected, we had strong shipments of our PTP defense products.

As expected we had strong shipments of our PTP defense products, we expect some improvement in orders for the <unk> business with the anticipated approval of six gigahertz spectrum.

Turning to the quarter Camden reported revenues of $40 2 million for Q4 23.

<unk> decreased by 7% quarter over quarter and were lower by 52% year over year.

We had seen Pnp channel inventories remained stable.

On a sequential basis for <unk> hundred 23 revenues decreased by $2 8 million. The majority of the decline in revenues was the result of the continued low order volume for our enterprise business as distributors focus at decreasing their channel inventories as project lead times have come down as well as aggressive competitor disk.

Revenues of $40 2 million decreased by $44 $3 million year over year, primarily due to lower enterprise revenue PMT revenues decreased 24% year over year with the weakness primarily from regions outside of North America PTP revenues increased 3% three every year due to higher revenues for <unk>.

Counting stat quotations and slowing economies, while <unk> revenues decreased 4% quarter over quarter due to a large 20 gigahertz fixed shipment from EMEA. During Q3, 'twenty three partially offset by the strength in North America from our six gigahertz PSP products.

<unk> products in North America, and EMEA by region, North America increased sequentially by 52%, while all other regions weakened.

Moving to our gross margin our non-GAAP gross margin for Q4 23 of negative 19, 4% compared to 49, 6% in Q4 'twenty two the year over year decrease in our non-GAAP gross margin was primarily due to the $11 million reduction in revenues as the result of price incentives provided to distributors.

As expected we had strong shipments of our PTP defense products, we expect some improvement in orders for the <unk> business with the anticipated approval of six gigahertz spectrum.

John Besserell: We expect some improvement in orders for the PMP business with the anticipated approval of the 6 GHz spectrum. We have seen PMP channel inventories remain stable, revenues of 40.2 million decreased by 44.3 million year-over-year primarily due to lower enterprise revenues. PMP revenues decreased 24% year-over-year, with the weakness primarily from regions outside of North America. DTP revenues increased 3% three over year due to higher revenues for defense products in North America and America. By region, North America increased sequentially by 52% while all other regions did not.

We have seen Pnp channel inventories remained stable.

And inventory charges of approximately $18 9 million related to excess and obsolete inventories as well as unfavorable product mix as a result of lower enterprise revenues.

Revenues of $40 2 million decreased by $44 $3 million year over year, primarily due to lower enterprise revenues Pnp revenues decreased 24% year over year with the weakness primarily from regions outside of North America PTP revenues increased 3% three every year due to higher revenues for <unk>.

On a sequential basis Q4, 23, non-GAAP gross margin of negative 19, 4% compared to 27, 7% the lower quarter over quarter non-GAAP gross margin was primarily the result of higher enterprise inventory reserves, partially offset by higher revenues from our defense products.

<unk> products in North America, and EMEA by region, North America increased sequentially by 52%, while all other regions weakened.

John Besserell: Moving to our gross margin, our non-GAAP gross margin for Q4'23 was negative 19.4% compared to 49.6% in Q4'22. The year-over-year decrease in our non-GAAP gross margin was primarily due to the $11 million reduction in revenues as a result of price incentives provided to distributors and inventory charges of approximately $18.9 million related to excess and obsolete inventories, as well as unfavorable product mix On a sequential basis, Q4-23 non-GAAP gross margin of negative 19.4% compared to 27.7%. The lower quarter-over-quarter non-GAAP loss margin was primarily the result of higher enterprise inventory reserves, partially offset by higher revenues from our defense products, which have a higher margin than other products in our portfolio. In Q4-23, our non-GAAP gross profit dollars of negative $7.8 million decreased by $49.7 million For the full year 2023, non-GAAP gross margin declined to 33.8% compared to 49.5% in 2022 due to lower enterprise revenues, enterprise price incentives, and higher inventory charges.

Which have a higher margin than other products in our portfolio.

In Q4, 'twenty three our non-GAAP gross profit dollars of negative $7 8 million decreased by $49.

$7 million compared to the prior year and were lower by $19 7 million sequentially due to the lower revenues and higher inventory charges.

And inventory charges of approximately $18 9 million related to excess and obsolete inventories as well as unfavorable product mix as a result of lower enterprise revenues.

For the full year 2023, non-GAAP gross margin declined to 33, 8% compared to 49, 5% from 2022 due to lower enterprise revenues enterprise price incentives and higher inventory charges.

On a sequential basis Q4, 2000, <unk> non-GAAP gross margin of negative 19, 4% compared to 27, 7% the lower quarter over quarter non-GAAP gross margin was primarily the result of higher enterprise inventory reserves, partially offset by higher revenues from our defense products.

non-GAAP total operating expenses, including depreciation and amortization in Q4, 'twenty three decreased by approximately $2 $4 million when compared to Q4, 'twenty two and stood at $26 3 million or 65, 5% of revenues the decrease in operating expenses.

Which have a higher margin than other products in our portfolio.

Compared to the prior year period was primarily result of cost reductions during the second half of 2023, which resulted in lower operating costs primary due to lower variable compensation, partially offset by increased wages due to inflationary salary increases effective January one 2023.

In Q4, 'twenty three our non-GAAP gross profit dollars of negative $7 8 million decreased by $49.

<unk> million dollars compared to the prior year and were lower by $19 7 million sequentially due to the lower revenues and higher inventory charges.

For the full year 2023, non-GAAP gross margin declined to 33, 8% compared to 49, 5% from 2022 due to lower enterprise revenues enterprise price incentives and higher inventory charges.

When compared to Q3 23, non-GAAP operating expenses decreased by approximately $1 $1 million during Q4, 'twenty three the quarter over quarter decrease in operating expenses was due to lower G&A due to less professional services and lower R&D costs due to lower head count.

John Besserell: Non-GAAP total operating expenses, including depreciation and amortization, decreased by approximately $2.4 million when compared to Q4'22 and stood at $26.3 million, or 65.5% of revenue. The decrease in operating expenses compared to the prior year period was primarily the result of cost reductions during the second half of 2023, which resulted in lower operating costs, primarily due to lower variable compensation, partially offset by increased wages due to inflationary salary increases, effective January 1, 2023. When compared to Q3-23, non-GAF operating expenses decreased by approximately $1.1 million during Q4'23. The quarter-over-quarter decrease in operating expenses was due to lower G&A due to lower professional services and lower R&D costs due to lower headcount. For the full year, 2023, non-GAAP operating expenses of $113 million were flat, with higher wages due to inflation and higher headcounts during the first half of the year offset by cost reductions in the second half of the year.

For the full year 2023, non-GAAP operating expenses of $113 million were flat with higher wages due to inflation and higher head count during the first half of the year offset by cost reductions in the second half of the year. During 2024, we will continue to maintain our strong cost control.

Compared to the prior year period was primarily the result of cost reductions during the second half of 2023, which resulted in lower operating costs, primarily due to lower variable compensation, partially offset by increased wages due to inflationary salary increases effective January one 2023.

non-GAAP net loss for Q4, 23 was $26 4 million or a loss of <unk> 95 per diluted share below our outlook for the quarter and compared to non-GAAP net income of $10 3 million or earnings at <unk> 36 per 36 cents per diluted share for Q4, 'twenty, two and non-GAAP net loss of $12 one.

$1 million or a loss of 44 per diluted share during Q3 23.

The lower non-GAAP net income compared to the prior year was primarily due to lower enterprise and PMT revenues and a lower gross margin by the lower net income compared to the prior quarter's results was primary the result of the enterprise pricing incentives and higher inventory charges. We have a direct had a direct impact on our gross margin partially offset.

By lower operating expenses.

For the full year 2023, non-GAAP net loss was $30 7 million or $1.10 per diluted share compared to non-GAAP net income of $26 9 million or earnings of 94 cents per diluted share in 2022.

John Besserell: During 2024, we will continue to maintain our strong cost control. Non-GAAP net loss for Q4'23 was $26.4 million, or a loss of $0.95 per diluted share, below our outlook for the quarter and compared to non-GAAP net income of $10.3 million, or earnings of $0.36 per diluted share for Q4'22 and non-GAAP net loss of $12.1 million, or a loss of $0.44 per diluted The lower non-GAAP net income compared to the prior year was primarily due to lower enterprise and PMP revenues and a lower gross margin.

Adjusted EBITDA for Q4, 23 was a loss of $32 9 million compared to positive $14 3 million for Q4, 'twenty, two and a loss of $14 4 million for Q3 23.

$1 million or a loss of 44 per diluted share during Q3 23.

The full year 2020, adjusted EBITDA was a negative $34 2 million compared to a positive $38 8 million for the full year 2022.

John Besserell: While the lower net income compared to the prior quarter's results was primarily the result of the enterprise pricing incentives and higher inventory charges, it had a direct impact on our gross margin, partially offset by lower operating income. For the full year 2023, non-GAAP net loss was $30.7 million, or $1.10 per diluted share, compared to non-GAAP net income of $26.9 million, or earnings of $0.94 per diluted share in 2022. Adjusted EBITDA for Q4'23 was a loss of $32.9 million compared to a positive $14.3 million for Q4'22 and a loss of $14.4 million for Q3 The full year 2023 adjusted EBITDA was a negative $34.2 million compared to a positive $38.8 million for the full year 2022. Moving on to cash flow. Cash used in operating activities was $16.2 million for Q4-23, and this compares to cash provided by operating activities of $4 million for Q4-22 and cash used in operating activities of $200,000 for Q3-23.

Moving to cash flow cash used in operating activities was $16 2 million for Q4, 'twenty three and compares to cash provided by operating activities of $4 million for Q4, 'twenty two and cash used in operating activities of $200000 for Q3 23 during Q4 'twenty three.

By lower operating expenses.

For the full year 2023, non-GAAP net loss was $30 7 million or $1 10 per diluted share compared to non-GAAP net income of $26 9 million or earnings of 94 cents per diluted share in 2022.

We executed on converting receivables into cash and managing payables and working capital. Our goal for 2024 is to reduce our inventory balances to closer to $40 million as we returned to pre pandemic levels.

Adjusted EBITDA for Q4, 23 was a loss of $32 9 million compared to positive $14 2 million for Q4, 'twenty, two and a loss of $14 4 million for Q3 23.

Turning to the balance sheet cash totaled $18 7 million as of December 31, 2023, a decrease of $8 8 million from Q3 'twenty three the sequential decrease in cash primarily reflects lower revenues and material purchases suppliers and capital expenditures as of December 31, 2023.

The full year 2020, adjusted EBITDA was a negative $34 2 million compared to a positive $38 8 million for the full year 2022.

We have not yet drawn on our $45 million revolver, although we may draw on a portion of the revolver during the first half of 2024.

Moving to cash flow cash used in operating activities was $16 2 million for Q4, 'twenty three and compares to cash provided by operating activities of $4 million for key for 'twenty, two and cash used in operating activities of $200000 for Q3 23 during Q4 'twenty three.

Net inventories of $66 9 million in Q4, 'twenty three decreased by $12 9 million from Q3 dollars 23 and were higher by $9 8 million year over year net inventories were lower sequentially due to higher inventory reserves and shipments into the channel channel inventories continue to decline.

We executed a converting receivables into cash and managing payables and working capital. Our goal for 2024 is to reduce our inventory balances to closer to $40 million as we returned to pre pandemic levels.

Essentially for enterprise, while Pnp channel inventories were stable, we continue to take aggressive actions to work with our distributors and return enterprise channel inventories to pre pandemic levels.

John Besserell: During Q4-23, we executed on converting receivables into cash and managing payables and working capital. Our goal for 2024 is to reduce our inventory balances to closer to $40 million as we return to pre-pandemic levels. Turning to the balance sheet, cash totaled $18.7 million as of December 31, 2023, a decrease of $8.8 million from Q3'23. The sequential decrease in cash primarily reflects lower revenues and material purchases from suppliers and capital expenditures. As of December 31, 2023, we have not yet drawn on our 45 million revolver, although we may draw on a portion of the revolver during the first half of 2024. Net inventories of $66.9 million in Q4-23 decreased by $12.9 million from Q3-23 and were higher by $9.8 million year-over-year.

In summary, the fourth quarter results are not lower than anticipated as a result of higher discounting of enterprise products in reaction to the market conditions as well as higher inventory reserves as expected our PTP business grew sequentially. Our gross margin decreased sequentially as a result of the higher inventory charges as well as a very.

We have not yet drawn on a $45 million revolver, although we may draw on a portion of the revolver during the first half of 2024.

Competitive pricing environment for the enterprise business.

Net inventories of $66 9 million in Q4, 'twenty three decreased by $12 9 million from Q3 dollars 23 and were higher by $9 $8 million year over year net inventories were lower sequentially due to higher inventory reserves and shipments into the channel channel inventories continue to decline.

We continue to see improvements in channel inventories, which bodes well for the future. We continue to manage costs prudently and the actions we have taken should improve future operating performance as a non-GAAP breakeven operating profitability is now approximately $60 million in revenue.

During 2024, while we expect to see a slower but improving start for the enterprise business. During the first half of the year as enterprise channel inventories continue to decline. We believe we will regain scale, while improving operational efficiency. During the second half of the year. We are optimistic about the expected near term approval by the FCC.

<unk> for enterprise, while Pnp channel inventories were stable, we continue to take aggressive actions to work with our distributors and return enterprise channel inventories to pre pandemic levels.

Of the six gigahertz spectrum, we are excited about the number of opportunities in a growing and profitable defense business and our ongoing product development initiatives as we consolidate to a small number of platforms over the next few years.

Competitive pricing environment for the enterprise business.

Moving to the first quarter and full year 2024 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.

John Besserell: Net inventories were lowered sequentially due to higher inventory reserves and shipments into the channel. Channel inventories continued to decline sequentially for Enterprise, while PMP channel inventories were stable. We continue to take aggressive actions to work with our distributors and return Enterprise channel inventories to pre-pandemic levels. In summary, the fourth quarter results turned out lower than anticipated as a result of higher discounting of enterprise products and reaction to market conditions as well as higher inventory reserves. As expected, our PTP business grew sequentially. However, our gross margin decreased sequentially as a result of the higher inventory charges as well as a very competitive pricing environment for the enterprise business.

Considering our current visibility as of today, our Q1 'twenty four financial outlook is expected to be as follows.

During 2024, while we expect to see a slower but improving start for the enterprise business. During the first half of the year as enterprise channel inventories continues to decline. We believe we will regain scale, while improving operational efficiency. During the second half of the year. We are optimistic about the expected near term approval by the FCC.

Revenues between 43 million to $48 million, representing growth of approximately 7% to 19% sequentially due in part to growth in our enterprise business and <unk> business, partially offset by seasonality in our PT Pp defense business.

Of the six gigahertz spectrum, we are excited about the number of opportunities in a growing and profitable business and our ongoing product development initiatives as we consolidate to a small number of platforms over the next few years.

non-GAAP gross margin between 41% to 44% non-GAAP operating expenses between $25 4 million to $26 4 million and non-GAAP operating loss between five three to seven 8 million interest expense net of approximately 800000.

John Besserell: We continue to see improvements in channel inventories, which bodes well for the future. We continue to manage costs prudently, and the actions we have taken should improve future operating performance, as our non-GAF break-even operating profitability is now approximately $60 million in revenue. During 2024, while we expect to see a slower but improving start for the enterprise business during the first half of the year as enterprise channel inventories, and customers, we believe we will regain scale while improving operational efficiency during the second half of the year. We are optimistic about the expected near-term approval by the FCC of the 6 GHz spectrum.

Moving to the first quarter at full year 2024 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, considering our current visibility as of today.

And non-GAAP net loss between $6 1 million to $8 6 million.

Or net loss per diluted per diluted share between 22 sets to 31.

Q1, 24 financial outlook is expected to be as follows.

Adjusted EBITDA loss between $4, one to $6 $6 million and adjusted EBITDA margin between negative eight 6% to negative 15, 4%. Our non-GAAP effective income tax rate is immaterial approximately 20 28 million weighted average diluted shares outstanding.

Revenues between $43 million $248 million, representing growth of approximately 7% to 19% sequentially due in part to growth in our enterprise business and <unk> business, partially offset by seasonality in our PT Pp defense business.

John Besserell: We are excited about the number of opportunities in our growing and profitable defense business and our ongoing product development initiatives as we consolidate to a small number of platforms over the next few years. Moving to the first quarter of the full year 2024 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. Considering our current visibility, as of today, our Q124 financial outlook is expected to be as follows. Revenues between $43 million and $48 million represent growth of approximately 7% to 19% sequentially, due in part to growth in our enterprise business and PE business, partially offset by seasonality in our economy, and other factors. Thank you.

Cash requirements are expected to be filed for Q1.

Down in that $700000 cash interest approximately $600000 in capital expenditures $2 million to $3 million.

Full year 2024 financial outlook is expected to be as follows revenues between $2 15 to $2 $45 million, representing a decrease of <unk>.

And non-GAAP net loss between $6 1 million to $8 6 million.

Between 2% to an increase of approximately 11% non-GAAP gross margin approximately 44% non-GAAP net loss between $13 6 million to net income of $2 $3 million or between a loss of 48 cents per diluted share to net earnings of.

Or net loss per diluted per diluted share between two sets to 31.

<unk> per diluted share adjusted EBITDA margin between negative two 7% to positive four 1% for.

For the year capital expenditures are expected to be approximately 9% to $11 million.

Cash requirements are expected to be filed for Q1.

Down in that $700000 cash interest approximately $600000 in capital expenditures $2 million to $3 million.

John Besserell: Thank you. Non-GAAP gross margin between 41 to 44 percent, non-GAAP operating expenses between $25.4 million to $26.4 million, and non-GAAP operating loss between 5.3 to 7.8 million. Interest expense, none of approximately $800,000, and non-GAAP net loss between $6.1 million to $8.6 million, or net loss per diluted share between $0.22 to $0.31, adjusted EBITDA loss between $4.1 to $6.6 million, Our non-GAAP effective income tax rate is immaterial.

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

We have made good progress with our channel partners to bring channel inventories to a more appropriate level and recognition of much shorter product lead times, which has impacted revenues. This is an industry wide issue, which will recover over time as enterprise channel inventories or drive justice our sales out of the channel have remained relatively stable.

<unk> full year 2024 financial outlook is expected to be as follows revenues between $2 15 to $2 $45 million, representing a decrease of between 2% to an increase of approximately 11%.

non-GAAP gross margin approximately 44% non-GAAP net loss between $13 6 million to net income of $2 $3 million or between a loss of 48.

And we're working to ensure this continues in the future.

Internally, we've established new processes for planning and mitigating future inventory levels and improved our visibility into the channel to adjust faster to product lead times and I believe we've come a long way in a short period of time.

Per diluted share to net earnings of <unk> <unk> per diluted share adjusted EBITDA margin between negative two 7% to positive four 1%.

Our <unk> business is primed with multiple new products to address the growth cycle. Once the FCC approved six gigahertz spectrum over.

For the year capital expenditures are expected to be approximately 9% to $11 million.

Over the past six months I have been primarily internally focused working with the team on product development, improving our processes and developing our overall direction I've been pleased with the collaboration willingness to change and the desire to exceed succeed that.

John Besserell: Approximately 28 million weighted average diluted shares out... Cache requirements are expected to be as follows for QA. Paydown of Debt $100,000 Cash Interest $600,000 Capital Expenditures $2-$3 million. Full year 2024 financial outlook is expected to be as follows. Revenue is between $215 to $245 million, representing a decrease of between 2% to an increase of approximately 11%, non-capital gross margin of approximately 44%, and a net loss between $13.6 million to net income of $2.3 million, or between a loss of $0.48 per diluted share to net earnings of $0.08 per diluted share. Adjusted EBITDA margin is between negative 2.7% to positive 4.1%. For the year, capital expenditures are expected to be approximately $9 to $11 million.

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

We've made good progress with our channel partners to bring channel inventories to a more appropriate level and recognition of much shorter product lead times, which has impacted revenues. This is an industry wide issue, which will recover over time as enterprise channel inventories of dry justice our sales out of the channel have remained relatively stable.

But I have seen from all employees, we have reduced operational costs, while supporting a large existing customer and product base and developing future platforms. While this is not easy it has been necessary and was executed with full support while I would like to consolidate our products and the platforms more quickly. This is being managed in an evolutionary manner.

And we're working to ensure this continues in the future.

I am now focused more on our go to market strategy, specifically, how we address enterprise beyond our core customers.

The critical steps to grow include not just the great products, we have and continue to develop but also improving our engagement with distributors and value added resellers, who can demonstrate <unk> value proposition to end customers.

Our <unk> business is primed with multiple new products to address the growth cycle. Once the FCC approved six gigahertz spectrum over.

Have been and will continue to spend more time with our customers and channel partners to ensure that we're aligned with their needs.

Morgan Kirk: I will now turn the call back to Morgan for some closing remarks. We have made good progress with our channel partners to bring channel inventories to a more appropriate level in recognition of much shorter product lead times, which has impacted revenues. This is an industry-wide issue which will recover over time as enterprise channel inventories are digested. Our sales out of the channel have remained relatively stable, and we are working to ensure this continues in the future. Internally, we've established new processes for planning and mitigating future inventory levels and improved our visibility into the channel to adjust faster to product lead times. And I believe we've come a long way in a short period of time.

These are challenging times for cambium, and the industry and I'd like to share my appreciation for the continued focus and collaboration of our employees partners and customers.

But I have seen from all employees, we have reduced operational costs, while supporting a large existing customer and product base and developing future platforms. While this is not easy it has been necessary and was executed with full support while I would like to consolidate our products into platforms more quickly. This is being managed in an evolutionary manner.

This concludes our prepared remarks with that I'd like to turn the call over to Michel and begin the Q&A.

Thank you if you'd like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

Our first question comes from Simon Leopold with Raymond James Your line is open great.

I am now focused more on our go to market strategy, specifically, how we address enterprise beyond our core customers.

Thank you for taking the question.

First thing I wanted to ask about was really how we should think about modeling the enterprise or Wi Fi business in that in your March forecast are you assuming that you're still taking product back.

Morgan Kirk: Our PMP business is primed with multiple new products to address the growth cycle once the FCC approves the six gigahertz spectrum. Over the past six months, I have been primarily internally focused, working with the team on product development, improving our processes, and developing our overall direction. I've been pleased with the collaboration, willingness to change, and the desire to succeed that I've seen from all employees. We have reduced operational costs while supporting a large existing customer and product base and developing future platforms. While this was not easy, it was necessary and was executed with full support.

Have been and will continue to spend more time with our customers and channel partners to ensure that we're aligned with their needs.

And sort of when do we get back to normal so just looking for little bit extra handholding on that particular line item and then I've got a follow up.

These are challenging times for cambium, and the industry and I'd like to share my appreciation for the continued focus and collaboration of our employees partners and customers.

Sure Simon Thanks, Yes, so we said that we will be back I'll call. It to normal times with our inventory position in enterprise by the end of the first half we've been consistent that's what I said last time, we believe that that will will occur.

This concludes our prepared remarks with that I would like to turn the call over to Michele and begin the Q&A.

Thank you.

Michelle: While I would like to consolidate our products into platforms more quickly, this is being managed in an evolutionary manner. I am now focused more on our go-to-market strategy, specifically how we address enterprise beyond our core customers. The critical steps to grow include not just the great products we have and continue to develop but also improving our engagement with distributors and value-added resellers who can demonstrate Cambium's value proposition to end customers. I have been and will continue to spend more time with our customers and channel partners to ensure that we're aligned with their needs. These are challenging times for Cambium and the industry, and I'd like to share my appreciation for the continued focus and collaboration of our employees, partners, and customers. This concludes our prepared remarks. With that, I'd like to turn the call over to Michelle and begin the Q&A. Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1 1 again.

To ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue. Please press star one again.

I also noted that.

Our stock rotations in this area are decreasing on a quarterly basis.

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

And we expect that to be normal at a similar time, so youre just going to see sequentially.

Thank you for taking the question.

First thing I wanted to ask about was really how we should think about modeling the enterprise or Wi Fi business in that in your March forecast are you assuming that you are still taking product back.

Growing revenues in this area throughout the year.

I think that as well Simon.

We are seeing enterprise recovery here throughout 2024 sequentially will be getting better every quarter will still be down year over year, though for enterprise.

And sort of when do we get back to normal so just looking for little bit extra handholding on that particular line item and then I've got a follow up.

Yes.

So what are you what are you seeing in terms of the gross.

Shipments to customers. So if we ignore that what you've taken back into discounting. So we just look at what the channel is generating what's that level of sales.

So I think we said on our last call.

We're in the range of $15 million to $20 million on a quarterly basis and that remains unchanged.

I also noted that.

Our stock rotations in this area are decreasing on a quarterly basis.

Simon Leopold: Our first question comes from Simon Leopold with Raymond James. Your line is open. Great, thank you for taking the question. The first thing I wanted to ask you about was really how we should think about modeling the enterprise or Wi-Fi business in that in your March forecast, are you assuming that you're still taking product back and sort of when do we get back to normal? So, just looking for a little bit extra hand holding on on that particular line item. Then I've got a follow-up. Sure. Simon, thanks.

Great Thats very helpful.

Follow up was in terms of.

And we expect that to be normal at a similar time, so youre just going to see sequentially.

Trying to think about the six gigahertz products.

And how we should think about that I'm presuming.

Growing revenues in this area throughout the year.

That once the FCC approvals done and that frequency opens up and you have orders in hand.

I think that as well Simon.

We are seeing enterprise recovery here throughout 2024 sequentially will be getting better every quarter will still be down year over year, though for enterprise.

That we would see something like a step function.

In terms of revenue that you would recognize let's just say hypothetically in the third quarter.

So what are you what are you seeing in terms of the gross.

Morgan Kirk: Yes, so we said that we'd be back, I'll call it, to normal times with our inventory position in enterprise by the end of the first half. We've been consistent. That's what I said last time.

Can you give us a little bit more guidance in terms of how you think about that manifesting itself in your business in your financial statements. Thank you.

Shipments to customers. So if we ignore that what you've taken back into discounting. So we just look at what the channel is generating what's that level of sales.

John Besserell: We believe that that will occur. I also noted that our stock rotations in this area are decreasing on a quarterly basis, and we expect that to be normal at a similar time. So you're just going to see sequentially growing revenues in this area throughout the year. Yeah, I'll update that as well, Simon. You know, we are seeing enterprise recovery here throughout 2024. We'll be getting better every quarter.

Yes.

Good question Simon.

Once we get approval from the FCC, we're prepared to stop shipping orders.

So I think we said on our last call.

We're in the range of $15 million to $20 million on a quarterly basis and that remains unchanged.

There is documentation that still needs to be completed internally.

Great that's very helpful.

We're very close to seeing that happen, but we're ready once the FCC approved that in terms of guidance specifically.

Follow up was in terms of trying to think about the six gigahertz products.

Six gigahertz, you know we tend to not to guide that specifically on that will stick with our overall guidance range for the full year for 2020 for which.

Morgan Kirk: We'll still be down year over year, though, for enterprise. So what do you think in terms of the gross shipments to customers? So if we ignore what you've taken back in the discounting, and we just look at what the channel is generating, what's that level of sale? So I think we said on our last call that we're in the range of $15 to $20 million on a quarterly basis, and that remains unchanged. Great, that's very helpful.

And how we should think about that I'm presuming.

Once the FCC approvals done and that frequency opens up and you have orders in hand.

Which we said in our prepared remarks will be in the range of $2 15 to $2 45.

That we would see something like a step function.

Thank you for taking the questions.

In terms of revenue that you would recognize let's just say hypothetically in the third quarter.

Thank you.

Thank you. Our next question comes from George Notter with Jefferies. Your line is open.

Can you give us a little bit of more guidance in terms of how you think about that manifesting itself in your business in your financial statements. Thank you.

Hi, Thanks, very much guys.

Morgan Kirk: The follow-up was in terms of trying to think about the six gigahertz products and how we should think about that. I'm presuming that once the FCC approval is done and that frequency opens up, and you have orders in hand, that we would see something like a step function in terms of revenue that you'd recognize, let's just say hypothetically, in your third quarter. Can you give us a little bit more guidance in terms of how you think about that manifesting itself in your business and your financial statements? Thank you. Yeah, a good question, Simon.

I'd love to just sort of step back and.

Kind of see where you are Morgan just in terms of the bigger plan for the company the strategy yes.

Yes.

Good question Simon.

Once we get approval from the FCC, we're prepared to start shipping orders.

How have you kind of.

Has your mindset evolve around product strategy.

There is documentation that still needs to be completed internally.

Where the company is going to differentiate going forward what business lines Youre going to focus on anything you can tell us on the revised view would be great. Thanks.

Very close to seeing that happen, but we're ready once the SEC approved that in terms of guidance specifically.

Sure. Thanks George.

Six gigahertz, you know we tend to not to guide that specifically on that will stick with our overall guidance range for the full year for 2020 for which.

I don't think it's different very much from the last the last call.

John Besserell: Once we get approval from the FCC, we're prepared to start shipping orders. There's documentation that still needs to be completed internally, but we're very close to seeing that happen. But we're ready once the FCC approves it. In terms of guiding specifically on 6 gigahertz, we tend not to guide that specifically on that.

As I said on the last call.

I look internally first to make sure that I understand the product lines and that we improve our operational cadence and then work on the strategy from a.

Which we said in our prepared remarks will be in the range of $2 15 to $2 45.

Thank you for taking the questions.

Yes.

Thank you.

From a product standpoint, how we consolidate onto platforms, then I look externally how do we improve our channel and.

Thank you. Our next question comes from George Notter with Jefferies. Your line is open.

John Besserell: We'll stick with our overall guidance and range for the full year 2024, which we said in our prepared remarks would be in the range of 2015 to 2045. Thank you for taking the question. Thank you. Thank you. Our next question comes from George Notter with Jeffries. Your line is open.

Hi, Thanks, very much guys.

I don't think Thats changed I think what we see in the market for.

Would love to just sort of step back and.

Kind of see where you are Morgan just in terms of the bigger plan for the company the strategy.

Demand for point to point and government.

It means that we will continue to support this product line and evolve up I think in the point to Multipoint business.

How have you kind of.

Has your mindset evolve around product strategy.

Where the company is going to differentiate going forward what business lines Youre going to focus on anything you can tell us on the revised view would be great. Thanks.

It really is about platforming supporting all of these different.

Different frequencies from a.

George Charles Notter: Hi, thanks very much, guys. I'd love to just sort of step back and kind of see where you are, Morgan, just in terms of the bigger plan for the company, the strategy, you know, how have you kind of had your mindset evolved around, you know, product strategy, you know, where the company is going to differentiate going forward, and what business lines you're going to focus on. I mean, anything you can tell us about the revised view would be great. Thanks. Sure, thanks, George.

A single sort of product line that can do it all is something which which we're working on figuring out ways of doing and then in enterprise.

Sure. Thanks, Thanks George.

I don't think it's different very much from the last the last call.

As I said on the last call.

I think most of that as a go to market it.

I look internally first to make sure that I understand the product lines and that we improve our operational cadence and then work on the strategy from.

Improvement.

As we get our brand and the pretty complete product set that we have here at cambium out to the market. So I guess in summary, not much of a change from last time. This is now in the execution phase phase, which takes time.

From a product standpoint, how we consolidate onto platforms, then I look externally how do we improve our channel in and out.

Morgan Kirk: I don't think it's differed very much from the last call. As I said on the last call, I look internally first to make sure that I understand the product lines and that we improve our operational cadence. I then work on the strategy from a product standpoint, how we consolidate onto platforms. And then I look externally, how do we improve our channel? And I don't think that's changed.

I don't think Thats changed I think what we see in the market for.

Got it and then you guys mentioned the competitive environment I think a number of times in the monologue.

Demand for point to point and government.

It means that we will continue to support this product line and evolve up I think in the point to Multipoint business.

I think specifically as it relates to enterprise can you talk a bit about what youre seeing precisely.

Yes so.

It really is about platforming supporting all of these different.

After chips became available.

Virtually everybody in the industry goes through for enterprise goes through channel.

Different frequencies from a.

Morgan Kirk: I think what we see in the market for demand for point-to-point in government means that we will continue to support this product line and evolve that. I think in the point-to-multi-point business, it really is about platforming, supporting all these different frequencies from a... A single sort of product line that can do it all is something which we're working on figuring out ways of doing. And then an enterprise...

And the channel became.

A single sort of product line that can do it all is something which which we're working on figuring out ways of doing and then in enterprise.

Very full.

As everybody ship the orders they had we were a little bit ahead of the game.

But.

I think most of that as a go to market.

As the channel becomes less full and we've talked about how we've reduced our channel inventory channel works to reduce all of its inventory things will will return back to more normal more normal cadence. So all the while this was going on I would say and demand very similar no real appreciable change.

Improvement.

As we get our brand and the.

A pretty complete product set that we have here at cambium out to the market. So I guess in summary, not much of a change from last time. This is now in the execution phase phase, which takes time.

Morgan Kirk: I think most of that is a go-to-market improvement as we get our brand and the pretty, www.cambium.com. Got it. And then you guys mentioned the competitive environment a number of times in the monologue, I think specifically as it relates to enterprise. Can you talk a bit about what you're seeing precisely? Yep, so after chips became available, virtually everybody in the industry goes through the channel for enterprise. And the channel became very full.

<unk>.

But the channel decreasing.

Got it and then you guys mentioned the competitive environment I think a number of times in the monologue.

Its holdings back to a point where.

It can refresh its stock within now very short lead times is kind of where we're headed.

I think specifically as it relates to enterprise can you talk a bit about what youre seeing precisely.

Yes so.

Okay. Thank you very much.

After chips became available.

Thank you.

Virtually everybody in the industry goes through for enterprise goes through channel.

Thank you. Our next question comes from John Roy with Morningstar Research. Your line is open.

And the channel became.

Very full.

Yeah.

Morgan Kirk: As everybody shipped the orders they had, we were a little bit ahead of the game. But, as the channel becomes less full, and we've talked about how we've reduced our channel inventory, Channelworks reduced all of its inventory, things will return back to a more normal cadence. So all the while this was going on, I would say, end demand, very similar, no real appreciable change, but the channel decreasing its holdings back to a point where it can refresh its stock within now very short lead times is kind of where we're headed. Okay, thank you very much. Thank you. Thank you. Our next question comes from John Roy with Water Tower Research. Your line is open.

As everybody ship the orders they had we were a little bit ahead of the game.

Obviously, you're expecting a pretty good move in the second half of the year could you give us any kind of color on any kind of supply chain issues, you might have ramping up that fast.

But.

As the channel becomes less full than we've talked about how we've reduced our channel inventory channel works to reduce all of its inventory things will will return back to more normal a more normal cadence. So all the while this was going on I would say M demand very similar.

On a quiet their own supply chain at this point.

Absolutely so.

We.

Ron.

A I'll call it.

Real appreciable change.

ODM OEM outsource strategy, so ramping up and down is really about materials supply.

But the channel decreasing it.

<unk> holdings back to a point where.

And we monitor this now very closely.

It can refresh its stock.

And would prepare.

Within now very short lead times is kind of where we're headed.

We are prepared for.

The appropriate wrap up on this and we don't really see that as an issue.

Okay. Okay. Thank you very much.

Sure.

In any way shape or form.

Thank you. Our next question comes from John Roy with Morningstar Research. Your line is open.

From our perspective.

This is simply executing what we have actually started to become fairly good at.

John Roy: Yeah, obviously, you're expecting a pretty good move in the second half of the year. Could you give us any kind of color on any kind of supply chain issues you might have ramping up that fast? It's kind of quiet there on supply chain at this point. Absolutely.

Yes.

Obviously, you're expecting a pretty good move in the second half of the year could you give us any kind of color on any kind of supply chain issues, you might have wrapping up that fast.

I think just to add to that lead times have.

Have dropped significantly from the pandemic there now so we're back in a normal environment. So executing on customer orders is is going to be much more efficient operationally for us than in the past. So we feel good about it. In addition, the second component because we manufacture around the world of shipping.

Kind of quiet their own supply chain at this point.

Absolutely so.

We.

Morgan Kirk: So, we run an, I'll call it an... ODM, OEM, outsource strategy. So ramping up and down is really about material supply. And we monitor this now very closely and would prepare, or will, are prepared for the appropriate wrap-up in this. And we don't really see that as an issue in any way, shape, or form.

Ron.

A I'll call it.

ODM OEM outsource strategy, so ramping up and down is really about materials supply.

Times and costs is also.

Gone down appreciably, so we really don't see don't see issues.

And we monitor this now very closely.

This year there are occasional components that we see lead times.

And would prepare.

We are prepared for.

Going out on or going up in price and we manage that as part of our normal process.

The appropriate wrap up on this and we don't really see that as an issue.

Right and maybe one last kind of question on that.

In any way shape or form.

John Besserell: From our perspective, this is simply executing what we've actually started to become fairly good at. I think, just to add to that, lead times have dropped significantly from the pandemic so far. So we're back in a normal environment, and executing on customer orders is going to be much more efficient operationally for us than in the past. So I think we feel good about it. In addition, the second component, because we manufacture around the world, of shipping times and costs has also gone down appreciably. So we really don't see any issues this year. There are occasional components that we see lead times going out on or going up in price, and we manage that as part of our normal process. Right?

From our perspective.

SEC approval six gig.

This is simply executing what we've actually started to become fairly good at.

If that gets pushed out.

Do you feel like you would need to take additional steps youre kind of just.

I think just to add to that lead times have.

Ride it out.

Have dropped significantly from the pandemic there now so we're back in a normal environment. So executing on customer orders is going to be much more efficient operationally for us than in the past. So we feel good about it. In addition, the second component because we manufacture around the world of shipping.

In terms of what.

Managing.

Managing costs.

Yeah, Yeah, obviously.

We're very cautious about.

Making those types of statements, but we were in a very good.

Strong cost position right now containing costs and working capital in <unk>.

Times and costs is also.

<unk> gone down appreciably, so we really don't see don't see issues.

And given the potential of that happening, we're prepared to take whatever actions necessary to maintain.

This year there are occasional components that we see lead times.

Strong cost control across our portfolios, it and internally and our resources.

Going out on or going up in price and we manage that as part of our normal process.

Great. Thanks, so much.

Morgan Kirk: And maybe one last kind of question on the FTC approval of six gigabits. If that gets pushed out, do you feel like you would need to take additional steps or kind of just... to ride it out, in terms of what management. The Managing Costs. Yeah, obviously, you know, we're very cautious about, you know, making those types of statements. But you know, we are in a very good, strong cost position right now, containing costs and working capital and giving the potential of that happening.

Alright, and maybe one last kind of question on that.

Thank you.

Thank you as a reminder, SaaS question. Please press star one one.

FTC approval six gig.

If that gets pushed out do you.

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

You can see like you would need to take additional steps or kind of just.

Ride it out.

In terms of what.

Hi, good afternoon.

Managing.

Hey first question.

Managing costs.

And I do have a follow up.

Yes, obviously.

It looks like you're doubling your capex here.

We're very cautious about.

Making those types of statements, but we were in a very good.

Calendar 'twenty four.

We're not doing that.

No no no. So our outlook for Capex for 2024 is $9 million to $11 million, it's pretty much well be.

Strong cost position right now containing costs and working capital in and given the potential of that happening.

It would be tracking on an annual basis in fact, it's a little lower than 2000 22023 by $2 million.

I'm going to have to check my numbers then.

It looks like you're doing this.

A million a quarter last two quarters, but I'll take another look.

Alright.

That's not very interesting.

The second question.

<unk>.

So that's about modest growth for PMT for the year and I'm just try and also declines in an enterprise.

Yes, I think you probably ought to set a baseline there for Q1 just in terms of the number having reported negative five five for Q4, I think that would be helpful.

But I appreciate the color on the decline for the year.

After a solid strong growth year in PTP I mean, do you expect growth at that magnitude, 20% to continue or moderate and which segment between TMT.

<unk> and <unk>.

Point to point would you expect to grow faster on a percentage basis, yes.

Good question, Tim for point to point.

Looking at we had a very strong 2000 22023 going forward into 2024.

We're looking at flat to modest growth there for point to point.

And then in our PDP business.

We expect sequential growth there and point to Multipoint.

And.

Somewhere between the mid to upper teens growth for point to multi point.

Okay.

Great. Thanks very much.

Thank you there are no further questions at this time I'd like to turn the call back over to Peter Schuman for any closing remarks.

Thank you Michele during Q1 'twenty for Cambium networks will be presenting and meeting with investors on March 5th at the JMP Securities Technology Conference and on March 19th at the Roth Annual conference in the meantime, you're always welcome to contact 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 that concludes today's quarterly earnings call. Thank you for your participation you may now log off.

Q4 2023 Cambium Networks Corp Earnings Call

Request a DemoDemo

CMBM

Cambium Networks

Earnings