Cambium Networks Reports Third Quarter 2024 Financial Results
Cambium Networks (NASDAQ: CMBM) reported Q3 2024 financial results with revenues of $43.7 million, down 5% sequentially. The company posted a GAAP net loss of $9.7 million ($0.34 per share) and a non-GAAP net loss of $3.8 million ($0.14 per share). Gross margin improved to 39.9% GAAP and 42.3% non-GAAP. Operating cash flow was positive at $8.9 million with $46.5 million cash on hand. The company was not in compliance with its quarterly consolidated EBITDA covenant and October 2024 liquidity covenant, working with lenders for forbearance. Q4 2024 outlook projects revenues between $40.0-$45.0 million with continued operating losses.
Cambium Networks (NASDAQ: CMBM) ha riportato i risultati finanziari del terzo trimestre 2024 con ricavi di 43,7 milioni di dollari, in calo del 5% rispetto al trimestre precedente. L'azienda ha registrato una perdita netta GAAP di 9,7 milioni di dollari (0,34 dollari per azione) e una perdita netta non-GAAP di 3,8 milioni di dollari (0,14 dollari per azione). Il margine lordo è migliorato al 39,9% GAAP e al 42,3% non-GAAP. Il flusso di cassa operativo è stato positivo per 8,9 milioni di dollari, con 46,5 milioni di dollari in cassa. L'azienda non era in conformità con il suo covenant EBITDA consolidato trimestrale e il covenant di liquidità di ottobre 2024, collaborando con i creditori per un'agevolazione. Le previsioni per il quarto trimestre 2024 stimano ricavi tra 40,0 e 45,0 milioni di dollari con perdite operative continue.
Cambium Networks (NASDAQ: CMBM) reportó resultados financieros del tercer trimestre de 2024 con ingresos de 43,7 millones de dólares, una disminución del 5% en comparación con el trimestre anterior. La compañía reportó una pérdida neta GAAP de 9,7 millones de dólares (0,34 dólares por acción) y una pérdida neta no-GAAP de 3,8 millones de dólares (0,14 dólares por acción). El margen bruto mejoró al 39,9% GAAP y al 42,3% no-GAAP. El flujo de caja operativo fue positivo con 8,9 millones de dólares y 46,5 millones de dólares en efectivo. La empresa no cumplió con su convenio de EBITDA consolidado trimestral y con el convenio de liquidez de octubre de 2024, trabajando con los prestamistas para obtener una prórroga. Las proyecciones para el cuarto trimestre de 2024 estiman ingresos entre 40,0 y 45,0 millones de dólares con pérdidas operativas continuas.
캄비움 네트웍스(Cambium Networks) (NASDAQ: CMBM)는 2024년 3분기 재무 결과를 발표했으며, 수익은 4,370만 달러로 전 분기 대비 5% 감소했습니다. 회사는 GAAP 기준으로 970만 달러의 순손실(주당 0.34달러)과 비GAAP 기준으로 380만 달러(주당 0.14달러)의 순손실을 기록했습니다. 총 마진은 GAAP 기준으로 39.9%, 비GAAP 기준으로 42.3%로 개선되었습니다. 운영 현금 흐름은 890만 달러의 긍정적인 수치를 보였으며, 현금 보유액은 4,650만 달러였습니다. 회사는 분기별 통합 EBITDA 계약 및 2024년 10월 유동성 계약을 준수하지 않았으며, 대출 기관과 협력하여 유예를 요청하고 있습니다. 2024년 4분기 전망은 수익이 4,000만에서 4,500만 달러 사이가 될 것으로 예상하며, 운영 손실이 지속될 것으로 보입니다.
Cambium Networks (NASDAQ: CMBM) a annoncé ses résultats financiers pour le troisième trimestre 2024 avec des revenus de 43,7 millions de dollars, en baisse de 5 % par rapport au trimestre précédent. L'entreprise a enregistré une perte nette GAAP de 9,7 millions de dollars (0,34 dollar par action) et une perte nette non-GAAP de 3,8 millions de dollars (0,14 dollar par action). La marge brute s'est améliorée, atteignant 39,9 % GAAP et 42,3 % non-GAAP. Le flux de trésorerie d'exploitation a été positif, s'élevant à 8,9 millions de dollars, avec 46,5 millions de dollars de liquidités. L'entreprise ne respectait pas son covenants EBITDA consolidé trimestriel et son covenant de liquidité d'octobre 2024, et elle travaille avec les prêteurs pour demander un sursis. Les prévisions pour le quatrième trimestre 2024 projettent des revenus entre 40,0 et 45,0 millions de dollars, avec des pertes d'exploitation continues.
Cambium Networks (NASDAQ: CMBM) hat die finanziellen Ergebnisse des dritten Quartals 2024 veröffentlicht, mit Einnahmen von 43,7 Millionen US-Dollar, was einem Rückgang von 5 % im Vergleich zum vorhergehenden Quartal entspricht. Das Unternehmen verzeichnete einen GAAP-Nettoverlust von 9,7 Millionen US-Dollar (0,34 Dollar pro Aktie) sowie einen Nicht-GAAP-Nettoverlust von 3,8 Millionen US-Dollar (0,14 Dollar pro Aktie). Die Bruttomarge verbesserte sich auf 39,9 % GAAP und 42,3 % Nicht-GAAP. Der operative Cashflow war mit 8,9 Millionen US-Dollar positiv, und das Unternehmen hatte 46,5 Millionen US-Dollar in bar. Das Unternehmen war nicht in Übereinstimmung mit seinem vierteljährlichen konsolidierten EBITDA-Vertrag und dem Liquiditätsvertrag von Oktober 2024 und arbeitet mit den Kreditgebern an einer Stundung. Der Ausblick für das vierte Quartal 2024 prognostiziert Einnahmen zwischen 40,0 und 45,0 Millionen US-Dollar bei weiterhin operativen Verlusten.
- Operating cash flow improved to $8.9 million from $2.4 million in Q2
- Gross margin increased by 850 basis points to 39.9% GAAP
- Enterprise product portfolio showed growth
- Free cash flow improved to $5.2 million from -$1.8 million in Q2
- Revenue declined 5% sequentially to $43.7 million
- Net loss increased to $9.7 million from $9.1 million in Q2
- Non-compliance with quarterly EBITDA and liquidity covenants
- Adjusted EBITDA remains negative at -$2.3 million
- Q4 guidance indicates continued operating losses
Insights
The Q3 2024 results reveal significant financial challenges for Cambium Networks.
The most critical issue is the company's breach of its quarterly consolidated EBITDA covenant and October liquidity covenant, which could trigger immediate loan repayment demands. While operating cash flow improved to
The Q4 outlook projects continued challenges with revenue guidance of
Channel dynamics and inventory trends provide important context for Cambium's performance. While management notes that sell-through exceeds reported revenues and channel inventories are declining, this suggests potential market share challenges and weak end-market demand.
The defense segment weakness in Point-to-Point revenues indicates vulnerability in a historically strong market for Cambium. The company's small market cap of
With an adjusted EBITDA margin of
- Revenues of
decreased$43.7 million 5% sequentially - Gross margin of
39.9% and non-GAAP(1) gross margin of42.3% , both higher sequentially - Operating loss of
, non-GAAP(1) operating loss of$8.1 million $3.6 million - Net loss of
or a loss of$9.7 million per diluted share; non-GAAP(1) net loss of$0.34 or a loss of$3.8 million per diluted share$0.14 - Net cash provided by operating activities of
;$8.9 million cash on the balance sheet$46.5 million - Adjusted EBITDA(1) loss of
or (5.3)% of revenues, an improvement of$2.3 million 65% sequentially
GAAP | Non-GAAP (1) | |||||||||||||||||||||||
(in millions, except percentages) | Q3 2024 | Q2 2024 | Q3 2023 | Q3 2024 | Q2 2024 | Q3 2023 | ||||||||||||||||||
Revenues | $ | 43.7 | $ | 45.9 | $ | 43.0 | $ | 43.7 | $ | 45.9 | $ | 43.0 | ||||||||||||
Gross margin | 39.9 | % | 31.4 | % | 25.5 | % | 42.3 | % | 33.5 | % | 27.7 | % | ||||||||||||
Operating margin | (18.4) | % | (26.3) | % | (51.3) | % | (8.2) | % | (17.3) | % | (36.1) | % | ||||||||||||
Net loss | $ | (9.7) | $ | (9.1) | $ | (26.2) | $ | (3.8) | $ | (7.1) | $ | (12.1) | ||||||||||||
Adjusted EBITDA margin | (5.3) | % | (14.5) | % | (33.5) | % |
1Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and |
"We are pleased that, despite the market challenges, revenue and margins were within our guidance range for the third quarter. Most importantly, we generated continuing growth in the Enterprise portfolio of products. Margins improved and we delivered increased positive cash from operations compared to the second quarter 2024, and
Revenues of
GAAP gross margin for the third quarter 2024 was
Non-GAAP gross margin for the third quarter 2024 was
Net cash provided by operating activities was
As of September 30, 2024, the company remained in compliance with its monthly liquidity covenant for its outstanding bank debt at each measurement period during the quarter, but was not in compliance with its quarterly consolidated EBITDA covenant. The company was also not in compliance with its liquidity covenant as of October 31, 2024. The covenant violations affords the lenders the right to declare the amounts outstanding immediately due and payable, and as such, the term loan facility and the associated debt issuance costs and the revolving loan facility have all been classified as a current liability and the deferred debt issuance costs associated with the revolving loan facility have been classified as a current asset in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2024. The company is seeking a forbearance from the bank and is working with them to address its noncompliance with the covenants.
Fourth Quarter 2024 Financial Outlook
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 that they are reasonably foreseeable; however, actual results may differ materially from the outlook.
Taking into account our current visibility, the financial outlook as of November 7, 2024, for the fourth quarter ending December 31, 2024, is as follows:
- Revenues between
$40.0 -$45.0 million - GAAP gross margin between
40.0% -42.0% ; and non-GAAP gross margin between42.5% -44.5% - GAAP operating loss between
; and non-GAAP operating loss between$7.0 -$9.0 million $3.0 -$5.0 million - Adjusted EBITDA loss between
; and adjusted EBITDA margin between (2.0)%-(7.0)%$1.0 -$3.0 million
Conference Call and Webcast
Cambium Networks will host a live webcast and conference call to discuss its financial results for the third quarter of 2024 at 4:30 p.m. ET today, November 7, 2024. To join the financial results live webcast and view additional materials that will be posted to the investor website, listeners should access the investor page of Cambium Networks website at: 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/BIdc28a1c98af9472980b80dde48bef173. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode.
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's wired and wireless broadband and network edge technologies, allowing customers to focus more on managing their business rather than the network. We make 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.
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 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2024, and Form 10-Qs filed on May 10, 2024 and August 9, 2024. 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 ability to meet the financial and other covenants under our secured credit facilities; our ability to predict and respond to emerging technological trends and network operators' changing needs; our ability to successfully comply with or obtain a waiver of compliance with the financial covenants under our credit facilities and therefore continue as a going concern; the sufficiency of our cash resources and needs for additional financing; our ability to forecast future demand or the level of inventory in our distribution channel; our ability to manage inventory and the risk of excess or obsolete inventory in our channel; the impact of competitive pressures on the development of new products and our success against competitors in our markets; risks caused by political tensions around the world; the strength of
CAMBIUM NETWORKS CORPORATION | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(In thousands, except share and per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended | ||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||
Revenues | $ | 43,726 | $ | 45,946 | $ | 43,046 | ||||||
Cost of revenues | 26,281 | 31,536 | 32,087 | |||||||||
Gross profit | 17,445 | 14,410 | 10,959 | |||||||||
Gross margin | 39.9 | % | 31.4 | % | 25.5 | % | ||||||
Operating expenses | ||||||||||||
Research and development | 9,275 | 9,149 | 13,151 | |||||||||
Sales and marketing | 8,398 | 9,706 | 9,675 | |||||||||
General and administrative | 6,149 | 5,988 | 8,688 | |||||||||
Depreciation and amortization | 1,682 | 1,669 | 1,545 | |||||||||
Total operating expenses | 25,504 | 26,512 | 33,059 | |||||||||
Operating loss | (8,059) | (12,102) | (22,100) | |||||||||
Operating margin | (18.4) | % | (26.3) | % | (51.3) | % | ||||||
Interest expense, net | 1,403 | 1,304 | 620 | |||||||||
Other expense, net | 8 | 3 | 63 | |||||||||
Loss before income taxes | (9,470) | (13,409) | (22,783) | |||||||||
Provision (benefit) for income taxes | 206 | (4,266) | 3,417 | |||||||||
Net loss | $ | (9,676) | $ | (9,143) | $ | (26,200) | ||||||
Loss per share | ||||||||||||
Basic | $ | (0.34) | $ | (0.33) | $ | (0.95) | ||||||
Diluted | $ | (0.34) | $ | (0.33) | $ | (0.95) | ||||||
Weighted-average number of shares outstanding to compute loss per | ||||||||||||
Basic | 28,217,453 | 27,902,956 | 27,619,281 | |||||||||
Diluted | 28,217,453 | 27,902,956 | 27,619,281 | |||||||||
Share-based compensation included in costs and expenses: | ||||||||||||
Cost of revenues | $ | 52 | $ | 51 | $ | 45 | ||||||
Research and development | 959 | 920 | 1,037 | |||||||||
Sales and marketing | 413 | 486 | 597 | |||||||||
General and administrative | 1,071 | 1,104 | 1,166 | |||||||||
Total share-based compensation expense | $ | 2,495 | $ | 2,561 | $ | 2,845 |
CAMBIUM NETWORKS CORPORATION | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(In thousands, except share information) | |||||||
(Unaudited) | |||||||
September 30, 2024 | December 31, 2023 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash | $ | 46,491 | $ | 18,710 | |||
Accounts receivable, net of credit losses of | 57,275 | 64,103 | |||||
Inventories, net | 42,980 | 66,878 | |||||
Income taxes receivable | 1,118 | 222 | |||||
Prepaid expenses | 15,928 | 6,589 | |||||
Other current assets | 7,389 | 6,069 | |||||
Total current assets | 171,181 | 162,571 | |||||
Noncurrent assets | |||||||
Property and equipment, net | 13,957 | 12,879 | |||||
Software, net | 13,387 | 11,985 | |||||
Operating lease assets | 6,708 | 7,894 | |||||
Intangible assets, net | 6,551 | 7,675 | |||||
Goodwill | 9,842 | 9,842 | |||||
Deferred tax assets, net | — | 3,694 | |||||
Other noncurrent assets | 983 | 1,335 | |||||
TOTAL ASSETS | $ | 222,609 | $ | 217,875 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 19,619 | $ | 19,120 | |||
Accrued liabilities | 46,138 | 47,069 | |||||
Employee compensation | 3,894 | 5,071 | |||||
Current portion of long-term debt, net | 67,577 | 3,186 | |||||
Deferred revenues | 8,967 | 8,765 | |||||
Other current liabilities | 9,866 | 13,117 | |||||
Total current liabilities | 156,061 | 96,328 | |||||
Noncurrent liabilities | |||||||
Long-term debt, net | — | 21,926 | |||||
Deferred revenues | 11,761 | 10,473 | |||||
Noncurrent operating lease liabilities | 9,332 | 6,595 | |||||
Other noncurrent liabilities | 1,825 | 1,619 | |||||
Total liabilities | 178,979 | 136,941 | |||||
Commitments and contingencies | |||||||
Shareholders' equity | |||||||
Share capital; | 3 | 3 | |||||
Additional paid in capital | 160,958 | 152,768 | |||||
Treasury shares, at cost, 271,787 shares at September 30, 2024 and 260,236 shares at December 31, 2023 | (5,664) | (5,624) | |||||
Accumulated deficit | (109,864) | (64,598) | |||||
Accumulated other comprehensive loss | (1,803) | (1,615) | |||||
Total shareholders' equity | 43,630 | 80,934 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 222,609 | $ | 217,875 |
CAMBIUM NETWORKS CORPORATION | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
(In thousands) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (9,676) | $ | (9,143) | $ | (26,200) | ||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating | ||||||||||||
Depreciation and amortization of software and intangible assets | 2,696 | 2,584 | 2,294 | |||||||||
Amortization of debt issuance costs | 80 | 78 | 81 | |||||||||
Share-based compensation | 2,495 | 2,561 | 2,845 | |||||||||
Deferred income taxes | — | — | 3,612 | |||||||||
Provision for inventory excess and obsolescence | 727 | 2,384 | 4,577 | |||||||||
Other | (105) | (243) | 155 | |||||||||
Change in assets and liabilities: | ||||||||||||
Receivables | (275) | 1,674 | 22,457 | |||||||||
Inventories | 6,262 | 3,240 | (1,993) | |||||||||
Prepaid expenses | (3,872) | 684 | (772) | |||||||||
Income taxes receivable | 3,531 | (4,353) | (886) | |||||||||
Accounts payable | 4,407 | (298) | (5,156) | |||||||||
Accrued employee compensation | (447) | 387 | (527) | |||||||||
Other assets and liabilities | 3,074 | 2,846 | (733) | |||||||||
Net cash provided by (used in) operating activities | 8,897 | 2,401 | (246) | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (2,128) | (2,314) | (1,125) | |||||||||
Purchases of software | (1,534) | (1,856) | (2,185) | |||||||||
Net cash used in investing activities | (3,662) | (4,170) | (3,310) | |||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of revolver debt | — | 5,000 | — | |||||||||
Repayment of term loan | (1,312) | — | (656) | |||||||||
Issuance of ordinary shares under ESPP | — | 663 | — | |||||||||
Taxes paid related to net share settlement of equity awards | (6) | (17) | (219) | |||||||||
Proceeds from share option exercises | — | — | 6 | |||||||||
Net cash (used in) provided by financing activities | (1,318) | 5,646 | (869) | |||||||||
Effect of exchange rate on cash | — | (14) | (24) | |||||||||
Net increase (decrease) in cash | 3,917 | 3,863 | (4,449) | |||||||||
Cash, beginning of period | 42,574 | 38,711 | 31,978 | |||||||||
Cash, end of period | $ | 46,491 | $ | 42,574 | $ | 27,529 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Income taxes paid, net of refunds received | $ | (3,319) | $ | 2,231 | $ | 1,120 | ||||||
Interest paid | $ | 2,069 | $ | 922 | $ | 474 | ||||||
Significant non-cash activities: | ||||||||||||
Increase (decrease) in property, equipment and software unpaid in accounts | $ | 1,376 | $ | 46 | $ | (167) | ||||||
Operating lease right-of-use assets obtained in exchange for operating lease | $ | 115 | $ | — | $ | 14 | ||||||
Deferred issuance costs incurred but not yet paid | $ | 50 | $ | 275 | $ | — |
CAMBIUM NETWORKS CORPORATION | |||||||||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
REVENUES BY PRODUCT CATEGORY | Three Months Ended | ||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Point-to-Multi-Point | $ | 17,999 | $ | 19,647 | $ | 23,596 | |||||
Point-to-Point | 9,347 | 13,656 | 15,809 | ||||||||
Enterprise | 15,160 | 11,310 | 2,499 | ||||||||
Other | 1,220 | 1,333 | 1,142 | ||||||||
Total Revenues | $ | 43,726 | $ | 45,946 | $ | 43,046 | |||||
REVENUES BY REGION | |||||||||||
Three Months Ended | |||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
$ | 21,300 | $ | 20,647 | $ | 17,768 | ||||||
12,200 | 15,003 | 14,274 | |||||||||
5,902 | 5,306 | 5,726 | |||||||||
4,324 | 4,990 | 5,278 | |||||||||
Total Revenues | $ | 43,726 | $ | 45,946 | $ | 43,046 |
Use of non-GAAP (Adjusted) Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in
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 (loss) income as reported in our consolidated statements of operations excluding the impact of (i) interest expense (income), net; (ii) income tax provision (benefit); (iii) depreciation and amortization expense; (iv) nonrecurring expenses, (v) share-based compensation expense, and (vi) 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 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 nonrecurring expenses 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.
Free cash flow is a non-GAAP measure defined as cash flows from operating activities less capital expenditures, which is disclosed as purchases of property and equipment and purchases of software in our unaudited condensed consolidated statement of cash flows. We believe this non-GAAP financial measure is a useful indicator of liquidity that provides information to management and investors, even if negative, about the amount of cash used in our operations other than that used for investments in property and equipment. Since free cash flow is not a measure calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for cash from operating activities and may not be comparable to similarly titled measures employed by other companies. Free cash flow is not necessarily a measure of our ability to fund our cash needs.
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, 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
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, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||
Net loss | $ | (9,676) | $ | (9,143) | $ | (26,200) | ||||||
Interest expense, net | 1,403 | 1,304 | 620 | |||||||||
Provision (benefit) for income taxes | 206 | (4,266) | 3,417 | |||||||||
Depreciation and amortization of software and intangible assets | 2,696 | 2,584 | 2,294 | |||||||||
EBITDA | (5,371) | (9,521) | (19,869) | |||||||||
Share-based compensation | 2,495 | 2,561 | 2,845 | |||||||||
Restructuring and other nonrecurring expenses | 570 | 310 | 2,602 | |||||||||
Adjusted EBITDA | $ | (2,306) | $ | (6,650) | $ | (14,422) | ||||||
Adjusted EBITDA Margin | (5.3) | % | (14.5) | % | (33.5) | % |
The following table reconciles Cash flows from operating activities to Free cash flow, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands):
CAMBIUM NETWORKS CORPORATION | |||||||||||
SUPPLEMENTAL SCHEDULE OF NON-GAAP FREE CASH FLOW | |||||||||||
(In thousands) | |||||||||||
(Unaudited) | |||||||||||
Three months ended | |||||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||||||||
Net cash provided by (used in) operating activities | $ | 8,897 | $ | 2,401 | $ | (246) | |||||
Purchases of property and equipment | (2,128) | (2,314) | (1,125) | ||||||||
Purchases of software | (1,534) | (1,856) | (2,185) | ||||||||
Free cash flow | $ | 5,235 | $ | (1,769) | $ | (3,556) |
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, 2024 | June 30, 2024 | September 30, 2023 | ||||||||||
GAAP gross profit | $ | 17,445 | $ | 14,410 | $ | 10,959 | ||||||
Share-based compensation expense | 52 | 51 | 45 | |||||||||
Amortization of capitalized software costs | 1,014 | 916 | 750 | |||||||||
Restructuring and nonrecurring expense | — | 26 | 152 | |||||||||
Non-GAAP gross profit | $ | 18,511 | $ | 15,403 | $ | 11,906 | ||||||
Non-GAAP gross margin | 42.3 | % | 33.5 | % | 27.7 | % | ||||||
GAAP research and development expense | $ | 9,275 | $ | 9,149 | $ | 13,151 | ||||||
Share-based compensation expense | 959 | 920 | 1,037 | |||||||||
Restructuring and other nonrecurring expense | 172 | 26 | 630 | |||||||||
Non-GAAP research and development expense | $ | 8,144 | $ | 8,203 | $ | 11,484 | ||||||
GAAP sales and marketing expense | $ | 8,398 | $ | 9,706 | $ | 9,675 | ||||||
Share-based compensation expense | 413 | 486 | 597 | |||||||||
Restructuring and other nonrecurring expenses | 213 | 196 | 350 | |||||||||
Non-GAAP sales and marketing expense | $ | 7,772 | $ | 9,024 | $ | 8,728 | ||||||
GAAP general and administrative expense | $ | 6,149 | $ | 5,988 | $ | 8,688 | ||||||
Share-based compensation expense | 1,071 | 1,104 | 1,166 | |||||||||
Restructuring and other nonrecurring expenses | 185 | 62 | 1,470 | |||||||||
Non-GAAP general and administrative expense | $ | 4,893 | $ | 4,822 | $ | 6,052 | ||||||
GAAP depreciation and amortization | $ | 1,682 | $ | 1,669 | $ | 1,545 | ||||||
Amortization of acquired intangibles | 375 | 374 | 374 | |||||||||
Non-GAAP depreciation and amortization | $ | 1,307 | $ | 1,295 | $ | 1,171 | ||||||
GAAP operating loss | $ | (8,059) | $ | (12,102) | $ | (22,100) | ||||||
Share-based compensation expense | 2,495 | 2,561 | 2,845 | |||||||||
Amortization of capitalized software costs | 1,014 | 916 | 750 | |||||||||
Amortization of acquired intangibles | 375 | 374 | 374 | |||||||||
Restructuring and other nonrecurring expenses | 570 | 310 | 2,602 | |||||||||
Non-GAAP operating (loss) income | $ | (3,605) | $ | (7,941) | $ | (15,529) | ||||||
GAAP pre-tax loss | $ | (9,470) | $ | (13,409) | $ | (22,783) | ||||||
Share-based compensation expense | 2,495 | 2,561 | 2,845 | |||||||||
Amortization of capitalized software costs | 1,014 | 916 | 750 | |||||||||
Amortization of acquired intangibles | 375 | 374 | 374 | |||||||||
Restructuring and other nonrecurring expenses | 570 | 310 | 2,602 | |||||||||
Non-GAAP pre-tax (loss) income | $ | (5,016) | $ | (9,248) | $ | (16,212) | ||||||
GAAP (benefit) provision for income taxes | $ | 206 | $ | (4,266) | $ | 3,417 | ||||||
Valuation allowance impacts | 2,254 | (4,955) | 5,292 | |||||||||
Tax rate change | — | — | 119 | |||||||||
Tax impacts of share vesting | 272 | 487 | 80 | |||||||||
Tax effect of Non-GAAP adjustments | (1,114) | (1,040) | (1,314) | |||||||||
All other discrete items | (19) | 3,368 | 3,373 | |||||||||
Non-GAAP (benefit) provision for income taxes | $ | (1,188) | $ | (2,126) | $ | (4,133) | ||||||
Non-GAAP ETR | 23.7 | % | 23.0 | % | 25.5 | % | ||||||
GAAP net loss | $ | (9,676) | $ | (9,143) | $ | (26,200) | ||||||
Share-based compensation expense | 2,495 | 2,561 | 2,845 | |||||||||
Amortization of capitalized software costs | 1,014 | 916 | 750 | |||||||||
Amortization of acquired intangibles | 375 | 374 | 374 | |||||||||
Restructuring and other nonrecurring expenses | 570 | 310 | 2,602 | |||||||||
Non-GAAP adjustments to tax | 2,507 | (1,100) | 8,864 | |||||||||
Tax effect of Non-GAAP adjustments | (1,114) | (1,040) | (1,314) | |||||||||
Non-GAAP net (loss) income | $ | (3,829) | $ | (7,122) | $ | (12,079) | ||||||
Non-GAAP fully weighted basic shares | 28,242 | 28,209 | 27,662 | |||||||||
Non-GAAP fully weighted diluted shares | 28,242 | 28,211 | 27,744 | |||||||||
Non-GAAP net (loss) income per Non-GAAP basic share | $ | (0.14) | $ | (0.25) | $ | (0.44) | ||||||
Non-GAAP net (loss) income per Non-GAAP diluted share | $ | (0.14) | $ | (0.25) | $ | (0.44) |
Contacts:
Investor Relations
Cambium Networks
investors@Cambiumnetworks.com
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SOURCE Cambium Networks
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