Cambium Networks(US:CMBM)2020-02-11 04:02Financial Data and Key Metrics Changes - Cambium Networks reported Q4 2019 revenues of $64.1 million, a 1% increase year-over-year but a 2% decrease from Q3 2019, marking the 23rd consecutive quarter of year-over-year growth [10][40] - For the full year 2019, revenues totaled $267 million, reflecting a 10% increase from 2018, primarily driven by Wi-Fi solutions which grew 82% year-over-year [13][51] - Non-GAAP gross margin improved to 52.4% in Q4 2019, up 410 basis points year-over-year, and was the highest in two and a half years [45][47] - Non-GAAP net income for Q4 2019 was $2.3 million or $0.09 per diluted share, compared to $1 million or $0.07 per diluted share in Q4 2018 [54] Business Line Data and Key Metrics Changes - Enterprise Wi-Fi solutions grew 186% year-over-year in Q4 2019, contributing significantly to revenue growth [11] - Point-to-Point (PTP) products saw a 4% year-over-year increase, while Point-to-Multi-Point (PMP) products decreased by 19% year-over-year due to customer technology transitions [11][41] - For the full year 2019, Point-to-Multi-Point products grew 7% from FY 2018, while Point-to-Point products remained flat [13] Market Data and Key Metrics Changes - North America represented 45% of company revenues, growing 3% year-over-year, while EMEA decreased 11% year-over-year [42][43] - CALA region revenues grew 32% year-over-year, representing 13% of total revenues, and APAC increased by 2% year-over-year, representing 12% of revenues [44] Company Strategy and Development Direction - Cambium Networks is focusing on expanding its fixed wireless broadband business and introducing new products to enable gigabit wireless connectivity [68] - The company is optimistic about the upcoming Connect America Funding, which could provide substantial opportunities starting in 2021 [36][68] - Cambium is positioning itself as a leader in fixed wireless broadband and enterprise Wi-Fi, targeting mid-tier enterprises for growth [90][92] Management's Comments on Operating Environment and Future Outlook - Management noted that Q1 is traditionally a softer quarter, with expectations for sequential improvement in revenues after Q1 2020 due to new product adoption [60][71] - The company anticipates strong growth in the second half of 2020, driven by the introduction of Wi-Fi 6 and millimeter wave solutions [68][71] - Management expressed confidence in the technology transitions and customer demand for gigabit connectivity, expecting a ramp-up in sales [84][100] Other Important Information - Cambium Networks launched new products, including cnVision for video surveillance and upcoming 5 GHz 450 MicroPOP solutions [25][28] - The company expanded its channel presence by adding over 400 new channel partners sequentially and almost 1,500 year-over-year [33] Q&A Session Summary Question: Could you provide some color around the expected mix for Q1 2020 sales guidance? - Management indicated softness in EMEA due to customer transitions to next-generation technologies and delays in U.S. Federal program spending affecting PTP business [74][75] Question: Is there any portion of your supply chain exposed to China? - Management is monitoring the situation closely but currently sees minimal impact from supply chain issues related to China [77][78] Question: Can you quantify the impact of customer transition and inventory adjustment on guidance? - Management noted that the technology transition is primarily driving the impact, with inventory adjustments being a secondary factor [80][81] Question: What is the competitive and pricing environment like? - Management stated that there is no major price pressure in fixed wireless broadband, and they are focused on mid-tier enterprises for Wi-Fi solutions [90][91] Question: Why is the product cycle taking longer than expected? - Management explained that the confidence in the second half uptick is based on mature chipsets for Wi-Fi 6 and millimeter wave technologies, which are now ready for deployment [97][100]