Q2 2025 Ceragon Networks Ltd Earnings Call
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Ronen Stein: India, a clear demonstration of the operational strength, cross-discipline, and resilience we have built into CERAGON. At the same time, our broader momentum continues to build. In fact, the second quarter was an encouraging period for CERAGON, with our differentiated technology demonstrating meaningful capabilities that we believe outpaces our competitors. These durable competitive advantages are actively positioning us for new opportunities and use cases that can drive incremental revenue and market share gains across multiple geographies. Customer needs and market trends are aligning with our technological roadmap. We are proving our value through field trials and proof-of-concept engagements, and this is beginning to fuel potential growth in our pipeline and bookings in real time. This dynamic is especially evident in North America, where our recently introduced technologies are proving applicable to both service providers, carriers, and private network operators alike.
You have joined the meeting as an attendee and will be muted throughout the meeting. India, a clear demonstration of the operational strength cause discipline and resilience. We have built into seragon.
At the same time, our broader momentum continues to build.
In fact, the second quarter was an encouraging period for seragon with our differentiated technology demonstrating meaningful capabilities that we believe outpaces our competitors.
This durable, competitive advantages are actively positioning us for New Opportunities, and use cases that can drive incremental revenue and market share gains across multiple geographies.
Customer needs and market, trends are aligning with our technological roadmap.
We are proving our value through field, trials, and proof of concept engagements. And this is beginning to fuel potential growth in our Pipeline and bookings in real time.
Ronen Stein: In fact, during the second quarter, we secured a multimillion-dollar project as the preferred vendor for a new major Tier 1 carrier in North America. This project leverages CERAGON technology to introduce a new product, demonstrating our ability to deliver differentiated value through capabilities that, in our opinion, our competitors are far from introducing. We are also expanding interest in such products across North America and other regions. While still early, we believe this new carrier engagement, as well as this new product, could unlock substantial new business and contribute to incremental share gains with other service providers in one of the world's most strategic communications markets. Second, we are cultivating significant increased interest in our point-to-multipoint solution. This technology has been demonstrated and validated in multiple proof-of-concept projects, both in North America and Europe, serving a wide range of use cases across private networks and CSP domains.
This Dynamic is especially evident in North America, where our recent introduced Technologies are pro proving applicable to both service providers carriers and private Network operators alike.
In fact, during the second quarter, we secured a multi-million dollar project as a preferred vendor for a new major Tier 1 carrier in North America.
This project, leverages clue technology to introduced a new product, demonstrating our ability to deliver the differentiated value through capabilities. That in our opinion are competitors are far from introducing
We are also expanding interest in such products across North America and other regions.
well, still early, we believe this new carrier engagement as well as this new product could unlock substantial new business and contribute to incremental, share gains with other service providers, in 1 of the world's most strategic Communications markets,
Second we are cultivating significant increased interest in our point to multi-point solution.
This technology has been demonstrated and validated in multiple proof of concept projects, both in North America and Europe.
Ronen Stein: These successful evaluations have enabled us to advance into more detailed discussion with potential customers and discuss early-stage commercial engagement. The point-to-multipoint platform acquired through our CERAGON transaction continues to prove its value, particularly in private network applications, but increasingly with other customers as well. Given Ciclo's financial position at the time of acquisition, we expected to address areas of underinvestment, and we acted quickly to stabilize and strengthen the product. We are now beginning to see the returns from that effort, with growing momentum and expanding business potential. Importantly, the point-to-multipoint technology is particularly well suited for smart city applications. As a chosen partner, we are currently involved in a multi-year project in one of Latin America's largest cities under a connectivity as a service model.
Serving a wide range of use cases across private networks, and CSP domains.
This successful evaluations have enabled us to advance into more detailed discussion with potential customers and discuss early stage commercial engagements.
The point to multi-point platform acquired through our secular, transaction continues to prove its value, particularly in private Network applications, but increasingly with other customers as well.
Given 6 L's financial position at the time of acquisition. We expected to address areas of underinvestment and we acted quickly to stabilize and strengthen the product.
We are now beginning to see the returns from that effort with growing momentum and expanding business potential.
Importantly.
The point to multi-point Technologies, particularly well suited for Smart City applications.
Ronen Stein: Should this project mature to its full extent, it could represent recurring annual revenue of $7 to $8 million for a minimum of five years. In our traditional business, our IP-50EX Premium solution is gaining significant traction as a leading traditional microwave solution alternative. The IP-50EX Premium delivers millimeter-wave-like capacity over traditional microwave distances. This high-power product, combined with an auto-align antenna, enables customers to replace microwave deployments at a significantly lower total cost of ownership and, in many cases, even higher bandwidth. We are also participating in multiple RFPs for traditional backhauling projects using our latest IP-50CX, IP-50EX, and IP-100E product families in EMEA and Latin America. These projects support network modernization efforts aimed at increasing capacity.
As a chosen partner, we are currently involved in a multi-year project in 1 of Latin, America's largest cities under a connectivity as a service model.
Should this project mature to its full extent? It could represent recurring annual revenue of 7 to 8 million dollars for a minimum.
Of 5 years.
In our traditional business, our IP 50 EXP.
Fraction is a leading traditional microwave solution alternative.
The IP 50 XP delivers millimeter wave like capacity over traditional microwave distances.
This high power product combined with an auto align antenna, enables customers to replace micro deployments at a significantly lower total cost of ownership. And in many cases even higher bandwidth,
We are also participating in multiple rfps or for traditional back holding projects using our latest cxex and ip50 GP product families, in imia and Latin America.
Ronen Stein: Our new product's exceptional price-performance ratio is increasing our chances to win business from customers who we hadn't worked with in several years, demonstrating yet again our ability to capture and recapture market share with our industry-leading technology. We are driving demand globally, but in Q2, North America remained a standout. Excluding E2E Technologies contribution, both bookings and revenue in North America exceeded $20 million. Balancing these exciting developments, our short-term headwinds we are experiencing in India, our largest market, and it's important to address those directly. Revenue from customers in India was $24.8 million, a decrease of 30% year over year. As I mentioned, our customers' well-publicized financial challenges impacted the project we are involved in, and this project stalled.
These projects support network modernization efforts aimed at increasing capacity.
Our new products. Exceptional price. Performance ratio is increasing our chances to win business from customers who we hadn't worked with in several years.
Demonstrating yet, again, our ability to capture and recapture market share with our industry-leading technology.
We're driving the man globally.
but in Q2 North America remained a standout
Excluding e2e contribution, both bookings and revenue in North America exceeded $20 million.
Balancing these exciting developments are short-term headwinds.
We are experiencing in India, our largest market, and it's important to address those directly.
Revenue from customers in. India was 24.8 million a decrease of 30% year-over-year
Ronen Stein: At this point, it is hard to predict whether and when it will resume, although we believe the situation is a timing issue and expect a favorable resolution in the future. Additionally, some other projects with other Indian carriers are progressing at a slower pace than our original expectations. However, we are bidding on a new opportunity in India that could add significant incremental business for us in 2026 and beyond. We continue to pursue more opportunities with new products, including, without limitations, leveraging Ceragon's technology. To summarize, our market share in India is expected to remain intact, and we still see the region as a long-term contributor to our business growth. Zooming out, the variety of opportunities in front of Ceragon is the strongest I can recall. While near-term visibility remains limited, we are seeing positive and accelerating signals of success across our portfolio.
As I mentioned, our customers, well publicized Financial challenges, impacted the project, we are involved in and this project stalled.
At this point, it is hard to predict whether and when it will resume, although we believe the situation is a timing issue and expect a favorable resolution in the future.
Additionally, some other projects with other Indian carriers are progressing at a slower Pace than our original expectations.
However, we are bidding on a new opportunity in India that could add significant in incremental business for us in 2026 and Beyond.
We continue to pursue more opportunities with new products, including without limitations leveraging Clues technology.
To summarize our market share in India, is expected to remain intact and we still see the region as long-term contributor to our business growth.
Zooming out.
The variety of opportunities in front of seragon, is the strongest. I can record.
Ronen Stein: Our strategy is resonating, our commercial traction is expanding, and our technology is opening doors to further penetrate markets, enter new segments, and reach new customers. Most importantly, the bottom-line results we reported today reflect the meaningful improvements we have made to our business over the past several years, enabling us to continue investments in our strategic initiatives, even at times when revenue is low. As a result, we remain confident in our ability to translate future growth into stronger earnings and sustained value creation. I'd now like to turn the call over to Ronen Stein, our CFO, to discuss the financial results in more details. Ronen, over to you. Thank you, Doron, and good morning, everyone. The second quarter was impacted by revenue headwinds in India, as Doron described, with improving strengths in North America and continued progress against our strategy to create sustainable profitability.
While new term visibility remained limited. We are seeing positive and accelerating signals of success across our portfolio.
Our strategy is resonating. Our commercial traction is expanding and our technology is opening doors to further penetrate markets. Enter new segments, and reach new customers.
Most importantly.
The bottom line results. We reported today, reflect the meaningful improvements we have made to our business over the past several years. Enabling us to continue investments in our strategic initiatives. Even at times when revenue is low,
As a result, we remain confident in our ability to translate future growth into stronger earnings and sustained value creation.
I'd now like to turn the call over to Renee Stein, our CFO to discuss the financial results in more details.
On end, over to you.
Thank you, Don and good morning everyone.
Ronen Stein: 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 reconciliations of these measures, we refer investors to today's press release. Let me now review the second quarter results. Revenue for the second quarter was $82.3 million, down 14.4% from $96.1 million in the second quarter of 2024. North America was the strongest region in terms of revenue and contributed $26.8 million. India contributed $24.8 million in Q2 2025 and was the second strongest region. We had two customers in the second quarter that contributed at least 10% of our revenue. Gross profit in the second quarter on a non-GAAP basis was $29 million, which was down 14.2% from $33.8 million in Q2 2024. Our non-GAAP gross margin was 35.2%, unchanged from the prior year period.
The second quarter was impacted by Revenue, headwinds in India, as the 1 describe strengths in North America and continued progress against our strategy to create sustainable profitability.
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 reconciliations of these measures, we refer investors to today's press release.
I will review the second quarter results.
Revenue for the second quarter was 82.3 Million down, 14.4% from 96.1 million in the second quarter of 2024.
North America was the strongest region in terms of Revenue and contributed 26.8 million.
India contributed 24.8 million in Q2 2025 and was the second strongest region.
we had 2 customers in the second quarter, that contributed at least 10% of our Revenue,
Gross profit. In the second quarter on a longer basis was 29 million, which was down 14.2% from 33.8 million in Q2 2024.
Ronen Stein: The sustained gross margin, even on lower revenue, was mainly attributable to our success in North America. Moving on to operating expenses, I would note that we have now consolidated E2E Technologies into our results, impacting total operating expenses. Research and development expenses in Q2 2025 on a non-GAAP basis were $7.2 million, down from $8.2 million in Q2 2024. As a percentage of revenue, R&D expenses on a non-GAAP basis were 8.8% in the second quarter versus 8.5% in the prior year period. Sales and marketing expenses on a non-GAAP basis in the second quarter were $11.1 million, up from $11 million in Q2 2024. As a percentage of revenue, sales and marketing expenses on a non-GAAP basis were 13.5% in the second quarter, as compared to 11.5% in the second quarter of 2024.
Our non-gaap gross margin was 35.2%, unchanged from the prior year period.
The sustained growth margin, even on lower revenue, was mainly attributable to our success in North America.
Moving on to operating expenses, I note that we have now Consolidated e to e into our results. Impacting total operating expenses
research and development expenses in Q2 2025 on a non-gaap basis where 7.2 million down from 8.2 million in Q2 2024,
As a percentage of revenue, R&D expenses on a non-GAAP basis were 8.8% in the second quarter, versus 8.5% in the prior year period.
Sales and marketing expenses on a non-gaap basis. In the second quarter, where 11.1 million up from 11 million in Q2 2024.
Ronen Stein: General and administrative expenses on a non-GAAP basis for the second quarter were $5.9 million, as compared to $1.4 million in Q2 2024. Keep in mind that our G&A last year included the impact of a $4 million 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. As a percentage of revenue, G&A expenses on a non-GAAP basis were 7.2% in Q2 2025 versus 1.5% in the year-ago period. Operating income on a non-GAAP basis for the second quarter was $4.7 million versus operating income of $13.1 million in Q2 2024. The absence of the $4 million credit loss recovery benefit I mentioned earlier, combined with lower gross profit, was the primary factor for the decline in operating income year over year.
As a percentage of Revenue sales and marketing expenses on a non-gaap basis were 13.5% in the second quarter as compared to 11.5% in the second quarter of 2024.
General and administrative expenses on a non-gaap basis. For the second, quarter were 5.9 million as compared to 1.4 million in Q2 2024.
Keep in mind that our GNA last year, included the impact of million dollars, benefit related to an initial collection from a 12 million debt. Settlement agreement reached with the South American, customer for which we accounted, the credit loss at the end of 2022.
As a percentage of Revenue GNA expenses on a non-gaap basis were 7.2% in Q2 2025 versus 1.5% in the year ago. Period.
Operating income on a Nona basis. For the second quarter was 4.7 million versus operating income of 13.1 million in Q2 2024.
Ronen Stein: Financial and other expenses on a non-GAAP basis in the second quarter were $1.7 million, an improvement from $2.6 million in the prior year period. The change was positively impacted by favorable exchange rate changes and lower interest expenses. Our tax expenses on a non-GAAP basis for the second quarter were $0.6 million. Non-GAAP net income for Q2 2025 was $2.5 million or $0.03 per diluted share, versus non-GAAP net income of $9.9 million or $0.11 per diluted share in Q2 2024. Moving over to our balance sheet. Our cash position at June 30, 2025, was $29.2 million, down from $35.3 million at the end of 2024, primarily due to cash payments made in Q1 in connection with the acquisition of E2E Technologies, amounting to $6.6 million net of acquired cash.
The absence of the 4 million dollars credit loss recovery benefit. I mentioned earlier combined with lower growth. Profit was the primary factor for the decline in operating income year over year.
Financial and other expenses on a non-GAAP basis in the second quarter were $1.7 million, an improvement from $2.6 million in the prior year period. The change was positively impacted by favorable exchange rate changes and lower interest expenses.
Our tax expenses on a longer basis. For the second, quarter were 0.6 million.
Non-gaap net income for Q2 2025 was 2.5 million or 3 cents per diluted share versus non-gaap net. Income of 9.9 million or 11 cents per diluted share in Q2 2024.
Moving over to our balance sheet.
Ronen Stein: Short-term loans were $20.5 million at the end of the second quarter, down from $25.2 million at the end of 2024. Thus, our net cash position was approximately $8.7 million, as opposed to $10.1 million at December 31, 2024. Again, largely due to the acquisition of E2E Technologies, offset mainly by a positive free cash flow in Q2. We believe we have cash and facilities that are sufficient for our operations and working capital needs. I would note that we generated $6.1 million in free cash flow, enabling us to reduce our debt in Q2 despite significant short-term revenue headwinds. This speaks to the progress we have made in our business model. Inventory at the end of the second quarter was $59.9 million, essentially unchanged from $59.7 million at the end of 2024.
Our cash position at June, 30205 was 29.2 Million down from 35.3 million. At the end of 2024, primarily due to cash payments, made in q1, in connection with acquisition of e2e amounting to 6.6 million. Net of acquired cash.
Short-term loans, were 20.5 million at the end of the second quarter down from 25.2 million at the end of 2024.
December 31st, 2024, again, largely due to the acquisition of e2e offset, mainly by a positive free cash flow in Q2.
We believe we have cash and Facilities that are sufficient for operations and working capital needs.
I note that we generated 6.1 million in free cash flow, enabling us to reduce our debt in Q2 despite significant short-term Revenue headwinds
These speaks.
To the progress we have made in our business model.
Inventory at the end of the second quarter was $59.9 million, essentially unchanged.
Ronen Stein: Our trade receivables at the end of the second quarter were $124.1 million versus $149.6 million at the end of December 2024. Our DSO now stands at 119 days. Looking at our statements of cash flow, net cash flow used by operations and investing activities in Q2 2025 was $6.1 million. I would like to now turn the call back over to Doron Arazi to provide a summary and review our outlook. Doron.
From 59.7 million at the end of 2024.
Our trade receivables. At the end of the second quarter were 124.1 million versus 149.6 million at the end of the December 2024.
Our DSO. Now stands at 119 days,
Looking at our statements of cash flow.
Net cash flow used by operations and investing activities in Q2, 2025 or 6.1 million.
I'd like to now turn the call back over to the wrong, to provide a summary and review, our Outlook, the Run,
Doron Arazi: Thanks, Ronen. Before we open the call for questions, I want to briefly summarize the key takeaways and update our outlook. Q2 highlighted the strength of the foundation we have built as we delivered non-GAAP profitability and generated free cash flow despite the revenue headwinds while advancing our strategic roadmap. Traction across regions is growing, and our technology is opening new doors across both service provider and private network segments. Our strategy has not changed, and challenges primarily in India do not necessitate changes. We are on the right path, positioned to navigate these timing issues while expanding our strategic position globally. Turning now to our outlook. Our visibility this quarter has been adversely impacted primarily by dynamics in India, as discussed. As a result, we are not currently in a position to reaffirm our prior guidance or provide an updated range.
Thanks.
We open the call for questions. I want to Briefly summarize, the key takeaways and update our Outlook.
Q2 highlighted the strength of the foundation. We have built.
As we delivered non-gaap profitability and generated free cash flow. Despite the revenue headwinds while advancing our strategic roadmap,
Traction across regions is growing. Our technology is opening new doors across both service provider and private network segments.
Our strategy has not changed and challenges primarily in India. Do not necessitate changes.
we are on the right path position to navigate this timing issues, while expanding our strategic position globally,
Turning now to our Outlook.
Our visibility, this quarter has been adversely impacted primarily by Dynamics in India as discussed.
Doron Arazi: That said, we believe this is a matter of timing. In the meantime, this has placed greater weight on individual projects in other regions, some of which were expected to contribute meaningfully to our revenue and are currently delayed. Importantly, we strongly believe we have not lost market share in India or globally. In fact, we are expanding our opportunity set, particularly in North America, primarily due to technological leadership delivering stronger radio performance at a lower total cost of ownership. Looking ahead, we assume second-half revenue to be roughly in line with the first half. Based on this assumption, we believe we can deliver non-GAAP profit and generate cash while continuing to invest in our strategic pillars: advanced wireless connectivity solutions, private networks, and managed services. With that, I will now open the call for questions.
As a result, we are not currently in a position to reaffirm our prior guidance or provide an updated range. That said, we believe this is a matter of timing.
In the meantime, this has placed greater weight on individual projects in other regions, some of which were expected to contribute meaningfully to our revenue and our currently delayed.
Importantly, we strongly believe we have not lost market share.
In India or globally.
In fact, we are expanding our opportunity set, particularly in North America primarily due to the technological leadership, delivering stronger radio performance at a lower total cost of ownership.
Looking ahead, we assume second-half revenue to be roughly in line with the first half.
Based on this assumption, we believe we can deliver non-gaap profit and generate cash while continuing to invest in our strategic pillars.
Advanced Wireless connectivity Solutions.
Private networks and managed services.
Operator: 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 announced. Our first question will be from Scott Searle from ROTH Capital. Scott, please go ahead. Scott?
With that, I'll now open the call for questions.
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 announced.
Our first question will be from Scott Searle from Roth Capital. Scott, please go ahead.
Scott.
Scott Searle: My apologies. Good morning, good afternoon, guys. Thanks for taking the questions. Doron, maybe just to dive in on India, the obvious region talked about. What gives you the confidence that this isn't a share loss, that this isn't some sort of permanent impairment in terms of some of the customer relationships there? Could you extrapolate a little bit in terms of your visibility into the second half as it relates to India? You did about $25 million in the current quarter. Is that a sustainable level accounting for customers that are, I think, doing a little bit better from an economic standpoint now? This 26 opportunity, I am wondering if you could maybe gauge the size and timing of when we should see that really starting to play into the P&L.
Doron Arazi: Thank you for this question, Scott. Let's start with the competitive landscape and our stake in this market. We have very strong inroads into this market, and we have a constant dialogue with all of our customers, both existing and potential. CERAGON, generally speaking, is perceived as one of the strongest vendors to this industry. We are aware of the main drivers for the changes in the pace or in the cases where projects are stalled. Talking to our customers constantly, it is clear to us based on these discussions that it is not that they are now preferring other vendors over us. It is just a matter of the rollout pace that is driven by other factors that are totally not associated with our strength in this market. That is the main indications we have for not losing market share.
About customers that are I think doing a little bit better from an economic standpoint. Now and this 26 opportunity, I'm wondering if you could maybe gauge the size and timing of when we should see that really starting to play into the p&l,
Okay, so, thank you for, uh, this question Scott. So, let's start with the competitive landscape and, uh, our, uh,
Uh uh, stake in this market. Um, we have a a very strong inroads.
Into this market. And we have a constant dialogue with all of our customers, both existing and the potential.
And uh seragon generally speaking is perceived as 1 of the uh
Strongest, uh, uh, uh, vendor to this industry.
Um,
And we are aware of.
uh, the main drivers for the changes,
Uh, in the pace or in the cases where uh uh projects are stored.
and,
Talking to a customer's constantly.
And it's clear to US based on the discussions that it's not that they are now, preferring other uh, vendors uh, over us.
Doron Arazi: I would even dare say that in some new opportunities with new technology, we already finished the technical phase, and we are now talking about commercials. That can also fuel our business in 2026. I was referring more explicitly to a new opportunity that is not that one, but it is another one, more on the traditional microwave business. That opportunity is in terms of tens of millions of dollars to be, I would say, delivered during 2026, or I would say the majority of this opportunity will be delivered during 2026. Obviously, the RFP is still out there, and we do not know the results. Of course, we do not know the results yet, but we believe that we are in a very good position to win at least a big portion of this opportunity.
It's, uh, just a matter of, uh, the rollout Pace that is driven by other factors that are totally not, uh, uh, Associated uh, with our strength in this market. So that's the main, uh, uh, so to speak. Uh, uh, indications. We have for not losing market, share. I would even dare say,
uh, that in some new opportunities.
Uh, with new technology.
Uh, we already finished the the technical, uh, phase.
And we're now talking about commercials.
And that can also fuel our business in 2026.
Uh I was referring more explicitly to a new opportunity. That is not that 1 but it's another 1 more on the traditional microwave business and that opportunity is in terms of tens of millions of dollars.
To be, uh, I would say, delivered.
During 2026 or I would say. The majority of this opportunity will be delivered during 2026. Obviously, uh, the RFP is still out there and uh, we don't know the results. Of course, we don't the results yet, but we believe that we are in a very good position to win. At least a big portion,
Doron Arazi: All in all, when I look at the trends, I would say the following: the loss of the, I would say, the interim loss of the business from this specific provider or service provider that stopped the investment due to its financial issues is something that we cannot predict the resumption yet. We are not baking or hardly baking any potential revenue from this one into our second half of the year. With the others, each and every one has its own pace that is driven by different factors. I would say that $25 million that we have seen in Q2 might even be the high end in our most likely scenario. Still, there are so many unknowns that this number could fluctuate easily up and down.
Uh, of this uh, opportunity. So, so all in all
when I look at the uh, at the trends, I would say the following
uh, the loss of the, the, I would say the, um, interim loss of the business from, uh, this specific, uh, uh,
Uh provider or service provider that uh uh stopped the uh the investment due to its Financial uh issues.
uh,
Is something that we cannot predict the the resumption yet and we are not baking or hardly baking any potential uh Revenue uh from this 1 into our second half of the year uh uh with the others uh each and everyone has its own. Uh uh so to speak Pace. That is driven by different.
A factors and, uh, I would say that, uh, 25 million dollars that we've seen in Q2.
Um,
might even be the high end in our most likely scenario.
but uh,
Still, there's so many unknowns.
Doron Arazi: If it fluctuates up, I can assure you that we have a very good operational preparation and readiness to capture and capitalize on any trend up that will happen if indeed this happens during the second half of the year. For 2026, I am by far much more optimistic.
That this number could fluctuate easily up and down.
And if it, uh, fluctuates up, I can assure you, that we have a very good, uh, uh, so to speak, uh, operational, uh, preparation and readiness.
And if indeed uh, this happens during the second half of the year uh, for 2026.
Scott Searle: Great. Very helpful. Thank you, Doron Arazi. If I could, maybe shifting to a healthier region, North America was a great quarter. I think it is the best quarter you have had in five or six quarters. How sustainable is that as we are looking into the second half of this year? Maybe give us an idea. I think you have referenced private networks being strong, but maybe a little bit more color on that front versus the work with the Tier 1 operator. It sounds like you have got a second Tier 1 that is now starting to play into the mix. Thank you.
I'm by far, much more optimistic.
Doron Arazi: Sure. Thank you, Tom. Thank you for this question. Look, obviously, the business in Ceragon Networks Ltd. is still based on relatively imminent orders. Based on what we see today and the pattern and the pace of the business, we believe that the second part of the year can be more or less at the same level of the first part of the year. It is based on, first of all, the backlog we have accumulated as of the end of this quarter. Obviously, some forecasts that we have for Q3 and for Q4 from different customers. In terms of private networks, generally speaking, we are very excited about some new opportunities. We just finished a few POCs that we see a very clear path that these will return into significant orders. I hope that this will happen shortly.
Very helpful. Thank you. Don. And and if I could maybe shifting to a a healthier region, North America was a great quarter. Um, you know, I think it's the best quarter you've had in 5 or 6 quarters. How sustainable is that as we're looking into the second half of this year and maybe give us an idea. I think you referenced private networks, being strong but maybe a little bit more color on that front versus the work with the Tier 1, operator. And sounds like you've got a second tier 1 that's now starting to play into the mix. Thank you.
Sure. Thank you so much. Thank you for this question. So, so look, obviously the business.
Uh, in surgon is still based on uh, relatively imminent orders.
and uh, based on what we see today and the pattern and the pace
Of the business, we believe that the second part of the year...
Uh can be uh more or less the same level of the first uh uh part of the year. Uh, it it is based on, first of all, the backlog we have accumulated.
Uh, uh, as of the end of, uh, this quarter. And obviously some forecasts that we have for, uh, for Q3. Uh, and for Q4 from, uh, different customers, uh, in terms of private networks, uh, generally speaking
We are very uh, excited about some new opportunities.
And we just finished a few poc's.
That, uh, we see a very clear path that this will return into, uh, a significant orders.
Doron Arazi: I don't want to kind of be ahead of my skis, but it looks very promising. I would say that we hardly build on these opportunities for the second part of the year. Obviously, if this happens, it will definitely fuel our business in North America further. If not, I think it could be a very strong baseline for increased business from private networks in North America in 2026.
Uh, and I hope that this will happen shortly.
I don't want to uh uh, to kind of be ahead of my skills, but uh, it looks very promising. I would say that we hardly build on these opportunities for the second part of the Year. Obviously, if this happens, it will uh, definitely uh fuel our business in North America further.
Scott Searle: Great. Thanks so much. I'll get back in the queue.
Uh, but if not, I think it could be a very strong Baseline, uh, for uh, increased business from private networks, in North America in uh uh 2026.
Doron Arazi: Thank you.
Great. Thanks so much. I'll get back in the cube.
Operator: Our next question is from Ryan Koontz from Needham & Company. Ryan, please go ahead.
Thank you.
Scott Searle: Hey, can you hear me?
Our next question is from Ryan Coons from nem Ryan. Please go ahead.
Doron Arazi: Yes, Ryan. Hi, Ryan. Good morning.
Can you hear me?
Scott Searle: Hi, good morning. In terms of your 10% customers, maybe some housekeeping up front. Were those both from India region, your 10% customers, or different regions?
Yes, Ryan. Hi Ryan. Good morning.
Good morning. Um,
Uh, I told you 10% customers, maybe some housekeeping up front, uh, were those both from India region. Your 10% customers.
Doron Arazi: The 10% customers are coming from both India and North America.
Or different regions.
Scott Searle: Great. Thank you for that. You discussed some emerging Tier 1 North American opportunities here. Can you kind of outline what kind of shape and timing you think those opportunities might present you and how you are investing in terms of those emerging opportunities?
Customers are coming from both from India and the North America.
Great, thank you for that.
And uh, you know, you discussed some emerging Tier 1, uh,
Doron Arazi: Yeah. Actually, I am very excited with this particular win and some other opportunities that I see. To generalize the trend that we see, I would even dare say that I see that as almost a global trend. One of the big observations I had is that the FR2 as part of the 5G rollout is being looked at from various angles, and operators are looking at different ways to use and to utilize these frequencies other than just mobility. That opens up many new use cases in North America, but also outside North America, starting from a very simple model of frequency preservation just to make sure that they have the license that they can use it later on and all the way into fixed wireless access, multi-dwelling units. As I said, this is a phenomenon that we see not only in North America.
Uh, North American opportunities here. Can maybe you kind of outline, you know what, kind of shape and timing. You think those opportunities might present you and, you know, how you're investing in, uh, in in terms of those emerging opportunities.
Yeah, um, actually, I'm very excited with this particular, uh, uh, win and, uh, some other opportunities that I see, uh, to just to generalize the, the, the trend that we see. And I would even there saying that I see that as almost a global trend.
1 of the big observations.
I had is that the uh, effort to
Uh, as part of the 5G, uh, roll out.
Uh, is, uh, being looked at, uh, from various angles and operators are looking in different ways to use and to utilize these frequencies other than just mobility, and that opens up many new use cases.
In North America, but also outside, uh, North America.
Doron Arazi: I referred to our success in India in a previous question. It is more or less the same story there. There we are also in a great position since we have passed all the technical barriers, so to speak. Now we are starting to discuss commercials. I am obviously very optimistic. Specifically, the one we want is expected to add to our revenue quite significantly in North America in 2026. As we speak, we see more operators looking for very similar solutions in this region.
The same story there and there we are also in a great position since we've passed all the technical barriers so to speak. And now we are starting to discuss commercials so I'm obviously very optimistic.
Um,
Specifically the, the 1 we want H is expected to add to our uh, Revenue, uh, quite significantly in North America in 2026. And uh, as we speak uh, we see more operators uh, looking for very similar Solutions in this region.
Scott Searle: That's a great update. Appreciate that. Maybe one last one, if I could squeeze it in on your acquisition of E2E Technologies recently. How is that business trending in terms of private networks? I think you were penetrating the energy sector with that. Can you give us a few updates on how that business is performing?
Doron Arazi: So far, it is in accordance with our plan. I would even dare say that in terms of booking, we are ahead of our plan. That is even, I would say, despite some slowdown that we have seen in the private networks in different segments in North America due to the tariffs and many other things that have different implications on different segments in the private network. The bottom line is that we are progressing in accordance with the plan. In terms of booking, we are even exceeding it.
That's a great update. Appreciate that. Maybe 1 last 1, if I can squeeze it in, on your, your acquisition of end to end. Um, recently, how is that business, uh, trending in terms of, you know, private networks? And I think I think you or penetrating the the energy uh, sector with that. Can maybe give us a few updates on how that business is performing. Yeah, so so so so far, uh,
our plan, I would even there saying that in terms of booking
Uh, we are ahead of our plan.
Uh and that's uh, even uh, I would say despite uh, some slowdown that we've seen.
Scott Searle: Right. So you are saying the tariffs are not necessarily on your product, but tariffs on their core business.
Uh, in the private networks in different segments in North America due to uh, the tariffs and many other things that have, uh, uh, different implications on different segments in the private Network. So, the bottom line is, uh, uh, that we are in a quart progressing in accordance with the plan and in terms of booking where even exceeding it.
Doron Arazi: Yeah. Exactly. It's not necessarily associated with communication infrastructure and with our product particularly. Sometimes there are other factors that are impacting these industries, and that may create certain delays in the decision to move forward on the connectivity part.
Right. So you're saying the tariffs not necessarily on your product, but tariffs on? Yeah, yeah, for business. Yeah.
Scott Searle: Got it. Super. That is all I have got. Thanks. Thanks for the questions.
Exactly. It's not a necessarily associated with communication infrastructure and with our product particularly sometimes there are other factors that are impacting these industries and that create May create certain delays in the decision to move forward on the connectivity part.
Doron Arazi: Thank you.
Operator: Our next question is from Christian Schwab from Craig-Hallum. Christian, please go ahead.
But that's all I've got. Thanks, thanks for the questions.
Thank you.
Our next question is from Christian swab from Craig Helen Christian. Please go ahead.
Christian Schwab: Hey, it's Christian here. Thanks for letting me ask a question. Given the year through, I appreciate the fact that we'll still be profitable and generate cash this year. But given the revenue headwinds this year, at what point would it take for you to address OpEx, which looks heavy for these revenue levels?
Hey it's it's Christian here. Thanks for letting me ask a question. Um G give it the the near term. Appreciate the fact that we'll still be profitable and generate cash this year. Uh, but given
you know, the revenue, uh, headwinds this year, you know, at what point would um
Doron Arazi: I would start by giving a general comment, and maybe Ronen can complement. Look, we are investing in our new strategy, and we intend to continue investing in our new strategy, especially after we have seen so many strong signals that this strategy is probably the right strategy for Ceragon. I would dare say that as long as we are profitable and generating cash, it is our intention to continue investing in these strategic initiatives. Obviously, if at a certain point we see a situation that the relevant parameters for us deteriorate significantly, we will reconsider. At this point, it is our intention to keep our investments intact because of the momentum and because of our belief that this is the right path for this company. As we already said, we believe that the situation is a temporary situation, and we can resume growth as early as 2026.
Would it take for you to to address, uh, Opex which looks heavy for these Revenue levels?
so so I would uh, start by giving a general comment and maybe Ronin can can complement look
We are investing in our new strategy.
And we intend to continue investing in our new strategy, especially after we have seen so many uh strong signals.
That this is, uh, this strategy is probably the right strategy, uh, for sarago. So I would they're saying that as long as we are profitable and generating cash, it is Our intention to continue investing in this uh, in this strategic, uh, initiative. Obviously if at a certain point we see a situation that the uh, that the, the relevant uh, parameters for us deteriorate significantly will reconsider. But at this point, it's Our intention to keep our investments intact, uh, because of the momentum. And because of our belief that uh, uh, this is the right path for this company and as
Ronen Stein: Let me just add, good morning, Christian. Let me just add that in the last two years, I would say, we have been restructuring our operating models and operating expenses, and we were very disciplined. We shifted budgets. We opened new centers of excellence, both in Paraguay and in India. We have been able now to reduce our OpEx while still continuing, as Doron mentioned, still continue to spend and invest on growth initiatives. I think that with assumptions on our revenues for the second half and the fact that we expect North America to more or less continue in the same level, we think that gross margins should be okay and to cover and enable us the profitability that we just mentioned.
We already said, we believe that the situation is a temporary situation and we can resume growth as early as 2026.
Christian Schwab: Right. Thank you for that answer. No other questions. Thank you.
Go to, as Don mentioned, and still continue to, uh, spend the and invest on on growth, uh, initiatives. So I think that, uh, with the assumptions on our uh, uh, revenues for the second half. Uh, and and the fact that uh, we expect North America to uh, more or less continue in the same level. We think that growth margin should be okay and to cover and enable us a profitability that we just mentioned
Right. Uh thank you for that answer. Uh, no other questions, thank you.
Operator: Our next question is from Theodore O'Neill from Hills Research. Theodore, please go ahead.
Our next question is from O'Neal from Hills Research.
Theater. Please go ahead.
Christian Schwab: Yes, thank you very much. First question about the Ceragon point-to-multipoint solution. I think you've given us, I think you previously talked about use case examples, but can you give us some use case examples and what the potential market size is for that product line?
Doron Arazi: Yeah, sure. Look, the most common use cases we have seen so far are around smart cities and public safety. This product is very suitable for a situation where you need to carry data from video cameras either in relatively short distances or using mesh technology that can help very nicely in building a network or an access network that, on the one hand, is very strong in terms of capacity, very high capacity, and at the same token, is very cheap at street-level connectivity. We see that in projects of small cities. One of them is in North America. There is another one, the biggest one I was talking about, in Latin America. We see more of that coming from other regions.
Yes, thank you very much. Uh, first question about about the sickle point to multi-point solution. Um, I think you've given us. I think in your previously talked about use case examples, but can you give us some use case examples and what the potential Market size is for for those, for that product line?
Yeah, uh, sure. Look, uh, the, the most common, uh, use cases we've seen so far, are around smart cities and, uh, and Public Safety. Uh, this product is, uh, uh, very suitable for a situation where you need to carry data from, uh, video cameras, uh, either in, uh, in a relatively short distances, or using a mesh technology that can help a very nicely in building a a network or an Access Network. That on the 1 hand is very, uh, strong in terms of capacity, very high capacity. And at the same token is very cheap at street level connectivity. So we see that in in in, um,
Doron Arazi: This is a very common use case, and it can also develop to other ideas such as managing traffic lights and other things that are associated with improved, so to speak, quality of managing city public services elements. The other piece that we see as an opportunity and we have trialed for a relatively long time by now with huge success is actually in the CSP domain. While I tend to give this opportunity slightly less emphasis in terms of volumes, we are talking about street-level connectivity as a solution for small cells backhauling. We have seen that predominantly in Europe, in countries where, generally speaking, it is very difficult to bring the fiber to the last point. It is also even very difficult to put microwave and millimeter wave, the traditional one, over the roofs. That could also become a very common alternative in such cases.
Projects of small cities. Uh, 1 of them is in North America. There's another 1 the biggest 1. I was talking about in Latin America and we see more of that coming from other regions. So this is a very common uh uh use case. And it can also develop uh to other ideas, such as managing uh traffic lights, and other uh and other things.
Uh, that are associated with, uh, improved. Uh, so to speak quality, uh, of managing, uh, uh, City, uh, City, uh, Public Services elements. Uh, the other piece that, uh,
We see as an opportunity and if we have tried uh for relatively long time by now, with with youth success is actually in the CSP domain.
and while I tend to give this opportunity slightly less uh uh emphasis in terms of the volumes,
Uh, we are talking about street level connectivity as uh solution for small cells back holding.
Uh, we've seen that the predominantly in Europe.
in countries where
Generally speaking, uh it's very difficult to bring the fiber to uh to the last point.
Uh and it's also even um very difficult to put the microwave and millimeter wave the traditional 1 over the uh roofs.
Doron Arazi: Based on the opportunities we are engaged at, this could become tens of millions of dollars a year. Obviously, it depends on the size of the project. At this point, I would say that it is between a few single million dollars to tens of millions of dollars a year.
and that could also become a a very, common alternative in such cases, um, based on the, the, the opportunities we are engaged at
Christian Schwab: Okay, thank you. You mentioned your participation in multiple RFPs. How do you see the probability for winning these, and what is the competitive landscape look like?
This could become a TENS of millions of dollars a year, um, obviously depends on the size of the project. But, at this point, uh, I would say that it's between a few single million dollars, uh, to, uh, to tens of millions of dollars a year.
Okay, thank you. And you mentioned uh, your participation in multiple rfps.
Doron Arazi: Yes. I mentioned that particularly referring to EMEA and Latin America. I think the audience is aware that these are two regions where the Chinese are not, I would say, totally banned. Therefore, the competition continues to be a relatively fierce competition, especially when the Chinese decide to go for a dumping price strategy, which happens quite frequently. I am more enthusiastic about these opportunities basically because of two reasons. One, we start seeing a phenomenon where just using the Chinese as a single vendor is not working that well to many of the operators, both in Latin America and in EMEA. Therefore, these RFPs could create an opportunity for us to chime in and to take the second seat, which is also quite significant.
Um, how do you see the probability for winning these? And what's the competitive landscape look like?
A particularly referring to IMIA and Latin America.
I think the audience is aware that these are 2 regions where the Chinese are not, I would say, totally banned. And therefore, the competition continues to be a relatively first competition, especially when Chinese decide to go for dumping price strategy, which happens quite frequently.
Why I'm more enthusiastic about these opportunities.
Is, uh, basically, because of two reasons. One, we all start seeing a phenomenon where H is just using the Chinese as a single vendor.
Is not working that well to many of The Operators both in Latin America and in Mia, and therefore, H these rfps could create an opportunity for us.
Doron Arazi: The other reason is that with our new product families, the IP-50EX, the IP-50CX, and the IP-50EX Premium, these products are much more, I would say, price-performance effective than our older generations. That gives us, I would say, a good starting point to win in an environment where the prices are relatively low. I would just generalize and say that for a few years, we have not invested that much in split mount. Still, when you look at the market, split mount still consists of around 60% of this market. Now, after we finished to develop the Neptune chip, and obviously, we are working on the first product that will be publicized or launched based on this chip, we have basically directed resources from R&D to work on our next-generation split mount.
To chime in and to take the second seat, uh, which is also, uh, quite significant.
the other reason is that, with our new, uh, product families, the ex the CX and the ip50 GP
Uh these products are much more uh I would say price performance effective.
Than our older generations. And that gives us, I would say a a good starting point, uh, to win in an environment where the prices are relatively low. Uh, I would just generalize and say,
That uh, I for a few years.
Uh, we have not invested that much in Split Mount, and still, when you look at the market Split Mountain, Still consists of around 60% of this market. Now, after we finished to, uh, develop the Neptune chip, and obviously, we're working on the first product that will be uh, uh, uh, uh, publicized or or launched based on this chip. We have uh, basically directed resources from R&D.
Doron Arazi: The IP-50EX Premium is the first, the early bird in what I believe is a strong roadmap that if we execute on, will also help us gain a bigger market share in the split mount business.
Christian Schwab: Okay. Thanks very much.
To work on our next Generation, split mode. The it 50 GP is the first the early bird, uh, in in what I believe is, uh, a, a strong road map that if we execute on will also, uh, help us gaining a bigger market share in the split mode business.
Doron Arazi: Thank you.
Okay, thanks very much.
Operator: Our next question is from Romel Dionso from Aegis. Romel, please go ahead.
Thank you.
Ryan Koontz: Thank you. Can you hear me okay, Doron Arazi?
Our next question is from Romel Diono from ages Romel. Please go ahead.
Doron Arazi: Yes. Hi, Ronen.
Ryan Koontz: Hi. So, two questions, if I could. First, you've obviously made significant progress in North America on managed services business and private networks. I wonder if you can talk about private networks, the opportunity in Europe, and just the progress you've made there. Second, I appreciate your comments earlier about continuing to invest in the core business. What about acquisitions? Is a temporary delay in orders from India slow down your acquisition pace in upcoming periods? Thanks.
Uh, thank you. Can you hear me? Okay, John yes. Hi Romel. Hi. Um, so 2 questions, if I could, uh, first, uh, you've obviously made significant progress on, um,
Doron Arazi: Let me start with the acquisition question, then I will move to a discussion about the private network in Europe. In terms of acquisition, we have not slowed down. The positive cash flow and the reduction in the loans or the credit line that is utilized is just creating for us a better, so to speak, funding opportunities to do more acquisitions. I think it is more of finding the suitable acquisitions rather than slowing down or accelerating the pace. We have a funnel. I think the funnel looks good. It will take time to make, obviously, decisions. I can tell you that during the last couple of months, we looked at a few potential acquisitions, and we reached the conclusion that they are not suitable to us. It is our strong intention to continue pursuing acquisitions. It is just a matter of suitability.
Uh in in North America on managed Services business uh and private networks. And I wonder if you could talk about private networks, the opportunity in uh, Europe and just the progress you've made there and second I I appreciate your comments earlier about continuing to invest in the core business. What about Acquisitions is a temporary delay in orders from India, uh slow down your acquisition Pace in the in in upcoming periods. Thanks.
So let me start with the acquisition question and then I will go uh, move to uh, discussion about the private Network in Europe. In terms of acquisition, we have not slowed down
And actually the positive cash flow and the the reduction in the loans or the credit line that is utilized is just creating for us, a better. Uh, so to speak, uh, funding uh uh opportunities.
Uh, to do, uh, more Acquisitions. I think it's more of a, finding the suitable Acquisitions rather than slowing down, or accelerating the pace.
Uh, we have a funnel. I think the funnel looks good.
Doron Arazi: As to the private networks in Europe, we see many opportunities there. I think that we are quite successful, actually, in Europe and, by the way, in Africa in utilities and, to a certain degree, in defense and in energy. Generally speaking, we see many opportunities as well. Obviously, this gives us even stronger signals that we are on the right, so to speak, strategic path.
um,
we see also many opportunities there.
Uh, I think that we are quite successful, uh, actually in Europe, and by the way, in Africa, in utilities, and to a certain degree in defense and in energy,
So generally speaking, we see there, uh, many opportunities as well.
And uh, obviously, uh, this uh, uh, this gives us uh, even a stronger signals that we are on the right. Uh uh so to speak strategic path.
Ryan Koontz: Great. Thanks very much, Doron.
Great. Thanks very much.
Operator: There are no further questions.
Doron Arazi: Thank you so much, everyone, for participating in our conference call and looking forward to talk to you again in the conference call for Q3 results.
There are no further questions.
So, thank you so much, everyone for participating in our conference call and looking forward to talk to you again, uh, in the conference call for Q3 results.
Operator: Goodbye.