Cambium Networks Corp. Q4 FY2023 earnings call

Management Statement and Operational Highlights

• Q4 ‘23 revenues were $40.2 million, down 7% QoQ and 52% YoY, due to low order volume in Enterprise, PMP declines, and PTP strength. Gross margin was negative 19.4% YoY due to revenue reductions, inventory charges, and unfavorable product mix.
• Inventory: Channel inventories for Enterprise are decreasing and expected to reach pre-pandemic levels by H1 2024. PMP channel inventories remained stable. Customer wins include Nextlink in North America and Siglo in Mexico.
• Product Introductions: Upcoming releases include a fiber aggregation switch in Spring 2024, PMP 450b6, and continued development of 6 GHz products anticipating FCC approval.

Segment Performance

• PTP (Point-to-Point): In Q4 ‘23, PTP revenues increased 38% sequentially and 3% year-over-year. For full-year 2023, PTP had a record year, growing 20% and exceeding $80 million, driven by strength in the defense business.
• PMP (Point-to-Multi-Point): Q4 ‘23 PMP revenues decreased 4% sequentially and 24% year-over-year. Full-year 2023 PMP revenues declined 17%, with weakness primarily outside North America.
• Enterprise: Q4 ‘23 Enterprise revenues decreased $8 million sequentially and $37.5 million year-over-year. Full-year 2023 Enterprise revenues decreased 64% due to excess channel inventories and competition.

Guidance

• Q1 ‘24: Revenues expected between $43M to $48M (7%-19% QoQ growth). Non-GAAP gross margin 41%-44%, operating expenses $25.4M-$26.4M, non-GAAP net loss $6.1M-$8.6M.
• Full-Year 2024: Revenue expected $215M-$245M (2% decline to 11% growth). Non-GAAP gross margin ~44%, non-GAAP net loss $13.6M to net income $2.3M, adjusted EBITDA margin -2.7% to +4.1%.

Risks

• Competitive Environment: Intense competition in Enterprise leading to aggressive discounting and stock rotations.
• FCC Approval Delays: Delayed approval of 6 GHz spectrum could impact PMP revenue growth.
• Supply Chain: Occasional component lead time issues and price fluctuations, but managed as part of normal process.

Q: Doubling CapEx in 2024?

A: John Becerril clarified 2024 CapEx outlook is $9M-$11M, similar to annual basis, not a doubling.

Q: Growth expectations for PTP and PMP in 2024?

A: John Becerril said PTP expected flat to modest growth, PMP expected sequential growth in mid to upper teens.