Q3 2024 Ceragon Networks Ltd Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Saragon Network Earnings Call.
Our presentation today will be followed by a Q&A session, at which time, if you wish to ask a question, you will need to raise your hand using your mobile or desktop application, or press asterisks on your telephone keypad and wait for your name to be announced. I must advise you that today's call is being recorded.
Speaker Change: I'd like to hand the call over now to our first speaker, Rob Fink, Head of Investor Relations. Rob, please go ahead.
Rob Fink: Thank you, operator. Good morning, everyone. Thank you for joining us today.
Rob Fink: Hosting today's call is Doron Arazi, Saragon's Chief Executive Officer, and Ronen Stein, Chief Financial Officer.
Speaker Change: Before we start, I would like to remind everyone that certain statements made on this call, including projected financial information and other results could contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Speaker Change: Forward-looking statements are statements that are not subject to historical facts.
Speaker Change: Such statements reflect current expectations and assumptions of Saragon's 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.
These risks and uncertainties could affect results of operations.
Speaker Change: Such risks are discussed in detail in Saragon's most recent annual report on Form 20-F as published on March 21, 2024, as well as in other documents that may subsequently be filed by Saragon from time to time with the Securities and Exchange Commission.
Speaker Change: Forward-looking statements relate to the date initially made, and they are not predictions of future events or results, and there can be no assurances that they will prove to be accurate, and Saragon undertakes no obligation to update them.
Speaker Change: Seregon's public filings are available on the Securities and Exchange Commission's website at scc.gov and may also be obtained from Seregon's website at seregon.com.
Speaker Change: Also, today's call will include certain non-GAAP numbers. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier this morning, which is posted on the Investor Relations section of Saragon's website.
Doron Arazi: With that, I will now turn the call over to Doron. Doron, the call is yours.
Thank you, Rob, and good morning, everyone.
Doron Arazi: Saragon delivered another strong quarter in the third quarter of 2024, benefiting from continued execution and from robust demand, especially in India.
We achieved our target for the growth.
Doron Arazi: and profitability and narrowed our full year outlook, maintaining the midpoint but putting
A finer point on the range.
Increasingly, diversification is playing an important role in our success.
The geographical diversification has already proven itself this quarter.
Doron Arazi: while we also make progress in diversifying our business into private network business.
Doron Arazi: For example, in this quarter, we added four new private network customers to our customer base.
Doron Arazi: and since the beginning of the year we have penetrated 16 new private network customers representing approximately 11.5 million dollars in incremental bookings from customers in the private networks sector.
We are also making good progress in our product roadmap.
Doron Arazi: For example, we have generated meaningful orders from our new IP50-EX and increased interest in our upcoming IP50-EX Premium that is about to be released shortly.
Doron Arazi: This product is intended to use millimeter-wave frequency over a much longer distance, exploiting the high-capacity advantage of these frequencies and reducing total cost of ownership.
Doron Arazi: We have started a soft promotion of our first Neptune-based product, the IP100E, and have already seen very positive feedback.
Doron Arazi: The first version of this product is intended to deliver 25 gigabit per second capacity in a single box with a compelling total cost of ownership profile.
Doron Arazi: We intend to present the first units of this product at the Mobile World Congress.
Doron Arazi: We have recently started multiple new POCs for our network digital twin and the initial feedback is very positive.
Doron Arazi: I'd now like to provide an overview of our Q3 highlights by region.
Doron Arazi: 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 near term.
Rommel Dionisio, Gunther Karger,
In North America, revenue was $24.5 million.
Doron Arazi: In the private network segment, we have built a very strong pipeline and are working to leverage our completed project to build our brand in this domain.
In fact,
Doron Arazi: Our success with the City of Cincinnati continues to be a case study deployment for us and the level of satisfaction is also driving proactive references from existing customers to new potential customers, adding to our funnel of opportunities.
Doron Arazi: We are also leveraging Ciclo Strong Brand in the enterprise security domain for attaining more business.
Doron Arazi: Our bookings for private networks declined in the quarter compared to the prior quarter.
Doron Arazi: We believe this was a timing factor associated with seasonality and longer sale cycle and not a demand factor as supported by the healthy pipeline we have built.
Doron Arazi: We anticipate private networks playing an increased role in our growth going forward.
Doron Arazi: In communications service provider segment, Q3 has demonstrated some slowdown in the ordering pace primarily from T1 customers, similar to the dynamic some of our peers have mentioned.
The End
Doron Arazi: Following multiple discussions with our main customer, we believe this was a short-term phenomenon relating mostly to timing of network build over the year.
Doron Arazi: We are off to a much stronger start in the fourth quarter related to bookings.
Doron Arazi: As we have received a substantial value of orders which supports our current assessment.
Doron Arazi: In India, revenue was $50.5 million, an all-time record quarter for Saragon.
Doron Arazi: We have been shipping and deploying equipment related to both our long-standing customers as well as the new customers we won in Q4 2023.
Doron Arazi: These deployments are supporting both customers in their expansion of 4G and 5G networks.
Doron Arazi: In addition, due to our technological strength and market leader position,
Doron Arazi: We are further growing our business in India and diversifying to another customer that recently announced a multi-billion dollar project for upgrading its network to 4G and 5G.
Doron Arazi: Since Q3, we have received more than $18 million in orders from this customer for microwave products, further increasing substantially our market share.
Doron Arazi: We expect more orders from this customer in the coming quarters for our microwave as well as our eBent solutions.
Rommel Dionisio, Gunther Karger,
participating in the India Mobile Congress
Doron Arazi: We are encouraged by the increasing level of traction we are receiving in India and see large opportunities for 2025.
Doron Arazi: We believe that we will see much higher demand for Eben products in 2025 and our IP50-EX advanced
Doron Arazi: provides capabilities that fit the specific needs of the Indian market so we are very well positioned to capitalize on incremental growth opportunities.
Since there are multiple discussions about the general business environment,
I would like to share with you our observations.
Doron Arazi: Indeed, we have seen a slowdown in certain public network domains outside of India.
Doron Arazi: We believe this is primarily driven by the global economy and the level of demand for 5G by network users.
Doron Arazi: In addition, in Latin America, Africa, and some countries in Asia-Pacific, Chinese competition is very fierce in these regions, driving business softness there.
Doron Arazi: In these regions, we are increasing our focus on the private network segment where there is lower Chinese presence.
Doron Arazi: We also see an interesting opportunity in the current market conditions as multiple service providers are now focusing on fixed subscriber growth and using wireless technology with 5G high frequencies.
Doron Arazi: We are in multiple discussions with large operators exploring opportunities to leverage CCLU's point-to-multipoint technology to address this increasing need in other frequencies.
Speaker Change: With that, I'll turn the call over to Ronen Stein, our CFO, to discuss the results in more detail.
Ronen, over to you.
Thank you, Doron, and good morning, everyone.
Speaker Change: Doron spoke to our revenue diversification, an important strategic point, and he also mentioned our ability to extract operating leverage from our business model.
Speaker Change: I'd like to highlight the operating leverage, as we drove increasing operating income even with modest gross margin compression.
Speaker Change: To help you understand the results, I will be referring primarily to non-GAAP financials.
Speaker Change: For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures, we refer you to today's press release.
Let me now review the actual results.
Speaker Change: Revenues were $102.7 million, up 17.7% from $87.3 million in Q3 2023.
Speaker Change: Our strongest regions in terms of revenues for the quarter were India and North America with $50.5 million and $24.5 million respectively.
Speaker Change: Our third strongest region in terms of revenues was EMEA with $14.9 million.
and Ronen Stein.
Speaker Change: We had three customers in the third quarter that contributed more than 10% of our revenues.
© The Bulletproof Executive 2013
Speaker Change: Gross profit for the third quarter on a non-gap basis was $35.2 million, an increase of 15.9% compared to $30.4 million in Q3 2023.
Speaker Change: Our non-GAAP gross margin was 34.3%, compared with gross margin of 34.9% in Q3 2023.
Speaker Change: We continue to achieve high growth margins despite the change in regional revenue mix.
Speaker Change: We achieved this by increasing revenues and recognizing continuous improvement in product costs.
Speaker Change: We also maintained control over our fixed costs, all of which had a positive effect.
Speaker Change: Our gross margins may continue to fluctuate from quarter to quarter due to changes in product and regional mix.
as for operating expenses.
Speaker Change: In general, operating expenses in 2024 fully include the impact of the SEC acquisition at the end of 2023, and thus impact the comparison to 2023 operating expenses.
Speaker Change: Research and development expenses for the third quarter on an on-gap basis were $8.6 million, up from $7.3 million in Q3 2023.
Speaker Change: As a percentage of revenue, our R&D expenses were 8.4% in the third quarter compared to 8.3% in the third quarter last year.
Speaker Change: Sales and marketing expenses for the third quarter on an on-gap basis were $10.4 million, up from $9.7 million in Q3 2023.
Speaker Change: As a percentage of revenue, sales and marketing expenses were 10.1% in the third quarter compared to 11.1% in the third quarter last year.
Speaker Change: General and administrative expenses for the third quarter on a non-gap basis.
were $0.4 million compared to $5.5 million in Q3 2023.
Speaker Change: As a percentage of revenues, G&A expenses were less than 1% in the third quarter compared to 6.2% in the third quarter last year.
Speaker Change: of approximately $5.1 million benefit related to payments on account of a debt settlement agreement reached with a South American customer for which we accounted a credit loss at the end of 2022.
This payment reduced our G&A expenses in the quarter.
Speaker Change: I'd note that CICLU has been successfully integrated in the first half of 2024 and therefore we have not recorded any integration costs related to CICLU in our GAP operating expenses.
© The Ultimate Parody Site!
Speaker Change: Operating income for the third quarter on a non-gap basis was $15.8 million, compared with $8 million for Q3 2023.
Speaker Change: As a percentage of revenue, non-GAP operating income was 15.4% in the third quarter compared to 9.2% in the third quarter last year.
Speaker Change: Without the approximately $5.1 million debt collection benefit included in the GNA, non-gap operating income would be $10.8 million and as a percentage of revenues 10.5%.
Speaker Change: financial and other expenses for the third quarter on an on-gap basis
were 1.2 million dollars.
Speaker Change: positively impacted from favorable foreign exchange changes and to a lesser extent reduction in interest expenses as we continue to strengthen our balance sheet.
Speaker Change: Our tax expenses for the third quarter on an on-gap basis were $0.6 million.
Speaker Change: Net income for the third quarter, on an on-gap basis, was $14.1 million, or $0.16 per diluted share, compared to $5 million, or $0.06 per diluted share, for Q3 2023.
and Diluted Share.
and For Barashit.
Speaker Change: Our cash position at the end of the third quarter was $34 million, compared to $28.2 million at the end of 2023.
Speaker Change: Short-term loans were $25.2 million compared to $32.6 million as of December 31, 2023.
Speaker Change: Therefore, we shifted to net positive cash of $8.8 million compared to negative net cash position of $4.4 million at December 31, 2023.
Speaker Change: We generated significant cash in the quarter and continue to reduce our debt as a result.
Speaker Change: We believe we have cash and facilities that are sufficient for our operations and working capital needs.
Speaker Change: Our inventory at the end of Q3 2024 was $59.8 million, down from $68.8 million at the end of December 2023.
Speaker Change: The reduction is mainly related to our continued efforts since 2023 to streamline inventory levels following the improvement in components availability and substantial shipments to India.
Speaker Change: We continue to monitor inventory levels, taking into consideration the improvements in the availability of components and expected changes in demand.
Speaker Change: Our trade receivables at the end of Q3 2024 are $121.6 million.
Speaker Change: as compared to $104.3 million at the end of December 2023.
Our DSO now stands at 118 days.
S4 or Cash Flow.
Speaker Change: Net cash flow generated by operations and investing activities in the third quarter of 2024 was $10.7 million.
Speaker Change: We are reiterating the midpoint of our full-year outlook. For 2024, we expect revenues of $390 million to $400 million, representing growth of 12% to 15% compared to 2023.
This guidance includes the contribution from CICLU.
Speaker Change: You will note that we have narrowed the expected range, increasing the bottom end of the range by $5 million and decreasing the top end by a similar amount.
leaving the midpoint unchanged.
Speaker Change: This reflects our visibility with just two months left in the year.
Speaker Change: Non-GAAP operating margins are targeted to be at least 10% at the midpoint of the revenue guidance.
Speaker Change: As a result, we expect increased non-gap profit, representing another record year, and positive free cash flow for the full year of 2024.
Speaker Change: With that, I now open the call for your questions. Operator?
Speaker Change: Thank you. To ask a question, please raise your hand using your mobile or desktop application or press star 9 on your telephone keypad and wait for your name to be called.
Our first question comes from Scott Searle from Roth Capital.
Scott, please go ahead.
Hey, good morning, good afternoon. Thanks for taking my questions.
Doron, Ronen, congrats on the quarter. Nice job.
Maybe to just start off on India, a record quarter.
Speaker Change: Doron, I'm wondering if you could talk a little bit about
How
Speaker Change: The outlook is shaping up for India as you look into the fourth quarter, and I know it's a little bit early, but your maybe initial thoughts on 2025 in terms of the sustainability of that kind of strength, you know, particularly, it sounds like, you know, you've got that third major customer start to ramp up.
Speaker Change: Yeah, so I think that we are very well positioned for another strong year.
in India.
Speaker Change: for a few reasons. First of all, we are able to diverse our business between three customers or three major customers and obviously we continue to speak with other customers.
Speaker Change: and on top of that the situation in India nowadays is that while maybe on the classical 5G mobility part
They don't see yet a very strong ROI.
Speaker Change: Most of the customers, at least we are working with, are focusing on, first of all, enhancing their networks to 4G.
Speaker Change: and are looking for more use cases that can help them generate more revenue, primarily in the fixed wireless.
Speaker Change: domain and that requires a more capacity capabilities and and this is why we believe that 2025 can be another strong year for us
And we obviously are talking with all these customers.
Speaker Change: and they're getting some initial indications and it looks like indeed they plan to continue investing based on the strategy that I was just trying to describe in like two sentences.
Doron Arazi: So Doron, just to follow up, so in terms of higher capacity that means more e-band which you guys are pretty well positioned for?
Doron Arazi: Yeah, so to be more precise, at this point the vast majority of our business is in the microwave.
Doron Arazi: Their network to 4G and obviously to cover some uncovered areas
Doron Arazi: What we see now is that a demand for E-BEND is increasing and we believe that on the second part of 2025 we will see a more deployment of E-BEND.
Great
Speaker Change: Very helpful. Maybe moving on to the private network side, it seems like demand there continues to be pretty strong. I'm wondering if you could talk about, from a vertical market standpoint, where you're seeing some of that demand.
Speaker Change: If you could clarify a little bit, it sounds like, Ciclu, you might be taking it from V-band to other frequencies. I just wanted to clarify that, you know, with your opening remarks, I was thinking more, you know, in the 28 to 39 gig range is kind of what you're talking about. I was wondering if you could provide any clarity on that front.
Yeah, so let's start with the second question.
Speaker Change: As I explained in my previous remarks and also just right now to the previous question,
Speaker Change: We see a trend in, I would say, many T1 operators around the world that try to leverage
towards fixed wireless access. It looks like.
Speaker Change: that of a viable solution, and many operators are trying to divert the usage of these frequencies into helping them with fixed wireless offerings.
Speaker Change: Now, if you look at the solutions that are in the market nowadays, the 5G standard solutions are very expensive.
Speaker Change: And it still, or it doesn't work at least for some of the operators.
Speaker Change: and it doesn't make a reasonable ROI for them to go for the standard 5G. Maybe this will change down the road.
Speaker Change: the cost dramatically. We believe that the technology that was developed by Ziclu for the V-Band point-to-multipoint
could be, so to speak, converted
Speaker Change: into solutions at the 26 to 39 or 28 to 39.
Speaker Change: frequencies and as we speak we are actually in multiple discussions with different operators to see whether this could be a viable solution for them.
Now, as to your first question about the private networks...
Speaker Change: And at the same token, the demand for more capacity for enhanced private networks is critical. One is defense. The second one is, generally speaking, public safety.
And third one is energy.
Speaker Change: and the last one is a government and state solutions that need private networks.
Speaker Change: We feel that there is a demand in all of these segments that is strong enough.
Speaker Change: For each and everyone, there is a reason why it is strong, but generally speaking, these are the main focus areas for us.
And lastly, if I could, the guidance on the year.
Speaker Change: you know, kind of extrapolating that into the fourth quarter implies flattish to up 10%. I'm wondering if you could just give us some thoughts in terms of what the swing factors are to either end of that range. And lastly, use of the cash. You're in a luxury position now of generating a fair amount of cash. How are you thinking about redeploying that? Thanks.
So,
I will start by...
by saying that
The fourth quarter revenue results is primarily dependent on delivery.
Speaker Change: which means to what extent our customers will stick to the plan.
to basically accept our products.
Speaker Change: Sometimes, they have their own decisions that are driven by end year on their side.
Speaker Change: and therefore there could be some fluctuations. We had the similar situation in the past.
Speaker Change: So we are very careful, but I would say that we have the backlog, we have the orders, and it's more about the timing of delivery that can make the numbers either on the high end or on the low end of the range.
In terms of accumulating cash,
Speaker Change: Look, first of all, if we continue with this growth, obviously the need for more working capital is taken into account.
Speaker Change: Secondly, let's not forget we're still leveraged by certain dollar value of loans.
Speaker Change: And with the interest that we have today, this is a burden.
Speaker Change: that if we can reduce it to the minimum possible, we can just create additional few cents on an annual basis.
to our shareholders.
and improve our improve our
results.
Obviously, we continue to look into acquisition opportunities.
Obviously, we are talking about small opportunities.
Speaker Change: And if we find a right match, like the C-Clue case that is proven to be quite successful,
Speaker Change: Great. Doron, Ronen, thanks so much. Great job on the quarter and look forward to seeing you guys next week in New York. Thank you so much, Scott. Thank you, Scott.
Speaker Change: Our next question is from Ryan Coons from Needham and Company. Ryan, please go ahead.
Hi, can you hear me okay?
Yes. Hi, Ron. Hi.
Speaker Change: Great, thanks for the question. I wanted to follow up on your private network.
Speaker Change: opportunity there. Can you speak a little more about the channel, how that may be different, what sorts of channels you're maybe lighting up to access these new markets? I assume primarily
Speaker Change: in North America, and whether these channels will have any impact on your, you know, cost of sales as it relates to your model as you grow the private network business. Thank you.
Speaker Change: Sure, so first of all, our go-to-market strategy is primarily based on sales people.
who are basically chasing direct deals.
Speaker Change: Okay, so this is one part of it and generally speaking we have already made this shift
Speaker Change: and added the firepower in terms of salespeople that we thought is needed in 2024. So this is already part of our sales and marketing.
Speaker Change: We do use, and we intend to maybe even use more, some business development consultants.
to help us with the penetration.
Speaker Change: I don't think it's going to change dramatically the sales and marketing expenses.
Speaker Change: And obviously, there's multiple deals that are by far much smaller. And we have a very strong indirect business in North America, but also outside North America with very valuable distributors.
Speaker Change: and these are, I would say, additional stream or vector to approach the market specifically for the smaller deals.
Scott, that's really helpful and, you know,
Speaker Change: For these larger deals that you're direct on, you know, what's the kind of range of the size of deals you think that you typically are pursuing direct there? Usually, it will be a few million dollars deal. It can start
small and developed. We've seen this kind of situation where
Speaker Change: You start with a couple of hundreds of thousands of dollars and then you expand and we have also seen situations where you win an RFP
Speaker Change: for a few million dollars and then there's a change request in addition and suddenly numbers could be higher by 50% and even more.
Speaker Change: But the typical deal would probably be low-end, single digit of million dollars.
Speaker Change: Okay, that's super helpful. And maybe a follow-up I could around gross margins and your internal, you know, silicon development there. Any puts or takes we should think about as we model, you know, forward into 25 in terms of your FAB costs or, you know, FPGAs, etc.?
I don't think that it will make a big change
Speaker Change: to a gross margin in 2025. I think that in 2025, the volume of selling this product, based on the demand that we see for 25 gig product,
Speaker Change: is not going to be that high. I believe that towards the second part of the year
Speaker Change: We start seeing a more significant ramp-up of orders So all in all I don't think we at this point need to model any significant change in gross margins
Speaker Change: That's fair. Great. That's all the questions I had. Thanks for that. Thank you so much.
Our next question comes from Rommel Dionzo from HS Capital.
Please go ahead.
Thanks. Can you hear me, Doron?
Speaker Change: Yes. Hi, Romain. How are you? Great. Thank you very much. Doron, now, you know, over the last few years, you've targeted, you know, growth in managed services and private networks and really, you know, seen a great job as a result of your efforts. As I'm increasingly hearing from you, I think, from our recent conversations, the potential that you see in MillimeterWave and obviously with the new products, I know the IP100 is coming, I wonder, though, if you could just give us a kind of longer term
Speaker Change: outlook that you have for that business and then how you plan to target that whether it's product portfolio, the opportunity that you see in Millimeter Wave here over the next several years, the growth in that segment of the market. I wonder if you could just give us a little more of your thoughts on that, please.
Speaker Change: Yeah, if you look at the analysts' reports that are covering our space,
They project double-digit growth.
Speaker Change: is not going to grow that much, it's more of a low single digit.
Speaker Change: And this is why we are putting so much focus on millimeter wave.
Speaker Change: that will be very compelling in terms of capacity versus total cost of ownership. We can probably accelerate.
Speaker Change: our growth in this particular part of the market and take a bigger market share. And by that, we can probably outpace...
Speaker Change: the low single-digit growth that is expected for the market as a whole. So, that's the strategy behind focusing so much on milliwatt-a-wave products and solutions.
Speaker Change: And how should we think about the long-term margin opportunity also from that businesses that theoretically grows as a percentage of total revenues over time? Thanks.
Speaker Change: Look, that obviously depends on the competition. I, at this point, I believe that our IP50EX series and the upcoming 100E
Will
Speaker Change: put us in a position where we can increase our gross margins.
slightly relative to the current margins we have seen.
Speaker Change: And obviously, if the competition catches up, it's always something that we are taking into account.
Speaker Change: It doesn't change the range that we said a few times recently that our long-term
Speaker Change: objective is to still be in between the 35% to 38% gross margin. And the fluctuation will probably be primarily due to the regional mix.
as we've seen for example in in this last quarter.
Great, that's very helpful. Thank you, Doron.
Speaker Change: Our next question comes from Robert Marcin from TB Partners. Robert, please go ahead.
Speaker Change: Congratulations on an excellent quarter, Dron, especially considering how challenging the end markets have been.
Thank you so much, Robert. Let's talk about this.
Rob Fink: Ciclu Opportunity and Fixed Wireless. I know it's very early and you're still testing the technology, but if some Tier 1 operators around the globe really want to penetrate, you know, a fixed wireless approach...
for Incremental Broadband, I guess, you know, I guess.
Rob Fink: Someone's doing it here in the U.S. with, as you said, very expensive cellular 5G technology.
Rob Fink: a pink company, let's say. How big could that tan be over a five-year period? Is that a $50 million opportunity or would that be a $500 million opportunity? Can you give us some sense of, if this thing sort of takes off, how big could it be?
Well...
Rob Fink: Knowing the nature of the beast and knowing the customers that we are talking with
Rob Fink: I can think about anything between 50 and 150 million dollars over two to three years.
Speaker Change: That would be a nice addition to our growth rate. Thanks for sizing that for us. As an opportunity, early in the process. On a different subject, there's supposedly a lot of money around for
Speaker Change: I guess broadband, rural broadband in the U.S., tens of billions of dollars.
Speaker Change: It seems like none of it ever got spent, despite the fact that the Democratic administration tried to spend themselves out of money.
Speaker Change: and perhaps the more government efficiency that money gets spent and not just for rural fiber but for rural broadband and we get a significant bump in the U.S. business at some point in our lifetimes from these subsidies that have been out there and unused forever.
Robert, I'm not a politician.
Speaker Change: and for me as an outsider to North America or to the U.S. I see, I read different publications
Speaker Change: I don't know what Trump is going to do. Maybe you know better than I.
Speaker Change: is indeed something that he will be taking care of. It could increase the cost of building infrastructure.
Speaker Change: So, almost by definition, and that's a theory that I'm sharing with you, it's my own theory, as a result of that fiber will become even less economically viable solution as opposed to wireless. That could be an opportunity.
Maybe with Trump's approach
Speaker Change: to be more, so to speak, to give more freedom in terms of the decision makers by the investors, maybe the strict guidance to use primarily fiber
Speaker Change: decide which technology you want to use in order to make your ROI in the best possible
Speaker Change: and that can obviously change and move the needle towards more wireless transport as opposed to fiber. But all these things are theories and I assume you know better than I what Trump is going to do.
Speaker Change: I don't know if Trump knows what he's going to do.
Speaker Change: Okay, last question. We will see revenue from the Neptune-related products start to scale in 2026, correct?
Speaker Change: Yeah, look, I hope to start seeing revenue on the second part of 2025, but this is my hope.
Speaker Change: And when looking into 2025 and now working on the annual operational plan...
into this product in terms of revenue.
Speaker Change: I guess my question is, who's going to buy it with the profile of your client tell right now?
Speaker Change: Which, is that a tier one product for U.S. and Europe?
you know, three, four, five major new customers.
So
Speaker Change: I mentioned in my prepared comments that we did some sort of soft promotion with certain customers around the globe. Most of them are our customers but some of them are our prospects.
Speaker Change: I think that it is a viable solution for T1 operators in North America.
Speaker Change: for countries where maybe the width of the channel is not that big but they are still in a situation where they want to increase
Speaker Change: the capacity using even solution. So maybe they will not get to 25 gigabit per second because of the channel bandwidth, channel width, but they can, they will be still able to multiple.
The current width...
Speaker Change: and therefore I can see viable opportunities across the globe and yes it's probably going to start with the T1 operators.
Speaker Change: All right, thank you. And actually, let me get one more in. What's the odds of you doing a small bolt-on in the private network arena in 2025?
Handicap that for me, buddy.
Speaker Change: There is always a chance. I want some 10% chance or 70% chance. Well I'm not in the business of statistics.
Okay.
Thank you.
Speaker Change: Appreciate all your responses and congratulations again on the SolarCort. Thank you, Robert. Appreciate it.
Speaker Change: To ask a question, please raise your hand using your mobile or desktop application and wait for your name to be announced.
The next question comes from Peter Farber.
Speaker Change: Hai Gunther I wish to see my book I wish to see it I wish to see a treat
Can you hear us?
Rommel Dionisio, Gunther Karger,
Hi. I'm.
Are there no further questions?
Oh
Speaker Change: Can you hear me now? Yes, Gunther. Now we can hear you. I'm sorry, before I went to go out to the North American market again, and again, focused on the administration change that you already addressed. But with regard to the defense sector, do you see any meaningful change in that area?
Com.
I would say clearances
Speaker Change: to be able to sell there. Now, on the one hand, we are selling already to different defense units across the world.
Speaker Change: and in some of the cases we are making or doing this clearance process using the relationship between the Israeli Ministry of Defense
and the other country's Ministry of Defense.
Speaker Change: I'm not sure if this is a viable or easy, relatively easy
Speaker Change: a way to do these kind of things with the American defense. It looks to me that it's much more complex, but I can assure you that definitely if we find some sort of an avenue
Speaker Change: To get in there, I think that we have very compelling technologies and some very recent use cases that could be of an interest.
to the American military.
Doron Arazi: Thank you, Doron, and continue good luck. Thank you so much, Gunther.
The End
Speaker Change: Ceragon continues to focus on its growth initiatives primarily millimeter wave products, private networks, and managed services, and improves its strategic position in the market.
Speaker Change: We are adding new customers each quarter and growing our addressable market.
short-term fluctuations in buying patterns
in the U.S. likely
Speaker Change: related to election concerns have not diminished our current outlook and we are making up for these fluctuations and the headwinds in other regions by our strong business in India.
Speaker Change: With our healthy funnel of opportunities, we expect that the ramp-up in our private networks business, especially in the regions suffering from headwinds, will help resume growth in the longer run.
Speaker Change: Our new products and solutions, as well as Neptune-based future products, are gaining meaningful traction and positive feedback, respectively.
Speaker Change: These market signals together with our long-term product roadmap are building our confidence in long-term growth as they are expected to result in increasing market share in our space.
Speaker Change: I look forward to updating you further on our next quarterly call. Have a good day, everyone.