Cambium Networks Reports First Quarter 2022 Financial Results
- Revenues of
$61.9 million , decreased 21% sequentially, and decreased 30% year-over-year - Enterprise Wi-Fi revenues of
$15.5 million , increased 28% year-over-year - Gross margin of 47.1%, non-GAAP(1) gross margin of 47.8%
- Operating loss of
$2.2 million , non-GAAP(1) operating income of$1.0 million - Net loss of
$1.6 million or$0.06 per diluted share, non-GAAP(1) net income of$0.3 million or$0.01 per diluted share - Adjusted EBITDA(1) of
$1.9 million or 3.1% of revenues
GAAP |
Non-GAAP (1) |
|||||||||||
(in millions, except percentages) |
Q1 2022 |
Q4 2021 |
Q1 2021 |
Q1 2022 |
Q4 2021 |
Q1 2021 |
||||||
Revenues |
$ 61.9 |
$ 78.7 |
$ 88.5 |
$ 61.9 |
$ 78.7 |
$ 88.5 |
||||||
Gross margin |
47.1% |
43.8% |
49.9% |
47.8% |
44.2% |
50.1% |
||||||
Operating margin |
(3.5)% |
3.7% |
15.1% |
1.6% |
7.3% |
17.5% |
||||||
Adjusted EBITDA margin |
3.1% |
8.6% |
18.6% |
|||||||||
1 Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and |
"We faced supply chain challenges within our industry which impacted our first quarter results as a consequence of two unexpected events," said
Bhatnagar continued, "Cambium's gigabit wireless fabric, which allows network operators to dramatically improve broadband performance and quality of service, will continue to expand with the addition of fixed 5G technology at 28 GHz, increased federal spending for defense, and new premium versions of our software-as-a-service solutions. We remain very well positioned with customers for the next generation multi-gigabit fixed wireless infrastructure solutions featuring higher performance at affordable prices."
Revenues of
GAAP gross margin for the first quarter 2022 was 47.1%, compared to 49.9% for the first quarter 2021, and 43.8% for the fourth quarter 2021. GAAP operating loss for the first quarter 2022 was
Non-GAAP gross margin for the first quarter 2022 was 47.8%, compared to 50.1% for the first quarter 2021, and 44.2% for the fourth quarter 2021. Non-GAAP operating income for the first quarter 2022 was
Cash used in operating activities was
First Quarter 2022 Highlights
- Revenues of
$61.9 million , decreased 21% sequentially, and was lower by 30% year-over-year. - GAAP net loss of
$1.6 million or$0.06 per diluted share, non-GAAP net income of$0.3 million or$0.01 per diluted share. - Adjusted EBITDA of
$1.9 million or 3.9% of revenues, compared to$16.5 million or 18.6% of revenues for the first quarter 2021. - Net cash used in operating activities of
$19.2 million , compared to$7.6 million used in operating activities for the first quarter 2021. - Increased new channel partners by approximately 1,670 year-over-year, an increase of 17%.
- Devices under cnMaestro® Cloud management increased 37% year-over-year.
Second Quarter 2022 Financial Outlook
Taking into account our current visibility, the financial outlook as of
- Revenues between
$65.0-$73.0 million - GAAP gross margin between 46.9%-47.9%; and non-GAAP gross margin between 47.5%-48.5%
- GAAP operating expenses between
$33.3-$34.3 million ; and non-GAAP operating expenses between$29.7-$30.7 million - GAAP operating (loss) income between (
$2.75 )-$0.7 million ; and non-GAAP operating income between$1.2-$4.7 million - Interest expense, net of approximately
$0.7 million - GAAP net (loss) income between (
$2.8 )-$0.0 million or between ($0.10 ) and$0.00 per diluted share; and non-GAAP net income between$0.4-$3.2 million or between$0.01 and$0.11 per diluted share - Adjusted EBITDA between
$2.2-$5.8 million ; and adjusted EBITDA margin between 3.4%-7.9% - GAAP and non-GAAP effective tax rate of approximately 18.0%-20.0%
- Approximately 28.7 million weighted average diluted shares outstanding
Cash requirements are expected to be as follows:
- Paydown of debt:
$1.3 million - Cash flow interest expense: approximately
$0.3 million - Capital expenditures:
$1.4-$1.6 million
Full Year 2022 Financial Outlook
- Revenues between
$280.0-$300.0 million , decreasing between 16.6%-10.7% - GAAP net (loss) income between (
$1.3 )-$10.3 million or between ($0.04 ) and$0.36 per diluted share; and non-GAAP net income between$8.1-$20.1 million or between$0.28 and$0.70 per diluted share - Adjusted EBITDA margin between 6.0%-10.8%
Conference Call and Webcast
In addition,
About
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.
In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. 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 2021 Annual Report on Form 10-K filed with the
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.
|
||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||
(In thousands, except share and per share amounts) |
||||||
(Unaudited) |
||||||
Three months ended |
||||||
|
|
|
||||
Revenues |
$ 61,896 |
$ 78,710 |
$ 88,515 |
|||
Cost of revenues |
32,730 |
44,196 |
44,345 |
|||
Gross profit |
29,166 |
34,514 |
44,170 |
|||
Gross margin |
47.1% |
43.8% |
49.9% |
|||
Operating expenses |
||||||
Research and development |
12,102 |
11,627 |
11,603 |
|||
Sales and marketing |
10,148 |
11,091 |
10,040 |
|||
General and administrative |
7,665 |
7,425 |
7,529 |
|||
Depreciation and amortization |
1,446 |
1,464 |
1,595 |
|||
Total operating expenses |
31,361 |
31,607 |
30,767 |
|||
Operating (loss) income |
(2,195) |
2,907 |
13,403 |
|||
Operating margin |
-3.5% |
3.7% |
15.1% |
|||
Interest expense, net |
497 |
1,061 |
1,140 |
|||
Other expense, net |
77 |
35 |
42 |
|||
(Loss) income before income taxes |
(2,769) |
1,811 |
12,221 |
|||
(Benefit) provision for income taxes |
(1,201) |
384 |
(7,639) |
|||
Net (loss) income |
$ (1,568) |
$ 1,427 |
$ 19,860 |
|||
(Loss) earnings per share |
||||||
Basic |
$ (0.06) |
$ 0.05 |
$ 0.76 |
|||
Diluted |
$ (0.06) |
$ 0.05 |
$ 0.70 |
|||
Weighted-average number of shares outstanding to compute |
||||||
Basic |
26,749,675 |
26,655,437 |
26,115,615 |
|||
Diluted |
26,749,675 |
28,313,291 |
28,517,713 |
|||
Share-based compensation included in costs and expenses: |
||||||
Cost of revenues |
$ 57 |
$ 44 |
$ 19 |
|||
Research and development |
1,022 |
851 |
517 |
|||
Sales and marketing |
627 |
561 |
295 |
|||
General and administrative |
714 |
677 |
579 |
|||
Total share-based compensation expense |
$ 2,420 |
$ 2,133 |
$ 1,410 |
|
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(In thousands, except share information) |
||||
(Unaudited) |
||||
|
|
|||
ASSETS |
||||
Current assets |
||||
Cash |
$ 38,397 |
$ 59,291 |
||
Accounts receivable, net of allowance of |
64,506 |
69,773 |
||
Inventories, net |
40,210 |
33,777 |
||
Recoverable income taxes |
468 |
860 |
||
Prepaid expenses |
12,741 |
12,170 |
||
Other current assets |
5,130 |
4,718 |
||
Total current assets |
161,452 |
180,589 |
||
Noncurrent assets |
||||
Property and equipment, net |
10,732 |
10,490 |
||
Software, net |
6,433 |
5,867 |
||
Operating lease assets |
5,399 |
5,899 |
||
Intangible assets, net |
10,357 |
10,777 |
||
|
9,842 |
9,842 |
||
Deferred tax assets, net |
8,978 |
7,604 |
||
Other noncurrent assets |
1,150 |
1,200 |
||
TOTAL ASSETS |
$ 214,343 |
$ 232,268 |
||
LIABILITIES AND EQUITY |
||||
Current liabilities |
||||
Accounts payable |
$ 16,543 |
$ 28,241 |
||
Accrued liabilities |
25,016 |
21,948 |
||
Employee compensation |
6,875 |
16,601 |
||
Current portion of long-term external debt, net |
3,138 |
2,489 |
||
Deferred revenues |
6,964 |
6,880 |
||
Other current liabilities |
6,273 |
5,981 |
||
Total current liabilities |
64,809 |
82,140 |
||
Noncurrent liabilities |
||||
Long-term external debt, net |
26,351 |
26,965 |
||
Deferred revenues |
5,647 |
5,363 |
||
Noncurrent operating lease liabilities |
3,574 |
4,112 |
||
Other noncurrent liabilities |
1,554 |
1,551 |
||
Total liabilities |
101,935 |
120,131 |
||
Shareholders' equity |
||||
Share capital; |
3 |
3 |
||
Additional paid in capital |
126,437 |
124,117 |
||
|
(4,321) |
(3,906) |
||
Accumulated deficit |
(8,946) |
(7,378) |
||
Accumulated other comprehensive loss |
(765) |
(699) |
||
Total shareholders' equity |
112,408 |
112,137 |
||
TOTAL LIABILITIES AND EQUITY |
$ 214,343 |
$ 232,268 |
|
||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
Three Months Ended |
||||||
|
|
|
||||
Cash flows from operating activities: |
||||||
Net (loss) income |
$ (1,568) |
$ 1,427 |
$ 19,860 |
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating |
||||||
Depreciation and amortization of software and intangible assets |
1,790 |
1,731 |
1,720 |
|||
Amortization of debt issuance costs |
77 |
467 |
137 |
|||
Share-based compensation |
2,420 |
2,133 |
1,410 |
|||
Deferred income taxes |
(1,373) |
359 |
(6,367) |
|||
Provision for inventory excess and obsolescence |
52 |
695 |
(709) |
|||
Other |
81 |
(31) |
(31) |
|||
Change in assets and liabilities: |
||||||
Receivables |
6,152 |
1,315 |
(11,700) |
|||
Inventories |
(6,485) |
(5,683) |
3,236 |
|||
Prepaid expenses |
(578) |
(6,931) |
(3,099) |
|||
Accounts payable |
(12,109) |
4,400 |
(6,777) |
|||
Accrued employee compensation |
(10,276) |
3,671 |
(6,003) |
|||
Other assets and liabilities |
2,592 |
2,012 |
761 |
|||
Net cash (used in) provided by operating activities |
(19,225) |
5,565 |
(7,562) |
|||
Cash flows from investing activities: |
||||||
Purchase of property and equipment |
(714) |
(2,062) |
(814) |
|||
Purchase of software |
(1,068) |
(1,316) |
(798) |
|||
Net cash used in investing activities |
(1,782) |
(3,378) |
(1,612) |
|||
Cash flows from financing activities: |
||||||
Proceeds from issuance of term loan |
— |
29,812 |
— |
|||
Repayment of term loan |
— |
(30,678) |
(2,500) |
|||
Payment of debt issuance costs |
— |
(1,220) |
— |
|||
Issuance of ordinary shares |
— |
923 |
— |
|||
Taxes paid related to net share settlement of equity awards |
(42) |
(562) |
(1,563) |
|||
Proceeds from share option exercises |
146 |
266 |
1,971 |
|||
Payments to extinguish debt |
— |
(42) |
— |
|||
Net cash provided by (used in) financing activities |
104 |
(1,501) |
(2,092) |
|||
Effect of exchange rate on cash |
9 |
9 |
(24) |
|||
Net (decrease) increase in cash |
(20,894) |
695 |
(11,290) |
|||
Cash, beginning of period |
59,291 |
58,596 |
62,472 |
|||
Cash, end of period |
$ 38,397 |
$ 59,291 |
$ 51,182 |
|||
Supplemental disclosure of cash flow information: |
||||||
Income taxes paid |
$ 116 |
$ 206 |
$ 92 |
|||
Interest paid |
$ 95 |
$ 234 |
$ 773 |
|
||||||
SUPPLEMENTAL FINANCIAL INFORMATION |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
REVENUES BY PRODUCT TYPE |
||||||
Three Months Ended |
||||||
|
|
|
||||
Point-to-Multi-Point |
$ 30,926 |
$ 37,017 |
$ 57,799 |
|||
|
14,714 |
15,329 |
17,476 |
|||
Wi-Fi |
15,508 |
25,779 |
12,123 |
|||
Other |
748 |
585 |
1,117 |
|||
Total Revenues |
$ 61,896 |
$ 78,710 |
$ 88,515 |
|||
REVENUES BY REGION |
||||||
Three Months Ended |
||||||
|
|
|
||||
North America |
$ 28,321 |
$ 33,386 |
$ 54,195 |
|||
|
20,332 |
26,035 |
18,690 |
|||
|
5,084 |
10,314 |
10,515 |
|||
|
8,159 |
8,975 |
5,115 |
|||
Total Revenues |
$ 61,896 |
$ 78,710 |
$ 88,515 |
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 useful 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) secondary offering expenses, (vii) one-time acquisition costs, and (viii) 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
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, as well as awards with performance or other market characteristics, 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
Nonrecurring legal expenses include settlements of existing or threatened litigation. Secondary offering expenses were incurred by
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.
Acquisition and integration costs consist of legal and professional fees relating to the acquisition of
Restructuring expenses consist primarily of severance costs for employees which are not related to future operating expenses.
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 and impacts from the company's income tax valuation allowance initially recognized in the quarter ended
Non-GAAP fully weighted basic and diluted shares are shown as outstanding during the entire period presented and include dilutive shares if their effect to 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 (loss) income to Adjusted EBITDA, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands):
|
||||||
SUPPLEMENTAL SCHEDULE OF NON-GAAP ADJUSTED EBITDA |
||||||
(In thousands) |
||||||
(Unaudited) |
||||||
Three months ended |
||||||
|
|
|
||||
Net (loss) income |
$ (1,568) |
$ 1,427 |
$ 19,860 |
|||
Interest expense, net |
497 |
1,061 |
1,140 |
|||
(Benefit) provision for income taxes |
(1,201) |
384 |
(7,639) |
|||
Depreciation and amortization of software and intangible |
1,790 |
1,731 |
1,720 |
|||
EBITDA |
(482) |
4,603 |
15,081 |
|||
Share-based compensation |
2,420 |
2,133 |
1,410 |
|||
Adjusted EBITDA |
$ 1,938 |
$ 6,736 |
$ 16,491 |
|||
Adjusted EBITDA Margin |
3.1% |
8.6% |
18.6% |
The following table reconciles all other GAAP to non-GAAP financial measures (in thousands):
|
|||||||
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES |
|||||||
(In thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
|
|
|
|||||
GAAP gross profit |
$ 29,166 |
$ 34,514 |
$ 44,170 |
||||
Share-based compensation expense |
57 |
44 |
19 |
||||
Amortization of capitalized software costs |
344 |
267 |
125 |
||||
Non-GAAP gross profit |
$ 29,567 |
$ 34,825 |
$ 44,314 |
||||
Non-GAAP gross margin |
47.8% |
44.2% |
50.1% |
||||
GAAP research and development expense |
$ 12,102 |
$ 11,627 |
$ 11,603 |
||||
Share-based compensation expense |
1,022 |
851 |
517 |
||||
Non-GAAP research and development expense |
$ 11,080 |
$ 10,776 |
$ 11,086 |
||||
GAAP sales and marketing expense |
$ 10,148 |
$ 11,091 |
$ 10,040 |
||||
Share-based compensation expense |
627 |
561 |
295 |
||||
Non-GAAP sales and marketing expense |
$ 9,521 |
$ 10,530 |
$ 9,745 |
||||
GAAP general and administrative expense |
$ 7,665 |
$ 7,425 |
$ 7,529 |
||||
Share-based compensation expense |
714 |
677 |
579 |
||||
Non-GAAP general and administrative expense |
$ 6,951 |
$ 6,748 |
$ 6,950 |
||||
GAAP depreciation and amortization |
$ 1,446 |
$ 1,464 |
$ 1,595 |
||||
Amortization of acquired intangibles |
420 |
464 |
552 |
||||
Non-GAAP depreciation and amortization |
$ 1,026 |
$ 1,000 |
$ 1,043 |
||||
GAAP operating (loss) income |
$ (2,195) |
$ 2,907 |
$ 13,403 |
||||
Share-based compensation expense |
2,420 |
2,133 |
1,410 |
||||
Amortization of capitalized software costs |
344 |
267 |
125 |
||||
Amortization of acquired intangibles |
420 |
464 |
552 |
||||
Non-GAAP operating income |
$ 989 |
$ 5,771 |
$ 15,490 |
||||
GAAP pre-tax (loss) income |
$ (2,769) |
$ 1,811 |
$ 12,221 |
||||
Share-based compensation expense |
2,420 |
2,133 |
1,410 |
||||
Amortization of capitalized software costs |
344 |
267 |
125 |
||||
Amortization of acquired intangibles |
420 |
464 |
552 |
||||
Write-off of debt issuance costs and extinguishment fees upon payment of debt |
— |
426 |
— |
||||
Non-GAAP pre-tax income |
$ 415 |
$ 5,101 |
$ 14,308 |
||||
GAAP (benefit) provision for income taxes |
$ (1,201) |
$ 384 |
$ (7,639) |
||||
Valuation allowance impacts |
— |
(86) |
(7,816) |
||||
Tax rate change |
(929) |
— |
— |
||||
Tax impacts of share vesting |
— |
464 |
(1,975) |
||||
Tax effect of Non-GAAP adjustments |
(637) |
(658) |
(417) |
||||
All other discrete items |
250 |
(61) |
(19) |
||||
Non-GAAP provision for income taxes |
$ 115 |
$ 725 |
$ 2,588 |
||||
Non-GAAP ETR |
27.7% |
14.2% |
18.1% |
||||
GAAP net (loss) income |
$ (1,568) |
$ 1,427 |
$ 19,860 |
||||
Share-based compensation expense |
2,420 |
2,133 |
1,410 |
||||
Amortization of capitalized software costs |
344 |
267 |
125 |
||||
Amortization of acquired intangibles |
420 |
464 |
552 |
||||
Write-off of debt issuance costs and extinguishment fees upon payment of debt |
— |
426 |
— |
||||
Non-GAAP adjustments to tax |
(679) |
317 |
(9,810) |
||||
Tax effect of Non-GAAP adjustments |
(637) |
(658) |
(417) |
||||
Non-GAAP net income |
$ 300 |
$ 4,376 |
$ 11,720 |
||||
Non-GAAP fully weighted basic shares |
26,825 |
26,735 |
26,299 |
||||
Non-GAAP fully weighted diluted shares |
28,172 |
28,214 |
28,887 |
||||
Non-GAAP net income per Non-GAAP basic share |
$ 0.01 |
$ 0.16 |
$ 0.45 |
||||
Non-GAAP net income per Non-GAAP diluted share |
$ 0.01 |
$ 0.16 |
$ 0.41 |
Investor Inquiries:
Sr. Director Investor & Industry Analyst Relations
+1 (847) 264-2188
peter.schuman@cambiumnetworks.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/cambium-networks-reports-first-quarter-2022-financial-results-301540348.html
SOURCE