Cambium Networks Corp (CMBM) 2020 Q2 法說會逐字稿

Good afternoon. My name is Justin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks Second Quarter 2020 Financial Results Conference Call. (Operator Instructions)

Mr. Peter Schuman, Senior Director of Investor and Industry Analyst Relations, you may begin your conference.

Thank you, Justin. Welcome, and thank you for joining us today for Cambium Networks Second Quarter 2020 Financial Results Conference Call, and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO; and Stephen Cumming, our CFO, are here for today's call. The financial results press release and CFO commentary referenced on this call are accessible on the Investor page of our website, and the press release has been submitted on a Form 8-K with the SEC. A copy of today's prepared remarks will also be available on our Investor page at the conclusion of this call.

As a reminder, today's remarks, including those made during Q&A, will contain forward-looking statements about the company's outlook and expected performance. These statements are based on current expectations, forecasts and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not undertake any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments to conform these statements to actual results or make changes in Cambium's expectations or otherwise. It is Cambium Networks' policy not to reiterate our financial outlook. We encourage listeners to review a full risk of risk factors included in the safe harbor statement in today's financial results press release.

We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers, except where otherwise noted. A reconciliation of non-GAAP measures to GAAP measures is included in the appendix to today's financial press release, which can be found on the Investor page of our website and in today's press release announcing our results.

Turning to the agenda. Cambium Networks' President and CEO, Atul Bhatnagar, will provide the key investment highlights for the quarter, and Stephen Cumming, Cambium Networks' CFO, will provide a recap of the financial results for the second quarter 2020, and he will provide our financial outlook for the third quarter 2020. Our prepared remarks will be followed by a Q&A session.

I'd now like to turn the call over to Atul.

Thank you, Peter. We have always said wireless broadband connectivity is vital and essential infrastructure for people around the world and is a lifeline for most communities. Fixed wireless broadband is a critically important networking fabric being accelerated by 5G standards to connect our local communities and the importance has proved especially true in light of the current environment. The increases in network traffic continues to be driven by work-from-home, e-learning and secular trend of broadband communications and infrastructure projects, remaining a top priority throughout the world.

The second quarter's results reflect an inflection point for Cambium's financial performance and mark the start of significant new product introductions, which will continue over the next several quarters. These new product introductions will be material to our financial results for many quarters into the future. Cambium Networks has now entered the era of wireless end-to-end speeds equivalent to that of fiber. Our multi-gigabit wireless fabric, which can be controlled from a single pane of glass, can deliver performance and reliability of fiber at a fraction of the cost with our new Wi-Fi 6 and the additions of our upcoming 60 gigahertz millimeter wave solutions, followed by our 5G 28 gigahertz products, further expanding the Serviceable Available Market, SAM, for Cambium. We are already engaged with multiple customers on 60 gigahertz cnWave and have already won several RFPs from larger customers in multiple geos.

Wireless can now be extended to places, especially at the edge of the network where fiber could not go cost effectively. In certain greenfield environments, it will not be necessary to deploy fiber networks at all. And where older wired networks exist, capacity can be added with wireless rather than replacing them with costly fiber or other wired technologies, which are hard to install. Fiber is no longer the only answer to high-speed access in many situations.

Finally, Cambium will be entering urban markets in addition to high-density suburban markets and rural markets as our 60 gigahertz cnWave solutions deploy wireless at the speed of fiber. As we like to say at Cambium Networks, wireless is the new fiber. This is all managed by Cambium's cloud-based software, cnMaestro, our single pane of glass in the cloud.

Turning to the results of our second quarter 2020. We achieved revenues of $62.3 million, above the high end of our May 12 outlook of between $51 million to $56 million and ahead of the July 8 preliminary revenues of approximately $61 million. Non-GAAP diluted EPS of $0.16 also exceeded the high end of our May 12 outlook of $0.05 per diluted share. We executed very well during the quarter with a strong performance by our entire Cambium team as we continued to work remotely during the COVID pandemic. We would like to express our gratitude to our worldwide cambium employees for their resiliency and strong loyalty by our channel partners.

Looking at some notable customer wins and new product developments. During Q2 '20, I'm pleased to report Cambium Networks continued to have several high-profile customer engagements. In North America, a large service provider in Northeast Texas, providing commercial and residential access, has selected Cambium Networks for network upgrade using PMP 450m and PTP 820. This has resulted in a supply agreement that will yield thousands of devices delivered over the next year. They selected Cambium for reliability, scalability and spectral efficiency. A large managed service provider, MSP, in Northeast servicing campus, health care, Department of Defense and Federal customers selected Cambium for a nationwide Wi-Fi deployment. Thousands of access points will roll out over the next year. This was a highly competitive win and Cambium was selected for our superior multi-tenant cloud management for switches and access points delivering a lower total cost of ownership.

In the education vertical, the local school district in South Texas through the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is using Cambium's wireless fabric in conjunction with our Citizens Broadband Radio Service, CBRS, with our PMP 450m, combined with our enterprise Wi-Fi solutions to provide Internet for remote learning as a result of the COVID lockdown. The school district is placing clusters of our PMP 450m on 6 towers throughout the district, combined with approximately 1,000 subscriber modules located on local utility poles across underserved communities to provide Internet access. Cambium Networks is one of, if not the only, manufacturer that can provide these type of creative and end-to-end performance solutions with a wireless fabric to connect the unconnected and managed from a single pane of glass in the cloud.

On past calls, we have spoken about the Federal Communication's Commission newly released 3 gigahertz CBRS spectrum. Cambium is first mover with this technology. Spectrum is a precious resource for an operator, and CBRS provides advanced technology to share bandwidth effectively. And Cambium has a full end-to-end solution, including high-performance radios and cloud-based software solutions.

On our Q1 '20 earnings call, we disclosed having over 19,000 devices managed by our CBRS SaaS service. As of today's call, we now have approximately 24,000 devices managed by our CBRS SaaS service. CBRS is driving new sales of our PMP 450 products in North America. Our success with the dynamic spectrum-sharing model using CBRS in the United States has the potential to be replicated in additional geographies as the model continues to mature and demonstrate significant benefits for operators and users.

Cambium added over dozens of new CBRS customers in Q2, ranging from small proof-of-concepts, POCs, to regional rollouts. Customers selected our PMP 450m for CBRS due to its simplicity compared to LTE competitors, our high-performance features, Massive MUMIMO and Cambium's attractive total cost of ownership. In addition, PMP 450m was purpose-built for delivering reliable, fixed wireless access and offer superior network management capabilities for fixed wireless service providers.

In the Europe, Middle East and Africa region, EMEA, we are seeing ongoing increased demand from service providers as they increase capacity to their networks and add new subscribers in this COVID environment. We added a significant number of new service providers in Eastern Europe during the second quarter. Across the service provider market in EMEA, Cambium sees steady demand for its technology as new service providers switch to Cambium's broadband solutions and existing service providers expand and fortify their networks. A few strategic wins in EMEA from Q2 include: the Polish health administration selected Cambium to deploy its Wi-Fi access solutions into 232 hospitals across the country. In Luxembourg, we had our first Wi-Fi 6 win with the International School of Luxembourg. We provided hundreds of our new high-end Wi-Fi 6 devices and Xirrus XMS cloud management to support 1,700 students and teachers. In Nigeria, a service provider named Tizeti expanded its network with Cambium, becoming the country's largest public Wi-Fi operator, using Cambium cnPilot Wi-Fi solution, backhaul over our ePMP fixed wireless broadband solution. Additionally, we have won service provider projects in several other African nations.

In APAC region, Globe, one of the largest Philippines service provider, selected Cambium networks for reliable and quickly deployable backhaul using our ePMP product. Globe selected Cambium because of our reliability, scalability, to build strong and sustainable business model, quality of service and the ease of management with our cloud-managed cnMaestro software.

In American Samoa, a U.S. territory covering South Pacific Islands, Cambium won a sizable contract to provide CBRS services using our PMP 450m and 450b products. In Caribbean and Latin America, CALA, a Tier 1 service provider in Brazil has selected the PTB 450i to provide fixed wireless broadband access to enterprise customers. In the remote Amazon region of Colombia, Cambium is providing Internet access to an isolated hospital, San Rafael de Leticia, the only public hospital in the region. The hospital will be using both Cambium's indoor and outdoor cnPilot Wi-Fi solutions. Wi-Fi will enable the use of telemedicine at the hospital to assess and enhance the health of the inhabitants of the region.

Looking at new products launched since our previous quarterly update. Cambium Networks released the first of our new high-performance enterprise Wi-Fi 6 solutions on June 24. Cambium's converged Xirrus and cnPilot Wi-Fi 6 product portfolio alongside new cnMatrix wireless savvy switches, cost effectively serve a wide range of business needs. Our cloud-first solutions offer a superior end-user performance and disruptive economics that enable a broad spectrum of enterprises to focus on their business outcomes rather than on managing their networks. Mid- and large-sized organizations benefit from our software-defined radios and high-density architecture to reduce the amount of equipment required and leverage automation. The reception to date for our new Wi-Fi 6 products has been excellent, with initial shipments during the second quarter and solid orders going into the third quarter as the product portfolio ramps. One of our customers, North River IT, was quoted as saying, "there's no other vendor that can deliver this feature set at this price point and deliver Wi-Fi 6." Another customer from Northwest Missouri State University commented "we have seen impressive performance from the Cambium Wi-Fi 6 solutions."

Our first product released included the high-density, high-performance XV 3-8 Wi-Fi access point, which offers 8x8 Massive MIMO technology, offering 4x the data rates and lower latency than prior technology and leverages our cloud-managed approach, which increases ease of use and operation for system maintenance and software upgrades. In the performance category, we also announced in July our XV 2-2 product, a 2x2 solution. In addition to the 4 new cloud-managed enterprise switching products in the cnMatrix ex2000 family released during the second quarter. During the third quarter 2020, we will be releasing 4 additional wireless savvy switches in our entry-level enterprise switch family. The cnMatrix ex1000 family is targeted to the value category for small- and medium-sized businesses.

In-licensed spectrum, Cambium Networks will release our next-generation fixed wireless broadband LTE platform, cnRanger, for 3 gigahertz spectrum. The product is expected to be widely available with shipments commencing in the third quarter. cnRanger is integrated with our cnMaestro Cloud platform. This is in addition to the first fixed LTE products, which operate in 2 gigahertz spectrum. cnRanger is an ideal solution for Internet service providers, providing Cambium Networks an opportunity for a larger footprint with Tier 2 carriers and industrial customers.

In late Q3, Cambium Networks will launch one of our most important fixed wireless networking solutions in many years, gigabit wireless solutions for the residential and enterprise access and backhaul for Wi-Fi or small cell markets. Our 60 gigahertz cnWave utilizes millimeter wave technology and standards-based commercial silicon, coupled with an advanced meshing technology, called Terragraph, provided by Facebook's connectivity division. Our 60 gigahertz cnWave solution enables service providers to reliably provide gigabit-per-second bandwidth to the home and business, equivalent to the speed of fiber and economically. The technology and capability will be increasingly relevant for urban use cases for many years to come. Weaving together our networking solutions, we continue to experience strong growth in accounts utilizing cnMaestro Cloud, our end-to-end cloud powered connectivity solution, to manage the entire network from a single pane of glass. Total devices under cloud management in Q2 '20 totaled 452,000, an increase of approximately 10% from Q1 '20 and up 52% year-over-year.

Turning to channel. In Q2 '20, we expanded our channel presence by adding over 500 new channel partners sequentially and over 2,000 new channel partners year-over-year, which represents an increase of approximately 7% sequentially and 35% year-over-year.

The COVID pandemic has shown that there's a digital divide does exist in many parts of the United States. To address that issue, Cambium Networks is supporting the next round of Connect America funding called Rural Digital Opportunity Fund, or RDOF, which is currently being evaluated by FCC for committing $20.4 billion in funding over the next 10 years to bring high-speed broadband service to millions of unserved Americans. This represents almost 10x the value of the present Connect America Fund Phase II funding. Under RDOF, there are 4 tiers of service with the highest level of service 1 gigabit download and 500 megabits per second upload. I'm pleased to report, the FCC approved fixed wireless broadband as the highest -- for the highest tier of service. This is a win-win for both Cambium and our service providers.

Also in the channel we have instituted new programs and tools to help partners, distributors and MSPs grow revenue and transition enterprise customers to our new Wi-Fi 6 technology. Cambium's new channel investments include: an upgraded partner portal; a total cost of ownership, TCO, profiler software tool for quickly comparing deployment options for Cambium versus a number of our Wi-Fi competitors; expanded free online training; virtual online demonstration capabilities; and expanded digital marketing funds. These new programs and tools enable partners to sell, deploy and manage Cambium's new Wi-Fi 6 products, including our 2 new Wi-Fi 6 access points, 6 new multi-gigabit wireless savvy switches and enhanced cloud-based software, Wi-Fi Designer and Wi-Fi Inspector, that simplifies wireless network design and deployment.

I will now turn the call over to Stephen for a review of our Q2 '20 financial results and outlook.

Thanks, Atul. Our outlook at the start of the second quarter resulted from our concern over our partners' ability to install our solutions during the COVID pandemic. I'm pleased to say the second quarter results reflect the increased demand for Cambium's high-quality products, the resilience of our partner community, the strength of our bookings and better-than-anticipated demand ahead of new product introductions during the second half of calendar 2020.

Revenues of $62.3 million for Q2 '20 came in above the high end of our initial outlook of $51 million to $56 million and above our revised outlook of approximately $61 million released on July 8. Revenues increased by 3% quarter-over-quarter and decreased by 10% year-over-year from $69.2 million. On a sequential basis for Q2 '20, revenues were higher by $1.9 million or an increase of approximately 3%. The higher revenues were driven by PMP products, which grew 16% quarter-over-quarter due to service providers scaling networks driven by request for increased capacity and better-than-anticipated field deployments. Q2 '20 revenue growth was offset by lower demand for PTP products with revenues lower by 4% sequentially due to the timing of U.S. federal programs, which are expected to materialize during Q3 '20. As expected, our enterprise Wi-Fi solutions declined, although performing better than anticipated, decreasing by 33% quarter-over-quarter with weakness centered around the hospitality and retail verticals as this business was challenged by the impact of global shutdowns and other restrictions to combat the COVID pandemic.

Looking at revenues by geography. North America represented 52% of company revenues compared to 51% during Q1 '20. On a quarter-over-quarter basis, North America grew 5% primarily driven by PMP with Wi-Fi softer due to the impact from COVID. EMEA, our second largest region, increased 9% quarter-over-quarter and represented 33% of revenues during Q2 '20 and 31% of revenues during Q1 '20. The quarter-over-quarter improvement in EMEA primarily reflects increasing PMP revenues from both existing service providers adding capacity and new service providers building out networks, offset by weaker enterprise Wi-Fi revenues. CALA represented 7% of revenues during Q2 '20, decreasing by 11% quarter-over-quarter, with Brazil particularly impacted by the COVID pandemic. APAC represented 8% of revenues during Q2 '20, declining by 13% from Q1 '20, impacted by COVID-related lockdowns in the region.

Looking at our gross margin, non-GAAP gross margin of 49.2% decreased by 90 basis points compared to Q2 '19. The year-over-year decline in non-GAAP gross margin was a result of lower mix of higher-margin defense and enterprise Wi-Fi products, increased inventory reserves and higher shipping costs, partially offset by key initiatives put in place focused on cost reductions and supply chain efficiencies. Non-GAAP gross margin in Q2 '20 was 180 basis points lower than Q1 '20. The lower quarter-over-quarter non-GAAP gross margin was a result of lower mix of higher-margin products, increased inventory reserves, partially offset by key initiatives put in place focused on cost reductions and supply chain efficiencies.

In Q2 '20, our non-GAAP gross profit dollars decreased by $4 million to $30.6 million compared to the prior year and decreased by $156,000 sequentially. We continue to make progress towards our longer-term goal of achieving an annual non-GAAP gross margin target of 51% to 52%.

Non-GAAP operating expenses, research and development, sales and marketing, general administrative and depreciation and amortization in Q2 '20 decreased by $3.4 million when compared to Q2 '19 and stood at $24.1 million or 38.8% of revenues. When compared to Q1 '20, non-GAAP operating expenses decreased by approximately $3.6 million, the majority of both the year-over-year and sequential decrease in non-GAAP operating expenses was primarily driven by the benefit of our past restructuring activities, lower wages due to the temporary company-wide salary reductions as well as lower discretionary spending in sales and marketing due to less travel and trade show expenses impacted by COVID. Non-GAAP operating margin was 10.4%, up from 10.3% for Q2 '19, an increase from 5% of revenues in Q1 '20.

Adjusted EBITDA for Q2 '20 stood at $7.7 million or 12.3% of revenues compared to $8.1 million or 11.8% of revenues for Q2 '19 and up from $4.4 million or 7.3% of revenues for Q1 '20. We remain committed to driving our adjusted EBITDA expansion to our target model of 18% to 19% of revenues over the next few years.

Cash flow provided by operating activities was a record $26.2 million for the second quarter of 2020, primarily the result of improved profitability, strong collections, resulting in a significant decrease in accounts receivable of $11.6 million, an increase in accounts payable of $3.6 million and a continued reduction in our inventories. This compares to cash provided by operating activities of $6 million for the second quarter of 2019 and $800,000 cash used in operating activities in the first quarter of 2020. The strong operating cash flow during the second quarter of 2020 reflects the cash-generation potential of our business.

Non-GAAP net income for Q2 '20 was $4.3 million or $0.16 per diluted share compared to $3.9 million or $0.15 per diluted share for Q2 '19 and non-GAAP net income of $1.4 million or $0.05 per diluted share for Q1 '20. The higher non-GAAP net income compared to the prior year period was due to lower period expenses as a result of the benefits from our restructuring, temporary cost-saving measures, lower sales and marketing expenses and lower interest expense due to a reduction in long-term debt. The increase in non-GAAP net income compared to Q1 '20 was primarily attributable to lower operating expenses due to our cost-containment efforts, temporary cost-saving measures and lower sales and marketing expenses as a result of the impact of COVID.

Turning to the balance sheet. Cash totaled $37.4 million as of Q2 '20, an increase of $13 million from Q1 '20. The sequential increase in cash balance during Q2 '20 was primarily the result of improved earnings, strong cash collections resulting in a decrease of accounts receivable, an increase in accounts payables and decrease in inventories, offset by a pay down of $10 million on the revolver. As a result of the stronger-than-expected performance, we made the decision to pay down the $10 million revolver during Q2 '20. Excluding the pay down of the revolver, cash would have increased by $23 million quarter-over-quarter.

Q2 '20 net receivables totaled $51.3 million, a decrease of $11.3 million from Q2 '19 and decreased by $10.3 million sequentially. Days sales outstanding for the second quarter stood at 66 days, a decrease of 10 days from the prior year and a decrease of 20 days from the first quarter of 2020 as a result of improved linearity of the business and the timing of collections from several customers, which occurred during the first month of the quarter. In Q2 '20, days payable outstanding stood at 57 days, a decrease of 2 days from the second quarter of the prior year and 4 days from the first quarter of 2020. We made good progress reducing our inventory dollars and days. Net inventories of $30.1 million in Q2 '20 decreased by $6.9 million year-over-year and were lower by $2.4 million from Q1 '20. We continued to reduce inventories towards our target model of 80 to 90 days. Inventory days stood at 90 days, down 2 days compared to Q2 '19 and down by 22 days from the end of March.

In summary, we took early and decisive actions to align our cost structure in response to the COVID pandemic. We are focused on our objective of achieving our long-term target operating model by accelerating growth and improving our cost structure and operational efficiency. As we enter Q3, we now have improved visibility into our business. While we are not yet providing full year 2020 outlook due to the possibility of a second wave of COVID, we do expect revenues to increase quarter-over-quarter for the remainder of the year as we have the benefit of new product introductions during the second half of 2020 and beyond. As a result of the improved outlook and cash position, we have decided to eliminate the temporary cost measures in regard to employee salary reductions. I'm grateful for our employees' perseverance and fortitude during the period of uncertainty.

Moving to the third quarter 2020 financial outlook. Please note that Cambium Networks' financial outlook does not include the potential impact of any possible future financial transactions, pending legal matters or other transactions. Accordingly, Cambium Networks only includes such items in our financial outlook to the extent they are reasonable. However, actual results differ materially from the outlook. Considering our current visibility as of August 11, 2020, our Q3 '20 financial outlook is expected to be as follows: GAAP revenues between $64 million to $67 million, non-GAAP gross margin between 49% to 50%, non-GAAP operating income between $5.3 million to $6.4 million, non-GAAP net income between $3.2 million to $3.8 million or between $0.12 and $0.14 per diluted share, adjusted EBITDA between $6.4 million and $7.4 million and adjusted EBITDA margin between 10% and 11.1%, non-GAAP effective tax rate of approximately 17% to 18% and approximately 26.6 million weighted average diluted shares outstanding.

Turning to our cash requirements, pay down of debt of $2.5 million, interest expense of approximately $0.9 million and capital expenditures of between $900,000 to $1.1 million.

I'll now turn the call back to Atul for some closing remarks.

We are very pleased with the second quarter results and improved outlook as we enter the third quarter. Cambium Networks will continue to manage our business for the goal of growth and profitability. Our balance sheet strengthened, and we have shown what type of cash generation is possible with good execution. At no point in our company's history has Cambium Networks been better positioned to win business based on the superior value derived from proven high-performance, high-quality and affordable products providing end-to-end wireless connectivity managed by our cloud-based cnMaestro solution and matching end-to-end speeds of fiber.

Fixed wireless broadband is a critically important networking fabric being accelerated by 5G standards to connect our local communities. The secular trends driven by the COVID environment have shown how vital and essential wireless broadband connectivity infrastructure is for people around the world. Working from home is no longer a luxury for many people. It is a necessity and a lifeline for most communities. For those listeners new to Cambium Networks, the key secular drivers for our growth over the next several years, in addition to the need for our existing portfolio of solutions by Tier 2 and Tier 3 service providers and midsized enterprises, are the anticipated release of new gigabit wireless products as the next several quarters unfold, such as enterprise Wi-Fi 6, 60 gigahertz and 28 gigahertz millimeter wave solutions for fixed 5G wireless and the continued adoption of CBRS-compatible solutions. We expect faster-than-market growth for our enterprise Wi-Fi solutions based on Wi-Fi 6 adoption.

Finally, we are starting to see growth of our cloud Software-as-a-Service business model generating recurring revenues. Cambium Networks is very well positioned as a gigabit wireless leader for global markets and as an affordable yet high-quality competitor offering super reliability and scalability. We have the right products at the right time, the right team in place to deliver outstanding results for both our customers and shareholders.

This concludes our prepared remarks. So with that, I would like to turn the call over to Justin and begin the Q&A session.

(Operator Instructions) And our first question comes from Paul Coster from JPMorgan.

So a couple of things. One is on the growth front. I think I heard you say, Stephen, that we're going to see sequential growth in the next 2 quarters into year-end. And is that with the full benefit of the new product cycle kicking in? Or is that still sort of playing out into the first half of 2021? And whilst you're answering that question, how is it that you could suddenly see -- you could see this recovery in growth even though new products were pending? Normally that causes customers to slow down in advance of the new product cycle.

Paul, this is Atul. First of all, thank you for the question. The new product introductions of Wi-Fi 6 already started with Q2. Generally, what I find is it takes about 3 to maybe 5 months of lots of POCs, then the expansion starts. So Wi-Fi 6 expansion will start in second half because those POCs, which people start using in, say, end of Q2, early Q3 will start to mature. The 60 gigahertz we'll introduce towards the end of Q3, and that will enter POCs in late Q3 and then continue in Q4. So I think 60 gigahertz, we'll see some acceleration in Q4, but most of it will be, I think, '21. So overall, I think we are pretty much -- the life cycle is well understood by us in terms of second half versus '21. '21 will see definitely a lot more acceleration for new products.

I'd just add to that, Paul, we are -- as you heard from our prepared remarks, right, our PMP business grew 16% sequentially. So that was stronger than we had anticipated. And we're seeing a bit of a secular story here with the start of an upgrade cycle on these new products and requiring more gigabit speeds. And then you overlay that with the work-from-home dynamic where we're seeing a lot of our service providers now are having to invest in new infrastructure, given the increased demand on the network as customers are upgrading their service or requesting services where they didn't need them before as they change their lifestyles to more rural locations. So our portfolio is well positioned, highly reliable and highly scalable, and we're benefiting as a result of that.

Stephen, the other thing -- well, both Stephen and Atul, the other thing which is obvious is that your visibility seems to have improved, your forecasting seems to have improved. You've issued guidance and beaten twice in a row now. Nice change there. What is it that's happened that's made your forecasting better? And what is it that's happening that's improving visibility in the end market at the moment?

Yes. I think -- Paul, this is Stephen again. There's a few things happening now. And we have spoken about them in the past, but I think we sort of continue to refine them and improve them. But the company has been doing a lot of working in terms of improving its visibility and predictability of the business and ultimately trying to improve the linearity of our business. And we've spoken about some of these things in the past such as [diffi] incentive plans. We implemented a channel management tool. So we really look at end demand dynamics with the end customers and getting our distributors to report POS and inventory. I would say on top of that, though, what's happened in probably the last few quarters is some of our customers are a little skittish with regards to supply. So they're tending to get ahead of this earlier and booked earlier and provide us with more visibility. So we started to see that happen in Q2, and it's continuing into Q3. And so that gives us the confidence to guide where we're guiding.

And then, Paul, a quick comment. I think there's no question, COVID has made fixed wireless broadband a lot more relevant. And in some cases, it has accelerated the technological transition by 1 year. And in some cases, even I mean more than that, look at the video, for example. The adoption of video, it would have taken probably 2 years, 3 years for video to go to this range of usage. So I think COVID has accelerated the transition.

And our next question comes from Simon Leopold from Raymond James.

So first thing I wanted to ask about was, I think, Stephen, you mentioned ending the temporary salary reductions. Just wanted to get a better sense of what we should look at as really the baseline for operating expenses? I'm thinking it's around $28 million in the September quarter, but just want to make sure I understand what this means.

Yes. So we did end the temporary cost reductions, and we are -- salary reductions, and we are very thankful for our employees for going through that pain. I think from a baseline perspective, guidelines -- based on the guidance I've given you, you're probably looking at the midpoint of our guidance of around $26.6 million with regards to OpEx. And that, in corporate, I would say, the majority of those temporary salary reductions coming in, some of them didn't get reinstated until right at the beginning of the quarter. So as you look to sort of Q4, spending may come up a little bit more. I don't think we're going to get back, quite frankly, to that $28 million level. Remember, we've gone through a fairly substantial restructuring initiative that we announced in Q4 and Q1. And that's largely taken effect in our numbers now. So I think to answer your question directly, $26.6 million is the number for Q3 and maybe up a little bit more from there for Q4.

Great. No, that's very helpful. And I wanted to maybe double-click on how to think about the Wi-Fi business and the trajectory. So your explanation for this quarter's Wi-Fi segment makes a ton of sense, given the current environment. I guess I'm struggling to try to really think about and visualize what a recovery looks like for that line of business. How should we think about -- you did mention growing faster than the market, that really is not a very high bar. So I guess I'm looking for some better insight as to what your expectations are for where that business goes longer term.

Simon, let me take the question. So Wi-Fi, where we see shrinkage in Q2 is hospitality and retail. And no question. Those segments have been hit. But where we are seeing now more positive economic activity is education. Education institutions are fortifying online tools, technologies everywhere. And that includes indoor and outdoor. So that's one segment we are beginning to see good activity in our regions like EMEA, North America, number one. Secondly, the government -- local governments, state governments, they are all looking at many outdoor wireless public areas. I think those projects are also accelerating. Health care, Cambium, I think before COVID, we were not in as much health care, but as you -- even from the commentary, both this quarter and last quarter, many hospital -- midsized hospitals are adopting Cambium solutions worldwide. So I would say those are the probably segments where we will see good activity in second half. And then as COVID hopefully is handled by the end of the year, I think you will see even the other segments where we were squeezed in '21, they accelerate. So overall, I feel the Wi-Fi will grow reasonably well, especially as we come back. Stephen, do you want to add something?

Yes. Just to quantify that more, and I don't need to add, I think Atul was spot on with his comments, but just to give you some numbers around it. So you heard from our prepared remarks that Wi-Fi was down 33% for us in Q2. And obviously, retail hospitality led the charge there. And I won't go over the markets that we talk about in terms of being a bit stronger that Atul just mentioned. But I think just to give you some idea of Wi-Fi for us in Q3, we're going to see that sequentially move up about sort of the lower mid -- lower to mid-20s in sequential growth as we go into Q3. And that obviously driven by some of those verticals that Atul just referred to.

And our next question comes from Rod Hall from Goldman Sachs.

This is RK on behalf of Rod. Could you give some color on the visibility you have by geography? And also talk about impacts from COVID. Did you see a pull forward in demand? And to what extent did you see the negative impact?

Okay. Let me give you -- this is a broad question. I'll give you just a high-level answer. I think the visibility by the geo, we have excellent visibility in North America and very good visibility in EMEA as well. Where the visibility and impact of COVID -- impact of COVID is on everyone. But I think where the impact of COVID is probably a little more severe is, I would say, Asia and some specific countries in CALA, like Brazil. And there, I would also say that though people kind of say COVID impact, some of those countries have economic impact going on even before. It's just the COVID has exacerbated the situation a little bit, made it a little more serious. So I would say visibility wise, good visibility in North America, good visibility in EMEA and some countries in CALA, less -- a little more opaque, like Brazil. And then Asia, definitely, places like India are impacted with COVID far more seriously. So hopefully, that gives you color.

Yes, that's very helpful. Any commentary on pull forward in demand?

Yes, the pull forward in demand, some -- maybe some in fixed wireless broadband, you can say, as people are scaling the network, but not really in the sense that some of those networks are also ready for transition to a higher speed. So maybe from specific areas, there might be pull forward. But I wouldn't say it's something extraordinary. I think we will see secular, steady-state growth in the fixed wireless broadband as we kind of visualize next several quarters.

Yes. I mean, I'd add to that, I think we're seeing -- just -- and I said this earlier, we're seeing a little bit higher booking activity as distributors want to get the orders on the book sooner to ensure supply. But I don't really think we're seeing much in the way of pull forward.

That's very helpful. And Stephen, could you give us some more color on the guidance by segment? I know you talked about Wi-Fi. But could you talk about the other segments, too?

Yes, I can. Bear with me. I've got a breakout, if you can just hold on. Yes, so overall, our midpoint of our guidance is roughly up about 5% sequentially. And as we said, in general, we're seeing some good bookings performance, some regions stronger than others. So we're cautiously optimistic. And still a lot of uncertainty with regards to COVID on some of the impacts in some regions, like APAC. But from a product perspective, we expect PMP to grow low single digits sequentially. Remember, that's coming off a very strong Q2, which grew 16% sequentially, and the service providers really driving that growth. PTP will be low double digits sequentially in Q3 as we see some of those federal and defense programs start to come back, and obviously, a lot more opportunity. And we've spoken about this in the past as we look to 2021 there, but we're starting to see some shoots of recovery there. And then Wi-Fi, I've already covered. I think that's going to be low to mid-20s sequential increase. Europe is coming back online, the verticals that Atul mentioned and nice portfolio of new products from our Wi-Fi 6 launch will help that refresh cycle.

Great. That's very helpful. And one final question, if I may. You are ramping a number of new products like Wi-Fi 6 millimeter wave in H2 and into next year. Could you give us some color on how material these could be eventually?

Well, let me -- I think these products, as I said, it takes POCs the good 3 to 5 months of good POCs. We focus a lot on quality. These are wireless products, which are very environmental-driven as well. So we learned a lot in those POCs. And then they accelerate. So all the products we're describing, their life is actually not 1 or 2 years. Their life is 3 years, 4 years, 5 years. And there's a full life cycle of acceleration, stabilization and then they kind of decrease. So these are our long-range products. And I think one point I want to make is the acceleration we are seeing is not that suddenly we have done something right. We have been working on these things for 2 years, 18 months, these technologies, these investments. It's just that, I think, in some cases, it may be accelerated, but these are very secular technologies, secular drivers. And just we focus on doing the right things. And we now think that as people -- I always say that on the calls, when people come back from any major transition, like COVID, or any other major transition, they always buy next-generation architecture. They don't buy legacy stuff. We knew that. So we were always planning for this technology transition. And we're pleased to see that these new products are at the right time at the right place.

And our next question comes from Scott Searle from ROTH Capital.

Guys, nice job, particularly considering that the new products have yet to really kick in, in a meaningful fashion. Atul, just to go back to some of your earlier comments as it related to some of the funding, whether it's the FCC or otherwise in the United States related to RDOF and 5G rural opportunity funds and CAF II. With now wireless being viewed as a comparable to wireline technology, what is the incremental portion of that $30 billion over the next 10 years across those programs? What does that open to you guys now? Or I guess maybe another way of asking, what is not open to you now? Because in the past, wireless tended to get a relatively small portion of that overall pie, if you will. And then I had a follow-up as it relates to the outlook on 60 gig.

Scott, very insightful question. The thing -- what has changed is, I think the world has realized that wireless is a fabric, which is easier to deploy, it's greener, you're not digging trenches, and it has reached the reliability and performance equal to fiber. I think that's what has changed. So my sense is that every country, irrespective of the incumbents and the different groups pushing for different technologies, ultimately go for efficiency, ultimately go for whatever makes the good business sense. So I think you will see the penetration of wireless more and more, and I'm so glad that FCC approved fixed wireless broadband as a technology, even for the high tier, which is gigabit throughput and speeds. So we feel good. And then the CAF II funding, we are winning good deals there. So I think in RDOF, I don't think there is any part of RDOF where we won't be able to compete. Of course, different companies will win different parts, but we feel pretty good how we're positioned for that $20 billion spend in North America across next 10 years. So approximately $2 billion, $3 billion a year, you'll start to see for next few years. And if COVID has shown one thing, that is the broadband Internet is really a lifeline. Now it's not just work from home, it's not WFH, it's EFH as well, education from home and both are important. So we feel good about good participation in RDOF and opening a good segment for Cambium.

Great. Very helpful. And if I could, just to follow-up on the 60 gig front. A very exciting market opportunity. It sounds like the product will be commercially launched by the end of this quarter. But it sounds like that pipeline is already growing. You've got some -- it sounds like RFP wins and some other activity in the pipeline. I'm wondering if you could quantify that a little bit, maybe take us through what the sales cycle and the size of some of those opportunities are. I would imagine for 60 gig, given that these are -- there's urban networks. The opportunity in the dollars that you win per RFP is probably larger than what you've seen in the past. I'm wondering if you could provide some color around that. And then how quickly that will ramp? And if that's taking you into some Tier 1 opportunities now as well, an area where you historically haven't competed, and I don't know if you'd be willing to put out a number in 2021, what would constitute success in the 60 gig product line?

Okay. The way I look at this is, as I said, last 5 years, as we introduced new advanced breakthrough technologies, there's a very clear life cycle. It takes good 4 to 5, 6 months of POCs. Because customers, when they deploy, they want to test it out. They want to kick the tires. So what we will see, I think, is that in Q3 and maybe some Q4, there'll be lots of POCs. These POCs are seeds in the ground. And then they start to accelerate. Customers know how to deploy it. If there's any issues in terms of installations or RF characteristics, they learn all that. So my sense is you will see some acceleration for Wi-Fi 6 and probably 60 gigahertz in Q4, but a lot of good, strong acceleration probably will come in '21. And as I said earlier, these technologies are deployed over 2, 3-year period. They are not just 1 or 2 quarters. And we have very good experience with our Medusa, which was Massive MIMO breakthrough technology, or our Wi-Fi product lines. So my sense is that I think this will be -- this is not a massive hockey stick suddenly, and then it's going to be a nice ramp, which will go in '21, '22. And maybe '23, they start to decline. That's the kind of cycle you see.

Let me address one more question you asked. In terms of -- these are very efficient technologies. So it's not that suddenly the network will become very large with them. I think what you will see is they will coexist with the previous products. They will find new applications where we are not there, for example. We -- when it comes to urban connectivity, Cambium really doesn't do much urban connectivity. But I think the 60 gigahertz could potentially open urban backhauling application for us, so -- small cell backhauling. So I think we will see a lot more applications of this in Tier 2, Tier 3 service providers. Large service providers might experiment. But generally, I would say Tier 2, Tier 3s are faster adopters of advanced technologies. That's kind of what I see in even '21.

And our next question comes from Erik Suppiger from JMP Securities.

Congrats on a good quarter. Can you talk a little bit about the CBRS opportunity? One, kind of how you think that sizes up compared to your traditional technologies and -- or maybe the 60 gig? And then two, how do you think the competitive landscape will evolve in that sector?

Thanks, Erik. So CBRS, I really believe, it's a breakthrough, very innovative way of spectrum sharing and spectrum management. As we said, the spectrum is the most precious resource for an operator. CBRS is also using cloud very effectively, and very innovative licensing model. So I really believe that CBRS is a kind of window into the future. And many governments -- and in fact, we are involved with certain governments in advising them, if they ask for advice, how this can be done for their country. I think the world is watching the progressive approach of FCC with respect to CBRS. And we are glad how we have adopted that. CBRS will influence many standards, I believe, in next 2, 3 years, because spectrum management, sharing spectrum is a common problem, every country and every technology wants to solve. So in that sense, you'll see broad applicability.

With respect to what competition will do, we believe in standards. Cambium increasingly, if you watch our portfolio, we believe in standards. And I think -- and then innovating within the framework of standards, that's our strategy, keeping the quality high and yet designing affordable products has been our formula. So you'll see that approach and then innovate with our MUMIMO technologies, our antenna -- intelligent antenna technologies, our cloud management software, RF algorithm. We have plenty of room to innovate even within the framework of standards, and that's what you'll see us do in 60 gigahertz and other things. So those are my comments. I think these are breakthrough technologies. And when we adopted CBRS, we didn't know how things will go. But the fact that we are now -- 24,000 devices are using. And another benefit I think Cambium is reaping is we are learning Software-as-a-Service business model. We're learning a little bit, though it's still a small number, but I think we're learning how that part of the business model can evolve for our company down the line.

And our next question comes from George Iwanyc from Oppenheimer.

Atul, just following up on your comments on cnMaestro. It seems like you continue to see good uptake from a device standpoint. Can you give us a sense of the type of software enhancements that you're doing to cnMaestro? And then what can you add over the next, let's say, a year as far as expanding the reach of software?

Okay. So George, when you look at cnMaestro, it has taken us lot of effort to implement Maestro for different devices and it has taken us -- because different devices are different models, whether it's microwave or whether it's fixed wireless broadband or whether it's Wi-Fi or switching, they all are very different. So the creativity of the team really has created a single pane of glass. And the cnMaestro, the kind of functionality we would like to add over next, say, a year, 1.5 years, maybe more security. We would like to provide more security. I think security is going to be a very key differentiator in this industry, especially as number of devices increase, industrial IoT gets going. So I think you'll see us probably add some of that. We have a lot of security there, but add that and maybe try to monetize some of that. I think the second part is the scaling of the network is going to be another order. And I always say that in our talks that whatever number you and I predict today in terms of number of devices, digital sensors and digitization on the industrial side will be easily off by an order of magnitude, because it's very difficult to predict how rapidly that digitization will happen. So I think for Maestro, having the scalability to the next degree and that's another part we probably would like to see if we can monetize that. So a lot of room for us to grow. And frankly speaking, the number of devices we have added in cnMaestro, in some cases, we wish we could have added more security earlier because there are limited resources in every company. But overall, when I look at this, I would say, security is probably one of the key areas and scalability is probably the next -- another area where we would like to keep expanding for future.

Okay. And just looking at your channel partner expansion, I think you added over 500 again this quarter and 2,000 over the last year. What type of leverage are you gaining from the expansion? What areas are you getting access to that you previously weren't able to reach?

I would say more mix -- mid enterprises, because for us the go-to-market is -- fulfillment is through channel. And especially as we're expanding our enterprise footprint to the mid-market, channel will play key role. And many a times, those channels are the MSPs or the WARs, very application-specific WARs. So that's kind of where our focus is. On fixed wireless broadband, we have very good channels established over time. So a lot of our increase is really happening, I would say, in the mid-tier market.

Yes. And just to add to that, we've built out our mid-channel inside sales organization to really help facilitate this and create a very broad-based business. So we're quite encouraged by the results we're seeing so far. And obviously, the onboarding of those new partners is a good metric.

And I would now like to turn the call back to Peter, Senior Director of Investor Relations, for closing remarks.

Thank you, Justin. During Q3 '20, Cambium Networks will be meeting with investors virtually at the Oppenheimer Technology and Internet Communications Conference tomorrow, August 12. And on Tuesday, September 1, 2020, at the Jefferies 2020 Virtual Semiconductor, IT, Hardware, Communications Infrastructure Summit. Atul will also be presenting and meet investors virtually at the Deutsche Bank Technology Conference on Monday, September 14. In the meantime, you're always welcome to contact our Investor Relations department at (847) 264-2188 with any questions that arise. Thank you for joining us, and this concludes today's call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.