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Cambium (CMBM) Earnings and Revenues Miss Estimates in Q3
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Cambium Networks Corporation (CMBM - Free Report) reported soft third-quarter 2023 results, with the top and bottom lines missing the Zacks Consensus Estimate. The leading wireless solutions provider recorded a year-over-year revenue contraction due to a decline in net sales in the Enterprise business, high inventory levels and macroeconomic headwinds.
However, total devices under cnMaestro Cloud management software crossed an all-time-high of 1 million, marking 17% year-over-year growth, which is a positive.
Net Income
On a GAAP basis, the company reported a net loss of $26.2 million or a loss of 95 cents per share against a net income of $9.4 million or 34 cents per share a year ago. The downturn was primarily attributable to a significant revenue decline.
The non-GAAP net loss was $12.1 million or a loss of 44 cents per share against a net income of $11.3 million or 40 cents per share in the year-ago quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 13 cents.
Cambium Networks Corporation Price, Consensus and EPS Surprise
Quarterly net sales declined to $43 million from $81.2 million reported in the year-ago quarter. Revenue growth was affected by a 93% year-over-year sales decline in the Enterprise business due to weak demand in North America, Europe and the Middle East. The net sales decline in the Point-to-Multi-Point (PMP) business also negatively impacted the top line. The top line missed the consensus estimate of $46 million.
By product category, revenues from PMP were $23.6 million compared with $26.1 million a year ago. Inventory adjustments and the timing of the FCC’s approval of 6 GHz spectrum affected demand from service providers. However, a solid momentum for 28 GHz fixed products partially reversed the declining trend. The top line fell short of our revenue estimate of $30.7 million.
PTP business revenues marginally rose to $15.8 million from $15.4 million in the year-ago quarter. U.S. federal budgetary issues significantly impacted Cambium defense sales in the quarter. Net sales missed our revenue estimate of $25.4 million. Revenues from the Enterprises business witnessed a sharp decline to $2.5 million from $38.3 million in the year-ago quarter. Top line missed our revenue estimate of $6.3 million.
Region-wise, revenues from North America decreased to $17.8 million from $30.1 million in the year-ago quarter. Net sales in the EMEA region declined to $14.3 million from $29.3 million in the prior-year quarter. Revenues from the Asia Pacific declined to $5.3 million from $12.9 million in the year-earlier quarter. Revenues from the Caribbean and Latin America region fell from $8.9 million to $5.7 million.
Other Details
Non-GAAP gross profit was $11.9 million for a corresponding margin of 27.7% compared with respective figures of $41.6 million and 51.3% in the year-ago quarter. Lower volumes of high-margin Enterprise products, low freight capitalization and elevated inventory levels impacted the gross margin. Non-GAAP operating loss was $15.5 million against an operating income of $13.8 million in the prior-year quarter.
Cash Flow & Liquidity
In the September quarter, Cambium utilized $0.2 million against an operating cash flow of $2.2 million in the prior-year quarter. As of Sep 30, 2023, the company had a $27.5-million cash balance with $22.6 million long-term debt.
Outlook
For the fourth quarter of 2023, revenues are estimated to be in the range of $45-$50 million. Non-GAAP gross margin is projected to be 38-45%. Non-GAAP operating expenses are expected at $25.7-26.7 million. The company anticipates a non-GAAP net loss of $4-7.5 million or a loss of 14-27 cents per share.
Cambium is taking active initiatives to optimize cost structure. Its strategy to identify and invest in key growth areas will likely 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 solid revenues from defense, as demand in the PTP business remains strong.
Zacks Rank & Stock to Consider
Cambium currently has a Zacks Rank #3 (Hold).
Model N Inc , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
MODN provides revenue management solutions for life sciences and technology companies, including applications for configuration, price, quote, rebate management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Cambium (CMBM) Earnings and Revenues Miss Estimates in Q3
Cambium Networks Corporation (CMBM - Free Report) reported soft third-quarter 2023 results, with the top and bottom lines missing the Zacks Consensus Estimate. The leading wireless solutions provider recorded a year-over-year revenue contraction due to a decline in net sales in the Enterprise business, high inventory levels and macroeconomic headwinds.
However, total devices under cnMaestro Cloud management software crossed an all-time-high of 1 million, marking 17% year-over-year growth, which is a positive.
Net Income
On a GAAP basis, the company reported a net loss of $26.2 million or a loss of 95 cents per share against a net income of $9.4 million or 34 cents per share a year ago. The downturn was primarily attributable to a significant revenue decline.
The non-GAAP net loss was $12.1 million or a loss of 44 cents per share against a net income of $11.3 million or 40 cents per share in the year-ago quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 13 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 declined to $43 million from $81.2 million reported in the year-ago quarter. Revenue growth was affected by a 93% year-over-year sales decline in the Enterprise business due to weak demand in North America, Europe and the Middle East. The net sales decline in the Point-to-Multi-Point (PMP) business also negatively impacted the top line. The top line missed the consensus estimate of $46 million.
By product category, revenues from PMP were $23.6 million compared with $26.1 million a year ago. Inventory adjustments and the timing of the FCC’s approval of 6 GHz spectrum affected demand from service providers. However, a solid momentum for 28 GHz fixed products partially reversed the declining trend. The top line fell short of our revenue estimate of $30.7 million.
PTP business revenues marginally rose to $15.8 million from $15.4 million in the year-ago quarter. U.S. federal budgetary issues significantly impacted Cambium defense sales in the quarter. Net sales missed our revenue estimate of $25.4 million. Revenues from the Enterprises business witnessed a sharp decline to $2.5 million from $38.3 million in the year-ago quarter. Top line missed our revenue estimate of $6.3 million.
Region-wise, revenues from North America decreased to $17.8 million from $30.1 million in the year-ago quarter. Net sales in the EMEA region declined to $14.3 million from $29.3 million in the prior-year quarter. Revenues from the Asia Pacific declined to $5.3 million from $12.9 million in the year-earlier quarter. Revenues from the Caribbean and Latin America region fell from $8.9 million to $5.7 million.
Other Details
Non-GAAP gross profit was $11.9 million for a corresponding margin of 27.7% compared with respective figures of $41.6 million and 51.3% in the year-ago quarter. Lower volumes of high-margin Enterprise products, low freight capitalization and elevated inventory levels impacted the gross margin. Non-GAAP operating loss was $15.5 million against an operating income of $13.8 million in the prior-year quarter.
Cash Flow & Liquidity
In the September quarter, Cambium utilized $0.2 million against an operating cash flow of $2.2 million in the prior-year quarter. As of Sep 30, 2023, the company had a $27.5-million cash balance with $22.6 million long-term debt.
Outlook
For the fourth quarter of 2023, revenues are estimated to be in the range of $45-$50 million. Non-GAAP gross margin is projected to be 38-45%. Non-GAAP operating expenses are expected at $25.7-26.7 million. The company anticipates a non-GAAP net loss of $4-7.5 million or a loss of 14-27 cents per share.
Cambium is taking active initiatives to optimize cost structure. Its strategy to identify and invest in key growth areas will likely 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 solid revenues from defense, as demand in the PTP business remains strong.
Zacks Rank & Stock to Consider
Cambium currently has a Zacks Rank #3 (Hold).
Model N Inc , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
MODN provides revenue management solutions for life sciences and technology companies, including applications for configuration, price, quote, rebate management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.