Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues for Q2 2024 were $45.9 million, up 9% sequentially, driven by growth in the enterprise and point-to-multipoint (PMP) businesses.
- Adjusted gross margin improved quarter-over-quarter, with a potential of reaching 44.4% excluding unexpected charges.
- Cash flow from operations was positive $2.4 million, marking the first positive cash flow in six quarters.
- Sales outpaced sales in, indicating strong demand and progress in reducing channel inventories.
- New product introductions, such as the PTP 850EX, are expected to drive future growth with their competitive pricing and advanced features.
Negative Points
- Free cash flow was negative $1.8 million during Q2 2024, indicating ongoing cash management challenges.
- Gross margins were impacted by $7 million in additional inventory charges and supplier commitment reserves.
- The point-to-point business declined by 5% sequentially due to the completion of a large installation in the prior quarter.
- North America PMP business remains slow as service providers are still adapting to the 6 gigahertz PMP solution.
- The company is projecting a non-GAAP net loss for the full year 2024, indicating ongoing financial challenges.
Q & A Highlights
Q: Could you clarify the gross margin expectations for the third quarter, considering the reserves taken in the second quarter?
A: Jacob Sayer, CFO: The third quarter guidance includes an assumption of just under $2 million for excess and obsolete (E&O) reserves, significantly lower than the $7 million charges in the previous quarters. This is a placeholder, and we expect it to reduce substantially.
Q: What is the current status of inventory destocking, and how does it affect sales?
A: Morgan Kurk, CEO: Inventory destocking is occurring at a rate of approximately $10 million per quarter. This is less than in the past but still significant. The numbers are based on distributor reports and are not exact.
Q: Can you provide insights into the point-to-multipoint (PMP) product cycle and its future impact?
A: Morgan Kurk, CEO: We expect the PMP product cycle to have a more significant impact in late 2025 or 2026. Customers are planning deployments, and funding is being secured. The 6 gigahertz spectrum, once fully utilized, will drive growth, but it will take time to materialize.
Q: What are the expectations for point-to-multipoint revenues in a normalized environment?
A: Morgan Kurk, CEO: I am not prepared to provide a specific revenue target for point-to-multipoint in a normalized environment at this time.
Q: What is driving the expected sequential improvement in the fourth quarter?
A: Morgan Kurk, CEO: The sequential improvement in the fourth quarter is expected to come from growth in the enterprise segment and some growth in the PMP segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
