Ceragon Networks(US:CRNT)2021-08-02 16:15Financial Data and Key Metrics Changes - Revenue for Q2 2021 was $68.6 million, up by 10% compared to Q2 2020, attributed mainly to strong sales in North America and India [24] - Gross profit for Q2 2021 on a non-GAAP basis was $21.6 million, resulting in a gross margin of approximately 72%, compared to 26% in Q2 2020 [25] - Net loss on a non-GAAP basis for the quarter was $1.2 million, or $0.01 per diluted share, while on a GAAP basis, the net loss was $1.7 million, or $0.02 per diluted share [29] Business Line Data and Key Metrics Changes - In North America, 52% of year-to-date bookings were 5G-related, with strong momentum from Tier 1 operators [9] - In India, multiple Tier 1 operators placed follow-on orders, contributing to the company holding around 50% market share in the region [11] - European 5G-related bookings accounted for 31% of all European bookings year-to-date, indicating positive momentum [12] Market Data and Key Metrics Changes - Q2 bookings were the highest in three years, particularly strong in North America, Europe, and India [7] - The company reported a book-to-bill ratio significantly above 1, indicating strong demand [23] - Latin America showed signs of recovery, with new contracts awarded in Mexico, Brazil, Colombia, and Peru, despite ongoing COVID-19 impacts [12] Company Strategy and Development Direction - The company aims to expand its total addressable market and reinforce its solutions as the go-to for wireless transport, particularly in the context of 5G [15] - The transition to OpenRAN architecture is seen as an opportunity for the company, as it allows for vendor-neutral component selection [17] - Managed services are being positioned as a significant recurring revenue source, with a focus on network monitoring and optimization [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue growth for 2021, expecting it to be at the higher end of the annual guidance of $275 million to $295 million [30] - The company is optimistic about returning to profitability in the second half of the year, despite ongoing component shortages [31] - Management acknowledged challenges related to component shortages and high supply chain costs, which may impact gross margins [26] Other Important Information - The company has 16 5G design wins, with five being new additions to the customer base [13] - A new system-on-chip is expected to be a significant technological breakthrough, with a focus on reliability and capacity [21] - The company is committed to improving gross margins to 33% to 34% and above in the long term [14] Q&A Session Summary Question: How many quarters have you run a book-to-bill above one? - Management indicated it has been three or four quarters with a book-to-bill above 1, with the last two quarters being particularly significant [33] Question: Can you discuss the timeline for realizing large orders? - Management noted that some projects will last more than one year, and while they are comfortable with visibility for the remainder of 2021, challenges remain due to component shortages [35][37] Question: What is the status of gaining share from the Huawei install base? - Management stated that Huawei's presence has diminished in key markets, opening up opportunities for the company [39] Question: What opportunities do you see for managed services globally? - Management highlighted the development of strong operational capabilities and the increasing demand for managed services as networks become more complex [42][44] Question: What are the trends in your supply chain? - Management noted improvements in supply chain issues but acknowledged that challenges remain, impacting timelines and expectations [47] Question: What is the outlook for gross margins? - Management indicated that while they aim for long-term gross margins of 33% to 34%, current challenges may keep margins flat in the near term [50][52]