Q2 2024 Ceragon Networks Ltd Earnings Call
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to Ceragon Networks' earnings call.
Speaker: Earnings coal.
Operator: earnings call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you'll either raise your hand using your mobile or desktop application or press asterisks on your mobile keypad and wait for your name to be announced. I must advise you that this call is being recorded today. I'd like to hand over the call now to our first speaker today, Rob Fink, Head of Investor Relations. Please go ahead.
Operator: Our presentation today will be followed by a question-and-answer session, at which time, if you wish to ask a question, you'll either raise your hand using your mobile or desktop application or press Astrics on your mobile keypad and wait for your name to be announced. I must advise you that this call is being recorded today.
Speaker Change: Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you'll either raise your hand using your mobile or desktop application or press asterisks on your mobile keypad and wait for your name to be announced.
Rob Fink: I'd like to hand over the call now to our first speaker today.
Speaker Change: I must advise you that this call is being recorded today.
Rob Fink: Rob Fink, Head of Investor Relations, please go ahead.
Speaker Change: I'd like to hand over the call now to our first speaker today, Rob Fink, Head of Investor Relations. Please go ahead.
Rob Fink: Thank you, Operator, and good morning, everyone.
Rob Fink: Thank you, operator, and good morning, everyone. Hosting today's call is Doron Arazi, Ceragon's Chief Executive Officer, and Ronen Stein, Chief Financial Officer. Before we start, I'd like to note that certain statements made on this call, including projected financial information and other results, and the company's future initiatives, future events, business outlook, development efforts, and their potential outcome, anticipated progress and plans, results and timelines, and other financial and accounting related matters, constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended and the Securities Act, of 1934 as amended, and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Rob Fink: Hosting today's call is Doron Arazi, Ceragon's Chief Executive Officer, Ronen Stein, Chief Financial Officer.
Speaker Change: Thank you, operator, and good morning, everyone. Hosting today's call is Doron Arazi, Ceragon's Chief Executive Officer, and Ronen Stein, Chief Financial Officer.
Rob Fink: Before we start, I'd like to note that certain statements made on this call, including projected financial information and other results in the company's future initiatives, future events, business outlook, development efforts, and their potential outcome, anticipated progress in plans, results and timelines, and other financial accounting related matters, constitute forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Act of 1934, as amended, and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Ceragon attempts forward-looking terminology such as Belize expects, may, will, should, anticipate, plans, or similar expressions to identify forward-looking statements.
Rob Fink: Ceragon intends to use forward-looking terminology such as believes, expects, may, will, should, anticipates plans, or similar expressions to identify forward-looking statements. Such statements reflect the current expectations and assumptions of Ceragon management. Actual results may differ materially, as they are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in forward-looking statements. Such risks and uncertainties include but are not limited to those that are described in Ceragon's most recent annual report on Form 20-F and as may be supplemented from time to time in Ceragon's other filings with the SEC, including today's earlier filing of the earnings press release, all of which are expressly incorporated herein by reference.
Speaker Change: Before we start, I'd like to note that certain statements made on this call, including projected financial information and other results and the company's future initiatives.
Speaker Change: Future Events, Business Outlook, Development Efforts, and their Potential Outcome, Anticipated Progress and Plans, Results and Timelines, and Other Financial and Accounting-Related Matters constitute forward-looking statements within the meaning of the Securities Act of 1933.
Rob Fink: Forward-looking statements relate to the date initially made, they are not predictions of future events or results, and there can be no assurance that they will prove to be accurate, and Ceragon undertakes no obligation to update them. With all that said, I'd now like to turn the call over to Doron. Doron, the call is yours.
Rob Fink: Such statements reflect current expectations and assumptions of Ceragon Management. Actual results may differ materially as they are subject to certain risks and uncertainties, which could cause the actual results to differ materially from those projected in forward-looking statements. Such risks and uncertainties include that are not limited to those that are described in Ceragon's most recent annual report on Form 20-F and may be supplemented from time to time in Ceragon's other filings with the SEC, including today's earlier filing of the earnings press release, all of which are expressly incorporated herein by reference. Forward-looking statements relate to the date initially made, and they are not predictions of future events or results, and that could be no assurance that they will prove to be accurate.
Speaker Change: Such statements reflect current expectations and assumptions of Ceragon management. Actual results may differ materially as they are certain to certain risks and uncertainties, which could cause the actual results to differ materially from those projected in forward-looking statements.
Speaker Change: Such risks and uncertainties include, but are not limited to, those that are described in Ceragon's most recent annual report on Form 20-F.
Speaker Change: And as may be supplemented from time to time in Ceragon's other filings with the SEC, including today's earlier filing of the earnings press release, all of which are expressly incorporated herein by reference.
Saragon: Forward-looking statements relate to the date initially made and they are not predictions of future events or results and there can be no assurance that they will prove to be accurate. Ceragon undertakes no obligation to update them.
Rob Fink: Ceragon undertakes no obligation to update them.
Rob Fink: Ceragon's public filings are available on the Securities and Exchange Commission's website at sec.gov, and they may also be obtained from Ceragon's website at ceragon.com.
Rob Fink: On today's call, we will include certain non-gap numbers for reconciliation between gap and non-gap results. Please see the table that was attached to the press release that was issued earlier today, which is posted on the Investor Relations section of Ceragon's website.
Saragon: On today's call, we will include certain non-GAAP numbers for reconciliation between GAAP and non-GAAP results. Please see the table that was attached to the press release that was issued earlier today, which is posted on the Investor Relations section of Ceragon's website.
Rob Fink: With all that said, I now like to turn the call over to Jerome.
Doron Arazi: Jerome, the call is yours.
Saragon: With all that said, I'd now like to turn the call over to Doron. Doron, the call is yours.
Doron Arazi: Thank you, Rob, and good morning, everyone.
Doron Arazi: Rob, and good morning, everyone. Let me start by providing some content. Over the past year or so, we have been implementing a strategic plan to diversify our business. Under this plan, we intend to increase our market share in private networks and move up the value chain from an equipment provider to assisting our customers with network operations, optimizing their investment, all while maintaining our strong position in Tier 1 carriers. We expect the successful execution of this strategy, both in the number of accounts as well as in dollars. For further evidence, our first half annualized booking in private networks was up more than 35%.
Doron Arazi: Let me start by providing some context. Over the past year or so, we have been implementing a strategic plan to diversify our business. Under this plan, we intend to increase our market share in private networks and move up the value chain from an equipment provider to assisting our customers with network cooperation, optimizing their investments, or while maintaining our strong position in T1. We expect that successful execution of this strategy will result in increased customer diversification, higher levels of recurring revenues, and expanded margins. The second-quarter results reflect continued progress in implementing this strategy. We had another quarter of significant bookings from new private network customers.
Doron Arazi: Thank you, Rob, and good morning, everyone.
Doron Arazi: Let me start by providing some context.
Doron Arazi: The second quarter results reflect continued progress in implementing this strategy.
Doron Arazi: We had another quarter of significant bookings from new Private Networks customers.
Doron Arazi: New customers from private networks accounted for more than 50% of our overall new customers, both in number of accounts as well as in dollars. For further evidence, our first half annualized booking in private networks was up more than 35% versus last year, and we are growing our funnel of opportunities. The integration of the recent cyclical acquisition has continued in accordance with our plans and has been helping to enhance our competitive position with ISP and private networks customers. In our journey to generate higher software led recurring revenue, we also started generating meaningful adoption of our smart activation key software as well as creating opportunities for our network digital twin solutions leading to proof of concept engagement.
Doron Arazi: In our journey to generate higher software-led recurring revenue, we have also started generating meaningful adoption of our smart activation key software, as well as creating opportunities for our network digital twin solutions, leading to proof-of-concept engagement. All of that, while continuing to maintain and even increase our market share in T1 operators, primarily in India and North America.
Doron Arazi: In our journey to generate higher software-led recurring revenue, we also started generating meaningful adoption of our smart activation key software, as well as creating opportunities for our network digital twin solutions.
Doron Arazi: All of that while continuing to maintain and even increase our market share in T1 operators, primarily in India and North America. To summarize, each of these initiatives is showing progress, and this progress is increasing our confidence in our strategy. The month for our solution from our customers remains strong across the globe, and we were able to gain new customers primarily in private networks. Our dependency on 5G related spending is decreasing as we are focusing on increasing our market share in private networks, and a significant spending is ongoing in 4G upgrades and expansions, primarily in rural areas.
Doron Arazi: All of that while continuing to maintain and even increase our market share in T1 operators primarily in India and North America.
Doron Arazi: Each of these initiatives is showing progress, and this progress is increasing our confidence in our strategy. Demand for our solution from our customers remained strong across the globe, and we were able to gain new customers primarily in private networks, for example.
Doron Arazi: To summarize...
Doron Arazi: Each of these initiatives is showing progress.
Doron Arazi: And this progress is increasing our confidence in our strategy.
Doron Arazi: Our dependency on 5G-related spending is decreasing.
Doron Arazi: In fact, our backlog, especially in North America and India, gives us confidence that we can continue with our growth momentum into the second half of the year. As expected, our new offerings have started to translate to bookings and revenue. For example, some of the new solutions in our portfolio that are worth highlighting include the IP50EX, or sorry, IP50EX, which continues to garner customer interest. This is an ultra-compact high-capacity event radio which is ideally suited for a variety of cases, especially when small size and low IP50EX are priority. In addition, our recently introduced smart activation key software has generated meaningful customer adoption.
Doron Arazi: Some of the new solutions in our portfolio that are worth highlighting include this is an ultra-compact, high-capacity E-band radio which is ideally suited for a variety of use cases, especially when small size and low operational costs are priorities. In addition, our recently introduced smart activation key software has generated meaningful customer adoption. With this innovative software, we continue to release more frequencies of our 50 CX. These additional bands will enable us to cover additional market needs and meet demand in other regions.
Speaker Change: This is an ultra-compact, high-capacity E-band radio which is ideally suited for a variety of use cases, especially when small size and low op-ecs are priorities.
Doron Arazi: Tense of thousands of licenses have been secured by several customers across multiple regions within the first half of the fiscal year. This innovative software simplifies the activation process for network radios, and there are various license-able features allowing customers to activate and upgrade thousands of devices simultaneously, significantly enhancing operational efficiency and reducing costs. Importantly, this software solution is a major step in our initiatives to drive recurring revenue, reducing the volatility inherent with project-based non-recovering revenue. Over time, we anticipate solutions like this to become an increasingly important contributor to our revenue. We continue to release more frequencies of our 50CX, a solution that has already demonstrated huge success in India.
Speaker Change: Importantly, this software solution is a major step in our initiative to drive recurring revenue, reducing the volatility inherent with project-based non-recovering revenue.
Speaker Change: a solution that has already demonstrated huge success in India.
Doron Arazi: These additional bands will enable us to cover additional market needs and meet demand in other regions.
Speaker Change: These additional bands will enable us to cover additional market needs and meet demand in other regions.
Doron Arazi: I'd now like to provide an overview of our Q2 highlights by region. Noting that on today's call, we will focus primarily on activities in North America and India, the two regions that have and we expect will continue to have the greatest impact on our results in the new term. In North America, revenue was $23 million. This was a strong quarter for our private network group as we added nine new customers and generated substantial private network bookings. In the first half of 2024, on an annual basis, we have delivered tremendous growth from private networks, with bookings up more than 45% of our 2023 bookings.
Speaker Change: I'd now like to provide an overview for our Q2 highlights by region.
Speaker Change: In North America, revenue was 23 million dollars.
Speaker Change: This was a strong quarter for our private network group as we added nine new customers and generated substantial private network bookings.
Speaker Change: In the first half of 2024, on an annualized basis, we have delivered tremendous growth from private networks, with bookings up more than 45% of our 2023 bookings.
Doron Arazi: We also had another strong quarter selling and delivering cyclobyseragon products primarily to ISPs. Overall, we continue to maintain strong booking and revenue levels in North America, and the growing contribution of private network and ISP business has smoothed out natural fluctuations related to T1 service providers' capex friends. This result was exactly our objective to diversify our revenue and smooth out the impact of large project-based orders from T1 customers. We were successful in this quarter, and we are encouraged by the trends. In India, revenue was $36 million. As a reminder, in Q1, we had record bookings related to the large agreement with disclosed in the fourth quarter. As expected, the delivery and deployment of the new customer orders began in the second quarter, and deployment is expected to take approximately 2 years, with about 75% of the $150 million project value expected to be recognized during this time frame.
Doron Arazi: We also had another strong quarter selling and delivering Ciclu by Ceragon products, primarily to ISPs, to diversify our revenue and smooth out the impact of large project-based orders from tier 1 customers. We were successful in this quarter, and we are encouraged by the trend. Clearly, we have continued to be successful in India and North America, and this has been facilitating our growth and profitability. As a last comment, I would point to our success in other regions as further evidence of success regarding our new strategy.
Speaker Change: We also had another strong quarter selling and delivering Ciclu by Ceragon products primarily to ISPs.
Speaker Change: to diversify our revenue and smooth out the impact of large project-based orders from Tier 1 customers.
Speaker Change: We were successful in this quarter, and we are encouraged by the trends.
Speaker Change: As expected,
Doron Arazi: As well as certain 5G upgrades, key customers continue to invest heavily in both phases of this capacity upgrade, and we are growing our market share in this regard. We are also seeing large opportunities, which can fuel our business in 2025 and working to win them against competition. Clearly, we have continued to be successful in India and North America, and this has been facilitating our growth and profitability.
Speaker Change: We are also seeing large opportunities which can fuel our business in 2025 and working to win them against competition.
Speaker Change: Clearly, we have continued to be successful in India and North America, and this has been facilitating our growth and profitability.
Doron Arazi: As the last comment, I would point to our success in other regions as further evidence of success regarding our new strategy. I note that in the first half of 2024, other regions, notably Latin America and APOC, have also seen the benefits of this new strategy with significant growth in private network business. This is very encouraging, especially in light of the first competition against Chinese vendors in those regions.
Speaker Change: As a last comment, I would point to our success in other regions as further evidence of success regarding our new strategy.
Doron Arazi: I know that in the first half of 2024, other regions, notably Latin America and APAC, have also seen the benefits of this new strategy with significant growth in private network business. This is very encouraging, especially in light of the first competition against Chinese vendors in those regions.
Ronen Stein: With that, I will turn the call over to Ronan Stein, our CFO, to discuss the results in more detail.
Ronen Stein: With that, I'll turn the call over to Ronen Stein, our CFO , to discuss the results in more detail. Ronen, over to you.
Ronen Stein: Ronan, over to you. Thank you, Ron, and good morning, everyone. As the one outlined, we continue in our progress towards our stated strategy. Simultaneously, we continue to deliver on our growth plans and improve our operating leverage on a non-GAAP basis. To help you understand the results, I will be referring primarily to non-GAAP financials. For more information regarding our use of non-GAAP financial measures, including your considerations of these measures, we refer you to today's press release.
Ronen Stein: Thank you, Doron, and good morning, everyone. Simultaneously, we continue to deliver on our growth plans and improve our operating leverage on a longer basis. For more information regarding our use of non-gap financial measures, including reconciliations of these measures, we refer you to today's press release. Now, I will review the actual results.
Ronen Stein: Thank you, Doron, and good morning, everyone. As Doron outlined, we continue in our progress towards our stated strategy.
Ronen Stein: Simultaneously, we continue to deliver on our growth plans and improve our operating leverage on a non-gap basis.
Ronen Stein: To help you understand the results, I will be referring primarily to non-GAAP financials.
Ronen Stein: Let me now review the actual results. Revenues were 96.1 million dollars, up 11.5% from 86.2 million dollars in Q2 2023. Our strongest regions in terms of revenues for the quota were India and North America, with 35.5 and 23.3 million dollars, respectively, in line with the continuous strong demand we see in these regions. Our strongest region in terms of revenues was a mayor with 19 million dollars. We had one customer in the second quota that contributed more than 10% of our revenues. Gross profit for the second quota on a non-GAAP basis was 33.8 million dollars, an increase of 11.1% compared to 30.4 million dollars in Q2 2023.
Ronen Stein: Revenues were $96.1 million, up 11.5% from $86.2 million in Q2 2023. Our third strongest region in terms of revenues was Emea, with $19 million. We had one customer in the second quarter that contributed more than 10% of our revenues. Gross profit for the second quarter on an on-gap basis was $33.8 million, an increase of 11.1% compared to $30.4 million in Q2 2023. Our non-gap gross margin was 35.2% compared with a gross margin of 35.3% in Q2 2023, all of which had a positive effect. Our gross margins may continue to fluctuate from quarter to quarter due to changes in product and regional mix.
Ronen Stein: Revenues were $96.1 million, up 11.5% from $86.2 million in Q2 2023.
Ronen Stein: Our strongest regions in terms of revenues for the quarter were India and North America with $35.5 and $23.3 million respectively, in line with the continuous strong demand we see in these regions.
Ronen Stein: Our third strongest region in terms of revenues was EMEA with $19 million.
Ronen Stein: Gross profit for the second quarter on an on-gap basis was $33.8 million, an increase of 11.1% compared to $30.4 million in Q2 2023.
Ronen Stein: Our non-GAAP gross margin was 35.2% compared with gross margin of 35.3% in Q2 2023. We continue to achieve high gross margins within the guidance range, despite the fact mixture changed and revenues from India increased significantly. We achieved this by increasing revenues and recognizing continued improvement in product costs. We also maintain control over our fixed costs, all of which had a positive effect.
Ronen Stein: We continue to achieve high gross margins within the guidance range, despite the fact mixtures changed and revenues from India increased significantly.
Ronen Stein: We achieve this by increasing revenues and recognizing continued improvement in product costs.
Ronen Stein: We also maintain control over our fixed costs.
Ronen Stein: Our gross margins may continue to fluctuate from Q2 to Q2 due to changes in product and regional mix.
Ronen Stein: all of which had a positive effect.
Ronen Stein: As for our operating expenses, in general, operating expenses in 2024 fully include the impact of the secret acquisition at the end of 2023 and thus impact the comparison to 2023 operating expenses. Research and development expenses for the second quarter on a non-GAAP basis were 8.2 million dollars, up from 7.6 million dollars in Q2 2023. As a percentage of revenue, our R&D expenses were 8.5% in the second quarter compared to 8.8% in the second quarter last year. Sales and marketing expenses for the second quarter on a non-GAAP basis were 11 million dollars, up from 9.4 million dollars in Q2 2023.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: In general, operating expenses in 2024 fully include the impact of the cycloacquisition at the end of 2023, and thus impact the comparison to 2023 operating expenses.
Ronen Stein: Research and development expenses for the second quarter on a non-gap basis were $8.2 million, up from $7.6 million in Q2 2023. As a percentage of revenue, our R&D expenses were 8.5% in the second quarter, compared to 8.8% in the second quarter last year. Sales and marketing expenses for the second quarter on an on-gap basis were $11 million, up from $9.4 million in Q2 2023. Our trade receivables are at $112.9 million, as compared to $104.3 million at the end of December 2023.
Speaker Change: Research and development expenses for the second quarter on a non-gap basis were $8.2 million, up from $7.6 million in Q2 2023.
Speaker Change: As a percentage of revenue, our R&D expenses were 8.5% in the second quarter compared to 8.8% in the second quarter last year.
Ronen Stein: As a percentage of revenue, says the marketing expenses were 11.5% in the second quarter compared to 10.9% in the second quarter last year. General and administrative expenses for the second quarter on a non-GAAP basis were 1.4 million dollars compared to 6.1 million dollars in Q2 2023. As a percentage of revenue, GNA expenses were 1.5% in the second quarter compared to 7% in the second quarter last year. The main reason for the reduction in GNA is the impact of a 4 million dollars benefit related to an initial collection from a 12 million dollars debt settlement agreement reached with the South American customer, for which we accounted a credit loss at the end of 2022.
Speaker Change: General and administrative expenses for the second quarter on an on-grab basis were $1.4 million, compared to $6.1 million in Q2 2023.
Speaker Change: As a percentage of revenues, G&A expenses were 1.5% in the second quarter compared to 7% in the second quarter last year.
Speaker Change: The main reason for the reduction in GNA is the impact of a $4 million dollar loss.
Speaker Change: benefit related to an initial collection from a $12 million debt settlement agreement reached with a South American customer for which we accounted a credit loss at the end of 2022.
Ronen Stein: This is a great opportunity to note. The last week we collected the second installment of 4 million dollars from this customer, brings us to a collection of 8 million dollars out of 12 million dollars debt. This recent collection is expected to be reflected in our financials Q3 results.
Speaker Change: This is a great opportunity to note that last week
Speaker Change: We collected the second installment of $4 million from this customer, bringing us to a collection of $8 million out of $12 million debt.
Ronen Stein: I'd note that our gap operating expenses include integration costs related to Cyclops. These charges are backed out of our non-GAAP operating expenses. We believe the integration is mostly completed, and we do not anticipate any further meaningful integration charges in future presents. Operating income for the second quarter on a non-GAAP basis was 13.1 million dollars, compared with 7.4 million dollars for Q2 2023. As a percentage of revenues, non-GAAP operating income was 13.7% in the second quarter, compared to 8.5% in the second quarter last year. Without the $4 million debt collection benefit, included in the GNA, non-GAAP operating income would be $9.1 million and, as a percentage of revenues, 9.5%.
Speaker Change: I note that our GAP operating expenses include integration costs related to CICLU.
Speaker Change: These charges are backed out of our non-GAAP operating expenses. We believe the integration is mostly completed and we do not anticipate any further meaningful integration charges in future periods.
Speaker Change: Operating income for the second quarter on a non-gap basis was $13.1 million, compared with $7.4 million for Q2 2023.
Speaker Change: As a percentage of revenues, non-GAAP operating income was 13.7% in the second quarter compared to 8.5% in the second quarter last year.
Speaker Change: Without the $4 million debt collection benefit included in the GNA, non-GAAP operating income would be $9.1 million and as a percentage of revenues, 9.5%.
Ronen Stein: Financial and other expenses for the second quarter on a non-GAAP basis were $2.6 million. Our tax expenses for the second quarter on a non-GAAP basis were $0.6 million. Net income for the second quarter on a non-GAAP basis was $9.9 million, or 11 cents per diluted share, compared to $4.4 million, or 5 cents per diluted share, for Q2 2023. Without the $4 million benefit related to the debt collection, included in the GNA, non-GAAP net income would be $5.9 million or 7 cents per diluted share.
Speaker Change: Financial and other expenses for the second quarter on an on-gap basis were $2.6 million.
Speaker Change: Without the $4 million benefit related to the debt collection included in the GNA, non-GAAP net income would be $5.9 million or $0.07 per diluted share.
Ronen Stein: As for our balance sheet, our cash position at the end of the second quarter was $26.3 million compared to $28.2 million at the end of 2023. Short-term loans were $28.5 million compared to $32.6 million as of December 31, 2023. We believe we have cash and facilities that are sufficient for operations and working capital needs. Our inventory at the end of Q2 2024 was $59.5 million, down from $68.8 million at the end of December 2023 and down from just over $61 million at March 31. The reduction is mainly as our efforts during 2023 to streamline inventory levels, following the improvement in components availability, have materialized and initial shipments to the larger order in India.
Speaker Change: Therefore, balance sheets.
Speaker Change: Our inventory at the end of Q2 2024 was $59.5 million, down from $68.8 million at the end of December 2023, and down from just over $61 million at March 31st.
Speaker Change: The reduction is mainly as our efforts during 2023 to streamline inventory levels
Speaker Change: following the improvement in components availability have materialized and initial shipments to the larger order in India. We continue to monitor inventory levels taking into consideration the improvements in availability of components and expected changes in demand.
Ronen Stein: We continue to monitor inventory levels, taking into consideration the improvements in availability of components and expected changes in demand. Our trade receivers are at $112.9 million as compared to $104.3 million at the end of December 2023. Our DSO now stands at 114 days.
Speaker Change: Our DSO now stands at 114 days.
Ronen Stein: As for our cash flow, net cash flow generated by operations and investing activities in the first six months of 2024 was $1.7 million.
Ronen Stein: Net cash flow generated by operations and investing activities in the first six months of 2024 was $1.7 million. This guidance includes the contribution from CICLU. As a result, we expect an increased loan gap, profit, and positive cash flow for the full year of 2024.
Speaker Change: S4 or cash flow?
Ronen Stein: We are reiterating our full-year outlook. For 2024, we expect revenue of $385 million to $405 million, representing growth of 11% to 17% compared to 2023. This guidance includes the contribution from Cyclo. Non-GAAP operating margins are targeted to be at least 10% at the midpoint of the revenue guidance. As a result, we expect increased non-GAAP profit and positive cash flow for the full year of 2024.
Speaker Change: For 2024, we expect revenue of $385 million to $405 million, representing growth of 11% to 17% compared to 2023.
Speaker Change: As a result, we expect increased non-gap profit and positive cash flow for the full year of 2024.
Operator: With that, I now open the call for your questions.
Operator: Operator? Thank you. If you wish to ask a question, please raise your hand using your mobile or desktop application or press estrics when your mobile keypad and wait for your name to be announced.
Speaker Change: With that, I now open the call for your questions. Operator?
Operator: Thank you. If you wish to ask a question, please raise your hand.
Speaker Change: Thank you. If you wish to ask a question, please raise your hand.
Alex Henderson: Our first question is from Alex Henderson of Needham and Company.
Alex Henderson: Alex, please go ahead. Great. Thanks. Nice execution again, and it sounds like visibility remains pretty good.
Unidentified Analyst: Great, thanks. Nice execution again, and it sounds like the visibility remains pretty good.
Speaker Change: Nice execution again, and it sounds like the visibility remains pretty good. I wanted to ask you a question on the competitive front.
Doron Arazi: I wanted to ask you a question on the competitive front. Actually, I've posed to me by a couple of investors. One of the other people who developed a system on a chip for wireless had, in 2022, talked about a significant upgrade, but I can't find any evidence of that product in the field. Can you talk about that upgrade, whether that's out there, whether you're seeing that, or has that formed by the wayside?
Unidentified Analyst: I wanted to ask you a question on the competitive front, actually posed to me by a couple of investors. One of the other people who developed a system on a chip for wireless had in 2022 talked about a significant upgrade, but I can't find any evidence of that product in the field. Can you talk about that upgrade, whether that's out there, whether you're seeing that, or has that fallen by the wayside?
Speaker Change: One of the
Speaker Change: and other people who develop a system on a chip for wireless had in 2022 talked about a
Speaker Change: a significant upgrade, but I can't find any evidence of that product in the field.
Doron Arazi: So hi, Alex, this is Doron. We have not seen any actual implementation in the field of new chip that actually allow for a very, I would say significant enhanced capabilities rather than what we are seeing today. So, that, that, that, I think it was Max Linear chip didn't make it into the field; it didn't make it in the product. Obviously, we don't, we don't know exactly what max linear plans are, but to the best of our knowledge and based on what we are hearing in the industry.
Doron Arazi: Um,
Speaker Change: Hi Alex, this is Doron.
Alex: We have not seen any actual implementation in the field of Neochip that actually allow for very, I would say, significant enhanced capabilities.
Doron Arazi: At the moon, at the minimum, there is no cheap available out there from rocks linear that is enhanced and can be usable immediately. Great sounds good.
Doron Arazi: In terms of the landscape, do you have any exposure in Eastern Europe that might be negatively impacted by increased regulations on shipments into that geography. And similarly, relative to Japan, been a lot of volatility on the, you know, the yen exchange rates. Does that have any impact on you guys? So our business in the two, a tank is less region, you have mentioned, is not high, is not big. And therefore, I see any sort of exposure insignificant on orbit. Okay, it's for both the Eastern Europe issue and the Japanese issue, the neither concern. No, there's no concern.
Alex: Well, great. Sounds good. In terms of the landscape,
Speaker Change: Do you have any exposure in Eastern Europe that might be negatively impacted by COVID-19?
Speaker Change: increased regulations on shipments into that geography. And similarly, relative to Japan, been a lot of volatility on the yen exchange rates. Does that have any impact on you guys?
Speaker Change: So our business in the two countries less region
Doron Arazi: Okay, that's for both the Eastern Europe issue and the Japanese issue where neither are concerned.
Doron Arazi: We sell in most of the use cases in good years a few million dollars altogether. I don't see that as something that can that is perceived as a significant exposure.
Doron Arazi: In most of the use cases, in good years, a few millions of dollars altogether. I don't see that as something that is perceived as a significant exposure.
Speaker Change: No, there's no concern. We sell.
Speaker Change: In most of the use cases, in good years, a few millions of dollars altogether. I don't see that as something that is perceived as a significant exposure.
Doron Arazi: Then just talking about the pipeline of activity, are you seeing any change in some of the mechanics there in terms of deal closure rates or deal sizes, or how does the pipeline look as we go into the back half of the year and into the 25th?
Doron Arazi: Then just talking about the pipeline of activity. Are you seeing any change in some of the mechanics there in terms of deal closure rates or deal sizes, or, you know, how's the pipeline look as we go into the back half of the year and into 25. So first of all, as I mentioned in our prepared comments, we are seeing the benefits of our decision to increase focus on private networks. And we increased our booking and our deal closure on this side that is definitely helpful to streamline the total booking that we are seeing because of the T1 and 5G fluctuations and maybe some slowdown.
Speaker Change: Then just talking about the pipeline of activity, are you seeing any change in some of the mechanics there in terms of deal closure rates or deal sizes, or, you know, how's the pipeline look as we go into the back half of the year and into the twenty-five?
Speaker Change: We are seeing the benefits of our decision to increase focus on private networks.
Doron Arazi: And we increased our bookings and our deal closure on this side. That is definitely helpful to streamline the total booking that we are seeing because of the T1 and 5G fluctuations and maybe some slowdown, primarily in Europe.
Speaker Change: and we increased our booking and our deal closure.
Speaker Change: on this side that is definitely helpful to streamline the total booking that we are seeing because of the T1 and 5G fluctuations and maybe some slowdown.
Doron Arazi: So, in terms of particular, in terms of deal closure, I would say that with the T1 primarily outside India and, to a certain degree, also outside North America, at least for us. We saw a certain slowdown. Just to give you a few examples in Indonesia, for example, the business is going through consolidation. There are some consolidations in this particular market, and this slows down the buying patterns. But generally speaking, other than in the T1 and, to a certain degree, in ISPs primarily in Europe, we have not seen any significant slowdown. So, in aggregate, the private networks combined with a little bit of slowdown, some of the tier ones is a net neutral environment.
Speaker Change: Just to give you a
Speaker Change: a few examples. In Indonesia, for example, the business is going through consolidation. There are some consolidation in this particular market and this slows down.
Speaker Change: the buying patterns, but generally speaking,
Speaker Change: other than in the T1 and to a certain degree in ISPs primarily in in Europe
Speaker Change: So, in aggregate, the private networks combined with a little bit of slowdown in some of the Tier 1s is a net-neutral environment.
Doron Arazi: I would very highly say that yes, it's not one to one, but generally speaking, the situation is that the private networks can cover, especially in the areas that I mentioned in my prepared comments, which is APOC, as well as Latin America, relative weakness in the T1 operators.
Speaker Change: I would, I would very highly say that
Speaker Change: Yes, it's not a one-to-one, but generally speaking...
Speaker Change: The situation is that the private networks can cover, especially in the areas that I mentioned in my prepared comments, which is APAC, as well as Latin America, relative weakness in the T1 operators.
Doron Arazi: Great. Thanks. Thank you.
Speaker Change: Great, thanks.
Rommel Dionisio: Our next question is from Romell Dionso from HS Capital.
Doron Arazi: Romell, please go ahead. Yes, good morning. Just a question on the private networks. Obviously, you guys have made significant progress over the last few years in expanding that business. How do you think about boosting some of the resources behind that business, given the significant opportunities and the momentum that you have there, both in North America and in Europe, and elsewhere in the world that you see opportunities there? Thank you. So obviously, while we are executing successfully on our new strategy, we are very, very attentive to what's happening, and it is our intention to adjust our investments, especially in sales and marketing accordingly in order to leverage the momentum. Said that we are always with a very close eye on our bottom line and our operating expenses.
Speaker Change: Yes, good morning. Just a question on the private networks. Obviously, you guys have made significant progress over the last few years in expanding that business. How do you think about, you know, boosting
Speaker Change: So, obviously, while we are executing successfully on our new strategy,
Speaker Change: especially in sales and marketing.
Speaker Change: accordingly in order to leverage the momentum. Said that, we are always there with a very close eye on our bottom line and our operating expenses.
Doron Arazi: So it is our intention to do it as needed, but still keep as much as we can with the trajectory of improved operating models.
Speaker Change: So it is our intention to do it as needed, but still keep as much as we can with the trajectory of improved operating margins.
Doron Arazi: Okay, fair enough, and specifically, could you just talk about the private networks in Europe? I know that you've made some progress there, but just given some of the geopolitical uncertainty, what's your outlook for private networks in Europe and signing up some new business there? Have the next few quarters going forward? Thanks. Generally speaking, I would say that the funnel we see for the private networks across the world, but specifically also in Europe, your question is increasing. Obviously, the environment in Europe is not that, so to speak, friendly in terms of investments given the situation, but we still see opportunities to increase our private networks business in Europe in the coming quarters.
Doron Arazi: Okay, fair enough. And specifically, could you just talk about the private networks in Europe? I know that you've made some progress there. But you know, given some of the geopolitical uncertainty, what's your kind of outlook for private networks in Europe and signing up some new business there over the next few quarters going forward? Thanks.
Doron Arazi: Generally speaking, I would say that the funnel we see for private networks.
Speaker Change: Generally speaking, I would say that the funnel we see for the private networks
Speaker Change: across the world, but specifically also in Europe , to your question.
Speaker Change: is increasing.
Doron Arazi: Great, thank you very much, Karan. Sure, thank you, Rolmer.
Unidentified Analyst: Great. Thank you very much, Karan. Sure.
Speaker Change: Great. Thank you very much, Doron. Sure. Thank you, Romer.
Operator: Our next question is from Robert Marston of TB Partners. Robert, please go ahead.
Robert Marson: Our next question is from Robert Marsen of TB Partners.
Speaker Change: Our next question is from Robert Marston of TB Partners. Robert, please go ahead.
Robert Marson: Robert, please go ahead. Hey guys, congratulations on a good quarter. The revenue growth of nearly 12% was particularly impressive, especially since it was against the 22% comparable last year. I just want to say, we noted that.
Doron Arazi: Regarding Neptune, can you give us an update?
Robert Marston: Regarding Neptune, can you give us an update?
Doron Arazi: Yeah, look, I didn't put too much high focus on Neptune in my prepared comments because nothing has significantly changed.
Doron Arazi: Yeah, look, I didn't put too much high focus on Neptune in my first comments because nothing has significantly changed since last quarter. But the general comment, I would say, is that we continue with the post-silicon validation.
Speaker Change: Yeah, look, I didn't put too much high focus on Neptune in my prepared comments because nothing has significantly changed.
Doron Arazi: It is nearing the end. And in parallel, as we already discussed in previous calls, we have already started developing the first product that will be based on this Neptune chip. So all in all, the bottom line is that we are moving forward as we were expecting.
Doron Arazi: And the photo is nothing new, so sometimes no news is good news. Excellent.
Doron Arazi: Regarding software and manage services, the press release of tens of thousands of licenses sounds impressive their own, but the real question is what kind of revenue did that represent? In 2025, if we had to disclose software and service revenue as a percent of revenue, what kind of number could we expect, realizing it's still in the early innings?
Speaker Change: The press release of tens of thousands of licenses sounds impressive.
Speaker Change: but the real question is, what kind of revenue does that represent? In 2025, if we had to disclose...
Doron Arazi: So, first of all, at least so far, it's our policy not to disclose this petition.
Speaker Change: So first of all, at least so far, it's our policy not to disclose this politician. So you'll have to excuse me for not answering the second part of your question.
Doron Arazi: So you will have to excuse me for not answering the second part of your question. As to the qualitative question about what is the potential there, I would say that the potential is significant, but it also entails market education. T1 operators have their own reasons for buying a graphics model versus OPEX model. At the same token, they are exploring seriously different use cases where it makes sense for them to pay a periodical fee or based on a success fee to companies like us for improving also their operating results. And so T1 is something that we believe can generate a significant amount of revenues in the future, yet the adoption of this concept is going to take time. But the fact that the software is already there and available for immediate use in these models, in my view, is nearing the time where we'll be able to use it.
Doron Arazi: So you'll have to excuse me for not answering the second part of your question. As to the qualitative question about, "What is the potential there?", I would say that the potential is significant, and they have their own reasons for buying a CAPEX model versus an OPEX model. At the same token, they are exploring seriously different use cases where it makes sense for them to pay a periodical fee or a success fee to companies like us for improving their operating results. From my perspective, this is a very strong signal that there is a good chance to enjoy the fruits of this kind of technology with a recurring business model.
Speaker Change: As to the qualitative question about...
Speaker Change: but it also entails market education.
Speaker Change: And so T1 is something that we believe can generate a significant amount of revenues in the future, yet
Speaker Change: The adoption of this concept is going to take us time, but the fact that the software is already there and available for an immediate use in these models, in my view, is nearing
Doron Arazi: If I look at the other segment, which is the, I would say, either smaller players, ISPs, and also private networks, I think that the results of such kind of capabilities in terms of new commercial recurring models will come faster. And, as I mentioned also in our press release, one of the customers that adopted this software is a smaller player that decided to go already for a term license. From my perspective, this is a very strong signal that there is a good chance to enjoy the fruits of this kind of technology with the recurring business model.
Speaker Change: in terms of new commercials, recurring models will come faster. And as I mentioned also in our press release, one of the customers that adopted this software is a smaller player that decided to go already for a term license.
Doron Arazi: Germany passed a rip-and-replace Huawei law this quarter.
Doron Arazi: Our last quarter, excuse me, I believe, is there any traction with that movement in any other geographies in the world, other parts of Europe, or maybe even Southeast Asia, where people are concerned about data security, and is there any opportunity for us to take that kind of market share back from when they were given product away tenure. The short answer is yes. Just to give you slightly more color, just in Europe, since you mentioned Europe and you also mentioned Germany, we are engaged with at least two or three new prospects, relatively sizable, that are interested in our solutions as a result of the ban on the Chinese that is starting to take place in Europe.
Speaker Change: our last quarter, excuse me, I believe. Is there any traction with that movement in any other geographies in the world?
Doron Arazi: The short answer is yes, they are relatively sizable.
Speaker Change: two or three new prospects.
Speaker Change: Relatively sizable.
Speaker Change: that are interested in our solutions.
Speaker Change: as a result of the ban.
Speaker Change: on the Chinese that is starting to take place in Europe . At the same token, I must tell you, and I don't want to offend anyone, the European are much slower to kind of deploy.
Doron Arazi: At the same token, I must tell you, and I don't want to, so I think it will take more time. But all in all, we have started discussions with new prospects, which is a good signal for us.
Unidentified Analyst: Thank you. Regarding Tier 1s in the U.S., I believe we only service one. Is there any chance we could get any material business out of it?
Doron Arazi: Thank you regarding tier ones in the U.S. I believe we only service one. Is there any chance we could get any material business out of the other two? So if I need to be very precise, we are not serving just one, but the one the other one that we are serving. The business there is not meaningful enough to have a grand discussion about it, but I must tell you that in that case, the nice thing about it is that we were the only vendor to resolve a very unique situation for them or a very unique use case to be more precise with them.
Doron Arazi: So if I need to be very precise, they have a huge fiber network piece that they own. And therefore, their economics is slightly different.
Speaker Change: We are not serving just one.
Speaker Change: The nice thing about it is that we were the only vendor.
Speaker Change: for them.
Doron Arazi: And that puts us in terms of technology, innovation, and customer-oriented approach, probably in the front line. We will continue this dialogue with them, but you use a fiber network piece that they own. And the four, their economics is slightly different.
Speaker Change: And that puts us in terms of technology, innovation, and customer-oriented approach probably in the front line. We will continue this dialogue with them, but you need to also bear in mind.
Doron Arazi: Thank you regarding acquisitions. Sickle is turning out to be a gem. Congratulations on that.
Unidentified Analyst: Regarding acquisitions. Siclu is turning out to be a gem; congratulations on that.
Speaker Change: Thank you. Regarding acquisitions...
Doron Arazi: The balance sheet can afford some small bolt-on deals if they are done without risk and it very credibly. Is there anything in the works for the rest of this year that might give us a little revenue bump for 2025 in the acquisition department? I cannot be that specific. I will only say that we continue to pursue opportunities for small M&A, and in order to augment our execution or our organic execution of our strategy. And I am quite encouraged by the funnel.
Doron Arazi: I cannot be that specific. I will only say that. And in order to augment our execution, or our organic execution of our strategy. And I would say that this is
Speaker Change: I cannot be that specific. I will only say that.
Speaker Change: We continue to pursue opportunities for small M&As.
Speaker Change: and in order to augment our execution or our organic execution of our strategy
Speaker Change: Enough for this question.
Robert Marson: I just wanted to address the question of the game that shows up in the GNA: the seven cent number versus the 11 cent number. Hopefully, everybody will be on the same page. But it seems to me that having a million dollar GNA number in the second quarter just sets up a ridiculous cop into 25 because obviously that really is a one time event. I don't understand why you didn't back it out of the numbers. Why are we not using seven cents as the non-GAF number instead of 11 cents? We need to be consistent with our accounting also when we are talking about non-GAF.
Operator: Our next question comes from Alex Henderson from Needham & Company. Alex, go ahead.
Speaker Change: Thank you very much. Sure.
Speaker Change: Our next question comes from Alex Henderson from Needham and Company. Alex, go ahead.
Alex Henderson: the numbers...
Speaker Change: Why are we not using 7 cents as the non-GAAP number instead of 11 cents?
Doron Arazi: We need to be consistent, and after consulting with our lawyers, an allowance for credit loss cannot be taken out of the non-GAAP.
Speaker Change: Ron Fink, Doron Arazi, Ronen Stein, Ronen Stein
Ronen Stein: If you look back into comparative numbers, and that's really seen in our investor presentation. After consulting with our lawyers and allows for credit loss cannot be taken out from the non-GAF. And when we accounted for that, yes, it was late; our beginning of 2023, we had to keep it in our numbers, and you'll see it in our comparable numbers. So we need, when it's positive, we need to keep it also in the non-GAF. However, in our prepared comments, we mentioned specifically the results without this one airliner item. So do you think the street would be better off using the 11 cent number going forward or the 7 cent number for the baseline as opposed to the 11 cent for the simple reason that it sets up a very odd comparison and overinflates the 24 numbers, which makes the 25 numbers look a lot softer in terms of appreciation.
Speaker Change: And after consulting with our lawyers, an allowance for credit loss cannot be taken out from the non-GAAP .
Speaker Change: also in the non-game. However, in our prepared comments we mentioned specifically the results
Doron Arazi: So, do you think the street would be better off using the 11 cent number going forward or the 7 cent number for the baseline as opposed to the 11 cents for the simple reason that
Speaker Change: So, do you think the street would be better off using the 11 cent number going forward or the 7 cent number for the baseline as opposed to the 11 cent for the simple reason that.
Speaker Change: you know, softer in terms of appreciation. It seems to me that the seven cent number is probably the right number to be using.
Ronen Stein: It seems to me that the 7 cent number is probably the right number to be used. If, from my perspective, the normal course of business, if I need to use this term because we don't write off 12 million dollars every now and then, the normal course of business should be probably taking the 7 cents and not the 11 cents. And therefore, we are paying a lot of attention to this item, and you'll be able to see that in our investor presentation very clearly.
Speaker Change: If, from my perspective,
Speaker Change: The normal course of business, if I need to use this term, because we don't write off $12 million every now and then, the normal course of business should be.
Doron Arazi: And therefore, we are paying a lot of attention to this item, and you'll be able to see that in our investor presentation very clearly. OK.
Gunther Karger: Our next question comes from Gunter Kager. Please go ahead. Gunther?
Operator: Our next question comes from Gunther Kager.
Gunther Karger: So, yes, can you hear me now?
Gunther Kager: So yes, can you hear me now? Hi Gunther. How are you? Fine, thank you. And first of all, congratulations on excellent execution, and particularly, probably with the advice of Fink. My question is chipsets. You did mention this in your earlier comments, but on a competitive basis, do you see any other companies coming out with chipsets that would encroach on your expectations for your system?
Doron Arazi: Hi, Gunther. How are you? Fine, thank you. And first of all, congratulations on excellent execution, and I'm particularly hopeful, probably with the advice of Fink.
Speaker Change: Execution, and particularly and probably with the advice of Fink. My question is, chipsets,
Doron Arazi: My question is chipsets. You did mention this in your earlier comments, but on the competitive basis, do you see any other companies coming out with chipsets that would encroach on your expectations for your systems? So, thank you, Gunther. Thank you for this question. To the best of our knowledge, the Chinese probably have their own chips. And as for the rest of the competition, they usually use much linear chips. I am not aware, at least not at this point, of any development of a chip, of an ex-generation chip, other than Max Linear. And SI answered the previous question regarding the chip.
Doron Arazi: So thank you, Gunther, and thank you for this question. To the best of our knowledge, the Chinese probably have their own church.
Speaker Change: To the best of our knowledge,
Speaker Change: The Chinese probably have their own chief.
Doron Arazi: And as for the rest of the competition, they usually use Max Linear chip. I am not aware, at least not at this point, of any development of a chip, of a next generation chip other than MaxLinear. And as I answered the previous question regarding the chip, we don't really know where MaxLinear is in this development. We still believe that we have probably two to three years' advantage with our own chip ahead of the competition.
Ronen Stein: and Ronen Stein.
Speaker Change: And as I answered the previous question regarding the chip, we don't really know where MaxLinear is in this development.
Doron Arazi: We don't really know where Max Linear is in this development. We still believe that we have probably two to three years' advantage with our own chip ahead of the competition.
Doron Arazi: Thank you. And to follow up on that, do you still anticipate some of your products coming later this year to incorporate your new chip?
Doron Arazi: Thank you, and the follow-up on that. Do you still anticipate some of your products coming on later on this year to incorporate your new chip? So, as I said, we will probably start seeing the chip being used, especially from commercial deployments during 2025. And that hasn't changed.
Speaker Change: Thank you. And to follow up on that, do you still anticipate some of your products coming on later on this year to incorporate your new chip?
Doron Arazi: So, as I said, we will probably start seeing the chip being used, especially for commercial deployments, during 2025, and that hasn't changed.
Speaker Change: So, as I said, we will probably start seeing the chip being used especially for commercial deployments during 2025.
Speaker Change: and that hasn't changed.
Doron Arazi: Thank you.
Unidentified Analyst: But thank you. Thank you very much. Sure. Thank you.
Speaker: Thank you very much. Sure. Thank you.
Speaker Change: Thank you. Thank you very much. Sure. Thank you.
Robert Marson: The next question will come from Robert Marson of TV Partners.
Operator: The next question will come from Robert Marson of TV Partners. Please go ahead, Robert. Thank you.
Speaker Change: The next question will come from Robert Marston of TB Partners.
Robert Marson: Please go ahead, Robert. To follow up on that, Theron, saying that you're going to ship commercially is one thing, but 2% of your product versus 30% of your product is a different thing. Are the shipments using that to next year going to be material?
Unidentified Analyst: To follow up on that, Doron, saying that you're going to ship commercially is one thing, but 2% of your product versus 30% of your product is a different thing. Are the shipments using Neptune next year going to be material?
Robert Marston: To follow up on that, Doron, saying that you're going to ship commercially is one thing, but 2% of your product versus 30% of your product is a different thing. Are the shipments using Neptune next year going to be material?
Doron Arazi: So, first of all, I want to make sure everybody is on the same page, because it looks to me that we need to put the chip development and commercialization, sorry for that, in context. No product. It's not the first chip that Theron has developed, and it's probably not going to be the last. We believe that this chip will create, once again, a significant advantage over the competition for a few years. Would that change the company totally? No. And therefore, we do expect to see significant business, but the implementation of such chip is gradual. It's not going to make the numbers suddenly become 50 percent growth.
Doron Arazi: So first of all, I want to make sure everybody is on the same page, because it looks to me that we need to put the cheap development and commercialization, sorry for that, in context. Look, it's not the first chip Ceragon has developed. And it's probably not going to be the last.
Robert Marston: because it looks to me that we need to put the...
Speaker Change: Look, it's not the first chip Ceragon has developed.
Doron Arazi: We believe that this chip will create once again a significant advantage over the competition for a few years. Would that change the company totally? No, and the other four.
Speaker Change: and it's probably not going to be the last chip.
Speaker Change: We believe that this chip will create, once again,
Speaker Change: a significant advantage over the competition for a few years.
Doron Arazi: We do expect to see significant business, but the implementation of such a is gradual. It's not going to make the numbers suddenly become 50% growth. If someone thinks that these are the numbers we should talk about, or 5-0.
Speaker Change: No!
Speaker Change: Significant Business
Speaker Change: but the implementation of such a
Doron Arazi: If someone thinks that these are the numbers we should talk, or five zero, I think that next year we will start seeing a business. I'm not sure to what extent the business is going to be very significant. Let's not forget, the first product is going to be at least 25 gigabit per second in the box. This is going to be the first version. Based on my experience in the industry now, the hardly need the most of the use cases are up to 10 gigabit per second. And the four while there is an interest, we start seeing the impact gradually.
Doron Arazi: I think that next year we will start seeing business. I'm not sure to what extent the business is going to be very significant. Let's not forget.
Doron Arazi: The product, the first product, is going to be at least 25 gigabits per second in a box. This is going to be the first version. Based on my experience in the industry now, there's hardly any need for it; most of the use cases are up to 10 gigabits per second. And therefore, while there is an interest, we start seeing the impact gradually.
Speaker Change: is going to be at least 25 gigabit per second in the box. This is going to be the first version.
Speaker Change: Based on my experience in the industry now...
Speaker Change: and the four why there is an interest
Doron Arazi: Okay, so a gradual ramp in 25 and more impact on the revenue and income statement in 26 and 27. Exactly.
Unidentified Analyst: Okay, so a gradual ramp-up in 25 and more impact on the revenue and income statement in 26 and 27. Exactly. Okay, excellent. Thank you.
Speaker Change: Okay, so a gradual ramp in 25 and more impact on the revenue and income statement in 26 and 27. Exactly. Okay, excellent.
Speaker: Okay, excellent.
Speaker: Thank you. Thanks.
Speaker: Okay, there are no further questions.
Operator: Okay, there are no further questions. I would like now to hand over the call to Doron for closing remarks.
Doron Arazi: I would like now to hand over the call to Doron for closing remarks.
Speaker Change: Okay, there are no further questions. I would like now to hand over the call to Doron for closing remarks.
Doron Arazi: Ceremon's competitive position continues to improve, and we continue to deliver on our strategic plan for growth and profitability. Our new products and solutions are gaining meaningful traction, and our wins and private networks are encouraging. We believe that our new products and solutions, as well as our roadmap, including the Neptune-based future products, are positioning us for long-term growth, as they are expected to result in increasing market share in our space.
Doron Arazi: Ceragon's competitive position continues to improve, and we continue to deliver on our strategic plan for growth and profitability. Our new products and solutions are gaining meaningful traction, and our wins in private networks are encouraging. We believe that our new products and solutions, as well as our roadmap, including the Neptune-based future products, are positioning us for long-term growth as they are expected to result in increasing market share in our space. I look forward to updating you further on our next quarterly call. Have a good day, everyone!
Doron Arazi: Our new products and solutions are gaining meaningful traction and our wins in private networks are encouraging.
Doron Arazi: We believe that our new products and solutions, as well as our roadmap, including the Neptune-based future products, are positioning us for long-term growth as they are expected to result in increasing market share in our space.
Doron Arazi: I look forward to updating you further on our next quarterly call.
Doron Arazi: I look forward to updating you further on our next quarterly call. Have a good day, everyone.
Speaker: Have a good day, everyone.
Speaker: Good Bye.