Cambium Networks Corporation (NASDAQ:CMBM) Q2 2023 Earnings Call Transcript

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AFC, our current thinking is and again, remember as the government is working on approvals for 6 GHz, it’s difficult to predict, it’s their schedule, but our feeling is that September, October timeframe is when 6 GHz most probably will be approved and AFC will be unleashed and algorithms will be working and customers can deploy networks. Most of the networks are in POCs right now and as we said earlier about 25 POCs we are in already and we are very much looking forward to turning that on.

Andrew Bronstein: Yes, in terms of the forecast, just to go through some of the details here. So first, PMP is somewhat unchanged from where it was when we spoke last. And you’ll see that for the year, we’re expecting flattish to plus or minus 1% or so in terms of revenue growth. We do expect both Q3 and Q4 in PMP to show sequential and year-over-year growth. Point-to-Point, as we’ve said before as well. We have very good visibility in terms of opportunities within the defense sector especially and we continue to expect that we’re going to see a record year in revenues in PTP and we’re probably going to see in Q3 and Q4 somewhat consistent revenue that we had in Q2. And that’s going to generate at the end of the year a very strong mid to high 30s growth rate for the year in terms of what we’re currently anticipating.

And the enterprise sector is going to take some time. As we said, we’re going to be looking at the first half of next year probably Q2 when we get to that more normalized level. And we’ve got to eat through the inventory that’s in the channel and we’re not counting on a significant ramp-up in revenue, although we are anticipating some level of very modest increase in Q3 and Q4. We are looking at working through that channel inventory with each of our major distributors and seeing that further growth into next year and getting to more of a normalized $20 million to $30 million quarterly level in Q2 of next year.

Scott Searle: Great. Thank you.

Operator: Please hold for our next question. Our next question comes from George Notter at Jefferies LLC. Please go ahead.

George Notter: Hi, guys. Thanks a lot. Just continuing with the inventory discussion. So it sounds like your plan to clear out inventory with a distribution channel is to just incentivize them. Is it just simply a price cutting exercise or are there more actions that you can take there? I’d be curious to hear. And then also, can you tell us how much inventory you think is really out there and how much inventory is out there in excess of normal levels? Any sense for that would be great.

Atul Bhatnagar: Yes, George, when we say working with channel, I think it’s not just price cutting. I think, first of all, we are working with each one of them, the way we did in fixed wireless broadband. We looked at we’d work with each distributor and also figured out what projects they have engaged our sales team, worked with them on a very individualized basis. In addition to that, the demand generation programs we have for Enterprise, they’re also focused on those segments of hospitality, multi-dwelling units, education. So it’s a combination of all of those things working with them, pricing plus demand generation plus supporting them with whatever marketing they need with our MDF funds, all of that.

Andrew Bronstein: Yes, and the extra incentives are also to get new customers in new geographies and for those to be longer lasting in essence and get into those customers and focus on the verticals that we’ve spoken about in the past. So that’s number one. Number two, as I mentioned earlier in the call, I’m not sure if you were on or not, but we spoke about the fact that we’re expecting Enterprise to get to a level, normalized level of a $20 million to $30 million quarterly run rate by Q2 of next year. And the sales out this past quarter were $17 million. So although revenue was only six, we had sales out of 17. And a portion of that differential was a result of inventory that was in essence, exchanged for other inventory, and in some cases, it was exchanged for PMP inventory.

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