Ceragon Networks Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Saragon Networks Earnings Conference Call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you will need to raise your hand using your mobile or desktop application or press star 9 on your telephone keypad and wait for your name to be announced. I must advise you that today's call is being recorded. I'd like to hand the call over now to our first speaker today, Rob Fink, Head of Investor Relations. Rob, please go ahead.

Thank you, Operator, and good morning, everyone. Hosting the call today is Daron Arazi, Saragon's Chief Executive Officer, and Ronan Stein, Chief Financial Officer. Before we start, we'd like to note that certain statements made on this call will constitute as 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 Security Litigation Reform Act of 1995. Saragon intends forward-looking terminology such as may, plans, anticipates, believes, estimates, targets, expects, intends, potential, or other comparable terminology, although not all forward-looking statements contain these identifying words. Such statements reflect current expectations and assumptions of Saragon management. Actual results may differ materially as they are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in these forward-looking statements. A full list of risk and uncertainties are disclosed in Saragon's annual report on Form 20F that was published on March 21, 2024, as well as with other documents that have been subsequently filed by Saragon from time to time with the Securities and Exchange Commission. Forward-looking statements relate to the date initially made, and they are not prediction 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 scc.gov, and they may also be obtained from Saragon's website at saragon.com. In addition, today's call will include certain non-GAAP financials. for reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier today, which is posted on the investor relations section of Saragon's website. With all that said, I'd now like to turn the call over to Daron. Daron, the call is yours.

Thank you, Rob, and good morning, everyone. This was a record year for Saragon financially. achieving record operating profit on the highest revenue levels since 2012. Importantly, we made significant progress in our strategy to expand our TAM and diversify our revenue streams. To remind everyone, our growth strategy consists of three pillars, focusing on millimeter wave products that are expected to be the fastest growing part in the wireless transport market, increasing our market share in private networks of end-to-end solutions, and increasing our recurring revenue primarily by helping our customers in network operation and optimization. Let me highlight some of the achievements in this regard. We grew our annual revenue during 2024 by more than 13%, even as the wireless transport market, according to industry analysts, declined more than 10% year over year. About half of that growth was organic and the balance was contributed by cycloacquisition. We grew our bookings from private networks by more than 50% and we secured additional recurring revenue from managed services with approximately $7 million annual recurring revenue, which is more than 30% of our current ARR. These additional revenues are expected to have gradual impact on our recurring revenue in 2025 and 2026. Simultaneously, we continue to execute against our product roadmap, extending our technological lead. We have introduced the IP50CX, enabling us to win a significant new business and take market share in India. We have introduced the new millimeter wave series, IP50EX, that we believe is the best price performance millimeter wave product in the industry as demonstrated by the recent indication of demand for the IP50EXA product in India. On that same front, we have finished the tests of our proprietary Neptune chip successfully, and have been developing the first 25 gigabit per second in a single box, our IP50100E, that once again is expected to be the best price performance product in the industry, enabling us to also provide a multi-band solution in a split-mount configuration of 29 gigabit per second, likely the highest in our space. And finally, on the millimeter wave, we have launched the new product version of Ciclo by Ceregon product, the 8020, that many Ciclo by Ceregon customers have been waiting for. During 2024, we also started developing a new split-mount product After many years of focusing primarily on an all-outdoor solution, this product can address the needs of a large part of the market, including private networks, that still prefers split-mount products, and we expect it to be commercially available within the first half of 2025. On the software front, we've introduced the smart activation key. that enables more flexibility and ease of use of different features and configurations of our products, opening the door for software as a service business models. We have recently seen an increased interest in our encryption features due to the increased threats of cyber attacks. This can drive higher software revenue for us from both our install base and future purchases. Our smart activation key can make this feature even easier to use. With these achievements, we entered 2025 in a strong competitive position. I believe our position is the strongest it has been since I became CEO. We are making our strides and seeing the signals of success tied to the continued execution of our strategy. The recent acquisition of E2E technologies is another attestation of our determination to pursue the private network market organically and inorganically. The two acquisitions completed over the last 14 months improve our ability to compete in this domain. I firmly believe that we can continue increasing our market share significantly. Said that, the dynamics of the private network market results in projects shifting from quarter to quarter. And this impacts our visibility on revenue until we reach a critical mass of projects in our backlog. On the managed services front, we had a few recent successes that are reflected in our increased committed ARR and make us more optimistic or even much more optimistic about this path of growth. We have seen increasing interest in the market for full turnkey deals where we are expected to design, deliver, deploy, and manage the performance of our products over periods that can range between five to 10 years. We expect to continue this approach even if it impacts our growth pace in the short run. Ceregon has been outperforming the market in 2024, and we expect to continue to outperform the market in 2025. That said, data from analysts as well as other companies' performance in the telecommunication technology space suggest that the CSP market has been soft for at least a year. Recently, some of the companies, especially in the run and fiber domain are reporting on signs of potential recovery. Run and fiber deployments typically come before wireless transport deployments, serving as a leading indicator for growth for us. In 2024, Saragon outperformed the industry in this respect due to being the vendor of choice in particular parts of the market, primarily in India and North America. Yet, we are not immune to the global market trends. But, with the huge progress we have made with our offerings, we are very well positioned to benefit from a recovery in the industry. To summarize, I am very optimistic about long-term direction. 2025 is indeed starting with low visibility, but can also turn into another successful year for Saragon if CSP markets recovers and subject to the pace of success in private networks. As we navigate this period, I continue to believe that Saragon is well positioned and we expect to continue to outperform the market. I'd now like to provide an overview of our Q4 highlights by region. In North America, revenue was $13.4 million. This reflects the lower levels of booking we had in Q3 as previously discussed and into Q4. We saw a nice uptick in bookings in Q4 and we expect another sequential growth in Q1 of 2025. This trend reinforces our confidence that lower bookings in Q3 were reflective of timing issues, not demand. We also see opportunities for deployment of our encryption capabilities as cybersecurity is getting more attention. In India, revenue was $55.6 million, an all-time record quarter for Saragon, exceeding the $50.5 million reported in the third quarter. our previous record. We have been shipping and deploying equipment related to several projects in India, including the new customer we won in Q4 2023. These deployments are supporting customers in both the expansions of 4G and 5G networks. During the last few months, We have finished negotiations of the commercial terms with two of our customers, securing our market share with the potential for a certain increase on account of competition. We have started receiving orders for delivery in 2025 based on the new commercial terms, and we expect more orders in the coming quarters for both our microwave and even products. Importantly, Our IP50 EXA has generated significant traction, being most probably the best price performance product in our space. Our strong relationship with one of our customers and their trust in us and its appreciation of our strong technological capabilities are opening for us more opportunities that are beyond our core domain and current roadmap. While these opportunities are in the initial exploration phase, they are another attestation to our strong position in India. In our Asia-Pacific region, we finished the year strong, winning business that included significant C-CLU by Ceregon products. This was primarily in the point-to-multipoint access solutions for municipality projects, which included managed services following deployment. We also were awarded a project worth of approximately $20 million in collaboration with a tower company to provide capacity as a service to certain communications service providers, as well as a $3.5 million win in the energy domain. We expect to have final agreements signed by the first half of 2025. With that, I'll turn the call over to Ronen Stein, our CFO, to discuss the results in more detail. Ronen, over to you.