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Operator: Good afternoon. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks’ Fourth Quarter and Full Year 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Please limit yourself to one question and one follow-up question. Thank you. Mr. Peter Schuman, Vice President, Investor and Industry Analyst Relations, you may begin your conference.

Peter Schuman: Thank you, Amy. Welcome, and thank you for joining us today for Cambium Networks fourth quarter and full year 2022 financial results conference call and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO; and Andrew Bronstein, our CFO, are here for today’s call. The financial results press release and CFO commentary referenced on this call are accessible on the investor page of our website and the press release has been submitted on a Form 8-K with the SEC. Certain revisions were made within operating expenses in prior periods to conform to the classifications in the current period. These revisions had no impact to operating income. A copy of today’s prepared remarks will also be available on our investor page at the conclusion of this call.

As a reminder, today’s remarks, including those made during Q&A, will contain forward-looking statements about the company’s outlook and expected performance. These statements are based on current expectations, forecasts, and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not undertake any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments, to conform these statements to actual results or to make changes in Cambium’s expectations or otherwise. It is Cambium Networks policy not to reiterate our financial outlook. We encourage listeners to review the full list of risk factors included in the safe harbor statement in today’s financial results press release.

We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers except where otherwise noted. A reconciliation of non-GAAP measures to GAAP is included in the appendix to today’s financial results press release, which can be found on the investor page of our website and in today’s press release announcing our results. Turning to the agenda. Cambium Networks President and CEO, Atul Bhatnagar, will provide the key investment highlights for the fourth quarter and full year 2022 and Andrew Bronstein, Cambium Networks CFO, will provide a recap of the financial results for the fourth quarter and full year 2022 and present our financial outlook for the first quarter and full year 2023.

Our prepared remarks will be followed by a Q&A session. I’d now like to turn the call over to Atul.

Atul Bhatnagar: Thank you, Peter. Cambium continued growth in our fourth quarter, with revenues of $84.5 million, increasing 4% sequentially, ahead of the high-end of our outlook of between $80 million to $84 million announced during the Q3 2022 quarter call. Profitability remained strong, with a gross margin of 49.6%, near the high-end of the outlook, and EPS of $0.36, exceeding the high-end of the outlook. We had a strong finish to the year in North America, with growth in all major product categories and sequential growth for our Point-to-Multi-Point, PMP solutions. After record breaking results during Q3 2022 that included an incremental $5 million in switching revenues, as expected, our enterprise business returned to a normalized run rate in Q4 2022.

For full year 2022, our Enterprise business grew 64% to $109.8 million, exceeding the high-end of our original forecast. This is after growth of 67% during full year 2021. For 2023, Enterprise growth will be from a much higher base, with our initial forecast of growth for the Enterprise business of 20-30%, as we continue to innovate with new Wi-Fi, switching, and cloud-based software solutions. And we continue to gain market share globally. We’ve grown from approximately 1,500 cumulative Wi-Fi customers at time of our IPO, in mid-2019 to about 18,500 at Q4 2022. We are now at the start of the next wave of high-performance fixed wireless broadband deployments for our PMP business with the ramp of new gigabit solutions including 28 GHz cnWave 5G Fixed products, an acceleration in the growth of our 60 GHz cnWave products, and the introduction of disruptive 6 GHz PMP products during Q4 2022 which delivers industry leading price performance.

Final FCC approval for outdoor use of the 6 GHz spectrum is expected around mid-year 2023. However, the FCC has already started approving Special Temporary Authority Licensing (STA) for proof-of-concept networks. Turning to the results of the fourth quarter 2022, looking at revenues across our product lines, our PMP business revenues increased 14% sequentially and decreased 20% year-over-year, as service providers are beginning to move from our legacy PMP 450 products to the new gigabit technologies. We did see an acceleration of growth for our multi-gig 60 GHz cnWave solutions, as service providers are gaining an understanding of how to deploy the technology at scale, to take advantage of the benefits of multi-gigabit bandwidth, low-latency, and efficiency with hybrid-fiber and cable networks.

The PTP business revenues increased a healthy 38% sequentially, while improving 39% year over-year during Q 2022, due to higher shipments for our Federal Defense Business in North America, as well as growth in EMEA, and CALA, using Cambium’s PTP 700 mission-critical technology for Fixed Wireless Broadband Communications. Cambium has been selected to supply our PTP defense products to over 10 key Programs of Record (POR) for the Department of Defense. We expect continued strong defense shipments during 2023. As expected, our Enterprise business declined sequentially, decreasing by $6.3 million or 17% after record revenues of $38.3 million during Q3 2022, which included the previously mentioned catch-up shipments for switching, while higher by $6.2 million or 24% year-over-year.

The year-over-year growth was driven by increased demand for our Wi-Fi 6 and 6E solutions, switching revenues and growth in our SaaS solutions. For the full year 2022, revenues of $296.9 million, decreased 12% from 2021. The 2022 decline was driven by our PMP products, which declined 44% from the prior year, partially offset by the growth of our Enterprise business which had a record year, increasing 64% for the full year 2022, breaking the $100 million threshold for the first time in Cambium’s history, while our PTP business grew 10% compared to 2021 revenues due to the strength of our Federal defense business. It is notable that our Enterprise business represented 37% of the company revenues during calendar year 2022, compared to 20% of revenues for 2021.

In the long-term, we anticipate our Enterprise and PMP businesses will each represent approximately 40% of our total revenues as we ride the new growth S-Curves, while PTP will represent the remaining 20%. We do foresee the return to modest growth for the PMP business, driven by new product momentum in 6 gigahertz upon the FCC’s approval, expected to drive revenue growth during the second half of the year, as well as the continued ramp of 28 gigahertz and 60 gigahertz millimeter wave solutions, and new 5 gigahertz and 6 gigahertz products for both the ePMP and PMP 450 product lines. Both 60 gigahertz and 28 gigahertz cnWave solutions have recently brought in several multi-million dollar deals. Looking at some notable customer wins and new product developments.

In North America, Salt Lake City placed an order for 60 gigahertz cnWave connectivity as part of a smart city deployment. Cambium was selected for our portfolio breadth and ability to deliver backhaul and access with a single management platform. A division of the third-largest cable television provider in the United States, serving 3.5 million Internet subscribers, introduced a new business service for customers through our system integration partner, FutureTech. The service utilizes Cambium’s 60 gigahertz cnWave solution to fit between fiber and CBRS assets as part of the new private network offering for multi-gigabit connectivity. We had a large order for 60 gigahertz solutions from a Canadian operator in Alberta, MCSnet, for a 60 gigahertz network build-out.

They were attracted to our 60 gigahertz products as it offers gigabit speeds at a much lower total cost of ownership than fiber. They have already deployed in 12 communities so far with a goal of 44 connected communities during 2023. This is an example of where we are seeing a resurgence in our 60 GHz business after an initial period of gestation. In the Europe, Middle East, and Africa region, EMEA, we continued to have healthy demand for our enterprise business and are winning larger projects. Cambium had a customer win with a fiber network operator in South Africa, Isizwe, for our outdoor Wi-Fi with a goal of connecting households with up to 100 Mbps and a disruptive cost model for the consumer. Isizwe aims to increase its number of homes connected from 4,500 in December 2022 to 22,000 in 2023.

In the Asia Pacific APAC region, we landed our first Network-as-a-Service, NaaS win to enable rural connectivity in Sumatra, Indonesia. This first NaaS order in the region is for 500 homes and includes our Wi-Fi and cnMaestro X cloud software. This is in addition to our ePMP 3000 for fixed wireless broadband access. Upon successful deployment of this first order, we expect a larger multi-year volume agreement. And in the Caribbean and Latin America, CALA region, in Brazil, we partnered with Qualcomm, in collaboration with the National Telecommunications Agency, Anatel, and Telium, to demonstrate the first use of the 6 GHz band in an outdoor area in the Campo Belo neighborhood of Sao Paulo. The connection featured Cambium’s outdoor Wi-Fi 6 and 6E access points, 6 GHz ePMP 4600 for fixed wireless infrastructure, cnMatrix wireless savvy switches, and cnMaestro X cloud management software.

The demo became available for two months starting on December 3rd, for visitors in the surrounding area. The demo included the use of the Automated Frequency Coordination, AFC, spectrum sharing platform to ensure that there was no interference with fixed point-to-point systems existing in that region, and to demonstrate its overall speed, performance, and reliability. Turning to upcoming product introductions since our previous quarterly update. While the industry is excited about the future availability of new 6 GHz spectrum to enable the delivery of gigabit data rates to the edge of the network and awaits FCC approval, Cambium also continues to push the envelope with affordable new 5 GHz solutions with our ePMP 4500 featuring 8X8 MU-MIMO, and over 3 Gigabits of capacity with up to 80 MHz channels, and enables non-line-of-sight to select subscribers.

The ePMP 4500 is a powerful and transformative product, which we expect will penetrate the market due to its high performance and affordability compared to other alternatives in the market, especially to take market share from our competition in the service providers space, ahead of the FCC’s approval of 6 GHz spectrum. Looking at our cnMaestro Cloud software, our end-to-end cloud-powered connectivity solution to manage the network from a single pane of glass. The cnMaestro Cloud software continued to experience strong user growth. Total devices under cloud management in Q4 ’22 was over 898,000, an increase of over 4% from Q3 ’22, and up 21% year-over-year. Turning to our Channel. In Q4 ’22, we expanded our channel presence by adding over 425 net new channel partners sequentially, and over 1,300 net new channel partners year-over-year, which represents an increase of over 3% sequentially and 11% year-over-year.

We continued to expand our reach into new customers around the world. I will now turn the call over to Andrew for a review of our Q4 2022 and full year 2022 financial results and Q1 2023 and full year 2023 outlook.

Andrew Bronstein: Thanks, Atul. Cambium reported revenues of $84.5 million for Q4 ’22. Revenues increased by 4% quarter-over-quarter and increased by 7% year-over-year. On a sequential basis for Q4 ’22, revenues were higher by $3.3 million. The higher revenues were primarily the result of increased PTP revenues for defense products, and an increase in PMP products as a result of our 60 GHz cnWave and ePMP products, while enterprise solutions decreased after a record Q3 ’22, which included a $5 million catch-up in switching revenues due to supply chain shortages in previous quarters. For the full year 2022, revenues of $296.9 million decreased by $39.0 million, or 12% compared to the full year 2021. The decrease is a result of lower PMP revenues, which declined by $89.8 million or 44%, compared to 2021 due to product transitions to the next generation 6 gigahertz and 28 gigahertz cnWave 5G Fixed solutions.

We had record enterprise revenues of $109.8 million during 2022, which grew by $42.9 million, or 64% compared to 2021. And our PTP revenues increased by $6.3 million to $67.1 million, or an improvement of 10% compared to full year 2021, due to strong demand for our defense products. Moving to our gross margin. Our non-GAAP gross margin of 49.6% was better than anticipated, increasing by 540 basis points compared to Q4 2021. The year-over-year increase in our non-GAAP gross margin was the result of higher volumes and a greater mix of higher margin enterprise and PTP products and lower freight costs. On a sequential basis, non-GAAP gross margin was lower by 170 basis points compared to Q32022. The lower quarter-over-quarter non-GAAP gross margin in Q4 2022 was the result of a higher mix of lower margin PMP products, and as expected a decline in enterprise switching revenues, offset in part by higher PTP revenues and higher component inventory costs.

In Q4 2022, our non-GAAP gross profit dollars of $41.9 million increased by $7.1 million compared to the prior year due to higher volumes and improved mix of PTP and enterprise products, and lower shipping costs, and increased by $276,000 sequentially, mostly a result of higher revenues, offset in part by the higher component costs due to inflation. For the full year 2022, non-GAAP gross margin improved by 130 basis points to 49.5%, compared to 48.2% for 2021, due to an improved mix of our higher margin enterprise and PTP product lines. Our longer term goal remains a consistent non-GAAP gross margin target of 51% to 52% on an annual basis. Non-GAAP operating expenses, including amortization, in Q4 2022 decreased by $348,000 when compared to Q4 2021, and stood at $28.7 million, or 34.0% of revenues.

The decrease in operating expenses compared to the prior year period was primarily due to lower variable compensation and tight controls around headcount, offset by higher sales and marketing costs related to travel and trade shows, and higher wages, while R&D remained flat. When compared to Q3 2022, non-GAAP operating expenses increased by approximately $850,000. Quarter-over-quarter sales and marketing expenses increased primarily because of higher wages and sales accelerators related to our enterprise business, and increased trade show and travel expenditures, while R&D increased as a result of higher staffing costs related to development work on new products, and G&A decreased due to tight cost controls. For the full year 2022, non-GAAP operating expenses decreased by $1.6 million and stood at $112.7 million, compared to $114.3 million for 2021.

The lower non-GAAP operating expenses during 2022 reflect less variable compensation, offset by higher wages due to inflation. We will continue to maintain our strong cost controls. Non GAAP operating margin for Q4 2022 was 15.6%, up from 7.3% during Q4 2021 and down from 17% of revenues in Q3 22. For the full year 2022, our non GAAP operating margin was 11.6% compared to 14.1% in 2021, primarily reflecting lower revenues and less scale resulting in fewer gross profit dollars, despite an improved mix of revenues. Non-GAAP net income for Q4 22 was $10.3 million or $0.36 cents per diluted share, above our previous outlook of between $0.23 to $0.27 per diluted share, and compared to $4.4 million or $0.16 cents per diluted share for Q4 21 and non-GAAP net income of $11.3 or $0.40 cents per diluted share during Q3 2022.

The higher non-GAAP net income compared to the prior year period was primarily due to higher gross profit dollars, while lower net income compared to the prior quarter’s results was primarily a result of higher sales and marketing expenses. For the full year 2022, non-GAAP net income was $26.9 million or $0.94 per diluted share, compared to $35.6 million or $1.26 per diluted share in 2021. Adjusted EBITDA for Q4 2022 was $14.3 million or 16.9% of revenues, compared to $6.7 million or 8.6% of revenues for Q4 2021, and compared to $14.7 million or 18.2% of revenues for Q3 2022. The full year 2022 adjusted EBITDA was $38.8 million or 13.1% of revenues, compared to $51.2 million or 15.3% of revenues for the full year 2021. Our operating model remains solid.

We remain committed to consistently driving our adjusted EBITDA to our long-term target of 18% to 19% of revenues. Now moving on to cash flow. Cash provided by operating activities was $4.0 million for Q4 2022, and compares to $5.6 million for Q4 2021, and $2.2 million for Q3 2022. Our cash flow was negatively impacted as we increased inventories and materials to support new products and to take advantage of supply chain opportunities for the anticipated growth of our business, and we increased accounts receivables as a result of higher revenues. Now turning to the Balance Sheet. Our cash totaled $48.2 million as of December 31, 2022, an increase of $3.3 million from Q3 2022. The sequential increase in cash primarily reflects collections on higher revenues and changes in working capital.

Our net inventories of $57.1 million in Q4 2022 increased by approximately $23.3 million year-over-year, while increasing $6.4 million from Q3 2022. Inventories were higher sequentially because of an increase in inventories as we continued to grow our business and take advantage of supply chain opportunities. The increased level of inventories reflects anticipated higher demand for Federal products, Enterprise solutions, and the ramp of new PMP products during the second half of calendar year 2023. In summary, the fourth quarter played out better than anticipated. As predicted, our PMP business grew sequentially. Our gross margin remained strong. We continue to see improvement in our supply chain environment. Our backlog remains solid, and we are at the start of new product cycles.

During 2023, we expect to gain scale, improve operational efficiency, and make significant progress towards achieving our long-term target operating model. As expected, while the supply chain continues to improve, there are still areas of component shortages in certain products, and longer lead-times as compared to pre-COVID levels. Moving to the first quarter and full year 2023 financial outlook. Cambium Networks’ financial outlook does not include the potential impact of any possible future financial transactions, acquisitions, pending legal matters, or other transactions. Considering our current visibility as of today, our Q1 2023 financial outlook is expected to be as follows; revenues between $74 to $80 million, representing growth of approximately 20% to 29% year-over-year, and a decrease of between 5% to 12% sequentially, due in part to seasonality in our PMP business and slowing world economies, while our defense business in PTP remains strong.

Non-GAAP gross margin between 49.2% to 50.8%; non-GAAP operating expenses between $30.6 million to $31.6 million; and non-GAAP operating income between $5.8 million to $9 million. Interest expense, net of approximately $600,000, and non-GAAP net income between $4.1 million to $6.8 million or net income per diluted share between $0.14 to $0.23. Adjusted EBITDA between $6.8 million to $10; and adjusted EBITDA margins between 9.2% to 12.5%. A non-GAAP effective income tax rate of approximately 17% to 21.0% and approximately 28.9 million weighted average diluted shares outstanding. Cash requirements are expected to be as follows; paydown of debt of $700,000, cash interest of approximately $400,000, and CapEx of between $3 million to $4 million.

Full year 2023 financial outlook is expected to be as follows. We expect revenues of between $327 million and $345 million, representing approximately 10% to 16% growth. Non-GAAP gross margin approximately 50%. Non-GAAP net income between $33.9 million and $36.4 million or net income per diluted share of between $1.17 to $1.25. Adjusted EBITDA margin between 14.5% to 15%. And for the year, CapEx to be approximately $14 million to $18 million, mainly driven by an expansion in our R&D labs and equipment, along with software costs in connection with new products. I will now turn the call back to Atul for some closing remarks.

Atul Bhatnagar: We delivered a solid quarter of results with increased revenues, excellent profitability, and a strong balance sheet, significant new product introductions, and a return to growth for our PMP business, driven by 60 GHz cnWave, 28 GHz cnWave 5G Fixed, and the launch of affordable 6 GHz fixed wireless PMP solutions. Our Enterprise business remains strong, led by Wi-Fi 6 and 6E, wireless savvy switching products, and an increased offering of our Software-as-a-Service solutions and excellent onboarding of new large managed service providers. We expect the Enterprise business to grow between 20% and 30% during calendar year 2023. The Cambium ONE Network integrated wireless fabric has become a reality, providing customers ease of deployment, scalability of networks, and lower total cost of ownership as the world deploys next-generation high-performance wireless broadband networks.

During 2022, we diversified and made our business more resilient. We remain focused on judiciously managing our costs, improving our operations, continuing to invest in innovative products to maintain our technology edge, and expect increased scale will benefit our future operating results. As we look to 2023, our 6 gigahertz, 28 gigahertz cnWave 5G Fixed technology, millimeter wave products and upcoming fiber products, will expand our markets and continue to propel Cambium in the fixed wireless broadband market. Our defense business is expected to continue growing, as national security has become a global issue. And our reach into Managed Service Providers and Multi-Dwelling Units will broaden and strengthen our Enterprise business and position us for continued strong growth.

We will expand our software and services offerings and add even more features, security, and functionality into our flagship cnMaestro platform. Our focus will be on solutions that our customers want, keeping a keen eye on how our products mesh with customer applications and network automation. Cambium has now graduated from building just radios to delivering an exceptional customer experience through our extensive broadband solutions that brings delight and confidence. Given the humanitarian crisis unfolding in Turkey last week, Cambium is contributing wireless broadband solutions in the country for connectivity to loved ones to support the citizens and relief workers in the hardest hit areas. I’d like to show my appreciation for our employees, partners, and customers for their resilience as we returned to growth during the second half of calendar 2022.

This concludes our prepared remarks. So, with that, I’d like to turn the call over to the Amy and begin the Q&A session.

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Operator: We will now open the call for your questions. And our first question comes from Simon Leopold with Raymond James. Your line is open.

Simon Leopold: Thanks for taking the question. First, I just wanted to knock out a quick clarification. In the prepared remarks, Atul, I think you’ve talked about the mix being roughly 40% PMP, 40% Wi-Fi or enterprise and 20% PTP, but I wasn’t sure what timeframe you were thinking about those targets, whether that was your 2023 view or something longer term? And then I’ve got a follow-up.

Atul Bhatnagar: Yes. Thanks, Simon. That’s the long-term model. Generally long-term model for us is a two to three year timeframe. And especially, PMP is a very key foundation of Cambium with the resurgence of new products innovations we are doing with gigabit connectivity, millimeter wave, 5G. So, that just tells you the confidence we have that in the long-term model you will see PMP and enterprise probably equal, and PTP about 20%.

Simon Leopold: Thanks. And then a little bit more, I guess, a trending question is around, I get the impression there’s some controversy around the BEAD, or government Broadband Equity, Access, Deployment Program funding that if I’m understanding it correctly, they looked at areas where WISP are providing service and considered them unserved or underserved. And I guess the thought process is that there be some risks that the government funds with pay to build out competition to your WISP customers. And I guess, I’m just trying to get a better understanding, I think the WISP association is lobbying the NTIA, if you could maybe tell us a little bit about what’s going on and where we are in terms of solving this problem?

Atul Bhatnagar : Sure. So Simon, let me address on both RDOF as well as BEAD. The RDOF which is Rural Digital Opportunity Fund actually just approved two of our customers for total of about $700 million. And they plan to deploy 6-gigahertz for that gigabit connectivity. So in the art of work, the 6-gigahertz CBRS all that stuff is giving mission critical connectivity. In the BEAD world, as we said, this is the federal infrastructure initiative, as we said, it will be probably early 24 when the dissemination will happen. And I think the results of our all the interactions we are having within different folks, it’s very clear that wireless will provide a very affordable mission critical infrastructure, the BEAD has provided in CAF I and CAF II, the Connect America Fund I and Connect America Fund II.

So we are pretty confident that economics and the results of RDOF success will prevail in all the government installations and also many of the fiber customers of Cambium are actually using it very successfully in tough terrains and some localities where fiber cannot be deployed. So for many practical reasons, I think you will see BEAD also adopted, but RDOF is taking the initiative probably a little earlier.

Simon Leopold: Thank you for that.

Operator: Thank you One moment for our next question. And our next question comes from Samik Chatterjee with JPMorgan. Your line is open.

Angela Jin : Hi. Good afternoon. This is Angela Jin on for Samik Chatterjee. I just wanted to ask one question on the customer verticals. So in the service provider vertical, are you seeing any sort of pause in span from the mature providers and then on the enterprise side, all can we hacve — doesn’t really serve that many traditional enterprise players? Are you seeing the macro impacting hospitality, education, health care verticals and their budgets heading into 2023? And then I have one follow-up.

Atul Bhatnagar : Sure. Thanks, Angela. Let me address the service provider first. So in the service provider, they are moving to next gen architecture actually Cambium has used the pandemic timeframe to completely create the new architectures for gigabit. That’s what we did last two years. So what we’re finding is that if someone is selling last generation architecture with flow speed, you’re absolutely right. They are not going to adopt that. But if you have gigabit connectivity, you have 60 gigahertz 5G standards, we are seeing significant activity in our funnel. And the number of customers, number of POCs even 20 increase quite a bit. So the key message, you have to have the next generation architecture. And that’s the platform for the future for Cambium.

And we are seeing good growth there. In Enterprise we focus on hospitality, education and our challenge is to manage service providers and they value either deployment, they value economics, and those are the two key differentiations Cambium has. And that’s why we are posting 50% plus year-over-year type of growth. So we are not seeing any slowdown there. But even there, Angela, you have to have very high performance Wi Fi 6 and 6E products again, a network architecture. And that has been our key message new growth S-curves are what’s driving the growth right now. Do you have a follow-up?

Angela Jin: Yeah. Yeah. So I guess, moving to my follow-up. So given the ramp in 5G Investments and build outs that are going on in India, could you maybe just walk there. What is your exposure to India and your thoughts on potential growth in that region?

Atul Bhatnagar: So Angela, India’s 5G, we are very engaged, I think it will take still a year to 1.5 year for the dust to settle down, because their frequency is I think, 26 gigahertz or so. And we have a very good understanding of what will it take. In general, 5G fixed addressable markets between, 2021 to 2026 is going to go from 890 million to 1.6 billion, that’s 100% increase in those, five, six years. So we think that that 28 gigahertz will be a key market, including India, but gestation might take good solid year to 18 months, but very engage in that market.

Angela Jin: Got it. Thank you.

Atul Bhatnagar: Thanks, Angela.

Operator: Thank you, one moment for our next question. And our next question comes from Scott Searle with ROTH. Your line is open.

Scott Searle: Hi. Good afternoon. Thanks for taking the questions. To a lot of new products are going to go out the door. I’m not sure, if I heard a number. But I was wondering if you could give us some idea of the magnitude of the contribution of 28 gig and 60 gig, I know its early days in the just completed fourth quarter. And 60 gig as well. And it was starting to ramp up. I’m wondering, what sort of opportunities you’re seeing with the other newer products? And then add a follow-up?

Atul Bhatnagar: Sure. Thanks, Scott. Let me go one-by-one. So 60 gigahertz we have now as we mentioned, we have couple of million dollars. You know, in every new technology, I look for three pillars. When do you cross 100,000 in revenue? When do you cross half million revenue and when do you cross the million. So we are now beginning to see many customers in 60 gigahertz crossing million. What that basically means is they are deploying North 1000 subscribers. And as Cambium history shows, every new platform we bring first we crossed the 1000 barrier, then we crossed 10,000 subscriber barriers, then because 100,000 subscriber barriers, and it’s a four year cycle. So the key message and 60 I think we are now scaling, our customers are scaling the gestation, for many of the POC we talked about last, three, four quarters has happened.

And this cycle will continue. And where we see acceleration is Wireless Internet Service Providers with, Municipalities which are using it for Public Wi Fi, Video Surveillance, and Enterprises, particularly Logistics, Outdoor Wi Fi, Campus Connectivity. These are the segments where 60 is expanding. So feel pretty good about that. As we as we exit as Q4. We felt now our customers are beginning to scale. So that’s 60. 28 gigahertz will not have as many customers. But the deal sizes of 28 gigahertz will be probably in many cases in a five to 10 times, because it’s unlicensed frequency and it is very much adopted by Tier 1s and Tier 2s. So what you see between 28 and 60? IF 60 will be lots of deals, lots of customers 1000s of them. Whereas 28 will be probably hundreds, but the deal size on 28 will be much larger, we have about 20 POCs, 2-0, 20 POCs, worldwide, and eight are in production right now.

And that tells you how fast Cambium is moving. And just if you look at 2021, we only have two or three. So in last 12 months, our POCs have increased, production customers have increased. And as I mentioned, many, many times in the last few quarters, deal sizes is much, much larger, and their duration is also, three to four years, not just one or two years. And let me touch very briefly on 6 gigahertz. We shipped Q4, our 6 gigahertz products, and that will support 10 To 20 POCs, many of the POCs are turning into now production, though FCC has not yet approved the final €“ they’re not given the final green signal. But many customers believe that, the cost of deployment on towers is very expensive. So they are deploying 6 gigahertz. And some of them are also using the 5 gigahertz version, which is the ePMP 4500, as we mentioned.

So all these areas are growing that’s why we are saying 2023 For PMP will be expansion more second half. Because many of these by the time they enter production and scale and all that you will see the results and when we fast forward two, three years. We believe PMP 40%, enterprise 40%, PTP 20% is probably the right steady state distribution.

Scott Searle: Got you. Very helpful. And if I could for a follow-up on the 6 gigahertz front, we’re waiting for certification and approval from the SEC for the ASC, before I just restore to go into more commercial production. So with that in mind, I’m wondering, how you’re thinking about the ramp up into the second half of this year? And what’s going to constitute success kind of exiting 2023. And as we think about 2024, how big of an opportunity is that? The 6 gigahertz product line, what would be success. And if I could just briefly kind of dissect between the US international markets been a lot of focus, near-term on the US opportunity. But this is certainly a global market in terms of what’s going on with 6 gigahertz and regulatory approval and the allocation of frequencies. So I’m wondering how you’re seeing that shape up on that front? And how we should be thinking about that over the next couple years? Thanks.

Atul Bhatnagar: Excellent question, Scott. So first of all, 6 gigahertz United States is leading. I think every other country is observing Brazil is one of the first ones to come on the bandwagon. And in our prepared remarks, we just say, in Sao Paulo, we work with Brazilian authorities like NFL, and we showed that capability, I think you will see many progressive countries adopt 6 gigahertz. And there’s a reason for that, 5 gigahertz is a very well established frequency. But it is getting noisy. So when government gives you in about 1200 megahertz of, very clean spectrum, that’s a big deal. Like in two decades, there’s nothing like this has ever happened. So it’s a big deal. So our belief is that US will lead and many 5 gigahertz widths particularly are waiting for €“ to expand and the cost advantage and the performance advantage from 5 gigahertz to 6 gigahertz continue.

Remember, when you go to the 60 gigahertz, 28 gigahertz there’s a technological change. And that’s why the gestation is needed. That’s why the experience is needed before you scale. But when it comes to six gigahertz, it’s a €“ it’s an adjacency. They know how to do it. So I think the 6 gigahertz volume is starting the second half 2023 is still early, it will ratchet up in 2024 and 2025. And this has been our experience when we introduced Medusa in 2016, with our 5 gigahertz architecture and 3 gigahertz architecture, it ran for next four or five years. And that’s why I always emphasize that. So I think 2023 still for 6 in second half is a start, but it has a long legs after that. And we are feeling very excited, because our customers are getting excited, because they can see the price performance is of a different magnitude.

That’s why I always call it S-curve. It’s a new S-curve.

Scott Searle: Great. Thank you. I’ll get back in the queue.

Atul Bhatnagar: Thanks, Scott.

Operator: Thank you. One moment for our next question. And our next question comes from Erik Suppiger with JMP Securities. Your line is open.

Erik Suppiger: Yes. Thanks for taking the question and just following up a little bit more on some of the product segments. When — how much of your shipments on the enterprise side are Wi-Fi 6 or Wi-Fi 6E at this point. And then secondly, any comments in terms of timing around your fiber products, when you think those will start hitting the market and if they would be a meaningful contributor in 2023?

Atul Bhatnagar: Yes. Thanks. All right. First of all, Wi-Fi 6 transition in Cambium portfolio has happened very successfully. I would say majority of our shipments as of today are Wi-Fi 6 and 6E. . So that gives you a pretty good indication, majority. And this was a bet we made almost 18 months to two years back and has played very well. In terms of fiber timing, we are in beta. We will ship volume Q2 timeframe. And our customers are pulling us actually, because one of the things Cambium is known for is ease of deployment, single pane of glass for management. And they are saying, since the government dollars are going to be coming on that side as well, Cambium why don’t you provide us a nice solution. So our plan is where wireless stops fiber can take over, where fiber stops wireless can take over, single pane of glass to manage and focus on ease of deployment.

Erik Suppiger: Just real quick on the on the Wi-Fi 6, are you shipping much Wi-Fi 6E at this point?

Atul Bhatnagar: Some. Yes, some. But I think Wi-Fi 6E has so much horsepower in the outdoor arena and indoor arena that I think as of now, some, but I would say most of it is Wi-Fi 6. But that will change in probably 2023 second half and 2024.

Erik Suppiger: Very good. Thank you.

Atul Bhatnagar: Thanks, Erik.

Operator: Thank you. One moment for our next question. And our next question comes from Paul Essi with William K. Woodruff. Your line is open.

Paul Essi: Yes. Thank you for taking my question. Well, my questions have been answered. But I’ve got a couple of quick ones. In the software area, what percent of the software revenues are now within a SaaS model? And what is the average, is it a one year, two year, three year contract that you sign with them?

Atul Bhatnagar: Yes. Hi. Thanks for the question. So as a percentage of our total revenue, if you look at SaaS type revenue, that’s recurring in nature, both software and support services together is about 5% to 6% of our total revenue. And most of those deals, they do vary one year, two year, three, even some five, but I would say on average, they’re three year deals.

Paul Essi: Okay. Okay, because I noticed your deferred revenues are starting to build and I just wanted to —

Atul Bhatnagar: Exactly.

Paul Essi: — get an idea.

Atul Bhatnagar: That’s why. Yes.

Paul Essi: Okay. And second question. Real briefly, have you seen any labor issues? Some of the other companies have expressed concern that the year or two, there might be some difficulty getting this product out in meeting some of the specs that the government’s putting into the grants they’re providing?

Atul Bhatnagar: Paul, I didn’t understand labor issue. Could you be more specific?

Paul Essi: Well, labor €“ labor issues with rolling out the €“ rolling out the, you know, installations, they might be your bottleneck?

Atul Bhatnagar: No, no, we have not heard that. We had those issues, I would say in 2020 first half and then 2020 second half little bit.2021,people figured out how to work.w2022 no, I would not say we have heard labor issues on at least for our products.

Paul Essi: Okay. Well, thank you very much. That’s all I have.

Atul Bhatnagar: Thanks, Paul.

Operator: Thank you. one moment for our next question. And our next question comes from Tim Savageaux with Northland Capital Markets. Your line is open.

Tim Savageaux: Hey, good afternoon. And nice quarter. So I wanted to contrast a lot of these positives that you’ve been discussing in terms of PMP, 6-gigahertz new products 28-gig, I would imagine the fiber product would go in that bucket. Some funding for customers from the government. So there’s a lot of positives there, you appear to be guiding to very, very modest growth is PMP in 2023. Like, you know, low-single digits, maybe. And I know there’s kind of some recovery, maybe from the seasonal decline in Q1, but, you know, I guess how do we contrast, are we seeing kind of a fall off quicker than expected fall off of legacy products on the one hand, that’s kind of short-term, and then longer-term to get to your target, even if you assume Wi Fi is slowing.

I mean, in the next few years past 2023 year growth rates kind of need to be in PMP sort of need to be where your enterprise growth rate is now 25%, 30%, something like that. Is that something you have confidence in, or a line of sight to?

Atul Bhatnagar: Yes, Tim, thank you for the question. An excellent question. Let me give you more insight into this. As I said earlier, I look for million dollar deals. But then I know the technologies are scaling. I think that’s happening on 60-gigahertz. And even as we speak, some of the networks we are conceiving, even with 60-gigahertz, the numbers are now beginning to be 5,000 to 10,000 subscribers. So that gives us the confidence that these new platforms are not scaling, customers are deploying, and they’re getting the confidence that they can truly provide fiber-like speed wirelessly, that’s 60. 28 is a €“ 28 is driven by 5G standards. And I mentioned earlier, 2026, the TAM of that market for fixed wireless is about 1.6 billion.

And we have just started the 5G route. I think what you will €“ the contrast you will see between 60 and 28, 28, we are now as I said, we have 20 POCs, 18 production, and customers are beginning to scale. The difference will be the deal size on 28 will be far larger, as I said earlier, over a three, four year period, five to 10 times the revenue total deal size, because this is a license frequency, somebody has paid money, they really want to deploy. But for fixed wireless broadband, lifecycle is about four to five years still from the start to finish. So I think what we are describing is probably the first 20, 25 percentile in 2023, and probably half of 2024. And then we — and this is what we have experienced the last 10 years. So we are sharing with you based on how we have seen these technologies just state they have a long, really long, long life in that sense.

So I think that gives us the confidence that as the gestation happens, or next three years, that 40-40-20 PMP Enterprise and PTP is very, very realistic. Because we know the market sizes. We know where our strengths are. We know where our sales teams and channels are. We are excellent channels, especially for PMP markets. So — and this is what we did last two years post-COVID, just focused on these next generation platforms. And now we’re beginning to get the confidence just scaling that the keywords, the scaling, and they’re being deployed. Fiber, while we are excited fiber will go through the same thing. Our enterprise quarters used to be 2 million, 3 million, 4 million for past few years. It took us time to kind of learn, scale, deploy.

And now we are cranking north of $25 million quarter. So that’s what we do work with customers closely with them learn and scale.

Andrew Bronstein: And just give you a little bit more color as well, that you’re right that there will be some level of seasonality in the first quarter with PMP and revenues in PMP. In the first half of the year, when you look at it on a year-over-year basis will decline. But in the second half of the year, and this is how we define getting back to how we define success is that we’ll be exiting the year with double-digit year-over-year and sequential quarter increases as a result of the new products coming into market and PMP and that will continue, we believe to accelerate it to 2024.

Tim Savageaux: Thanks very much. Sorry. Thanks very much. That was great color.

Atul Bhatnagar: Thanks, Tim.

Operator: Thank you. One moment for our next question. And the next question comes from George Notter with Jefferies. Your line is open.

George Notter: Hi, guys. Thanks very much. In the past, you guys have talked a little bit about what channel inventory looks like, whether it was kind of above or below average or average. Could you just give us any comments on where you think that is right now?

Andrew Bronstein: Yeah. So when you break it down, I think that the channel inventory on the enterprise side is a little bit higher than what it’s been running at over the course of the past 12 months or so. Some of that is because of improvements in supply chain and lead times getting a little bit shorter as well and the ability to deliver product into the distributors. So I think that’s what we’re seeing on enterprise slightly higher on the PMP side, in terms of our inventory out of distributors, it’s actually going the other direction. And that’s a sign of the distributors getting ready for some of our new products as well. So, I think it’s somewhat balanced out in that fashion.

George Notter: Got it. And then I guess I was also just going to ask about supply chain. I think you kind of answered it there. I mean, are you still seeing any big holdups on supply chain golden screw type issues, or do you think products are flowing pretty freely now from a manufacturing perspective?

Atul Bhatnagar: The George, first of all our all manufacturing subcontractors in the sites are open and operating. As I said, supply chain is improving. But I don’t think it’s not yet normalcy. I think it’d be probably mid 2023 when it will reach — for us at least mid-2023 pre-COVID normalcy. There are still shortages on certain parts, but by and large things have improved. And I think even after the Chinese New Year, which is always something we watch carefully. This year, no hiccups, factories are fully open, logistics and freight are continually improving. So, so far, so good.

George Notter: Great, super. Thank you very much.

Atul Bhatnagar: Thanks, George.

Operator: Thank you. And we have a follow-up question from Scott Searle with ROTH Capital Partners. Your line is open.

Scott Searle: Hey, just quick follow-up on the 6-gig front. I know you’re looking at rolling a dual mode 6-gigahertz solution product. I thought, it was in the second quarter around CBRS, right. So it helps you circumvent some issues as it relates to reliability and bead funding. Just want to check on the progress of that, make sure that that’s still tracking for the second quarter. And what the interest level is that you’re seeing at least early on in dialogues with wireless ISPs and other carriers on that front? Thanks.

Atul Bhatnagar: Yeah. So Scott, the combo product of five and six will very much be driven by the chips availability. In the beginning, the 5-gigahertz and 6-gigahertz are two different products, and CBRS. CBRS 1 is a 3-gigahertz separate frequency, completely different product. So I think this year, you will see us very much gain the experience. And then focus on the combo side based on our experience with the customers, and also based on availability of chips and all that. So I don’t think the combo part will come right away, because I think most of our customers right now are either deploying five or six. And CBRS is a completely different product.

Scott Searle: Right. Thank you.

Atul Bhatnagar: Thanks, Scott.

Operator: Thank you. And our next question comes from Timothy Horan with Oppenheimer. Your line is open.

Timothy Horan: Thanks, guys. So you have five, six, or I guess almost seven new major products coming out here now. Can you talk a little bit about, last time you had this many new services, or are certain new products coming out and what the impact was? And I mean, should we be expecting a material step up and growth in 2024-2025 based on all the commentary that you have here? Thanks.

Atul Bhatnagar: Thanks, Tim. Yeah. So while there are new products, if you look at when did we introduce them, a lot of it is about gestation. 60 gigahertz actually was introduced by us, almost 18 months back, it’s just that the gestation is now reaching a point where customers understand how to deploy, they’re scaling. 28 gigahertz we introduced about, year back or so something like that. And that is also beginning to now enter a point where they’re going to scale. So I think when we say new products, while — we use a new platform, some of them were introduced year or year-and-half back, the completely new stuff, which is coming now is a 6-gigahertz, which we just introduced in Q4 last year about three months back or so. So these are different waves.

And I think the way to think about this is as customers are scaling the network, they will not deploy all of them at the same time. They will deploy depending on the region, terrain, they’ll deploy different frequency and these will overlap over time. And that’s what gives us resiliency, because we now we have different frequency for different countries and regions. We have different performances and different cost structures, like 28 is a license frequency. Only Tier 1s and Tier 2s can afford that, so we are now working with them versus six is a lot of risk will use — 6-gigahertz is an extension of 5-gigahertz. And 60-gigahertz is going both in enterprise, as I explained, as well as municipalities and west. So what you’re seeing from Cambium is a broad wireless fabric serving some very key segments.

And each one of them takes a little different time to just stay.

Timothy Horan: You know, I understand, but I mean, they’re all kind of hitting the S-curve of the adoption cycle, in the next six to eight — in the next six to 12 months. I mean, they’re all hitting almost at the same time. And the same thing with the Wi-Fi products, it feels like I know, they’ve all been addressed at different times. But for a whole bunch of reasons. It does feel like we should really see a real acceleration and 2024 and 2025. And I’m not trying to put words in your mouth, but it does seem like they’re all really hitting for 2024.

A €“ Atul Bhatnagar: Yes, Tim, I agree with you. I think starting in the second half, you will see some of the acceleration, as we mentioned, in 6-gigahertz, for example, but 2024 2025, we will benefit from all these investments we have done in last almost 18 months. That’s an accurate statement.

Timothy Horan: Thank you

Andrew Bronstein: Our product cycles for the older products as well, that that just in terms of its lifecycle will go the other direction, as well. So just keep that in mind.

Timothy Horan: And do have any — I know it’s early to give guidance. But I mean, all things being equal, it should be up from this year’s growth rate. Is that pretty fair?

Andrew Bronstein: We really having gone through that level of guidance for our analysis for 2024 yet but we do — we are like we said, we are excited about the new S-curves, especially when you look out over the next 12 months. And you look at 60 years product and the level of volume that that could mean in starting a new S-curve in the PMP side of the business.

Timothy Horan: And do we have any sense of the TAM of the 6-gigahertz product?

A €“ Atul Bhatnagar: Yes, I think the way, Tim, you want to think about this is 6-gigahertz is an extension of 5. And the five €“ 5-gigahertz point to multipoint was about a $1 billion TAM. The way you want to think about this is that $1 billion will churn and extend into the 6-gigahertz. That’s the €“ probably the easiest way to think about it.

Timothy Horan: Thank you.

Operator: I’m showing no further questions at this time. I would now like to turn the conference back to Peter Schuman, Vice President, Investor & Industry Analyst Relations for closing remarks.

Peter Schuman: Thank you, Amy. During Q1 2023 Cambium Networks will be presenting a meeting with Investors on March 7 at the JMP Securities Technology Conference and on March 14 at the Ross Annual Conference. In the meantime, you’re always welcome to contact our Investor Relations Department at 847-264-2188 with any questions that arise. Thank you for joining us and this concludes today’s call.

Operator: Ladies and gentlemen, that concludes today’s quarterly earnings call. Thank you for your participation. You may now log off.