Cambium Networks Corporation CMBM reported soft second-quarter 2024 results, with the top and bottom lines missing the respective Zacks Consensus Estimate. The leading wireless solutions provider recorded a year-over-year revenue contraction due to a decline in net sales, high inventory levels and macroeconomic headwinds. High incentives and discounts to distributors also hurt revenues.
Net Income
On a GAAP basis, the company reported a net loss of $9.1 million or a loss of 33 cents per share compared with a net loss of $2.6 million or a loss of 10 cents per share a year ago. The downturn was primarily attributable to a significant revenue decline.
Non-GAAP net loss was $7.1 million or a loss of 25 cents per share against a net income of $0.9 million or 3 cents per share in the year-ago quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 21 cents.
Cambium Networks Corporation Price, Consensus and EPS Surprise 
Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote
Revenues
Quarterly net sales decreased considerably to $45.9 million from $59.5 million in the year-ago quarter. The net sales decline in the Point-to-Multi-Point (PMP) and Point-to-Point (PTP) businesses hurt the top line. The top line missed the consensus estimate of $47 million.
By product category, revenues from PMP were $19.6 million compared with $26.7 million a year ago. Inventory adjustments and the timing of the FCC’s approval of the 6 GHz spectrum affected demand from service providers.
Revenues from the PTP business were down to $13.6 million from $25.1 million in the year-ago quarter. Delays in the U.S. federal budgetary allocations for defense sales affected the PTP segment sales. Revenues from the Enterprise business witnessed a sharp improvement to $11.3 million from $6.4 million in the year-ago quarter.
Region-wise, revenues from North America decreased to $20.6 million from $39.5 million in the year-ago quarter. Net sales in the EMEA region more than doubled to $15 million from $6.8 million. Revenues from the Asia Pacific fell to $5 million from $7.2 million in the year-earlier quarter. Revenues from the Caribbean and Latin America region declined from $6 million to $5.3 million.
Other Details
Non-GAAP gross profit was $15.4 million for a corresponding margin of 33.5% compared with respective figures of $29.9 million and 50.3% in the year-ago quarter. Lower volumes of high-margin Enterprise products, low freight capitalization and elevated inventory levels adversely impacted the gross margin. Non-GAAP operating loss was $7.9 million against an operating income of $1.6 million in the prior-year quarter.
Cash Flow & Liquidity
In the June quarter, Cambium generated $2.4 million in cash from operating activities against cash utilization of $4.5 million in the prior-year quarter. As of Jun 30, 2024, the company had $42.6 million in cash with $65.7 million in long-term debt.
Outlook
For the third quarter of 2024, revenues are estimated to be in the range of $43-$48 million. Non-GAAP gross margin is projected to be 41.5-43.5%. Non-GAAP operating expenses are expected to be $23.4-$24.4 million. The company anticipates a non-GAAP net loss of $3.8-$5.4 million or a loss of 14-19 cents per share.
For 2024, revenues are estimated to be in the range of $180-$190 million. Non-GAAP gross margin is projected to be about 37%. The company anticipates a non-GAAP net loss of $24.6-$29.4 million or a loss of 87 cents to $1.04 per share.
Cambium is taking active initiatives to optimize cost structure. Its strategy to identify and invest in key growth areas is likely to bring long-term benefits. Management expects the normalization of channel inventory for the Enterprise business to take a considerable amount of time. FCC’s approval of Cambium’s affordable 6 GHz solutions will likely boost the PMP business’s prospects. The company anticipates revenues in the PTP business to improve as defense allocation picks up.
Zacks Rank
Cambium currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Keysight Technologies, Inc. KEYS is due to release third-quarter fiscal 2024 earnings on Aug 20. The Zacks Consensus Estimate for earnings is pegged at $1.35 per share, implying a decline of 38.4% from the year-ago reported figure.
Keysight has a long-term earnings growth expectation of 5.5%. KEYS delivered an average earnings surprise of 4.4% in the last four reported quarters.
Workday, Inc. WDAY is slated to release second-quarter fiscal 2025 earnings on Aug 22. The Zacks Consensus Estimate for earnings is pegged at $1.63 per share, indicating growth of 14% from the year-ago reported figure.
Workday has a long-term earnings growth expectation of 18.7%. WDAY delivered an average earnings surprise of 10.9% in the last four reported quarters.
Ubiquiti Inc. UI is slated to release fourth-quarter fiscal 2024 earnings on Aug 23. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a decline of 3.5% from the year-ago reported figure.
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