CFO Departure and 4Q23 Miss Driven by Distributor Incentives
On January 18, 2024, Cambium preannounced that 4Q23 revenue would likely come in at $40 million, below its guidance of $45.0-50.0 million provided on November 2, 2023. This is the third revenue miss in a row. Cambium stated that the revenue miss was driven by $11 million in distributor incentives in 4Q23. While the company shipped $51 million of product, it recognizes revenue on sell-in to the channel so recognized revenue was significantly lower. The company indicated that this represents a continued decrease in channel inventories. Cambium also expects 4Q23 gross margin and net loss to be below the low end of the range. We were previously modeling an EPS loss of $0.25 on sales of $45.8 million with 40% gross margin. We are now modeling an EPS loss of $0.31 on sales of $40.0 million. We expect gross margin of 37% for the quarter and an adjusted EBITDA loss of $7.0 million. For FY24, we are modeling an EPS loss of $0.43 on sales of $208.4 million. Cambium also announced that CFO Andrew Bronstein will be leaving the company effective February 2, 2024. The company is working to find a permanent replacement. In the interim, Chief Accounting Officer John Becerril will assume the responsibilities as acting CFO. Mr. Bronstein has agreed to assist in the transition to a new CFO following his departure. Cambium’s comparables include wired and wireless networking companies of a similar size. The comps have a median P/S of 0.6x, and Cambium is slightly below at 0.5x. As expectations are for losses in the next few quarters, P/E and forward P/E will not be appropriate valuation metrics.Cambium Network provides wireless broadband networking solutions for network operators, including medium-sized wireless internet service providers, enterprises and government agencies. The company's wireless fabric includes intelligent radios, smart antennas, radio frequency, algorithms, wireless-aware switches and its cloud-based network management software. The company's products can be categorized into its PTP backhaul, PMP distribution, Wi-Fi access, cnMatrix switching, and cnReach IIoT solutions. The company also provides a number of other network management and monitoring tools, such as cnMaestro, XMS Cloud, LINKPlanner, cnHeat, and cnArcher, to further improve ease of use and network performance.
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