Strong Demand and Bookings Bolster, Confidence of Continued
Growth and Margin Expansion
Management Reiterates Full-Year 2024 Outlook
ROSH
HA'AIN, Israel,
May 7,
2024 /PRNewswire/ -- Ceragon Networks Ltd (NASDAQ:
CRNT), the global innovator and leading solutions provider of 5G
wireless transport, today reported its financial results for the
first quarter period ended March 31,
2024.
Q1 2024 Financial Highlights:
- Revenues of $88.5 million, up
6.1% year-over-year
- Operating income of $4.2
million on a GAAP basis, or $7.6
million on a non-GAAP basis
- Net Income of $0.4 million on
a GAAP basis, and net income of $4.7
million on a non-GAAP basis
- EPS of $0.00 per diluted share
on a GAAP basis, or $0.05 per diluted
share on a non-GAAP basis
Q1 2024
Business Highlights:
- North America:
- Continued strong bookings, supported by demand for 5G
capabilities
- Strongest region in terms of revenue, with record
quarterly revenues
- India:
- Record quarterly bookings, including substantial orders
from the approximately $150 million
project from global integrator, in support of a network
modernization project for a Tier 1 Operator
Doron Arazi, CEO, commented:
"Ceragon continues to experience high demand for its solutions, and
our increased marketing efforts primarily in the private networks
space enable us to increase our funnel in this segment in general
and in North America particularly.
Bookings were particularly strong in the first quarter, primarily
due to the large orders booked in India, which give us higher confidence in our
outlook for the full year. Our expanded offerings are ideally
suited for the needs of customers in our key growth geographies,
and this is driving interest from current and prospective
customers."
Primary First Quarter 2024 Financial Results:
Revenues were $88.5
million, up 6.1% from $83.4
million in Q1 2023.
Gross profit was $32.1
million, giving us a gross margin of 36.2%, compared
to gross margin of 33.8% in Q1 2023.
Operating income was $4.2 million compared to
$4.7 million in Q1 2023.
Net income was $0.4
million, or $0.00 per diluted
share, compared to $2.0 million, or
$0.02 per diluted share in Q1
2023.
Non-GAAP results were as follows: Gross margin was
36.7%, operating profit was $7.6
million, and net income of $4.7
million, or $0.05 per diluted
share.
Balance Sheet
Cash and cash equivalents were $28.8 million on March 31,
2024, compared to $28.2
million on December 31,
2023.
For a reconciliation of GAAP to non-GAAP results, see the
attached tables.
Revenue Breakout by Geography:
|
Q1
2024
|
North
America
|
33 %
|
India
|
29 %
|
EMEA
|
17 %
|
Latin
America
|
12 %
|
APAC
|
9 %
|
Outlook
Management reiterated its 2024 outlook:
- Revenue of $385 million to
$405 million, representing growth of
11% to 17% compared to 2023 revenue. This guidance includes the
contribution from Siklu, which was acquired in December 2023.
- Non-GAAP operating margins are targeted to be at least 10% at
the mid-point of the revenue guidance.
- As a result, management expects increased non-GAAP profit and
positive free cash flow for the full year of 2024.
Conference Call
The Company will host a Zoom web conference today at
8:30 a.m. ET to discuss the results,
followed by a question-and-answer session for the investment
community.
Investors are invited to register by clicking here. All relevant
information will be sent upon registration.
If you are unable to join the live call, a replay will be
available on our website at www.ceragon.com within 24 hours after
the call.
About Ceragon Networks
Ceragon Networks Ltd. (NASDAQ: CRNT) is the global innovator and
leading solutions provider of 5G wireless transport. We help
operators and other service providers worldwide increase
operational efficiency and enhance end customers' quality of
experience with innovative wireless backhaul and fronthaul
solutions. Our customers include service providers, public safety
organizations, government agencies and utility companies, which use
our solutions to deliver 5G & 4G broadband wireless
connectivity, mission-critical multimedia services, stabilized
communications, and other applications at high reliability and
speed.
Ceragon's unique multicore technology and disaggregated approach
to wireless transport provides highly reliable, fast to deploy,
high-capacity wireless transport for 5G and 4G networks with
minimal use of spectrum, power, real estate, and labor resources.
It enables increased productivity, as well as simple and quick
network modernization, positioning Ceragon as a leading solutions
provider for the 5G era. We deliver a complete portfolio of turnkey
end-to-end AI-based managed and professional services that ensure
efficient network rollout and optimization to achieve the highest
value for our customers. Our solutions are deployed by more than
600 service providers, as well as more than 1,600 private network
owners, in more than 130 countries. For more information please
visit: www.ceragon.com
Ceragon Networks® and FibeAir® are registered trademarks of
Ceragon Networks Ltd. in the United
States and other countries. CERAGON ® is a trademark of
Ceragon Networks Ltd., registered in various countries. Other names
mentioned are owned by their respective holders.
Safe Harbor
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Securities
Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended, and the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are
based on the current beliefs, expectations and assumptions of
Ceragon's management about Ceragon's business, financial condition,
results of operations, micro and macro market trends and other
issues addressed or reflected therein. Examples of forward-looking
statements include, but are not limited to, statements regarding:
projections of demand, revenues, net income, gross margin, capital
expenditures and liquidity, competitive pressures, order timing,
supply chain and shipping, components availability; growth
prospects, product development, financial resources, cost savings
and other financial and market matters. You may identify these and
other forward-looking statements by the use of words such as "may",
"plans", "anticipates", "believes", "estimates", "targets",
"expects", "intends", "potential" or the negative of such terms, or
other comparable terminology, although not all forward-looking
statements contain these identifying words.
Although we believe that the projections reflected in such
forward-looking statements are based upon reasonable assumptions,
we can give no assurance that our expectations will be obtained or
that any deviations therefrom will not be material. Such
forward-looking statements involve known and unknown risks and
uncertainties that may cause Ceragon's future results or
performance to differ materially from those anticipated, expressed
or implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: the effects of
global economic trends, including recession, rising inflation,
rising interest rates, commodity price increases and fluctuations,
commodity shortages and exposure to economic slowdown; The effects
of the evolving nature of the war situation in Israel and the related evolving regional
conflicts; risks associated with delays in the transition to 5G
technologies and in the 5G rollout; risks relating to the
concentration of our business on a limited number of large mobile
operators and the fact that the significant weight of their
ordering, compared to the overall ordering by other customers,
coupled with inconsistent ordering patterns, could negatively
affect us; risks resulting from the volatility in our revenues,
margins and working capital needs; disagreements with tax
authorities regarding tax positions that we have taken could result
in increased tax liabilities; the high volatility in the
supply needs of our customers, which from time to time lead to
delivery issues and may lead to us being unable to timely fulfil
our customer commitments; and such other risks, uncertainties
and other factors that could affect our results of operation, as
further detailed in Ceragon's most recent Annual Report on Form
20-F, as published on March 21, 2024,
as well as other documents that may be subsequently filed by
Ceragon from time to time with the Securities and Exchange
Commission.
We caution you not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. Ceragon does
not assume any obligation to update any forward-looking statements
in order to reflect events or circumstances that may arise after
the date of this release unless required by law.
While we believe that we have a reasonable basis for each
forward-looking statement contained in this press release, we
caution you that these statements are based on a combination of
facts and factors currently known by us and our projections of the
future, about which we cannot be certain. In addition, any
forward-looking statements represent Ceragon's views only as of the
date of this press release and should not be relied upon as
representing its views as of any subsequent date. Ceragon does not
assume any obligation to update any forward-looking statements
unless required by law.
The results reported in this press-release are preliminary
and unaudited results, and investors should be aware of possible
discrepancies between these results and the audited results to be
reported, due to various factors.
Ceragon's public filings are available on the Securities and
Exchange Commission's website at www.sec.gov and may also be
obtained from Ceragon's website at www.ceragon.com.
Ceragon Investor & Media Contact:
Rob Fink
FNK IR
Tel. 1+646-809-4048
crnt@fnkir.com
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(U.S. dollars in
thousands, except share and per share data)
|
(Unaudited)
|
|
Three months
ended
March
31,
|
|
2024
|
|
2023
|
Revenues
|
88,498
|
|
83,409
|
Cost of
revenues
|
56,430
|
|
55,233
|
|
|
|
|
Gross profit
|
32,068
|
|
28,176
|
|
|
|
|
Operating
expenses:
|
|
|
|
Research and
development, net
|
8,847
|
|
7,938
|
Sales and
marketing
|
11,261
|
|
10,196
|
General and
administrative
|
5,863
|
|
5,324
|
Restructuring and
related charges
|
1,416
|
|
-
|
Acquisition- and
integration-related charges
|
462
|
|
-
|
|
|
|
|
Total operating
expenses
|
27,849
|
|
23,458
|
|
|
|
|
Operating
income
|
4,219
|
|
4,718
|
|
|
|
|
Financial expenses and
others, net
|
2,861
|
|
1,458
|
|
|
|
|
Income before
taxes
|
1,358
|
|
3,260
|
|
|
|
|
Taxes on
income
|
955
|
|
1,292
|
|
|
|
|
Net income
|
403
|
|
1,968
|
|
|
|
|
Basic net income per
share
|
0.00
|
|
0.02
|
|
|
|
|
Diluted net income per
share
|
0.00
|
|
0.02
|
|
|
|
|
Weighted average number
of shares used in computing basic net income per share
|
85,520,712
|
|
84,354,297
|
|
|
|
|
Weighted average number
of shares used in computing diluted net income per share
|
87,584,818
|
|
84,992,254
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(U.S. dollars in
thousands)
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2024
|
|
2023
|
|
Unaudited
|
|
Audited
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
28,783
|
|
28,237
|
Trade receivables,
net
|
97,386
|
|
104,321
|
Inventories
|
61,029
|
|
68,811
|
Other accounts
receivable and prepaid expenses
|
17,434
|
|
16,571
|
|
|
|
|
Total current assets
|
204,632
|
|
217,940
|
|
|
|
|
NON-CURRENT
ASSETS:
|
|
|
|
Severance pay and
pension fund
|
4,926
|
|
4,985
|
Property and equipment,
net
|
32,836
|
|
30,659
|
Operating lease
right-of-use assets
|
18,063
|
|
18,837
|
Intangible assets,
net
|
16,274
|
|
16,401
|
Goodwill
|
7,749
|
|
7,749
|
Other non-current
assets
|
1,899
|
|
1,954
|
|
|
|
|
Total non-current
assets
|
81,747
|
|
80,585
|
|
|
|
|
Total assets
|
286,379
|
|
298,525
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Trade
payables
|
56,511
|
|
67,032
|
Deferred
revenues
|
4,198
|
|
5,507
|
Short-term
loans
|
30,500
|
|
32,600
|
Operating lease
liabilities
|
3,734
|
|
3,889
|
Other accounts payable
and accrued expenses
|
25,454
|
|
23,925
|
|
|
|
|
Total current
liabilities
|
120,397
|
|
132,953
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
Accrued severance pay
and pension
|
8,988
|
|
9,399
|
Deferred
revenues
|
670
|
|
670
|
Operating lease
liabilities
|
12,997
|
|
13,716
|
Other long-term
payables
|
8,310
|
|
7,768
|
|
|
|
|
Total long-term
liabilities
|
30,965
|
|
31,553
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Share
capital
|
224
|
|
224
|
Additional paid-in
capital
|
438,412
|
|
437,161
|
Treasury shares at
cost
|
(20,091)
|
|
(20,091)
|
Other comprehensive
loss
|
(8,743)
|
|
(8,087)
|
Accumulated
deficit
|
(274,785)
|
|
(275,188)
|
|
|
|
|
Total shareholders'
equity
|
135,017
|
|
134,019
|
|
|
|
|
Total liabilities and shareholders'
equity
|
286,379
|
|
298,525
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOW
|
(U.S. dollars, in thousands)
|
(Unaudited)
|
|
|
Three months
ended
March
31,
|
|
2024
|
|
2023
|
Cash flow from
operating activities:
|
|
|
|
Net income
|
403
|
|
1,968
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,939
|
|
2,553
|
Loss from sale of
property and equipment, net
|
-
|
|
10
|
Stock-based
compensation expenses
|
904
|
|
1,169
|
Decrease in accrued
severance pay and pensions, net
|
(352)
|
|
(64)
|
Decrease (increase) in
trade receivables, net
|
6,776
|
|
(290)
|
Decrease (increase) in
other assets (including other accounts
receivable, prepaid
expenses, other non-current
assets, and the effect of exchange
rate
changes on cash and cash equivalents)
|
(731)
|
|
996
|
Decrease
in inventory
|
7,369
|
|
3,166
|
Decrease in operating
lease right-of-use assets
|
932
|
|
1,011
|
Decrease in trade
payables
|
(11,486)
|
|
(6,790)
|
Increase (decrease) in
other accounts payable and accrued expenses
(including other long-term payables)
|
2,102
|
|
(294)
|
Decrease in operating
lease liability
|
(1,020)
|
|
(1,366)
|
Increase
(decrease) in deferred
revenues
|
(1,309)
|
|
1,440
|
Net cash
provided by operating activities
|
6,527
|
|
3,509
|
|
|
|
|
Cash flow from
investing activities:
|
|
|
|
Purchases of property
and equipment, net
|
(3,393)
|
|
(3,142)
|
Software development
costs capitalized
|
(313)
|
|
(1,288)
|
Net cash used in
investing activities
|
(3,706)
|
|
(4,430)
|
|
|
|
|
Cash flow from
financing activities:
|
|
|
|
Proceeds from exercise
of stock options
|
258
|
|
-
|
Proceeds from
(repayments of) bank credits and loans, net
|
(2,100)
|
|
4,350
|
Net cash
provided by (used in) financing activities
|
(1,842)
|
|
4,350
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(433)
|
|
46
|
|
|
|
|
Increase in cash and
cash equivalents
|
546
|
|
3,475
|
|
|
|
|
Cash and cash
equivalents at the beginning of the period
|
28,237
|
|
22,948
|
|
|
|
|
Cash and cash
equivalents at the end of the period
|
28,783
|
|
26,423
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
|
(U.S. dollars in
thousands, except share and per share data)
|
(Unaudited)
|
|
|
Three months
ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
GAAP Cost
of revenues
|
56,430
|
|
55,233
|
Stock-based
compensation expenses
|
(131)
|
|
(180)
|
Amortization of
acquired intangible assets
|
(189)
|
|
-
|
Excess cost on acquired
inventory in business combination (*)
|
(124)
|
|
-
|
Non-GAAP Cost
of revenues
|
55,986
|
|
55,053
|
|
|
|
|
GAAP Gross
profit
|
32,068
|
|
28,176
|
Stock-based
compensation expenses
|
131
|
|
180
|
Amortization of
acquired intangible assets
|
189
|
|
-
|
Excess cost on acquired
inventory in business combination (*)
|
124
|
|
-
|
Non-GAAP Gross
profit
|
32,512
|
|
28,356
|
|
|
|
|
GAAP Research and
development expenses
|
8,847
|
|
7,938
|
Stock-based
compensation expenses
|
(152)
|
|
(246)
|
Non-GAAP Research and
development expenses
|
8,695
|
|
7,692
|
|
|
|
|
GAAP Sales and
marketing expenses
|
11,261
|
|
10,196
|
Stock-based
compensation expenses
|
(296)
|
|
(376)
|
Amortization of
acquired intangible assets
|
(271)
|
|
-
|
Non-GAAP Sales and
marketing expenses
|
10,694
|
|
9,820
|
|
|
|
|
GAAP General and
administrative expenses
|
5,863
|
|
5,324
|
Stock-based
compensation expenses
|
(325)
|
|
(368)
|
Non-GAAP General and
administrative expenses
|
5,538
|
|
4,956
|
|
|
|
|
GAAP Restructuring and
related charges
|
1,416
|
|
-
|
Restructuring and
related charges
|
(1,416)
|
|
-
|
Non-GAAP Restructuring
and related charges
|
-
|
|
-
|
|
|
|
|
GAAP Acquisition- and
integration-related charges
|
462
|
|
-
|
Acquisition- and
integration-related charges
|
(462)
|
|
-
|
Non-GAAP Acquisition-
and integration-related charges
|
-
|
|
-
|
|
|
|
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in
thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
Three months
ended
March
31,
|
|
2024
|
|
2023
|
|
|
|
|
GAAP Operating
income
|
4,219
|
|
4,718
|
Stock-based
compensation expenses
|
904
|
|
1,170
|
Amortization of
acquired intangible assets
|
460
|
|
-
|
Excess cost on acquired
inventory in business combination (*)
|
124
|
|
-
|
Restructuring and other
charges
|
1,416
|
|
-
|
Acquisition-
and integration-related
charges
|
462
|
|
-
|
Non-GAAP Operating
income
|
7,585
|
|
5,888
|
|
|
|
|
GAAP Financial expenses
and others, net
|
2,861
|
|
1,458
|
Leases – financial
income
|
112
|
|
358
|
Non-cash revaluation
associated with business combination
|
(673)
|
|
-
|
Non-GAAP Financial
expenses and others, net
|
2,300
|
|
1,816
|
|
|
|
|
GAAP Tax
expenses
|
955
|
|
1,292
|
Non-cash tax
adjustments
|
(413)
|
|
(853)
|
Non-GAAP Tax
expenses
|
542
|
|
439
|
|
|
|
|
GAAP Net
income
|
403
|
|
1,968
|
Stock-based
compensation expenses
|
904
|
|
1,170
|
Amortization of
acquired intangible assets
|
460
|
|
-
|
Excess cost on acquired
inventory in business combination (*)
|
124
|
|
-
|
Restructuring and other
charges
|
1,416
|
|
-
|
Acquisition- and
integration-related charges
|
462
|
|
-
|
Leases – financial
income
|
(112)
|
|
(358)
|
Non-cash revaluation
associated with business combination
|
673
|
|
-
|
Non-cash tax
adjustments
|
413
|
|
853
|
Non-GAAP Net income
|
4,743
|
|
3,633
|
|
|
|
|
GAAP Basic net income
per share
|
0.00
|
|
0.02
|
|
|
|
|
GAAP Diluted net income
per share
|
0.00
|
|
0.02
|
|
|
|
|
Non-GAAP Diluted net
income per share (**)
|
0.05
|
|
0.04
|
|
|
|
|
(*) Consists of
charges to cost of revenues for the difference between the fair
value of acquired inventory in business
combination, which was recorded at fair value, and the actual cost
of this inventory, which impacts the Company's gross
profit.
(**) Weighted average
number of shares used in computing diluted net income per share is
the same as in GAAP
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SOURCE Ceragon Networks Ltd.