Ceragon Networks Ltd. (NASDAQ:CRNT) Q4 2022 Earnings Call Transcript

Doron Arazi: So first of all, hi, Brian and obviously thank you for joining the call. So the trajectory, as Ronen said, is a positive trajectory. Still within quarters, there could be some fluctuations because of revenue mix between regions. But the general trajectory is to continue and see the percentages going up. So if we ended up on, was it 31.8% for 2022. I think as a target, we want to increase 2023, by at least 1%. Do we have a chance to do better? Yes, but this is a target taking into account all aspects and factors that are impacting our gross margins.

Brian Kinstlinger: In a period where inflation maybe is modest, obviously, not today, in a period where the supply chain is not a challenge at all to you, is the long-term goal to be above 35%?

Doron Arazi: Yes. We said that already. We put some sort of a range last time that we discussed that because the situation was much more turbulent than it is now. And obviously, the more we see the market stabilize, the more we feel comfortable to aim towards the higher end of the range. Originally, we’re indicating 34% to 36%. So already kind of indicator of 35%, there could be very probable scenarios where we, in the long run, go beyond 35%.

Brian Kinstlinger: Okay. My other question is if you could discuss at a high level the M&A pipeline? Is this going to be an area of focus for the company? And if so, what is it you hope to accomplish? Is it more international expansion? Is it complementary technologies, increased scale? Thank you.

Doron Arazi: Yeah. So obviously, this is something that I cannot discuss very freely. All I can say is that our strategy is basically to increase our portion, especially in the segments of private networks and small operators. We see huge opportunities there. And in order to take a bigger market share, we will look for either a faster attainment of customers’ M&A or for some augmenting technologies, products that can help us provide end-to-end network solutions to these players. So these are basically the main focus areas when we are looking into potential M&As.

Brian Kinstlinger: Great, thank you.

Operator: Thank you. Our next question today comes from the line of Scott Searle from ROTH Capital. Please go ahead.

Doron Arazi: Hi, Scott.

Scott Searle: Hey, good morning. Good afternoon, Doron and Ronen. Thanks for taking the questions. I just wanted to get some clarification on the sequential outlook. It sounds like there was $2 million to $3 million that slipped out due to customer delivery schedules. And it sounds like another $2 million to $3 million in terms of component availability. So is that correct? We had about $5 million or so slip out. So as we’re looking into March, what are you guys thinking about in terms of the sequential progression. Typically, there’s seasonality where it’s down. Do we not see that now because of what sounds like you’ve already recognized in the March quarter?? And then for all of 2023, the guidance of 10% to 17% growth is very healthy. I wonder if you could give us some color in terms of the geographies, specifically where you’re kind of seeing a lot of that strength.

Doron Arazi: Yeah, so first of all, you are right on spot. We expect that Q1 will be stronger than the usual. So the seasonality that we usually have will be by far lower, if not even kind of evened out due to the slippage of this level of revenues that you just mentioned. So generally speaking, we believe and we plan for a strong Q1 in terms of revenue. As to the other question, can you remind me?