Ceragon Networks Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Saragon Network's Q1 2023 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, 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 believes, expects, may, will, should, anticipates, plan or similar expressions to identify forward-looking statements. Such statements reflect only current beliefs, expectations and assumptions of surrogate management, but actual results, performance or achievements of surrogate may differ materially as they are subject to certain risks and uncertainties, which could cause surrogates 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 relate 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-gap numbers for a reconciliation between gap and non-gap please see the table attached to the press release that was issued earlier today i will now turn the call over to the ron please go ahead thank you maya and good morning everyone

Ceragon Networks deliver double digit revenue growth and solid profitability in the first quarter with $83.4 million in revenue, 4 cents in non-GAAP earnings per share, and importantly, a book to bill above one. These results, our booking levels, and the demand we are seeing are encouraging data points for us And the trends, especially when looking at trailing 12-month revenue and bookings, confirm the positive momentum we are experiencing. To be clear, we have not seen the slowdown in spending softness or pressures that others across the telecom industry have reported. In fact, demand for our solutions has continued to be strong and our sales execution in key regions has improved all while our access to supply chain continues to normalize. The trends we are seeing are encouraging. We are cognizant of the macro environment and recognize that others in the telecom industry are speaking to softness. Softness we have not experienced and volatility in customer buying patterns. With that in mind, we want to validate the customer trends we have experienced to date before we consider raising our full year outlook. Doing so will give us more touch points to confirm that the demand we are experiencing is as it seems and not being pulled forward from a future period. Beyond the revenue line, our results demonstrate the improving earnings power of our organization. Our gross margins continue to expand, reflecting our improved execution in key markets higher revenues from North America, as well as reductions in supply chain costs. We delivered $3.6 million in non-GAAP net income in the first quarter. Barring any unexpected developments, we continue to believe that we will deliver positive non-GAAP net income during 2023. With a profitable business model, a solid backlog, a booking to revenue ratio that exceeds one, and solutions that address key CAPEX and OPEX goals for customers around the world, we believe we are well positioned for sustained success. Importantly, there were no significant impacts from supply chain disruption in the quarter, and while we continue to carefully manage the supply chain, component availability has been improving. Our geographic diversification continues to benefit our revenue. In the first quarter, we generated sequential and year-over-year revenue growth in APAC Europe and North America, and year-over-year growth in India, where we generated our fourth consecutive quarter of revenue over $20 million. In North America, we generated revenue of $26.4 million up from $17.2 million in the fourth quarter and from $13.3 million in the first quarter last year. In Europe, We believe we have room for improvement even considering the modest improvement in our revenues. We recently installed a seasoned region head to lead our business in Europe and we expect further improvements as this transition advances. Our first quarter revenues reflect approximately $5 million in revenue that shifted out of the fourth quarter of 2022 and into the first quarter of 2023 that we noted on our last quarterly call. With that shift, we would expect some normalization in the revenue cadence going forward. This is primarily impacting North America. The fourth quarter had lower than expected revenue from North America, with some revenue shifting into the first quarter. And therefore, the normalized run rate in this region is probably somewhere in between these two data points going forward. The trend for our gross margins is also encouraging. We delivered non-GAAP margins of 34% in the quarter, driving $5.9 million in non-GAAP operating income, a positive swing of $6.5 million. This improvement reflects higher revenues from North America, coupled with better operational execution, especially in the supply chain. We continue to advance the productization of our new system on a chip technology. To date, our efforts are advancing according to plan. And while there's much work to be done, we remain on track to launch our new product line in 2024. We believe we have first movers position, a two to three year time to market advantage over our competitors. With this, we believe that our system on a chip powered products will drive significant demand and have a transformative impact on the industry and on our market share. I'd now like to overview our Q1 highlights by region. Noting that on today's call and future quarterly calls, we will focus primarily on activities in North America and India, the two regions that have, and we expect will continue to have, the greatest impact on our quarterly results. In North America, the 5G build continues to be strong. We have continued to receive orders from major carriers with one customer driving a significant portion of our volume. We are also participating in multiple RFPs for the critical infrastructure sector and pursuing new rural broadband initiatives as well as other opportunities we are seeing in this region. Those are driven by federal and state funding plans, as well as the demand for faster networks rollout, which can be accommodated by wireless transport technology. These initiatives remain a critical area for incremental opportunity and diversification for our business. Rural broadband initiatives represent government priorities in the United States in general and in specific states in particular. The process for rural broadband expansion takes time as the various federal plans take shape, but we believe we are increasingly well positioned to capitalize when these opportunities mature. In India, operators are increasingly turning to upselling and cross-selling to improve customer experience and drive engagement. India telcos continue to invest in 4G technology while beginning to deploy 5G in certain regions. We're working with operators in the market for 4G rollout and enhancement in selected regions, as well as deploy 5G equipment in urban areas. Indian telcos augment their network capacity with additional fiber and wireless e-band and multi-band to meet demand for high speed, though government has not concluded the e-band fees yet. 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 Q1, 2023, we continue to deliver our products for 4G networks, as well as delivering our e-band, multi-band solution for 5G networks in an increased pace. We ended the quarter with approximately $30 million in follow-on orders from tier one operators that we expect to deploy mainly over the next two quarters. These orders include both products and services focused on upgrading existing network capabilities to 5G, expanding capacity, improving rural connectivity, and providing customers with reliable uninterrupted high-speed experiences. We expect this trend to continue throughout 2023. Looking at the rest of the world, in Europe, we had another good quarter benefiting from strong Q4 bookings, even as we navigate a significant organizational change and despite the ongoing macroeconomic challenges. We believe there is a significant opportunity for us here with near-term room for improvement under the new leadership. In AIPAC, we had a good quarter in terms of booking, primarily from Australia and Indonesia. We see opportunities in this region as 5G deployment is unfolding at a different pace in different parts of the region, in the telecom and also in the private network domain. In Africa, we had a significant booking from a private networks business this quarter, although the market is still soft. To summarize, conditions have been improving both on the macro and the micro levels. Demand for our solutions is strong, execution is improving, and supply chain availability has been getting better. Quarter-to-quarter variability in our financials is always a reality, but we believe the trailing 12-month trends for our business are solid and improving, both from revenue and a profitability standpoint. Given the positive business traction, our significant backlog, and a book-to-bill that is above one in the first quarter, we expect our growth trajectory over time to continue. Importantly, we also believe that we can be profitable on a non-gap basis for the 2023 full year. Ronen, over to you.