- Revenues of $43.0 million,
decreased 28% sequentially, and decreased 47% year-over-year
- Gross margin of 25.5%, non-GAAP(1) gross margin of
27.7%
- Operating loss of $22.1 million,
non-GAAP(1) operating loss of $15.5 million
- Net loss of $26.2 million or a
loss of $0.95 per diluted share,
non-GAAP(1) net loss of $12.1
million or a loss of $0.44 per
diluted share
- Adjusted EBITDA(1) loss of $14.4 million or (33.5)% of revenues
ROLLING
MEADOWS, Ill., Nov. 2, 2023
/PRNewswire/ -- Cambium Networks Corporation ("Cambium Networks")
(NASDAQ: CMBM), a leading provider of wireless networking
infrastructure solutions, today announced financial results for the
third quarter 2023 ended September 30,
2023.
|
|
GAAP
|
|
Non-GAAP
(1)
|
(in millions, except
percentages)
|
|
Q3
2023
|
|
Q2
2023
|
|
Q3
2022
|
|
Q3
2023
|
|
Q2
2023
|
|
Q3
2022
|
Revenues
|
|
$
43.0
|
|
$
59.5
|
|
$
81.2
|
|
$
43.0
|
|
$
59.5
|
|
$
81.2
|
Gross margin
|
|
25.5 %
|
|
49.1 %
|
|
50.7 %
|
|
27.7 %
|
|
50.3 %
|
|
51.3 %
|
Operating
margin
|
|
(51.3) %
|
|
(4.5) %
|
|
12.3 %
|
|
(36.1) %
|
|
2.8 %
|
|
17.0 %
|
Net (loss)
income
|
|
$
(26.2)
|
|
$
(2.6)
|
|
$
9.4
|
|
$
(12.1)
|
|
$
0.9
|
|
$
11.3
|
Adjusted EBITDA
margin
|
|
|
|
|
|
|
|
(33.5) %
|
|
4.7 %
|
|
18.2 %
|
1Refer to Supplemental Financial Information
accompanying this press release for a reconciliation of GAAP to
non-GAAP numbers and for reconciliation of adjusted EBITDA for the
third quarter 2023 ended September 30,
2023.
"As mentioned in our preliminary third quarter results press
release, we are challenged by high channel inventories for
Enterprise products, delayed government defense orders due to
budgetary timing issues—which now appear to be resolving during the
fourth quarter 2023, and lower revenues in the Point-to-Multi-Point
business, which is expected to continue until the FCC's approval
and subsequent ramp of sales of Cambium's 6 GHz products," said
Morgan Kurk, president and CEO.
"Cambium is taking steps to improve profitability and to
rationalize business operations with the current demand
environment."
Kurk continued, "We believe we have the right products and
technologies to deliver future growth as we drive operating
efficiencies and build customer acceptance, and we look forward to
the addition of 6 GHz spectrum which will benefit the
Point-to-Multi-Point business."
Revenues of $43.0 million for the
third quarter 2023 decreased $38.2
million year-over-year primarily as a result of lower
revenues for Enterprise products due to high channel inventories,
slowing economies, and high stock rotations, and lower
Point-to-Multi-Point revenues from service providers awaiting the
addition of 6 GHz spectrum, partially offset by higher
Point-to-Point revenues due to increased defense revenues. Revenues
for the third quarter 2023 decreased by $16.5 million compared to $59.5 million for the second quarter 2023,
primarily due to U.S. Federal budgetary timing issues resulting in
a shortfall in defense revenues impacting the Point-to-Point
business, lower Enterprise revenues as a result of economic
headwinds, high channel inventories, and stock rotations, as well
as lower Point-to-Multi-Point revenues as a result of service
providers awaiting the addition of 6 GHz spectrum, which is now
expected during late Q4'23.
GAAP gross margin for the third quarter 2023 was 25.5%, compared
to 50.7% for the third quarter 2022, and 49.1% for the second
quarter 2023. GAAP operating loss for the third quarter 2023 was
$22.1 million, compared to operating
income of $10.0 million for the third
quarter 2022, and operating loss of $2.7
million for the second quarter 2023. GAAP net loss for the
third quarter 2023 was $26.2 million,
or net loss of $0.95 per diluted
share, compared to net income of $9.4
million, or net earnings of $0.34 per diluted share for the third quarter
2022, and net loss of $2.6 million,
or net loss of $0.10 per diluted
share for the second quarter 2023.
Non-GAAP gross margin for the third quarter 2023 was 27.7%
compared to 51.3% for the third quarter 2022, and 50.3% for second
quarter 2023, due primarily to higher inventory reserves and lower
freight capitalization, as well as changes in product mix. Non-GAAP
operating loss for the third quarter 2023 was $15.5 million, compared to non-GAAP operating
income of $13.8 million for the third
quarter 2022, and non-GAAP operating income of $1.6 million for the second quarter 2023.
Non-GAAP net loss for the third quarter 2023 was $12.1 million, or a net loss of $0.44 per diluted share, compared to net income
of $11.3 million, or $0.40 per diluted share for the third quarter
2022, and net income of $0.9 million,
or $0.03 per diluted share, for the
second quarter 2023. For the third quarter 2023, adjusted EBITDA
was a loss of $14.4 million or
(33.5)% of revenues, compared to adjusted EBITDA of $14.7 million or 18.2% of revenues for the third
quarter 2022, and $2.8 million or
4.7% of revenues for the second quarter 2023.
Net cash used in operating activities was $0.2 million for the third quarter 2023, compared
to net cash provided by operating activities of $2.2 million for the third quarter 2022, and net
cash used in operating activities of $4.5
million for the second quarter 2023. Cash totaled
$27.5 million as of September 30, 2023, $17.3
million lower than September 30,
2022.
Third Quarter 2023 Highlights
- Revenues of $43.0 million,
decreased 28% sequentially, and were lower by 47%
year-over-year.
- GAAP net loss of $26.2 million or
a net loss of $0.95 per diluted
share, non-GAAP net loss of $12.1
million or a net loss of $0.44
per diluted share, compared to GAAP net income of $9.4 million, or $0.34 per diluted share for the third quarter
2022, and non-GAAP net income of $11.3
million or $0.40 per diluted
share for the third quarter 2022.
- Adjusted EBITDA was a loss of $14.4
million or (33.5)% of revenues, compared to adjusted EBITDA
of $14.7 million or 18.2% of revenues
for the third quarter 2022.
- Net cash used in operating activities was $0.2 million, compared to net cash provided by
operating activities of $2.2 million
for the third quarter 2022.
- Surpassed 17 million radios shipped since becoming a standalone
company.
- Increased net new channel partners by approximately 1,620
year-over-year, an increase of over 13%.
- Devices under cnMaestro® cloud management increased 17%
year-over-year.
Cambium Networks' financial outlook does not include the
potential impact of any possible future financial transactions,
acquisitions, pending legal matters, or other transactions.
Accordingly, Cambium Networks only includes such items in the
company's financial outlook to the extent they are reasonably
foreseeable; however, actual results may differ materially from the
outlook.
Fourth Quarter 2023 Financial Outlook
Taking into account our current visibility, the financial
outlook as of November 2, 2023, for
the fourth quarter ending December 31,
2023, is expected to be as follows:
- Revenues between $45.0-$50.0
million
- GAAP gross margin between 36.3%-43.3%; and non-GAAP gross
margin between 38.0%-45.0%
- GAAP operating expenses between $29.8-$30.8
million; and non-GAAP operating expenses between
$25.7-$26.7
million
- GAAP net loss between $8.0-$11.5 million
or a net loss between $0.29 and
$0.41 per diluted share; and non-GAAP
net loss between $4.0-$7.5 million or a net loss between $0.14 and $0.27 per
diluted share.
Conference Call and Webcast
Cambium Networks will host a live webcast and conference call to
discuss its financial results at 4:30 p.m.
ET today, November 2, 2023. To
join the financial results live webcast and view additional
materials which will be posted to the investor website, listeners
should access the investor page of Cambium Networks website
https://investors.cambiumnetworks.com/. Following the live
webcast, a replay will be available in the event archives at the
same web address for a period of one year.
To access the live conference call by phone, listeners
should register in advance at
https://register.vevent.com/register/BIe5b0682df41d424994bf8930c81ce039
receive a confirmation email detailing how to join the conference
call, including the dial-in number and a unique passcode.
In addition, Cambium Networks president & CEO,
Morgan Kurk, CFO Andrew Bronstein, will hold one-on-one meetings
virtually with investors and present on Tues., November 14, 2023, at the Needham Virtual
Security, Networking and Communications Conference, and will hold
one-on-one meetings in person on Wed.,
November 15, 2023, at the ROTH Capital Technology Conference
held in New York, and virtually on
Mon., December 11, 2023, at the
Oppenheimer 5G Summit.
About Cambium Networks
Cambium Networks enables service providers, enterprises,
industrial organizations, and governments to deliver exceptional
digital experiences and device connectivity with compelling
economics. Our ONE Network platform simplifies management of
Cambium Networks' wired and wireless broadband and network edge
technologies. Our customers can focus more resources on managing
their business rather than the network. We deliver connectivity
that just works.
Cautionary Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements
within the meaning of the federal securities laws, including
statements concerning our expected next quarter revenues, net
income and cash. All statements other than statements of historical
fact contained in this document, including statements regarding our
future results of operations and financial position, business
strategy and plans and objectives of management for future
operations, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance, or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements.
The forward-looking statements in this document are only
predictions. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. These forward-looking
statements speak only as of the date of this document and are
subject to a number of risks, uncertainties and assumptions
including those described in the "Risk factors" section of our 2022
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 27, 2023, and
Form 10-Qs filed on May 9, 2023, and
August 2, 2023. Because
forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified, you
should not rely on these forward-looking statements as predictions
of future events. The events and circumstances reflected in our
forward-looking statements may not be achieved or occur and actual
results could differ materially from those projected in the
forward-looking statements. Some of the key factors that could
cause actual results to differ from our expectations include: the
unpredictability of our operating results; our inability to predict
and respond to emerging technological trends and network operators'
changing needs; the impact of political tensions between
the United States and other
countries such as the war between Russia and Ukraine, tensions with China and the evolving events in Israel and Gaza; the strength of the dollar and the
impact on the cost of our products globally; current or future
unfavorable economic conditions, both domestically and in our
foreign markets, including the risk of a global or localized
recession; our inability to predict and respond to emerging
technological trends and network operators' changing needs; the
impact of competitive pressures on the development of our new
products; the impact of actual or threatened health epidemics and
other outbreaks; our limited or sole source suppliers' inability to
acquire or produce third-party components to build our products and
the impact of supply shortages, extended lead times or changes in
supply or cost of components needed to manufacture our products;
our ability to effectively forecast demand or manage our inventory,
including our channel inventory, which may cause us to record
write-downs for excess or obsolete inventory; our reliance on
third-party manufacturers, which subjects us to risks of product
delivery delays and reduced control over product costs and quality;
our reliance on distributors and value-added resellers for the
substantial majority of our sales; the inability of our third-party
logistics and warehousing providers to deliver products to our
channel partners and network operators in a timely manner; or our
distributors' and channel partners' inability to attract new
network operators or sell additional products to network operators
that currently use our products; the technological complexity of
our products, which may contain undetected hardware defects or
software bugs or subject our products to the risks of ransomware or
malware or other cyber-attack; our channel partners' inability to
effectively manage inventory of our products, timely resell our
products or estimate expected future demand; and current or future
unfavorable economic conditions, both domestically and in foreign
markets.
Except as required by applicable law, we do not plan to
publicly update or revise any forward-looking statements contained
herein, whether as a result of any new information, future events
or otherwise.
CAMBIUM NETWORKS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands,
except share and per share amounts)
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
|
|
|
|
|
|
|
Revenues
|
|
$
43,046
|
|
$
59,542
|
|
$
81,200
|
Cost of
revenues
|
|
32,087
|
|
30,300
|
|
40,034
|
Gross
profit
|
|
10,959
|
|
29,242
|
|
41,166
|
Gross
margin
|
|
25.5 %
|
|
49.1 %
|
|
50.7 %
|
Operating
expenses
|
|
|
|
|
|
|
Research and
development
|
|
13,151
|
|
13,008
|
|
12,609
|
Sales and
marketing
|
|
9,675
|
|
11,528
|
|
11,033
|
General and
administrative
|
|
8,688
|
|
5,836
|
|
6,058
|
Depreciation and
amortization
|
|
1,545
|
|
1,573
|
|
1,506
|
Total operating
expenses
|
|
33,059
|
|
31,945
|
|
31,206
|
Operating (loss)
income
|
|
(22,100)
|
|
(2,703)
|
|
9,960
|
Operating
margin
|
|
-51.3 %
|
|
-4.5 %
|
|
12.3 %
|
Interest expense,
net
|
|
620
|
|
579
|
|
514
|
Other expense,
net
|
|
63
|
|
64
|
|
165
|
(Loss) income before
income taxes
|
|
(22,783)
|
|
(3,346)
|
|
9,281
|
Provision (benefit) for
income taxes
|
|
3,417
|
|
(704)
|
|
(154)
|
Net (loss)
income
|
|
$
(26,200)
|
|
$
(2,642)
|
|
$
9,435
|
|
|
|
|
|
|
|
(Loss) earnings per
share
|
|
|
|
|
|
|
Basic
|
|
$
(0.95)
|
|
$
(0.10)
|
|
$
0.35
|
Diluted
|
|
$
(0.95)
|
|
$
(0.10)
|
|
$
0.34
|
Weighted-average
number of shares outstanding to compute (loss) earnings per
share
|
|
|
|
|
|
|
Basic
|
|
27,619,281
|
|
27,432,705
|
|
26,977,155
|
Diluted
|
|
27,619,281
|
|
27,432,705
|
|
27,979,575
|
|
|
|
|
|
|
|
Share-based
compensation included in costs and expenses:
|
|
|
|
|
|
|
Cost of
revenues
|
|
$
45
|
|
$
59
|
|
$
56
|
Research and
development
|
|
1,037
|
|
1,388
|
|
1,241
|
Sales and
marketing
|
|
597
|
|
728
|
|
696
|
General and
administrative
|
|
1,166
|
|
887
|
|
855
|
Total share-based
compensation expense
|
|
$
2,845
|
|
$
3,062
|
|
$
2,848
|
|
|
|
|
|
|
|
Certain revisions
were made within operating expenses in prior periods to conform to
the current period. These revisions had no impact to operating
income.
|
CAMBIUM NETWORKS
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In thousands,
except share information)
|
(Unaudited)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
$
27,529
|
|
$
48,162
|
Accounts receivable,
net of allowance of $734 and $577
|
|
60,444
|
|
89,321
|
Inventories,
net
|
|
79,764
|
|
57,068
|
Recoverable income
taxes
|
|
982
|
|
117
|
Prepaid
expenses
|
|
8,810
|
|
11,857
|
Other current
assets
|
|
9,643
|
|
6,464
|
Total current
assets
|
|
187,172
|
|
212,989
|
|
|
|
|
|
Noncurrent
assets
|
|
|
|
|
Property and equipment,
net
|
|
11,365
|
|
11,271
|
Software,
net
|
|
11,804
|
|
8,439
|
Operating lease
assets
|
|
4,257
|
|
4,011
|
Intangible assets,
net
|
|
8,050
|
|
9,173
|
Goodwill
|
|
9,842
|
|
9,842
|
Deferred tax assets,
net
|
|
12,494
|
|
12,782
|
Other noncurrent
assets
|
|
880
|
|
955
|
TOTAL
ASSETS
|
|
$
245,864
|
|
$
269,462
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
24,849
|
|
$
31,284
|
Accrued
liabilities
|
|
20,690
|
|
28,042
|
Employee
compensation
|
|
5,333
|
|
7,394
|
Current portion of
long-term external debt, net
|
|
3,173
|
|
3,158
|
Deferred
revenues
|
|
8,791
|
|
8,913
|
Other current
liabilities
|
|
15,988
|
|
8,429
|
Total current
liabilities
|
|
78,824
|
|
87,220
|
Noncurrent
liabilities
|
|
|
|
|
Long-term external
debt, net
|
|
22,588
|
|
24,463
|
Deferred
revenues
|
|
9,731
|
|
8,617
|
Noncurrent operating
lease liabilities
|
|
2,793
|
|
2,170
|
Other noncurrent
liabilities
|
|
1,705
|
|
1,619
|
Total
liabilities
|
|
115,641
|
|
124,089
|
Shareholders'
equity
|
|
|
|
|
Share capital; $0.0001
par value; 500,000,000 shares authorized at September 30, 2023 and
December 31, 2022; 27,661,860 outstanding at September 30, 2023 and
27,313,273 outstanding at December 31, 2022
|
|
3
|
|
3
|
Additional paid in
capital
|
|
149,165
|
|
138,997
|
Treasury shares, at
cost, 255,569 shares at September 30, 2023 and 209,461 shares at
December 31, 2022
|
|
(5,600)
|
|
(4,922)
|
Accumulated (deficit)
earnings
|
|
(11,744)
|
|
12,822
|
Accumulated other
comprehensive loss
|
|
(1,601)
|
|
(1,527)
|
Total shareholders'
equity
|
|
130,223
|
|
145,373
|
TOTAL
LIABILITIES AND EQUITY
|
|
$
245,864
|
|
$
269,462
|
|
|
|
|
|
CAMBIUM NETWORKS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
(26,200)
|
|
$
(2,642)
|
|
$
9,435
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization of software and intangible assets
|
|
2,294
|
|
2,222
|
|
1,930
|
Amortization of debt
issuance costs
|
|
81
|
|
79
|
|
76
|
Share-based
compensation
|
|
2,845
|
|
3,062
|
|
2,848
|
Deferred income
taxes
|
|
3,612
|
|
(1,805)
|
|
(694)
|
Provision for inventory
excess and obsolescence
|
|
4,577
|
|
(276)
|
|
1,587
|
Other
|
|
155
|
|
69
|
|
(88)
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
Receivables
|
|
22,457
|
|
9,165
|
|
(5,506)
|
Inventories
|
|
(1,993)
|
|
(13,739)
|
|
(4,786)
|
Prepaid
expenses
|
|
(772)
|
|
2,734
|
|
(4,116)
|
Accounts
payable
|
|
(5,156)
|
|
134
|
|
(137)
|
Accrued employee
compensation
|
|
(527)
|
|
(931)
|
|
759
|
Other assets and
liabilities
|
|
(1,619)
|
|
(2,593)
|
|
851
|
Net cash (used
in) provided by operating activities
|
|
(246)
|
|
(4,521)
|
|
2,159
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(1,125)
|
|
(667)
|
|
(974)
|
Purchase of
software
|
|
(2,185)
|
|
(1,796)
|
|
(1,440)
|
Net cash used in
investing activities
|
|
(3,310)
|
|
(2,463)
|
|
(2,414)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Repayment of term
loan
|
|
(656)
|
|
(657)
|
|
(656)
|
Issuance of ordinary
shares under ESPP
|
|
—
|
|
1,102
|
|
—
|
Taxes paid related to
net share settlement of equity awards
|
|
(219)
|
|
(285)
|
|
(231)
|
Proceeds from share
option exercises
|
|
6
|
|
105
|
|
113
|
Net cash (used
in) provided by financing activities
|
|
(869)
|
|
265
|
|
(774)
|
Effect of exchange rate
on cash
|
|
(24)
|
|
1
|
|
(41)
|
Net decrease in
cash
|
|
(4,449)
|
|
(6,718)
|
|
(1,070)
|
Cash, beginning of
period
|
|
31,978
|
|
38,696
|
|
45,929
|
Cash, end of
period
|
|
$
27,529
|
|
$
31,978
|
|
$
44,859
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information:
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
1,120
|
|
$
2,639
|
|
$
486
|
Interest
paid
|
|
$
474
|
|
$
468
|
|
$
213
|
CAMBIUM NETWORKS
CORPORATION
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
REVENUES BY
PRODUCT CATEGORY
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Point-to-Multi-Point
|
|
$
23,596
|
|
$
26,734
|
|
$
26,090
|
Point-to-Point
|
|
15,809
|
|
25,074
|
|
15,409
|
Enterprise
|
|
2,499
|
|
6,420
|
|
38,330
|
Other
|
|
1,142
|
|
1,314
|
|
1,371
|
Total
Revenues
|
|
$
43,046
|
|
$
59,542
|
|
$
81,200
|
|
|
|
|
|
|
|
REVENUES BY
REGION
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
North
America
|
|
$
17,768
|
|
$
39,526
|
|
$
30,086
|
Europe, Middle East and
Africa
|
|
14,274
|
|
6,769
|
|
29,263
|
Caribbean and Latin
America
|
|
5,726
|
|
6,015
|
|
8,935
|
Asia Pacific
|
|
5,278
|
|
7,232
|
|
12,916
|
Total
Revenues
|
|
$
43,046
|
|
$
59,542
|
|
$
81,200
|
|
|
|
|
|
|
|
Use of non-GAAP (Adjusted) Financial Measures
In addition to providing financial measurements based on
generally accepted accounting principles in the United States (GAAP), we provide
additional financial metrics that are not prepared in accordance
with GAAP (non-GAAP), including Adjusted EBITDA, non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP operating income and
non-GAAP operating margin, non-GAAP pre-tax income, non-GAAP
provision for income taxes, non-GAAP net income, and non-GAAP fully
weighted basic and diluted shares. Management uses these non-GAAP
financial measures, in addition to GAAP financial measures, to
understand and compare operating results across accounting periods,
for financial and operational decision making, for planning and
forecasting purposes, to measure executive compensation and to
evaluate our financial performance. We believe that these non-GAAP
financial measures help us to identify underlying trends in our
business that could otherwise be masked by the effect of the
expenses that we exclude in the calculations of the non-GAAP
financial measures.
We believe that these financial measures reflect our ongoing
business in a manner that allows for meaningful comparisons and
analysis of trends in the business and provides information to
investors and others in understanding and evaluating our operating
results, enhancing the overall understanding of our past
performance and future prospects. Although the calculation of
non-GAAP financial measures may vary from company to company, our
detailed presentation may facilitate analysis and comparison of our
operating results by management and investors with other peer
companies, many of which use similar non-GAAP financial measures to
supplement their GAAP results in their public disclosures. These
non-GAAP financial measures are discussed below.
Adjusted EBITDA is defined as net income as reported in our
consolidated statements of income excluding the impact of (i)
interest expense (income), net; (ii) income tax provision
(benefit); (iii) depreciation and amortization expense; (iv)
nonrecurring legal expenses, (v) share-based compensation expense,
(vi) one-time costs, and (vii) restructuring expenses. EBITDA is
widely used by securities analysts, investors and other interested
parties to evaluate the profitability of companies. EBITDA
eliminates potential differences in performance caused by
variations in capital structures (affecting net finance costs), tax
positions (such as the availability of net operating losses against
which to relieve taxable profits), the cost and age of tangible
assets (affecting relative depreciation expense) and the extent to
which intangible assets are identifiable (affecting relative
amortization expense). We adjust EBITDA to also exclude
nonrecurring legal expenses since this is one-time in nature and
does not reflect our ongoing operations. We adjust EBITDA for
share-based compensation expense which is a non-cash expense that
varies in amount from period to period and is dependent on market
forces that are often beyond Cambium Networks' control. As a
result, management excludes this item from Cambium Networks'
internal operating forecasts and models. We also adjust EBITDA to
exclude one-time costs and restructuring expenses as these relate
to events outside of the ordinary course of continuing operations
and to provide a more accurate comparison of our ongoing business
results.
Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP
operating income and non-GAAP operating margin, non-GAAP effective
tax rate and non-GAAP net income are used as a supplement to our
unaudited condensed consolidated financial statements presented in
accordance with GAAP. We believe these non-GAAP measures are the
most meaningful for period-to-period comparisons because they
exclude the impact of share-based compensation expense,
restructuring expenses, nonrecurring legal expenses, amortization
of acquired intangibles, and amortization of capitalized software
costs as we do not consider these costs and expenses to be
indicative of our ongoing operations.
Share-based compensation expenses are excluded. Management may
issue different types of awards, including share options,
restricted share awards and restricted share units, and excludes
the associated expense in this non-GAAP measure. Share-based
compensation expense is a non-cash expense that varies in amount
from period to period and is dependent on market forces that are
often beyond Cambium Networks control.
Amortization of acquired intangibles includes customer
relationships and is excluded since these are not indicative of
continuing operations.
Amortization of capitalized software costs include capitalized
research and development activities amortized over their useful
life and included in cost of revenues and are excluded since these
are not indicative of continuing operations.
Restructuring expenses consist primarily of severance costs for
employees which are not related to future operating expenses.
Cambium Networks excludes these expenses since they result from an
event that is outside the ordinary course of continuing operations.
Excluding these charges permits more accurate comparisons of
Cambium Networks' ongoing business results.
Our non-GAAP tax adjustments include the tax impacts from
share-based compensation expense including excess or decremental
tax benefits available to the company that are recorded when
incurred. Non-GAAP results exclude the effect of a valuation
allowance recorded against tax assets for the cumulative loss
related to our UK operation. Cambium Networks excludes these
amounts to more closely approximate the company's ongoing effective
tax rate after adjusting for one-time or unique non-recurring
items. The associated non-GAAP effective tax rate is also applied
to the gross amount of non-GAAP adjustments for the purpose of
calculating non-GAAP net income in total and on a per-share basis.
This approach is designed to enhance the ability of investors to
understand the company's tax expense on its current operations,
provide improved modeling accuracy, and substantially reduce
fluctuations caused by GAAP adjustments which may not reflect
actual cash tax expense.
Non-GAAP fully weighted basic and diluted shares are shown as
outstanding during the entire period presented and include dilutive
shares if their effect on earnings per share is dilutive. We also
use non-GAAP fully weighted basic and diluted shares to provide
more comparable per-share results across periods.
These non-GAAP financial measures do not replace the
presentation of our GAAP financial results and should only be used
as a supplement to, not as a substitute for, our financial results
presented in accordance with GAAP. There are limitations in the use
of non-GAAP measures because they do not include all the expenses
that must be included under GAAP and because they involve the
exercise of judgment concerning exclusions of items from the
comparable non-GAAP financial measure. In addition, other companies
may use other measures to evaluate their performance, or may
calculate non-GAAP measures differently, all of which could reduce
the usefulness of our non-GAAP financial measures as tools for
comparison. We present a "Reconciliation of GAAP Financial Measures
to Non-GAAP Financial Measures" in the tables below.
The following table reconciles net income to Adjusted EBITDA,
the most directly comparable financial measure, calculated and
presented in accordance with GAAP (in thousands):
CAMBIUM NETWORKS
CORPORATION
|
SUPPLEMENTAL
SCHEDULE OF NON-GAAP ADJUSTED EBITDA
|
(In
thousands)
|
(Unaudited)
|
|
|
Three months
ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
Net (loss)
income
|
|
$
(26,200)
|
|
$
(2,642)
|
|
$
9,435
|
Interest expense,
net
|
|
620
|
|
579
|
|
514
|
Provision (benefit) for
income taxes
|
|
3,417
|
|
(704)
|
|
(154)
|
Depreciation and
amortization of software and intangible assets
|
|
2,294
|
|
2,222
|
|
1,930
|
EBITDA
|
|
(19,869)
|
|
(545)
|
|
11,725
|
Share-based
compensation
|
|
2,845
|
|
3,062
|
|
2,848
|
Restructuring and other
nonrecurring expenses
|
|
2,602
|
|
256
|
|
168
|
Adjusted
EBITDA
|
|
$
(14,422)
|
|
$
2,773
|
|
$
14,741
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
-33.5 %
|
|
4.7 %
|
|
18.2 %
|
The following table reconciles all other GAAP to non-GAAP
financial measures (in thousands):
CAMBIUM NETWORKS
CORPORATION
|
RECONCILIATION OF
GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
GAAP gross
profit
|
|
$
10,959
|
|
$
29,242
|
|
$
41,166
|
Share-based
compensation expense
|
|
45
|
|
59
|
|
56
|
Amortization of
capitalized software costs
|
|
750
|
|
648
|
|
424
|
Restructuring
expense
|
|
152
|
|
—
|
|
—
|
Non-GAAP gross
profit
|
|
$
11,906
|
|
$
29,949
|
|
$
41,646
|
Non-GAAP gross
margin
|
|
27.7 %
|
|
50.3 %
|
|
51.3 %
|
|
|
|
|
|
|
|
GAAP research and
development expense
|
|
$
13,151
|
|
$
13,008
|
|
$
12,609
|
Share-based
compensation expense
|
|
1,037
|
|
1,388
|
|
1,241
|
Restructuring and other
nonrecurring expense
|
|
630
|
|
256
|
|
—
|
Non-GAAP research
and development expense
|
|
$
11,484
|
|
$
11,364
|
|
$
11,368
|
|
|
|
|
|
|
|
GAAP sales and
marketing expense
|
|
$
9,675
|
|
$
11,528
|
|
$
11,033
|
Share-based
compensation expense
|
|
597
|
|
728
|
|
696
|
Restructuring and other
nonrecurring expenses
|
|
350
|
|
—
|
|
—
|
Non-GAAP sales and
marketing expense
|
|
$
8,728
|
|
$
10,800
|
|
$
10,337
|
|
|
|
|
|
|
|
GAAP general and
administrative expense
|
|
$
8,688
|
|
$
5,836
|
|
$
6,058
|
Share-based
compensation expense
|
|
1,166
|
|
887
|
|
855
|
Restructuring and other
nonrecurring expenses
|
|
1,470
|
|
—
|
|
168
|
Non-GAAP general and
administrative expense
|
|
$
6,052
|
|
$
4,949
|
|
$
5,035
|
|
|
|
|
|
|
|
GAAP depreciation
and amortization
|
|
$
1,545
|
|
$
1,573
|
|
$
1,506
|
Amortization of
acquired intangibles
|
|
375
|
|
375
|
|
390
|
Non-GAAP
depreciation and amortization
|
|
$
1,170
|
|
$
1,198
|
|
$
1,116
|
|
|
|
|
|
|
|
GAAP operating
(loss) income
|
|
$
(22,100)
|
|
$
(2,703)
|
|
$
9,960
|
Share-based
compensation expense
|
|
2,845
|
|
3,062
|
|
2,848
|
Amortization of
capitalized software costs
|
|
750
|
|
648
|
|
424
|
Amortization of
acquired intangibles
|
|
374
|
|
375
|
|
390
|
Restructuring and other
nonrecurring expenses
|
|
2,602
|
|
256
|
|
168
|
Non-GAAP operating
(loss) income
|
|
$
(15,529)
|
|
$
1,638
|
|
$
13,790
|
|
|
|
|
|
|
|
GAAP pre-tax (loss)
income
|
|
$
(22,783)
|
|
$
(3,346)
|
|
$
9,281
|
Share-based
compensation expense
|
|
2,845
|
|
3,062
|
|
2,848
|
Amortization of
capitalized software costs
|
|
750
|
|
648
|
|
424
|
Amortization of
acquired intangibles
|
|
374
|
|
375
|
|
390
|
Restructuring and other
nonrecurring expenses
|
|
2,602
|
|
256
|
|
168
|
Non-GAAP pre-tax
(loss) income
|
|
$
(16,212)
|
|
$
995
|
|
$
13,111
|
|
|
|
|
|
|
|
GAAP provision
(benefit) for income taxes
|
|
$
3,417
|
|
$
(704)
|
|
$
(154)
|
Valuation allowance
impacts
|
|
5,292
|
|
—
|
|
—
|
Tax rate
change
|
|
119
|
|
(147)
|
|
(8)
|
Tax impacts of share
vesting
|
|
80
|
|
18
|
|
—
|
Tax effect of Non-GAAP
adjustments
|
|
(1,314)
|
|
(868)
|
|
(766)
|
All other discrete
items
|
|
3,373
|
|
200
|
|
(1,216)
|
Non-GAAP (benefit)
provision for income taxes
|
|
$
(4,133)
|
|
$
93
|
|
$
1,836
|
Non-GAAP
ETR
|
|
25.5 %
|
|
9.4 %
|
|
14.0 %
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
|
$
(26,200)
|
|
$
(2,642)
|
|
$
9,435
|
Share-based
compensation expense
|
|
2,845
|
|
3,062
|
|
2,848
|
Amortization of
capitalized software costs
|
|
750
|
|
648
|
|
424
|
Amortization of
acquired intangibles
|
|
374
|
|
375
|
|
390
|
Restructuring and other
nonrecurring expenses
|
|
2,602
|
|
256
|
|
168
|
Non-GAAP adjustments to
tax
|
|
8,864
|
|
71
|
|
(1,224)
|
Tax effect of Non-GAAP
adjustments
|
|
(1,314)
|
|
(868)
|
|
(766)
|
Non-GAAP net (loss)
income
|
|
$
(12,079)
|
|
$
902
|
|
$
11,275
|
Non-GAAP fully
weighted basic shares
|
|
27,662
|
|
27,603
|
|
27,016
|
Non-GAAP fully
weighted diluted shares
|
|
27,744
|
|
28,279
|
|
27,916
|
Non-GAAP net income
per Non-GAAP basic share
|
|
$
(0.44)
|
|
$
0.03
|
|
$
0.42
|
Non-GAAP net income
per Non-GAAP diluted share
|
|
$
(0.44)
|
|
$
0.03
|
|
$
0.40
|
|
Certain revisions
were made within operating expenses in prior periods to conform to
the current period. These revisions had no impact to operating
income.
|
Investor Inquiries:
Peter
Schuman, IRC
Vice President Investor & Industry Analyst Relations
Cambium Networks
+1 (847) 264-2188
peter.schuman@cambiumnetworks.com
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SOURCE Cambium Networks