EX-99 2 exhibit_a.htm EXHIBIT A
Exhibit A


CERAGON NETWORKS REPORTS 2022 FOURTH QUARTER AND
FULL YEAR FINANCIAL RESULTS
 
Q4 2022 Financial Highlights:
 

•
Revenues of $75.5 million
 

 •
Operating income of $1.7 million on a GAAP basis, or $3.2 million on a non-GAAP basis
 

 •
EPS of $(0.03) per diluted share on a GAAP basis, or $(0.00) per diluted share on a non-GAAP basis
 
Full Year 2022 Financial Highlights:
 

 •
Revenues of $295.2 million
 

 •
Operating income of $1.4 million on a GAAP basis, or $9.3 million on a non-GAAP basis
 

 •
EPS of $(0.09) per diluted share on a GAAP basis, or $(0.01) per diluted share on a non-GAAP basis
 
Q4 & FY 2022 Business Highlights:
 

 •
Strong yearly bookings in North America and India; 2022 annual book-to-bill well above 1
 

 •
Increased success in open networks solutions, Managed Services, and new use cases in Q4 and throughout the year
 

 •
North America:
 

 o
Excellent year in terms of bookings; Q4 softer due to seasonality
 

 o
Increased focus and significant traction in the critical infrastructure sector in Q4
 

 •
Europe:
 

 o
Strong quarter with several key agreements signed
 

 o
Open network solution gaining traction
 

 •
India:
 

 o
Strongest region in terms of Q4 and annual revenue
 

 o
Ongoing strong demand for our 4G network products and growing demand for our 5G network solutions
 
Rosh Ha’ain, Israel, February 08, 2023 - Ceragon Networks Ltd. (NASDAQ: CRNT), the global innovator and leading solutions provider of 5G wireless transport, today reported its financial results for the fourth quarter and full year ended December 31, 2022.

Doron Arazi, CEO, commented: “I’m pleased to share that we had a very good 2022 in terms of the strength of our business, as reflected in our bookings. The second half of the year showed significant improvement in our revenue levels and profitability thanks to our relentless execution of our Growth Strategy and changing supply chain dynamics, which continue heading in the right direction.
 
We achieved 33.1% gross margin and a $3.2 million in operating profit in the fourth quarter 2022 on a non-GAAP basis. Our revenues and profits would have been even higher were it not for unforeseen outside events. A month into 2023, we are mostly caught up on our revenue shift from the fourth quarter 2022.
 
We are starting 2023 with a strong backlog and a positive operational momentum.”


Primary Fourth Quarter 2022 Financial Results:
 
Revenues were $75.5 million, a decrease of 3.0% compared to $77.8 million in Q4 2021 and 4.1% compared to $78.6 million in Q3 2022. The decrease is mainly attributed to a policy change by one of our customers regarding equipment receipt prior to year-end.
 
Gross profit was $24.5 million, giving us a gross margin of 32.5%, compared with a gross margin of 29.4% in Q4 2021 and 35.3% in Q3 2022.
 
Operating income was $1.7 million compared with $1.0 million for Q4 2021 and $1.3 million for Q3 2022.
 
Net loss was $2.7 million, or $(0.03) per diluted share, compared with $12.2 million, or $(0.15) per diluted share for Q4 2021 and $0.9 million, or $(0.01) per diluted share for Q3 2022.
 
Non-GAAP results were as follows: gross margin 33.1%, operating income $3.2 million, and net loss of $0.2 million, or $(0.00) per diluted share.
 
Cash and cash equivalents were $22.9 million at December 31, 2022, compared to $26.0 million at September 30, 2022.

Primary Full Year 2022 Financial Results:

Revenues were $295.2 million, up 1.5% from $290.8 million in 2021.

Gross profit was $93.1 million, giving us a gross margin of 31.5%, compared with a gross margin of 30.4% in 2021.

Operating income was $1.4 million, compared to $4.8 million in 2021.

Net loss was $7.4 million, or $(0.09) per diluted share. Net loss for 2021 was $14.8 million, or $(0.18) per diluted share.

Non-GAAP results were as follows: Gross margin was 31.8%, operating income was $9.3 million, and net loss was $0.4 million, or $(0.01) per diluted share.

For a reconciliation of GAAP to non-GAAP results, see the tables below.

Revenue breakout by geography:

 
Q4 2022
Full Year 2022
India
29%
27%
North America
23%
23%
Latin America
17%
18%
Europe
13%
14%
APAC
11%
11%
Africa
7%
7%

Outlook
 
We are targeting revenue growth in 2023. We expect yearly revenue to be between $325 - $345 million.

Conference Call

The Company will host a zoom web conference on the same day at 9:00a.m. ET to discuss the results, followed by a question-and-answer session for the investment community. Investors are invited to register by clicking here. All relevant information will be sent upon registration.

If you are unable to join us live, a recording of the call will be available on our website at www.ceragon.com within 24 hours after the call.

About Ceragon Networks

Ceragon Networks Ltd. (NASDAQ: CRNT) is the global innovator and leading solutions provider of 5G wireless transport. We help operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul and fronthaul solutions. Our customers include service providers, public safety organizations, government agencies and utility companies, which use our solutions to deliver 5G & 4G broadband wireless connectivity, mission-critical multimedia services, stabilized communications, and other applications at high reliability and speed.
 
Ceragon’s unique multicore technology and disaggregated approach to wireless transport provides highly reliable, fast to deploy, high-capacity wireless transport for 5G and 4G networks with minimal use of spectrum, power, real estate, and labor resources. It enables increased productivity, as well as simple and quick network modernization, positioning Ceragon as a leading solutions provider for the 5G era. We deliver a complete portfolio of turnkey end-to-end AI-based managed and professional services that ensure efficient network rollout and optimization to achieve the highest value for our customers. Our solutions are deployed by more than 400 service providers, as well as more than 800 private network owners, in more than 150 countries. For more information please visit: www.ceragon.com
 
Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United States and other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.
 
Safe Harbor

This press release contains statements that constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, and the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon’s management about Ceragon’s business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include, but are not limited to, statements regarding: projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, supply chain and shipping, components availability, growth prospects, product development, financial resources, cost savings and other financial and market matters. You may identify these and other forward-looking statements by the use of words such as “may”, “plans”, “anticipates”, “believes”, “estimates”, “targets”, “expects”, “intends”, “potential” or the negative of such terms, or other comparable terminology, although not all forward-looking statements contain these identifying words.

Although we believe that the projections reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations therefrom will not be material. Such forward-looking statements involve known and unknown risks and uncertainties that may cause Ceragon’s future results or performance to differ materially from those anticipated, expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the continuing impact of the components shortage due to the global shortage in semiconductors, chipsets, components and other commodities, on our supply chain, manufacturing capacity and ability to timely deliver our products, which have caused, and could continue to cause, delays in deliveries of our products and in the deployment of projects by our customers, risk of penalties and orders cancellation created thereby, as well as profit erosion due to constant price increase, payment of expedite fees and costs of inventory pre-ordering and procurement acceleration of such inventory, and the risk of becoming a deadstock if not consumed; the continued effect of the global increase in shipping costs and decrease in shipping slots available to us, our supply chain and customers, which have resulted, and may continue to result in, price erosion, late deliveries and the risk of penalties and orders cancellation due to late deliveries; the impact of the transition to 5G technologies on our revenues if such transition is developed differently than we anticipated; the risks relating to the concentration of a major portion of our business on large mobile operators around the world from which we derive a significant portion of our ordering, that due to their relative effect on the overall ordering coupled with inconsistent ordering pattern and volume of business directed to us, creates high volatility with respect to our financial results and results of operations; the risks associated with our engagement with long term projects, which expose us to our customers’ default, insolvency, or other adverse effects on our customers’ ability to pay us, including the risk that our collection efforts relating to a significant debt from a single customer will not be successful for the full amount owed or on the anticipated timeframe or at all; the effect of the competition from other wireless transport equipment providers and from other communication solutions that compete with our high-capacity point-to-point wireless products; the risks relating to increased breaches of network or information technology security along with increase in cyber-attack activities, growing cyber-crime threats, and changes in privacy and data protection laws, that could have an adverse effect on our business;  the risks relating to the concentration of a significant portion of Ceragon’s expected business in certain countries and particularly in India, where a small number of customers are expected to represent a significant portion of our revenues; risks associated with any failure to meet our product development timetable, including delay in the commercialization of our new chipset; imposition of additional sanctions and global trade limitations in connection with Russia's invasion to Ukraine; risks relating to potential uprise or additional outbreak of the COVID-19 pandemic and the effects on the global economy and markets and on us and on the markets in which we operate that are associated therewith; the effects of general economic conditions and trends on the global and local markets in which we operate and such other risks, uncertainties and other factors that could affect our results, as further detailed in Ceragon’s most recent Annual Report on Form 20-F and in Ceragon’s other filings with the Securities and Exchange Commission.

We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Ceragon does not assume any obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release unless required by law.

Ceragon’s public filings are available on the Securities and Exchange Commission’s website at www.sec.gov and may also be obtained from Ceragon’s website at www.ceragon.com.

Investor & Media Contact:
Maya Lustig
Ceragon Networks
Tel. +972-54-677-8100
mayal@ceragon.com


- Tables Follow -

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

   
Three months ended
December 31,
    
Year ended
December 31,
  
   
2022
    
2021
    
2022
    
2021
  
                         
Revenues
  
$
75,531
    
$
77,760
    
$
295,173
    
$
290,766
  
Cost of revenues
    
50,999
      
54,929
      
202,110
      
202,389
  
                                 
Gross profit
    
24,532
      
22,831
      
93,063
      
88,377
  
                                 
Operating expenses:
                                
Research and development, net
    
8,080
      
7,795
      
29,690
      
29,473
  
Seles and Marketing
    
8,998
      
9,026
      
35,795
      
33,509
  
General and administrative
    
5,536
      
4,983
      
22,005
      
20,589
  
Other operating expenses (*)
    
249
      
-
      
4,220
      
-
  
                                 
Total operating expenses
  
$
22,863
    
$
21,804
    
$
91,710
    
$
83,571
  
                                 
Operating income
    
1,669
      
1,027
      
1,353
      
4,806
  
                                 
Financial expenses and others, net
    
3,012
      
3,397
      
6,306
      
8,625
  
                                 
Loss before taxes
    
(1,343
)
    
(2,370
)
    
(4,953
)
    
(3,819
)
                                 
Taxes on income
    
1,385
      
9,842
      
2,446
      
11,009
  
                                 
Net loss
  
$
(2,728
)
  
$
(12,212
)
  
$
(7,399
)
  
$
(14,828
)
                                 
Basic and diluted net loss per share
  
$
(0.03
)
  
$
(0.15
)
  
$
(0.09
)
  
$
(0.18
)
                                 
Weighted average number of shares used in computing basic and diluted net loss per share
    
84,347,548
      
83,916,419
      
84,132,982
      
83,414,831
  

(*) Hostile attempt related costs.

CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)

   
December 31,
2022
    
December 31,
2021
  

 
Unaudited
    
Audited
  
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
22,948
    
$
17,079
  
Trade receivables, net
    
112,324
      
107,826
  
Other accounts receivable and prepaid expenses
    
15,756
      
17,179
  
Inventories
    
72,009
      
61,398
  
                 
Total current assets
    
223,037
      
203,482
  
                 
NON-CURRENT ASSETS:
                
    Trade receivables, net
    
-
      
10,484
  
   Severance pay and pension fund
    
4,633
      
5,648
  
   Property and equipment, net
    
29,456
      
29,383
  
   Operating lease right-of-use assets
    
17,962
      
20,233
  
   Intangible assets, net
    
8,208
      
6,274
  
    Other non-current assets
    
18,312
      
17,059
  
                 
Total non-current assets
    
78,571
      
89,081
  
                 
Total assets
  
$
301,608
    
$
292,563
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Trade payables
  
$
67,384
    
$
69,436
  
Deferred revenues
    
3,343
      
3,384
  
Short-term loans
    
37,500
      
14,800
  
Operating lease liabilities
    
3,745
      
4,359
  
Other accounts payable and accrued expenses
    
20,864
      
23,704
  
                 
Total current liabilities
    
132,836
      
115,683
  
                 
LONG-TERM LIABILITIES:
                
Accrued severance pay and pensions
    
9,314
      
10,799
  
Deferred revenues
    
11,545
      
9,275
  
Other long-term payables
    
2,653
      
2,445
  
Operating lease liabilities 
    
13,187
      
17,210
  
                 
Total long-term liabilities
    
36,699
      
39,729
  
                 
SHAREHOLDERS' EQUITY:
                
Share capital:
                
     Ordinary shares
    
224
      
224
  
Additional paid-in capital
    
432,214
      
428,244
  
Treasury shares at cost
    
(20,091
)
    
(20,091
)
Other comprehensive loss
    
(11,156
)
    
(9,507
)
Accumulated deficits
    
(269,118
)
    
(261,719
)
                 
Total shareholders' equity
    
132,073
      
137,151
  
                 
Total liabilities and shareholders' equity
  
$
301,608
    
$
292,563
  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)
(Unaudited)

   
Three months ended
December 31,
    
Year ended
December 31,
  
   
2022
    
2021
    
2022
    
2021
  
Cash flow from operating activities:
                        
Net loss
  
$
(2,728
)
  
$
(12,212
)
  
$
(7,399
)
  
$
(14,828
)
Adjustments to reconcile net loss to net cash used in operating activities:
                                
Depreciation and amortization
    
2,622
      
3,458
      
11,040
      
12,246
  
Loss from sale of property and equipment, net
    
-
      
9
      
20
      
82
  
Share-based compensation expense
    
958
      
891
      
3,560
      
2,562
  
Increase (decrease) in accrued severance pay and pensions, net
    
245
      
(134
)
    
(445
)
    
(418
)
Decrease (increase) in trade receivables, net
    
3,652
      
(8,562
)
    
6,138
      
(11,150
)
Decrease (increase) in other accounts receivable and prepaid expenses (including other long term assets)
    
1,414
      
744
      
(345
)
    
(6,976
)
Decrease in operating lease right-of-use assets
    
845
      
2,320
      
3,571
      
5,713
  
Increase in inventory, net of write off
    
(7,845
)
    
(8,473
)
    
(11,155
)
    
(11,908
)
Decrease in deferred tax asset, net
    
-
      
8,543
      
-
      
8,279
  
Increase (decrease) in trade payables
    
(5,191
)
    
6,148
      
(2,018
)
    
5,883
  
Decrease in other accounts payable and accrued expenses (including other long term liabilities)
    
(2,190
)
    
(1,370
)
    
(4,154
)
    
(1,556
)
Decrease in operating lease liability
    
(779
)
    
(1,578
)
    
(5,937
)
    
(4,620
)
Increase in deferred revenues
    
494
      
476
      
2,229
      
1,672
  
Net cash used in operating activities
  
$
(8,503
)
  
$
(9,740
)
  
$
(4,895
)
  
$
(15,019
)
                                 
Cash flow from investing activities:
                                
Purchase of property and equipment
    
(1,432
)
    
(3,136
)
    
(10,464
)
    
(9,383
)
Proceeds from sale of property and equipment
    
-
      
-
      
-
      
200
  
Purchase of intangible assets
    
(697
)
    
(192
)
    
(1,957
)
    
(212
)
Net cash used in investing activities
  
$
(2,129
)
  
$
(3,328
)
  
$
(12,421
)
  
$
(9,395
)
                                 
Cash flow from financing activities:
                                
Proceeds from exercise of options
    
-
      
42
      
410
      
4,730
  
Proceeds from bank credits and loans, net
    
7,600
      
2,900
      
22,700
      
9,800
  
Net cash provided by financing activities
  
$
7,600
    
$
2,942
    
$
23,110
    
$
14,530
  
                                 
Translation adjustments on cash and cash equivalents
  
$
16
    
$
(30
)
  
$
75
    
$
(138
)
Increase (decrease) in cash and cash equivalents
  
$
(3,016
)
  
$
(10,156
)
  
$
5,869
    
$
(10,022
)
Cash and cash equivalents at the beginning of the period
    
25,964
      
27,235
      
17,079
      
27,101
  
Cash and cash equivalents at the end of the period
  
$
22,948
    
$
17,079
    
$
22,948
    
$
17,079
  


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
(Unaudited)

   
Three months ended
    
Year ended
  
   
December 31,
    
December 31,
  
   
2022
    
2021
    
2022
    
2021
  
                         
GAAP cost of revenues
  
$
50,999
    
$
54,929
    
$
202,110
    
$
202,389
  
Stock based compensation expenses
    
(169
)
    
(129
)
    
(587
)
    
(289
)
Paycheck protection program
    
-
      
-
      
-
      
306
  
Changes in indirect tax positions
    
(279
)
    
399
      
(281
)
    
394
  
Non-GAAP cost of revenues
  
$
50,551
    
$
55,199
    
$
201,242
    
$
202,800
  
                                 
GAAP gross profit
  
$
24,532
    
$
22,831
    
$
93,063
    
$
88,377
  
Gross profit adjustments
    
448
      
(270
)
    
868
      
(411
)
Non-GAAP gross profit
  
$
24,980
    
$
22,561
    
$
93,931
    
$
87,966
  
                                 
GAAP Research and development expenses
  
$
8,080
    
$
7,795
    
$
29,690
    
$
29,473
  
Stock based compensation expenses
    
(217
)
    
(50
)
    
(405
)
    
(236
)
Non-GAAP Research and development expenses
  
$
7,863
    
$
7,745
    
$
29,285
    
$
29,237
  
                                 
GAAP Sales and Marketing expenses
  
$
8,998
    
$
9,026
    
$
35,795
    
$
33,509
  
Stock based compensation expenses
    
(393
)
    
(345
)
    
(1,355
)
    
(700
)
Paycheck protection program
    
-
      
-
      
-
      
673
  
Non-GAAP Sales and Marketing expenses
  
$
8,605
    
$
8,681
    
$
34,440
    
$
33,482
  
                                 
GAAP General and Administrative expenses
  
$
5,536
    
$
4,983
    
$
22,005
    
$
20,589
  
Retired CEO compensation
    
-
      
-
      
96
      
(810
)
Stock based compensation expenses
    
(179
)
    
(367
)
    
(1,213
)
    
(1,337
)
Non-GAAP General and Administrative expenses
  
$
5,357
    
$
4,616
    
$
20,888
    
$
18,442
  
                                 
GAAP Other operating expenses
  
$
249
    
$
-
    
$
4,220
    
$
-
  
Hostile attempt related costs
    
(249
)
    
-
      
(4,220
)
    
-
  
Non-GAAP Other operating expenses
  
$
-
    
$
-
    
$
-
    
$
-
  
                                 
GAAP operating income
  
$
1,669
    
$
1,027
    
$
1,353
    
$
4,806
  
Stock based compensation expenses
    
958
      
891
      
3,560
      
2,562
  
Changes in indirect tax positions
    
279
      
(399
)
    
281
      
(394
)
Retired CEO compensation
    
-
      
-
      
(96
)
    
810
  
Paycheck protection program
    
-
      
-
      
-
      
(979
)
Hostile attempt related costs
    
249
      
-
      
4,220
      
-
  
Non-GAAP operating income
  
$
3,155
    
$
1,519
    
$
9,318
    
$
6,805
  
                                 
GAAP financial expenses and others, net
  
$
3,012
    
$
3,397
    
$
6,306
    
$
8,625
  
Leases – financial income (expenses)
    
(154
)
    
(706
)
    
2,278
      
(1,057
)
Non-GAAP financial expenses and others, net
  
$
2,858
    
$
2,691
    
$
8,584
    
$
7,568
  
                                 
GAAP Tax expenses
  
$
1,385
    
$
9,842
    
$
2,446
    
$
11,009
  
Non cash tax adjustments
    
(851
)
    
(8,987
)
    
(1,278
)
    
(9,039
)
Non-GAAP Tax expenses
  
$
534
    
$
855
    
$
1,168
    
$
1,970
  


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands, except share and per share data)
(Unaudited)

    
Three months ended
December 31,
    
Year ended
December 31,
  
   
2022
    
2021
    
2022
    
2021
  
                         
GAAP net loss
  
$
(2,728
)
  
$
(12,212
)
  
$
(7,399
)
  
$
(14,828
)
                                 
   Stock based compensation expenses
    
958
      
891
      
3,560
      
2,562
  
   Changes in indirect tax positions
    
279
      
(399
)
    
281
      
(394
)
   Leases – financial expenses (income)
    
154
      
706
      
(2,278
)
    
1,057
  
   Paycheck protection program
    
-
      
-
      
(96
)
    
(979
)
   Retired CEO compensation
    
-
      
-
      
-
      
810
  
   Hostile attempt related Costs
    
249
      
-
      
4,220
      
-
  
   Non-cash tax adjustments
    
851
      
8,987
      
1,278
      
9,039
  
Non-GAAP net loss
  
$
(237
)
  
$
(2,027
)
  
$
(434
)
  
$
(2,733
)
                                 
GAAP basic and diluted net loss per share
  
$
(0.03
)
  
$
(0.15
)
  
$
(0.09
)
  
$
(0.18
)
                                 
Non-GAAP diluted net loss per share
  
$
(0.00
)
  
$
(0.02
)
  
$
(0.01
)
  
$
(0.03
)
                                 
Weighted average number of shares used in computing GAAP basic and diluted net loss per share
    
84,347,548
      
83,916,419
      
84,132,982
      
83,414,831
  
                                 
Weighted average number of shares used in computing Non-GAAP diluted net loss per share
    
84,347,548
      
83,916,419
      
84,132,982
      
83,414,831