Cambium (CMBM) Q4 Loss Wider Than Expected on Lower Revenues
Cambium Networks Corporation CMBM reported soft fourth-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. High incentives and discounts to distributors also contributed to lower revenues year over year.
Net Income
On a GAAP basis, the company reported a net loss of $39.1 million or a loss of $1.41 per share against a net income of $10 million or 35 cents per share a year ago. The downturn was primarily attributable to a significant revenue decline.
Non-GAAP net loss was $26.4 million or a loss of 95 cents per share against a net income of $10.3 million or 38 cents per share in the year-ago quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 34 cents.
Cambium Networks Corporation Price, Consensus and EPS Surprise
Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote
For 2023, GAAP net loss of $63.6 million or a loss of $2.31 per share against a net income of $20.2 million or 72 cents per share in 2022. Non-GAAP net loss was $30.7 million or a loss of $1.10 per share against a net income of $26.9 million or 94 cents per share in 2022.
Revenues
Quarterly net sales more than halved to $40.2 million from $84.5 million in the year-ago quarter. Revenue growth was affected by a low order volume in the Enterprise business as distributors largely focused on lowering their channel inventories. Aggressive discounts and soft economic growth also led to the revenue shortfall. The net sales decline in the Point-to-Multi-Point (PMP) business further hurt the top line. The top line missed the consensus estimate of $44 million. For 2023, revenues declined to $220.2 million from $296.9 million in 2022.
By product category, revenues from PMP were $22.6 million compared with $29.7 million a year ago. Inventory adjustments and the timing of the FCC’s approval of 6 GHz spectrum affected demand from service providers. The top line fell short of our revenue estimate of $24.6 million.
PTP business revenues marginally rose to $21.9 million from $21.3 million in the year-ago quarter. U.S. federal budgetary allocations for defense sales helped the segment sales. Net sales beat our revenue estimate of $19.6 million. Revenues from the Enterprises business witnessed a sharp decline to negative $5.5 million from $32 million in the year-ago quarter.
Region-wise, revenues from North America decreased to $27.1 million from $44.4 million in the year-ago quarter. Net sales in the EMEA region declined to $3.4 million from $20 million. Revenues from the Asia Pacific declined to $4.4 million from $10.9 million in the year-earlier quarter. Revenues from the Caribbean and Latin America region fell from $9.2 million to $5.3 million.
Other Details
Non-GAAP gross loss was $7.8 million for a corresponding margin of negative 19.4% compared with respective figures of $41.9 million and 49.6% in the year-ago quarter. Lower volumes of high-margin Enterprise products, low freight capitalization and elevated inventory levels adversely impacted the gross margin. Non-GAAP operating loss was $34.1 million against an operating income of $13.2 million in the prior-year quarter.
Cash Flow & Liquidity
In the December quarter, Cambium utilized $6.2 million against an operating cash flow of $4 million in the prior-year quarter. As of Dec 31, 2023, the company had $19.7 million cash with $21.9 million long-term debt compared with respective tallies of $48.2 million and $24.5 million a year ago.
Outlook
For the first quarter of 2024, revenues are estimated to be in the range of $43-$48 million. Non-GAAP gross margin is projected to be 41-44%. Non-GAAP operating expenses are expected to be $25.4-26.4 million. The company anticipates a non-GAAP net loss of $6.1-8.6 million or a loss of 22-31 cents per share.
For 2024, revenues are estimated to be in the range of $215-$245 million. Non-GAAP gross margin is projected to be about 44%. The company anticipates non-GAAP earnings within a net loss of $13.6 million or a loss of 48 cents per share and net income of $2.3 million or 8 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 & Key Picks
Cambium currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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