Cambium Networks Corporation

Good afternoon. My name is Jason. I'll be your conference operator today. At this time, I would like to welcome everyone to the Cambium Network's second quarter 2022 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, you may press star, then one on your touchtone phone. To withdraw from the question queue, please press star, then two. Please limit yourself to one question and one follow-up question. Thank you. Mr. Peter Schuman, Vice President, Investor and Industry Analyst Relations, you may begin your conference.

Thank you, Jason. Welcome and thank you for joining us today for Cambium Network's second quarter 2022 financial results conference call, and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO, and Andrew Brownstein, our CFO, are here for today's call. The financial results, press release, and CFO commentary referenced on the call are accessible on the investor page of our website, and the press release has been submitted on 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. Risk 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's 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 results 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 measures to GAAP measures 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 2022 And Andrew Bronstein, Cambium's CFO, will provide a recap of the financial results for the second quarter 2022 and present our financial outlook for the third quarter and full year 2022. 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 had recovery in our second quarter results with revenues of $69.3 million, increasing 12% sequentially, slightly ahead of our midpoint of between $65 to $73 million announced during the Q1-22 quarter call. Profitability improved significantly, with EPS of 18 cents ahead of our outlook of between 1 to 11 cents. As we regained some scale, had higher gross margin, and spending was lower than anticipated due to our tight cost controls. Our technology roadmap and strategy continue to strengthen. Cambium is at the start of a new growth S-curve. During evolutionary change, performance starts from a slow initial phase, goes into an accelerated deployment phase, before stabilizing and maturing. This is about a five-year cycle for Cambium, and the last time we entered this cycle was 2016. We are now at the cusp of entering the accelerated phase of growth for high-performance broadband networks. We anticipate continued recovery in revenues during the third quarter 2022. Given our record backlog, pricing actions announced late last year are now fully in place, and we expect further improvements in the supply chain and distribution of components and finished products during the second half of 2022. We exited the second quarter 2022 with backlog up 5% quarter over quarter and higher by 29% year over year. We saw strong demand for our enterprise solutions, which grew 55% sequentially and increased 31% year over year, including record Wi-Fi 6 revenues. We now expect our enterprise business to grow over 45% for calendar year 2022. While the supply situation remains tight and challenging, we exited Q2 2022 with another record quarter of backlog for enterprise products. Cambium's attractive total cost of ownership and cloud-managed wireless fabric of solutions integrate multiple communication standards and emerging broadband technologies, which we are now calling Cambium One Network. Our solutions are a compelling choice for wireless infrastructure projects around the world with network management from a single pane of glass. Turning to the results of the second quarter 2022. Looking at revenues across our product lines, our point-to-multipoint PMP business revenues decreased 9% sequentially and decreased 53% year-over-year due to the continued sluggish demand from service providers for legacy PMP450 products. ahead of the ramp of both 28 GHz CNWave 5G fixed technology and the introduction of 6 GHz products expected during Q4-22. We are seeing the component shortages continue to improve, although gradually, which benefited the EPMP product lines as a result of the reopening of China during Q2-22. The point-to-point PTP business increased 7% sequentially during Q2-22, while year-over-year increased 12% due to higher shipments for PTP products using unlicensed frequencies. Our enterprise business had robust revenues of $24 million during Q222, increasing 55% sequentially and higher by 31% year-over-year due to improved supply and distribution and strong demand for our Wi-Fi 6 solution. Cambium has an opportunity to be a significant leader in mid-market enterprise networking, served by our extensive enterprise channel built over the last few years. In May, Cambium was named an outperformer in the 2022 Giga Ohm Radar Report for Wi-Fi 6 and 6E solutions. We are also beginning to see software become a more meaningful contributor to bookings and revenues. looking at some notable customer wins and new product development. In North America, we are receiving very strong orders in enterprise Wi-Fi. White Sky Communications, a managed service provider, MSP, focusing on the multi-dwelling unit, MDU market, placed a large order for enterprise Wi-Fi, including CN Maestro X, our flagship subscription network management solution. Cambium was selected for our price performance and superior value proposition. CN Maestro X is fine-tuned and optimized for MSP and MDU applications. An NFL city in the southeast placed an order for 60 gigahertz CN Wave connectivity and Wi-Fi as part of a smart city deployment. Cambium was selected for our portfolio breadth and ability to deliver backhaul and access with a single management platform. In our federal defense business, we have a large funnel of deals as the hostilities in Eastern Europe are leading to multiple nations wanting to upgrade their military communications infrastructure with same equipment as the US defense establishment using Cambium's PTP 700 technology for fixed wireless broadband communications. This enables total equipment interoperability and rapid deployment in the field. In the Europe, Middle East, and Africa region, EMEA, we continue to have healthy demand for our enterprise business and continue to win larger projects. A recent strategic win in Germany included Cambium partnering with NCR OrderMan, a global market leader for mobile ordering, providing high-performance Wi-Fi solutions for hospitality industry, including connectivity for point-of-sale systems, as well as handhelds for mobile order-taking and billing. More than 80,000 restaurants around the world are equipped with an orderment system. With this new solution, restaurants and other venues can deliver fast and reliable service with Wi-Fi from Cambium. This win included Cambium's Wi-Fi 6 access points, CN Matrix Ethernet switches, and CN Maestro cloud management solutions. Cambium's wireless fabric makes it easy to plan, deploy, and manage affordable gigabit speed for the home and enterprise. In the UK enterprise market, we closed a few large MSP deals specialized in MDUs with a focus on providing services for student housing accommodations. These deals cover multiple quarters and countries across Europe. In the Asia-Pacific APAC region, we received a sizable order in India from Airtel for small cell backhaul using our EPMP product line for unlicensed spectrum covering LTE in less dense locations. And in the Caribbean and Latin America, Cala region, we had a significant win, lending our first multimillion-dollar agreement for 28 gigahertz CNWave 5G fixed technology from a leading telecommunications and IT service provider operating in Puerto Rico and U.S. Virgin Islands. Cambium was selected for our ability to support gigabit speeds with low latency and consistently high performance. Turning to new product introductions since our previous quarterly update. The industry is eagerly awaiting the availability of 6 gigahertz spectrum for wider channels and higher throughputs. Cambium will have an industry-leading position when our next-generation multi-gigabit EPMP4600 product is expected to be released before year-end. Approximately a half dozen customers, including Nextlink Internet, are already field testing our product under special FCC licenses. In May, Nextlink announced the results of 6 GHz spectrum testing utilizing an FCC experimental license and achieved actual throughput of over 1 Gbps download and 500 Mbps upload to each subscriber module under full load, utilizing a 160 megahertz channel at two miles, clearing the way for more gigabit fixed wireless deployments nationwide. Upon full commercial deployment next year, NextLink will be rolling out gigabit speed plans for the existing fixed wireless service network expansion for the FCC's Rural Digital Opportunity Fund, RDOF, program. Ultimately, NextLink's expansion of gigabit fixed wireless will cover over 4 million households and businesses. The promise of 6 gigahertz enabling gigabit speeds over wireless is real, and fixed wireless enables Cambium's customers to roll out gigabit speeds faster than they can with fiber in an economical and timely manner. Fixed wireless broadband takes months as compared to years for fiber to be deployed. For our federal and national security PTP business, before year end, we plan to roll out a new smart antenna. The PTP 700 antenna will facilitate rapid alignment of a remote radio with a primary site in a highly automated manner. And within our software and subscription services business, this fall, Cambium will launch our network service edge NSC solution. NSE bundles a rich set of network services, SD-WAN, and security features, optimizing SaaS applications performance and reliability at the network edge. This complements our cloud-managed Wi-Fi and switching products to deliver Cambium One network solution, especially for mid-market enterprises which are looking for easy-to-deploy and operate networks with our significant IT help. Instead of building solutions from multiple vendors and spending excessive time dealing with complex install problems, service providers and enterprises can manage one efficient solution utilizing Cambium's expertise in Wi-Fi, fixed wireless broadband switching, management, and security solutions. Our integrated solution provides better combined insights into the network performance to improve overall quality of experience and security while reducing complexity, and lowering total cost of ownership. This fall, Cambium's newest version of the 28 GHz mmWave solutions for 5G fix will become available. Network operators will be able to support scale deployment featuring competitive differentiation with our 4x4 multi-user MIMO and software-defined radio architecture that delivers 400 Mbps speeds for business and residential subscribers in urban suburban, and rural locations at scale. We believe this newest version of CN Wave 5G fixed will drive high volumes with large deal sizes. Cambium presently has over 10 POCs in four continents for our 28 GHz equipment, and during the second quarter, we landed our first multimillion-dollar contract for this technology. We remain excited about the revenue potential for this upcoming PMP product. Looking at 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 Q222 was over 837,000, an increase of 6% from Q122 and up 36% year-over-year. For our premium CN Maestro X offering, we booked a major deal with a sizable service provider for fixed wireless broadband during the second quarter and are now seeing healthy growth in annual recurring revenue, ARR, for this product. ARR for CN Maestro X, which includes both enterprise and fixed wireless solutions, grew 66% sequentially during the quarter. Turning to our channels. In Q222, we expanded our channel presence by adding over 520 net new channel partners sequentially and approximately 1,600 net new channel partners year-over-year, which represents an increase of approximately 5% sequentially and 15% year-over-year. This is expanding our reach into new mid-market customers around the world. During the second quarter, Cambium shared our strategy and vision at Cambium Connections, our biannual online webinars for end customers and the partner community throughout various geos. Our upcoming 6 GHz ePMP solution is generating lots of excitement for gigabit connectivity, particularly with North American service providers. And we held separate events surrounding the opening of this important spectrum for future commercial use. I will now turn the call over to Andrew for a review of our Q2 22 financial results and Q3 22 outlook. Thanks, Atul.