- Revenues of $77.4 million,
decreased 8% sequentially, and increased 25% year-over-year
- Enterprise revenues of $35.7
million, up 11% sequentially, and increased 130%
year-over-year
- Gross margin of 51.2%, non-GAAP(1) gross margin of
52.1%
- Operating income of $5.6 million,
non-GAAP(1) operating income of $9.4 million
- Net income of $4.3 million or
$0.15 per diluted share,
non-GAAP(1) net income of $6.8
million or $0.24 per diluted
share
- Adjusted EBITDA(1) of $10.4
million or 13.4% of revenues
ROLLING
MEADOWS, Ill., May. 8, 2023
/PRNewswire/ -- Cambium Networks Corporation ("Cambium
Networks") (NASDAQ: CMBM), a leading provider of wireless
networking infrastructure solutions, today announced financial
results for the first quarter 2023 ended March 31, 2023.
|
|
GAAP
|
|
Non-GAAP
(1)
|
(in millions, except
percentages)
|
|
Q1
2023
|
|
Q4
2022
|
|
Q1
2022
|
|
Q1
2023
|
|
Q4
2022
|
|
Q1
2022
|
Revenues
|
|
$
77.4
|
|
$
84.5
|
|
$
61.9
|
|
$
77.4
|
|
$
84.5
|
|
$
61.9
|
Gross margin
|
|
51.2 %
|
|
49.0 %
|
|
47.1 %
|
|
52.1 %
|
|
49.6 %
|
|
47.8 %
|
Operating
margin
|
|
7.2 %
|
|
11.2 %
|
|
(3.5) %
|
|
12.2 %
|
|
15.6 %
|
|
1.6 %
|
Net Income
(loss)
|
|
$
4.3
|
|
$
10.0
|
|
$
(1.6)
|
|
$
6.8
|
|
$
10.3
|
|
$
0.3
|
Adjusted EBITDA
margin
|
|
|
|
|
|
|
|
13.4 %
|
|
16.9 %
|
|
3.1 %
|
|
|
1
|
Refer 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 first quarter 2023 ended
March 31, 2023.
|
"Our first quarter profitability was excellent as a result of
strong sales of Enterprise products as customers realize the
high-quality, reliability, and value proposition provided by our
Cambium ONE Network integrated wireless fabric," said Atul Bhatnagar, president and CEO. "The company
delivered an outstanding gross margin and strong operating profit
due to improved product mix and tight cost controls."
Bhatnagar continued, "Our next growth phase is expected to occur
during the second half of 2023, as Cambium accelerates growth for
next generation multi-gigabit fixed wireless products in the
Point-to-Multi-Point business including 6 GHz products, our first
ever fiber-based solutions for service providers, and new
innovations for enterprises, industrial customers, and government
agencies around the world."
Revenues of $77.4 million for the
first quarter 2023 increased $15.5
million year-over-year primarily as a result of higher
revenues for Enterprise and Point-to-Point products, partially
offset by lower Point-to-Multi-Point revenues due to
less demand from service providers ahead of the ramp of
product transitions to new technologies. Revenues for the first
quarter 2023 decreased by $7.1
million compared to $84.5
million for the fourth quarter 2022, due to
lower Point-to-Multi-Point and Point-to-Point revenues,
partially offset by higher Enterprise revenues.
GAAP gross margin for the first quarter 2023 was 51.2%, compared
to 47.1% for the first quarter 2022, and 49.0% for the fourth
quarter 2022. GAAP operating income for the first quarter 2023 was
$5.6 million, compared to operating
loss of $2.2 million for the first
quarter 2022, and operating income of $9.5
million for the fourth quarter 2022. GAAP net income for the
first quarter 2023 was $4.3 million,
or net earnings of $0.15 per diluted
share, compared to net loss of $1.6
million, or net loss of $0.06
per diluted share for the first quarter 2022, and $10.0 million, or net earnings of $0.35 per diluted share for the fourth quarter
2022.
Non-GAAP gross margin for the first quarter 2023 was 52.1%,
compared to 47.8% for the first quarter 2022, and 49.6% for the
fourth quarter 2022. Non-GAAP operating income for the first
quarter 2023 was $9.4 million,
compared to $1.0 million for the
first quarter 2022, and $13.2 million
for the fourth quarter 2022. Non-GAAP net income for the first
quarter 2023 was $6.8 million, or
$0.24 per diluted share, compared to
$0.3 million, or $0.01 per diluted share for the first quarter
2022, and $10.3 million, or
$0.36 per diluted share, for the
fourth quarter 2022. For the first quarter 2023, adjusted EBITDA
was $10.4 million or 13.4% of
revenues, compared to adjusted EBITDA of $1.9 million or 3.1% of revenues for the first
quarter 2022, and $14.3 million or
16.9% of revenues for the fourth quarter 2022.
Net cash used in operating activities was $6.0 million for the first quarter 2023, compared
to net cash used in operating activities of $19.2 million for the first quarter 2022, and net
cash provided by operating activities of $4.0 million for the fourth quarter 2022. Cash
totaled $38.7 million as of
March 31, 2023, $0.3 million higher than March 31, 2022.
First Quarter 2023 Highlights
- Revenues of $77.4 million,
decreased 8% sequentially, and were higher by 25%
year-over-year.
- GAAP net income of $4.3 million
or $0.15 per diluted share, non-GAAP
net income of $6.8 million or
$0.24 per diluted share, compared to
GAAP net loss of $1.6 million, or net
loss of $0.06 per diluted share for
the first quarter 2022, and non-GAAP net income of $0.3 million or $0.01 per diluted share for the first quarter
2022.
- Adjusted EBITDA of $10.4 million
or 13.4% of revenues, compared to $1.9
million or 3.1% of revenues for the first quarter 2022.
- Net cash used in operating activities was $6.0 million, compared to cash used in operating
activities of $19.2 million for the
first quarter 2022.
- Increased net new channel partners by over 1,700
year-over-year, an increase of over 15%.
- 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.
Second Quarter 2023 Financial Outlook
Taking into account our current visibility, the financial
outlook as of May 8, 2023, for the
second quarter ending June 30, 2023,
is expected to be as follows:
- Revenues between $72.0-$80.0
million, up approximately 4%-15% year-over-year
- GAAP gross margin between 49.4%-50.9%; and non-GAAP gross
margin between 50.3%-51.8%
- GAAP operating expenses between $33.5-$34.5
million; and non-GAAP operating expenses between
$30.3-$31.3
million
- GAAP operating income between $2.1-$6.2 million;
and non-GAAP operating income between $5.9-$10.1
million
- Interest expense, net of approximately $0.6 million
- GAAP net income between $1.2-$4.8 million
or between $0.04 and $0.17 per diluted share; and non-GAAP net income
between $4.2-$7.6 million or between $0.15 and $0.27 per
diluted share
- Adjusted EBITDA between $6.9-$11.1 million;
and adjusted EBITDA margin between 9.6%-13.9%
- GAAP effective tax rate of approximately 11.0%-15.0%; and
non-GAAP effective tax rate of approximately 17.0%-21.0%
- Approximately 28.6 million weighted average diluted shares
outstanding
Cash requirements are expected to be as follows:
- Paydown of debt: $0.7
million
- Cash interest expense: approximately $0.5 million
- Capital expenditures: $1.5-$2.5
million
Full Year 2023 Financial Outlook
- Revenues between $327.0-$337.0
million, increasing between approximately 10%-14%
- GAAP gross margin approximately 50.1%; and non-GAAP gross
margin approximately 50.9%
- GAAP net income between $22.8-$26.0 million
or between $0.80 and $0.91 per diluted share; and non-GAAP net income
between $33.7-$36.0 million or between $1.18 and $1.26 per
diluted share
- Adjusted EBITDA margin between 14.8%-15.5%
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, May 8, 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/BI773324cdce80433cb26e2df8fbd71a24.
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.
In addition, Cambium Networks President and CEO,
Atul Bhatnagar, and CFO,
Andrew Bronstein, hold one-on-one
meetings virtually with investors on Thursday, May 11, 2023, at the Oppenheimer Annual
Emerging Growth Conference, and will present and hold one-on-one
meetings in person on Tuesday, May 23,
2023, at the J.P. Morgan Global TMT Conference in
Boston, Mass. To join the live
webcast for the J.P. Morgan conference, 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.
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.
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; the impact of the global shortage of certain components
including semiconductor chipsets; the constraint in global shipping
and logistics; 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 and tensions with China; 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; the
quality of our support and services offerings; our 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; our channel partners' inability to effectively
manage inventory of our products, timely resell our products or
estimate expected future demand; our inability to manage our growth
and expand our operations; unpredictability of sales and revenues
due to lengthy sales cycles; our inability to maintain an effective
system of internal controls, produce timely and accurate financial
statements or comply with applicable regulations; our reliance on
the availability of third-party licenses; risks associated with
international sales and operations; 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
|
|
|
|
|
|
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
77,401
|
|
$
84,507
|
|
$
61,896
|
|
|
|
|
|
|
Cost of
revenues
|
|
37,741
|
|
43,138
|
|
32,730
|
|
|
|
|
|
|
Gross
profit
|
|
39,660
|
|
41,369
|
|
29,166
|
|
|
|
|
|
|
Gross
margin
|
|
51.2 %
|
|
49.0 %
|
|
47.1 %
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
14,262
|
|
12,874
|
|
12,942
|
|
|
|
|
|
|
Sales and
marketing
|
|
11,670
|
|
12,148
|
|
10,429
|
|
|
|
|
|
|
General and
administrative
|
|
6,667
|
|
5,422
|
|
6,544
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
1,496
|
|
1,475
|
|
1,446
|
|
|
|
|
|
|
Total operating
expenses
|
|
34,095
|
|
31,919
|
|
31,361
|
|
|
|
|
|
|
Operating income
(loss)
|
|
5,565
|
|
9,450
|
|
(2,195)
|
|
|
|
|
|
|
Operating
margin
|
|
7.2 %
|
|
11.2 %
|
|
-3.5 %
|
|
|
|
|
|
|
Interest expense,
net
|
|
597
|
|
559
|
|
497
|
|
|
|
|
|
|
Other expense,
net
|
|
154
|
|
15
|
|
77
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
|
4,814
|
|
8,876
|
|
(2,769)
|
|
|
|
|
|
|
Provision (benefit) for
income taxes
|
|
538
|
|
(1,135)
|
|
(1,201)
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
4,276
|
|
$
10,011
|
|
$
(1,568)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.16
|
|
$
0.37
|
|
$
(0.06)
|
|
|
|
|
|
|
Diluted
|
|
$
0.15
|
|
$
0.35
|
|
$
(0.06)
|
|
|
|
|
|
|
Weighted-average
number of shares outstanding to compute
earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
27,341,013
|
|
27,109,926
|
|
26,749,675
|
|
|
|
|
|
|
Diluted
|
|
28,452,855
|
|
28,273,786
|
|
26,749,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation included in costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
$
56
|
|
$
56
|
|
$
57
|
|
|
|
|
|
|
Research and
development
|
|
1,269
|
|
1,258
|
|
1,022
|
|
|
|
|
|
|
Sales and
marketing
|
|
700
|
|
702
|
|
627
|
|
|
|
|
|
|
General and
administrative
|
|
850
|
|
879
|
|
714
|
|
|
|
|
|
|
Total share-based
compensation expense
|
|
$
2,875
|
|
$
2,895
|
|
$
2,420
|
|
|
|
|
|
|
|
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)
|
|
|
March 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
$
38,696
|
|
$
48,162
|
Accounts receivable,
net of allowance of $540 and $577
|
|
98,207
|
|
89,321
|
Inventories,
net
|
|
68,333
|
|
57,068
|
Recoverable income
taxes
|
|
122
|
|
117
|
Prepaid
expenses
|
|
10,792
|
|
11,857
|
Other current
assets
|
|
7,557
|
|
6,464
|
Total current
assets
|
|
223,707
|
|
212,989
|
|
|
|
|
|
Noncurrent
assets
|
|
|
|
|
Property and equipment,
net
|
|
11,521
|
|
11,271
|
Software,
net
|
|
9,309
|
|
8,439
|
Operating lease
assets
|
|
4,709
|
|
4,011
|
Intangible assets,
net
|
|
8,799
|
|
9,173
|
Goodwill
|
|
9,842
|
|
9,842
|
Deferred tax assets,
net
|
|
14,301
|
|
12,782
|
Other noncurrent
assets
|
|
876
|
|
955
|
TOTAL
ASSETS
|
|
$
283,064
|
|
$
269,462
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
29,537
|
|
$
31,284
|
Accrued
liabilities
|
|
31,657
|
|
28,042
|
Employee
compensation
|
|
6,991
|
|
7,394
|
Current portion of
long-term external debt, net
|
|
3,160
|
|
3,158
|
Deferred
revenues
|
|
8,761
|
|
8,913
|
Other current
liabilities
|
|
13,667
|
|
8,429
|
Total current
liabilities
|
|
93,773
|
|
87,220
|
Noncurrent
liabilities
|
|
|
|
|
Long-term external
debt, net
|
|
23,837
|
|
24,463
|
Deferred
revenues
|
|
8,666
|
|
8,617
|
Noncurrent operating
lease liabilities
|
|
2,723
|
|
2,170
|
Other noncurrent
liabilities
|
|
1,529
|
|
1,619
|
Total
liabilities
|
|
130,528
|
|
124,089
|
Shareholders'
equity
|
|
|
|
|
Share capital; $0.0001
par value; 500,000,000 shares authorized at March 31, 2023 and
December 31, 2022;
27,397,342 outstanding at March 31, 2023 and 27,313,273 outstanding
at December 31, 2022
|
|
3
|
|
3
|
Additional paid in
capital
|
|
142,009
|
|
138,997
|
Treasury shares, at
cost, 220,929 shares at March 31, 2023 and 209,461 shares at March
31, 2023
|
|
(5,133)
|
|
(4,922)
|
Accumulated
earnings
|
|
17,098
|
|
12,822
|
Accumulated other
comprehensive loss
|
|
(1,441)
|
|
(1,527)
|
Total shareholders'
equity
|
|
152,536
|
|
145,373
|
TOTAL LIABILITIES
AND EQUITY
|
|
$
283,064
|
|
$
269,462
|
|
|
|
|
|
CAMBIUM NETWORKS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
4,276
|
|
$
10,011
|
|
$
(1,568)
|
Adjustments to
reconcile net income (loss) to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization of software and intangible assets
|
|
2,095
|
|
1,972
|
|
1,790
|
Amortization of debt
issuance costs
|
|
75
|
|
75
|
|
77
|
Share-based
compensation
|
|
2,875
|
|
2,895
|
|
2,420
|
Deferred income
taxes
|
|
(1,519)
|
|
(3,202)
|
|
(1,373)
|
Provision for inventory
excess and obsolescence
|
|
1,336
|
|
2,024
|
|
52
|
Other
|
|
(231)
|
|
(31)
|
|
81
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
Receivables
|
|
(8,973)
|
|
(3,470)
|
|
6,152
|
Inventories
|
|
(12,601)
|
|
(8,451)
|
|
(6,485)
|
Prepaid
expenses
|
|
1,069
|
|
(3,768)
|
|
(578)
|
Accounts
payable
|
|
(1,474)
|
|
3,114
|
|
(12,109)
|
Accrued employee
compensation
|
|
(584)
|
|
1,293
|
|
(10,276)
|
Other assets and
liabilities
|
|
7,697
|
|
1,564
|
|
2,592
|
Net cash (used in)
provided by operating activities
|
|
(5,959)
|
|
4,026
|
|
(19,225)
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(1,569)
|
|
(1,332)
|
|
(714)
|
Purchase of
software
|
|
(1,537)
|
|
(1,230)
|
|
(1,068)
|
Net cash used in
investing activities
|
|
(3,106)
|
|
(2,562)
|
|
(1,782)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Repayment of term
loan
|
|
(656)
|
|
(657)
|
|
—
|
Issuance of ordinary
shares under ESPP
|
|
—
|
|
839
|
|
—
|
Taxes paid related to
net share settlement of equity awards
|
|
(148)
|
|
(226)
|
|
(42)
|
Proceeds from share
option exercises
|
|
387
|
|
1,872
|
|
146
|
Net cash (used in)
provided by financing activities
|
|
(417)
|
|
1,828
|
|
104
|
Effect of exchange rate
on cash
|
|
16
|
|
11
|
|
9
|
Net (decrease) increase
in cash
|
|
(9,466)
|
|
3,303
|
|
(20,894)
|
Cash, beginning of
period
|
|
48,162
|
|
44,859
|
|
59,291
|
Cash, end of
period
|
|
$
38,696
|
|
$
48,162
|
|
$
38,397
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information:
|
|
|
|
|
|
|
Income taxes
paid
|
|
$
204
|
|
$
438
|
|
$
116
|
Interest
paid
|
|
$
412
|
|
$
310
|
|
$
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAMBIUM NETWORKS
CORPORATION
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(In
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
REVENUES BY
PRODUCT CATEGORY
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Point-to-Multi-Point
|
|
$
22,292
|
|
$
29,656
|
|
$
30,926
|
Point-to-Point
|
|
18,008
|
|
21,276
|
|
14,714
|
Enterprise
|
|
35,656
|
|
31,992
|
|
15,508
|
Other
|
|
1,445
|
|
1,583
|
|
748
|
Total
Revenues
|
|
$
77,401
|
|
$
84,507
|
|
$
61,896
|
|
|
|
|
|
|
|
REVENUES BY
REGION
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
North
America
|
|
$
47,593
|
|
$
44,350
|
|
$
28,321
|
Europe, Middle East and
Africa
|
|
19,708
|
|
20,007
|
|
20,332
|
Caribbean and Latin
America
|
|
3,685
|
|
9,244
|
|
5,084
|
Asia Pacific
|
|
6,415
|
|
10,906
|
|
8,159
|
Total
Revenues
|
|
$
77,401
|
|
$
84,507
|
|
$
61,896
|
|
|
|
|
|
|
|
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 and secondary
offering 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 and secondary offering expenses,
nonrecurring legal expenses, write-down of debt issuance costs upon
prepayment of debt, 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 expense and associated employment taxes
paid 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 while
the associated employment taxes are cash-based expenses that vary
in amount from period-to-period and are dependent on market forces
as well as jurisdictional tax regulations that are often beyond
Cambium Networks control.
Amortization of acquired intangibles includes customer
relationships, unpatented technology, patents, software, and
trademarks, and are 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. 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
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
Net income
(loss)
|
|
$
4,276
|
|
$
10,011
|
|
$
(1,568)
|
Interest expense,
net
|
|
597
|
|
559
|
|
497
|
Provision (benefit) for
income taxes
|
|
538
|
|
(1,135)
|
|
(1,201)
|
Depreciation and
amortization of software and intangible assets
|
|
2,095
|
|
1,972
|
|
1,790
|
EBITDA
|
|
7,506
|
|
11,407
|
|
(482)
|
Share-based
compensation
|
|
2,875
|
|
2,895
|
|
2,420
|
Adjusted
EBITDA
|
|
$
10,381
|
|
$
14,302
|
|
$
1,938
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
|
13.4 %
|
|
16.9 %
|
|
3.1 %
|
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
|
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
GAAP gross
profit
|
|
$
39,660
|
|
$
41,369
|
|
$
29,166
|
Share-based
compensation expense
|
|
56
|
|
56
|
|
57
|
Amortization of
capitalized software costs
|
|
599
|
|
497
|
|
344
|
Non-GAAP gross
profit
|
|
$
40,315
|
|
$
41,922
|
|
$
29,567
|
Non-GAAP gross
margin
|
|
52.1 %
|
|
49.6 %
|
|
47.8 %
|
|
|
|
|
|
|
|
GAAP research and
development expense
|
|
$
14,262
|
|
$
12,874
|
|
$
12,942
|
Share-based
compensation expense
|
|
1,269
|
|
1,258
|
|
1,022
|
Non-GAAP research
and development expense
|
|
$
12,993
|
|
$
11,616
|
|
$
11,920
|
|
|
|
|
|
|
|
GAAP sales and
marketing expense
|
|
$
11,670
|
|
$
12,148
|
|
$
10,429
|
Share-based
compensation expense
|
|
700
|
|
702
|
|
627
|
Non-GAAP sales and
marketing expense
|
|
$
10,970
|
|
$
11,446
|
|
$
9,802
|
|
|
|
|
|
|
|
GAAP general and
administrative expense
|
|
$
6,667
|
|
$
5,422
|
|
$
6,544
|
Share-based
compensation expense
|
|
850
|
|
879
|
|
714
|
Non-GAAP general and
administrative expense
|
|
$
5,817
|
|
$
4,543
|
|
$
5,830
|
|
|
|
|
|
|
|
GAAP depreciation
and amortization
|
|
$
1,496
|
|
$
1,475
|
|
$
1,446
|
Amortization of
acquired intangibles
|
|
374
|
|
374
|
|
420
|
Non-GAAP
depreciation and amortization
|
|
$
1,122
|
|
$
1,101
|
|
$
1,026
|
|
|
|
|
|
|
|
GAAP operating
income (loss)
|
|
$
5,565
|
|
$
9,450
|
|
$
(2,195)
|
Share-based
compensation expense
|
|
2,875
|
|
2,895
|
|
2,420
|
Amortization of
capitalized software costs
|
|
599
|
|
497
|
|
344
|
Amortization of
acquired intangibles
|
|
374
|
|
374
|
|
420
|
Non-GAAP operating
income
|
|
$
9,413
|
|
$
13,216
|
|
$
989
|
|
|
|
|
|
|
|
GAAP pre-tax income
(loss)
|
|
$
4,814
|
|
$
8,876
|
|
$
(2,769)
|
Share-based
compensation expense
|
|
2,875
|
|
2,895
|
|
2,420
|
Amortization of
capitalized software costs
|
|
599
|
|
497
|
|
344
|
Amortization of
acquired intangibles
|
|
374
|
|
374
|
|
420
|
Non-GAAP pre-tax
income
|
|
$
8,662
|
|
$
12,642
|
|
$
415
|
|
|
|
|
|
|
|
GAAP provision
(benefit) for income taxes
|
|
$
538
|
|
$
(1,135)
|
|
$
(1,201)
|
Tax rate
change
|
|
28
|
|
118
|
|
(929)
|
Tax impacts of share
vesting
|
|
(99)
|
|
(221)
|
|
—
|
Tax effect of Non-GAAP
adjustments
|
|
(770)
|
|
(753)
|
|
(637)
|
All other discrete
items
|
|
(472)
|
|
(2,598)
|
|
250
|
Non-GAAP provision
for income taxes
|
|
$
1,851
|
|
$
2,319
|
|
$
115
|
Non-GAAP
ETR
|
|
21.4 %
|
|
18.3 %
|
|
27.7 %
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
4,276
|
|
$
10,011
|
|
$
(1,568)
|
Share-based
compensation expense
|
|
2,875
|
|
2,895
|
|
2,420
|
Amortization of
capitalized software costs
|
|
599
|
|
497
|
|
344
|
Amortization of
acquired intangibles
|
|
374
|
|
374
|
|
420
|
Non-GAAP adjustments to
tax
|
|
(544)
|
|
(2,701)
|
|
(679)
|
Tax effect of Non-GAAP
adjustments
|
|
(770)
|
|
(753)
|
|
(637)
|
Non-GAAP net
income
|
|
$
6,811
|
|
$
10,323
|
|
$
300
|
Non-GAAP fully
weighted basic shares
|
|
27,397
|
|
27,313
|
|
26,825
|
Non-GAAP fully
weighted diluted shares
|
|
28,314
|
|
28,605
|
|
28,172
|
Non-GAAP net income
per Non-GAAP basic share
|
|
$
0.25
|
|
$
0.38
|
|
$
0.01
|
Non-GAAP net income
per Non-GAAP diluted share
|
|
$
0.24
|
|
$
0.36
|
|
$
0.01
|
|
|
|
|
|
|
|
|
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