Ceragon Networks Ltd (CRNT) 2023 Q3 法說會逐字稿

Rob, we can begin.

羅布，我們可以開始了。

Thank you, operator, and good morning, everyone. Hosting today's call is Doron Arazi, Ceragon's Chief Executive Officer; and Ronen Stein, Chief Financial Officer.

謝謝接線員，大家早安。今天的電話會議由 Ceragon 執行長 Doron Arazi 主持。和財務長 Ronen Stein。

Before we begin, I would like to remind participants that certain statements made on this call including projected financials results and the company's future initiatives, future events, business outlook, development efforts, and their potential outcome, anticipated progress and plans and results and timelines and other matters constitute forward looking statements within the meaning of the Securities Act of 1933 as amended in the Securities Exchange Act of 1934 and as amended the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

在我們開始之前，我想提醒與會者，本次電話會議中所做的某些陳述，包括預計的財務業績和公司的未來舉措、未來事件、業務前景、發展努力及其潛在成果、預期進展和計畫、結果和時間表以及其他事項構成經 1934 年證券交易法修訂的 1933 年證券法以及經 1995 年私人證券訴訟改革法修訂的安全港條款界定的前瞻性陳述。

Ceragon attempts forward-looking terminologies, such as believes, expects, may, will, should, anticipates, plans, or similar expressions to identify forward-looking statements. Such statements reflect only current beliefs, expectations, assumptions of Ceragon's management. Actual results or achievements may differ materially as they are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in such forward-looking statements.

Ceragon 嘗試使用前瞻性術語，例如相信、期望、可能、將、應該、預期、計劃或類似表達來識別前瞻性陳述。此類聲明僅反映 Ceragon 管理層當前的信念、期望和假設。實際結果或成就可能存在重大差異，因為它們受到某些風險和不確定性的影響，這可能導致實際結果與此類前瞻性陳述中預測的結果有重大差異。

Such risks and uncertainties include but are not limited to uncertainties as the occurrence and timing of the consummation of the transaction of the Siklu and the potential failure to satisfy the conditions of closing of such transaction, the effects of the evolving nature of the recent war in Gaza as well as other risks and uncertainties that are described in Ceragon's most recent annual report on Form 20-F and as updated from time to time in Ceragon's other filings with the SEC, including today's filing of the earnings press release, all of which are expressly incorporated here on in by reference.

此類風險和不確定性包括但不限於 Siklu 交易完成的發生和時間以及可能無法滿足此類交易交割條件的不確定性、近期戰爭性質演變的影響等。加薩以及Ceragon 最近的20-F 表格年度報告中所述的以及Ceragon 向SEC 提交的其他文件中不時更新的其他風險和不確定性，包括今天提交的收益新聞稿，所有這些都在透過引用明確併入本文。

Forward-looking statements relate to the date additionally made and are not intended to be predictions of future events or results. There could be no assurance that they will prove to be accurate and Ceragon takes no obligation to update them. Ceragon's public filings are available on the Securities and Exchange Commission's website at sec.gov and may also be obtained from Ceragon's website at ceragon.com.

前瞻性陳述涉及額外做出的日期，並非旨在預測未來事件或結果。無法保證它們將被證明是準確的，並且 Ceragon 沒有義務更新它們。 Ceragon 的公開文件可在美國證券交易委員會網站 sec.gov 上取得，也可從 Ceragon 網站 ceragon.com 取得。

Also, today's call will include certain non-GAAP financial measures, the reconciliation between GAAP and non-GAAP results. Please see the table attached to the press release that was issued earlier today, which is posted on the Investor Relations section of Ceragon's website. With all that said, I can now the turn the call to Doron. Doron, the call is yours.

此外，今天的電話會議還將包括某些非公認會計原則財務指標、公認會計原則與非公認會計原則結果之間的調節。請參閱今天稍早發布的新聞稿所附的表格，該新聞稿發佈在 Ceragon 網站的投資者關係部分。話雖如此，我現在可以把電話轉給多倫了。多倫，電話由你接聽。

Thank you, Rob. And good morning, everyone. Ceragon Networks delivered another strong quarter, our third solid quarter in what is expected to be the strongest year of non-GAAP operating and net profit since 2018. Our strategy to increase market share within the private networks and with smaller service providers is bearing fruit.

謝謝你，羅布。大家早安。 Ceragon Networks 又一個強勁的季度，這是我們第三個穩定的季度，預計將是自2018 年以來非GAAP 運營和淨利潤最強勁的一年。我們在專用網路和小型服務提供商中增加市場份額的戰略正在取得成果。

Since the start of this year, we've received initial orders from 20 new customers in these categories. And we expect our performance in these growth markets will be reinforced by the pending acquisition of Siklu.

自今年年初以來，我們已收到這些類別的 20 個新客戶的初始訂單。我們預計，即將完成的 Siklu 收購將增強我們在這些成長市場的表現。

Siklu's strength align well with our strategy to diversify our business beyond our core of T1 and T2 service providers with a broader range of solutions that can help us expand our addressable market, further pursuing private networks and small service providers opportunities to accelerate revenue growth and expand margins.

Siklu 的優勢與我們的策略非常契合，透過更廣泛的解決方案實現業務多元化，超越我們的T1 和T2 服務供應商核心，這些解決方案可以幫助我們擴大潛在市場，進一步尋求專用網路和小型服務提供者的機會，以加速收入成長並擴大規模邊距。

Ceragon continues to successfully navigate macroeconomic challenges affecting our industry, demonstrating the durable demand for our solutions, primarily in North America and India. Similarly, the ongoing hostilities in the Gaza Strip have not had any material impact on our business to date.

Ceragon 繼續成功應對影響我們行業的宏觀經濟挑戰，展示了對我們的解決方案的持久需求，主要是在北美和印度。同樣，加薩地帶持續的敵對行動迄今尚未對我們的業務產生任何重大影響。

While we are proud to be a company headquartered in Israel, the majority of Ceragon employees are based outside of Israel, close to the customers and partners. The vast majority of our manufacturing and our suppliers are also located outside of Israel.

雖然我們很自豪能夠成為一家總部位於以色列的公司，但大多數 Ceragon 員工都在以色列境外，靠近客戶和合作夥伴。我們絕大多數的製造工廠和供應商也位於以色列境外。

We have a detailed contingency plan, which anticipates conflict in the region, and this planning has enabled us to minimize the impact of the current events. Following the horrific terrorist attacks of October 7, approximately 3.5% of our total employee base has been called up to active duty in the Israeli Defense Force.

我們有一個詳細的應急計劃，該計劃預測了該地區的衝突，該計劃使我們能夠最大限度地減少當前事件的影響。繼 10 月 7 日發生可怕的恐怖攻擊事件之後，我們員工總數中約 3.5% 已被徵召加入以色列國防軍現役。

Based on our analysis, we don't anticipate this level of -- to materially change and don't expect it to disrupt our operations in any meaningful way. For now our offices in Israel are open and some employees are working there, while others are working remotely.

根據我們的分析，我們預計不會發生這種程度的重大變化，也不期望它以任何有意義的方式擾亂我們的營運。目前，我們在以色列的辦事處是開放的，有些員工在那裡工作，而有些員工則是遠距工作。

We're following the same type of protocols we used during the pandemic. We are in constant communication with our team, and our priority is the safety and well-being of our employees and their families. These are challenging times, but Israelis are resilient and we have a devoted team. We continue to see robust demand, particularly in India and North America, and we're executing well in the face of geopolitical and economic concerns impacting others. This demonstrates the durability of our business.

我們遵循與大流行期間使用的相同類型的協議。我們與我們的團隊保持持續溝通，我們的首要任務是員工及其家人的安全和福祉。這是一個充滿挑戰的時代，但以色列人很有韌性，我們有一支敬業的團隊。我們繼續看到強勁的需求，特別是在印度和北美，面對影響其他國家的地緣政治和經濟問題，我們表現良好。這證明了我們業務的持久性。

We believe our growth strategy involving expanding our addressable market beyond T1 and T2 customers that have historically been our base is coming into clear focus and the acquisition of Siklu, which we expect to close later this quarter will only accelerate this initiative.

我們相信，我們的成長策略涉及將我們的目標市場擴展到歷史上一直是我們基礎的T1 和T2 客戶之外，這項策略正在成為明確的重點，而我們預計將於本季稍後完成的Siklu 收購將只會加速這項舉措。

For the third quarter in a row, revenues surpassed $80 million, and we remain solidly profitable, generating significant cash from operations and investing activities. Our performance in the first nine months of 2023, combined with improving visibility into the fourth quarter, which is only dependent on smooth delivery and absent surprises has given us the confidence to further narrow and raise the midpoint of our annual revenue guidance range.

收入連續第三季超過 8000 萬美元，我們仍然保持穩健的盈利，從營運和投資活動中產生了大量現金。我們在 2023 年前 9 個月的業績，加上第四季度可見性的提高（僅依賴順利交付和不出現意外），使我們有信心進一步縮小和提高年度收入指導範圍的中點。

We believe we will end the year with a strong fourth quarter, giving us significant momentum as we move into 2024, which we expect to be another growth year for Ceragon. We're executing well, de-risking our business and reinforcing our competitive advantages.

我們相信，我們將以強勁的第四季度結束今年，為我們進入 2024 年提供巨大動力，我們預計 2024 年將是 Ceragon 的另一個增長年。我們執行得很好，降低了我們的業務風險並增強了我們的競爭優勢。

While the timing of bookings is not in our full control and we are susceptible to shift in orders. we also believe that we will end the year with a book-to-bill ratio above 1, increasing the strong backlog we had at the beginning of the year. Revenue for the fourth for the quarter was $87 million, up 10.9% year over year.

雖然預訂時間並非由我們完全控制，但我們很容易發生訂單變更。我們也相信，今年年底我們的訂單出貨比將超過 1，從而增加了年初的大量積壓。第四季營收為 8,700 萬美元，較去年同期成長 10.9%。

Demand remains strong, primarily in India and North America. Revenue in India reached quarterly highs since Q2 of 2018, and this was the third consecutive quarter with North America revenues exceeding $20 million. New leadership in Europe, in particular, and in other regions, are putting initiatives in place to drive improvements in 2024.

需求依然強勁，主要在印度和北美。印度的營收達到 2018 年第二季以來的季度新高，這也是北美營收連續第三個季度超過 2,000 萬美元。特別是歐洲和其他地區的新領導層正在採取舉措，以推動 2024 年的改進。

In addition, we believe the pending Siklu acquisition will provide new capabilities to meet customer demands and help fueling growth not only in North America and Europe, where Siklu has established significant presence, but also in other regions especially in South America and Asia.

此外，我們相信即將進行的Siklu 收購將提供新的能力來滿足客戶需求，並有助於推動Siklu 不僅在北美和歐洲（Siklu 已在北美和歐洲建立了重要業務）的成長，而且還有助於推動其他地區（尤其是南美洲和亞洲）的成長。

We're encouraged by the initial reaction from existing Ceragon customers to this acquisition. Based on this feedback, we are optimistic that we will have opportunities to integrate Siklu's products into solutions for some of our existing customers for specific use cases.

現有 Ceragon 客戶對此收購的初步反應令我們深受鼓舞。根據這些回饋，我們樂觀地認為，我們將有機會將 Siklu 的產品整合到我們一些現有客戶的特定用例的解決方案中。

Additionally, Siklu's technologies broadens our addressable market by opening up the fixed wireless access portion to an end-to-end solution, particularly for private networks and small service providers. For each of these reasons, we see the pending Siklu acquisition as an important strategic transaction, providing approximately $25 million to $29 million in revenue, incremental to Ceragon's standalone plan for 2024, which is expected to be another year of organic growth.

此外，Siklu 的技術透過將固定無線存取部分開放為端到端解決方案，拓寬了我們的潛在市場，特別是對於專用網路和小型服務供應商。基於上述原因，我們將即將進行的Siklu 收購視為一項重要的策略交易，可提供約2,500 萬至2,900 萬美元的收入，是Ceragon 2024 年獨立計畫的增量，預計這將是另一個有機增長的一年。

We also believe that this pending acquisition will be a catalyst for accelerated revenue and earnings growth over the next several years and think that it will accelerate our path to achieving and potentially exceeding our $500 million revenue target currently anticipated by 2027. Following the closing of this and the finalization of our 2024 AOP process, we intend to provide guidance for 2024 and discuss long-term plans.

我們也相信，這項待決收購將成為未來幾年收入和盈利加速成長的催化劑，並認為它將加速我們實現並可能超過目前預計的 2027 年 5 億美元收入目標。以及2024 年AOP 流程的最終確定，我們打算為2024 年提供指導並討論長期計劃。

Simultaneously, our existing core business remain solidly profitable. We delivered $0.04 in GAAP earnings per share and $0.06 on a non-GAAP basis. Importantly, strong collections enabled us to generate nearly $11 million in cash flow from operations and investing activities in the quarter. This reinforces our expectations that we will grow revenue and be profitable for 2023, generating cash and demonstrating that our business is self-sustaining.

同時，我們現有的核心業務仍保持穩健獲利。我們的 GAAP 每股收益為 0.04 美元，非 GAAP 每股收益為 0.06 美元。重要的是，強勁的收款使我們能夠在本季從營運和投資活動中產生近 1,100 萬美元的現金流。這強化了我們的預期，即我們將在 2023 年增加收入並實現盈利，產生現金並證明我們的業務能夠自我維持。

We have no current plans to raise money, and we do not believe we need additional capital to execute on our existing opportunities. As I mentioned, we've not encountered any significant impacts from supply chain disruption in the quarter. And while we continue to carefully manage the supply chain, component availability continues to improve.

我們目前沒有籌集資金的計劃，並且我們認為我們不需要額外的資金來執行現有的機會。正如我所提到的，本季我們沒有遇到供應鏈中斷的任何重大影響。在我們繼續仔細管理供應鏈的同時，組件的可用性不斷提高。

I do want to call attention to the increase in inventory that we amassed during the quarter and note that this increase is directly related to current orders that are in hand and in the process of being fulfilled. We continue to advance the productization of our new system-on-a-chip technology. During the third quarter, we surpassed approximately 50% of our testing plan with no bugs or issues that would delay our plans for production of the system-on-a-chip.

我確實想提請注意我們在本季度積累的庫存增加，並指出這種增加與當前手頭和正在履行的訂單直接相關。我們持續推進新系統單晶片技術的產品化。第三季度，我們超過了測試計畫的約 50%，沒有出現任何會延遲系統單晶片生產計畫的錯誤或問題。

To date our efforts are advancing according to plan. And while there is still much work to be done, we believe we remain on track to launch our new product line using the new system-on-a-chip in 2024. In addition, we are in the final stage of productization of two new products featuring a lower total cost of ownership.

迄今為止，我們的努力正在按計劃推進。儘管還有很多工作要做，但我們相信我們仍有望在 2024 年推出使用新系統單晶片的新產品線。此外，我們正處於兩種新產品的產品化的最後階段產品具有較低的總擁有成本。

These two products are expected to be available for commercial use during Q1 2024. We believe these new additional products will help us further expand our market presence and offer tangible benefits to our customers. In addition, they're expected to also help us with our long-term goal of improving gross margins.

這兩款產品預計將於 2024 年第一季投入商業使用。我們相信這些新的附加產品將幫助我們進一步擴大市場份額，並為我們的客戶帶來切實的利益。此外，預計它們還將幫助我們實現提高毛利率的長期目標。

I'd now like to overview our Q3 highlights by region, noting that on today's call, we'll focus primarily on activities in North America and India, the two regions that have and we expect will continue to have the greatest impact on our results in the near term.

我現在想按地區概述我們第三季度的亮點，並指出在今天的電話會議上，我們將主要關注北美和印度的活動，這兩個地區已經並且我們預計將繼續對我們的業績產生最大的影響在短期內。

In North America, we've continued to receive orders from major carriers. We have one customer driving a significant portion of our volume. Service providers are standardizing on higher transport capacity and investing in upgrading existing sites in parallel to network expansion and densification. We expect this upgrade need will continue creating demand for our high-end solutions even as build-out for 5G new sites is slowing down.

在北美，我們繼續收到來自主要營運商的訂單。我們有一位客戶推動了我們銷售的很大一部分。服務供應商正在對更高的傳輸容量進行標準化，並在網路擴展和緻密化的同時投資升級現有站點。我們預計，儘管 5G 新站點的建設速度正在放緩，但這種升級需求將繼續創造對我們高端解決方案的需求。

Encouragingly, we're participating in additional opportunities with smaller carriers and private networks in line with our strategy. These also revolve around new use cases that we had not historically been involved with as the need for ubiquitous connectivities intensifies and is not fully addressed by fiber.

令人鼓舞的是，我們正在根據我們的策略參與與小型營運商和專用網路的更多機會。這些也圍繞著我們歷史上從未參與過的新用例，因為對無處不在的連接的需求不斷增強，並且光纖尚未完全滿足這些需求。

There are multiple enterprise use cases, including autonomous vehicles and IoT, where fiber is either not an option or cannot be delivered fast enough to support the business. Again, Siklu may help us penetrate this growing market with a larger set of connectivity solutions. To date our business in North America remains weighted toward large carriers, but this is beginning to shift.

在許多企業用例中，包括自動駕駛汽車和物聯網，光纖要么不是一種選擇，要么無法以足夠快的速度交付來支援業務。 Siklu 可能會再次幫助我們透過更多的連接解決方案滲透這個不斷增長的市場。迄今為止，我們在北美的業務仍然以大型航空公司為主，但這種情況正在開始轉變。

As it relates to the multiyear contract with the city of Cincinnati, we've started deployment, which will include long-term maintenance and support plans. In parallel, we're already identifying various expansion opportunities, the expansion of availability for 5G frequencies as well as the evolving need for heterogeneous services profiles continue to serve as durable catalysts for our business.

由於它涉及與辛辛那提市的多年合同，我們已經開始部署，其中將包括長期維護和支援計劃。同時，我們已經在尋找各種擴展機會，5G 頻率可用性的擴展以及對異質服務配置文件不斷變化的需求將繼續成為我們業務的持久催化劑。

This is leading to a growing number of RFPs covering all segments of our addressable market, including T1 operators, rural ISPs, and small carriers as well as private networks. Some of these opportunities, particularly in the rural broadband and critical infrastructure segments may take longer to mature as they are also supported by federal and state-funding plans.

這導致越來越多的 RFP 涵蓋我們可尋址市場的所有部分，包括 T1 營運商、農村 ISP、小型營運商以及專用網路。其中一些機會，特別是在農村寬頻和關鍵基礎設施領域，可能需要更長的時間才能成熟，因為它們也得到聯邦和州資助計劃的支持。

However, rural broadband and infrastructure projects remain an important opportunity for Ceragon, contributing to our revenue growth and diversification. Our digital twin software solution is also getting traction with several significant customers in North America. With some, we are about to start proof of concept shortly. This solution is a differentiator in providing managed services to help customers optimize their multi-vendor, multi-technology networks.

然而，農村寬頻和基礎設施項目仍然是 Ceragon 的重要機遇，有助於我們的收入成長和多元化。我們的數位孿生軟體解決方案也受到北美幾家重要客戶的青睞。對於其中一些，我們即將開始概念驗證。此解決方案在提供託管服務方面具有獨特優勢，可協助客戶優化其多供應商、多技術網路。

We won our first managed services engagement in North America earlier this year, and we're building a nice funnel of opportunities for additional engagements in the telco and private networks. We believe we're increasingly well-positioned to capitalize on all of these opportunities when they mature. We also continue to increase other services business in the region, which often can double the value of the equipment we sell.

今年早些時候，我們在北美贏得了第一個託管服務項目，並且我們正在為電信和專用網路中的其他項目建立一個良好的機會管道。我們相信，當所有這些機會成熟時，我們將越來越有能力利用它們。我們也繼續增加該地區的其他服務業務，這通常可以使我們銷售的設備價值翻倍。

In India telcos continue to aggressively invest in 4G technology and 5G expansions, depending on the region, with larger cities adding 5G and 4G being used in more rural areas. We continue to work with operators in the market for 4G rollout as 4G continues to be the dominant subscription type in India as well as delivering our E-band multiband solution for 5G networks at an increased pace.

在印度，電信公司繼續積極投資 4G 技術和 5G 擴展，取決於地區，大城市增加 5G，更多農村地區使用 4G。由於 4G 仍然是印度的主要訂閱類型，我們將繼續與市場上的營運商合作推出 4G，並加快為 5G 網路提供 E-band 多頻段解決方案。

Bookings were modest in India during the quarter, but this was a factor of timing, not demand. In fact, bookings have accelerated in the first weeks of the fourth quarter, and we expect a strong end to the year in India from a booking perspective. We've not seen a reduction in demand and headwinds described by certain major equipment manufacturers have not had an impact on our business. Demand has remained robust.

本季印度的預訂量不大，但這是時間因素，而不是需求因素。事實上，第四季前幾週的預訂量有所增加，從預訂的角度來看，我們預計印度今年年底的預訂量將會強勁。我們沒有看到需求減少，某些主要設備製造商所描述的不利因素並未對我們的業務產生影響。需求依然強勁。

To summarize, we continue to deliver solid execution, including revenue growth, advancing our strategy, and driving profitability and cash flow. Conditions continue to improve both on the macro and the micro level, especially in regards to the supply chain.

總而言之，我們持續提供堅實的執行力，包括收入成長、推進我們的策略以及提高獲利能力和現金流。宏觀和微觀層面的情況都在持續改善，特別是在供應鏈方面。

Demand for our solutions is strong, and we're participating in RFPs for new opportunities. We believe we can deliver similar revenue trajectory for the foreseeable future and that we can be profitable on a non-GAAP basis for each quarter this year. With that, I'll turn the call over to Ronen Stein, our CFO, to discuss the results in more detail. Ronen, over to you.

對我們解決方案的需求很強勁，我們正在參與 RFP 尋找新的機會。我們相信，在可預見的未來，我們能夠實現類似的收入軌跡，並且我們今年每個季度都可以在非公認會計原則的基礎上實現盈利。接下來，我會將電話轉給我們的財務長 Ronen Stein，以便更詳細地討論結果。羅南，交給你了。

Thank you, Doron, and good morning, everyone. As Doron outlined, this was another strong quarter for Ceragon. Though it is important to keep in mind that we are a project-driven business and as such, there is inherent variability in results from quarter to quarter. Because of this, we analyze our bookings, revenue, and gross margins as well as other key performance indicators over a 12-month period, the duration, which we believe better reflects the underlying business trends.

謝謝你，多倫，大家早安。正如 Doron 所概述的，這是 Ceragon 的另一個強勁季度。儘管重要的是要記住，我們是一家專案驅動型企業，因此每個季度的結果都存在固有的變化。因此，我們分析了 12 個月期間的預訂量、收入和毛利率以及其他關鍵績效指標，我們認為這更能反映了潛在的業務趨勢。

In addition, to help you understand the results, I will be referring primarily to non-GAAP financials. For more information, regarding our use of non-GAAP financial measures, including reconciliations of these measures, we refer you to today's press release.

此外，為了幫助您理解結果，我將主要參考非 GAAP 財務數據。有關我們使用非公認會計準則財務指標（包括這些指標的調節）的更多信息，請參閱今天的新聞稿。

Let me now review the actual results. Revenues were $87.3 million, up 10.9% from $78.6 million in Q3 2022 and 1.3% compared to $86.2 million in Q2 2023. When we take the trailing 12 months view, our revenue was $332.4 million, an increase compared to last quarter's trailing 12 months revenue of $323.7 million. Our strongest regions in terms of revenues for the quarter were India and North America, with $29.9 million and $22.5 million, respectively, in line with the continuous strong demand we see in these regions.

現在讓我回顧一下實際結果。營收為8,730 萬美元，比2022 年第三季的7,860 萬美元成長10.9%，比2023 年第二季的8,620 萬美元成長1.3%。從過去12 個月的情況來看，我們的營收為3.324 億美元，比上一季過去12 個月的營收有所成長3.237 億美元。我們本季收入最強的地區是印度和北美，分別為 2,990 萬美元和 2,250 萬美元，這與我們在這些地區看到的持續強勁需求相符。

Our third strongest region in terms of revenues was Latin America with $12.9 million. We had two customers in the third quarter that contributed more than 10% of our revenues. Gross profit for the third quarter on a non-GAAP basis was $30.4 million, an increase of 8.8% compared to $28 million in Q3 2022 and essentially unchanged compared to $30.4 million in Q2 2023.

就收入而言，我們第三強的地區是拉丁美洲，為 1,290 萬美元。第三季我們有兩個客戶貢獻了我們10%以上的收入。以非公認會計準則計算，第三季毛利為 3,040 萬美元，較 2022 年第三季的 2,800 萬美元成長 8.8%，與 2023 年第二季的 3,040 萬美元基本持平。

Our non-GAAP gross margin was 34.9% compared to 35.5% in Q3 2022 and 35.3% in Q2 2023. We continue to achieve high gross margins, mainly as revenues from North America continue to maintain its high level and product mix continue to be favorable, while we keep costs under control, although this was offset to some extent by inventory write-offs as we prepare to launch new products.

我們的非 GAAP 毛利率為 34.9%，而 2022 年第三季為 35.5%，2023 年第二季為 35.3%。我們繼續實現高毛利率，主要是因為北美收入持續保持高水平，產品組合繼續有利，同時我們控製成本，儘管這在一定程度上被我們準備推出新產品時的庫存沖銷所抵消。

Our gross margins continue to fluctuate from quarter to quarter due to changes in product and regional mix. When we take the trailing 12 months view, our non-GAAP gross margin was 34.3%, slightly lower from last quarter's trailing 12 months gross margin of 34.5%.

由於產品和區域組合的變化，我們的毛利率持續波動。從過去 12 個月的情況來看，我們的非 GAAP 毛利率為 34.3%，略低於上季過去 12 個月的毛利率 34.5%。

As for operating expenses, research and development expenses for the third quarter on a non-GAAP basis were $7.3 million, up from $7.2 million in Q3 2022 and slightly lower from the $7.6 million in Q2 2023. As a percentage of revenue, our R&D expenses were 8.3% in the third quarter compared to 9.1% in the third quarter last year.

至於營運費用，以非公認會計原則計算，第三季的研發費用為730 萬美元，高於2022 年第三季的720 萬美元，略低於2023 年第二季的760 萬美元。按佔收入的百分比計算，我們的研發費用第三季為 8.3%，去年第三季為 9.1%。

Sales and marketing expenses for the third quarter on a non-GAAP basis were $9.7 million, up from $8.3 million in Q3 2022, and also up from $9.4 million in Q2 2023. As a percent of revenues, sale and marketing expenses were 11.1% in the third quarter compared to 10.5% in the third quarter last year.

以非公認會計準則計算，第三季的銷售和行銷費用為970 萬美元，高於2022 年第三季的830 萬美元，也高於2023 年第二季的940 萬美元。佔營收的百分比，銷售和行銷費用佔2022 年第三季的11.1%。第三季相比去年第三季成長了10.5%。

General administrative expenses for the third quarter on a non-GAAP basis were $5.5 million, down from $6.1 million in Q3 2022 and down from $6.1 million in Q2 2023. As a percent of revenues, G&A expenses were 6.2% in the third quarter compared to 7.8% in the third quarter last year.

以非公認會計準則計算，第三季的一般管理費用為550 萬美元，低於2022 年第三季的610 萬美元，也低於2023 年第二季的610 萬美元。以收入百分比計算，第第三季的一般管理費用為6.2%，而2022 年第三季的一般管理費用為6.2%。去年第三季成長7.8%。

We intend to continue being disciplined in our operating expenses, while leveraging our strong results to further invest in certain areas to support continuous growth. Primarily, it is our intention to increase our sales and marketing expenses to support acceleration in our penetration to private networks and small service providers. Therefore, we expect our operating expenses in the fourth quarter to slightly exceed $23 million. We believe that such investments can better position us to see further growth in these segments in 2024.

我們打算繼續嚴格控制營運支出，同時利用我們強勁的業績進一步投資於某些領域，以支持持續成長。首先，我們打算增加銷售和行銷費用，以支援加速我們對專用網路和小型服務供應商的滲透。因此，我們預計第四季度的營運支出將略超過 2,300 萬美元。我們相信，這類投資可以讓我們更好地在 2024 年看到這些領域的進一步成長。

Operating profit for the third quarter on a non-GAAP basis was $8 million, up from the $6.4 million reported in last year's third quarter and also up from $7.4 million reported in Q2 2022.

以非公認會計準則計算，第三季營業利潤為 800 萬美元，高於去年第三季報告的 640 萬美元，也高於 2022 年第二季報告的 740 萬美元。

Financial and other expenses for the third quarter on a non-GAAP basis were $2.1 million in line with expectations and prior periods. Our tax expenses for the third quarter on a non-GAAP basis were just under $1 million.

以非 GAAP 計算，第三季的財務和其他費用為 210 萬美元，與預期和前期相符。以非 GAAP 計算，我們第三季的稅務支出略低於 100 萬美元。

Net income on a non-GAAP basis for the quarter was $5 million or $0.06 per diluted share compared to net income of $4.1 million or $0.05 per share in the third quarter last year. The third-quarter GAAP net income was $3.4 million or $0.04 per diluted share compared to a net loss of $0.9 million or a loss of $0.01 per share for the third quarter last year.

以非公認會計準則計算，本季淨利為 500 萬美元，或稀釋後每股 0.06 美元，而去年第三季淨利為 410 萬美元，或每股 0.05 美元。第三季 GAAP 淨利為 340 萬美元，即稀釋後每股虧損 0.04 美元，去年第三季淨虧損為 90 萬美元，即每股虧損 0.01 美元。

As for our balance sheet, our cash position at the end of the third quarter was $34 million compared to $22.9 million at the end of 2022. Short-term loans were $38.2 million compared to $37.5 million as of December 31, 2022.

就我們的資產負債表而言，第三季末我們的現金部位為 3,400 萬美元，而 2022 年末為 2,290 萬美元。短期貸款為 3,820 萬美元，而截至 2022 年 12 月 31 日為 3,750 萬美元。

We believe we have cash and facilities that are sufficient for our operations and working capital needs. Our inventory at the end of Q3 2023 was $70.1 million, down from the $72 million at the end of December 2022. We continue to monitor inventory levels, taking into consideration the improvements in availability of components and expected changes in demand.

我們相信我們擁有足夠的現金和設施來滿足我們的營運和營運資金需求。截至 2023 年第三季末，我們的庫存為 7,010 萬美元，低於 2022 年 12 月底的 7,200 萬美元。我們將繼續監控庫存水平，同時考慮組件可用性的改善和預期需求變化。

As Doron mentioned, inventory levels increased slightly compared sequentially to the second quarter, reflecting firm orders we're scheduled to deliver in the fourth quarter and the first quarter. As such, we expect inventory levels to normalize in the near term. Our trade receivables are at $104.6 million as compared to $100 million at the end of December 2022. Our DSO now stands at 115 days.

正如多倫所提到的，庫存水準與第二季度相比略有增加，反映出我們計劃在第四季度和第一季交付的確定訂單。因此，我們預計庫存水準將在短期內恢復正常。我們的貿易應收帳款為 1.046 億美元，而 2022 年 12 月底為 1 億美元。我們的 DSO 目前為 115 天。

As for our cash flow, net cash flow generated by operations and investing activities in Q3 2023 was $10.8 million. We expect to generate positive cash from operations for the full year. As Doron indicated at the top of this call, demand in our business continues to be strong and we're encouraged by our backlog, which gives us good visibility into the fourth quarter.

至於我們的現金流，2023 年第三季營運和投資活動產生的淨現金流為 1,080 萬美元。我們預計全年營運將產生正現金。正如多倫在本次電話會議開頭所指出的那樣，我們的業務需求持續強勁，我們對積壓的訂單感到鼓舞，這使我們對第四季度有良好的了解。

Based on our results and as our visibility improves, we're updating and raising the midpoint of our full-year revenue outlook [from $334 million to $348 million to $338 million, $346 million] and reaffirming expectations for full-year profitability. The outlook we're providing today is based on our current visibility. With that, I now open the call for your questions. Operator?

根據我們的業績以及隨著知名度的提高，我們正在更新並提高全年收入前景的中點[從3.34 億美元到3.48 億美元到3.38 億美元、3.46 億美元]，並重申對全年盈利能力的預期。我們今天提供的前景是基於我們當前的可見性。至此，我現在開始詢問大家的問題。操作員？

(Operator Instructions) Alex Henderson, Needham.

（操作員說明）Alex Henderson，Needham。

Great. Thank you so much for letting me ask a question here and my thoughts are with you guys, given the horrible terrorist attack, that's (inaudible) guys into war. I hope everybody is safe and your families are okay. I wanted to hit a couple of quick questions. The first one is, can you give us some sense of the size of the inventory write-down in the quarter? And is that now completed or do you expect a similar kind of write-down in the fourth quarter as you anticipate launching the products in the first quarter of next year?

偉大的。非常感謝你們讓我在這裡問一個問題，我的想法與你們同在，考慮到可怕的恐怖攻擊，那些（聽不清楚）人們捲入了戰爭。我希望每個人都安全，你的家人也都安好。我想問幾個簡單的問題。第一個問題是，您能否讓我們了解本季庫存減記的規模？現在已經完成了嗎？或者您預計第四季會出現類似的減記，就像您預計明年第一季推出產品一樣？

Regarding the level of write-offs, I would say that there was approximately $1.6 million of write-off that is beyond the regular write-offs. So it is in total -- it's around $2 million. We do not anticipate any additional write-offs, but this is being monitored every quarter. So I cannot say that we know now about any expected write-offs except from the regular model that we have.

關於核銷水平，我想說，大約有 160 萬美元的核銷超出了常規核銷。總共大約是 200 萬美元。我們預計不會有任何額外的沖銷，但每季都會對此進行監控。因此，我不能說我們現在知道除了我們現有的常規模型之外的任何預期沖銷。

So if I adjust for that write-off, your gross margins would have permitted 36.7%, can you talk about why that would not be the case again in the December quarter?

因此，如果我對沖銷進行調整，你們的毛利率將達到 36.7%，你能談談為什麼 12 月季度不會再發生這種情況嗎？

Well, the impact of the inventory is just something that we cannot anticipate exactly the mixture in the next quarter. That could be different paths to achieve our targets for the next quarter. And as you see, we still have some room of change in the revenues, so it can be higher, it can be a little bit lower. We cannot anticipate that exactly and provide guidance on that.

嗯，庫存的影響只是我們無法準確預測下個季度的混合。這可能是實現我們下季度目標的不同途徑。正如你所看到的，我們的收入仍然有一些變化的空間，所以它可能會更高，也可能會更低一些。我們無法準確預測這一點並就此提供指導。

And again, if I back out the $1.6 million, your 36.7%, is it reasonable to think that you're in the 35%-plus range? Not only in the fourth quarter. But for that matter with these new products launching having higher margins in '24, shouldn't your margins be of 35%-plus going forward?

再說一遍，如果我放棄 160 萬美元，即您的 36.7%，那麼認為您處於 35% 以上的範圍內是否合理？不僅是第四季。但就這一點而言，隨著這些新產品在 24 年推出的利潤率更高，你們的利潤率不應該在 35% 以上嗎？

So we've shown that we can reach higher numbers of higher percentage of margins even to 35.5%. And we even discussed that we can reach even 36%. But this is something that we have to make some room also for any other changes in mixture -- in mixture of products, software, yes or no, and other, a mixture of revenues from different regions.

因此，我們已經證明，我們可以達到更高的利潤率，甚至達到 35.5%。我們甚至討論過甚至可以達到 36%。但這是我們必須為混合中的任何其他變化留出一些空間——產品、軟體的混合，是或否，以及其他來自不同地區的收入的混合。

So as long as we don't know exactly the final revenues mixture, it's very difficult to predict it. Usually there are something that can take us down, as you can see to the level of 35%, 36%. But yes, in the last few quarters, we've been in high 34 to the high 35.

因此，只要我們不確切地知道最終的收入組合，就很難預測它。通常有些東西會讓我們失望，如你所見，達到 35%、36% 的水平。但是，是的，在過去幾個季度中，我們的排名一直在前 34 名到前 35 名之間。

Okay. So looking out into the '24 timeframe and just looking back at the '23 window, just to be clear, the supply chain problems did not cause a boom-bust in your revenue recognition and the timing of your revenue. So we're not looking at it an overaged on '23 that's then setting up a tougher comp in '24, which has been expressed by some of the companies that are in the same category, is that a fair statement?

好的。因此，回顧 24 年的時間範圍並回顧 23 年的窗口，需要明確的是，供應鏈問題並沒有導致您的收入確認和收入時間繁榮-蕭條。因此，我們不會在 23 年考慮超齡，然後在 24 年建立更嚴格的競爭，這一點已被同一類別的一些公司所表達，這是一個公平的聲明嗎？

I'm sorry, I couldn't hear you well. Can you repeat the question, please?

抱歉，我聽不清楚。請您重複一下這個問題好嗎？

Sure. So a number of companies have understated revenues in prior periods because they couldn't get parts. Then when the supply chain improved, they overshipped relative to demand and have very tough comps. I don't believe that that happened with Ceragon. Is Ceragon's '23 numbers are normal demand numbers, correct? There's no boom-bust in the -- or bust-boom in the shipments because of supply chain. Is that a fair statement?

當然。因此，許多公司因為無法獲得零件而低估了前期收入。然後，當供應鏈改善時，他們的出貨量相對於需求來說是超額的，而且競爭非常激烈。我不相信 Ceragon 會發生這種事。 Ceragon 的 '23 數字是正常需求數字，對嗎？由於供應鏈的原因，出貨量不存在繁榮-蕭條，也不存在蕭條-繁榮。這是一個公平的說法嗎？

Let me take this, Alex. If you're talking business wise, as I said, we expect book-to-bill ratio in this year to be above 1. And that means that probably the short answer is that we don't feel that we overshipped or overdelivered this year relative to the true demand that we're seeing now from the market.

讓我接受這個，亞歷克斯。如果你談論商業明智的問題，正如我所說，我們預計今年的訂單出貨比將高於 1。這意味著簡短的答案可能是我們不認​​為今年我們超額發貨或超額交付相對於我們現在從市場看到的真實需求。

Perfect. So you made the comment on in the prepared remarks that you expect similar levels of growth, you're growing at about a 10% clip now. Is it fair for us to think of '24 as a 10% growth year?

完美的。因此，您在準備好的評論中發表了評論，您預計會有類似的增長水平，現在的增長速度約為 10%。我們將 24 年視為 10% 的成長年是否公平？

I think I did not make the exact comment like you got it. I think that we do expect to grow next year as well organically, setting aside Siklu's contribution, I think we can get to high single digit, maybe touch 10%. But let's not forget that this year is a year of very, very strong demand and where we started with a relatively low baseline in 2023. So all in all, I think we can be in high single digit growth, touching 10%, maybe slightly below, and that's in terms of organic growth.

我想我沒有像你得到的那樣做出準確的評論。我認為我們確實預計明年也會實現有機成長，撇開 Siklu 的貢獻不談，我認為我們可以達到高個位數，也許達到 10%。但我們不要忘記，今年是需求非常非常強勁的一年，我們從 2023 年的基線相對較低開始。所以總而言之，我認為我們可以實現高個位數增長，達到 10%，也許會略有增長下面是有機成長方面的。

Looking at the fourth quarter, just to nail that down a little bit, you talked about $23 million in OpEx, which is a pretty good increase sequentially and year over year, quite a substantial increase. I assume that some of that's in the sales and marketing. I assume some of it's in the R&D line for the new products. Is it reasonable to think that the gross margins can be robust enough in 4Q to allow you to produce close to that 10% operating margin again in the quarter or is that stretching?

看看第四季度，為了稍微確定一下這一點，您談到了 2300 萬美元的營運支出，這是一個相當不錯的環比和同比增長，相當大的增長。我認為其中一些是在銷售和行銷方面。我認為其中一些是在新產品的研發線上。是否有理由認為第四季度的毛利率足夠強勁，可以讓您在本季度再次實現接近 10% 的營業利潤率，或者這種情況是否超出預期？

You want to take it, Ronen? Just go ahead.

你想接受它嗎，羅南？前進吧。

Yes, we do believe that this investment is important. And as I mentioned, primarily in the sales and marketing, we feel that in order to achieve our targets in growing in the specific segments of private networks and small to medium a service providers, we have to invest and to use our profitability right now in these quarters for some investment to the future.

是的，我們確實相信這項投資很重要。正如我所提到的，主要是在銷售和行銷方面，我們認為，為了實現我們在專用網路和中小型服務提供者的特定細分市場中成長的目標，我們必須立即投資並利用我們的獲利能力這些季度對未來進行了一些投資。

So there may be some fluctuation in the profitability -- in the operating profit percentage from revenues. But as we don't know exactly the gross margin that is expected, hopefully, we will not be much less than the current operating profit.

因此，獲利能力——營業利潤佔收入的百分比——可能會出現一些波動。但由於我們不清楚預期的毛利率，希望不會比目前的營業利潤少很多。

All right. I'll see you at the floor and go back in the queue.

好的。我會在樓層見並返回隊列。

Thank you, Alex.

謝謝你，亞歷克斯。

(Operator Instructions) Rommel Dionisio, Aegis.

（操作員指示）隆美爾·迪奧尼西奧，宙斯盾。

Good morning. Thank you. And I just wanted to echo Alex's sentiments as well and wishing you and your families all the best and safety. I wonder if you could -- thanks. You guys talked about the marketing efforts on to reach out to -- expand your business with private networks and smaller customers, could you talk about -- are you adding personnel there? Are there other sort of more temporary expenses that you'll be incurring in the unit term? Or would it be additional personnel and thus, therefore, more permanent addition to the sales and marketing level? Thank you.

早安.謝謝。我只是想表達亞歷克斯的感受，並祝福你和你的家人一切順利和安全。我想知道你是否可以——謝謝。你們談到了行銷工作，以擴大您的業務，透過專用網路和較小的客戶，您能談談嗎？你們是否在那裡增加人員？您在單位期限內是否會產生其他類型的臨時費用？或者是否會增加人員，從而對銷售和行銷水平進行更持久的補充？謝謝。

Yeah, Rommel, thanks for this question. It's a -- basically, it's a combination. First of all, we've beefed up our salesforce in North America primarily that is focusing on this private network segment. So that's one thing for us to stay. And obviously, as these guys started bringing business, it will also help us to grow our booking and obviously, the revenue.

是的，隆美爾，謝謝你提出這個問題。基本上，這是一個組合。首先，我們加強了北美的銷售隊伍，主要專注於這個專用網路部分。所以我們留下來是一回事。顯然，隨著這些人開始帶來業務，它也將幫助我們增加預訂量，顯然也將幫助我們增加收入。

The second part is more of a variable part, it's an investment in marketing. Let's not forget that Ceragon is very, very well-known brand in the T1, T2 operators across the world. We're just building the brand in the private networks and the smaller players, and that requires certain marketing investments. Now this could be up and down depending on campaigns, depending on the marketing strategy. So that is part that is more of a variable expenditure.

第二部分更多的是可變部分，是對行銷的投資。我們不要忘記，Ceragon 在全球 T1、T2 營運商中是非常非常知名的品牌。我們只是在私人網絡和較小的參與者中建立品牌，這需要一定的營銷投資。現在，這個數字可能會根據行銷活動和行銷策略的不同而上下波動。所以這部分更多的是變動支出。

Okay. And just on a geographic focused standpoint, you've obviously made some penetration in North America with the private networks. Looking forward, do you foresee continued penetration in North America, expansion into Europe potentially? What are some of the geographic regions you want to target there? Thanks, Doron.

好的。僅從地理角度來看，您顯然已經透過專用網路在北美取得了一些滲透。展望未來，您是否預計會繼續滲透到北美，並有可能擴展到歐洲？您想要定位哪些地理區域？謝謝，多倫。

So generally speaking, first of all, I mentioned 20 new customers in the domain of private networks and small operators. One thing is that this is widespread, but definitely, North America has a very significant portion in this success. And just for you to understand, we're not accounting every $5,000 new customer, the aggregate amount of these 20 new customers initial orders is amounting to eight-digit booking. So it's not an insignificant amount.

所以總的來說，首先我提到了專網和小型營運商領域的20個新客戶。有一件事是，這種情況很普遍，但毫無疑問，北美在這一成功中發揮了非常重要的作用。請您瞭解，我們並沒有統計每位 5,000 美元的新客戶，這 20 位新客戶的初始訂單總額相當於八位數的預訂。所以這不是一個微不足道的金額。

We see the opportunity in many regions. And we're actually changing the structure of our salesforce to be led by segment rather than by geography in each and every region. So for example, in Europe now we have three categories, one is chasing T1 big operators, one is chasing private networks, and one is chasing smaller transactions via channels. So the focus on private networks is increasing.

我們在許多地區看到了機會。實際上，我們正​​在改變銷售團隊的結構，以細分市場而不是每個地區的地理位置為主導。例如，在歐洲，現在我們有三類，一類是追逐T1大運營商，一類是追逐私有網絡，一類是追逐透過管道進行的較小交易。因此，對專用網路的關注日益增加。

And as I said, the wins are not just in North America. Although in North America, we are very, so to speak, pleased with the progress, but this is meant to be a global effort, not just in North America.

正如我所說，勝利不僅僅在北美。儘管在北美，我們對所取得的進展感到非常滿意，但這意味著這是一項全球性的努力，而不僅僅是北美的努力。

Great. Thank you very much, Doron.

偉大的。非常感謝你，多倫。

(Operator Instructions) We have no further questions. Please proceed with closing [comments].

（操作員說明）我們沒有其他問題了。請繼續關閉[評論]。

To close, we're encouraged by our year-to-date results, and we believe that we are well-positioned to achieve self-sustaining cash flows as we execute our growth strategy. We're excited about the opportunities in front of Ceragon.

最後，我們對今年迄今的業績感到鼓舞，我們相信，在執行成長策略時，我們有能力實現自我維持的現金流。我們對 Ceragon 面前的機會感到興奮。

We've commenced our strategic planning and budgeting process for 2024, and we anticipate achieving organic growth business next year. We announced the pending closing strategic acquisition that we believe will accelerate Ceragon's strategy execution and can provide incremental growth opportunities and extend our margin expansion efforts. We expect to communicate our guidance for 2024 when we announce Q4 2023 results. I look forward to updating you further on our next quarterly call. Have a good day, everyone.

我們已經開始 2024 年的策略規劃和預算流程，預計明年將實現業務有機成長。我們宣布了即將完成的策略性收購，我們相信這將加速 Ceragon 的策略執行，並能提供增量成長機會並擴大我們的利潤擴張努力。我們預計在宣布 2023 年第四季業績時傳達我們對 2024 年的指導。我期待在下一次季度電話會議上向您進一步通報最新情況。祝大家有美好的一天。