Cambium Networks (CMBM) 9 May 242024 Q1 Earnings call transcript

Good afternoon. My name is Therese, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks' First Quarter 2020 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Mr. Investor and President, Relations. Vice Schuman, Industry Public Analysts Peter

conference. You your may begin

on welcome joining of for Welcome CEO; Form this for Financial call. be Quarter and are page First and and with Results remarks has CFO commentary Results accessible our all joining page Call, today CFO, thank today's you Jacob website, this us of Sayer, call Investor release prepared and the on at for are A referenced been Kurk, available webcast. SEC. the submitted X-K by Morgan the today's Cambium our Networks' Investor Conference copy press to our press the and those here on XXXX release conclusion call. on of our also will

Networks' developments not the result and risk most SEC. of We with full of today's differ Safe the remarks, to factors for changes review uncertainties Cambium any new required As and otherwise. obligation of revise to forecasted outlook conform results statements forward-looking results company's those current conditions, as assumptions. a outlook. not make by statement any a to about to list XX-Qs Q&A, XX-Ks after recent forecasts financial update to actual reiterate our financial are information, in the to on made and any whether policy results does listeners Networks release statements included in encourage forward-looking will based could materially. Harbor or statements this Form today's and reason including and is press filed the date undertake It reminder, contain cause the or performance. Cambium future or law, statements our actual these These in as during Risks presentation, expectations Except Cambium's

reconciliation of non-GAAP for the will our which press comparisons non-GAAP the release, year-over-year to found in results note our A and is website can GAAP results. numbers, otherwise reference all except non-GAAP Investor GAAP to press in release reference both specifically be measures included We of and sequential noted. also today's appendix financial financial page and that and today's measures announcing on

Morgan first XXXX, operational the Turning and the a key our Jacob provide will quarter for quarter we'll provide and the recap XXXX. financial for financial the XXXX, for agenda. discuss will highlights year full the outlook to the first second quarter and results of

also I'd will Our remarks be to question-and-answer call like turn prepared a now the Morgan. by session. over to followed

new begin Jacob by our to introducing first CFO. Sayer, want I

Jacob in Finance see of those you where Technologies, joined who For recently and most technology press our VP Sensata of a was revenue, $X with has company over billion technology of in didn't release, industrial of banking he Cambium various global various Jacob with held roles and Head divisional the Sensata. for years and another experience investment segments roles. years XX companies of Investor CFO Relations previously XX of experience from

interim value CFO to also are to thank on John as past stepping for like We have board Veseral help to I for excellence, operational pleased would and strategy, growth drive up creation. the quarter. him

in defense 'XX America Revenues orders for decreased subscriber expected of Europe QX business, QX for sequentially. in quarter, and power standard long-awaited models hoped, PTP had delays process PMP our were than be the modules in quarter of In our leading expected, X access to the FCC in products shipments later approval XXXX received The for to XX% gigahertz Point-to-Multi-Point, the subscriber and related shortfall last Summarizing North to to million. was Point-to-Point, 'XX. Cambium finished although final gigahertz the ePMP the the $XX.X As QX, which with point guidance May. in we approved of X mostly week the performance lower-than-anticipated spectrum of the products. high-power in approval

expect We this increases the in of XXXX. portion throughout business sequential

aforementioned X gigahertz lines, our Wi-Fi note, of today. gigahertz new and America the which The ePMP in due XX% PMP we the FCC in product and revenues positive drive XXXX XXX% to anticipated, of North anticipated was X Our both PMP as enterprise of first levels in decline. to a sales demand Also improved than approval product. product X On April, XXXb the first slower is available FCC are approval Cambium's quarter. late improved decreasing inventories timing sequentially the business launched process by channel

in in While revenues, did increased maintained Cambium's obsolete We improved expenses. channel tightly in distribution controls than for as corresponding manage Sales channel of margin goods products for operating by not and revenues sequentially saw result declines cost increase primarily a QX inventory we Cambium's of components. our during meet QX revenues, of and an due and excess of below reported enterprise finished distributors see gross only we mix reported outlook, higher 'XX inventories. came reserves and 'XX to and product our out expectations slightly the to good were Cambium's as did

And clearing inventories make continue channel progress We good are in approaching the to healthy aggregate, inventories. in levels.

channel times and We cost are the in at capital shorter distributors diligently past. than by increased of monitoring different behaviors lead inventories and may managing drive

be revenues. This which approaching to previously, in improvements and of 'XX, equilibrium. incremental expect sales drive incremental therefore, the communicated of result should As to we sales to end will channel improvement into channel an normal back QX the in and out sales inventories by

Wi-Fi which of glass enterprise a performance unique the gear one in one to Glencore, some win cnMaestro $X dynamic includes and a of our manage system. run upgrade to that This future Wi-Fi center solutions. fiber by largest for consist million PON-based enterprise ease are is of of and is tactical In Cambium's network Convention deployment network. success. in of versatility over of and to combination our of demonstrates will from managed win line, and key Looking CambiumX in The the the results sizable Kenya, connectivity PMP and upgraded and mining ePMP our will a of Cambium's large and cost-effective cost effectiveness selected a deliver to outdoor mining throughout ONTs access mix had outdoor all system a ability X-year provider efficient to a the and critical the using roll deployment we in X points industry-leading and The cnMaestro. In expected This The management in a space, Orleans ship deploy year. business the companies the indoor deployment. reconfiguration integrated, dynamic result was in with solution. the Safaricom service Cambium's wins of U.S., interconnectivity of our world entire single single plan business cap. Cambium's New Australia, win the for Cambium's over on efficient deal flexibility and vendor tightly product a significant for Wi-Fi XXX a a residential with have wireless out the the strength, based at and customer on fiber Center, indoor In project

streaming speeds to step new Now with up experiences. quarterly X turning forward previous and access product units. announced data Wi-Fi is gigabits, connectivity, another to ensuring first fast of upcoming X lag and launch we X.X X+X+X introductions since point light our tri-radio, reaching free wireless in tri-band offering XX-XXX our March, downloads, update. the seamless our Wi-Fi In

Wi-Fi Wi-Fi all performance, Wi-Fi While with remains for cloud-managed boundaries with Networks X standards. secure X Cambium cnMaestro Cambium's the of backward previous or management pushing end-to-end network compatible on-prem control. works system --

a up approximately were from XX% year-over-year. and 'XX Finally, under now 'XX QX of 'XX review will 'XX total QX QX and Jacob call QX year increased XXXX outlook. devices for in financial X% and cnMaestro full turn our the Cloud financial to Management I results over

business at timing to the product additional and forward gross and the which below would orders improve shortly. been later PMP impact to 'XX in margins the X only 'XX than been mix and lower us see do isolated start the have due of The expect supplier would the the to XX.X%, impact the $X revenue by delays behind we have approximately to gigahertz original for QX commitments, approximately shortfall expectations, of but gross slightly and of results the beginning quarter, closer PTP. impacted in to growth. the look state solutions Without can forecast PTP the charges, to inventory While current we be included of QX the government and the market approval demand. in was margins business QX additional within results reflect the expected, quarter of charges which are which and million products these now defense

on are for products work costs We our current are and critical hard focusing the managing for that and continue success. forecast with Cambium's future align to most operating resources those on XXXX projects to

The of revenues revenues from by of reported or Revenues and Cambium for increase of majority X% QX in in the low volume improved million order Turning $X.X a business million to quarter. Europe, result the base. XX. albeit America the both enterprise North sequentially. our $XX.X increased for was

by by for revenues due for While This QX America recovery hurting some while decreased in Europe results. PMP PMP North with America increased defense By PTP in impacting business, defense the by XXX% year-end by gigahertz result territories. region, orders the of the of were Asia X Europe X% for after PTP regions XX% North was gigahertz delays in a and in strong sequentially. business. the to quarter-over-quarter delays due to approval business and approval and CALA the decreased delayed offset PMP to timing X revenues Europe while the States business of lower timing dropped orders XX% during the sequentially defense the and as 'XX. the products lower other enterprise decreased recovery United X% products in due partially for

margins. gross our to on Moving

million compared Non-GAAP QX payroll XX.X% quarter-over-quarter G&A higher lower was R&D 'XX. by at amortization including flat revenues depreciation a Our gross higher $XX.X on charges, quarter-over-quarter non-GAAP $XX.X a million were our higher once and of inventory freight in stood gross 'XX. XX.X% were When was -- to expenses lower to increase in higher-margin gross impacted although higher and The higher higher 'XX or to and inventory 'XX, had lower operating lower QX was offset costs, In revenues non-GAAP QX sequentially during enterprise the by QX and primarily products. margin $X.X operating and need the less revenues. rebates. and of non-GAAP excess for result we operating QX mix margin services defense debt to compared of due million non-GAAP expense, rebates negative profit total had expenses due high lower increased materials. bad The approximately of professional by and spending reserves 'XX 'XX, QX lower enterprise expenses, again to margin XX.X%

diluted per our million $X.XX QX $X.XX Our EBITDA $XX.X million non-GAAP for QX loss million quarter to 'XX. share a for the diluted non-GAAP loss compared 'XX. or 'XX for 'XX a of to million that a $XX.X loss and or loss QX Adjusted loss per of in was of a $XX.X share below was compared $XX.X a net was loss net of outlook of QX during

Moving $XX.X to operating operating to of cash flow. 'XX Cash and used for QX activities million for used in was 'XX. $X.X compares million in cash activities QX

to on continued capital cash we offset and receivables 'XX, execute closely QX loss. managing net working by into converting the During

the revolver, totaled of sequential to to of reflects from partially on primarily $XX $XX.X $XX 'XX. XX, loss, million expenditures. the capital by the as an cash million Cash million draw March increase and The in QX suppliers offset sheet. Turning XXXX, material of purchases a company's balance increase net $XX million

we focused revenues. lowering are cash capital on to and operating minimizing by inventory expenses, convert forward, conserving look continuing we into As expenditures

million 'XX. the have net to and to EBITDA profitability breakeven by million $XX.X be of reduced 'XX lower million Net were due revenue positive inventories during sequentially, to rate. higher $XX our expect quarterly below QX in by and revenues decreased $XX.X second -- calendar run QX half XXXX reserves. We Net consumption a driven inventories of both from

approval of of In As turned FCC X lower higher balance revenue for than we of spectrum market note, conditions the the delays closer well quarter million. because and is improve. Cambium than products. as to gigahertz we approval are a shipments to had to expects a later revenues the to reminder, ePMP positive our hoped. had goal gigahertz high-power as summary, starting XXXX soon reduce slightly as timing to our inventories final enterprise in first X On quarter $XX out our granting for receive defense anticipated

margin of improved as business very rebates gross lower sequentially environment. enterprise and higher Our in a competitive revenues result a

future should operating managing We see improvements continue remain channel which and performance. benefit to vigilant in inventories about costs,

business enterprise During to we improving start QX for an the as saw decline. channel 'XX, inventories continue

enterprise, quarter this improve we operational for As each to efficiency year. scale regain we expect our

spectrum, we the now PMP X help the on which the by FCC business, that gigahertz will approval business. have For

are a For the we continue for number a the we to large business, smaller of few business work And smaller several next for of PTP platforms number defense product to opportunities. pursuing product our to consolidate years. overall

Moving year million legal Cambium possible Considering financial to the to $X.XX. adjusted our QX other full XX.X%. expected is be XXXX as per $XX.X Non-GAAP XX% margins $X.X $X.XX million including EBITDA $X.X $XX Networks' between to margin approximately sequentially. the or loss be representing growth Non-GAAP -- matters to to million. net pending between million, operating 'XX between $X.X million to between and $X.X or approximately of does G&A X.X% between outlook million million include expenses, EBITDA any potential diluted $X.X acquisitions, $X.X outlook net $XX.X expense transactions. a visibility, gross XX% net transactions, impact financial share financial negative financial second to of to Adjusted quarter of outlook. million to not revenues between to loss X% million follows: is and negative $X.X and $XX to negative Interest and non-GAAP to million, between of XX%. our loss million current between non-GAAP is operating expected loss future negative leading

be requirements follows: non-GAAP in expect million We expected diluted to of expect approximately Cash tax outstanding. XX%, have average we a about as are QX. XX and shares to weighted benefit

a pay interest and capital million. of million expenditures First, between of $X.X and $X.X $X.X of debt cash $XXX,XXX, approximately million down

the $X.XX between million $XXX Our back of are million. approximately to $XX negative of decrease X.X%. of per expected for to as non-GAAP expenditures a XX%, or up expected loss representing million to for $X.XX some $XX.X full loss negative of remarks. call net year turn to follows: share. the $XXX X.X% is be loss XXXX Adjusted now net financial non-GAAP a closing EBITDA to And outlook a Morgan million gross diluted be X% between to margin million, between capital million revenues X%; year, I'll approximately between to $X $XX margins to

work to to and efficiency our end to and improve levels. continue and continues maintaining impact We while has revenue. inventory channel customers service manage with This

of this started by occur than others However, and the QX. expect to we believe we earlier work equilibrium the end

that We demand supply on we minimizing internal our chain. fail to to our focus to overcorrect don't ensure continue meet processes and while customers' the inventory throughout

the spectrum PMP to compete business with released WISP broadband X reliability. our Our is other positioned and on speed gigahertz as grow solutions well customers newly with

Our in architectural beginnings hardware platforming development activities both of with both progress to and decisions and software. continue

markets. working time go we where and highly faster with our the with with our these are benefits direction the to continue decisions its customers customers is most cost. I've driving ensure level the with aligned. channel been make implementation access in past can While customer business lowering our and and pleased where fully we are our in be aligned the the feature months, the fall, customers directly initiatives forward. intend involved Cambium I'm are and interest go-to-market we initial to to review from our we're is our of has need in that actions the force sales our base end the going the and take important competitive to sure over to be I going After making prospects, to has the future one my of driving impact last business long-term X of development, will decreasing teams initial

I'm throughout efficiently challenges, the industry, be begin session. While we employees, appreciation as partners, these for how problems to effectively the as support. industry share encouraged Therese solve the meet that, call effort to like to continued to my challenges the there and the to move internally and I'd the and With help our Q&A of like both and collaboration forward. well over customers and investor continue I'd turn

from Instructions] Our ROTH Scott today [Operator question first comes MKM. with Searle

heard quick clarification. or if clarify if wanted sell-through. margin but impact on you've was enterprise the congratulations sure and Morgan wondering I also welcome think talked I Wi-Fi a not I'm the there in about past, a number there. to just Maybe aboard. reserves. Jacob, I it, gross I'm

half million. I then at I wanted think the significant was I $X quick million of a the and then into $XX comfort think, implies to about current visibility in follow-up. full I looking gives north the of it you year, for XXXX, guidance that. second clarify time? it the pretty uplift had And quarter. What And a the this a

Yes.

with off, a similar. So It healthy level, enterprise I'll Scott, start maintains question on sell-through. the very

said range, Jacob changed and much number I to this to million $XX think the the it at million all. to of question. past working specifically let range in up. quarter And talk start the other we've you, your $XX the we're portions that giving I'll And hasn't we're in to drive

the correct, terms And of the in that million E&O gross last question regard Yes, Scott, you the was of impact $X on profit the your heard was to half of in the then year. the uplift quarter. second in in reserves

right. absolutely You're

of distributors significant revenue X have last over are the year. channel comes the from sales contraction headwind That in We second come in falling uplift the levels for with the That's an quarters. a company away. pretty the inventory the down in primarily as expecting half been inventory

year. the to near second an of end that, of expect the quarter here We this will that process end come

the as technology of for a And is has into dollars within if wireless particularly are medium more viable guess, and second push I grand level, in initiatives there, It's to right? to been, are BEAD do candidate but a unconnected last a a that. much try the terms wireless of that, wireless able number I a the effect, starting phase significant in this $XX.X early, that is the get million. to still to cost-effective But effort there high could, Morgan medium that BEAD to connect right, from a that given available mantra fiber-first is and deployments, time be

I'm terms in gigahertz maybe wireless participation specifically early coupling conversation. X the So your of BEAD that and in and wondering what program thoughts into are point-to-multipoint

Sure.

couple a things. So of

funding, been level a does but out licensed So a for which speed set are while not require has spectrum. requires

are and has customers additional BEAD BEAD, deploy is and So BEAD spectrum. applicable to that. the starting can absolutely case some X In for X put gigahertz the of only our this, towards license eagerly restrictions. on gigahertz be want

So that And has it gigahertz there so think while will is uplift probably much from to XX range. probably X.X more be done not in a XX event, the a event. this, like be we some

get Thanks. back Great. the in queue. I'll

comes from question next James. with Our Raymond Simon Leopold

Chiu is for Victor Simon. This in

You that about because of how Maybe year? noted gigahertz roll of delayed approval. FCC shortfall this that shipments has mostly recovered QX? kind quarter we the lower-than-expected do that? the of balance the through into Or kind X of Does think

Yes.

So still, learnings in there gigahertz. on I'll go are X call to it,

that more think rolls the don't I rolling It's year. QX. So throughout just into probably

band X different varies than is and because how our to of gigahertz pieces on users X for the it gigahertz then So be they granted use customers of could current AFC what spectrum doing. because based of they are have various

see think really take do understanding a take mass model see get X to some And how year. people the then it. significant scale I'd going months of we're for of to on a to this better to on off learnings deployments we'll and will and take throughout they it so probably sort X I

Okay.

slower kind was the gigahertz delay, the than without even what. ramp of So little a X

a think originally way we I of yes, anticipated Than it. had that's putting good

XX update just quick give adoption we And Can the progress how of an that? should product? mention then And helpful. the gigahertz you follow-up. with about around think That's a us

XX gigahertz? On Sure.

Yes.

we're we're product that more I'll we projects So base, this variety customers finding finding thought. intended but call there actually it our what call original line a in for I'll for with, We're had enterprise success other it, it, markets. than using are of

going And of it's is that. with step the a a say. build, a But going short economics. a be So There are have slow would makes function. not this continued I'm drive areas want to be have And reason to for sense where any you It's increase. -- of specific to be for this and It's I of don't hopeful where chance a data lot a you interference. distance. really transport relatively lot to

happen not And to a I so X [indiscernible] where you just it's gigahertz, period, what big This will see a be expect like after growth. uplift. in slow

with Notter George from Jefferies comes question next LLC. Our

structure I about curious was business. the margin gross guess I the of

going I mentioned margin what step had in be heard year. back now of you obviously, of where of to and the as some sort relative XX% good think you have the you QX, as run some say business off, comes you're just for think right Obviously, you naturally if target inventory run gross expense, But think would Like the about to a you rate E&O rebounds? the would margins land. the scale do I normalizes? more the gross sort business rates the that

for the around of range being is margins family gross good a higher But with George, range overall by defense the XX% at end XX% Probably, a modelling yes, those. of probably the business. rate. Obviously, product in there's

term? referring you year, you to for So trying this -- to were are long

term. Long

Okay.

target, we that. in of we kind points of our So modeled few historically and below I were XX% was have sort think a hitting

get to everybody bit of I inventory probably becomes that before it's occurs excess dominant going recover suppressed be going the that margins think channel, inventory out is enterprise X -- the until competing the in term. channel. we're to a And as tremendously with to won't are Wi-Fi

looking at. able as said, the we back that's to what should be so And we move this as up But long-term get scale. year, for we're Jacob margins,

Got it.

what XX% XX%, that's like of that on thought of think gross any like? a what XX% or you look kind margin do So might

which X. business, those I which think our XX%. certainly the and higher a goal higher is enterprise, of believe north normal it's focus that our government average, I long to is think have are than Yes, I is with on my than term, -- And with I it's think

it. Got

through excluded? out I And trying and G&A. I'm bad debt expense mentioned is I'm in Was Okay. going think you that guess the pro the forma big numbers looking or then it's in I how that financials if a to at. figure

and about $XXX,XXX, numbers. the it's It's non-GAAP in

it. excluded haven't We

showing at questions Instructions] no time. [Operator further I'm this

will back for Public I the and Analyst the Relations statement. Investor, So turn to closing President, Industry over call Vice Schuman, Peter

During Cambium be at QX at meeting Thursday, investors welcome Conference. 'XX, XXX-XXXX In Networks Consumer contact us, and will the Conference Tuesday, XX, with you and joining XXXX, you're Needham the XX, on the any Media Northland May presenting June for on Technology Growth concludes and with call. meantime, to always our Investor questions this Relations (XXX) virtually today's department at arise. Thank that

you, Thank everyone.

You phone from the disconnect may call. now