Cambium (CMBM) Earnings and Revenues Miss Estimates in Q3
Cambium Networks Corporation CMBM reported soft third-quarter 2023 results, with the top and bottom lines missing the Zacks Consensus Estimate. The leading wireless solutions provider recorded a year-over-year revenue contraction due to a decline in net sales in the Enterprise business, high inventory levels and macroeconomic headwinds.
However, total devices under cnMaestro Cloud management software crossed an all-time-high of 1 million, marking 17% year-over-year growth, which is a positive.
Net Income
On a GAAP basis, the company reported a net loss of $26.2 million or a loss of 95 cents per share against a net income of $9.4 million or 34 cents per share a year ago. The downturn was primarily attributable to a significant revenue decline.
The non-GAAP net loss was $12.1 million or a loss of 44 cents per share against a net income of $11.3 million or 40 cents per share in the year-ago quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 13 cents.
Cambium Networks Corporation Price, Consensus and EPS Surprise
Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote
Revenues
Quarterly net sales declined to $43 million from $81.2 million reported in the year-ago quarter. Revenue growth was affected by a 93% year-over-year sales decline in the Enterprise business due to weak demand in North America, Europe and the Middle East. The net sales decline in the Point-to-Multi-Point (PMP) business also negatively impacted the top line. The top line missed the consensus estimate of $46 million.
By product category, revenues from PMP were $23.6 million compared with $26.1 million a year ago. Inventory adjustments and the timing of the FCC’s approval of 6 GHz spectrum affected demand from service providers. However, a solid momentum for 28 GHz fixed products partially reversed the declining trend. The top line fell short of our revenue estimate of $30.7 million.
PTP business revenues marginally rose to $15.8 million from $15.4 million in the year-ago quarter. U.S. federal budgetary issues significantly impacted Cambium defense sales in the quarter. Net sales missed our revenue estimate of $25.4 million. Revenues from the Enterprises business witnessed a sharp decline to $2.5 million from $38.3 million in the year-ago quarter. Top line missed our revenue estimate of $6.3 million.
Region-wise, revenues from North America decreased to $17.8 million from $30.1 million in the year-ago quarter. Net sales in the EMEA region declined to $14.3 million from $29.3 million in the prior-year quarter. Revenues from the Asia Pacific declined to $5.3 million from $12.9 million in the year-earlier quarter. Revenues from the Caribbean and Latin America region fell from $8.9 million to $5.7 million.
Other Details
Non-GAAP gross profit was $11.9 million for a corresponding margin of 27.7% compared with respective figures of $41.6 million and 51.3% in the year-ago quarter. Lower volumes of high-margin Enterprise products, low freight capitalization and elevated inventory levels impacted the gross margin. Non-GAAP operating loss was $15.5 million against an operating income of $13.8 million in the prior-year quarter.
Cash Flow & Liquidity
In the September quarter, Cambium utilized $0.2 million against an operating cash flow of $2.2 million in the prior-year quarter. As of Sep 30, 2023, the company had a $27.5-million cash balance with $22.6 million long-term debt.
Outlook
For the fourth quarter of 2023, revenues are estimated to be in the range of $45-$50 million. Non-GAAP gross margin is projected to be 38-45%. Non-GAAP operating expenses are expected at $25.7-26.7 million. The company anticipates a non-GAAP net loss of $4-7.5 million or a loss of 14-27 cents per share.
Cambium is taking active initiatives to optimize cost structure. Its strategy to identify and invest in key growth areas will likely bring long-term benefits. Management expects the normalization of channel inventory for the Enterprise business to take a considerable amount of time. FCC’s approval of Cambium’s affordable 6 GHz solutions will likely boost the PMP business’s prospects. The company anticipates solid revenues from defense, as demand in the PTP business remains strong.
Zacks Rank & Stock to Consider
Cambium currently has a Zacks Rank #3 (Hold).
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