8-K
false0001738177CAMBIUM NETWORKS CORP0001738177dei:FormerAddressMember2024-05-092024-05-0900017381772024-05-092024-05-09

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 09, 2024

 

 

CAMBIUM NETWORKS CORPORATION

(Exact name of Registrant as Specified in Its Charter)

 

 

Cayman Islands

001-38952

00-0000000

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

c/o Cambium Networks, Inc.

2000 Center Drive, Suite East A401

 

Hoffman Estates, Illinois

 

60192

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 345 814-7600

 

 

3800 Golf Road, Suite 360

Rolling Meadows, Illinois 60008

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Ordinary shares, $0.0001 par value

 

CMBM

 

Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02 Results of Operations and Financial Condition.

On May 9, 2024, Cambium Networks Corporation (the "Company") issued a press release announcing financial results for the three-month period ended March 31, 2024. The press release contains forward-looking statements regarding the Company, and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.

The press release dated May 9, 2024 is furnished herewith as Exhibit 99.1. The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

Exhibit No.

Description

99.1

Press release dated May 9, 2024

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

CAMBIUM NETWORKS CORPORATION

 

 

 

 

Date:

May 9, 2024

By:

/s/ Jacob Sayer

 

 

Name:

Title:

  Jacob Sayer
  Chief Financial Officer

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/d6af03974874858de2ca465e21bbe66b-img178355216_0.jpg

Cambium Networks Reports First Quarter 2024 Financial Results

 

Revenues of $42.3 million, increased 5% sequentially, and decreased 45% year-over-year
Gross margin of 20.5%, non-GAAP(1) gross margin of 22.7%
Operating loss of $21.0 million, non-GAAP(1) operating loss of $16.7 million
Net loss of $26.4 million or a loss of $0.95 per diluted share, non-GAAP(1) net loss of $12.7 million or a loss of $0.46 per diluted share
Adjusted EBITDA(1) loss of $15.5 million or (36.7)% of revenues

HOFFMAN ESTATES, Ill., May 9, 2024 — Cambium Networks Corporation (“Cambium Networks”) (NASDAQ: CMBM), a leading provider of wireless networking infrastructure solutions, today announced financial results for the first quarter 2024 ended March 31, 2024.

 

 

GAAP

 

 

Non-GAAP (1)

 

(in millions, except percentages)

 

Q1 2024

 

 

Q4 2023

 

 

Q1 2023

 

 

Q1 2024

 

 

Q4 2023

 

 

Q1 2023

 

Revenues

 

$

42.3

 

 

$

40.2

 

 

$

77.4

 

 

$

42.3

 

 

$

40.2

 

 

$

77.4

 

Gross margin

 

 

20.5

%

 

 

(27.4

)%

 

 

51.2

%

 

 

22.7

%

 

 

(25.1

)%

 

 

52.1

%

Operating margin

 

 

(49.6

)%

 

 

(103.5

)%

 

 

7.2

%

 

 

(39.5

)%

 

 

(90.6

)%

 

 

12.2

%

Net (loss) income

 

$

(26.4

)

 

$

(52.9

)

 

$

4.3

 

 

$

(12.7

)

 

$

(28.2

)

 

$

6.8

 

Adjusted EBITDA margin

 

 

 

 

 

 

 

 

 

 

 

(36.7

)%

 

 

(87.5

)%

 

 

13.4

%

1Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers and for reconciliation of adjusted EBITDA for the for the first quarter 2024 ended March 31, 2024.

“I’m pleased we delivered sequential growth during the first quarter as the Enterprise business has started to recover and we reduced channel inventories. We are at the start of a new product cycle for our Point-to-Multi-Point business with the Federal Communications Commission’s (FCC’s) approval of 6 GHz spectrum,” said Morgan Kurk, president and CEO.

Kurk continued, “While we have a lot of hard work ahead of us, Cambium is well positioned to deliver sequential growth for the remainder of calendar 2024, and we continue to work to improve our operating efficiency to drive increased cash generation.”

Revenues of $42.3 million for the first quarter 2024 decreased $35.1 million year-over-year primarily as a result of lower revenues across all product families. Revenues for the first quarter 2024 increased by $2.1 million compared to $40.2 million for the fourth quarter 2023, primarily due to higher Enterprise revenues in North America and Europe, Middle-East, and Africa as channel inventories begin to improve, partially offset by lower Point-to-Point revenues due to delays in government funding for defense orders in North America and Europe, and lower Point-to-Multi-Point revenues due to delays in the timing of approval for 6 GHz products in the United States and its territories.

GAAP gross margin for the first quarter 2024 was 20.5%, compared to 51.2% for the first quarter 2023, and (27.4%) for the fourth quarter 2023. GAAP operating loss for the first quarter 2024 was $21.0 million, compared to operating income of $5.6 million for the first quarter 2023, and operating loss of $41.6 million for the fourth quarter 2023. GAAP net loss for the first quarter 2024 was $26.4 million, or net loss of $0.95 per diluted share, compared to net income of $4.3 million, or net


earnings of $0.15 per diluted share for the first quarter 2023, and a net loss of $52.9 million, or net loss of $1.91 per diluted share for the fourth quarter 2023.

Non-GAAP gross margin for the first quarter 2024 was 22.7%, which included $7.0 million in inventory reserves and additional supplier commitments, and compared to 52.1% for the first quarter 2023, and (25.1)% for the fourth quarter 2023 which included an $11 million reduction in revenues as the result of price incentives provided to distributors, and inventory reserves of approximately $21.2 million mostly for Enterprise products. Non-GAAP operating loss for the first quarter 2024 was $16.7 million, compared to non-GAAP operating income of $9.4 million for the first quarter 2023, and a non-GAAP operating loss of $36.4 million for the fourth quarter 2023. Non-GAAP net loss for the first quarter 2024 was $12.7 million, or a net loss of $0.46 per diluted share, compared to net income of $6.8 million, or net earnings of $0.24 per diluted share for the first quarter 2024, and net loss of $28.2 million, or a net loss of $1.01 per diluted share for the fourth quarter 2023. For the first quarter 2024, adjusted EBITDA was a loss of $15.5 million or (36.7)% of revenues, compared to adjusted EBITDA of $10.4 million or 13.4% of revenues for the first quarter 2023, and an adjusted EBITDA loss of $35.2 million or (87.5)% of revenues for the fourth quarter 2023.

Net cash used in operating activities was $15.6 million for the first quarter 2024, compared to net cash used in operating activities of $6.0 million for the first quarter 2023, and net cash used in operating activities of $6.2 million for the fourth quarter 2023. Cash totaled $38.7 million as of March 31, 2024, $20.0 million higher than December 31, 2023.

First Quarter 2024 Highlights

Revenues of $42.3 million, increased 5% sequentially, and was lower by 45% year-over-year.
GAAP net loss of $26.4 million or a net loss of $0.95 per diluted share, non-GAAP net loss of $12.7 million or a net loss of $0.46 per diluted share, compared to GAAP net income of $4.3 million, or net earnings of $0.15 per diluted share for the first quarter 2023, and non-GAAP net income of $6.8 million or net earnings of $0.24 per diluted share for the first quarter 2023.
Adjusted EBITDA was a loss of $15.5 million or (36.7)% of revenues, compared to adjusted EBITDA of $10.4 million or 13.4% of revenues for the first quarter 2023.
Net cash used in operating activities was $15.6 million, compared to net cash used in operating activities of $6.0 million for the first quarter 2023.
Surpassed 23 million radios shipped since becoming a standalone company.
Devices under cnMaestro™ cloud management increased 15% 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 2024 Financial Outlook

Taking into account our current visibility, the financial outlook as of May 9, 2024, for the second quarter ending June 30, 2024, is as follows:

Revenues between $43.0-$48.0 million

GAAP gross margin between 37.9%-39.9%; and non-GAAP gross margin between 40.0%-42.0%
GAAP operating expenses between $27.7-$28.7 million; and non-GAAP operating expenses between $24.6-$25.6 million
GAAP operating loss between $9.6-$11.4 million; and non-GAAP operating loss between $5.4-$7.4 million
Interest expense, net, of approximately $1.8 million
GAAP net loss between $11.3-$13.2 million or a net loss between $0.40 and $0.47 per diluted share; and non-GAAP net loss between $5.4-$6.9 million or a net loss between $0.19 and $0.24 per diluted share
Adjusted EBITDA loss between $4.2-$6.2 million; and adjusted EBITDA margin between (8.8)%-(14.4)%
GAAP effective tax rate not meaningful; and a non-GAAP effective tax benefit of approximately 25%
Approximately 28.0 million weighted average diluted shares outstanding

Cash requirements are expected to be as follows:

Paydown of debt: $0.7 million
Cash interest expense: approximately $1.7 million
Capital expenditures: $1.5-$2.5 million

Full Year 2024 Financial Outlook

Revenues between $205.0-$225.0 million, a decrease of approximately 7% to up 2%
GAAP gross margin approximately 38.0%; and non-GAAP gross margin approximately 40.0%
GAAP net loss between $34.2-$42.8 million or a net loss between $1.22 and $1.53 per diluted share; and non-GAAP net loss between $11.6-$18.0 million or between a net loss between $0.41 and $0.64 per diluted share
Adjusted EBITDA margin between (2.2)%-(6.8)%

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 9, 2024. 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/BIa49474c45d8f4fc9b8063983dae84925. 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 & CEO, Morgan Kurk will present and hold one-on-one meetings with investors virtually on Thursday, May 16, 2024, at the Needham Technology, Media, & Consumer Conference, and on Tuesday, June 25, 2024, at the Northland Growth Conference.


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 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. 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; 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 the United States dollar and the impact on the cost of our products globally; current or future unfavorable economic conditions, both domestically and in our foreign markets, including the risk of a global or localized recessions; our reliance on limited or sole source suppliers; 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 ability of our third-party logistics and warehousing providers to deliver products to our channel partners and network operators in a timely manner; the technological complexity of our products, which may contain undetected hardware defects or software bugs or subject our products to the risks of ransomware or malware or other cyber-attacks; the impact of any material weaknesses in and our ability to maintain an effective system of internal controls, produce timely and accurate financial statements or comply with applicable regulations; the impact of actual or threatened health epidemics and other outbreaks; our reliance on the availability of third-party licenses; and our inability to obtain intellectual property protections for our products. 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, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

42,337

 

 

$

40,206

 

 

$

77,401

 

Cost of revenues

 

 

33,652

 

 

 

51,236

 

 

37,741

 

Gross profit

 

 

8,685

 

 

 

(11,030

)

 

39,660

 

Gross margin

 

 

20.5

%

 

 

(27.4

)%

 

 

51.2

%

Operating expenses

 

 

 

 

 

 

 

 

 

Research and development

 

 

10,799

 

 

 

13,057

 

 

14,262

 

Sales and marketing

 

 

9,721

 

 

 

9,726

 

 

 

11,670

 

General and administrative

 

 

7,510

 

 

 

6,207

 

 

 

6,667

 

Depreciation and amortization

 

 

1,633

 

 

 

1,596

 

 

 

1,496

 

Total operating expenses

 

 

29,663

 

 

 

30,586

 

 

34,095

 

Operating (loss) income

 

 

(20,978

)

 

 

(41,616

)

 

5,565

 

Operating margin

 

 

(49.6

)%

 

 

(103.5

)%

 

 

7.2

%

Interest expense, net

 

 

881

 

 

 

725

 

 

 

597

 

Other expense (income), net

 

 

59

 

 

 

(10

)

 

 

154

 

(Loss) income before income taxes

 

 

(21,918

)

 

 

(42,331

)

 

4,814

 

Provision for income taxes

 

 

4,529

 

 

 

10,523

 

 

538

 

Net (loss) income

 

$

(26,447

)

 

$

(52,854

)

 

$

4,276

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.95

)

 

$

(1.91

)

 

$

0.16

 

Diluted

 

$

(0.95

)

 

$

(1.91

)

 

$

0.15

 

Weighted-average number of shares outstanding to compute (loss) earnings per share

 

 

 

 

 

 

 

 

 

Basic

 

 

27,849,604

 

 

 

27,680,080

 

 

 

27,341,013

 

Diluted

 

 

27,849,604

 

 

 

27,680,080

 

 

 

28,452,855

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation included in costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

$

33

 

 

$

47

 

 

$

56

 

Research and development

 

 

945

 

 

 

1,005

 

 

 

1,269

 

Sales and marketing

 

 

508

 

 

 

547

 

 

 

700

 

General and administrative

 

 

1,100

 

 

 

1,212

 

 

 

850

 

Total share-based compensation expense

 

$

2,586

 

 

$

2,811

 

 

$

2,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


CAMBIUM NETWORKS CORPORATION

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share information)

 

(Unaudited)

 

 

 

March 31, 2024

 

 

December 31, 2023

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

38,711

 

 

$

18,710

 

Accounts receivable, net of credit losses of $860 and $283

 

 

58,157

 

 

 

64,103

 

Inventories, net

 

 

55,593

 

 

 

66,878

 

Income taxes receivable

 

 

300

 

 

 

222

 

Prepaid expenses

 

 

12,752

 

 

 

6,589

 

Other current assets

 

 

6,334

 

 

 

6,069

 

Total current assets

 

 

171,847

 

 

 

162,571

 

 

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

 

Property and equipment, net

 

 

13,741

 

 

 

12,879

 

Software, net

 

 

12,220

 

 

 

11,985

 

Operating lease assets

 

 

7,327

 

 

 

7,894

 

Intangible assets, net

 

 

7,300

 

 

 

7,675

 

Goodwill

 

 

9,842

 

 

 

9,842

 

Deferred tax assets, net

 

 

 

 

 

3,694

 

Other noncurrent assets

 

 

1,280

 

 

 

1,335

 

TOTAL ASSETS

 

$

223,557

 

 

$

217,875

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

15,783

 

 

$

19,120

 

Accrued liabilities

 

 

42,511

 

 

 

47,069

 

Employee compensation

 

 

4,229

 

 

 

5,071

 

Current portion of long-term debt, net

 

 

2,514

 

 

 

3,186

 

Deferred revenues

 

 

8,510

 

 

 

8,765

 

Other current liabilities

 

 

13,734

 

 

 

13,117

 

Total current liabilities

 

 

87,281

 

 

 

96,328

 

Noncurrent liabilities

 

 

 

 

 

 

Long-term debt, net

 

 

61,315

 

 

 

21,926

 

Deferred revenues

 

 

10,074

 

 

 

10,473

 

Noncurrent operating lease liabilities

 

 

6,409

 

 

 

6,595

 

Other noncurrent liabilities

 

 

1,688

 

 

 

1,619

 

Total liabilities

 

 

166,767

 

 

 

136,941

 

Shareholders' equity

 

 

 

 

 

 

Share capital; $0.0001 par value; 500,000,000 shares authorized at March 31, 2024 and December 31, 2023; 27,892,848 outstanding at March 31, 2024 and 27,834,908 outstanding at December 31, 2023

 

 

3

 

 

 

3

 

Additional paid in capital

 

 

155,137

 

 

 

152,768

 

Treasury shares, at cost, 265,153 shares at March 31, 2024 and 260,236 shares at December 31, 2023

 

 

(5,646

)

 

 

(5,624

)

Accumulated deficit

 

 

(91,045

)

 

 

(64,598

)

Accumulated other comprehensive loss

 

 

(1,659

)

 

 

(1,615

)

Total shareholders’ equity

 

 

56,790

 

 

 

80,934

 

TOTAL LIABILITIES AND EQUITY

 

$

223,557

 

 

$

217,875

 

 

 

 

 

 

 

 

 

 


CAMBIUM NETWORKS CORPORATION

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(26,447

)

 

$

(52,854

)

 

$

4,276

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization of software and intangible assets

 

 

2,536

 

 

 

2,414

 

 

 

2,095

 

Amortization of debt issuance costs

 

 

77

 

 

 

99

 

 

 

75

 

Share-based compensation

 

 

2,586

 

 

 

2,811

 

 

 

2,875

 

Deferred income taxes

 

 

3,694

 

 

 

8,800

 

 

 

(1,519

)

Provision for inventory excess and obsolescence

 

 

6,175

 

 

 

10,958

 

 

 

1,336

 

Other

 

 

687

 

 

 

(431

)

 

 

(231

)

Change in assets and liabilities:

 

 

 

 

 

 

 

 

 

Receivables

 

 

2,385

 

 

 

9,399

 

 

 

(8,973

)

Inventories

 

 

5,110

 

 

 

1,928

 

 

 

(12,601

)

Prepaid expenses

 

 

(6,161

)

 

 

2,224

 

 

 

1,069

 

Accounts payable

 

 

(3,581

)

 

 

(7,141

)

 

 

(1,474

)

Accrued employee compensation

 

 

(1,018

)

 

 

(145

)

 

 

(584

)

Other assets and liabilities

 

 

(1,690

)

 

 

15,712

 

 

 

7,697

 

Net cash used in operating activities

 

 

(15,647

)

 

 

(6,226

)

 

 

(5,959

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,767

)

 

 

(1,228

)

 

 

(1,569

)

Purchases of software

 

 

(1,250

)

 

 

(1,118

)

 

 

(1,537

)

Net cash used in investing activities

 

 

(3,017

)

 

 

(2,346

)

 

 

(3,106

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from issuance of revolver debt

 

 

40,000

 

 

 

 

 

 

 

Repayment of term loan

 

 

(1,313

)

 

 

(656

)

 

 

(656

)

Payment of debt issuance costs

 

 

 

 

 

(122

)

 

 

 

Issuance of ordinary shares under ESPP

 

 

 

 

 

578

 

 

 

 

Taxes paid related to net share settlement of equity awards

 

 

(15

)

 

 

(48

)

 

 

(148

)

Proceeds from share option exercises

 

 

 

 

 

 

 

 

387

 

Net cash provided by (used in) financing activities

 

 

38,672

 

 

 

(248

)

 

 

(417

)

Effect of exchange rate on cash

 

 

(7

)

 

 

1

 

 

 

16

 

Net increase (decrease) in cash

 

 

20,001

 

 

 

(8,819

)

 

 

(9,466

)

Cash, beginning of period

 

 

18,710

 

 

 

27,529

 

 

 

48,162

 

Cash, end of period

 

$

38,711

 

 

$

18,710

 

 

$

38,696

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

Income taxes paid

 

$

116

 

 

$

960

 

 

$

204

 

Interest paid

 

$

1,030

 

 

$

486

 

 

$

412

 

 

 


CAMBIUM NETWORKS CORPORATION

 

SUPPLEMENTAL FINANCIAL INFORMATION

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

REVENUES BY PRODUCT CATEGORY

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

Point-to-Multi-Point

 

$

19,421

 

 

$

22,575

 

 

$

22,292

 

Point-to-Point

 

 

14,411

 

 

 

21,874

 

 

 

18,008

 

Enterprise

 

 

7,163

 

 

 

(5,478

)

 

 

35,656

 

Other

 

 

1,342

 

 

 

1,235

 

 

 

1,445

 

Total Revenues

 

$

42,337

 

 

$

40,206

 

 

$

77,401

 

 

 

 

 

 

 

 

 

 

 

REVENUES BY REGION

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

North America

 

$

25,049

 

 

$

27,056

 

 

$

47,593

 

Europe, Middle East and Africa

 

 

8,410

 

 

 

3,418

 

 

 

19,708

 

Caribbean and Latin America

 

 

4,892

 

 

 

5,303

 

 

 

3,685

 

Asia Pacific

 

 

3,986

 

 

 

4,429

 

 

 

6,415

 

Total Revenues

 

$

42,337

 

 

$

40,206

 

 

$

77,401

 

 

 

 

 

 

 

 

 

 

 

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 (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.

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 UK and U.S. operations. 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, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

Net (loss) income

 

$

(26,447

)

 

$

(52,854

)

 

$

4,276

 

Interest expense, net

 

 

881

 

 

 

725

 

 

 

597

 

Provision for income taxes

 

 

4,529

 

 

 

10,523

 

 

 

538

 

Depreciation and amortization of software and intangible assets

 

 

2,536

 

 

 

2,414

 

 

 

2,095

 

EBITDA

 

 

(18,501

)

 

 

(39,192

)

 

 

7,506

 

Share-based compensation

 

 

2,586

 

 

 

2,811

 

 

 

2,875

 

Restructuring and other nonrecurring expenses

 

 

377

 

 

 

1,191

 

 

 

 

Adjusted EBITDA

 

$

(15,538

)

 

$

(35,190

)

 

$

10,381

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin

 

 

(36.7

)%

 

 

(87.5

)%

 

 

13.4

%

 


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, 2024

 

 

December 31, 2023

 

 

March 31, 2023

 

GAAP gross profit

 

$

8,685

 

 

$

(11,030

)

 

$

39,660

 

Share-based compensation expense

 

 

33

 

 

 

47

 

 

 

56

 

Amortization of capitalized software costs

 

 

903

 

 

 

818

 

 

 

599

 

Restructuring and nonrecurring expense

 

 

3

 

 

 

69

 

 

 

 

Non-GAAP gross profit

 

$

9,624

 

 

$

(10,096

)

 

$

40,315

 

Non-GAAP gross margin

 

 

22.7

%

 

 

(25.1

)%

 

 

52.1

%

 

 

 

 

 

 

 

 

 

 

GAAP research and development expense

 

$

10,799

 

 

$

13,057

 

 

$

14,262

 

Share-based compensation expense

 

 

945

 

 

 

1,005

 

 

 

1,269

 

Restructuring and other nonrecurring expense

 

 

285

 

 

 

1,145

 

 

 

 

Non-GAAP research and development expense

 

$

9,569

 

 

$

10,907

 

 

$

12,993

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

 

$

9,721

 

 

$

9,726

 

 

$

11,670

 

Share-based compensation expense

 

 

508

 

 

 

547

 

 

 

700

 

Restructuring and other nonrecurring expenses

 

 

18

 

 

 

34

 

 

 

 

Non-GAAP sales and marketing expense

 

$

9,195

 

 

$

9,145

 

 

$

10,970

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expense

 

$

7,510

 

 

$

6,207

 

 

$

6,667

 

Share-based compensation expense

 

 

1,100

 

 

 

1,212

 

 

 

850

 

Restructuring and other nonrecurring expenses

 

 

71

 

 

 

(57

)

 

 

 

Non-GAAP general and administrative expense

 

$

6,339

 

 

$

5,052

 

 

$

5,817

 

 

 

 

 

 

 

 

 

 

 

GAAP depreciation and amortization

 

$

1,633

 

 

$

1,596

 

 

$

1,496

 

Amortization of acquired intangibles

 

 

375

 

 

 

375

 

 

 

374

 

Non-GAAP depreciation and amortization

 

$

1,258

 

 

$

1,221

 

 

$

1,122

 

 

 

 

 

 

 

 

 

 

 

GAAP operating (loss) income

 

$

(20,978

)

 

$

(41,616

)

 

$

5,565

 

Share-based compensation expense

 

 

2,586

 

 

 

2,811

 

 

 

2,875

 

Amortization of capitalized software costs

 

 

903

 

 

 

818

 

 

 

599

 

Amortization of acquired intangibles

 

 

375

 

 

 

375

 

 

 

374

 

Restructuring and other nonrecurring expenses

 

 

377

 

 

 

1,191

 

 

 

 

Non-GAAP operating (loss) income

 

$

(16,737

)

 

$

(36,421

)

 

$

9,413

 

 

 

 

 

 

 

 

 

 

 

GAAP pre-tax (loss) income

 

$

(21,918

)

 

$

(42,331

)

 

$

4,814

 

Share-based compensation expense

 

 

2,586

 

 

 

2,811

 

 

 

2,875

 

Amortization of capitalized software costs

 

 

903

 

 

 

818

 

 

 

599

 

Amortization of acquired intangibles

 

 

375

 

 

 

375

 

 

 

374

 

Restructuring and other nonrecurring expenses

 

 

377

 

 

 

1,191

 

 

 

 

Non-GAAP pre-tax (loss) income

 

$

(17,677

)

 

$

(37,136

)

 

$

8,662

 

 

 

 

 

 

 

 

 

 

 

GAAP provision for income taxes

 

$

4,529

 

 

$

10,523

 

 

$

538

 

Valuation allowance impacts

 

 

11,194

 

 

 

29,841

 

 

 

 

Tax rate change

 

 

 

 

 

(2,845

)

 

 

28

 

Tax impacts of share vesting

 

 

58

 

 

 

169

 

 

 

(99

)

Tax effect of Non-GAAP adjustments

 

 

(1,060

)

 

 

(1,039

)

 

 

(770

)

All other discrete items

 

 

(687

)

 

 

(6,662

)

 

 

(472

)

Non-GAAP (benefit) provision for income taxes

 

$

(4,976

)

 

$

(8,941

)

 

$

1,851

 

Non-GAAP ETR

 

 

28.1

%

 

 

24.1

%

 

 

21.4

%

 

 

 

 

 

 

 

 

 

 

GAAP net (loss) income

 

$

(26,447

)

 

$

(52,854

)

 

$

4,276

 

Share-based compensation expense

 

 

2,586

 

 

 

2,811

 

 

 

2,875

 

Amortization of capitalized software costs

 

 

903

 

 

 

818

 

 

 

599

 

Amortization of acquired intangibles

 

 

375

 

 

 

375

 

 

 

374

 

Restructuring and other nonrecurring expenses

 

 

377

 

 

 

1,191

 

 

 

 

Non-GAAP adjustments to tax

 

 

10,565

 

 

 

20,503

 

 

 

(544

)

Tax effect of Non-GAAP adjustments

 

 

(1,060

)

 

 

(1,039

)

 

 

(770

)

Non-GAAP net (loss) income

 

$

(12,701

)

 

$

(28,195

)

 

$

6,811

 

Non-GAAP fully weighted basic shares

 

 

27,893

 

 

 

27,844

 

 

 

27,397

 

Non-GAAP fully weighted diluted shares

 

 

27,908

 

 

 

27,861

 

 

 

28,314

 

Non-GAAP net (loss) income per Non-GAAP basic share

 

$

(0.46

)

 

$

(1.01

)

 

$

0.25

 

Non-GAAP net (loss) income per Non-GAAP diluted share

 

$

(0.46

)

 

$

(1.01

)

 

$

0.24

 

 


###

Investor Inquiries:

Peter Schuman, IRC

Vice President Investor, Industry Analyst & Public Relations

Cambium Networks

+1 (847) 264-2188

peter.schuman@cambiumnetworks.com