Financial Performance - Revenues for Q3 2022 were $41.1 million, a 5.0% increase from $38.9 million in Q3 2021, driven by a $4.4 million increase in product and software license sales[168]. - Gross profit for Q3 2022 was $16.3 million, a decrease of 4.5% from $17.1 million in Q3 2021, resulting in a gross margin of 39.8%[167]. - Operating expenses for Q3 2022 totaled $33.1 million, down 30.3% from $47.5 million in Q3 2021, primarily due to reduced research and development and general administrative expenses[173]. - Net loss for Q3 2022 was $23.3 million, an improvement of 13.8% compared to a net loss of $26.9 million in Q3 2021[181]. - Adjusted EBITDA for Q3 2022 was a loss of $10.0 million, an improvement from a loss of $10.4 million in Q3 2021[182]. - Revenue from products and software licenses for the nine months ended September 30, 2022 was $114.1 million, a 7.1% increase from $105.6 million in the same period of 2021[184]. - Revenue from maintenance, warranty, and services for the nine months ended September 30, 2022 was $11.5 million, a decrease of 46.2% from $21.3 million in the same period of 2021[185]. - Total operating expenses for the nine months ended September 30, 2022 were $107.5 million, an increase from $101.7 million in the same period of 2021[167]. - Net loss increased to $74.1 million for the nine months ended September 30, 2022, compared to a net loss of $50.9 million in 2021, reflecting an increase of $23.2 million[197]. - Adjusted EBITDA for the nine months ended September 30, 2022, was a loss of $40.3 million, worsening from a loss of $21.2 million in 2021[198]. Cost and Expenses - The company incurred $0.9 million in restructuring costs during both the three and nine months ended September 30, 2022, with a liability of $0.1 million recorded as of September 30, 2022[144]. - Interest expense for Q3 2022 was $4.3 million, an increase of 19.0% from $3.6 million in Q3 2021, attributed to higher average debt and interest rates[177]. - Cost of revenues for products and software licenses increased to $74.7 million, representing 59.5% of total revenue for the nine months ended September 30, 2022, up from 52.2% in 2021[186]. - Total operating expenses rose to $107.5 million, accounting for 85.5% of revenue, compared to 80.2% in the same period of 2021[189]. - Interest expense, net, increased to $13.1 million for the nine months ended September 30, 2022, up from $8.6 million in 2021, due to higher average debt and interest rates[193]. Cash Flow and Liquidity - Net cash used in operating activities was $29.6 million for the nine months ended September 30, 2022, a decrease of $15.7 million from $45.3 million for the same period in 2021[214]. - Net cash used in investing activities was $2.2 million for the nine months ended September 30, 2022, a decrease of $2.1 million from $4.3 million for the same period in 2021[215]. - Net cash used in financing activities was $4.0 million for the nine months ended September 30, 2022, primarily related to the repayment of borrowings under the senior term loan[216]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $35.8 million for the nine months ended September 30, 2022[213]. - Cash, cash equivalents, and restricted cash at the end of the period were $27.3 million, down from $63.1 million at the beginning of the period[213]. - The company believes its existing cash resources are sufficient to fund its cash needs for at least the next 12 months, despite potential covenant breaches[212]. Operational Insights - The company’s operations are primarily located in the U.K., India, Japan, Israel, and California, with corporate headquarters in Boca Raton, Florida[142]. - The company is focused on the development and supply of broadband wireless products and technologies, with a single reportable segment[166]. - The company is investing heavily in 5G research and development and expects to use cash from operations to fund these activities through 2023[201]. - The company is focusing on increasing sales in additional geographic markets and developing 5G product offerings[205]. - Days sales outstanding (DSO) improved to 92 days as of September 30, 2022, down from 103 days at the end of 2021[202]. Customer and Market Dynamics - Revenue from sales outside the U.S. and North America accounted for 54.7% of total revenue for the three months ended September 30, 2022, down from 73.2% in the same period of 2021[151]. - The company's top three customers represented 50.8% of revenue for the three months ended September 30, 2022, compared to 60.4% for the same period in 2021[150]. Compliance and Commitments - As of September 30, 2022, the company was not in compliance with all applicable covenants under the Fortress Credit Agreement[207]. - The company is seeking waivers for breached covenants under the Fortress Credit Agreement and Fortress Convertible Note Agreement, with no assurance of success[210]. - As of September 30, 2022, the company had commitments with subcontract manufacturers totaling $55.5 million, with expected delivery dates during the remainder of 2022[211]. - The company has classified its senior term loan, convertible debt, subordinated term loan, and subordinated debt as current liabilities as of September 30, 2022[210]. Product and Service Offerings - The company’s solutions include a complete range of 4G and 5G network products, aimed at helping network operators monetize these technologies[140]. - The gross margin is affected by changes in product mix, with software and services having a higher margin than base station equipment[153]. - Adjusted EBITDA is used as a key performance metric, providing insight into revenue and cost performance, excluding certain non-core items[162]. - The COVID-19 pandemic has caused disruptions in supply chains, leading to increased component costs and extended lead times[145].
Airspan Networks (MIMO) - 2022 Q3 - Quarterly Report