Cambium Networks Corporation

Good afternoon. My name is Mel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Network's second quarter 2021 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on the telephone keypad. Please limit yourself to one question and one follow-up question. Thank you. Mr. Peter Schuman, Senior Director, Investor and Industry Analyst Relation, you may begin your conference.

Thank you, Mel. Welcome and thank you for joining us today for Cambium Network's second quarter 2021 financial results conference call. And welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO, and Stephen Cumming, our CFO, are here for today's call. The financial results press release and CFO commentary referenced on this call are accessible on the investor page of our website, and the press release has been submitted on a form 8K with the SEC. A copy of today's prepared remarks will also be available on our investor page at the conclusion of this call. As a reminder, today's remarks, including those made during Q&A, will contain forward-looking statements about the company's outlook and expected performance. These statements are based on current expectations, forecasts, and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not undertake any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments, to conform these statements to actual results, or to make changes in Cambium expectations or otherwise. It is Cambium Networks' policy not to reiterate our financial outlook. We encourage listeners to review the full list of risk factors included in the Safe Harbor Statement in today's financial press release. We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers except where otherwise noted. A reconciliation of non-GAAP to GAAP is included in the appendix to today's financial results press release, which can be found on the investor page of our website and in today's press release announcing our results. Turning to the agenda, Cambium Network's President and CEO, Atul Bhatnagar, will provide the key investment highlights for the second quarter of 2021 and and Stephen Cumming, Cambium Networks CFO, will provide a recap of the financial results for the quarter and our financial outlook for the third quarter and calendar year 2021. Our prepared remarks will be followed by a Q&A session. I'd now like to turn the call over to Atul.

Thank you, Peter. Cambium's business remains strong as the expansion of broadband wireless communications networks continues, and our vision as a high-performance yet affordable global infrastructure leader was well received during Q2 21. Cambium hit two significant milestones as a standalone company during the second quarter 2021. The first achievement was shipping our 10 millionth radio. The second accomplishment was breaking the $90 million revenue barrier in a quarter for the first time. After only breaking the $80 million revenue barrier in Q4 20 and reaching the $70 million threshold for the first time during Q320. Cambium's momentum continued to build during Q221 with our new multi-gigabit product introductions ramping, increased interest in fixed wireless broadband solutions as performance matches data fiber, and the attractive cost of ownership of our solutions making Cambium a compelling choice for wireless infrastructure projects around the world for many new emerging applications. We see increased government spending on infrastructure products, accelerating this trend over the next few years as broadband is a lifeline to connect local communities and distributed enterprises around the globe. If it can be a wireless solution, it will be a wireless solution because of the ease of installation and operations, speed of service enablement, along with affordability. Cambium had a breakthrough quarter for our enterprise Wi-Fi business. with revenues for that business significantly exceeding our expectations during the second quarter 2021, reaching record revenues of $18.3 million, increasing by 139% year-over-year, and improving by 51% sequentially. We experienced strength across many verticals, including education, public Wi-Fi, and a recovery in hospitality vertical. Even more importantly, we benefited from service providers increasingly adopting our complete multi-gigabit wireless fabric solutions, consisting of fixed wireless broadband, enterprise Wi-Fi, and wireless savvy switching, combined with our cloud-based CN Maestro software solutions to manage the network. Cambium is at the start of a new era of end-to-end wireless speeds equivalent to data fibers. with our multi-gigabit wireless fabric delivering fiber's performance and reliability at a fraction of the cost and enabling exciting new applications. Customers are adopting our 60 GHz CN Wave solution to extend fiber networks with reduced capital expense, accelerating time to revenue, and improving their ROI. In addition, fiber operators are using 60 GHz CN Wave to seamlessly cross streets and railroad crossings and traverse physical obstacles without the hassles of permits, trenching, and other limitations encountered with legacy wired networks. Around the time of our next earnings call, our forthcoming fixed millimeter wave 5G 28 gigahertz CN wave will further expand our serviceable available market SAM as both new and existing customers demand higher broadband performance at the edge of their networks. Network upgrades are multi-year events, and we are at the intersection of the new need for powerful emerging high-speed networks and the introduction of Cambium's leading-edge cost-effective technology. Together with significant government funding as nations want to bridge the digital divide and achieve digital equity, we expect fixed wireless networks to continue to provide meaningful growth for many years to come. Cambium will be a significant beneficiary of these new infrastructure builds. Turning to the results of second quarter 2021. We achieved record revenues of $92.7 million above the high end of our outlook. Record non-GAAP diluted EPS of 45 cents also exceeded the high end of our outlook of between 29 and 35 cents per diluted share. We delivered these excellent results in a supply-constrained environment where many of our employees and partners continued working remotely during the COVID pandemic. Looking at revenues across our different product lines, our point-to-multipoint PMP business had record revenues increasing 3% sequentially and up 47% year-over-year as we continued to see strong momentum in network traffic, increased demand for CBRS solutions, and broadening interest in our new product introductions as we expand our portfolio of solutions, offering industry-leading spectral efficiency, scalability, reliability, and attractive economics for our customers. As expected, the point-to-point business was lower, decreasing 20% sequentially during Q221 due to timing of shipments for federal products, while improving 12% year-over-year on higher demand for backhaul. Q3-21 tends to be a stronger quarter for our federal business. As previously mentioned, we had another record quarter for our enterprise Wi-Fi business, growing 51% sequentially and increasing 139% year-over-year during Q2-21 due to strong growth of Wi-Fi 6 solutions and record revenues and attach rates for our wireless savvy CNmetrix enterprise switching products. This is also the first time in Cambium's history that Wi-Fi revenues reached 20% of company revenues. Looking at some notable customer wins and new product developments. In North America, at a pre-qualification event for the U.S. Olympic trials, Cambium's PMP450 CBR solution featuring our PMP450B high-gain customer premise equipment was used to backhaul through trees for our new outdoor Wi-Fi 6 product. The guest Wi-Fi network covered the entire perimeter of the track and field area and performed flawlessly. 157 devices connected to the Wi-Fi network that could not get cell reception at the venue due to the mobile network being down mid-event. We won a large new service provider in Vancouver, British Columbia, using PMP450M, and PMP450B for residential broadband access. They selected Cambium for our superior total cost of ownership and quality. In enterprise Wi-Fi, the hospitality market is recovering nicely, and we had a win at a five-star resort in Hawaii, the Hala Kulani, for our XV2-2 Wi-Fi 6 product. Cambium was selected for coverage of rooms, indoor spaces, and the outdoor pool areas with our new XV2-2T0. We won the deal over a larger competitor as a result of our superior total cost of ownership, including our secure cloud management CN Maestro X platform, and the ability to provide a range of different use cases. Cambium's first mover status for the FCC's 3.5 GHz CBR spectrum continued to benefit sales of our PMP450 products, and our CBRS SaaS service in both the U.S. and its territories. Our PMP450M system featuring CN Medusa massive MU-MIMO technology enables service providers to rapidly enhance their networks using the CBRS frequency bands to provide high-performance broadband service to business and residential subscribers. In late July, Cambium announced we have deployed over 100,000 fixed wireless broadband devices utilizing CBRS frequency licenses. As of today's call, we now have over 103,000 devices managed by our CBRS SaaS service, an increase of approximately 14% since we reported last quarter. In addition to our industry-leading CBRS PMP450 platform, we now offer a fifth LTE platform for CBRS, the 3GHz CN Ranger for those customers that require standards-based platforms. We are differentiated among alternative LTE choices because of CN Ranger's operational simplicity and lower total cost of ownership versus our competition. The 3 GHz CN Ranger platform joins the previously introduced 2.5 GHz CN Ranger solution. In the Europe, Middle East, and Africa region EMEA, the strategic wins from Q2 include Vodafone one of Italy's top network operators selected Cambium for a smart city project in the Bessilicata region to receive a full wireless fabric deployment. Cambium was selected for outdoor public access to 130 municipalities, and the deployment included the use of our EPMP Force 300, CN Pilot, and Wi-Fi 6 access points, and CN Matrix enterprise switches. We beat out a larger competitor, and were selected for our superior performance in outdoor areas. As part of the project, we recruited, certified, and onboarded an important new system integrator. In Germany, we had numerous enterprise wins in the education market with deployments in the Frankfurt-Stadtlingen, Landkreis-Wilkenfell, and Tuttlingen school districts. In Africa, our wireless fabric strategy is paying off with a sizable order from a large multinational operator with a win in Nigeria for our PMP450M, Enterprise Wi-Fi 6, and CN Matrix switches, and our CN Maestro X fabric management software. The project is with the country's largest national carrier to deploy indoor and outdoor Wi-Fi, plus switching to the nation's largest countrywide bank, with over 500 offices being connected by Cambium's wireless fabrics. In the APAC region, we had a large enterprise win in Korea with our new outdoor Wi-Fi 6 product, the XV2-2T0, in the city of Gangneung. We won this business against two larger competitors as a result of Cambium's performance and value. In Japan, we received a substantial order for outdoor Wi-Fi from a large multinational hamburger chain for their drive-thru service. And in India, We had an enterprise Wi-Fi win at the Atal Tunnel. The Atal Tunnel is the world's longest tunnel above 10,000 feet and has a total length of over six miles. The tunnel operator deployed Cambium Wi-Fi access points to create a mesh network. The mesh network connects all video cameras and IP phones. Several OEM brands were tested in the difficult conditions, and Cambium's Wi-Fi was selected as the best due to its greater range, stability, and robustness. In the Caribbean and Latin America, Cala region, we had a record-breaking quarter with revenues exceeding $12 million for the first time, including record enterprise revenues for the region. We had a large enterprise win with the Ministry of Telecom in Peru. Cambium partnered with a satellite communications provider to deliver Wi-Fi connectivity to over 1,300 rural sites in the Amazonia region, to provide connectivity for primary education and rural health care centers. We won this project based on our reputation and the reliability of our enterprise Wi-Fi and switching products, plus the functionality of our CN Maestro cloud management software. Now that the pandemic is easing in the Kala region, the hospitality industry is recovering. We are seeing extraordinary acceptance of our enterprise solutions throughout the region. Some enterprise wins include the Hotel Regatta in Cartagena, Colombia, Hotel Mocava in Quindio, Colombia, and in the Mayan Riviera of Mexico, Tulum, two different boutique resorts, NIA Jose Spa and Hip Hotel and Spa. In addition, Telesur, the largest service provider in Suriname, has deployed our PMP-450i in the jungles of Guyana to provide broadband solutions for the oil and gas industry. Turning to new product introductions, since our previous quarterly update. During this fall, we expect to have two significant new product introductions. First, our Wi-Fi 6E product will bring even more performance benefits, including the availability of up to 1.2 gigahertz of new clean spectrum in the 6 gigahertz band. With up to 760 megahertz channels, Wi-Fi 6E delivers improved performance, increased capacity, and lower latency that enables a new set of high-density use cases. Cambium expertise and history with multi-radio AP designs enables us to deliver differentiated Wi-Fi 6E products. We start betas in Q3 for our highly anticipated 28 GHz CN Wave 5G and our fixed wireless product for early adopters of the technology with POCs this fall and shipments in Q4. We have approximately 30 customers requesting gear for 28 GHz CN Wave trials and have received firm orders from one of our distributors to support a specific network operator. Cambium's 28 GHz CN Wave provides high-capacity, scalable residential access, backhaul for outdoor Wi-Fi access points, 4G and 5G small cells, and video surveillance networks at a lower total cost of ownership than fiber. Our highly reliable and rapidly deployable 28 GHz CN wave products feature multi-user MIMO, beamforming, and stays up to date for next-generation performance enhancements with Cambium CN Maestro X cloud software. Interest in our 28 GHz CNW products remains very high, and customer activity remains strong ahead of availability. This product paves the way for fixed 5G wireless leadership from Cambium. During this fall, we will commence extensive field trials and proof-of-concept deployments in advance of expected commercial shipments in fourth quarter, with product revenues ramping during calendar 2022. We remain very positive on the global use of 60 gigahertz CN wave solutions and see many new use cases developing from a variety of customers around the globe. Cambium's 60 gigahertz CN wave for millimeter wavelengths make it possible to provide a city with high-speed broadband access by utilizing existing street furniture, such as street lamps, traffic lights, and utility poles. As a result, it can be deployed faster and more cost-effectively than wired networks. As we have previously mentioned, 60 GHz opens up new markets for Cambium due to its performance and versatility. We had a sizable win with our 60 GHz CNWave technology with Pentanet, a rapidly growing high-speed service provider in Western Australia, which is a favorite choice among gaming enthusiasts. Pentanet is using our 60 GHz CN wave to backhaul for homes and businesses. Cambium is helping transform the city of Perth to gigabit speeds throughout the city. In EMEA, we expect the government of France to approve formal use of 60 GHz band during Q321. More broadly, across the EMEA region, we see countries opening access to 60 GHz. Also in the EMEA region, a large service provider in Nigeria, a provider of affordable broadband connectivity to Africa's underserved populations, has selected our 60 gigahertz CN wave to backhaul Wi-Fi in more urban areas. Finally, in North America, we have secured a trial network utilizing 60 gigahertz CN wave from a nationwide cable operator for fiber extensions to enterprise customers. We anticipate the first networks being deployed in Southern California later this year. Looking at new developments in our PTP microwave product lines, during Q3, we will be releasing the new PTP850C with 224 MHz wideband channel supporting 11, 18, and 23 GHz frequencies. The wideband version is backward compatible with the prior narrowband version of the product. Wider channels provide a key benefit of additional capacity for customers. Turning to our CN Maestro cloud software, our end-to-end cloud-powered connectivity solution to manage the network from a single pane of glass. The CN Maestro cloud software continued to experience strong user growth. Total devices under cloud management in Q221 totaled over 616,000 users. and 600, an increase of 7% from Q1-21 and up 36% year-over-year. Looking at our channel, in Q2-21, we expanded our channel presence by adding over 590 net new channel partners sequentially and over 2,340 net new channel partners year-over-year, which represents an increase of approximately 6% sequentially and 29% year-over-year. Cambium added some new, larger distribution partners during the second quarter, including in North America, we recently added ScanSource as a distributor, and in the Middle East, we added Ingram Micro as a distribution partner for a wide variety of wireless connectivity solutions. This fall, we plan to return with our presence at the largest WISP trade show of the year, WISPA Palooza 2021, held in mid-October in Las Vegas. The annual convention will provide up-to-date information on Cambium's latest hardware, software, and services. We will also have our next set of Cambium Connections online webinars for our end customers and partner community throughout the various geos in September. I will now turn the call over to Stephen for a review of our Q221 financial results and Q321 outlook. Thanks, Atul.