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Ceragon Networks Reports 22% Growth in Second Quarter and Raises Full Year Guidance

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Ceragon Networks Ltd. reported its Q2 2023 financial results, with revenues of $86.2 million and GAAP net income of $2.1 million. The company raised its full-year revenue outlook to $334-$348 million. Ceragon also highlighted its strong performance in India and North America, as well as the multi-year contract it won with the City of Cincinnati.
Positive
  • Ceragon Networks reported a 21.9% increase in revenues for Q2 2023 compared to Q2 2022.
  • The company generated $2.1 million in GAAP net income for Q2 2023.
  • Ceragon raised its full-year revenue outlook to $334-$348 million.
  • Book-to-bill ratio was above 1 on a quarterly and trailing 12-month basis.
  • Ceragon won a multi-year contract worth up to $4.2 million with the City of Cincinnati.
  • Q2 bookings in India nearly matched those in India, with a 10% sequential increase compared to Q1.
  • India was the strongest region in terms of Q2 bookings and revenue.
  • Ceragon aims to increase its gross margins to at least 34-36% by fiscal 2027.
Negative
  • None.

Company Generates $2.1 Million in GAAP Net Income and Positive Free Cash Flow

Raises Full Year Revenue Outlook to $334 - $348 Million

ROSH HA'AIN, Israel, August 1, 2023 /PRNewswire/ -- Ceragon Networks Ltd. (NASDAQ: CRNT), the global innovator and leading solutions provider of 5G wireless transport, today reported its financial results for the second quarter and six months ended June 30, 2023.

 

Ceragon Networks Ltd Logo

 

Q2 2023 Financial Highlights:

  • Revenues of $86.2 million
  • Operating income of $5.7 million on a GAAP basis, or $7.4 million on a non-GAAP basis; The non-GAAP operating income excludes an $0.9 million restructuring charge related to European operations.
  • EPS of $0.02 per diluted share on a GAAP basis, or $0.05 per diluted share on a non-GAAP basis

Q2 2023 Business Highlights:

  • Book-to-bill above 1 on a quarterly and trailing 12-month basis
  • Ceragon won a multi-year contract worth up to $4.2 million with the City of Cincinnati to upgrade its public safety network
  • North America:
    - Nearly matched India in Q2 bookings, with bookings increasing nearly 10% sequentially compared to Q1
    - Continued strong revenue in Q2 
  • India:
    - Strongest region in terms of Q2 bookings and revenue
    - Strong demand for ongoing 4G network and 5G network rollouts

Doron Arazi, CEO, commented: "Ceragon delivered strong double digit year-over-year revenue growth, margin expansion and solid profitability in the second quarter. During the quarter, we again recorded bookings that exceeded our revenue levels which improved our visibility into the third quarter and strengthened our confidence for the full year. We have not seen any signs of a slowdown or changes in demand across our customer base and remain focused on our operational execution as well as efforts to enhance our product portfolio including new product line based on system-on-a-chip technology."

"Demand in key geographies remains robust, and we continue to deliver solid execution," Arazi added. "Our year-to-date performance and improved visibility into the third quarter has given us the confidence to increase our full-year guidance and narrow the range to increase the midpoint."

Primary Second Quarter 2023 Financial Results:

Revenues were $86.2 million, up 21.9% from $70.7 million in Q2 2022 and up 3.3% from $83.4 million in Q1 2023.

Gross profit was $30.4 million, giving us a gross margin of 35.2%, compared with a gross margin of 30.3% in Q2 2022 and 33.8% in Q1 2023.

Operating income (loss) was $5.7 million compared with $(0.3) million for Q2 2022 and $4.7 million for Q1 2023.

Net Income (loss) was $2.1 million, or $0.02 per diluted share compared with $(1.5) million, or $(0.02) per diluted share for Q2 2022 and $2.0 million, or $0.02 per diluted share for Q1 2023.

Non-GAAP results were as follows: Gross margin was 35.3%, operating profit was $7.4 million, and net income was $4.4 million, or $0.05 per diluted share.

Cash and cash equivalents were $24.5 million at June 30, 2023, compared to $26.4 million at March 31, 2023.

For a reconciliation of GAAP to non-GAAP results, see the attached tables.

Revenue Breakout by Geography:


Q2 2023

India

31 %

North America

26 %

Latin America

15 %

Europe

12 %

APAC

11 %

Africa

5 %

Outlook

Ceragon management increased full-year revenue guidance to $334 million to $348 million, up from prior guidance of $325 - $345 million and expects full-year non-GAAP profitability. Our guidance is based on current visibility and assumes normal conversion of bookings to revenue. Our revenue target for fiscal 2027 is approximately $500 million, and we also target increasing our gross margins to at least 34-36% over the same period.

Conference Call

The Company will host a Zoom web conference today at 8:30a.m. ET to discuss the results, followed by a question-and-answer session for the investment community.

Investors are invited to register by clicking here. All relevant information will be sent upon registration.

If you are unable to join us live, a recording of the call will be available on our website at www.ceragon.com within 24 hours after the call.

About Ceragon Networks

Ceragon Networks Ltd. (NASDAQ: CRNT) is the global innovator and leading solutions provider of 5G wireless transport. We help operators and other service providers worldwide increase operational efficiency and enhance end customers' quality of experience with innovative wireless backhaul and fronthaul solutions. Our customers include service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 5G & 4G broadband wireless connectivity, mission-critical multimedia services, stabilized communications, and other applications at high reliability and speed.

Ceragon's unique multicore technology and disaggregated approach to wireless transport provides highly reliable, fast to deploy, high-capacity wireless transport for 5G and 4G networks with minimal use of spectrum, power, real estate, and labor resources. It enables increased productivity, as well as simple and quick network modernization, positioning Ceragon as a leading solutions provider for the 5G era. We deliver a complete portfolio of turnkey end-to-end AI-based managed and professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Our solutions are deployed by more than 600 service providers, as well as more than 1,600 private network owners, in more than 130 countries. For more information please visit: www.ceragon.com

Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.

Safe Harbor

This press release contains statements that 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. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon's management about Ceragon's business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include, but are not limited to, statements regarding: projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, supply chain and shipping, components availability, growth prospects, product development, financial resources, cost savings and other financial and market matters. You may identify these and other forward-looking statements by the use of words such as "may", "plans", "anticipates", "believes", "estimates", "targets", "expects", "intends", "potential" or the negative of such terms, or other comparable terminology, although not all forward-looking statements contain these identifying words.

Although we believe that the projections reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations therefrom will not be material. Such forward-looking statements involve known and unknown risks and uncertainties that may cause Ceragon's future results or performance to differ materially from those anticipated, expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the effects of global economic trends, including recession, rising inflation, rising interest rates, commodity price increases and fluctuations, commodity shortages and exposure to economic slowdown; risks associated with delays in the transition to 5G technologies and in the 5G rollout; risks relating to the concentration of our business on a limited number of large mobile operators and the fact that the significant weight of their ordering, compared to the overall ordering by other customers, coupled with inconsistent ordering patterns, could negatively affect us; risks resulting from the volatility in our revenues, margins and working capital needs, substantial losses incurred and negative cash flows generated, which, if continue, may significantly adversely impact our results of operations and cash flow; the high volatility in the supply needs of our customers, which from time to time lead to delivery issues and may lead to us being unable to timely ulfil our customer commitments; risks associated with inaccurate forecasts or business changes, which may expose us to inventory-related losses on inventory purchased by our contract manufacturers and other suppliers, to increased expenses should unexpected production ramp up be required, or to write off to parts of our inventory, which would increase our cost of revenues; and such other risks, uncertainties and other factors that could affect our results of operation, as further detailed in Ceragon's most recent Annual Report on Form 20-F, as published on May 1, 2023, as well as other documents that may be subsequently filed by Ceragon from time to time with the SEC.

We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Ceragon does not assume any obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release unless required by law.

While we believe that we have a reasonable basis for each forward-looking statement contained in this press release, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. In addition, any forward-looking statements represent Ceragon's views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. Ceragon does not assume any obligation to update any forward-looking statements unless required by law.

Ceragon's public filings are available on the Securities and Exchange Commission's website at www.sec.gov and may also be obtained from Ceragon's website at www.ceragon.com.

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)




Three months ended

June 30,


Six months ended

June 30,



2023


2022


2023


2022



















Revenues


$       86,151


$       70,674


$     169,560


$    140,993

Cost of revenues


55,795


49,268


111,028


100,250










Gross profit


30,356


21,406


58,532


40,743










Operating expenses:









   Research and development, net


7,812


7,527


15,750


14,292

Sales and Marketing


9,778


9,362


19,974


18,134

General and administrative


6,218


4,840


11,542


9,898

Restructuring and related charges


897


-


897


-










Total operating expenses


$       24,705


$       21,729


$       48,163


$      42,324










Operating income (loss)


5,651


(323)


10,369


(1,581)










Financial expenses and others, net


1,886


757


3,344


1,516










Income (loss) before taxes


3,765


(1,080)


7,025


(3,097)










Taxes on income


1,677


440


2,969


711










Net income (loss)


$         2,088


$         (1,520)


$         4,056


$       (3,808)










Basic net income (loss) per share


$           0.02


$           (0.02)


$           0.05


$         (0.05)

Diluted net income (loss) per share


$           0.02


$           (0.02)


$           0.05


$         (0.05)










Weighted average number of shares used in
 computing basic net income
 (loss) per share


84,365,168


84,019,188


84,359,762


83,989,766










Weighted average number of shares
 used in computing diluted net income
 (loss) per share


85,312,954


84,019,188


85,152,634


83,989,766

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)




June 30,

2023


December 31,

2022

ASSETS


Unaudited


Audited






CURRENT ASSETS:





Cash and cash equivalents


$          24,529


$          22,948

Trade receivables, net


107,592


100,034

Other accounts receivable and prepaid expenses


15,813


15,756

Inventories


67,836


72,009






Total current assets


215,770


210,747






NON-CURRENT ASSETS:





   Severance pay and pension fund


4,705


4,633

   Property and equipment, net


30,494


29,456

   Operating lease right-of-use assets


16,724


17,962

   Intangible assets, net


9,027


8,208

   Other non-current assets


17,744


18,312






Total non-current assets


78,694


78,571






Total assets


$          294,464


$         289,318











LIABILITIES AND SHAREHOLDERS' EQUITY










CURRENT LIABILITIES:





Trade payables


$           62,769


$           67,384

Deferred revenues


3,104


3,343

Short-term loans


39,550


37,500

Operating lease liabilities


3,246


3,745

Other accounts payable and accrued expenses


23,565


20,864






Total current liabilities


132,234


132,836






LONG-TERM LIABILITIES:





Accrued severance pay and pensions


9,054


9,314

Deferred revenues


12,170


11,545

Other long-term payables


2,797


2,653

Operating lease liabilities


11,827


13,187






Total long-term liabilities


35,848


36,699






SHAREHOLDERS' EQUITY:





Share capital:





    Ordinary shares


224


224

Additional paid-in capital


434,221


432,214

Treasury shares at cost


(20,091)


(20,091)

Other comprehensive loss


(10,620)


(11,156)

Accumulated deficits


(277,352)


(281,408)






Total shareholders' equity


126,382


119,783






Total liabilities and shareholders' equity


$         294,464


$        289,318

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars, in thousands)

(Unaudited)



Three months ended

June 30,


Six months ended

June 30,


2023


2022


2023


2022

Cash flow from operating activities:








Net income (loss)

$         2,088


$     (1,520)


$          4,056


$       (3,808)

Adjustments required to reconcile net income (loss) to net cash
 provided by (used in) operating activities:








Depreciation and amortization

2,582


2,834


5,135


5,775

Loss from sale of property and equipment, net

20


2


30


20

Stock-based compensation expense

808


689


1,977


1,435

Decrease in accrued severance pay and pensions, net

(280)


(296)


(344)


(369)

Increase in trade receivables, net

(6,620)


(2,609)


(6,910)


(4,173)

Decrease (increase) in other accounts receivable and
 prepaid expenses (including other long term assets)

(445)


(1,278)


551


(3,056)

Decrease in operating lease right-of-use assets

886


892


1,897


1,873

Decrease (increase) in inventory, net of write off

893


(3,102)


4,059


449

Increase (decrease) in trade payables

2,835


3,103


(3,955)


1,339

Increase (decrease) in other accounts payable and accrued
 expenses (including other long term liabilities)

2,620


(433)


2,326


(1,706)

Decrease in operating lease liability

(1,152)


(2,666)


(2,518)


(4,071)

Increase (decrease) in deferred revenues

(1,054)


1,211


386


1,303

Net cash provided by (used in) operating activities

$         3,181


$      (3,173)


$           6,690


$        (4,989)

Cash flow from investing activities:








Purchase of property and equipment, net

(2,330)


(2,845)


(5,472)


(5,368)

Purchase of intangible assets, net

(549)


(234)


(1,837)


(437)

Net cash used in investing activities

$      (2,879)


$      (3,079)


$        (7,309)


$        (5,805)









Cash flow from financing activities:








Proceeds from exercise of options

30


32


30


113

Proceeds from (repayment of) bank credits and loans, net

(2,300)


4,950


2,050


17,100

Net cash provided by (used in) financing activities

$      (2,270)


$         4,982


$        2,080


$        17,213









Translation adjustments on cash and cash equivalents

$              74


 

$            (98)


$            120


 

$              94

Increase (decrease) in cash and cash equivalents

$       (1,894)


$       (1,368)


$         1,581


$         6,513

Cash and cash equivalents at the beginning of the period

26,423


24,960


22,948


17,079

Cash and cash equivalents at the end of the period

$       24,529


$       23,592


$      24,529


$     23,592

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands)

(Unaudited)




Three months ended


Six months ended



June 30,


June 30,



2023


2022


2023


2022













GAAP cost of revenues


$

55,795


$

49,268


$

111,028


$

100,250

Stock based compensation expenses



(46)



(125)



(225)



(257)

Changes in indirect tax positions



(2)



(1)



(3)



(1)

Non-GAAP cost of revenues


$

55,747


$

49,142


$

110,800


$

99,992














GAAP gross profit


$

30,356


$

21,406


$

58,532


$

40,743

Gross profit adjustments



48



126



228



258

Non-GAAP gross profit


$

30,404


$

21,532


$

58,760


$

41,001














GAAP Research and development expenses


$

7,812


$

7,527


$

15,750


$

14,292

Stock based compensation expenses



(232)



(34)



(478)



(20)

Non-GAAP Research and development expenses


$

7,580


$

7,493


$

15,272


$

14,272














GAAP Sales and Marketing expenses


$

9,778


$

9,362


$

19,974


$

18,134

Stock based compensation expenses



(363)



(302)



(739)



(579)

Non-GAAP Sales and Marketing expenses


$

9,415


$

9,060


$

19,235


$

17,555














GAAP General and Administrative expenses


$

6,218


$

4,840


$

11,542


$

9,898

Retired CEO compensation



-



-



-



96

Stock based compensation expenses



(167)



(228)



(535)



(579)

Non-GAAP General and Administrative expenses


$

6,051


$

4,612


$

11,007


$

9,415














GAAP Restructuring and related charges


$

897


$

-


$

897


$

-

Restructuring



(897)



-



(897)



-

Non-GAAP Restructuring and related charges


$

-


$

-


$

-


$

-



























GAAP operating income (loss)


$

5,651


$

(323)


$

10,369


$

(1,581)

Stock based compensation expenses



808



689



1,977



1,435

Changes in indirect tax positions



2



1



3



1

Restructuring and related charges



897



-



897



-

Retired CEO compensation



-



-



-



(96)

Non-GAAP operating income (loss)


$

7,358


$

367


$

13,246


$

(241)














GAAP financial expenses and others, net


$

1,886


$

757


$

3,344


$

1,516

Leases – financial income



285



1,774



643



2,199

Non-GAAP financial expenses and others, net


$

2,171


$

2,531


$

3,987


$

3,715














GAAP Tax expenses


$

1,677


$

440


$

2,969


$

711

Non cash tax adjustments



(890)



(136)



(1,743)



(346)

Non-GAAP Tax expenses


$

787


$

304


$

1,226


$

365














 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(U.S. dollars in thousands, except share and per share data)

(Unaudited)





  Three months ended



Six months ended

June 30,





 June 30,







2023



2022



2023



2022


















   GAAP net income (loss)


$

2,088


$

(1,520)


$

4,056


$

(3,808)



   Stock based compensation   

    expenses



808



689



1,977



1,435



   Changes in indirect tax positions



2



1



3



1



   Leases – financial income



(285)



(1,774)



(643)



(2,199)



   Retired CEO compensation



-



-



-



(96)



   Restructuring and related charges



897



-



897



-



   Non-cash tax adjustments



890



136



1,743



346



Non-GAAP net income (loss)


$

4,400


$

(2,468)


$

8,033


$

(4,321)


















GAAP basic net income (loss) per share


$

0.02


$

(0.02)


$

0.05


$

(0.05)


















GAAP diluted net income (loss) per share


$

0.02


$

(0.02)


$

0.05


$

(0.05)



Non-GAAP diluted net income (loss) per share


$

0.05


$

(0.03)


$

0.09


$

(0.05)


















Weighted average number of shares used in computing GAAP
basic net income (loss) per share



84,365,168



84,019,188



84,359,762



83,989,766


















Weighted average number of shares used in computing GAAP
diluted net income (loss) per share



85,312,954



84,019,188



85,152,634



83,989,766


















Weighted average number of shares used in computing Non-GAAP
diluted net income (loss) per share



86,747,484



84,019,188



86,729,802



83,989,766





















 

Ceragon Investor & Media Contact:

Rob Fink or Bob Meyers
FNK IR
Tel. 1+646-809-4048
crnt@fnkir.com

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SOURCE Ceragon Networks Ltd.

FAQ

What were Ceragon Networks' Q2 2023 revenues?

Ceragon Networks reported revenues of $86.2 million for Q2 2023.

What was Ceragon Networks' GAAP net income for Q2 2023?

Ceragon Networks generated $2.1 million in GAAP net income for Q2 2023.

What is Ceragon Networks' updated full-year revenue outlook?

Ceragon Networks raised its full-year revenue outlook to $334-$348 million.

What was Ceragon Networks' book-to-bill ratio?

Ceragon Networks' book-to-bill ratio was above 1 on a quarterly and trailing 12-month basis.

What contract did Ceragon Networks win?

Ceragon Networks won a multi-year contract worth up to $4.2 million with the City of Cincinnati.

How did Q2 bookings in India compare to those in North America?

Q2 bookings in India nearly matched those in North America, with a 10% sequential increase compared to Q1.

Which region performed the strongest in terms of Q2 bookings and revenue?

India was the strongest region for Ceragon Networks in terms of Q2 bookings and revenue.

What are Ceragon Networks' gross margin targets?

Ceragon Networks aims to increase its gross margins to at least 34-36% by fiscal 2027.

Ceragon Networks Ltd

NASDAQ:CRNT

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