Q2 2026 Ceragon Networks Ltd Earnings Call

August 11, 2026

Speaker #2: Our presentation today will be followed by a question-and-answer 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 star 9 on your telephone keypad, and wait for your name to be announced.

Speaker #2: I must advise you that this call is being recorded today. I'd now like to hand over the call to our first speaker, Rob Fink, Head of Investor Relations.

Speaker #2: Rob, please go ahead.

Speaker #3: Thank you, operator, and good morning, everyone. Hosting today's call are Doron Arazi, CERAGON's Chief Executive Officer, and Ronen Stein, Chief Financial Officer. Before we start, please note that today's discussion includes forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #3: These statements include among other things financial projected financial performance future initiatives, business outlook, development efforts, and anticipated results timelines, and other matters. Forward-looking statements are based on expectations and assumptions and involve risks and uncertainties that could cause actual results differ materially.

Speaker #3: These risks and uncertainties include among others global and regional economic conditions, conditions in Israel and the region, fluctuations in exchange rate, customer concentration, ordering patterns, supply chain challenges, and others matters further detailed in CERAGON's most recent annual report on Form 20F and other documents that are filed with the securities and exchange commission.

Speaker #3: Forward-looking statements are accurate only as the date they are made, and CERAGON undertakes no obligation to update them. CERAGON's public filings are available on the security and exchange commission's website at sec.gov and on CERAGON's website at ceragon.com.

Speaker #3: Also, today's call will include certain non-GAAP measures. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier today, which is posted on the investor relations section of Ceragon's website.

Speaker #3: With that, I will now turn the call over to Doron. Doron, the call is yours.

Speaker #2: Thank you, Rob, and good morning, everyone. CERAGON delivered a strong second quarter, as recently introduced technologies and solutions are creating a clear competitive advantage and driving demand in key markets, with particularly strong execution in India.

Speaker #2: Revenue for the second quarter was $93.9 million, up 14% year over year, and non-GAAP EPS was $0.02. Bookings in the second quarter reached their highest level since the first quarter of 2024.

Speaker #2: Bookings and the book-to-build ratio in the first half of 2026 represent the highest in the last 10 years for any first half period. This demonstrates the strong competitive positions Ceragon has established, especially in the faster-growing segments of our market.

Speaker #2: Additionally, the recent changes in the competitive landscape are opening more opportunities for us. We believe that two significant competitors are without visible technological continuity and may be observed as effectively out of the market, and the third competitor's future commitment to the market is uncertain.

Speaker #2: Subsequently, customers are looking for an established technology leader like Ceragon to fill the gap. Given these dynamics, we are capturing more opportunities and engaging in our FPs with potential new customers and being asked to bid on projects involving new use cases.

Speaker #2: Driving our results were demand in India, the continued adoption of our IBAN products, and private network wins, as customers continue to invest in capacity, network modernization, and new connectivity. Our portfolio is increasingly well aligned with those investments.

Speaker #2: At the same time, we continue to expand the ways in which we serve customers beyond our traditional wireless transport business, including end-to-end private network solutions and managed services.

Speaker #2: Customer interest and demand in our newest products and solutions is encouraging. Positive results from proof-of-concept projects are helping to drive these interests from both existing customers and many potentially new customers, in both proven and many new use cases.

Speaker #2: I'll start with India, a region with continued strong demand. As we recently announced, we have booked approximately $120 million in orders from operators in India through late July.

Speaker #2: These orders are primarily driven by two of the country's leading mobile operators, and support both the expansion and modernization of nationwide 4G and 5G transport networks.

Speaker #2: Fixed wireless access remains an important driver for this activity. As operators expand broadband coverage and address rapidly increasing data consumption, they require higher-capacity transport that can be deployed quickly and economically.

Speaker #2: Our new IP50X platform and multi-band solution are winning this business for us, as they are well suited to the requirements of the Indian market.

Speaker #2: In general, demand for our innovative e-band-wide portfolio is very strong. This is consistent with the trend we discussed last quarter, as customers increasingly recognize e-band as an attractive way to deliver fiber-like capacity while accelerating deployment and lowering total cost of ownership.

Speaker #2: Given the exceptionally strong bookings in India during the first half, and based on our visibility for the remainder of the year, 2026 has the potential to be one of the strongest bookings years in India in quite some time.

Speaker #2: Turning to North America, this market also remains strong and active for Ceragon. Revenue from our existing key Tier 1 carrier customer was slightly higher than what we had anticipated during the quarter.

Speaker #2: We overcame some of the supply chain timing issues we discussed on our last call, but some of their revenue has shifted from the second quarter to the third quarter, as expected.

Speaker #2: More importantly, the underlying demand environment with these customers remains healthy. Across North America more broadly, engagement is strong from both CSPs and ISPs around many of the themes we have discussed previously, including higher capacity, network architectures, E-band for fiber redundancy, E-band as the new microwave, and next-generation wireless transport solutions that can provide additional capacity with attractive deployment economics.

Speaker #2: These are areas where we believe Ceragon's technology and expanding product portfolio position us very well. We were successful in our proof-of-concept field trials with our 5G FR2 solution for a new Tier 1 carrier in North America, and now we are in commercialization discussions with this potentially new customer.

Speaker #2: We also recognize the increased interest in Leo connectivity technology which has grown even further following the IPO of SpaceX. We believe that such satellite-based technologies are very important for global connectivity and the digitization trend.

Speaker #2: However, we view these technologies as complementary to terrestrial technology, not as a substitute. We believe wireless backhaul, such as what CERAGON provides, will remain the dominant solution for high-capacity connectivity.

Speaker #2: Anecdotally, we would also remind investors of the recent announcement by SpaceX, highlighting its intent to build a terrestrial network in the U.S. If this happens, it may become another opportunity for us.

Speaker #2: Private network business in North America was particularly encouraging with record bookings. In general, private network opportunities are accelerating globally and our recently introduced capabilities are aligned with the needs of this market segment.

Speaker #2: The recently announced deals are evidence of our ability to serve various use cases within private networks. We are encouraged that our continued investment in this segment is bearing fruit.

Speaker #2: What is particularly encouraging is the diversity of these opportunities. We are increasingly competing for broader end-to-end projects that combine advanced wireless transport with technologies like LTE, enabling IoT connectivity, automation, and other mission-critical applications.

Speaker #2: These opportunities are reflective of industry estimates that predict private network growth will exceed 30% CAGR over the next four years. We believe we are well positioned for significant growth in this segment, despite an inherently longer sales cycle when compared to our traditional carrier business.

Speaker #2: Growth is not expected to be in a straight line, but our pipeline is expanding, the range of use cases is broadening, and we are seeing greater conversion of opportunities into bookings.

Speaker #2: We believe this can become an increasingly meaningful contributor to Ceragon over time. Our momentum also extends beyond the business and geographies that drove the majority of second-quarter revenue.

Speaker #2: In managed services, we recently secured a two-year 3.4 million dollar contract with our major mobile with a major mobile operator in Mexico. This is an important win because it demonstrates the opportunity to expand CERAGON's relationship with customers beyond equipment and into broader long-term or long duration service engagements.

Speaker #2: Managed and professional services remain an important part of our strategy to increase the value we provide to customers while building a more diversified revenue base.

Speaker #2: We also recently secured an additional five-year agreement with up to 70 million dollars with a T1 mobile operator in APAC. We believe the duration and scale of this engagement validate our ability to build long-term.

Speaker #1: +7

Operator 1: Welcome to Zoom. Enter your meeting ID followed by pound. You have not entered any numbers. Please re-enter. Enter your participant ID followed by pound. Otherwise, you have joined the meeting as an attendee and will be muted throughout the meeting.

Speaker #1: 918 091,

Speaker #1: but can you kind of tie that all together and make it

Speaker #1: simple?

Speaker #2: I would say the I would say the following. I'll give you following: I'll give you any sort of any sort of specific guidance for specific guidance for 2027 2027 and and beyond.

Speaker #2: beyond, and we And we continue continue to to assume in assume in our our office office that a single that a single high-speed high-speed growth gross revenue revenue is a is reasonable reasonable assumption assumption, and and obviously obviously if we'll be able if we'll be able to to accelerate accelerate the execution the execution of our new of our new strategy with regards to strategy with regard to private private networks it networks, it can can become—so to speak—a become so to speak a driver for driver for even even higher higher growth.

Operator 2: Ladies and gentlemen, thank you for standing by. Our call will begin shortly. Ladies and gentlemen, thank you for standing by, and welcome to Ceragon's Q2 2026 earnings call. Our presentation today will be followed by a question and answer session. At which time, if you wish to ask a question, you will need to raise your hand using your mobile or desktop application, or press star nine on your telephone keypad and wait for your name to be announced. I must advise you that this call is being recorded today. I would now like to hand over the call to our first speaker today, Rob Fink, head of investor relations. Rob, please go ahead.

Revenues for the second quarter were 93.9 million up, 14.2% from 82.3 million in Q2, 2025 our strongest regions, in terms of revenue, for the quarter, where India and North America at 45 million and 211 million of respectively.

We had 2 customers in the second quarter that contributed more than 10% of our revenues.

Gross profits for the second quarter on a longer basis was 30.3 million and increase of 4.4% compared to 29 million in Q2 2025.

Speaker #2: customers—easier. And is And is that that become because even even bigger for bigger for us in order to us throughout outplace this the the single-digit single-digit low low—single-digit growth that is single-digit profit expected for expected for this this business of the business of the business?

Our non-GAAP gross margin was 32.2%, compared to 35.2% in Q2 2025.

Gross margin was negatively impacted by geographical and product, mixtures along with some cost pressures as mentioned, previously by Dawn.

Speaker #2: So all business. So all in in all, when I look all when I look at at our strategy, we're our strategy we're doing two doing two things.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to Ceragon's Q2 2026 Earnings Call. Our presentation today will be followed by a question-and-answer session. At which time, if you wish to ask a question, you will need to raise your hand using your mobile or desktop application, or press star nine on your telephone keypad and wait for your name to be announced. I must advise you that this call is being recorded today. I would now like to hand over the call to our first speaker today, Rob Fink, Head of Investor Relations. Rob, please go ahead.

Given the magnitude and breadth of the cost pressures, we do not currently expect our mitigation initiatives to appreciably offset the pressure in the near term.

Speaker #2: First of things. First of all, we are all, we are increasing our increasing our time time beyond just beyond just point-to-point point-to-point and product product to either private networks or either private networks or public public networks.

Speaker #2: And that networks. And that by itself is by itself is increasing our increasing our time and time, and since we are since we are directing our directing our business business towards towards private networks private networks end-to-end, which is end-to-end which is expected to expected to grow in a relatively grow relatively fast fast pace, we pace we feel that feel that at this point, without at this point without doing a very in-depth analysis, doing in-depth analysis a a high-speed digit high-speed digit growth for the growth for this to years to come is come is prudent prudent.

As a result, we anticipate that component costs and supply chain challenges will continue to pressure gross margins over the remainder of 2026.

As another mitigation plan for current challenges, we are also focusing on increased software sales.

Rob Fink: Thank you, operator, and good morning, everyone. Hosting today's call are Doron Arazi, Ceragon's Chief Executive Officer, and Ronen Stein, Chief Financial Officer. Before we start, please note that today's discussion includes forward-looking statements within the meaning of the Securities Act of 1933 as amended, the Securities Exchange Act of 1934, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, projected financial performance, future initiatives, business outlook, development efforts, and anticipated results, timelines, and other matters. Forward-looking statements are based on expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially.

Turning to operating expenses research and development expenses. For the second quarter on a longer basis, were 8.2 million dollars up from 7.2 million dollars in Q2 2025.

Speaker #2: And.

Speaker #1: Perfect.

Speaker #1: That's all I've got. I appreciate

Speaker #1: it.

As a percentage of Revenue, our non-gaap R&D, expenses were 8.7% in the second quarter as compared to 8.8% in the second quarter last year.

Speaker #3: Okay. Our next question is from

Speaker #3: Theodore Ocho from Health

Speaker #3: Research. Theodore, please go

Speaker #3: ahead.

Speaker #4: Yes,

Speaker #4: hi. I wanted to

In marketing expenses, for the second quarter on a year-over-year basis, we were at $12.3 million, up from $11.1 million in Q2 2025.

Speaker #4: circle back on

Speaker #4: SpaceX's discussion about

Speaker #4: what they will do with the terrestrial

Speaker #4: network. I mean, Elon Musk was

Speaker #4: talking

Speaker #4: about earlier this—last

As a percentage of revenue, sales and marketing expenses on a non-GAAP basis were 13.1% in the second quarter, compared to 13.5% in the second quarter last year.

Speaker #4: week—that they're talking

Speaker #4: about trying to create

Speaker #4: a network, a network that would run

Speaker #4: on the acquired exercise

Rob Fink: These risks and uncertainties include, among others, global and regional economic conditions in Israel and the region, fluctuations in exchange rates, customer concentration, ordering patterns, supply chain challenges, and other matters further detailed in Ceragon's most recent annual report on Form 20-F and other documents that are filed with the Securities and Exchange Commission. Forward-looking statements are accurate only as the date they are made, and Ceragon undertakes no obligation to update them. Ceragon's public filings are available on the Securities and Exchange Commission's website at sec.gov and on Ceragon's website at ceragon.com. Also, today's call will include certain non-GAAP measures. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier today, which is posted on the investor relations section of Ceragon's website. With that, I will now turn the call over to Doron.

General and administrative expenses for the second quarter, on a non-GAAP basis, were $5.7 million, compared to $5.9 million in Q2 2025.

As a percentage of revenues, non-GAAP G&A expenses were 6.1% in the second quarter, compared to 7.2% in the second quarter last year.

Operating income for the second quarter on a longer basis was 4 million dollars compared to 4.7 million for Q2 2025.

As a percentage of revenues non-gaap operating income was 4.2% in the second quarter compared to 5.7% in the second quarter last year.

As a reminder, operating income was also negatively impacted versus 2025 due to adverse foreign currency movement in the Israeli sheet.

Financial and other expenses for the second quarter on a non-GAAP basis were $1.6 million, compared to $1.7 million in the second quarter last year.

Foreign exchange conditions stabilized during the quarter?

Rob Fink: Doron, the call is yours.

Doron Arazi: Thank you, Rob, and good morning, everyone. Ceragon delivered a strong Q2 as recently introduced technologies and solutions are creating a clear competitive advantage.

Doron Arazi: Thank you, Rob, and good morning, everyone. Ceragon delivered a strong Q2, as recently introduced technologies and solutions are creating a clear competitive advantage.

Our tax expenses for the second quarter on a run-rate basis were $0.7 million.

Rob Fink: Doron

Doron Arazi: and driving demand in key markets with particularly strong execution in India. Revenue for Q2 was $93.9 million, up 14% year over year, and non-GAAP EPS was two cents. Booking in Q2 reached their highest level since Q1 2024. Bookings and the book-to-bill ratio in H1 2026 represent the highest in the last 10 years for any H1 period. This demonstrates the strong competitive position Ceragon has established, especially in the faster-growing segments of our market. Additionally, the recent changes in the competitive landscape are opening more opportunities for us. We believe the two significant competitors are without visible technological continuity and may be observed as effectively out of the market, and the third competitor's future commitment to the market is uncertain. Subsequently, customers are looking for an established technology leader like Ceragon to fill the gap.

Net income for the second quarter on a longer basis was 1.7 million or 2 cents per diluted share compared to 2.5 million or 3 cents per diluted share for Q2 2025.

As, for our balance sheet.

Our cash position at the end of the second quarter was $34.8 million, compared to $38.425 million.

$19 million at the end of 2025.

Thus, at the end of the second quarter, we had a net positive cash position of approximately $22.8 million, compared to a net cash position of approximately $19.4 million.

At the end of 2025, we believe we have cash and Facilities that are sufficient for operations and working capital needs.

Our inventory, at the end of the second quarter was 59.5 Million down from 61.6 million at the end of 2025.

Our trade receivables at the end of the second quarter were $101.3 million, up from $99.7 million at the end of 2025.

Our DSO now stands at 107 days?

With respect to our cash flow.

Doron Arazi: Given these dynamics, we are capturing more opportunities, engaging in RFPs with potential new customers, and being asked to bid on projects involving new use cases. Driving our results were demand in India, the continued adoption of our E-band products and private network wins as customers continue to invest in capacity, network modernization, and new connectivity applications. Our portfolio is increasingly well-aligned with those investments. At the same time, we continue to expand the ways in which we serve customers beyond our traditional wireless transport business, including end-to-end private network solutions and managed services. Customer interest and demand in our newest products and solutions is encouraging. Positive results from proof of concept projects are helping to drive this interest from both existing customers and many potentially new customers in both proven and many new use cases. I start with India, a region with continued strong demand.

Net cash generated by operations and investing activities was $0.3 million in the second quarter, compared to approximately $5.6 million in Q2 2025.

Net cash provided by operating activities. Was 5.1 million while net cash used in investing. Activities was 4.8 million compared to 10.8% in Q2 2025.

Turning to our 2026 guidance.

We reiterate our 2026 Revenue, guidance of 355 million to 385 million.

Given the underlying business strengths and the anticipated cost challenges in the second half of 2026. We now expect our full year, 2026 gross margin

To be between 33.5% to 34.5% versus 35.5%. Previously and operating margin to be between 5% to 6% versus 6.5% to 7.5% previously. Both at the midpoint of our provided Revenue range for 2026.

The reduction in on gaap, gross margin, reflects our current view of the full year impact of anticipated cost pressures.

Doron Arazi: As we recently announced, we have booked approximately $120 million in orders from operators in India through late July. These orders are primarily driven by two of the country's leading mobile operators and support both the expansion and modernization of nationwide 4G and 5G transport networks. Fixed wireless access remains an important driver for this activity. As operators expand broadband coverage and address rapidly increasing data consumption, they require higher capacity transport that can be deployed quickly and economically. Our new IP-50CX platform and multi-band solution are winning this business for us as they are well-suited to the requirements of the Indian market. In general, demand for our innovative E-band wide portfolio is very strong. This is consistent with the trend we discussed last quarter as customers increasingly recognize E-band as an attractive way to deliver fiber-like capacity while accelerating deployment and lowering total cost of ownership.

That concludes my prepared remarks, and I'd like to now turn the call back over to Ronen for any remaining comments. Ronen?

Thanks Ron.

There will always be a moving pieces in our business from quarter to quarter. And today, those include components costs.

Supply availability, and Geographic mix.

But the underlying fundamentals that matter most to our long-term Outlook remain encouraging.

The amount for our technology and solutions is increasing.

Our addressable market is expanding, and we are converting more of these opportunities into meaningful bookings and long-term customer relationships.

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 *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.

Please go ahead.

Scott, are you able to unmute?

Doron Arazi: Given the exceptionally strong bookings in India during the H1 and based on our visibility for the remainder of the year, 2026 has the potential to be one of the strongest bookings years in India in quite some time. Turning to North America, this market also remains strong and active for Ceragon. Revenue from our existing key Tier 1 carrier customer was slightly higher than what we had anticipated during the quarter. We overcame some of the supply chain timing issues we discussed on our last call, but some of their revenue has shifted from the Q2 to the Q3 as expected. More importantly, the underlying demand environment with this customer remains healthy.

Okay, we will move to, uh, Ryan Coons from Needham Ryan. Oh, sorry. Okay. Go ahead. Uh, yes. Thanks for good morning, good afternoon. Thanks for taking the questions. I apologize for my confusion there. Um, hey, Don, just need to dive in. I'm not sure if I heard a book to build number, but I'd be curious if you had it, and then given the reiterated guidance.

For 2026, given the performance in the second quarter at the lower end, it would imply.

You're kind of saying that it's flattish in the second half versus the first half, given the strength that you're seeing in India and the bookings there. It sounds like even the recovering strength in the third quarter for North America would imply a number that's higher than, I think, just flattish versus the first half. So I'm kind of wondering what your thought process is there, and what the swing factors are to get you from the low end of the range to the high end of the range.

Thank you for this question, Scott. The issue is not the demand; the issue is not the visibility.

Uh, the issue is the, uh, disruption in the supply chain.

Doron Arazi: Across North America more broadly, engagement is strong from both CSPs and ISPs around many of the themes we have discussed previously, including higher capacity network architectures, E-band for fiber redundancy, E-band as the new microwave and next generation wireless transport solutions that can provide additional capacity with attractive deployment economics. These are areas where we believe Ceragon's technology and expanding product portfolio position us very well. We were successful in our proof of concept field trials with our 5G FR2 solution for a new Tier 1 carrier in North America, and now we are in commercialization discussions with this potential new customer. We also recognize the increased interest in LEO connectivity technology, which has grown even further following the IPO of SpaceX. We believe that such satellite-based technologies are very important for global connectivity and the digitization trend.

Doron Arazi: Across North America more broadly, engagement is strong from both CSPs and ISPs around many of the themes we have discussed previously, including higher-capacity network architectures, E-band for fiber redundancy, E-band as the new microwave, and next-generation wireless transport solutions that can provide additional capacity with attractive deployment economics. These are areas where we believe Ceragon's technology and expanding product portfolio position us very well. We were successful in our proof-of-concept field trials with our 5G FR2 solution for a new Tier 1 carrier in North America, and now we are in commercialization discussions with this potential new customer. We also recognize the increased interest in LEO connectivity technology, which has grown even further following the IPO of SpaceX. We believe that such satellite-based technologies are very important for global connectivity and the digitization trend.

Uh, and timeline of getting components.

Let's not forget, the AI explosion has created the perfect storm.

In the domain, uh, of a chips and uh, Active Components.

For many Industries.

And while timeline for uh, delivery of this components are lingering

and the level of confidence in meeting timelines is also being kind of, uh,

It reduced a little bit. Uh, we prefer to take, uh, the approach.

Uh, in which we keep, uh, this revenue, uh, guidance within this, uh, frame.

Uh, because this is, uh, the main, uh, so to speak.

Um, visibility problem that we have. So, to summarize, it's not about the demand.

It's about the ability to get the components in time to deliver and to convert.

these great orders into Revenue.

Doron Arazi: However, we view these technologies as complementary to terrestrial technology, not as a substitute. We believe wireless backhaul, such as what Ceragon provides, will remain the dominant solution for high capacity connectivity. Anecdotally, we would also remind investors of the recent announcement by SpaceX, highlighting its intent to build a terrestrial network in the US. If this happens, it may become another opportunity for us. Private network business in North America was particularly encouraging with record bookings. In general, private network opportunities are accelerating globally, and our recently introduced capabilities are aligned with the needs of this market segment. The recently announced deals are evidence of our ability to serve various use cases within private networks. We are encouraged that our continued investment in this segment is bearing fruit. What is particularly encouraging is the diversity of these opportunities.

I'm very helpful and, and if I could follow up, um, is my follow-up question? Just specifically in North America was a little weaker this quarter. It sounds like your Tier 1 slipped, uh, shipments from, uh, the second quarter into the third quarter. But I'm wondering now the private networks front. Um, how did that progress sequentially from March to June? And it sounds like you've got a good backlog of business. So the visibility from North America, maybe into the second half of the year and, and since you you touched on it, starlink

I'm wondering if if you're actually seeing any opportunities created from there. If there are any discussions ongoing on that front or if at this point, it's basically just, you know, kind of speculating if they start to build out um, a terrestrial Network. Thanks.

Uh so thanks I'll start with the second question. Look, um,

We probably all heard the same messages coming on the conference calls, they had a while ago.

They did not indicate uh anything that is more specific such as what is the architecture or more details about the architecture of this? Uh so uh new uh, terrestrial Network and so on so forth. So I think that it's still early to uh, to assess

How this is going to play out.

but if I'm trying to to kind of uh, get the messages uh, from that call,

Doron Arazi: We are increasingly competing for broader end-to-end projects that combine advanced wireless transport with technologies like private 5G and LTE, enabling IoT connectivity, automation, and other mission-critical applications. These opportunities are reflective of industry estimates that predict private network growth will exceed 30% CAGR over the next four years. We believe we are well positioned for significant growth in this segment, despite the inherently longer sales cycle compared to our traditional carrier business. Growth is not expected to be in a straight line, but our pipeline is expanding, the range of use cases is broadening, and we are seeing greater conversion of opportunities into bookings. We believe this can become an increasingly meaningful contributor to Ceragon over time. Our momentum also extends beyond the business and geographies that drove the majority of Q2 revenue.

Doron Arazi: We are increasingly competing for broader end-to-end projects that combine advanced wireless transport with technologies like private 5G and LTE, enabling IoT connectivity, automation, and other mission-critical applications. These opportunities are reflective of industry estimates that predict private network growth will exceed 30% CAGR over the next 4 years. We believe we are well-positioned for significant growth in this segment, despite inherently longer sales cycle when compared to our traditional carrier business. Growth is not expected to be in a straight line, but our pipeline is expanding, the range of use cases is broadening, and we are seeing greater conversion of opportunities into bookings. We believe this can become an increasingly meaningful contributor to Ceragon over time. Our momentum also extends beyond the business and geographies that drove the majority of Q2 revenue.

They would definitely want to buy to build a network that can be built very fast and, at the same time, can be quite competitive.

to the existing legacy networks in such cases.

Especially when they will start aggregating much more, uh, data.

In their existing antennas, the back—all.

It will become a very important element in the architecture.

I don't think that, at this point, the technology—

Uh, can carry, uh, such amount of data. I'm not sure that it will be able to carry such amount of data, even in the long term, but that's something that we can leave out.

So, based on all these assumptions,

I think that there can be an opportunity for players in the millimeter wave and macro web domain to help them build their network very fast.

With a, with a level of service that can compete with the incumbents.

Um,

And and now to your to your first question look, North America looks good.

Doron Arazi: In managed services, we recently secured a two-year, $3.4 million contract with a major mobile operator in Mexico. This is an important win because it demonstrates the opportunity to expand Ceragon's relationship with customers beyond equipment and into broader, long-term, or long-duration service engagements. Managed and professional services remain an important part of our strategy to increase the value we provide to customers while building a more diversified revenue base. We also recently secured an additional five-year agreement worth up to $70 million with a tier 1 mobile operator in APAC. We believe the duration and scale of this engagement validate our ability to build long-term

Doron Arazi: In managed services, we recently secured a 2-year, $3.4 million contract with a major mobile operator in Mexico. This is an important win because it demonstrates the opportunity to expand Ceragon's relationship with customers beyond equipment and into broader, long-term or long-duration service engagements. Managed and professional services remain an important part of our strategy to increase the value we provide to customers while building a more diversified revenue base. We also recently secured an additional 5-year agreement worth up to $70 million with a tier 1 mobile operator in APAC. We believe the duration and scale of this engagement validate our ability to build long-term

Um, we anticipated that in the second part, and predominantly in Q3.

Uh, we look better for us because of the all the reasons that we we described.

Uh, already in the call of, uh, of the, the first quarter results. So basically, uh, we are a bit positively surprised in Q2, but the general trajectory

As we discussed already, which indicates that we believe the second half will be much better.

Conversion.

uh, of private Network projects, into revenue is much slower than just

Sending our, uh, equipment to, uh, T1 operator and recognizing it within the same quarter. So I don't think that the impact of the strength

Uh, in terms of booking and backlog of private networks, uh, will be that significant.

Uh, in the short term.

But all in all, the bottom line for North America is positive. We believe that the second part of the year could be stronger than the first one.

Thanks so much. I'll get back in the queue.

Our next question is from Ryan Coons from Nathan Ryan. Please go ahead.

Ryan.

Please go ahead.

Okay. Um, we will take the next question. Can you hear me? Oh yes. Oh great. Okay, sorry about that. Um super um with regards to India. Um you know what do you see in there in terms of changes in in mix and use case? It's great to hear the strength.

Coming from India, is this mostly for Rural coverage, you know, are you looking at, you know, fwa and urban areas at all? Or what, what kind of use cases, are you seeing in, in India, that are that are giving you the the, uh, confidence and the bookings here and, um,

How is that affecting your product mix?

Yeah, so I think that the the, the business in India is, uh, is driven by by 2 main. Uh, uh, so to speak, uh,

A phenomenal.

1. There's still uh operators who have not completed the upgrade of the network even to forge.

And this is 1 part of the business strengths. The other part,

And that's for the more advanced uh, uh operators.

Um, in the 5G era.

Erh the operators in India are looking to expand the business predominantly uh, bringing connectivity.

Uh to uh, um, to residential areas.

And to, uh, to Enterprise, which means more fixed Wireless, uh, access use cases.

There you're talking about much higher capacity.

Is that needed for the backhaul?

And in those cases that they're using either our XA product or multi-band, that can ensure minimum level of connectivity with uh, much bigger capacity on average, these are the 2 main phenomena that are driving the demand.

Great that's helpful. And then maybe on the US side, uh sounds like you're new Tier 1, you're trying to ramp with uh you're really just working through the operational uh processes and maybe commercial processes. And I I think you have a still a good shot of uh seeing some share gains and uh 27 there.

Yeah, I I would

Uh, this, uh, um, um, this, uh, strengthening, uh, uh, relationship.

With this new Tier 1 operator, will start driving a meaningful revenue for us in 2027. I do believe that we and I, I think, I also mentioned that in the previous call, I do believe that we'll start getting the orders, uh, quite soon, maybe even, uh, in Q3.

Uh, but uh, in terms of impact on, uh, on Revenue, it's going to become meaningful in 2027.

Great, that's that's helpful. And then maybe lastly on the uh,

On on the Leo impacts. It's interesting. I, I hear what you're saying on, uh, on starlink if they build this, we give them time to Market to get to the, you know, microwave for the density and more urban areas. Um,

you know, I I assume the other Leos, uh, namely ASG space mobile, and their collaboration with

With the uh, the US incumbent mobile operators, you get this point. You're not seeing

in terms of their thoughts around 2027 and beyond

and we don't see any slowdown and and I, I need to, to kind of reiterate, um,

The main so to speak observation.

Given what we know. I don't know what, I don't know.

but based on all the public announcements, including some announcements and discussions about the the, the technology and the current uh, capabilities

The fundamental limitation is area spectral efficiency, which means bits per square kilometer.

and uh, in this respect in this respect, if you need very high capacity,

uh, at this point at least,

The Leo is not a great solution, the Leo is an amazing solution.

For increasing coverage.

Predominantly for mobility, because you know that once you start getting into homes and so on and so forth, the signal cannot go through walls and this kind of stuff. So,

The way I see the world is that this is a great collaboration between the opos.

And the, uh, and the LEO players to basically improve the level of service.

Speaker #2: areas where they don't have coverage and it doesn't make sense for the opcos to invest in more so to speak fundamental technology. That's the reason why we see this collaboration.

Uh, for the opos and reach out to this very rural areas where they don't have coverage and it doesn't make sense for the op codes to invest.

Speaker #2: It's about coverage it's not about capacity.

Speaker #3: That's very helpful. Thanks so much, Yasabra.

Speaker #1: Our next question is from Tyler Burmeister from Lake Street Capital Markets. Tyler, please go ahead.

Speaker #3: Thanks. You guys hear me all right?

Speaker #1: Yes.

Speaker #3: All right. Maybe first, I was wondering if you could give us any idea how much of the 120 million bookings year to date in India would you expect to convert to revenue this year?

Speaker #3: And then it sounds like the second half gross margin impact is largely or all component supply chain related. But I'm just wondering is there any potential impact as well from just a stronger mix in India than maybe you're expecting at least earlier this year?

Speaker #4: Well, good morning. The 120 million is expected mostly to be converted this year or fully all, but mostly this year. This is the expectation.

Speaker #4: Some of it was already converted. I remind that the 120 million is bookings over this year to date till end of July. When it was announced.

Speaker #2: I would just add to Ronen's point in terms of the your question about gross margin. How should we think about gross margin? So let's not forget when we take my previous comment when I'm expecting obviously subject to the supply chain challenges that North America revenue will be stronger in the second part of the year as opposed to the first part.

Speaker #2: And with the fact that India continues to be strong, we see the contribution of North America helping us to improve the gross margin. But the bottom line is that Ronen has actually indicated how the gross margin for the year is going to look like in his comments and that's basically based on a better mix between North America and India for the second part of the year and I think that all in all with the comments with the prepared comments you can anticipate the gross margins on the second part of the year.

Speaker #3: Great. Great. I appreciate that. And then maybe just a follow-up there on the gross margin side of it. With your updated supply chain timelines, component timelines, do we expect to see any directional rebound in gross margins into Q4?

Speaker #3: Do you expect some of these challenges to persist into 27? Any update on a timeline for improvement from some of these component challenges would be great.

Speaker #3: Thanks.

Speaker #4: So I cannot guide on a quarterly basis, but the H2 is the one just mentioned and completed my prepared remarks. This is supposed to be already covered.

Speaker #4: So the costs we don't see in 2026 in the second half much improvement on the cost side. On the mixture side, both regional and product and trying to sell more software as I commented in my prepared remarks, we expect the margins to streamline on the annual basis as I just mentioned.

Speaker #4: For the next year, we continue to have and for the future, we continue to have more initiatives that we'll just take a small time both on cost initiatives as well as the fact that once agreements with customers will get renewed or something like that, we will continue to push for higher prices because this is already been discussed not only on our part but also other players in the market are I think that everybody understands that current prices cannot be continue if costs continue to go up.

Speaker #2: Just as a general comment, I think that we're truly in a perfect storm. And this situation is not a sustainable for very long time.

Speaker #2: And because of that, we believe that we'll start seeing gradual improvement in 2027. And as Ronen hinted, it may come from different angles. Starting with building a more efficient products in terms of home cost and redesign and some of the comments that we already mentioned in this regard in our prepared comments.

Speaker #2: But also from the angle of price increase. It's a full industry issue and while today we may have some sort of contracts that we are honoring, obviously many of the contracts and some of the orders are always or almost always being opened up on an annual basis.

Speaker #2: And that will also give us another opportunity to also discuss pricing. With our customers. So we are not absorbing everything within our industry.

Speaker #3: I appreciate that. All right. That's all from me guys. Thanks.

Speaker #1: Great. Our next question is from Ben Textile from Craig Holland. Ben, please go ahead.

Speaker #3: Hey, can you guys hear me?

Speaker #1: Yes. Please go ahead.

Speaker #3: Perfect. I'm on for Christian Schwab here. A lot of my questions have been answered. I'm just wondering how maybe a little bit more broadly, how does this demand environment shape up to ones in years past?

Speaker #3: And then maybe if you could tie in there what is your initial...

Speaker #3: thoughts. 27. I know maybe you can give a

Speaker #3: number. But can

Speaker #3: together?

Speaker #2: growth and And on the on the local local business, the business of the CSP CSP highest—all highest all these these public public networks networks—our assumption is our assumption is that in that, on one one hand, we have new hand we have new opportunities opportunities because of the because of the competition competition and environment environment is generally is generally speaking speaking diluted, diluted and making and making our our life in terms lives—in terms of attaining new of attaining new customers easier.

Speaker #2: and.

Speaker #3: Perfect. That's all I got. I

Speaker #3: appreciate

Speaker #3: it.

Speaker #1: Okay. Our next

Speaker #1: question is from Theodore

Speaker #1: Arjun from Hills Research. Theodore,

Speaker #1: please go

Speaker #1: ahead.

Speaker #5: Yes.

Speaker #5: Hi. I

Speaker #5: wanted to go back

Speaker #5: on

Speaker #5: SpaceX's discussion about what they will do.

Speaker #5: with the terrestrial

Speaker #5: network. Elon Musk talked

Speaker #5: about

Speaker #5: earlier this last week

Speaker #5: that they're talking about

Speaker #5: trying to create a

Speaker #5: network that would run on the

Speaker #5: acquired

Speaker #4: frequencies.

Speaker #4: And it should be completely

Speaker #4: different than

Speaker #4: what the major carriers are

Speaker #4: using now. Is that something you can

Speaker #4: anticipate in if they decide to go that

Speaker #4: way? Or is it just a

Speaker #4: microwave battle that you will be

Speaker #4: addressing?

Speaker #2: we are a are predominantly the predominant the record network or the or transport output in transport part in any any network network, which is which is our our main main competency.

Speaker #2: great. And what's going to And what's going to happen with the happen in the aggregation aggregation? After you part? After you are able to are able to serve serve more more subscriptions.

Speaker #2: And aggregation and for for that, I don't that I don't think think they they gave gave information or a question or a a—it was not was not posed.

Speaker #2: How access. How do do I I approach playing know plan a my transport transport part so part so that the that the network can be network can be as as efficient and as efficient and as good good as the I as the, I would say, legacy would say legacy industrial terrestrial one.

Speaker #2: one?

Speaker #4: Okay. Thank you very

Speaker #4: much.

Speaker #3: Okay. There are no further

Speaker #3: questions, so that concludes today's

Speaker #3: call. Thank you for your

Speaker #3: participation. You may now

Speaker #5: frequencies. And which would

Speaker #5: be completely different

Speaker #5: than what

Speaker #5: the major carriers do. Is that

Speaker #5: something you participate in if they

Speaker #5: decide to go that way? Or is

Speaker #5: it just a microwave backbone

Speaker #5: that you would be addressing?

Speaker #2: We

Speaker #2: And in competency. And in this this respect the respect, assuming they will assuming they will use the use the spectrum spectrum very very good good way the way, the question I'm asking question I'm asking myself and myself—and I think many I think many others are others are okay—that's okay that's great.

Speaker #2: How do subscriptions, how do you expect you want to to manage your network manage your network architecture architecture starting from starting from the the aggregation?

Speaker #2: To proposed. To such information such information about the about the architecture architecture, and due to and my main my main focus in my comment, focus in my comment.

Speaker #2: I I believe that if believe that if they want to they want to move be fast one of fast, one of the challenges will be, the things will be okay, I got okay I got much more much more subscriptions, I got subscription.

Speaker #2: I got much more much more customer to serve, network to serve. I actually I actually got much got much more more traffic traffic in the in the access.

Speaker #5: Okay. Thank you very

Speaker #5: much.

Speaker #2: Sure. Sure.

Speaker #1: Okay. There are no further questions.

Speaker #1: So that concludes today's call. Thank

Speaker #1: you for your participation. You

Speaker #1: may now disconnect.

Q2 2026 Ceragon Networks Ltd Earnings Call

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