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Cambium Networks Reports Second Quarter 2022 Financial Results

·12 min read
  • Revenues of $69.3 million, increased 12% sequentially, and decreased 25% year-over-year

  • Enterprise Wi-Fi revenues of $24.0 million, increased 55% sequentially and 31% year-over-year

  • Gross margin of 48.3%, non-GAAP(1) gross margin of 48.9%

  • Operating income of $2.7 million, non-GAAP(1) operating income of $6.3 million

  • Net income of $2.3 million or $0.08 per diluted share, non-GAAP(1) net income of $5.0 million or $0.18 per diluted share

  • Adjusted EBITDA(1) of $7.8 million or 11.3% of revenues

ROLLING MEADOWS, Ill., Aug. 4, 2022 /PRNewswire/ -- Cambium Networks Corporation ("Cambium Networks") (NASDAQ: CMBM), a leading provider of wireless networking infrastructure solutions, today announced financial results for the second quarter 2022 ended June 30, 2022.

Cambium Networks Logo (PRNewsFoto/Cambium Networks)
Cambium Networks Logo (PRNewsFoto/Cambium Networks)



GAAP


Non-GAAP (1)

(in millions, except percentages)


Q2 2022


Q1 2022


Q2 2021


Q2 2022


Q1 2022


Q2 2021

Revenues


$            69.3


$            61.9


$            92.7


$            69.3


$            61.9


$            92.7

Gross margin


48.3 %


47.1 %


49.7 %


48.9 %


47.8 %


50.0 %

Operating margin


3.8 %


(3.5) %


15.4 %


9.1 %


1.6 %


18.9 %

Adjusted EBITDA margin








11.3 %


3.1 %


19.9 %



1

Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and for reconciliation of adjusted EBITDA for the second quarter ended June 30, 2022.

"We are pleased to deliver a significant improvement in our second quarter financial results," said Atul Bhatnagar, president and CEO. "Our supply chain began recovering as we experienced an easing of Chinese government COVID lockdowns allowing for improved production and distribution of our products from Asia."

Bhatnagar continued, "Cambium's gigabit wireless fabric allows network operators to dramatically improve broadband performance and quality of service. Our Wi-Fi 6/6E solutions are in the first phase of expansion followed by the next leg of growth comprised of millimeter wave technologies, continued by the opening of 6 GHz spectrum to drive the next generation multi-gigabit fixed wireless broadband infrastructure solutions. We are also forecasting a healthy increase in global defense spending, as national security has become a paramount issue for many nations."

Revenues of $69.3 million for the second quarter 2022 decreased $23.4 million year-over-year primarily as a result of lower Point-to-Multi-Point revenues primarily due lower demand from service providers and global supply and distribution constraints, offsetting strong demand for enterprise Wi-Fi products and higher Point-to-Point revenues. Revenues for the second quarter 2022 increased by $7.4 million compared to $61.9 million for the first quarter 2022, primarily due to higher enterprise Wi-Fi and Point-to-Point revenues, offset by lower Point-to-Multi-Point revenues.

GAAP gross margin for the second quarter 2022 was 48.3%, compared to 49.7% for the second quarter 2021, and 47.1% for the first quarter 2022. GAAP operating income for the second quarter 2022 was $2.7 million, compared to operating income of $14.3 million for the second quarter 2021, and operating loss of $2.2 million for the first quarter 2022. GAAP net income for the second quarter 2022 was $2.3 million, or net income of $0.08 per diluted share, compared to net income of $11.5 million, or net earnings of $0.40 per diluted share for the second quarter 2021, and net loss of $1.6 million, or net loss of $0.06 per diluted share for the first quarter 2022.

Non-GAAP gross margin for the second quarter 2022 was 48.9%, compared to 50.0% for the second quarter 2021, and 47.8% for the first quarter 2022. Non-GAAP operating income for the second quarter 2022 was $6.3 million, compared to $17.5 million for the second quarter 2021, and $1.0 million for the first quarter 2022. Non-GAAP net income for the second quarter 2022 was $5.0 million, or $0.18 per diluted share, compared to $12.9 million, or $0.45 per diluted share for the second quarter 2021, and $0.3 million, or $0.01 per diluted share, for the first quarter 2022. For the second quarter 2022, adjusted EBITDA was $7.8 million or 11.3% of revenues, compared to adjusted EBITDA of $18.4 million or 19.9% of revenues for the second quarter 2021, and $1.9 million or 3.1%  of revenues for the first quarter 2022.

Cash provided by operating activities was $10.0 million for the second quarter 2022, compared to $20.1 million cash provided by operating activities for the second quarter 2021, and $19.2 million cash used in operating activities for the first quarter 2022. Cash totaled $45.9 million as of June 30, 2022, $5.5 million lower than June 30, 2021, due primarily to higher inventories, offset by earnings during the past year. The increase in cash balance of $7.5 million from March 31, 2022, was primarily the result of higher earnings, and improved working capital management.

Second Quarter 2022 Highlights

  • Revenues of $69.3 million, increased 12% sequentially, and was lower by 25% year-over-year.

  • Received a multi-million agreement for 28 GHz millimeter wave solutions for cnWave™ Fixed 5G technology.

  • GAAP net income of $2.3 million or $0.08 per diluted share, non-GAAP net income of $5.0 million or $0.18 per diluted share.

  • Adjusted EBITDA of $7.8 million or 11.3% of revenues, compared to $18.4 million or 19.9% of revenues for the second quarter 2021.

  • Net cash provided by operating activities of $10.0 million, compared to $20.1 million provided by operating activities for the second quarter 2021.

  • Increased new channel partners by approximately 1,600 year-over-year, an increase of 15%.

  • Devices under cnMaestro® Cloud management increased 36% year-over-year.

Third Quarter 2022 Financial Outlook

Taking into account our current visibility, the financial outlook as of August 4, 2022, for the third quarter ending September 30, 2022, is expected to be as follows:

  • Revenues between $72.0-$76.0 million

  • GAAP gross margin between 47.9%-48.9%; and non-GAAP gross margin between 48.5%-49.5%

  • GAAP operating expenses between $32.0-$33.0 million; and non-GAAP operating expenses between $28.9-$29.9 million

  • GAAP operating income between $2.5-$4.2 million; and non-GAAP operating income between $6.1-$7.8 million

  • Interest expense, net of approximately $0.5 million

  • GAAP net income between $1.6-$2.9 million or between $0.06 and $0.10 per diluted share; and non-GAAP net income between $4.5-$5.8 million or between $0.16 and $0.20 per diluted share

  • Adjusted EBITDA between $7.0-$8.7 million; and adjusted EBITDA margin between 9.8%-11.5%

  • GAAP and non-GAAP effective tax rate of approximately 18.0%-20.0%

  • Approximately 28.2 million weighted average diluted shares outstanding

Cash requirements are expected to be as follows:

  • Paydown of debt: $0.7 million

  • Cash flow interest expense: approximately $0.5 million

  • Capital expenditures: $2.4-$2.6 million

Full Year 2022 Financial Outlook

  • Revenues between $280.0-$300.0 million

  • GAAP net income between $3.2-$14.1 million or between $0.11 and $0.50 per diluted share; and non-GAAP net income between $13.1-$25.1 million or between $0.46 and $0.89 per diluted share

  • Adjusted EBITDA margin between 7.8%-12.5%

Cambium Networks financial outlook does not include the potential impact of any possible future financial transactions, acquisitions, pending legal matters, or other transactions.  Accordingly, Cambium Networks only includes such items in the company's financial outlook to the extent they are reasonably foreseeable; however, actual results may differ materially from the outlook.

Conference Call and Webcast

Cambium Networks will host a live webcast and conference call to discuss its financial results at 4:30 p.m. ET today, August 4, 2022. To access the live conference call by phone, listeners should dial +1(833) 634-2275 in the U.S. or Canada and +1(412) 902-4143 for international callers, referencing the Cambium Networks conference call. To join the live webcast and view additional materials, listeners should access the investor page of Cambium Networks website at https://investors.cambiumnetworks.com/. Following the live webcast, a replay will be available on the investor page of Cambium Networks website for a period of one year. A replay of the conference call will be available for 48 hours soon after the call by phone by dialing +1(877) 344-7529 in the U.S. or Canada and +1(412) 317-0088 for international callers, using the conference ID number 3054204.

In addition, Cambium Networks President and CEO, Atul Bhatnagar, and Andrew Bronstein, CFO, will present and hold one-on-one meetings with investors including Wednesday August 10, 2022, at Oppenheimer Technology, Internet & Communications Conference held virtually; on Wednesday August 31, 2022, at the Jefferies 2022 Semiconductor, IT Hardware and Communications Infrastructure Summit in Chicago, Ill.; on Thursday September 1, 2022, Cambium will host a  tour at our Rolling Meadows, Ill. headquarters with Barrington Research; and on Wednesday September 14, and Thursday September 15, 2022, Cambium will hold one-on-one meetings and present at the Goldman Sachs Communacopa + Technology Conference in San Francisco, Calif. To join the live webcasts for the Oppenheimer and Goldman Sachs conferences, listeners should access the investor page of Cambium Networks website https://investors.cambiumnetworks.com/.  Following the live webcasts, a replay will be available in the event archives at the same web address.

About Cambium Networks

Cambium Networks delivers wireless communications that work for businesses, communities, and cities worldwide. Millions of our radios are deployed to connect people, places and things with a unified wireless fabric that spans multiple standards and frequencies of fixed wireless and Wi-Fi, all managed centrally via the cloud. Our multi-gigabit wireless fabric offers a compelling value proposition over traditional fiber and alternative wireless solutions. We work with our Cambium certified ConnectedPartners to deliver purpose-built networks for service provider, enterprise, industrial, and government connectivity solutions in urban, suburban, and rural environments, with wireless that just works.

Cautionary Note Regarding Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the federal securities laws, including statements concerning our expected next quarter revenues, net income and cash. All statements other than statements of historical fact contained in this document, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this document are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this document and are subject to a number of risks, uncertainties and assumptions including those described in the "Risk factors" section of our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2022, and most recent Quarterly Report on Form 10-Q filed on May 6, 2022. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include: the unpredictability of our operating results; the impact of the global shortage of certain components including semiconductor chipsets; the constraint in global shipping and logistics; risks presented by the global COVID-19 pandemic, including new or continued government shutdowns such as the recent shutdowns in China that caused some of our manufacturing operations as well as our third-party logistics and warehousing provider to shutdown, which has and could continue to significantly disrupt our manufacturing, supply chain, sales and other operations and negatively impact our financial results; our inability to predict and respond to emerging technological trends and network operators' changing needs; the impact of the tensions between Russia and Ukraine, which have resulted in our cessation of sales to Russia, Belarus and select regions of Ukraine, and may continue to disrupt our sales and product design activities in these regions; our reliance on third-party manufacturers, which subjects us to risks of product delivery delays and reduced control over product costs and quality; our reliance on distributors and value-added resellers for the substantial majority of our sales; the inability of our third-party logistics and warehousing providers to deliver products to our channel partners and network operators in a timely manner; the quality of our support and services offerings; our or our distributors' and channel partners' inability to attract new network operators or sell additional products to network operators that currently use our products; the technological complexity of our products, which may contain undetected hardware defects or software bugs; our channel partners' inability to effectively manage inventory of our products, timely resell our products or estimate expected future demand; our inability to manage our growth and expand our operations; unpredictability of sales and revenues due to lengthy sales cycles; our inability to maintain an effective system of internal controls, produce timely and accurate financial statements or comply with applicable regulations; our reliance on the availability of third-party licenses; risks associated with international sales and operations; current or future unfavorable economic conditions, both domestically and in foreign markets and political tensions among the U.S. and China; and our inability to obtain intellectual property protections for our products.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)



Three months ended



June 30, 2022


March 31, 2022


June 30, 2021






Revenues


$                    69,296


$                    61,896


$                    92,709

Cost of revenues


35,857


32,730


46,617

Gross profit


33,439


29,166


46,092

Gross margin


48.3 %


47.1 %


49.7 %

Operating expenses







Research and development


10,576


12,102


12,617

Sales and marketing


10,579


10,148


9,718

General and administrative


8,085


7,665


7,896

Depreciation and amortization


1,534


1,446


1,564

Total operating expenses


30,774


31,361


31,795

Operating income (loss)


2,665


(2,195)


14,297

Operating margin


3.8 %


-3.5 %


15.4 %

Interest expense, net


407


497


1,316

Other (income) expense, net


(371)


77


79

Income (loss) before income taxes


2,629


(2,769)


12,902

Provision (benefit) for income taxes


307


(1,201)


1,385

Net income (loss)


$                      2,322


$                    (1,568)


$                    11,517








Earnings (loss) per share







Basic  


$                        0.09


$                      (0.06)


$                        0.44

Diluted


$                        0.08


$                      (0.06)


$                        0.40

Weighted-average number of shares outstanding to compute earnings (loss) per share







Basic


26,836,853


26,749,675


26,365,207

Diluted


27,588,772


26,749,675


28,909,348








Share-based compensation included in costs and expenses:







Cost of revenues 


$                           50


$                           57


$                           50

Research and development


1,011


1,022


842

Sales and marketing


578


627


539

General and administrative


878


714


667

Total share-based compensation expense


$                      2,517


$                      2,420


$                      2,098

 

 

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(Unaudited)



June 30, 2022


December 31, 2021

ASSETS





Current assets





Cash


$                    45,929


$                    59,291

Accounts receivable, net of allowance of $731 and $683


79,538


69,773

Inventories, net


47,442


33,777

Recoverable income taxes


280


860

Prepaid expenses


3,980


12,170

Other current assets


5,251


4,718

Total current assets


182,420


180,589






Noncurrent assets





Property and equipment, net 


10,929


10,490

Software, net


6,847


5,867

Operating lease assets


4,938


5,899

Intangible assets, net


9,938


10,777

Goodwill


9,842


9,842

Deferred tax assets, net


8,897


7,604

Other noncurrent assets


1,089


1,200

TOTAL ASSETS


$                  234,900


$                  232,268

LIABILITIES AND EQUITY 





Current liabilities





Accounts payable 


$                    28,096


$                    28,241

Accrued liabilities 


29,129


21,948

Employee compensation


5,580


16,601

Current portion of long-term external debt, net


3,152


2,489

Deferred revenues


7,269


6,880

Other current liabilities


6,388


5,981

Total current liabilities


79,614


82,140

Noncurrent liabilities





Long-term external debt, net


25,715


26,965

Deferred revenues


6,796


5,363

Noncurrent operating lease liabilities


3,051


4,112

Other noncurrent liabilities


1,572


1,551

Total liabilities


116,748


120,131

Shareholders' equity 





Share capital; $0.0001 par value; 500,000,000 shares authorized at June 30, 2022 and December 31, 2021; 26,964,218 outstanding at June 30, 2022 and 26,735,183 outstanding at December 31, 2021


3


3

Additional paid in capital


130,430


124,117

Treasury shares, at cost, 188,216 shares at June 30, 2022 and 156,907 shares at December 31, 2021


(4,512)


(3,906)

Accumulated deficit


(6,624)


(7,378)

Accumulated other comprehensive loss


(1,145)


(699)

Total shareholders' equity 


118,152


112,137

TOTAL LIABILITIES AND EQUITY


$                  234,900


$                  232,268

 

 

CAMBIUM NETWORKS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)










Three Months Ended



June 30, 2022


March 31, 2022


June 30, 2021

Cash flows from operating activities:







Net income (loss)


$                      2,322


$                    (1,568)


$                    11,517

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:







Depreciation and amortization of software and intangible assets


1,904


1,790


1,751

Amortization of debt issuance costs 


76


77


440

Share-based compensation


2,517


2,420


2,098

Deferred income taxes


80


(1,373)


748

Provision for inventory excess and obsolescence


80


52


(60)

Other


(87)


81


14

Change in assets and liabilities:







Receivables


(10,082)


6,152


(10,881)

Inventories


(7,312)


(6,485)


3,102

Prepaid expenses


8,748


(578)


3,500

Accounts payable


11,899


(12,109)


5,295

Accrued employee compensation


(642)


(10,276)


2,565

Other assets and liabilities


483


2,592


49

Net cash provided by (used in) operating activities


9,986


(19,225)


20,138

Cash flows from investing activities:







Purchase of property and equipment


(1,554)


(714)


(1,150)

Purchase of software


(933)


(1,068)


(801)

Net cash used in investing activities


(2,487)


(1,782)


(1,951)

Cash flows from financing activities:







Repayment of term loan


(656)



(19,572)

Issuance of ordinary shares under ESPP


1,127