Ceragon Networks Reports First Quarter 2019 Financial Results
May 6, 2019

CERAGON NETWORKS REPORTS FIRST QUARTER 2019
FINANCIAL RESULTS
Revenues affected by timing of orders from India, while positive overall demand trends continue
Little Falls, New Jersey, May 6, 2019 - Ceragon Networks Ltd. (NASDAQ: CRNT), the #1 wirelessbackhaul specialist, today reported results for the first quarter ended March 31, 2019.
First Quarter 2019 Highlights
Revenues - $69.2 million, down 16.9% from the first quarter of 2018, and down 19.3% from the fourthquarter of 2018.
Gross margin - 35.6%, compared to 33.1% in the first quarter of 2018 and 34.4% in the fourth quarter of2018.
Operating income - $3.2 million, compared to $5.4 million in the first quarter of 2018 and $6.5 million in
the fourth quarter of 2018.
Net income - net income of $0.8 million, or $0.01 per diluted share for the first quarter of 2019. Net income
for the first quarter of 2018 was $2.1 million, or $0.03 per diluted share. Net income for the fourth quarter of2018 was $11.6 million or $0.14 per diluted share.
Non-GAAP results - gross margin was 35.7%, operating income was $3.7 million, and net income was $2.1
million, or $0.03 per diluted share. For reconciliation of GAAP to non-GAAP results, see the attached tables.
Cash and cash equivalents - $29.8 million at March 31, 2019, compared to $35.6 million at December 31,2018.
“As we expected, first quarter results were low due to the timing of large orders from India, in addition totypical seasonal factors,” said Ira Palti, president and CEO of Ceragon. “We continue to experience a highlevel of customer activity around the world resulting from the ongoing expansion of 4G and the beginning of
the transition to 5G. This high level of customer activity, together with our expectation that we will receive abatch of large orders in Q2 related to ongoing deployments in India, causes us to believe that our quarterly
revenue during the balance of 2019 is likely to be at or above the high end of our $80 to $85 million
quarterly revenue run rate. Thus, we continue to expect overall revenue for 2019 to be similar to that of2018. We are also continuing to target in 2019 a 5th consecutive year of growth in our non-GAAP net
income, based on our expectation to higher gross margin from a more favorable geographic mix of revenue
as well as lower financial expenses compared to 2018.”
1

Ceragon Networks Reports First Quarter 2019 Financial Results
May 6, 2019

Supplemental revenue breakouts by geography:
First quarter 2019:•

Europe:17%•Africa:

13%•

North America:

15%•Latin America:

22%•India:

15%

•APAC

18%

A conference call to discuss the results will begin at 9:00 a.m. EDT. Investors are invited to join theCompany’s teleconference by calling USA: (800) 230-1074 or International: +1 (612) 288-0329, from 8:50
a.m. EDT. The call-in lines will be available on a first-come, first-serve basis.
Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website at:https://www.ceragon.com/investors/webcasts/, and completing the registration.
If you are unable to join us live, the replay numbers are: USA: (800) 475-6701 or International +1 (320) 3653844 Access Code: 466180. A replay of both the call and the webcast will be available through June 6, 2019.

About Ceragon Networks Ltd.
Ceragon Networks Ltd. (NASDAQ: CRNT) is the #1 wireless backhaul specialist. We help operators andother service providers worldwide smoothly evolve their networks towards 5G, while increasing operational
efficiency and enhancing end customers’ quality of experience, with innovative wireless backhaul solutions.
Our customers include wireless service providers, public safety organizations, government agencies andutility companies, that use our solutions to deliver mission-critical multimedia services and otherapplications at high reliability and speed.
Ceragon’s unique multicore technology and wireless backhaul solutions provide highly reliable, 5G highcapacity connectivity with minimal use of spectrum, power and other resources. Our solutions enable
increased productivity, as well as simple and quick network modernization. We deliver a range ofprofessional services that ensure efficient network rollout and optimization to achieve the highest value forour customers. Ceragon’s solutions are deployed by more than 460 service providers, as well as hundreds ofprivate network owners, in more than 130 countries.
Join the Discussion

Ceragon Networks® and FibeAir® are registered trademarks of Ceragon Networks Ltd. in the United Statesand other countries. CERAGON ® is a trademark of Ceragon Networks Ltd., registered in various countries.
Other names mentioned are owned by their respective holders.

2Ceragon Networks Reports First Quarter 2019 Financial Results
May 6, 2019

This press release contains statements concerning Ceragon's future prospects that are "forwardlooking statements" as defined in the Private Securities Litigation Reform Act of 1995. Suchforward-looking statements are based on the current beliefs, expectations and assumptions ofCeragon's management. Examples of forward-looking statements include: projections of demand,revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, ordertiming, growth prospects, product development, financial resources, cost savings and otherfinancial matters. You may identify these and other forward-looking statements by the use of words
such as "may", "plans", "anticipates", "believes", "estimates", "targets", "expects", "intends","potential" or the negative of such terms, or other comparable terminology. These forward-looking
statements are subject to risks and uncertainties that may cause actual results to differ materially,including risks relating to the concentration of a significant portion of Ceragon's business incertain geographic regions and particularly in India, where two customers currently represent asignificant portion of its revenues, risks associated with a decline in demand from the single market
segment on which we focus; risks associated with any failure to effectively compete with otherwireless equipment providers; risk relating to certain guarantees granted by Ceragon on behalf ofOrocom to FITEL, in the framework of the FITEL project; and other risks and uncertainties
detailed from time to time in Ceragon's Annual Report on Form 20-F and Ceragon's other filings
with the Securities and Exchange Commission, that represent our views only as of the date they are
made and should not be relied upon as representing our views as of any subsequent date. We do notassume any obligation to update any forward-looking statements.
Investors:
Ran Vered+972 3 543 1595

ranv@ceragon.com

orClaudia Gatlin+1 212 830-9080

claudiag@ceragon.com

Media:
Tanya Solomon+972 3 5431163

tanyas@ceragon.com-tables follow-3

Ceragon Reports First Quarter 2019 Results

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(U.S. dollars in thousands, except share and per share data)(Unaudited)Three months ended
March 31,20192018
Revenues
Cost of revenues$

69,16344,531$

83,27555,671Gross profit

24,632

27,604

Operating expenses:
Research and development, net
Selling and marketing
General and administrative

6,164
9,462
5,782

7,214
10,562
4,459

Total operating expenses$21,408$

22,235

Operating income
Financial expenses, net3,224
1,109

5,369
2,034

Income before taxes

2,115

3,335

Taxes on income

1,134

1,265

173

-Equity loss in affiliates
Net income

$808

$

2,070

Basic net income per share

$0.01

$

0.03

Diluted net income per share

$0.01

$

0.03

Weighted average number of shares used incomputing basic net income per share

80,113,607

78,080,146

Weighted average number of shares used incomputing diluted net income per share

82,333,627

80,065,171

4

Ceragon Reports First Quarter 2019 Results

CONDENSED CONSOLIDATED BALANCE SHEETS(U.S. dollars in thousands)ASSETSCURRENT ASSETS:
Cash and cash equivalents
Short - term bank deposits
Trade receivables, net
Other accounts receivable and prepaid expenses
Inventories$March 31,
2019

December 31,
2018

Unaudited

Audited

29,754
119,548
12,55567,370$35,581
515
123,451
12,13553,509Total current assets

229,227

225,191

NON-CURRENT ASSETS:
Long-term bank deposits
Deferred tax assets
Severance pay and pension fundProperty and equipment, net
Intangible assets, net
Other non-current assets

90
6,882
5,378
34,287
6,931
14,722

504
7,476
5,096
33,613
6,576
4,544

Total non-current assets

68,29057,809Total assets$

297,517$

283,000$

82,845
4,246
29,281$

78,892
3,873
27,256

LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:
Trade payables
Deferred revenues
Other accounts payable and accrued expenses
Total current liabilities

116,372

110,021

LONG-TERM LIABILITIES:Deferred tax liability
Accrued severance pay and pension
Other long term payables

24
9,973
9,315

289,711
3,672

Total long-term liabilities

19,312

13,411SHAREHOLDERS' EQUITY:
Share capital:
Ordinary shares
Additional paid-in capital
Treasury shares at cost
Other comprehensive loss
Accumulated deficits

214
415,949(20,091)(8,292)(225,947)

214
415,408(20,091)(9,208)(226,755)

Total shareholders' equity

161,833

159,568

Total liabilities and shareholders' equity$

5297,517$

283,000

Ceragon Reports First Quarter 2019 Results

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S. dollars, in thousands)(Unaudited)Three months ended
March 31,20192018
Cash flow from operating activities:
Net Income
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:$

Depreciation and amortization
Stock-based compensation expense
Decrease (increase) in trade and other receivables, net
Decrease (increase) in inventory, net of write-off
Decrease in deferred tax asset, net
Increase (decrease) in trade payables and accrued
liabilities
Increase in deferred revenues
Other adjustments
Net cash provided by (used in) operating activities
Cash flow from investing activities:
Purchase of property and equipment, net
Purchase of intangible assets, net
Release of long and short - term bankdepositNet cash used in investing activities

$808

$

2,120
475
(6,391)(14,150)590
15,583

1,511
353
183
4,488
474
(5,854)

376
(31)
(620)

940
208
4,373

$

(3,991)(2,189)940$

Cash flow from financing activities:
Proceeds from exercise of options

2,070(5,240)(3,299)(1,086)$(4,385)

100

66

Net cash provided by financing activities

$66

$

100

Translation adjustments on cash and cash equivalents$)33($)9(Increase (decrease) in cash and cash equivalents$(5,827)$79

Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period

625,877

35,581$29,754$25,956

Ceragon Reports First Quarter 2019 Results

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(U.S. dollars in thousands)(Unaudited)Three months ended
March 31,20192018
GAAP cost of revenues
Stock based compensation expenses
Changes in indirect tax positions
Non-GAAP cost of revenues$

GAAP gross profit
Gross profit adjustments
Non-GAAP gross profit$GAAP Research and development expensesStock based compensation expenses
Non-GAAP Research and development expenses$

GAAP Sales and Marketing expenses
Stock based compensation expenses
Non-GAAP Sales and Marketing expenses$

GAAP General and Administrative expenses
Stock based compensation expenses
Non-GAAP General and Administrative expenses$

GAAP financial expenses
Leases – financial income (expenses)
Non-GAAP financial expenses$

GAAP taxes on income
Non-cash tax adjustments
Non-GAAP taxes on income$

GAAP equity loss in affiliates
Other non-cash adjustments
Non-GAAP equity loss in affiliates

$$$$$

$

$$$

7

44,531(15))21(44,495$

24,632
36
24,668$6,164(103)
6,061

$

9,462(175)
9,287

$

5,782(182)
5,600

$

1,109
26
1,135$

1,134)618(516$173)173(-$$$

$

$

$

$

$

$

55,671(17))15(55,639
27,60432
27,636
7,214
(60)
7,154
10,562(144)
10,4184,459(132)
4,327
2,034
2,034
1,265)564(701-Ceragon Reports First Quarter 2019 Results

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS(U.S. dollars in thousands, except share and per share data)(Unaudited)Three months ended
March 31,20192018
GAAP net income
Stock based compensation expenses
Changes in indirect tax positions
Leases – financial expenses (income)Non-cash tax adjustment
Other non-cash adjustment$808
47521)26(618173

$

2,070
353
15564
-Non-GAAP net income

$

2,069

$

3,002

GAAP basic net income per share

$0.01

$

0.03

GAAP diluted net income per share

$0.01

$

0.03

Non-GAAP basic and diluted net income per share

$0.03

$

0.04

Weighted average number of shares used in computingGAAP basic net income per share

80,113,607

78,080,146

Weighted average number of shares used in computing
GAAP diluted net income per share

82,333,627

80,065,171

Weighted average number of shares used in computing
Non-GAAP basic and diluted net income per share

82,701,755

80,377,797

8