Cambium Networks Corp - Quarter Report: 2023 June (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-38952

CAMBIUM NETWORKS CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Cayman Islands		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

c/o Cambium Networks, Inc.
3800 Golf Road, Suite 360 Rolling Meadows, Illinois 60008		(345) 814-7600
(Address of principal executive offices, including zip code)		(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Ordinary shares, $0.0001 par value

CMBM

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 28, 2023, the registrant had 27,605,505 shares of ordinary shares, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, forward-looking statements may be identified by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, they should not be relied upon as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

•

the unpredictability of our operating results;

•

risks caused by political tensions around the world including the current war in Ukraine as well as tensions between the United States and China;

•

the strength of the United States dollar and the impact on the cost of our products globally;

•

current or future unfavorable economic conditions, both domestically and in our foreign markets, including the risk of a global or localized recessions;

•

our inability to predict and respond to emerging technological trends and network operators' changing needs;

•

the impact of competitive pressures on the development of new products;

•

the impact of actual or threatened health epidemics and other outbreaks;

•

our limited or sole source suppliers' inability to acquire or produce third-party components to build our products and the impact of supply shortages, extended lead times or changes in supply of components and other parts required to manufacture our products;

•

the impact of increases in logistics, freight and other shipping costs and constraints on logistics and shipping due to labor shortages, container shortages or other constraints;

•

our reliance on third-party manufacturers, which subjects us to risks of product delivery delays and reduced control over product costs and quality;

•

our reliance on distributors and value-added resellers for the substantial majority of our sales;

•

the inability of our third-party logistics and warehousing providers to deliver products to our channel partners and network operators in a timely manner;

•

our distributors' and channel partners' inability to attract new network operators or sell additional products to network operators that currently use our products;

•

the technological complexity of our products, which may contain undetected hardware defects or software bugs or subject our products to the risks of ransomware or malware or other cyber attacks;

•

our channel partners' inability to effectively manage inventory of our products, timely resell our products or estimate expected future demand;

•

credit risk of our channel partners, which could adversely affect their ability to purchase or pay for our products;

•

our inability to maintain an effective system of internal controls, produce timely and accurate financial statements or comply with applicable regulations;

•

our reliance on the availability of third-party licenses; and

•

our inability to obtain intellectual property protections for our products.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Cambium Networks Corporation

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share data)


	December 31,			June 30,
	2022			2023

ASSETS
Current assets
Cash	$	48,162		$	31,978
Receivables, net of allowances of $577 and $600		89,321			86,819
Inventories, net		57,068			82,348
Recoverable income taxes		117			98
Prepaid expenses		11,857			8,042
Other current assets		6,464			9,020
Total current assets		212,989			218,305
Noncurrent assets
Property and equipment, net		11,271			11,375
Software, net		8,439			10,484
Operating lease assets		4,011			4,823
Intangible assets, net		9,173			8,424
Goodwill		9,842			9,842
Deferred tax assets, net		12,782			16,106
Other noncurrent assets		955			929
TOTAL ASSETS	$	269,462		$	280,288
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	31,284		$	30,067
Accrued liabilities		28,042			26,364
Employee compensation		7,394			5,852
Current portion of long-term external debt, net		3,158			3,166
Deferred revenues		8,913			8,307
Other current liabilities		8,429			15,323
Total current liabilities		87,220			89,079
Noncurrent liabilities
Long-term external debt, net		24,463			23,212
Deferred revenues		8,617			9,281
Noncurrent operating lease liabilities		2,170			3,033
Other noncurrent liabilities		1,619			1,632
Total liabilities		124,089			126,237
Shareholders' equity
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2022 and June 30, 2023; 27,522,734 shares issued and 27,313,273 outstanding at December 31, 2022 and 27,847,532 shares issued and 27,603,028 outstanding at June 30, 2023		3			3
Additional paid in capital		138,997			146,528
Treasury shares, at cost, 209,461 shares at December 31, 2022 and 244,504 shares at June 30, 2023		(4,922	)		(5,509	)
Accumulated earnings		12,822			14,456
Accumulated other comprehensive loss		(1,527	)		(1,427	)
Total shareholders' equity		145,373			154,051
TOTAL LIABILITIES AND EQUITY	$	269,462		$	280,288

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Cambium Networks Corporation

Condensed Consolidated Statements of Operations

(in thousands, except for share and per share data)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2023			2022			2023
Revenues	$	69,296		$	59,542		$	131,192		$	136,943
Cost of revenues		35,857			30,300			68,587			68,041
Gross profit		33,439			29,242			62,605			68,902
Operating expenses
Research and development		11,440			13,008			24,382			27,270
Sales and marketing		10,842			11,528			21,271			23,198
General and administrative		6,958			5,836			13,502			12,503
Depreciation and amortization		1,534			1,573			2,980			3,069
Total operating expenses		30,774			31,945			62,135			66,040
Operating income (loss)		2,665			(2,703	)		470			2,862
Interest expense, net		407			579			904			1,176
Other (income) expense, net		(371	)		64			(294	)		218
Income (loss) before income taxes		2,629			(3,346	)		(140	)		1,468
Provision (benefit) for income taxes		307			(704	)		(894	)		(166	)
Net income (loss)	$	2,322		$	(2,642	)	$	754		$	1,634

Earnings (loss) per share
Basic	$	0.09		$	(0.10	)	$	0.03		$	0.06
Diluted	$	0.08		$	(0.10	)	$	0.03		$	0.06
Weighted-average number of shares outstanding to compute net earnings (loss) per share
Basic		26,836,853			27,432,705			26,793,505			27,387,112
Diluted		27,588,772			27,432,705			27,917,728			28,315,457

Share-based compensation included in costs and expenses:
Cost of revenues	$	50		$	59		$	107		$	115
Research and development		1,011			1,388			2,033			2,657
Sales and marketing		578			728			1,205			1,428
General and administrative		878			887			1,592			1,737
Total share-based compensation	$	2,517		$	3,062		$	4,937		$	5,937

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Cambium Networks Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2023			2022			2023
Net income (loss)	$	2,322		$	(2,642	)	$	754		$	1,634
Other comprehensive income (loss)
Foreign currency translation adjustment		(380	)		14			(446	)		100
Comprehensive income (loss)	$	1,942		$	(2,628	)	$	308		$	1,734

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Cambium Networks Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands)

(unaudited)


	Three Months Ended June 30, 2022
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at March 31, 2022		26,825		$	3	$	126,437	$	(4,321	)	$	(8,946	)	$	(765	)	$	112,408
Net income		—			—		—		—			2,322			—			2,322
Share-based compensation		—			—		2,284		—			—			—			2,284
Issuance of ordinary shares under ESPP		87			—		1,606		—			—			—			1,606
Issuance of vested shares		52			—		—		—			—			—			—
Treasury shares withheld for net settlement		(13	)		—		—		(191	)		—			—			(191	)
Proceeds from exercise of share options		13			—		103		—			—			—			103
Foreign currency translation		—			—		—		—			—			(380	)		(380	)
Balance at June 30, 2022		26,964		$	3	$	130,430	$	(4,512	)	$	(6,624	)	$	(1,145	)	$	118,152

	Six Months Ended June 30, 2022
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2021		26,735		$	3	$	124,117	$	(3,906	)	$	(7,378	)	$	(699	)	$	112,137
Net income		—			—		—		—			754			—			754
Share-based compensation		—			—		4,458		—			—			—			4,458
Issuance of ordinary shares under ESPP		87			—		1,606		—			—			—			1,606
Issuance of vested shares		146			—		—		—			—			—			—
Treasury shares withheld for net settlement		(31	)		—		—		(606	)		—			—			(606	)
Proceeds from exercise of share options		27			—		249		—			—			—			249
Foreign currency translation		—			—		—		—			—			(446	)		(446	)
Balance at June 30, 2022		26,964		$	3	$	130,430	$	(4,512	)	$	(6,624	)	$	(1,145	)	$	118,152

	Three Months Ended June 30, 2023
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated equity			Accumulated other comprehensive loss			Total shareholders' equity
Balance at March 31, 2023		27,397		$	3	$	142,009	$	(5,133	)	$	17,098		$	(1,441	)	$	152,536
Net loss		—			—		—		—			(2,642	)		—			(2,642	)
Share-based compensation		—			—		3,312		—			—			—			3,312
Issuance of ordinary shares under ESPP		88			—		1,102		—			—			—			1,102
Issuance of vested shares		133			—		—		—			—			—			—
Treasury shares withheld for net settlement		(23	)		—		—		(376	)		—			—			(376	)
Proceeds from exercise of share options		8			—		105		—			—			—			105
Foreign currency translation		—			—		—		—			—			14			14
Balance at June 30, 2023		27,603		$	3	$	146,528	$	(5,509	)	$	14,456		$	(1,427	)	$	154,051

	Six Months Ended June 30, 2023
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated equity			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2022		27,313		$	3	$	138,997	$	(4,922	)	$	12,822		$	(1,527	)	$	145,373
Net income		—			—		—		—			1,634			—			1,634
Share-based compensation		—			—		5,937		—			—			—			5,937
Issuance of ordinary shares under ESPP		88			—		1,102		—			—			—			1,102
Issuance of vested shares		178			—		—		—			—			—			—
Treasury shares withheld for net settlement		(35	)		—		—		(587	)		—			—			(587	)
Proceeds from exercise of share options		59			—		492		—			—			—			492
Foreign currency translation		—			—		—		—			—			100			100
Balance at June 30, 2023		27,603		$	3	$	146,528	$	(5,509	)	$	14,456		$	(1,427	)	$	154,051

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Cambium Networks Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2022			2023
Cash flows from operating activities:
Net income	$	754		$	1,634
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		1,853			2,124
Amortization of software and intangible assets		1,841			2,193
Amortization of debt issuance costs		153			154
Share-based compensation		4,937			5,937
Deferred income taxes		(1,293	)		(3,324	)
Provision for inventory excess and obsolescence		132			1,060
Other		(6	)		(162	)
Change in assets and liabilities:
Receivables		(3,930	)		192
Inventories		(13,797	)		(26,340	)
Prepaid expenses		8,170			3,803
Accounts payable		(210	)		(1,340	)
Accrued employee compensation		(10,918	)		(1,515	)
Accrued liabilities		1,306			615
Other assets and liabilities		1,769			4,489
Net cash used in operating activities		(9,239	)		(10,480	)
Cash flows from investing activities:
Purchase of property and equipment		(2,268	)		(2,236	)
Purchase of software		(2,001	)		(3,333	)
Net cash used in investing activities		(4,269	)		(5,569	)
Cash flows from financing activities:
Repayment of term loan		(656	)		(1,313	)
Issuance of ordinary shares under ESPP		1,127			1,102
Taxes paid from shares withheld		(529	)		(433	)
Proceeds from share option exercises		249			492
Net cash provided by (used in) financing activities		191			(152	)
Effect of exchange rate on cash		(45	)		17
Net decrease in cash		(13,362	)		(16,184	)
Cash, beginning of period		59,291			48,162
Cash, end of period	$	45,929		$	31,978

Supplemental disclosure of cash flow information:
Income taxes paid	$	422		$	2,843
Interest paid	$	284		$	880

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Cambium Networks Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Business and significant accounting policies

Business

Cambium Networks Corporation (“Cambium” or “Cambium Networks” or the “Company”), incorporated under the laws of the Cayman Islands, is a holding company whose principal operating entities are Cambium Networks, Ltd. (UK), Cambium Networks, Inc. (USA), and Cambium Networks Private Limited (India). On June 26, 2019, the Company completed an Initial Public Offering and the Company's ordinary shares began trading on the Nasdaq Global Markets.

Cambium Networks Corporation and its wholly owned subsidiaries design, develop, and manufacture wireless and fiber broadband and enterprise networking infrastructure solutions that are used by businesses, governments, and service providers in urban, suburban and rural environments. Cambium's products simplify and automate the design, deployment, optimization, and management of broadband and Wi-Fi access networks through intelligent automation.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Cambium Networks Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements as of June 30, 2023, and for the three-month and six-month periods ended June 30, 2022 and 2023, and the related notes are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements, and, in the opinion of management, reflect all adjustments, which comprise only normal recurring adjustments necessary to state fairly the Company’s financial position as of June 30, 2023 and results of operations for the three-month and six-month periods ended June 30, 2022 and 2023 and cash flows for the six-month periods ended June 30, 2022 and 2023. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K and filed with the SEC on February 27, 2023. The results of operations for the three-month and six-month periods ended June 30, 2023 are not necessarily indicative of the operating results to be expected for the full year.

In 2022, management determined that certain costs previously included as general and administrative expenses related to other functions of the business. Prior periods have been revised to reflect the allocation of these costs to their respective functions. These costs primarily include facility costs such as leased space and shared IT costs. Revisions were made to increase research and development expense by $0.8 million and selling and marketing expense by $0.3 million and decrease general and administrative expense by $1.1 million for the three-month period ended June 30, 2022. Revisions were made to increase research and development expense by $1.7 million and selling and marketing expense by $0.5 million and decrease general and administrative expense by $2.2 million for the six-month period ended June 30, 2022.

Update to Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in the 2022 Form 10-K, Part II, Item 8.

Note 2. Balance sheet components

Inventories, net

Inventories, net consisted of the following (in thousands):


	December 31,			June 30,
	2022			2023

Finished goods	$	50,052		$	71,024
Raw materials		15,010			20,116
Gross inventory		65,062			91,140
Less: Excess and obsolete provision		(7,994	)		(8,792	)
Inventories, net	$	57,068		$	82,348

Accrued liabilities

Accrued liabilities consisted of the following (in thousands):


	December 31,		June 30,
	2022		2023

Accrued goods and services	$	10,633	$	10,078
Accrued inventory purchases		3,189		4,744
Accrued customer rebates		13,797		11,061
Other		423		481
Accrued liabilities	$	28,042	$	26,364

Accrued warranty

Provisions for warranty claims are primarily related to our hardware products and are recorded at the time products are sold. The change to accrued warranty was as follows (in thousands):


	Year ended December 31,			Six months ended June 30,
	2022			2023

Beginning balance	$	1,731		$	1,651
Fulfillment of assumed acquisition warranty		(142	)		(157	)
Provision increase (decrease), net		62			(27	)
Ending balance	$	1,651		$	1,467

At June 30, 2023, $1.2 million is included in Other current liabilities and $0.3 million is included in Other noncurrent liabilities on the Company’s condensed consolidated balance sheet.

Note 3. Property and equipment

Property and equipment, net consisted of the following (in thousands):


		December 31,			June 30,
	Useful Life	2022			2023

Equipment and tooling	3 to 5 years	$	33,026		$	34,665
Computer equipment	3 to 5 years		4,572			5,126
Furniture and fixtures	10 years		809			829
Leasehold improvements	2 to 3 years		472			521
Total cost			38,879			41,141
Less: Accumulated depreciation			(27,608	)		(29,766	)
Property and equipment, net		$	11,271		$	11,375

Total depreciation expense was $1.0 million and $1.0 million for the three-month periods ended June 30, 2022 and 2023, respectively and $1.9 million and $2.1 million for the six-month periods ended June 30, 2022 and 2023, respectively.

Note 4. Software

Software consisted of the following (in thousands):


		December 31, 2022							June 30, 2023
	Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance

Acquired and Software for internal use	3 to7 years	$	15,995	$	(15,326	)	$	669	$	16,453	$	(15,525	)	$	928
Software marketed for external sale	3 years		11,650		(3,880	)		7,770		14,683		(5,127	)		9,556
Total		$	27,645	$	(19,206	)	$	8,439	$	31,136	$	(20,652	)	$	10,484

Amortization of acquired and internal use software is computed using the straight-line method over an estimated useful life of generally three to seven years. Amortization expense recognized on acquired and internal use software is reflected in depreciation and amortization in the condensed consolidated statements of operations. Amortization expense was $0.1 million and $0.1 million for the three-month periods ended June 30, 2022 and 2023, respectively. Amortization expense was $0.3 million and $0.2 million for the six-month periods ended June 30, 2022 and 2023, respectively.

Amortization expense recognized on software to be sold or marketed externally was $0.4 million and $0.6 million for the three-month periods ended June 30, 2022 and 2023, respectively, and $0.7 million and $1.2 million for the six-month periods ended June 30, 2022 and 2023, respectively, and is included in cost of revenues on the condensed consolidated statements of operations.

Based on capitalized software assets at June 30, 2023, estimated amortization expense in future fiscal years is as follows (unaudited and in thousands):


Year ending December 31,	Acquired and internal use software		Software marketed for external use		Total
2023 (July - December)		180		1,516		1,696
2024		321		3,589		3,910
2025		272		2,762		3,034
2026		149		1,498		1,647
2027		6		191		197
Thereafter		—		—		—
Total amortization	$	928	$	9,556	$	10,484

Note 5. Goodwill and Intangible Assets

There was no change in the carrying amount of goodwill during the three-month period ended June 30, 2023 (unaudited).

The Company tests goodwill and intangible assets for impairment annually on December 31 and more frequently if impairment indicators exist. Accordingly, the Company performs quarterly qualitative assessments of significant events and circumstances such as a reporting unit’s historical and current results, assumptions regarding future performance, strategic initiatives and overall economic factors and macro-economic developments, to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of the reporting unit or intangible asset is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed.

The qualitative assessment for the quarter did not indicate the existence of impairment indicators. Based on the operating results for the three-month period ended June 30, 2023 and other considerations, the Company believes that it is more likely than not that the enterprise value for its one reporting unit and the fair value of intangibles is still greater than their carrying values. Accordingly, no goodwill impairment indicators were present at June 30, 2023 that would necessitate an interim impairment assessment.

The useful life, gross carrying value, accumulated amortization, and net balance for each major class of definite-lived intangible assets at each balance sheet date were as follows (in thousands):


		December 31, 2022							June 30, 2023
	Useful Life	Gross carrying amount		Accumulated amortization			Net balance		Gross carrying amount		Accumulated amortization			Net balance

Customer relationships	5 - 18 years		19,300		(10,127	)		9,173		19,300		(10,876	)		8,424
Total		$	19,300	$	(10,127	)	$	9,173	$	19,300	$	(10,876	)	$	8,424

Intangible assets are amortized over their expected useful life and none are expected to have a significant residual value at the end of their useful life. Intangible assets amortization expense was $0.4 million and $0.4 million for the three-month periods ended June 30, 2022 and 2023, respectively, and $0.8 million and $0.8 million for the six-month periods ended June 30, 2022 and 2023, respectively.

Based on capitalized intangible assets as of June 30, 2023, estimated amortization expense amounts in future fiscal years are as follows (unaudited and in thousands):


Year ending December 31,	Amortization
2023 (July - December)		749
2024		1,498
2025		1,498
2026		1,498
2027		1,498
Thereafter		1,683
Total amortization	$	8,424

Note 6. Debt

As of June 30, 2023, the Company had $26.7 million outstanding under its current term loan facility and $0.0 million outstanding under its revolving credit facility. The Company has available $45.0 million under its revolving credit facility (unaudited).

The following table reflects the current and noncurrent portions of the external debt facilities at December 31, 2022 and June 30, 2023 (in thousands):


	December 31,			June 30,
	2022			2023

Term loan facility	$	28,031		$	26,719
Less debt issuance costs		(410	)		(341	)
Total debt		27,621			26,378
Less current portion of term facility		(3,281	)		(3,281	)
Current portion of debt issuance costs		123			115
Total long-term external debt, net	$	24,463		$	23,212

Secured credit agreement

On June 9, 2023, the Company entered into the first amendment to its BofA Agreement ("First Amendment") which amended the original Bank of America Agreement ("BofA Agreement") to replace the benchmark used for the interest rate on Eurodollar Rate Loans from US Dollar LIBOR to the Term Secured Overnight Financing Rate ("SOFR"). Our outstanding debt under the BofA Agreement are now known as Term SOFR Loans, with the term selected by the Company. The new benchmark became effective on June 17, 2023, when the current interest period on the Eurodollar Rate Loan using the US Dollar LIBOR benchmark ended. Entry into the First Amendment transaction enabled for the Company to elect the practical expedient included in ASC 848, Reference Rate Reform, and it accounted for the First Amendment as if the modification were not significant. The First Amendment did not create a material impact on the consolidated financial statements.

Based on the terms of the First Amendment, interest on the Term SOFR Loan accrues on the outstanding principal amount of the Term and Revolving Facilities on a quarterly basis and is equal to the base rate equal to the rate per annum as now determined by reference to the 1-month, 3-month or 6-month Term SOFR rate as selected by the Company, plus a SOFR adjustment of 0.10%. The applicable margin range between 1.75% and 2.25% as determined by the Company's performance as measured by the consolidated leverage ratio that is added to calculate the all-in rate remains unchanged with the First Amendment. At June 30, 2023, the applicable margin was 1.75% and the effective interest rate on the term loan was 7.52% (unaudited).

The Company is still required to make quarterly principal payments of $0.7 million, with the remaining principal due on maturity on November 17, 2026. The Company is required to pay interest quarterly on the outstanding balance. The Company is still permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the BofA First Amendment at any time without premium or penalty.

Maturities on the external debt outstanding at June 30, 2023 is as follows (unaudited and in thousands):


Year ending December 31,
2023 (July- December)		1,312
2024		2,625
2025		2,625
2026		19,500
Total	$	26,062

As of June 30, 2023, the Company was in compliance with all affirmative and negative covenants (unaudited).

Net interest expense, including bank charges and amortization of debt issuance costs on the external debt, was $0.4 million and $0.6 million for the three-month periods ended June 30, 2022 and 2023, respectively, and $0.9 million and $1.2 million for the six-month periods ended June 30, 2022 and 2023, respectively (unaudited).

Note 7. Employee benefit plans

The Company’s employee benefit plans currently consist of a retirement plan in the United States and a separate defined contribution plan in the UK. The Company does not offer any other postretirement benefit plans, such as retiree medical and dental benefits or deferred compensation agreements to its employees or officers.

U.S. plan

U.S. employees that satisfy certain eligibility requirements, including requirements related to age and length of service, are eligible to participate in the Cambium Networks, Inc. 401(k) Plan. The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. Under the Cambium Networks, Inc. 401(k) Plan, the Company matches 100% of employee contributions to the 401(k) plan up to a maximum amount of 4% of eligible wages, which matching contributions are subject to vesting in equal annual increments over two years of service. All contributions, including the Company match, are made in cash. Contributions made by the Company under the Cambium Networks, Inc. 401(k) Plan were $0.5 million and $0.5 million for the three-month periods ended June 30, 2022 and 2023, respectively, and $1.0 million and $0.9 million for the six-month periods ended June 30, 2022 and 2023, respectively.

UK plan

UK employees who satisfy certain eligibility requirements are eligible to participate in the Cambium Networks Ltd. Stakeholder Pension Scheme, which is a qualified defined contribution plan. Employees are eligible to participate on the first of the month following receipt of their enrollment form, and eligible employees are automatically enrolled in the plan at a default employee contribution rate of 3% of eligible compensation and a company contribution rate of 5% of the employee’s basic salary. The Company contribution rate increases by 1% for each additional 1% that the employee contributes up to a maximum of 7%. Company matching contributions vest immediately and employees are always vested in their own contributions. All contributions, including the Company match, are made in cash and deposited in the participant’s account each pay period. The total contributed by the Company under this plan was $0.1 million and $0.1 million for the three-month periods ended June 30, 2022 and 2023, respectively, and $0.2 million and $0.2 million for the six-month periods ended June 30, 2022 and 2023, respectively.

Note 8. Other (income) expense, net

Net other (income) expense changed from income of $0.4 million for the three-month period ended June 30, 2022 to expense of $0.1 million for the three-month period ended June 30, 2023. Net other (income) expense changed from income of $0.3 million for the six-month period ended June 30, 2022 to expense of $0.2 million for the six-month period ended June 30, 2023. Net other (income) expense mostly represents foreign exchange gains and losses.

Note 9. Share-based compensation

2019 Share incentive plan

In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the 2019 Share Incentive Plan (“2019 Plan”). The 2019 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted share awards (“RSAs”), restricted share units (“RSUs”), other share-based awards and performance awards. The share reserve under the 2019 Plan is automatically increased on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2020 and continuing until, and including, the fiscal year ending December 31, 2029. The number of shares added annually is equal to the lowest of 1,320,000 shares, 5% of the number of the Company’s shares outstanding on the first day of such fiscal year, or an amount determined by the Board of Directors. On March 1, 2023, the Company registered 1,320,000 additional shares that may be issued under the 2019 Plan.

The Company’s employees, officers, directors, consultants, and advisors are eligible to receive awards under the 2019 Plan. Incentive share options, however, may only be granted to the Company's employees.

For the three-month periods ended June 30, 2022 and 2023, the Company recorded corresponding income tax benefits of $0.3 million and $0.0 million, respectively, and for the six-month periods ended June 30, 2022 and 2023, the Company recorded corresponding income tax benefits of $0.5 million and $0.1 million, respectively.

Share options

The Company's time-based share options typically have a contractual term of ten years from grant date and typically vest over a four-year period. The Company recognized compensation expense associated with its time-based share options on a straight-line basis over the requisite service period.

The following is a summary of option activity for the Company’s share incentive plans for the six-month period ended June 30, 2023 (unaudited):


	Options			Weighted average exercise price		Weighted Average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at December 31, 2022		3,395,219		$	13.83		7.6	$	28,985,969
Options granted1		80,000		$	15.00		—	$	—
Options exercised		(59,112	)	$	8.31		—	$	—
Options expired		(3,313	)	$	12.00		—	$	—
Options forfeited		(1,312	)	$	12.00		—	$	—
Outstanding at June 30, 2023		3,411,482		$	13.95		7.2	$	8,971,974
Options exercisable at June 30, 2023		2,276,431		$	12.84		6.6	$	7,758,912
Options vested and expected to vest at June 30, 2023		3,345,167		$	13.93		7.2	$	8,903,786

1 Options granted includes the time-based share options and the performance-based share options for which a grant date has been established, as described below.

The Company uses the Black-Scholes option pricing model to estimate the fair value of share options. The Company utilized a forfeiture rate of 8.2% during the six-month period ended June 30, 2023 for estimating the forfeitures of share options granted.

The fair value of share options is estimated using the following weighted-average assumptions (unaudited):


	Six Months Ended June 30,
	2022			2023
Expected dividend yield		—			—
Risk-free interest rate		2.43	%		3.66	%
Weighted-average expected volatility		61.3	%		67.6	%
Expected term (in years)		4.55			5.60
Weighted average grant-date fair value per share of options granted	$	8.15		$	9.28

At June 30, 2023, there was $9.6 million in unrecognized pre-tax share-based compensation expense, net of estimated forfeitures, related to unvested time-based share option awards. The unrecognized share-based compensation expense is expected to be recognized through the second quarter of 2027 (unaudited).

Restricted shares

The Company's time-based RSUs typically vest over a four-year period. The Company recognizes compensation expense associated with its time-based RSUs on a straight-line basis over the four-year requisite service period.

The following is a summary of restricted shares activity for the Company’s share incentive plan for the six-month period ended June 30, 2023 (unaudited):


	Units			Weighted average grant date fair value
RSU balance at December 31, 2022		696,990		$	18.22
RSUs granted1		115,811		$	15.51
RSUs vested		(177,621	)	$	16.27
RSUs forfeited		(9,289	)	$	18.14
RSU balance at June 30, 2023		625,891		$	18.25

1 RSUs granted includes the time-based RSUs and the performance-based RSUs for which a grant date has been established, as described below.

Of the 177,621 RSUs vested, the Company withheld 35,043 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

The fair value of the RSUs is based on the fair value of the Company's ordinary shares on the grant date. The Company utilized a forfeiture rate of 8.2% during the six-month period ended June 30, 2023 for estimating the forfeitures of RSUs granted.

As of June 30, 2023, there was $9.2 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to unvested time-based restricted share units. The unrecognized compensation expense is expected to be recognized through the second quarter of 2027 (unaudited).

Performance-based share awards

In May 2023, performance-based share awards were awarded to select executive officers of the Company. The awards contain a performance-based vesting criteria and included 60,000 share options and 135,000 restricted share units. The performance-based awards have two separate annual performance periods, with 50% of the performance-based awards vesting over each of the annual performance periods ending on December 31, 2023 ("First Performance Period") and December 31, 2024 ("Second Performance Period") if the performance goal is met. If the performance goal for that performance period is not met, the performance-based awards do not vest and are forfeited. The performance goal is based on the Company's adjusted earnings per share, as publicly reported by the Company, for each performance period. The method used to measure the fair value of the performance-based awards is consistent with the methods used to measure the fair value of time-based share options and RSUs, as described above.

For performance-based awards that vest during the First Performance Period, the Company's Compensation Committee retains the ability to modify the applicable adjusted earnings per share metric. Due to this discretion, the Company has determined that the grantee does not have a mutual understanding of the key terms and conditions of the performance-based awards in the First Performance Period, and a grant date will not exist until the Compensation Committee approves the adjusted earnings per share metric for the First Performance Period. As of June 30, 2023, based on the total potential shares that could be earned, there were 30,000 share options and 67,500 RSUs outstanding for which there is no accounting grant date. Accordingly, no grant date fair value was established and the weighted average grant date fair values calculated above excludes these performance-based share options and performance-based RSUs. The Company remeasures the fair value of the awards at each reporting date until a grant date is achieved, as the service inception date precedes the grant date. As of June 30, 2023, there was $1.3 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to unvested performance-based share awards for the First Performance Period, which would be recognized through the first quarter of 2024 upon achievement of the performance goal (unaudited).

Unlike the performance-based awards in the First Performance Period, the Compensation Committee does not have the discretion to modify the applicable adjusted earnings per share metric for performance-based awards that vest during the Second Performance Period. As such, a mutual understanding of the key terms and conditions, and thus a grant date, exists on the date that the performance-based awards are issued by the Company. As of June 30, 2023, based on the total potential shares that could be earned, there were 30,000 share options and 67,500 RSUs granted. A grant date fair value was established, and the weighted average grant date fair values calculated in the above tables include these performance-based share options and performance-based RSUs. The Company has not recognized any compensation expense on these performance-based awards since the requisite service period does not begin until January 1, 2024. As of June 30, 2023, there was $1.2 million in unrecognized pre-tax compensation expense, net of estimated forfeitures, related to these unvested performance-based share awards for the Second Performance Period, which will be recognized over the requisite service period starting January 1, 2024 through the first quarter of 2025 if it is probable that the adjusted earnings per share metric will be achieved (unaudited).

Employee share purchase plan

In June 2019, the Company’s Board of Directors adopted, and its shareholders approved, the Employee Share Purchase Plan (“ESPP”). The ESPP was effective on June 25, 2019, and the initial offering period of six-months commenced on January 1, 2021. The current offering period of six months commenced on January 1, 2023 and ran through June 30, 2023. The purchase price of the shares is 85% of the lower of the fair market value of the Company’s ordinary shares on the first trading day of the offering period and the purchase date. The ESPP includes an annual increase to the shares available for sale on the first day of each fiscal year beginning in 2020, equal to the lesser of: 275,000 shares, 1% of the outstanding shares as of the last day of the immediately preceding fiscal year, or such other amount as the administrator may determine. The Company registered 273,133 additional shares on March 1, 2023.

For the three-month periods ended June 30, 2022 and 2023, the Company recognized $0.3 million and $0.2 million, respectively, of share-based compensation expense related to the ESPP. For the six-month periods ended June 30, 2022 and 2023, the Company recognized $0.5 million and $0.5 million, respectively, of share-based compensation expense related to the ESPP. There were 87,229 shares issued under the ESPP during the three-month and six-month periods ended June 30, 2022 and 88,290 shares issued under the ESPP during the three-month and six-month periods ended June 30, 2023 (unaudited).

Note 10. Share capital - shares

The following table reflects the share capital activity (unaudited):


	Number of shares			Par value (in thousands)
Balance at December 31, 2022		27,313,273		$	3
Issuance of ordinary shares under employee share purchase plan		88,290			—
Issuance of vested shares		177,396			—
Share options exercised		59,112			—
Shares withheld for net settlement of shares issued		(35,043	)		—
Balance at June 30, 2023		27,603,028		$	3

As of June 30, 2023, no dividends have been declared or paid (unaudited).

Note 11. Earnings (loss) per share

Basic net earnings (loss) per share is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net earnings per share is computed by giving effect to all potentially dilutive ordinary share equivalents outstanding for the period. For purposes of this calculation, share options, RSUs, and ESPP awards are considered to be ordinary share equivalents but are excluded from the calculation of diluted earnings per share when including them would have an anti-dilutive effect. Performance-based share awards are only included in the calculation of diluted earnings per share if the performance metric would have been achieved as of June 30, 2023 if that had been the end of the contingency period. The following table sets forth the computation of basic and diluted net earnings per share (unaudited and in thousands, except for share and per share data):


	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2023			2022		2023
Numerator:
Net (loss) income	$	2,322	$	(2,642	)	$	754	$	1,634
Denominator:
Basic weighted average shares outstanding		26,836,853		27,432,705			26,793,505		27,387,112
Dilutive effect of share option awards		560,263		—			892,072		711,996
Dilutive effect of RSUs		187,826		—			223,752		212,160
Dilutive effect of employee share purchase plan		3,830		—			8,399		4,189
Diluted weighted average shares outstanding		27,588,772		27,432,705			27,917,728		28,315,457
Net (loss) earnings per share, basic	$	0.09	$	(0.10	)	$	0.03	$	0.06
Net (loss) earnings per share, diluted	$	0.08	$	(0.10	)	$	0.03	$	0.06

In the computation of diluted earnings per share for the three-month and six-month periods ended June 30, 2022, the Company did not include any share equivalents because their inclusion would have been antidilutive. In the computation of diluted earnings per share for the three-month and six-month periods ended June 30, 2023, 1,762,872 ordinary share equivalents and 1,708,983 ordinary share equivalents, respectively, were excluded because their inclusion would have been antidilutive (unaudited).

Note 12. Income taxes

The Company’s provision for income taxes is based upon the estimated annual tax rate for the year applied to federal, state and foreign income. The Company recorded a provision for income taxes of $0.3 million for the three-month period ended June 30, 2022 and a benefit for income taxes of $0.7 million for the three-month period ended June 30, 2023, with an effective tax rate of 11.7% and 21.0%, respectively. In the three-month period ended June 30, 2022, the effective tax rate of 11.7% was different from the statutory rate of 21.0%, primarily due to tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, and the revaluing of UK deferred tax assets at a higher future tax rate. For the three-month period ended June 30, 2023, the Company’s effective tax rate of 21.0% was not materially different from the statutory rate of 21.0%.

In the six-month periods ended June 30, 2022 and 2023, the Company recorded a tax benefit of $0.9 million and $0.2 million, respectively, with an effective income tax rate of 638.6% and (11.3)%, respectively. For the six-month period ended June 30, 2022, the effective income tax rate of 638.6% was different from the statutory rate of 21.0%, primarily due to tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, and the revaluing of UK deferred tax assets at a higher future tax rate. For the six-month period ended June 30, 2023, the effective income tax rate of (11.3)% was different from the statutory rate of 21.0%, primarily due to Foreign Derived Intangible Income, tax benefits arising on Research and Development tax credits, and the revaluing of UK deferred tax assets at a higher future tax rate.

In applying the statutory tax rate in the effective income tax rate reconciliation, the Company used the statutory U.S. federal income tax rate of 21% rather than the Cayman Islands zero percent rate.

The Company reviews the likelihood that it will realize the benefit of its deferred tax assets and, therefore, the need for a valuation allowance on a quarterly basis.

Note 13. Commitments and contingencies

In accordance with ASC 460, Guarantees, the Company recognizes the fair value for guarantee and indemnification arrangements it issues or modifies, if these arrangements are within the scope of the interpretation. In addition, the Company must continue to monitor the conditions that are subject to the guarantees and indemnifications in order to identify if a loss has incurred. If the Company determines it is probable that a loss has occurred, then any such estimated loss would be recognized under those guarantees and indemnifications and would be recognized in the Company’s condensed consolidated statements of operations and corresponding condensed consolidated balance sheets during that period.

Indemnification

The Company generally indemnifies its customers against claims brought by a third party to the extent any such claim alleges that the Company’s product infringes a patent, copyright or trademark or violates any other proprietary rights of that third party. The maximum potential amount of future payments the Company may be required to make under these indemnification agreements is not estimable.

The Company indemnifies its directors and officers and select key employees, including key employees serving as directors or officers of the Company’s subsidiaries, for certain events or occurrences, subject to certain limits, while the director or officer is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the director’s or officer’s term of service. The Company may terminate the indemnification agreements with its directors, officers or key employees upon the termination of their services as directors or officers of the Company or its subsidiaries, or the termination of activities for which indemnification has been provided, but termination will not affect claims for indemnification related to events occurring prior to the effective date of termination. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure. The Company believes the fair value of these indemnification agreements is minimal.

Purchase commitments with contract manufacturers and suppliers

We purchase components from a variety of suppliers and use contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory and components based upon criteria as defined by us, such as forecasted demand. The Company may be liable to purchase excess product or aged material or components from our suppliers following reasonable mitigation efforts.

Warranties

The Company offers a standard warranty on its products, with the term depending on the product, and records a liability for the estimated future costs associated with potential warranty claims. The Company’s responsibility under its standard warranty is the repair or replacement of in-warranty defective product, or to credit the purchase price of the defective product, at its discretion, without charge to the customer. The Company’s estimate of future warranty costs is largely based on historical experience factors including product failure rates, material usage, and service delivery cost incurred in correcting product failures. The standard warranty is included in either Other current liabilities or Other noncurrent liabilities on its condensed consolidated balance sheets, depending on the time period covered by the warranty. The Company also offers an extended warranty for purchase that represents a future performance obligation for the Company. The extended warranty is included in deferred revenues (both current and noncurrent) on the condensed consolidated balance sheets and recognized on a straight-line basis over the term of the extended warranty. The warranty costs are reflected in the Company’s condensed consolidated statements of operations within cost of revenues.

Legal proceedings

Third parties may from time to time assert legal claims against the Company. The Company records accruals for loss contingencies to the extent that it concludes it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. The Company evaluates, on a regular basis, developments in legal proceedings and other matters that could cause a change in amounts recorded. Due to the inherent uncertainty involving legal matters, the ultimate resolution could differ from amounts recorded. There is no pending or threatened legal proceedings to which the Company is a party, that in the Company’s opinion, is likely to have a material adverse effect on its financial condition or results of operations.

Note 14. Segment information

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, the Company determined that it operates as one operating segment and one reporting unit.

Note 15. Revenues from contracts with customers

Revenues consist primarily of revenues from the sale of hardware products with essential embedded software. Revenues also include amounts for software products, extended warranty on hardware products and subscription services. Substantially all products are sold through distributors and other channel partners, such as resellers and systems integrators.

The Company recognizes revenue to reflect the transfer of control of promised products or services to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for products or services.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The Company identifies its distinct performance obligations under each contract. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. Hardware products with essential embedded software, software products, and purchased extended warranty on hardware products have been identified as separate and distinct performance obligations.

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring products or services to a customer. An adjustment to revenue is made to adjust the transaction price to exclude the consideration related to products expected to be returned. The Company records an asset at the carrying amount of the estimated stock returns and a liability for the estimated amount expected to be refunded to the customer. The transaction price also excludes other forms of consideration provided to the customer, such as volume-based rebates and co-operative marketing allowances.

The Company recognizes revenue when, or as, it satisfies a performance obligation by transferring control of a promised product or service to a customer. Revenue from hardware products with essential embedded software is recognized when control of the asset is transferred, which is typically at the time of shipment. Revenue from perpetual license software is recognized at the point in time that the customer is able to use or benefit from the software. Extended warranty on hardware products is a performance obligation that is satisfied over time, beginning on the effective date of the warranty period and ending on the expiration of the warranty period. The Company recognizes revenue on extended warranties on a straight-line basis over the warranty period. Revenue from software subscriptions is recognized ratably over the term in which the services are provided and the performance obligation is satisfied.

The Company enters into revenue arrangements that may consist of multiple performance obligations, such as hardware products and extended warranty. The Company allocates the transaction price to each performance obligation on a relative standalone selling price basis for each distinct product or service in the contract. The best evidence of standalone selling price is the observable price of a product or service when the Company sells that product or service separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, the Company estimates the transaction price allocated to each performance obligation using the expected costs plus a margin approach.

Disaggregation of revenues

Revenues by product category were as follows (unaudited and in thousands, except percentages):


	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2023				2022				2023
Point-to-Multi-Point	$	28,269	41	%	$	26,734	45	%	$	59,195	45	%	$	49,026	36	%
Point-to-Point		15,684	22	%		25,074	42	%		30,398	23	%		43,082	31	%
Enterprise		24,014	35	%		6,420	11	%		39,522	30	%		42,076	31	%
Other		1,329	2	%		1,314	2	%		2,077	2	%		2,759	2	%
Total Revenues	$	69,296	100	%	$	59,542	100	%	$	131,192	100	%	$	136,943	100	%

The Company’s products are predominately sold through third-party distributors and distributed through a third-party logistics provider with facilities in the United States, Netherlands and China. The Company has determined the geographical distribution of product revenues based upon the ship-to destinations specified by its distributor customers.

Revenues by geography were as follows (unaudited and in thousands, except percentages):


	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2023				2022				2023
North America	$	31,140	45	%	$	39,526	67	%	$	59,461	45	%	$	87,119	63	%
Europe, Middle East and Africa		21,281	31	%		6,769	11	%		41,613	32	%		26,477	19	%
Caribbean and Latin America		7,960	11	%		6,015	10	%		13,044	10	%		9,700	7	%
Asia Pacific		8,915	13	%		7,232	12	%		17,074	13	%		13,647	10	%
Total Revenues	$	69,296	100	%	$	59,542	100	%	$	131,192	100	%	$	136,943	100	%

Contract balances

The following table summarizes contract balances as of December 31, 2021 and June 30, 2023 (in thousands):


	December 31, 2022		June 30, 2023

Trade accounts receivable, net of allowance for credit losses	$	89,181	$	86,671
Deferred revenue - current		8,913		8,307
Deferred revenue - noncurrent		8,617		9,281
Refund liability	$	3,186	$	10,109

Deferred revenue consists of amounts due or received from customers in advance of the Company satisfying performance obligations under contractual arrangements. Deferred revenue is classified as current or noncurrent based on the timing of when revenue will be recognized. The changes in deferred revenue were due to normal timing differences between the Company’s performance and the customers’ payment.

The refund liability is the estimated amount expected to be refunded to customers in relation to product exchanges made as part of the Company’s stock rotation program and returns that have been authorized, but not yet received by the Company. The increase in the refund liability is driven by the higher expected stock rotations of enterprise products as the channel aligns its inventory position with market demand. It is included within Other current liabilities in the condensed consolidated balance sheets.

Receivables and concentration of credit risk

Trade accounts receivable represent amounts for which the Company has an unconditional right to payment. Amounts are in accordance with contractual terms and are recorded at face amount less an allowance for credit losses. The Company establishes an allowance for credit losses to present the net amount of accounts receivable expected to be collected. The allowance is determined by using the loss-rate method, which requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivables. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of receivables and credit and liquidity indicators for individual customers.

The Company considers the credit risk of all customers and regularly monitors credit risk exposure in its trade receivables. The Company’s standard credit terms with its customers are generally net 30 to 60 days. The Company had one customer representing more than 10% of trade receivables at December 31, 2022 and two customers representing more than 10% of trade receivables at June 30, 2023.

Remaining performance obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations included in a contract that are unsatisfied, or partially satisfied, as of the end of a period. As of December 31, 2022, deferred revenue (current and noncurrent) of $17.5 million represents the Company’s remaining performance obligations, of which $8.9 million is expected to be recognized within one year, with the remainder to be recognized thereafter. As of June 30, 2023, deferred revenue (current and noncurrent) of $17.6 million represents the Company’s remaining performance obligations, of which $8.3 million is expected to be recognized within one year, with the remainder to be recognized thereafter (unaudited).

Revenue recognized during the three-month and six-month periods ended June 30, 2023 which was previously included in deferred revenues as of December 31, 2022 was $2.1 million and $5.5 million, respectively, compared to $2.0 million and $4.0 million of revenue recognized during the three-month and six-month periods ended June 30, 2022, respectively, which was previously included in deferred revenues as of December 31, 2021 (unaudited).

Cost to obtain a contract

Sales commissions are incremental costs of obtaining a contract. The Company has elected to recognize these expenses as incurred, as the amortization period of these costs is one year or less.

Note 16. Leases

The Company has operating leases for offices, vehicles and equipment. Leases with a term of 12 months or less are not recorded on the consolidated balance sheets and are expensed on a straight-line basis over the lease term.

Right-of-use assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s lease payments are typically fixed or contain fixed escalators. The Company’s leases typically include certain lock-in periods and renewal options to extend the lease but does not consider options to extend the lease it is not reasonably certain to exercise. The Company elected the practical expedient to not separate the lease and non-lease components of its leases and currently has no leases with options to purchase the leased property.

The components of lease expense were as follows and are included in general and administrative expense (unaudited and in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2023		2022		2023
Operating lease cost	$	592	$	613	$	1,201	$	1,185
Short-term lease cost		119		94		253		193
Variable lease costs		147		150		290		311
Total lease expense	$	858	$	857	$	1,744	$	1,689

Supplemental balance sheet information related to leases were as follows (in thousands, except lease term and discount rate):


	Balance Sheet Caption	December 31, 2022			June 30, 2023

Operating leases:
Operating lease assets	Operating lease assets	$	4,011		$	4,823
Current lease liabilities	Other current liabilities	$	1,930		$	1,940
Noncurrent lease liabilities	Noncurrent operating lease liabilities	$	2,170		$	3,033
Weighted average remaining lease term (years):
Operating leases			2.67			3.26
Weighted average discount rate:
Operating leases			6.11	%		6.30	%

Supplemental cash flow information related to leases were as follows (unaudited and in thousands):


	Six Months Ended June 30,
	2022		2023
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$	1,289	$	1,214

The Company’s current lease terms range from one to five years and may include options to extend the lease by one to four years.

Remaining maturities on lease liabilities as of June 30, 2023 is as follows (unaudited and in thousands):


	Operating leases
2023 (July - December)		1,250
2024		1,592
2025		1,228
2026		814
2027		440
Thereafter		198
Total lease payments		5,522
Less: interest		549
Present value of lease liabilities	$	4,973

As of June 30, 2023, the Company had entered into an agreement for their new corporate headquarters in Illinois. The Company will recognize the right-of-use asset and lease liability upon commencement of the lease, which is expected in the third quarter of 2023 when the exact space to be leased is defined and the Company has access to the space.

Note 17. Related party transactions

The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal.

For the three-month and six-month periods ended June 30, 2022 and 2023, the Company did not have any material related party transactions to disclose (unaudited).

Note 18. Subsequent Events

On August 1, 2023, the Company announced and initiated a corporate cost reduction to better align Cambium's cost structure with current economic conditions and position the Company to achieve near-term and long-term targets to maintain profitability, improve cash flow and maintain a strong balance sheet. The Company expects to incur approximately $2.0 million in costs, primarily related to one-time termination benefits, contract termination costs, and other associated costs, the majority of which will be incurred in the third quarter of 2023, and expects all costs incurred and cost reductions to be completed by the end of the fourth quarter of 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operation should be read in conjunction with the consolidated financial statements and related notes thereto of Cambium Networks Corporation (“Cambium”, “we”, “our”, or “us”) included elsewhere in this Quarterly Report on Form 10-Q and with the financial statements and related notes and Management’s Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed February 27, 2023. Results for the three-month and six-month periods ended June 30, 2023 are not necessarily indicative of the results that may be expected for any period in the future.

Overview

Cambium Networks is a global technology company that designs, develops, and manufactures wireless and fiber broadband and enterprise networking infrastructure solutions for a wide range of applications, including broadband access, wireless backhaul, Industrial Internet of Things (IIoT), public safety communications, and Wi-Fi access. Our products are used by businesses, governments, and service providers to build, expand and upgrade broadband networks. Our product lines fall into three broad, interrelated categories: Fixed Wireless & fiber Broadband (FWB), Enterprise networking, and Subscription and Services. The FWB portfolio spans point-to-point (PTP) and point-to-multi-point (PMP) architectures over multiple standards, including IEEE 802.11 and 3GPP (Third Generation Partnership Program) and frequency bands, including licensed, unlicensed, and lightly licensed spectrum, hardened switches for tower deployments and fiber products. In the second quarter of 2023, we introduced and had our first commercial shipments of a passive optical networking (PON) solution, supporting Gigabit PON (GPON) and XGS-PON (also known as 10G-PON or G987). The Enterprise portfolio includes Wi-Fi access points, wireless aware switches, and other networking devices.

The Subscription and Services portfolio includes network planning and design as well as cloud or on-premises network management and control solutions. The latter capability, delivered through subscription to cnMaestro™ X, forms the foundation of our ONE Network, a cloud-based network management architecture that allows users to remotely configure, monitor, and manage their wireless network. It provides a single, centralized view of all network devices, including wired and wireless broadband and Enterprise, as well as real-time performance and usage data, and allows users to make changes to the network configuration and settings. Advanced services offered in conjunction with this platform include application visibility and control, which is used to optimize end-user experiences; integrated security gateway and software defined wide area network (SD-WAN) for small and medium businesses; and automated and intelligent network optimization.

Trends impacting our business

Over the second quarter of 2023, revenue from our Enterprise products declined, partly resulting from increased competition as a result of readily available component supply reducing our prior advantage in supply and order fulfillment, aggressive pricing by our competitors and poor macroeconomic conditions in our primary markets resulting in lower order volumes from our distributors. We are taking actions to address these issues, including actions to reduce inventory of our Enterprise products as well as to reduce our operating costs to maintain profitability and improve cash flow. We do not see current market challenges persisting in the long term and are confident the product category will return to growth in the first half of 2024 as industry wide inventory levels normalize.

We have continued to work closely with our contract manufacturers and supply chain partners to balance production to market demand and have largely returned to historic, pre-pandemic customer order lead times. We have increased our inventory of certain key components to alleviate component shortages and extended our demand planning and purchase commitments to mitigate delays in component sourcing, and the risk of future supply chain disruptions. We continue to see inflation pressure in our supply chain, and scarcity of some materials needed to build our products. While we have increased our inventory of key components, technology shifts could result in this increased inventory becoming excess or obsolete before it is deployed, as new product development relies on different components.

We believe that we are at the start of the next wave of high-performance fixed wireless broadband deployments for our PMP solutions, in the second quarter of 2023 released our market-leading 6 GHz ePMP solution for global applications. However, material demand will follow final US Federal Communications Commission (FCC) approval for outdoor use of the 6 GHz spectrum, which we expect by the end of the year, and which is expected to drive PMP revenue growth in future quarters. We also expect a continued acceleration of our 28 GHz and 60GHz cnWave products through the end of this year and into the future. Our PTP business is expected to benefit from growth in defense and security deployments globally. During the second quarter of 2023, Cambium launched its first fiber-based solutions, Cambium Fiber, offering the most advanced PON technology for a complete end-to-end solution for service providers. The solutions for service providers offer a combo XGS-PON Optical Line Terminal (OLT) and Optical Network Terminals (ONT) for both indoor and outdoor use. The solutions are managed via cnMaestro X, our converged single pane of glass addressing both wireless and fiber management. The solutions also enable service providers and enterprises to go from fiber to wireless to Wi-Fi routers, all within a single pane of glass.

We continue to monitor the impact of macroeconomic factors, including a potential global recession, inflationary pressures, and growing political tensions as a result of the Russia-Ukraine conflict, as well as the escalating tensions between China and Taiwan, and

associated tensions between the U.S. and China. We also believe that our customers continue to grapple with the impact of these macroeconomic factors on their businesses and future investment plans, resulting in business uncertainty and a more constrained approach to forecasts and orders. In addition, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.

The impact of reverse globalization, including a more nationalistic trend globally leading to increasing government requirements for domestically produced products or limiting the sourcing of components and other products from China and elsewhere, has led us to limit our reliance on third-party manufacturers in China and begin moving manufacturing to other locations, which could cause disruptions in our supply operations. We believe that any extended or renewed economic disruptions or deterioration in the global economy could have a negative impact on demand from our customers in future periods. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends.

Financial results for the three-month period ended June 30, 2023

•

Total revenue was $59.5 million, a decrease of 14.1% year-over-year

•

Gross margin was 49.1%

•

Total costs of revenues and operating expenses were $62.2 million

•

Operating loss was $2.7 million

•

Net loss was $2.6 million

Basis of presentation

Revenues

Our revenues are generated primarily from the sale of our products, which consist of hardware with essential embedded software. Our revenues also include amounts for software products, extended warranty on hardware products and subscription services. We generally recognize product revenues at the time of shipment, provided that all other revenue recognition criteria have been met. Revenues are recognized net of estimated stock returns, volume-based rebates and cooperative marketing allowances that we provide to distributors. We recognize subscription services revenue ratably over the term in which services are provided and our performance obligation is satisfied. We provide a standard warranty on our hardware products, with the term depending on the product, and record a liability for the estimated future costs associated with potential warranty claims. In addition, we also offer extended warranties for purchase and represents a future performance obligation for us. The extended warranty is included in deferred revenues and is recognized on a straight-line basis over the term of the extended warranty.

Cost of revenues and gross profit

Our cost of revenues is comprised primarily of the costs of procuring finished goods from our third-party manufacturers, third-party logistics and warehousing provider costs, freight costs and warranty costs. We outsource our manufacturing to third-party manufacturers located primarily in Mexico, China, Israel and Taiwan. Cost of revenues also includes costs associated with supply operations, including personnel related costs and allocated overhead costs, provision for excess and obsolete inventory, third-party license costs and third-party costs related to services we provide. Cost of revenues also includes amortization of capitalized software development costs associated with products marketed to be sold.

Gross profit has been and will continue to be affected by various factors, including changes in product mix. The margin profile of products within each of our core product categories can vary significantly depending on the operating performance, features and manufacturer of the product. Gross margin will also vary as a function of changes in pricing due to competitive pressure, our third-party manufacturing and other production costs, cost of shipping and logistics, provision for excess and obsolete inventory and other factors. We expect our gross margins will fluctuate from period to period depending on the interplay of these various factors.

Operating expenses

We classify our operating expense as research and development, sales and marketing, and general and administrative expense. Personnel costs are the primary component of each of these operating expense categories, which consist of personnel costs, such as salaries, sales commissions, benefits, bonuses and share-based compensation expense. In addition, we separate depreciation and amortization in their own category.

Research and development

In addition to personnel-related costs, research and development expenses consist of costs associated with design and development of our products, product certification, travel, recruiting and shared facilities and shared IT costs. We generally recognize research and development expense as incurred. We capitalize certain software project costs under development during the period between determining technological feasibility of the product and commercial release. We amortize the capitalized development cost upon commercial release, generally over three years, and is included in cost of revenues. We typically do not capitalize costs related to the development of first-generation product offerings as technological feasibility generally coincides with general availability of the software.

Sales and marketing

In addition to personnel-related costs for sales, marketing, service and product line management personnel, sales and marketing expenses consist of our training programs, trade shows, marketing programs, promotional materials, demonstration equipment, national and local regulatory approval on our products, travel and entertainment, recruiting, digital marketing platforms, third-party marketing services and shared facilities and shared IT costs.

General and administrative

In addition to personnel-related costs, general and administrative expenses consist of professional fees, such as legal, audit, accounting, information technology and consulting costs, insurance, shared facilities and shared IT costs, and other supporting overhead costs.

Depreciation and amortization

Depreciation and amortization expenses consist of depreciation related to fixed assets such as computer equipment, furniture and fixtures, and testing equipment, as well as amortization related to acquired and internal use software and definite lived intangibles.

Provision for income taxes

Our provision for income taxes consists primarily of income taxes in the jurisdictions in which we conduct business. Management assesses our deferred tax assets in each reporting period, and if it is determined that it is not more likely than not to be realized, we will record a valuation allowance in that period.

Results of operations

The following table presents the consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our consolidated statements of operations (in thousands):


	Three Months Ended June 30,						Six months ended June 30,
(in thousands)	2022			2023			2022			2023
Statements of Operations Data:
Revenues	$	69,296		$	59,542		$	131,192		$	136,943
Cost of revenues		35,857			30,300			68,587			68,041
Gross profit		33,439			29,242			62,605			68,902
Operating expenses
Research and development		11,440			13,008			24,382			27,270
Sales and marketing		10,842			11,528			21,271			23,198
General and administrative		6,958			5,836			13,502			12,503
Depreciation and amortization		1,534			1,573			2,980			3,069
Total operating expenses		30,774			31,945			62,135			66,040
Operating income (loss)		2,665			(2,703	)		470			2,862
Interest expense, net		407			579			904			1,176
Other (income) expense, net		(371	)		64			(294	)		218
Income (loss) before income taxes		2,629			(3,346	)		(140	)		1,468
Provision (benefit) for income taxes		307			(704	)		(894	)		(166	)
Net income (loss)	$	2,322		$	(2,642	)	$	754		$	1,634


	Three Months Ended June 30,						Six months ended June 30,
	2022			2023			2022			2023
Percentage of Revenues:
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		51.7	%		50.9	%		52.3	%		49.7	%
Gross margin		48.3	%		49.1	%		47.7	%		50.3	%
Operating expenses
Research and development		16.6	%		21.8	%		18.6	%		19.9	%
Sales and marketing		15.6	%		19.4	%		16.2	%		16.9	%
General and administrative		10.0	%		9.8	%		10.3	%		9.1	%
Depreciation and amortization		2.2	%		2.6	%		2.2	%		2.2	%
Total operating expenses		44.5	%		53.6	%		47.3	%		48.2	%
Operating income (loss)		3.8	%		(4.5	)%		0.4	%		2.1	%
Interest expense, net		0.5	%		1.0	%		0.7	%		0.9	%
Other (income) expense, net		(0.5	)%		0.1	%		(0.2	)%		0.1	%
Income (loss) before income taxes		3.8	%		(5.6	)%		(0.1	)%		1.1	%
Provision (benefit) for income taxes		0.4	%		(1.2	)%		(0.7	)%		(0.1	)%
Net income (loss)		3.4	%		(4.4	)%		0.6	%		1.2	%

Comparison of three-month period ended June 30, 2022 to the three-month period ended June 30, 2023

Revenues


	Three Months Ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
Revenues	$	69,296	$	59,542	$	(9,754	)		(14.1	)%

Revenues decreased $9.8 million, or 14.1%, to $59.5 million for the three-month period ended June 30, 2023, from $69.3 million for the three-month period ended June 30, 2022, with the largest decrease in our enterprise product category driven by lower order volumes from distributors due to a recovery in the supply chain and higher channel inventories, aggressive pricing from competitors and the impact of slowing European economies. Revenues also decreased in our point-to-multi-point product category ahead of a product transition to new gigabit solutions in our product portfolio. These decreases were partially offset by increased revenues in our point-to-point product category driven by increased demand for defense products from the federal government.

Revenues by product category


	Three Months Ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
Point-to-Multi-Point	$	28,269	$	26,734	$	(1,535	)		(5.4	)%
Point-to-Point		15,684		25,074		9,390			59.9	%
Enterprise		24,014		6,420		(17,594	)		(73.3	)%
Other		1,329		1,314		(15	)		(1.1	)%
Total revenues by product category	$	69,296	$	59,542	$	(9,754	)		(14.1	)%

Point-to-Multi-Point

Our PMP revenues decreased $1.5 million, or 5.4%, from the three-month period ended June 30, 2022 to 2023, and represented 41% and 44% of our total revenues over the same periods, respectively. Our decrease in point-to-multi-point revenues were due to lower demand from service providers ahead of a product transition to new gigabit solutions in our product portfolio in Europe, Middle East, Africa, Caribbean and Latin America and Asia Pacific regions, partially offset by increased demand in North America for ePMP and new fiber products.

Point-to-Point

PTP revenues increased $9.4 million, or 59.9%, from the three-month period ended June 30, 2022 to 2023 mostly driven by increased revenues in North America as a result of increased demand for defense products partially offset by lower demand for PTP products in all other regions.

Enterprise

Enterprise revenues decreased $17.6 million, or 73.3%, from the three-month period ended June 30, 2022 to 2023. Enterprise revenues decreased in all but the Caribbean and Latin America region, driven mostly by lower order volumes from distributors. In addition, enterprise product revenues were impacted by the recovery of the product supply chain reducing our prior advantage in supply and order fulfillment and therefore, increased competition, coupled with aggressive pricing by our competitors, as well as higher inventory levels in the channel and the impact of slowing economies in Europe, Middle East, Africa.

Revenues by geography


	Three Months Ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
North America	$	31,140	$	39,526	$	8,386			26.9	%
Europe, Middle East, Africa		21,281		6,769		(14,512	)		(68.2	)%
Caribbean and Latin America		7,960		6,015		(1,945	)		(24.4	)%
Asia Pacific		8,915		7,232		(1,683	)		(18.9	)%
Total revenues by geography	$	69,296	$	59,542	$	(9,754	)		(14.1	)%

Revenues increased in North America and decreased in all other regions from the three-month period ended June 30, 2022 to June 30, 2023. North America revenues increased $8.4 million, or 26.9%, with large increases in PTP revenues as a result of higher demand for defense products along with increased PMP revenues due to higher demand and new fiber products offset by lower enterprise mostly due to high levels of channel inventory. Europe, Middle East, Africa revenues decreased by $14.5 million, or 68.2%, mostly driven by decreased enterprise revenue with slowing economies and high channel inventory along with lower demand for PMP and PTP products. Caribbean and Latin America revenues decreased $1.9 million, or 24.4%, mostly driven by lower PMP revenues. Asia Pacific revenues decreased $1.7 million, or 18.9%, mostly driven by decreased enterprise revenues.

Cost of revenues and gross margin


	Three Months Ended June 30,						Change
(dollars in thousands)	2022			2023			$			%
Cost of revenues	$	35,857		$	30,300		$	(5,557	)		(15.5	)%
Gross margin		48.3	%		49.1	%				80 bps

Cost of revenues decreased $5.6 million, or 15.5%, to $30.3 million for the three-month period ended June 30, 2023 from $35.9 million for the three-month period ended June 30, 2022. The decrease in cost of revenues was primarily due to decreased revenues along with decreased production costs due to decreases in component charges as a result of increased availability of components.

Gross margin increased to 49.1% for the three-month period ended June 30, 2023 from 48.3% for the three-month period ended June 30, 2022. The increase reflects increased revenues from higher margin products and the impact of price increases along with lower production costs due to improvements in component availability thereby reducing component costs, partially offset by the increase in our excess and obsolescence reserve.

Operating expenses


	Three Months Ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
Research and development	$	11,440	$	13,008	$	1,568			13.7	%
Sales and marketing		10,842		11,528		686			6.3	%
General and administrative		6,958		5,836		(1,122	)		(16.1	)%
Depreciation and amortization		1,534		1,573		39			2.5	%
Total operating expenses	$	30,774	$	31,945	$	1,171			3.8	%

Research and development

Research and development expense increased $1.6 million, or 13.7%, to $13.0 million for the three-month period ended June 30, 2023 from $11.4 million for the three-month period ended June 30, 2022. As a percentage of revenues, research and development expenses increased to 21.4% in 2023 from 16.6% in 2022 over the same period. The increase in research and development expense was primarily due to $1.4 million higher staff-related costs due to increased headcount, $0.5 million higher outside contractor spend due to the increase in projects, $0.4 million higher share-based compensation expense and $0.3 million higher homologation and regulatory fees due to the timing of projects. These increases were partially offset by $0.7 million higher capitalized software cost due to an increase in projects eligible for capitalization and $0.3 million lower corporate bonus accrual.

Sales and marketing

Sales and marketing expense increased $0.7 million, or 6.3%, to $11.5 million for the three-month period ended June 30, 2023 from $10.8 million for the three-month period ended June 30, 2022. As a percentage of revenues, sales and marketing expense increased to 19.8% in 2023 from 15.6% in 2022 over the same period. The increase in sales and marketing expense was primarily due to $0.3 million higher staff-related costs and $0.2 million higher travel-related spend as restrictions on travel and in-person trade shows, conferences and customer meetings have decreased and $0.2 million higher share-based compensation expense.

General and administrative

General and administrative expense decreased $1.2 million, or 16.1%, to $5.8 million for the three-month period ended June 30, 2023 from $7.0 million for the three-month period ended June 30, 2022. As a percentage of revenues, general and administrative expense decreased to 9.8% in 2023 from 10.0% in 2022 over the same period. The decrease in general and administrative expense was primarily due to $0.7 million lower professional fees, $0.3 million lower corporate bonus and $0.2 million lower insurance expense due to lower negotiated rates.

Depreciation and amortization

Depreciation and amortization expense remained flat from the three-month period ended June 30, 2022 to the three-month period ended June 30, 2023.

Interest expense, net


	Three Months Ended June 30,				Change
(dollars in thousands)	2022		2023		$		%
Interest expense, net	$	407	$	579	$	172		42.3	%

Interest expense increased $0.2 million, or 42.3%, to $0.6 million for the three-month period ended June 30, 2023 from $0.4 million for the three-month period ended June 30, 2022. The increase was primarily due to an increase in the interest rate on the term loan partially offset by increase in interest income earned.

Other (income) expense, net


	Three Months Ended June 30,					Change
(dollars in thousands)	2022			2023		$		%
Other (income) expense, net	$	(371	)	$	64	$	435		(117.3	)%

Other (income) expense, net changed from income of $0.4 million for the three-month period ended June 30, 2022 to $0.1 million for the three-month period ended June 30, 2023, primarily due to foreign currency fluctuations.

Provision for income taxes


	Three Months Ended June 30,						Change
(dollars in thousands)	2022			2023			$			%
Provision (benefit) for income taxes	$	307		$	(704	)	$	(1,011	)	nm
Effective income tax rate		11.7	%		21.0	%

Our benefit for income taxes was $0.7 million for the three-month period ended June 30, 2023 versus a provision for income taxes of $0.3 million for the three-month period ended June 30, 2022. The effective income tax rates were 21.0% and 11.7% over the same periods, respectively, and reflect the application of our expected annual tax rate to pre-tax results for each of the periods as well as discrete tax impacts that arise during the periods. In the three-month period ended June 30, 2022, the effective income tax rate of 11.7% was different from the statutory rate of 21.0% primarily due to tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, and revaluing of UK deferred tax assets at a higher future tax rate. In the three-month period ended June 30, 2023, our effective income tax rate of 21.0% was not materially different from the statutory rate of 21.0%.

Comparison of six-month period ended June 30, 2022 to the six-month period ended June 30, 2023

Revenues


	Six months ended June 30,				Change
(dollars in thousands)	2022		2023		$		%
Revenues	$	131,192	$	136,943	$	5,751		4.4	%

Revenues increased $5.8 million, or 4.4%, to $136.9 million for the six-month period ended June 30, 2023 from $131.2 million for the six-month period ended June 30, 2022, with the largest increase in our point-to-point product category driven by higher demand for defense products, along with increased revenues in our enterprise products driven by improved supply as well as the absence of COVID lockdowns in China in the first quarter of 2022 that enabled us to manufacture product without interruption in operations, partially offset by lower demand in our point-to-multi-point products due to slower network buildouts. Revenues benefited from the increase in the number of our channel partners, which consists of over 13,000 channel partners as of June 30, 2023.

Revenues by product category


	Six months ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
Point-to-Multi-Point	$	59,195	$	49,026	$	(10,169	)		(17.2	)%
Point-to-Point		30,398		43,082		12,684			41.7	%
Enterprise		39,522		42,076		2,554			6.5	%
Other		2,077		2,759		682			32.8	%
Total revenues by product category	$	131,192	$	136,943	$	5,751			4.4	%

Point-to-Multi-Point

Our PMP revenues decreased $10.2 million, or 17.2%, from the six-month period ended June 30, 2022 to 2023, and represented 45% and 36% of our total revenues over the same periods, respectively. Our decrease in point-to-multi-point revenues were due to lower demand from service providers ahead of a product transition to new gigabit solutions in our product portfolio in Europe, Middle East, Africa, Caribbean and Latin America and Asia Pacific regions, partially offset by increased demand in North America.

Point-to-Point

PTP revenues increased $12.7 million, or 41.7%, from the six-month period ended June 30, 2022 to 2023 mostly driven by increased revenues in North America as a result of increased demand for defense products.

Enterprise

Enterprise revenues increased $2.6 million, or 6.5%, from the six-month period ended June 30, 2022 to 2023. Enterprise revenues increased in North America, driven mostly by improvements in available product supply to meet demand and the absence of the COVID lockdowns in China in the first quarter of 2022 which resulted in the shutdown of manufacturing and distribution operations. Although revenues increased, enterprise revenues were impacted by the recovery of the product supply chain by reducing our prior advantage in supply and order fulfillment and therefore increasing competition, coupled with aggressive pricing by our competitors as well as higher inventory levels in the channel along with slowing economies in Europe, Middle East, Africa.

Revenues by geography


	Six months ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
North America	$	59,461	$	87,119	$	27,658			46.5	%
Europe, Middle East, Africa		41,613		26,477		(15,136	)		(36.4	)%
Caribbean and Latin America		13,044		9,700		(3,344	)		(25.6	)%
Asia Pacific		17,074		13,647		(3,427	)		(20.1	)%
Total revenues by geography	$	131,192	$	136,943	$	5,751			4.4	%

Revenues increased in North America and decreased in all other regions from the six-month period ended June 30, 2022 to June 30, 2023. North America revenues increased $27.7 million, or 46.5%, with increases in all product lines, mostly driven by increased PTP revenues as a result of higher demand for defense products along with increased enterprise revenues due to improved supply and increased demand as well as the absence of the COVID lockdowns in China in the first quarter of 2022 that enabled us to manufacture product without interruption in operations. Europe, Middle East, Africa revenues decreased by $15.1 million, or 36.4%, mostly related to decreased PMP revenues and decreased enterprise revenues due to high level of channel inventory. Asia Pacific revenues decreased $3.4 million, or 20.1%, mostly driven by decreased PMP and PTP revenues due to lower demand throughout the region. Caribbean and Latin America revenues decreased $3.3 million, or 25.6%, mostly due to lower PMP revenues.

Cost of revenues and gross margin


	Six months ended June 30,						Change
(dollars in thousands)	2022			2023			$			%
Cost of revenues	$	68,587		$	68,041		$	(546	)		(0.8	)%
Gross margin		47.7	%		50.3	%				260 bps

Cost of revenues decreased $0.6 million, or 0.8%, to $68.0 million for the six-month period ended June 30, 2023 from $68.6 million for the six-month period ended June 30, 2022. The decrease in cost of revenues was primarily due to decreased production costs due to decreases in component charges as a result of increased availability of components partially offset by the increase in our excess and obsolescence reserve and supply operations costs due to increased headcount.

Gross margin increased to 50.3% for the six-month period ended June 30, 2023 from 47.7% for the six-month period ended June 30, 2022. The increase reflects increased revenues from higher margin products and the impact of price increases along with lower production costs due to improvements in component availability reducing component costs, partially offset by the increase in our excess and obsolescence reserve.

Operating expenses


	Six months ended June 30,				Change
(dollars in thousands)	2022		2023		$			%
Research and development	$	24,382	$	27,270	$	2,888			11.8	%
Sales and marketing		21,271		23,198		1,927			9.1	%
General and administrative		13,502		12,503		(999	)		(7.4	)%
Depreciation and amortization		2,980		3,069		89			3.0	%
Total operating expenses	$	62,135	$	66,040	$	3,905			6.3	%

Research and development

Research and development expense increased $2.9 million, or 11.8%, to $27.3 million for the six-month period ended June 30, 2023 from $24.4 million for the six-month period ended June 30, 2022. As a percentage of revenues, research and development expenses increased to 19.9% in 2023 from 18.6% in 2022 over the same period. The increase in research and development expense was primarily due to $2.5 million higher staff-related costs due to increased headcount, $0.8 million higher contractor costs driven by increase in projects, $0.6 million higher share-based compensation expense and $0.2 million higher travel partially offset by $1.2 million higher capitalized software cost due to an increase in projects eligible for capitalization.

Sales and marketing

Sales and marketing expense increased $1.9 million, or 9.1%, to $23.2 million for the six-month period ended June 30, 2023 from $21.3 million for the six-month period ended June 30, 2022. As a percentage of revenues, sales and marketing expense increased to 16.9% in 2023 from 16.2% in 2022 over the same period. The increase in sales and marketing expense was primarily due to $0.6 million higher staff-related costs due to increased headcount, $0.6 million higher travel-related spend and $0.3 million higher trade show and marketing-related spend as travel and in person trade shows and conferences have increased, $0.3 million higher professional fees and $0.2 million higher share-based compensation expense.

General and administrative

General and administrative expense decreased $1.0 million, or 7.4%, to $12.5 million for the six-month period ended June 30, 2023 from $13.5 million for the six-month period ended June 30, 2022. As a percentage of revenues, general and administrative expense decreased to 9.1% in 2023 from 10.3% in 2022 over the same period. The decrease in general and administrative expense was primarily due to $0.5 million lower insurance expense due to lower negotiated fees along with $0.3 million lower professional fees, $0.1 lower business taxes and $0.1 million lower legal expense.

Depreciation and amortization

Depreciation and amortization expense remained flat from the six-month period ended June 30, 2022 to the six-month period ended June 30, 2023.

Interest expense, net


	Six months ended June 30,				Change
(dollars in thousands)	2022		2023		$		%
Interest expense, net	$	904	$	1,176	$	272		30.1	%

Interest expense, net increased $0.3 million, or 30.1%, to $1.2 million for the six-month period ended June 30, 2023 from $0.9 million for the six-month period ended June 30, 2022. The increase was primarily due to an increase in the interest rate on the term loan partially offset by increase in interest income earned.

Other (income) expense, net


	Six months ended June 30,					Change
(dollars in thousands)	2022			2023		$		%
Other (income) expense, net	$	(294	)	$	218	$	512	nm

Other (income) expense, net changed from income of $0.3 million for the six-month period ended June 30, 2022 to expense of $0.2 million for the six-month period ended June 30, 2023, primarily due to foreign currency fluctuations.

Provision for income taxes



	Six months ended June 30,						Change
(dollars in thousands)	2022			2023			$		%
Benefit for income taxes	$	(894	)	$	(166	)	$	728		(81.4	)%
Effective income tax rate		638.6	%		(11.3	)%

Our benefit for income taxes was $0.2 million for the six-month period ended June 30, 2023 and a benefit for income taxes of $0.9 million for the six-month period ended June 30, 2022. The effective income tax rates were (11.3)% and 638.6% over the same periods, respectively, and reflect the application of our expected annual tax rate to pre-tax results for each of the periods as well as discrete tax impacts that arise during the periods. In the six-month period ended June 30, 2022, the effective income tax rate of 638.6% was different from the statutory rate of 21.0% primarily due tax benefits arising on Research and Development tax credits, Foreign Derived Intangible Income, and revaluing of UK deferred tax assets at a higher future tax rate. In the six-month period ended June 30, 2023, our effective income tax rate of (11.3)% was different from the statutory rate of 21.0% primarily due to Foreign Derived Intangible Income, tax benefits arising on Research and Development tax credits, and revaluing of UK deferred tax assets at a higher future tax rate.

Liquidity and Capital Resources

As of June 30, 2023, we had a cash balance of $32.0 million. Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet interest and principal requirements of our outstanding indebtedness; and (iii) to fund capital expenditures. We believe these needs will be satisfied over at least the next 12 months using existing cash and using cash flow generated by our operations. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products and overall economic conditions. We expect to regularly assess market conditions and may take measures, including raising additional equity or incurring additional debt if and when our board of directors determines that doing so is in our best interest.

Cash Flows

The following table sets forth summarized cash flow data for the periods indicated (in thousands):

Cash flows from operating activities


	Six Months Ended June 30,
	2022			2023
Cash used in operating activities	$	(9,239	)	$	(10,480	)
Cash used in investing activities	$	(4,269	)	$	(5,569	)
Cash provided by (used in) financing activities	$	191		$	(152	)

Net cash used in operating activities for the six-month period ended June 30, 2022 of $9.2 million consisted primarily of net income of $0.8 million, share-based compensation expense of $4.9 million and adjustments for depreciation and amortization and other non-cash impacts of $4.0 million, an increase in deferred tax assets of $1.3 million and changes in operating assets and liabilities that resulted in net cash outflows of $17.6 million. The changes in operating assets and liabilities consisted primarily of a $13.8 million decrease in inventories due to management's plan to build inventory in response to supply chain constraints, a $10.9 million decrease in accrued employee compensation primarily due to the payment of the 2021 corporate bonus net of the 2022 corporate bonus accrual and $3.9 million increase in accounts receivable reflecting the impact of billing linearity and lower sales. These uses of cash were partially offset by $8.1 million lower prepaid expenses, mostly as a result of decrease in vendor prepayments to procure inventory, $1.8 million increase in deferred revenues and $1.3 million increase in accrued liabilities primarily related to inventory in transit.

Net cash used in operating activities for the six-month period ended June 30, 2023 of $10.5 million consisted of net income of $1.6 million, share-based compensation expense of $5.9 million and adjustments for depreciation and amortization and other non-cash impacts of $5.4 million, an increase in deferred tax assets of $3.3 million and changes in operating assets and liabilities that resulted in net cash outflows of $20.1 million. The changes in operating assets and liabilities consisted primarily of a $26.3 million increase in inventories due to lower sales along with management's plan to build inventory to manage component shortages, a $1.5 million decrease in accrued employee compensation due to lower corporate bonus accrual and $1.3 million decrease in accounts payable due to timing of invoices and payments. The uses of cash were partially offset by a $4.5 million increase in cash provided by all other assets and liabilities, mostly driven by the increase in accrued sales returns along with collection of the UK RDEC tax credit, $3.8 million reduction in prepaid expenses, mostly due to lower vendor prepayments, $0.6 million higher accrued liabilities primarily related to inventory in transit and $0.2 million decrease in accounts receivable reflecting the impact of lower sales and the timing of collections.

Cash flows from investing activities

Our investing activities for all periods presented consisted of capital expenditures for property, equipment and software in support of the growth of our business.

Cash flows from financing activities

During the six-month period ended June 30, 2022, net cash provided of $0.2 million was primarily due to proceeds received of $1.1 million for the issuance of ordinary shares under our Employee Share Purchase Program, proceeds received of $0.2 million from the exercise of share options offset by $0.7 million repayment of principal under the term loan facility with Bank of America and $0.5 million for taxes paid from shares withheld in net settlement of taxes due on vesting of restricted shares issued to our employees.

During the six-month period ended June 30, 2023, net cash used of $0.2 million was primarily due to $1.3 million repayment of principal due under the term loan facility with Bank of America and $0.4 million for taxes paid from shares withheld in net settlement of taxes due on vesting of restricted shares issued to our employees partially offset by proceeds received of $1.1 million from the issuance of ordinary shares under our ESPP and $0.4 million from the exercise of share options.

Debt

As of June 30, 2023, we had $26.7 million outstanding on our term credit facility and had $45.0 million available under our revolving credit facility with Bank of America. The effective interest rate on the term credit facility at June 30, 2023 was 7.52%. The Company is required to make scheduled quarterly principal payments of $0.7 million under the term credit facility. With the cessation of all tenors of US Dollar LIBOR as an available benchmark on June 30, 2023, we entered into an amendment to our credit facilities on June 9, 2023 to amend the original BofA Credit Agreement to replace the benchmark used for the interest rate on EuroDollar Rate Loans from US Dollar LIBOR to Term SOFR. Effective on June 17, 2023, our term credit facility interest rate is indexed to the Term SOFR rate based on the period selected by management. Our term credit facility matures on November 17, 2026, at which time the outstanding principal will be due. Refer to Note 6 – Debt, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Contractual Obligations and Commercial Commitments

For the three-month period ended June 30, 2023, the only material change to the contractual obligations and commercial commitments from what was disclosed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 is the addition of approximately $7.7 million in minimum lease payments beginning on April 1, 2024 to be made over 13 years for the new corporate headquarters in Illinois, with $0.1 million due within one year, $1.1 million due in one to three years, $1.9 million due in three to five years, and $4.6 million due in more than five years.

Off-balance sheet arrangements

We do not engage in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as variable interest entities, structured finance, or special purpose entities, as part of our ongoing business. Accordingly, our operating results, financial condition and cash flows are not subject to off-balance sheet risks.

Significant Accounting Estimates

Our consolidated financial statements and the related notes thereto are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expense and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

During the three-month period ended June 30, 2023, there were no significant changes to our critical accounting policies and estimates. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2022, filed on February 27, 2023, for a more complete discussion of our critical accounting policies and estimates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Excluding the impact of changes in interest rates and the uncertainty in the global financial markets, there have been no material changes to our market risk for the three-month period ended June 30, 2023. We conduct business in all parts of the world and are thereby exposed to market risks related to fluctuations in foreign currency exchange rates. The U.S. dollar is the single largest currency in which our revenue contracts are denominated. Any decline in the value of local foreign currencies against the U.S. dollar results in our products and services being more expensive to a potential foreign customer. In those instances where our goods and services have already been sold, receivables may be more difficult to collect. Additionally, in jurisdictions where the revenue contracts are denominated in U.S. dollars and operating expenses are incurred in the local currency, any decline in the value of the U.S. dollar will have an unfavorable impact to operating margins. We have not entered into any foreign currency hedging transactions. We do not purchase or hold any derivative financial instruments for speculation or arbitrage.

We do not hold any cash in any investment accounts and all cash is deposited with financial institutions that management believes are of high credit quality. The Company's cash consists primarily of U.S. dollar denominated demand accounts.

We had $26.7 million of debt outstanding on our term loan facility and $0.0 million of debt outstanding on our revolving credit facility as of June 30, 2023 under our BofA Credit Agreement. With the cessation of all tenors of US Dollar LIBOR on June 30, 2023, we entered into an amendment of our BofA Credit Agreement on June 9, 2023 to replace the Eurodollar Rate (the rate equal to US Dollar LIBOR) with Term Secured Overnight Financing Rate, or SOFR. The Company is exposed to interest rate risk from fluctuations in the Term SOFR that is a component of the interest rate used to calculate interest expense on the debt. Interest accrues on the outstanding principal amount of the term loan on a quarterly basis and is equal to the selected rate per annum determined by reference to the 1-month, 3-month or 6-month Term SOFR rate as selected by the Company, plus a SOFR adjustment of 0.10%, plus an applicable margin between 1.75% and 2.25% as determined by our financial performance as measured by the consolidated leverage ratio. At June 30, 2023, the applicable margin was 1.75% and the effective interest rate on the term loan was 7.52%. A hypothetical 100-basis point increase in interest rates, and assuming a constant applicable margin, would result in an additional $0.3 million in interest expense related to the external debt per year.

There have been no other material changes in our market risk since December 31, 2022.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act), as of June 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures are effective at a reasonable assurance level.

Changes in internal control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on effectiveness of controls and procedures

None.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Third parties may from time to time assert legal claims against us. Our industry is characterized by vigorous protection and pursuit of intellectual property rights. A number of companies hold a large number of patents that may cover technology necessary to our products. We have in the past received and expect to continue to receive claims by third parties that we infringe their intellectual property rights. In the opinion of management, we believe we have established adequate accruals pursuant to U.S. generally accepted accounting principles for any expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based on presently available information. However, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial conditions, or cash flows.

For additional information, see Note 13 – Commitments and contingencies in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Part I, Item 3. Legal Proceedings in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 1A. Risk Factors.

There have been no material changes to the risk factors as disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 except as discussed below. Additional risk and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

We have filed the exhibits listed on the accompanying Exhibit Index, which is incorporated herein by reference.

EXHIBIT INDEX


Exhibit Number		Description
10.40*		First Amendment to Credit Agreement dated as of June 9, 2023 between Cambium Networks and Bank of America
10.41+*		Form of Performance-Based Share Unit Notice and Agreement
10.42+*		Form of Performance-Based Share Option Award Agreement
10.43*		Office Lease, dated as of June 1, 2023, by and between Cambium Networks, Inc. and Hoffman Estates Acquisition LLC and Hoffman Estates Acquisitions II LLC
31.1*		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

+ Indicates management contract or compensatory plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CAMBIUM NETWORKS CORPORATION

Date: August 2, 2023	By:	/s/ Morgan Kurk
		Morgan Kurk
		President and Chief Executive Officer

Date: August 2, 2023	By:	/s/ Andrew P Bronstein
		Andrew P. Bronstein
		Chief Financial Officer