Cambium Networks Corporation

Good afternoon. My name is Steven, and I'll be your conference operator today. At this time, I would like to welcome everyone to the CAMUM Network's second quarter 2024 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. As a reminder, this call is being recorded. To ask a question during the session, you will need to press Star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star 1-1 again. Please limit yourself to one question and one follow-up question. Thank you. Mr. Peter Schuman, Vice President of Investor, Industry Analyst, and Public Relations, you may begin your conference.

Thank you, Stephen. Welcome and thank you for joining us today for Cambium Network's second quarter 2024 financial results conference call, and welcome to all those joining by webcast. Morgan Kirk, our president and CEO, and Jacob Sayre, our CFO, are here for today's call. The financial results press release and 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 forecasted performance. These statements are based on current conditions, 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'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 or most recent SEC filings, including our most recent Form 10-K and Form 10-Qs. 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 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, Morgan will provide the key operational highlights for the second quarter 2024, and Jacob will provide a recap of the financial results for the second quarter 2024, and we'll discuss our financial outlook for the third quarter and full year 2024. Our prepared remarks will be followed by a Q&A session. I'd now like to turn the call over to Morgan.

Thank you, Peter. Summarizing the performance of Q2 of 24, Revenues for Q2 24 were $45.9 million. We are pleased revenues were just above the midpoint of the outlook we provided during our Q1 24 financial results call, with revenues ups sequentially by 9% due to continued growth in our enterprise business, with higher revenues in all geographies, and growth in our point-to-multipoint PMP business. Adjusted gross margin improved, again, quarter over quarter, muted by higher-than-expected reserves taken for excess finished goods and raw materials. Excluding the unexpected E&O charges, adjusted gross margins would have been 44.4% above our guidance for the quarter. Operating margins improved sequentially as we continued to control expenses to lower our break-even point. Free cash flow was negative $1.8 million during to 24, and our cash balance stood at $42.6 million as of June 30. Cash flow from operations was positive $2.4 million. This is the first time it was positive in six quarters. We believe the business is moving in the right direction financially, operationally, and strategically. Sales of Cambium's products out of Distribution Channel, as reported by Cambium's distributors, were again higher for Q2 24 and Cambium's reported revenues, and we saw corresponding declines in channel inventories. We continue to make progress in cleaning channel inventories, and some of our partners are at appropriate levels of inventory, while other partners still have work to do. Sales in and sales out are expected to be at equilibrium by the end of the year, which is slightly longer than we had previously thought, as shorter lead times and higher interest rates are driving distributors to a greater level of efficiency than in the past. Looking forward, lower channel inventories will result in end users' demand more directly driving increased revenues. Looking at some customer wins that are key to our future success. In the US, CalNet, a provider of high-speed wireless broadband and digital services in the Central Valley and rural Northern California, has deployed EPMP4600 to serve residential and commercial users with improved service levels of 400 megabits per second downlink and 200 megabits per second uplink. They're providing high-speed internet service to agricultural operation, local businesses, and residential customers, enabling increased productivity, improved video experience, and a whole host of other broadband services. They selected Cambium as their supplier due to our value proposition, reliable, high-performance service at an affordable cost. This in turn allows CalNet to provide faster broadband speeds at a lower cost to their customers than the incumbent service providers. In England, Bonaeus, a rural broadband provider, is leveraging Cambium Network's CN-Wave 60 gigahertz mesh technology to bring improved connectivity to Walney Island. Bonaeus is deploying Cambium's technology to make gigabit broadband available to more than 10,000 island residents. This collaboration aims to support the community's economic development and enhance educational opportunities for local students. Cambium was selected due to the speed at which the system can be deployed. This is enabled by leveraging existing physical infrastructure and combining with Cambium's mesh technology, which also reduces the total cost of ownership. In addition, in the enterprise space, the Indian Institute of Technology, a premier public technical university located in Dunbat, India, selected Cambium's enterprise solutions to connect multiple academic and housing blocks across the university's campus. Now let's turn to upcoming product introductions since our previous quarterly update. In June, we announced the release of a new PTP product for our commercial customers in the 80 gigahertz EVAM, the PTP850EX. The product delivers 10 gigabit capacity and features a smaller form factor than prior product versions at a very compelling price. The EVAM is ideal for building-to-building and other point-to-point connectivity as an alternative to fiber or as a backup to fiber and is used for applications such as backhauling outdoor Wi-Fi and video surveillance. For channel partners, we have introduced a new concierge program called Elite. Managed Wi-Fi service providers, value-added resellers, and system integrators are eligible for this select program. The enhanced program introduces a new partner level, offering a host of benefits designed to accelerate growth, reduce risk, and increase sales velocity. The program includes personalized support in the deployment of Cambium One solutions from a senior technical staff member assigned to the account as a consultant and expertise from specialized technical staff for onboarding and customer engagement. Finally, total devices under CM Maestro Cloud Management in Q2 24 increased approximately 6% from Q1 24 and was up 15% year over year. I will now turn the call over to Jacob for a review of our Q2 24 financial results and Q3 24 and full year 2024 financial outlook.