Cambium (CMBM) Lags Q2 Earnings Estimates on Lower Revenues
Cambium Networks Corporation CMBM reported lackluster second-quarter 2023 results, with the bottom and the top line missing the respective Zacks Consensus Estimate. The leading wireless solutions provider reported lower revenues year over year due to a slowdown in revenues of Enterprise products.
Net Income
On a GAAP basis, quarterly net loss was $2.6 million or a loss of 10 cents per share against a net income of $2.3 million or 8 cents per share in the prior-year quarter. Net sales contraction and higher operating expenses dented the bottom line during the quarter.
Non-GAAP net income came in at $0.9 million or 3 cents per share compared with $5 million or 18 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 21 cents by a considerable margin.
Cambium Networks Corporation Price, Consensus and EPS Surprise
Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote
Revenues
During the quarter, Cambium generated revenues of $59.5 million, down from $69.3 million in the prior-year quarter. The year-over-year decline was attributable to significantly lower sales of Enterprise products owing to aggressive pricing by competitors and soft global economic conditions leading to order cancellations and delays in end-customer projects. Lower net sales in Point-to-Multi-Point (PMP) revenues added to the woes, while higher Point-To-Point (PTP) product sales partially reversed this positive trend. The top line missed the consensus estimate of $76 million.
By product category, quarterly revenues at PMP came in at $26.7 million compared with $28.3 million a year ago. The declining demand trends from service providers owing to the transition from PMP 450 products to Cambium’s new gigabit technologies hurt net sales from this segment. Revenues from the PTP business rose to $25.1 million from $15.7 million in the prior-year quarter, driven by robust growth in the defense business. Revenues at the Enterprises business declined to $6.4 million from $24 million in the year-ago quarter.
Region-wise, revenues from North America rose to $39.5 million from $31.1 million in the year-ago quarter. Revenues from EMEA (Europe, Middle East and Africa) declined to $6.8 million from $21.3 million in the prior-year quarter. The company witnessed a top-line decline from the CALA (Caribbean and Latin America) region, as revenues fell from $8 million in the year-ago quarter to $6 million. Revenues from Asia-Pacific declined to $7.2 million from $8.9 million in the prior-year quarter.
Other Details
Non-GAAP gross profit decreased to $29.9 million from $33.9 million for respective margins of 50.3% and 48.9%. The decline was largely due to lower Enterprise revenues. Non-GAAP operating income was down to $1.6 million from $6.3 million in the year-ago quarter. Non-GAAP adjusted EBITDA totaled $2.8 million compared with $7.8 million a year ago, for respective margins of 4.7% and 11.3%.
Cash Flow & Liquidity
During the quarter, Cambium utilized $4.5 million against an operating cash flow of $10 million in the prior-year quarter. As of Jun 30, 2023, the company had a $32 million cash balance with $23.2 million long-term debt.
Outlook
For the third quarter of 2023, revenues are expected in the range of $62-$70 million, while non-GAAP earnings are anticipated in the band of $3.7-$6.9 million or 13-25 cents per share. Non-GAAP operating income is projected between $5.2 million and $9.2 million, while adjusted EBITDA is likely to be in the range of $6.3-$10.3 million, with a corresponding margin between 10.2% and 14.8%.
For 2023, management has lowered its revenue estimates to the range of $265-$275 million from $327-$337 million. Non-GAAP gross margin is expected to be between 50.2% and 51.6%. Non-GAAP net income is expected in the band of $16.7-$21.9 million or 59-78 cents per share, down from $33.7-$36 million or $1.18-$1.26 per share expected earlier. The company plans to maintain its cost-control initiatives, and management is conservative about revenue growth rate owing to the persistence of uncertainty in the global economy.
Zacks Rank & Stock to Consider
Arista currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
InterDigital, Inc. IDCC, sporting a Zacks Rank #1, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. It has a long-term earnings growth expectation of 13.9%.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. AKAM, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 10%.
Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Motorola Solutions, Inc. MSI carries a Zacks Rank #2. It has a long-term earnings growth expectation of 9% and delivered an earnings surprise of 6.9%, on average, in the trailing four quarters.
As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem.
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