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Cambium (CMBM) Q1 Earning Beat Estimates, Revenues Rise Y/Y

Cambium Networks Corporation CMBM reported healthy first-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The leading wireless solutions provider reported higher revenues year over year, driven by positive demand trends for enterprise and Point-To-Point products and improved supply situation.

Net Income

On a GAAP basis, quarterly net income was $4.3 million or 15 cents per share against a loss of $1.6 million or a loss of 6 cents per share in the prior-year quarter. Net sales growth and strong cost discipline supported the bottom line during the quarter.

Non-GAAP net income came in at $6.8 million or 24 cents per share compared with $0.3 million or a penny per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents.

Cambium Networks Corporation Price, Consensus and EPS Surprise

 

Cambium Networks Corporation price-consensus-eps-surprise-chart | Cambium Networks Corporation Quote

 

Revenues

During the quarter, Cambium generated revenues of $77.4 million, up 25% from $61.9 million reported in the prior-year quarter. The year-over-year improvement was propelled by growth in Enterprise and Point-To-Point (PTP) products. Lower net sales in Point-to-Multi-Point (PMP) revenues partially reversed this positive trend. The top line marginally beat the Zacks Consensus Estimate of $77 million.

By product category, quarterly revenues at PMP came in at $22.3 million compared with $30.9 million a year ago. The declining demand trends from service provider owing to transition from PMP 450 products to Cambium’s new gigabit technologies hurt net sales from this segment.

Revenues from PTP business rose to $18 million in the first quarter from $14.7 million in the prior-year quarter. The company’s PTP products witnessed a solid momentum in several deal wins in EMEA (Europe, Middle East and Africa) and CALA (Caribbean and Latin America). Robust growth in defense business also supported revenue growth from this segment.

During the first quarter, revenues at Enterprises surged to $35.6 million from $15.5 million in the year-ago quarter. Increasing demand for company’s wireless solutions and innovative software improvements to support service providers led to a net sales gain in this segment.  

Region wise, revenues from North America rose to $47.6 million from $28.3 million in the year-ago quarter. Revenues from EMEA declined to $19.7 million from $20.3 million in the prior-year quarter. The company witnessed a top-line decline from the CALA region, as revenues fell from $5.1 million in the year-ago quarter to $3.7 million in the first quarter. Revenues from Asia-Pacific declined to $6.4 million from $8.1 million in the prior-year quarter.

Other Details

Non-GAAP gross profit increased to $40.3 million from $29.6 million for respective margins of 52.1% and 47.8%. The upside can be attributed to higher volumes and improved mix of enterprise and PTP products. Non-GAAP operating income rose to $9.4 million from $1 million in the year-ago quarter. Non-GAAP adjusted EBITDA totaled $10.4 million compared with $1.9 million a year ago, for respective margins of 13.4% and 3.1%.

Cash Flow & Liquidity

During the quarter, Cambium utilized $6 million in the first quarter 2023 compared with $19.2 million cash utilization in the prior-year quarter. As of Mar 31, 2023 the company had a $38.7 million cash balance with $23.8 million long term debt.

Outlook

For the second quarter of 2023, revenues are expected in the range of $72-$80 million, indicating growth of approximately 4-15% year over. Non-GAAP earnings are anticipated in the band of $4.2-$7.6 million or 15-27 cents per share. Non-GAAP operating income is projected between $5.9 million and $10.1 million, while adjusted EBITDA is likely to be in the range of $6.9-$11.1 million, with a corresponding margin between 9.6% and 13.9%.

For 2023, management estimates revenues in the range of $327-$337 million. Non-GAAP gross margin is approximated at 50.9%. Non-GAAP net income is expected in the band of $33.7-$36 million or $1.18-$1.26 earnings per share. The company is planning to maintain its cost-control initiatives and management is conservative about revenue growth rate owing to the persistence of uncertainty in the global economy.

Zacks Rank & Stocks to Consider

Cambium currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

InterDigital, Inc. IDCC, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%.

It is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.

Meta Platforms Inc. META, sporting a Zacks Rank #1, delivered an earnings surprise of 15.46%, on average, in the trailing four quarters. Meta Platforms is the world’s largest social media platform. The company’s portfolio offering evolved from a single Facebook app to multiple apps like photo and video sharing app Instagram and WhatsApp messaging app owing to acquisitions.

Meta is considered to have pioneered the concept of social networking, which is why it enjoys a first mover’s advantage in this market. As developed regions mature, Meta undertakes measures to drive penetration in emerging markets of South East Asia, Latin America and Africa.

Workday Inc. WDAY, carrying a Zacks Rank #2, delivered an earnings surprise of 7.67%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 11.24%.

Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.

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