Ceragon Networks Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Sargon Network's Q4 and full year 2022 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 your mobile or desktop application and wait for your name to be announced. I'd like to hand over the call now to our first speaker today, Ms. Maya Lustig, Investor Relations. Please go ahead.

Thank you operator and good morning everyone. I am joined by Doron Arazi, Surrogance Chief Executive Officer and Ronan Stain, Chief Financial Officer. Before we start, I would like to note that certain statements made on this call including projected financial information and other results and the company's future initiatives future events business outlook development efforts and their potential outcome anticipated progress and plans results and timelines and other financial and accounting related matters constitute 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. Saragon intends forward-looking terminology such as beliefs, expects, may, will, should, anticipates, plan or similar expressions to identify forward-looking statements. Such statements reflect only current beliefs expectations and assumptions of Saragon management, but actual results, performance or achievements of Saragon may differ materially as they are subject to certain risks and uncertainties which could cause Saragon's actual results to differ materially from those projected in such forward-looking statements. Such risks and uncertainties include, but are not limited to, those that are described in Saragon's most recent Annual Report on Form 20F and as may be supplemented from time to time in Saragon's other filings with the SEC, including today's earlier filing of the Earnings Press Release, all of which are expressly incorporated herein by reference. Forward-looking statements related to the date initially made do not purport to be predictions of future events or results and there can be no assurance that they will prove to be accurate and Saragon undertakes no obligation to update them. 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, 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.

Good morning everyone. We had a very good 2022 in terms of the strengths of our business as reflected in our annual bookings. Our bookings to revenue ratio was well above one. We ended the year with a strong backlog. Fourth quarter bookings were softer than prior quarters, but this is similar to fourth quarter 2021, largely reflecting seasonality factors in doing business in the last quarter of the calendar year. At the inception of 2023, we are seeing again strong demand for our products and services. Financially, the fourth quarter of 2022, despite being at the lower end of our revenue projection, was a good quarter for us in many aspects. We ended the quarter with 33.1% gross margin and $3.2 million in operating profit, which reflects a growth of 113% over the fourth quarter of 2021. When we look at the second half of 2022, we see significant improvement in our revenue levels and profitability. This we believe is mainly thanks to a combination of two factors. First is our relentless execution of our growth strategy. And the second is the changing market dynamics, especially in supply chain, which continues to head in a good direction. Our fourth quarter 2022 revenues would have been even higher by a few million dollars were it not for a policy change by one of our leading customers regarding equipment receipt prior to year end. The gap was also impacted to a lesser extent by a delay in a specific component that pushed certain equipment delivery out of fourth quarter 2022 into the first quarter 2023. As of today, we are mostly caught up with these deliveries. Without these two factors, our fourth quarter revenue and profit would be stronger. Throughout 2022, we made significant headway in the productization of our new system on a chip technology, and we are on track and expect to finish productization in 2023 and launch our new product line in 2024. We strongly believe this system on a chip will drive strong demand and have a transformative impact on the industry and on our market share and performance mainly due to two to three years time to market advantage we expect to have over our competitors. Assuming supply chain dynamics continue to head in the right direction together with strong business traction, diverse and growing use cases for Ceregon solutions and the new products in development we expect to launch, we are excited about the growth opportunities we anticipate for 2023 and beyond. I'd now like to give you an overview per region. In North America, in the fourth quarter of 2022, 5G build continues to be strong. We received first orders for the DISH 2023 deployment. We also saw significant traction in the critical infrastructure sector in certain states with multiple RFPs. We continue to invest and intensify our sales efforts and services infrastructure in the region, and we intend to continue with this investment in 2023. Our bookings were softer than our expectations as some of the orders were not received on time in Q4, 2022. And we shifted to Q1, 2023. Our revenues were also lower than our expectations due to the year end policy change by one of our clients. I'm happy to report that we already caught up on a major part of the slippages. We expect a strong first quarter in this region. India is a saturated market in terms of end customer demand, which means operators are increasingly turning to upselling and cross-selling to improve customer experience and drive engagement. Indian telcos continue to invest in 4G technology while they start deploying 5G in different regions. They augment their network capacity with additional fiber and wireless, eBand and multi-band to meet the demand for high speed. Coupled with the growing affordability and availability of 5G smartphones, we expect these developments to fuel consumer adoption of 5G in 2023 and beyond. In Q4 2022, we continue to deliver our products for 4G networks, as well as started delivering our eBend multiband solution for 5G networks. We expect this trend to continue in 2023. In Europe, we had a good quarter despite macroeconomic challenges seen in this region. We signed an agreement for a new turnkey project in Italy worth $4 million, through which we replaced competition. We won the first project in partnership with a leading open-run vendor composed of the full IP50 family, including IP50FX. In general, our open network architecture solution continues to get traction as we are invited to more labs of T1 operators, continue field trials with others and participate in RFQs. In APAC, 5G deployment is still unfolding though at a different pace in different parts of the region. Australia, Japan and Korea are well advanced in 5G rollout and those are increasing the focus into the rural regions. Indonesia, Vietnam and several others are behind. We are well positioned primarily in Australia where we are providing turnkey services as well as in South Korea and Japan. We continue to see traction and interest in our IP50 product series, especially for wide band and open network use cases. In Q4 2022, we received the first significant order from one of the largest operators in APAC, which includes our IP50FX. We also delivered the first phase of a private network in Taiwan, which is an emerging and promising use case for us. In Latin America, the continued instability of economies and governments may delay 5G rollout, government projects, and the overall expected telco business. We continue to see competition, primarily driven by Chinese vendors, and we continue to focus on offering our managed services, getting very strong traction. We also continue to focus on private networks. In Africa, business was slow in 2022, as many projects and POs were moved to 2023. We enjoyed recurring business in managed services in Nigeria and Congo. To summarize, while 2022 was a good year overall, it could have been better were it not for supply chain challenges, especially in the first half of the year. While these challenges are less intense today than they were a month ago, they still exist and impact our operations. Despite the said challenges, we reached new milestones in 2022. achieved successes in key areas of our business, advanced the productization of our new chipset, and gained traction on our managed services offering. We did all that while improving our gross margins and profitability. When we look into the future, we expect a strong 2023. Given the positive business traction and our operational momentum, we expect to continue our growth in the leading regions we operate in. We anticipate substantial growth coming from our eBend sales, especially with the new coming cost-effective product that enables covering a broader market base. We also expect that our sell-side routing and managed services businesses to increase in 2023 and beyond. Before I turn the call over to Ronen to review the financials, allow me to acknowledge our new chief revenue officer, Alon Klomek. In this newly created position, Alon will oversee the entire revenue materialization from prospect to order, delivery, and collection. We believe that with this addition to our team, we'll be better able to fulfill our strategic goals. I'd also like to welcome aboard Dima Friedman, who is joining us as Chief Operating Officer. Dima will work on further streamlining our operations. With these changes in place, our goal is to optimize our organizational structure and implement our growth strategy with further success. Ronan, over to you.