Cambium Networks(US:CMBM)2022-05-08 07:01Financial Data and Key Metrics Changes - Cambium Networks reported revenues of $61.9 million for Q1 2022, a decrease of 21% quarter-over-quarter and 30% year-over-year, primarily due to global supply constraints and Chinese lockdowns impacting shipments [34][15][36] - Non-GAAP gross margin was 47.8%, down 230 basis points year-over-year but improved by 360 basis points sequentially from Q4 2021 [36][37] - Non-GAAP net income for Q1 2022 was $300,000 or $0.01 per diluted share, compared to $11.7 million or $0.41 per diluted share for Q1 2021 [42] Business Line Data and Key Metrics Changes - Point-to-Multi-Point (PMP) business revenues decreased 16% sequentially and 46% year-over-year due to supply constraints [16] - Point-to-Point (PTP) business revenues decreased by 4% sequentially and 16% year-over-year, impacted by lower shipments for backhaul products [17] - Enterprise Wi-Fi revenues were $15.5 million, down 40% sequentially but up 28% year-over-year, indicating strong demand despite supply disruptions [18] Market Data and Key Metrics Changes - The company experienced strong demand for its enterprise solutions, particularly in the Wi-Fi segment, despite the supply chain challenges [10][11] - Backlog increased by 7% quarter-over-quarter and 10% year-over-year, indicating strong future demand [10][34] - The EMEA region showed healthy demand for enterprise business, although revenues were down due to COVID supply constraints [22] Company Strategy and Development Direction - Cambium Networks is focusing on high-performance wireless broadband technology, including 28 gigahertz 5G multi-gigabit fixed wireless products, with expectations for larger deal sizes [13][14] - The company is expanding its software and subscription services business, which is expected to enhance customer retention and recurring revenue [29] - Cambium is diversifying its manufacturing locations to reduce dependency on China and improve resilience against supply chain disruptions [106][108] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of supply chain challenges due to COVID lockdowns in China but expressed confidence in recovery and improved financial performance in the second half of 2022 [9][50] - The company anticipates revenue recovery in Q2 2022, with expectations of improved gross margins as price increases take effect [10][38] - Management remains cautiously optimistic about the second half of 2022, expecting better chip availability and operational efficiency [78][79] Other Important Information - Cambium Networks is introducing new products, including expansions to its Wi-Fi 6 portfolio, which are expected to drive future growth [26][28] - The company is trialing a new Network-as-a-Service (NaaS) solution, which has shown strong interest in initial tests [29] - Cash used in operating activities was $19.2 million for Q1 2022, reflecting a decrease in accounts payable and annual variable compensation payments [44] Q&A Session Summary Question: Can you provide insight into gross margin contributions and supply chain impacts? - Management noted that gross margin improved due to a favorable product mix and price increases, with Wi-Fi products contributing positively despite supply chain issues [60][61] Question: What is the expected contribution of the 28 gigahertz product? - Management expressed excitement about the potential of the 28 gigahertz solutions, indicating they could significantly increase deal sizes and contribute to revenue growth over the next few years [64][66] Question: How does the full-year guidance account for operations in China? - Management indicated that the full-year guidance reflects a prudent approach considering ongoing supply chain challenges, but they expect revenues to increase as the year progresses [72][74] Question: What is the expected revenue run rate for Q4? - Management anticipates a mid-80s revenue run rate for Q4, reflecting a cautious outlook based on current supply chain conditions [81][82] Question: What are the current channel inventory levels? - Management indicated that channel inventories are balanced, with some products experiencing higher inventory levels while others, particularly Wi-Fi, are in high demand [93][96]