Ceragon Networks Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Saragon Network's third quarter earnings call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you'll need to raise your hand using the Zoom desktop or mobile application. I'd like to hand the call over to the first speaker today, Maja Lustig, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I am joined by Doron Arazi, Saragon's Chief Executive Officer, and Ron Vered, Saragon's Chief Financial Officer. Before we start, I would like to note that this call includes information that constitutes forward-looking statements within the meaning of the Securities Act of 1933 as amended, and the Securities Exchange Act of 1934 as amended, and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviation therefrom will not be material. Such statements involve risks and uncertainties that may cause future results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to, such risks, uncertainties and other factors that could affect our results as detailed in our press release that was published earlier today and as further detailed in Saragon's most recent annual report on Form 20F and in Saragon's other filings with the Securities and Exchange Commission. Such forward-looking statements represent our views only as of the day they are made and should not be relied upon as representing our views as of any subsequent date. Such forward-looking statements do not purport to be predictions of future events or results, and there can be no assurance that they will prove to be accurate. Saragon may elect to update these forward-looking statements at any point in the future, but it specifically declaims any obligation to do so. Saragon's public filings are available on the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Saragon's website at www.saragon.com. Also, today's call will include certain non-GAAP numbers. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier today. I will now turn the call over to Doron. Please go ahead.

Thank you, Maya, and good morning everyone. Creating equal digital opportunities for all people around the world by bringing expert communication capabilities everywhere is the foundation of everything we do and will do moving forward. Today, many operators and network providers are on accelerated schedules to build the networks of tomorrow. We are proud that in the third quarter of 2021, a high number of them continued to select us. Since the days of 2G, we have worked hard to earn the trust of our customers in more than 140 countries. So far, in 2021, we have added around 10 new material customers. Many of them, as well as existing customers, concern projects designed to bring a better communication infrastructure to rural areas. We are seeing a growing number of governments allocate budgets and initiate incentives plans to improve rural networks, and we are all well positioned to take part in these vital projects. We have a strong solution mix and reputation, but it is important to note that gaining new customers in our market can be a long process, often lasting more than a year, depending on the type of customer and other incumbents' positions. Even when we win a new customer, in most cases, the business ramp up is gradual. Our revenues in Q3 were strong. We achieved this despite an external environment marked by unprecedented challenges in the chip and shipping industries. During this challenging time, we've been doing everything in our power to maintain and grow our customer base. These efforts are crucial, but they incur expenses. I will address these issues later in my speech, and so will Ron. In Q3, we have seen further increase in our backlog, which helps provide more confidence and visibility. The primary driver of this outperformance has been sustained strong booking in different regions. In Q3, our 5G orders maintained the trend of previous quarters and showed a steady performance. And once again, we achieved two new 5G design wins. Let me now provide a snapshot of our performance by each region. In North America, our 5G related bookings accounted for over 50% of all North American bookings year to date. As reported in the previous quarter call, we were selected by a leading US service provider for a multi-year managed services agreement. The satisfaction from our level of services and professionalism so far has driven a discussion about potential network modernization. We also just signed a contract with another new strategic operator in North America and are expecting orders in the coming quarters. Furthermore, we have one new 5G design. In addition to everything I've just mentioned, the evaluation of our IP50 products by two leading T1 operators, which we reported last quarter, continues successfully. If all goes well, we expect to have two new T1 customers buying our solutions in 2022. In India, Q3 was a healthy quarter for us as it was for telecom companies. Industry performance was driven by subscriber additions, increase in data consumption and tariff hikes, as well as recovery after a severe wave of COVID-19. The quality of the network experience is becoming more important. As such, there is a growing demand for network upgrades and expansions. India is moving towards rolling out 5G by developing 5G corridors. Three telecom operators have recently been approved to start 5G trials. Spectrum auctions are expected to take place in 2022. Commercial launch is expected during the same year and we will be there to meet the demand. We are planning to participate in RFP processes. Our competitive advantages include our indisputable local market leadership position driven by our technology, brand positioning and experience in India as well as in other regions. In Europe, we had a very strong quarter, especially in terms of bookings. We continue to receive orders by leading European operators from different countries, secured new orders, participated in trials and received great feedback on our POCs. We have multiple RFPs in progress. We are in the POC stage with a tier one global operator in Western Europe. They are interested in our disaggregated wireless transport solutions. With another, we have achieved product validation and we are in the negotiation phase to secure orders. Our European 5G related bookings accounted for over 35% of all European booking year to date. We had one new 5G design one. In APAC, in terms of booking, we have relatively stronger quarter compared to Q2 2021. Our 5G related bookings accounted for over 25% of all APAC bookings year to date. We are in a POC phase with a global tier one vendor regarding our disaggregated solution. While we're building a solid pipeline and witnessing the emergence of a new momentum, it might be too early to yield optimism. The shock waves of the pandemic continue to radiate throughout the region, affecting people, economies, and business decisions. In Latin America, we experienced some improvements in bookings. Even though the macro environment remains challenging, we received a substantial PO from new customer. We are working on POCs and have multiple RFPs in progress. A majority of LATAM countries have begun preparing for 5G. Several have already started trials, including Brazil, Chile, Argentina, Peru, and Colombia. But 5G spectrum allocations have just started and in most countries are to be assigned in 2022 or beyond. We are taking this time to engage with existing as well as new players that may take part in the spectrum allocations in order to position ourselves as the lead 5G wireless transport vendor. In Africa, we acquired new material customers received a new PO for managed services, and are working on a number of new opportunities. When it comes to 5G, only a few countries have started assessing and investigating, sorry, investing in a potential infrastructure. Overall, our global booking increased our confidence in Q4 and beyond. Among other things, what will take us further is the expected growth in the total addressable market. This is thanks to acceleration in 5G network densification, increased efforts to digitize the rural areas, as well as the shift to the open-run architecture. These developments are likely to continue to have positive and profound implications for us, especially in the medium and long term. They create more opportunities for us to not only sell our product-led solutions, but also expand our offering and business model to deliver managed services and increased sales of our software solutions. I mentioned earlier the tough external environment we are operating in. While we have maintained good control and were able to increase our revenue compared to Q2, we have also encountered challenges. We believe the component shortages all across the globe will extend into 2022. At the same time, international shipping bottlenecks will continue to prolong supply chain turmoil. It looks like there is no quick fix. It impacts both delivery timelines and costs. Our customer-first culture leads us to take measures to stabilize our lead times and avoid delays as much as possible, even on account of the current increased costs. Our goal during this turbulent period is to help customers continue with their plans as smoothly as possible. In parallel, we're working to optimize our product costs. We have undertaken an in-depth analysis of our bill of material cost in order to identify all the necessary cost reduction options that are in our control without sacrificing an ounce of quality along the way. We believe our initiatives will start bearing fruits in the next few quarters. While the big picture is complex and global market dynamics are beyond our control, we remain confident in our mid- and long-term prospects. We may experience shift of revenue between quarters and temporary gross margin pressures on which run will elaborate. Before turning over the call to run, I would like to refer to the progress of our new 5G SOC. As mentioned in our Q2 call, we expect the tape out towards the end of this year. Immediately after the tape out, we'll start the productization process of the SOC, which will be followed by the integration phase into Ceregon's future products. Once launched, our new SOC-based product series will enable our customers to increase wireless transport capacity by 16 times, using only a quarter as much of the spectrum. providing a several year lead on the rest of the market. It is ideal for the bulk of the 5G networks that will be rolling out in two to three years from now. Moreover, it will be significantly more cost efficient and less component market dependent, reducing our inventory and improving our delivery lead times. With that, let me now turn the call over to Ron to discuss the financial for the quarter. Ron?