Cambium Networks(CMBM) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for Q2 2024 was $45.9 million, a decrease of 23$12.1 million, compared to a loss of $2.7 million in Q2 2023[92]. - Revenues decreased by$13.6 million, or 22.8%, to $45.9 million for the three-month period ended June 30, 2024, compared to$59.5 million for the same period in 2023[94]. - Revenues for the six-month period ended June 30, 2024, decreased by $48.7 million, or 35.5$88.3 million, with the largest decrease in the enterprise product category[108]. - Total revenues decreased by $48.7 million, or 35.5$136.9 million for the six months ended June 30, 2023 to $88.3 million for the same period in 2024[109]. - Gross margin decreased to 26.2$7.1 million, or 26.5%, driven by lower demand from service providers transitioning to 6 GHz products[96]. - Point-to-Point revenues decreased by $11.4 million, or 45.5$4.9 million, or 76.2%, with significant growth in Europe, Middle East, and Africa[98]. - North America revenues decreased by $18.9 million, or 47.8$8.2 million, or 121.6%[99]. - Point-to-Multi-Point revenues decreased by $10.0 million, or 20.3$15.0 million, or 34.9%, mainly driven by lower demand for defense products in North America[111]. - Enterprise revenues decreased by $23.6 million, or 56.1$41.4 million, or 47.5%, largely due to lower demand for defense and licensed microwave products[113]. Expenses and Costs - Cambium's cost of revenues increased to $31.5 million in Q2 2024, leading to a gross profit of$14.4 million[92]. - Cost of revenues increased by $1.2 million, or 4.1$31.5 million, primarily due to a $4.6 million loss on supplier commitment charges[100]. - Total operating expenses decreased by$5.4 million, or 17.0%, to $26.5 million, with research and development expenses down by 29.7$9.1 million, representing 19.9% of total revenues[93]. - Research and development expenses decreased by $7.3 million, or 26.9$20.0 million, primarily due to lower staff-related costs and restructuring activities[117]. Interest and Debt - Interest expense increased by $0.7 million, or 125.2$1.3 million, primarily due to higher interest rates on loans[105]. - Interest expense increased by $1.0 million, or 85.8$2.2 million, attributed to higher interest rates on loans[120]. - As of June 30, 2024, the company had $24.1 million outstanding on its term loan facility and$45.0 million on its revolving credit facility, with effective interest rates of 9.17% and 8.67% respectively[127]. - The company’s long-term debt increased by $5.0 million to$45.0 million due to additional drawdowns on the revolving credit facility[128]. - A hypothetical 100-basis point increase in interest rates would result in an additional $0.2 million in interest expense for the term credit facility and$0.5 million for the revolving credit facility per year[133]. Cash Flow and Liquidity - As of June 30, 2024, the company had a cash balance of $42.6 million, an increase of$23.9 million from December 31, 2023[122]. - The company expects to regularly assess liquidity needs and may raise additional equity or incur additional debt as necessary[123]. - Net cash used in operating activities for the six-month period ended June 30, 2023 was $10.5 million, consisting of net income of$1.6 million and significant cash outflows due to inventory increases and changes in operating assets and liabilities[124]. - For the six-month period ended June 30, 2024, net cash used in operating activities increased to $13.2 million, primarily due to a net loss of$35.6 million and changes in operating assets and liabilities[124]. - Cash used in investing activities increased from $5.6 million for the six months ended June 30, 2023 to$7.2 million for the same period in 2024, mainly due to leasehold improvements at the new headquarters[125]. - Net cash provided by financing activities for the six-month period ended June 30, 2024 was $44.3 million, primarily from a$45.0 million drawdown on the revolving credit facility[126]. Market and Economic Conditions - The company is facing macroeconomic challenges, including higher interest rates and concerns about a global economic slowdown[82]. - The company is adjusting its manufacturing strategy to reduce reliance on third-party manufacturers in China due to nationalistic trends[83]. - There were no significant changes to the company's market risk for the three-month period ended June 30, 2024, with exposure to fluctuations in foreign currency exchange rates remaining a concern[131]. - The company has not entered into any foreign currency hedging transactions, maintaining a straightforward approach to managing currency risk[131]. - Inventory levels at distributors have improved, but may remain lower than historical levels, potentially delaying revenue recovery[80]. Product Development - The introduction of the first Wi-Fi 7 access point, XV7-35X, is part of Cambium's strategy to expand its product offerings[79].