Good afternoon. My name is Judith, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks Third Quarter 2021 Financial Results Conference Call. [Operator Instructions]. Mr. Peter Schuman, Senior Director, Investor and Industry Analyst Relations, you may begin your conference.

Thank you, Judith. Welcome and thank you for joining us. for Cambium Networks' Third Quarter 2021 Financial Results Conference Call, and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO; and Stephen Cumming, our CFO, are here for today's call. The financial results press release and CFO commentary referenced on this call are accessible on the Investor page of our website, and the press release has been submitted on Form 8-K with the SEC. A copy of today's prepared remarks will also be available on our Investor page at the conclusion of this call. As a reminder, today's remarks, including those made during Q&A, will contain forward-looking statements about the company's outlook and expected performance. These statements are based on current expectations, forecasts and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not take any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments, to conform these statements to actual results or make changes in Cambium's expectations or otherwise. It is Cambium's policy not to reiterate our financial outlook. We encourage listeners to review the full list of risk factors included in the safe harbor statement in today's financial results press release. We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers, except for otherwise noted. A reconciliation of non-GAAP measures to GAAP is included in the appendix to today's financial results press release, which can be found on the Investor page of our website and in today's press release announcing our results. Turning to the agenda. Cambium Networks' President and CEO, Atul Bhatnagar, will provide the key investment highlights for the third quarter 2021 and Stephen Cumming, Cambium Networks' CFO, will provide a recap of the financial results for the quarter and our financial outlook for the fourth quarter of 2021. Our prepared remarks will be followed by a Q&A session. I'd now like to turn the call over to Atul.

Thank you, Peter. Overall demand and backlog remains strong due to the continued need for expansion of broadband wireless communications networks, while supply chain challenges impacted Cambium's shipments during Q3 '21. The supply chain challenges facing our industry are unprecedented, including shortages and rising costs for semiconductors, mechanical components, increased expedite fees due to extended lead times and many supplier decommits as well as increased freight expenses. By late August, Cambium had decommits from some of our larger suppliers for key components, which caused us to redesign some of our higher-volume products with alternative parts from new suppliers. We remain cautious about supply for the next few quarters and are monitoring the situation and working with our key suppliers and manufacturing partners on a weekly basis until visibility and commits for calendar year '22 improve. As mentioned in our preliminary results, we now believe global supply and logistic constraints may last into calendar '22 based on several factors affecting the entire industry, including chip foundries getting additional fab capacity in place. We are not immune from future unforeseen events, which could impact supply in future quarters. Cambium is taking very specific steps to address the supply constraints. We are pushing for supplier commits for calendar year 2022. We are providing 21-month forecast to our key suppliers, and where necessary, we are redesigning products with more widely available parts to meet customer demand. Demand remains strong. We entered the fourth quarter 2021 with backlog up 57% year-over-year. Without the supply constraints, Cambium Networks would have met or exceeded the high end of the previous third quarter 2021 revenue outlook range provided on August 9, 2021. Looking at our market position. This October, Cambium celebrated our tenth anniversary as a standalone company. We have built an innovative, sustainable and prosperous business over…

Thanks, Atul. Cambium had revenues of $75.9 million for Q3 '21, compared to the original outlook of $88 million to $92 million provided at the time of our second quarter earnings call on August 9 and ahead of our preliminary outlook of approximately $75 million announced on October 21. As we mentioned in our preliminary results press release, the change in outlook primarily reflects increased global supply constraints impacting the shipment of products. While our backlog and end demand remains strong, with backlog increasing by 8% quarter-over-quarter and 57% year-over-year. Revenues decreased by 18% quarter-over-quarter and were up 4% year-over-year. On a sequential basis for Q3 '21, revenues were lower by $16.8 million. The lower revenues were primarily the result of fewer shipments of our PMP and enterprise WiFi solutions, which remained supply constrained. PTP products declined 1% sequentially due to backhaul products remaining supply constrained, although we did have increased shipments of federal products due to seasonality. Moving to our gross margin. Non-GAAP gross margin of 47.8% decreased by 190 basis points compared to Q3 '20. The year-over-year decrease in non-GAAP gross margin was a result of increased component costs as well as higher freight and distribution costs caused by expedited shipping. On a sequential basis, non-GAAP gross margin in Q3 '21 of 47.8% was 220 basis points lower than Q2 '21. The lower quarter-over-quarter non-GAAP gross margin was a result of higher component costs and increased freight and distribution costs, less mix of higher-margin WiFi products and lower revenues. Our previously announced pricing increases should begin to help offset some gross margin degradation during the latter part of Q4 '21. We are also implementing surcharges to offset the effects of the supply chain disruption. We're doing everything in our power to support customers and deliver next-generation products, but…

While we are clearly disappointed with our Q3 '21 results, multiple growth drivers remain intact for Cambium's future success, including our multi-gigabit wireless products such as enterprise WiFi 6 and 6E, new wireless-savvy switching products, 60 gigahertz cnWave and our 28 gigahertz millimeter wave solutions for fixed 5G wireless as well as our software-as-a-service cnMaestro X solution. We expect increased scale should benefit our future operating results, and we remain focused on judiciously managing our costs, while continuing to invest in innovative products to maintain our technology edge. Our vision to help bridge the digital device using our advanced wireless fabric solutions remain constant. Cambium continues to work diligently with different governments, enterprises and agencies to deploy our wireless solutions. If it can be a wireless solution, it will be a wireless solution. Finally, I would like to share my appreciation for our employees, partners and customers for their perseverance during these unprecedented times. This concludes our prepared remarks. So with that, I would like to turn the call over to Judith and begin the Q&A session.

[Operator Instructions]. Our first question comes from the line of Samik Chatterjee of JPMorgan.

This is Joe Cardoso on for Samik Chatterjee. So just one question for me. it sounds like the revenue headwinds from the supply impact was roughly $15 million to $20 million in the September quarter. How much of that was related to the decommitments in the quarter? And is that largely behind you now? Or is that expected to bleed into the December quarter as well? And then just relative to your December guide, are you baking in a similar supply headwind of $15 million to $20 million? Or is the expectation that headwind increases as we go into 4Q?

Yes. So this is Stephen. When we came into Q3, we had a very strong backlog position and even the first month, and I think we mentioned it on our last quarter's earnings call that we had pretty much 100% of our guide covered. Just to give you a perspective of what we went through, from a supply perspective, we felt we had comprehended and derisked many of the supply challenges when we gave that guidance. And really what we've seen also in previous quarters because it's not like Q3 -- or previous quarters, we hadn't seen any level of decommits. But what was different for us in Q3 as we started to sort of head to the latter part of August, I would say we saw an elevated level of decommits from our suppliers. And that really continued through the rest of the quarter. I think one other overlay to this -- so that was probably the majority of the reason for the miss, but we also were able historically to tap into secondary market options which were a nice little lever for us in previous quarters. And so we saw that side of things start to dry up also in Q3. And areas around that, we actually saw some really dramatic price increases, auction-like behavior where we couldn't always participate. So that left us with some meaningful constraints. I think in general, the constraints went across high-end semiconductor chips as well as the lower end. And it didn't really matter whether you had a $0.50 part missing, it still meant you couldn't ship the product. I think from an overall delta perspective, I think it was somewhere between $12 million to $16 million to answer your original question. In terms of headwinds for Q4, our sense is we are seeing things, I would say, stabilize. I can't say that we're seeing things necessarily improve. Overall, our suppliers commits have started to extend a little bit more, a little bit more maybe beyond a month or 5 weeks. But we are still seeing decommits, but we've built that into our guidance.

Our next question comes from the line of Rod Hall of Goldman Sachs.

I wanted to come back to kind of how to think about the revenue cap that you're experiencing? It looks like it's kind of in this mid- to high 70s, a couple of quarters here. and then maybe supply gets a little bit better as we head into the year -- in the beginning of the year. I'm just curious, like do you expect to kind of be between that $75 million and $80 million revenue level for the first quarter or 2? Or do you think that this is kind of a low point and revenue starts to ramp up from here? Just kind of curious what the trajectory of revenue looks like from here? And then I've got a follow-up.

Yes. I mean, Rob, this is Stephen again. I think in this environment, it's pretty dynamic. So quite frankly, it's tough to be that precise and give you that narrow number, especially in other quarter out. I'll go back to my earlier comments, our sense as we see at the moment is things are stabilizing. And so they're not necessarily getting any worse, but we don't see any sort of indications that we're getting materially better. I'd like to think as we go into Q1, we can improve upon that. But it's tough to be too precise at this point in time.

Okay. Okay. And then I wanted to ask on pricing. You talked about price increases. Just curious if you can quantify how much are you increasing prices? And one of the things -- I mean, of course, we're seeing this across all of our companies. it probably feels somewhat unique to you, but it isn't at all, of course, and nor are price increases. Just curious how sticky you think those will be? Do you think you'll maintain those increased prices for all of '22, do you expect to roll them back? I mean what's your strategy around pricing here?

Yes, Rod. So I cast your mind back to our Q3 earnings call, we actually mentioned that we were going to have a price increase that would go into effect at the end of Q3. And so our plan, as we see at the moment is to try to recover as much as we can around this higher input costs. But we recognize that the impact won't necessarily be immediate. I think our customers recognize the challenges, and they're not terribly surprised about the pricing actions, given the fact that it seems many of our competitors are doing something similar. I think we're proactive in getting ahead of it. We mentioned this, as I say, on our last earnings call, the new pricing went into effect at the end of Q3. So that will start to work its way through the system towards the end of this quarter. And once we burn off the existing backlog and really have more meaningful impact as we go into 2022. I would say the other item that we're executing on at the moment. And you heard about it in the prepared remarks as we're implementing surcharges to handle this inflationary environment and help offset the effects of the supply chain cost. These will go into effect this quarter. And again, I think you should expect to see the larger impact of that in sort of the first half of 2022 in attempt to recover these costs. I would say that the initial pricing increase that we implemented. We didn't see much in the way of cancellations I think if anything we saw, as you can expect, a little bit of acceleration on booking activity as our customers try to get ahead of this. But I would say, in general, things are pretty sticky for us.

Yes. Maybe Rod, one quick comment. The changes which have happened in the industry are pretty permanent. People working from home, need for more broadband, government really bringing connectivity projects in all communities, technology shifts are happening towards millimeter wave, WiFi 6. Those things are driving the demand. So demand remains strong. And I think all the changes we have made, whether it's surcharge, whether it's pricing, we always have advisory council of customers, channel partners, we always run by them, and they understand the changes we are making and we have pretty good support. If anything, Cambium will remain very proactive in keeping the business model very healthy and gross margins in a good, strong zone. So some of these things we're describing, they are temporary speed bumps. And they have slowed our velocity, but they will not slow us down as we fast forward.

Yes. I don't think Atul, anybody thinks that the demand has gone anywhere for this kind of business, it's just a question of what to expect trajectory wise? And then there is a lot of question on pricing. How much are the -- that's one thing you guys didn't answer. What -- how big of a percentage increase have people seen -- is it like a 10% increase in average prices or 15%? Or can you quantify that?

Somewhere between that 10% and 15%.

Okay. And then the other big question we get a lot is how sticky. It sounds like -- I think you're saying pretty sticky, but you'll keep reviewing it with your customers over time. Is that sort of the way to interpret this? Or will you just flex them right back down again?

Yes. We are laser-focused on this. We're monitoring it daily, weekly and looking, obviously, a new booking activity and POS sell-through. So yes, we're watching this like a hawk, but our sense is it's pretty sticky.

Our next question comes from the line of Simon Leopold of Raymond James.

You talked about doing some redesigns associated with the chip constraints, which makes sense, but trying to get an understanding of how to think about that impact, assume it shows up in your R&D and would kind of be a onetime or short-term incremental expense. Is it large enough that it's worth calling out? And how should we think about that going forward?

Simon, thank you for the question. the redesign is for actually, in some ways, one of the mill parts. Interestingly, the sophisticated chips, whether it's WiFi 6 or 60 gigahertz or 28 gigahertz, the big chips, by and large, we knew the surprise, and we could deal with that. It's the smaller chips, which are not that sophisticated, that supply also dried up. So there, the redesigns are mostly done. They are short term. They were pretty quick speed, and we took care of that. And some of the products actually we'll produce even in Q4, but majority will come in Q1. So it's not a big expense impact. It's just a significant inconvenience which we had to go through to just make sure we don't depend on a part, which is in paucity.

And then Atul, in your prepared remarks, it left me with an impression that you feel like the supply chain constraints ease around the turn of the year. And this is -- I'm admitting my interpretation, but it's in contrast to the tone of many of the other conference calls we've joined recently, where I'm interpreting most companies saying, it's going to be very difficult through at least the first half '22 and we don't recover through much of the year. Basically, the entire year looks challenging. And I just want to see if there's a good reason to think that your experience may be different than other networking companies in terms of supply chain constraints?

Yes. So Simon, as we see it right now, I think our feeling is 2022, will be, in some ways, reverse of 2021. In 2021, first half was very strong. Second half, we have these speed bumps. In 2022, I think first half will remain, we are pretty cautious and that's what we're watching, we're working very closely with our chip partners. So I think the first half will be similar. There may be tad improvement but not a whole lot. It's the second half, we are counting on good improvement. And let me give you a little more color on that. We have weekly meetings with our top 5, top 6 chip suppliers, both at working level as well as senior level. And we are monitoring commits. They themselves have a better visibility than they had before. So we feel pretty good in terms of our visibility, commits, as they are being communicated to us both by their lower-level organization as well as the senior leadership. So it's for alignment. So I would say second half of '22, we should see improvement. First half we are very cautious about. That's how I would like you to interpret our comments.

Our next question comes from the line of George Notter of Jefferies.

I guess I wanted to ask about channel inventory levels. obviously, lots of moving parts here with the supply chain constraints. Certainly, there's the demand side of things also. But where do you think inventory levels wound up at quarter end in terms of weeks or relative to last quarter?

Yes, this is Stephen. Channel inventory for us, and we've spoken about this a lot in the past. We've got some pretty good tools in terms of managing that on a monthly and a weekly basis. Channel inventories came up a little bit. which actually, we think is a good thing in this environment. I think that's by design to certainly from the distributor side of things. But that's also partly because they may not be able to get the complete set of products to allow them to shift things out the door as well. So we monitor this very carefully. We look at the POS sell-through. We don't -- we're not concerned about it, but if anything, it came up a little bit, which is a good thing.

Got it. Okay. And then one other one, if I could. On your inventory levels, I saw the sequential improvement in September. But if I go back a few quarters, I mean you guys were kind of working down inventories, which is, I guess, counter to what many other companies are doing in this environment. Is there -- I guess I'm trying to understand sort of the narrative around how you've been running inventory levels and what should we expect going forward?

Yes. I mean our inventory levels clearly are not the desired level that we want given the rate of growth of the company. I think coming into the supply constraint challenges, we actually had a very healthy level of inventory that allowed us to weather certainly the first half of the year very nicely. We're at a point now where our inventory is about 60 or 66 days. They're not our desired level. I think in this environment, it's tough to put additional inventory on the shelves and build any sort of buffer. But ultimately, we want to target back to that sort of 80 to 90 days, and we intend to do that over the coming quarters pending these supply constraints.

We have a question from Scott Searle of ROTH Capital.

I was wondering if you could clarify in terms of the fourth quarter guidance of 75% to 77%, what you actually have visibility to from a supply standpoint right now? Do you have strong comments there? What's your level of confidence in terms of coverage that you have against that? I'm not sure if you provided a number as well in terms of what the actual demand looks like in the fourth quarter? Just kind of help us calibrate on that front. And also, looking at the September results, Europe was surprisingly strong, and I thought that, that was a big WiFi region. So I'm wondering if there's some different sourcing issues that you have going on from a supply standpoint, across the different regions? Or is there anything to read into that? And then I will have a follow-up.

Yes. Scott, I'll take a few of this, and maybe Atul can add a little bit at the end. But in terms of commitments from a supply perspective, and we go through this pretty extensively with our vendors. We're meeting with them almost daily. So we have commits from our lenders, and we sort of have backup to support the guidance that we've given you. So I hope that we will be able to do a little bit better than that. But clearly, it's a pretty dynamic environment. From a demand perspective, we have a very healthy backlog coming into the quarter. From a guide perspective, we have well over 100% of bookings in backlog already in place to support that number. So it really comes down to us just working that supply dynamic. But we've derisked it as -- and we're being hopefully -- appropriately conservative with regard to that guide.

Yes. So Scott, a couple of quick comments as well. EMEA is a region where the enterprise business and the channel establishment, they led that for Cambium. There's a very strong run rate business for enterprise. There's also a very strong resurgence back of hospitality in enterprise. So we feel pretty good about both enterprise business as well as the point-to-multipoint business. But I want to make one more point. EMEA will lead Cambium Networks in the establishment of 28 gigahertz. 28 gigahertz adoption is extremely strong for our fixed wireless products in EMEA. And I think as we go into proof of concepts and as we said in the prepared remarks, all 4 continents, we have POCs going, very innovative, disruptive pricing MU-MIMO product for 28 gigahertz 5G. So you will see EMEA continue to accelerate in point-to-multipoint business as well as enterprise business and defense arena for Cambium and in our prepared remarks, we touched upon that, we feel very good about '22 when it comes to defense. Our funnels are -- funnels have diversified with multiple countries. Our funnels are also taking into account POR, plan of record programs, which have recurring revenue. So EMEA in general, not just the enterprise and PMP, but also the defense side of EMEA will also be accelerating. So hopefully, that gives you a little color about EMEA.

Very helpful. And if I could then Atul to follow up on one of your comments, the new product portfolio specifically thinking about 28 gig and 60 gigahertz, can you give us an idea in terms of the magnitude and the size of some of these deployments and then coupling that into the supply discussion. Are there specific constraints or issues related to any of those products that are going to impact the ability for that to ramp up? And maybe as well, CBRS and 3.5 gig products as they start to ramp up and RDOF opportunities. Are any of the newer things that are coming down the line. Are there concerns from a supply standpoint, given that you're new to the game in those areas?

Scott, excellent question. Let me touch upon and see if I can answer. 60 gigahertz, relatively speaking, in terms of supply in Q3 was better positioned because we are a leader. We are fast emerging as #1 player in 60 gigahertz. And I think you'll see market research reports, I would say, over probably the next quarter to 2 quarters, coming out, and you see Cambium extremely well positioned. We are overtaking 60 gigahertz companies who were there for 4 or 5 years. And in 1 year, we have shipped tens of thousands of products. We have 400 new customers with 60 gigahertz. And at the beginning of the year, we probably had 8 or 10 as we ship -- that we had just shipped the product Q4 '20. So very well positioned. 60 gigahertz is growing approximately 44% CAGR in the -- between 2020 to 2024. And this is a market research report, which we can get you access to, it's a 650 Group. And the 28 gigahertz market will grow 100% between '20 to '24. This is also 650 Group market research. So we feel very good about the demand there, the Cambium innovation. Now when it comes to supply, I think both products will have some level of supply challenges because whatever impacts -- remember what I said, sophisticated chips, we are dealing with, but also the run of the mill chips are impacting. So it's not necessarily the 28 gigahertz chips, but sometimes it's just Ethernet 5 chips or other very basic chips. So I think that could definitely slow down some of the supply. But overall, demand wise, we feel very, very strong. I hope that kind of answers your question.

Our next question comes from the line of Erik Suppiger of JMP Securities.

I wanted to just get a little more context around the decommits. What is your perspective in terms of how broadly these are affecting other switching -- other networking vendors. We've seen some report, they're all struggling with constraints, but some have been able to navigate through them and post some pretty good results. Do you think Cambium is maybe more susceptible to decommits than other larger vendors? Or how are you thinking of how you're affected by it versus others?

Erik, good question. Let me go into that and give you more color. Every network equipment manufacturer will be impacted. The timing of the impact may be a little different. It depends upon which is your dominant chip supplier or which is your architecture. And I wouldn't go into the chip manufacturer, but we know exactly who buys from whom and what their impacts are. Our partner on the chips, particularly on enterprise, we have worked very closely with, we feel very comfortable, the level of relationship we have at the senior level, that they now have the visibility. And on a weekly basis, we are evaluating the company. So I think the decommits -- the depth of decommits, as far as we can see, I think that is over. Now the question is how much they can supply. And my sense is that the first half, as I said, there might be tad improvement. The first half will be kind of similar to where we are. But this is the second half where we will see, I think, good improvement for especially our new architectures like WiFi 6 and 60 gigahertz, 28 gigahertz and these type of products. So while -- like this is one of those things where each company will have a little different story and different -- a little different timing of impact based on who they are depending on. And one more point I want to make is that fixed wireless broadband uses a lot of analog-to-digital, a lot of those chips, and they were reasonably well placed. But in Q3, they also had the paucity of chips. So if you look at the results, we were able to weather the first few quarters because we had inventory and also we had good supply of those chips. So I think overall, my key message is that I think some of these decommits, we believe the depth we have dealt with. Now we are working proactively, and we have good communication, reasonably good visibility. I would like more visibility. But a lot of that visibility will come on through our these weekly senior-level meetings.

Do you feel like your size and volume is an advantage or disadvantage in terms of your ability to work with your dominant vendors?

Our -- size-wise, there may be other companies who may be far bigger than us. But I think the reason they value us, and I make that point in many meetings is Cambium uses the products in the most sophisticated way, whether it's 60 gigahertz we have, as I said, some of the best 60 gigahertz products, they value us for the feedback. We have RF labs and testing, which is very intense, very in-depth, they like the fact that they're able to find things. And we design software-defined radios, MU-MIMO architecture for Wi-Fi, so we are able to give them feedback, which a lot of other companies don't give them maybe as rapidly. For that, they value us and as a result, I think those partnerships are pretty strong, volume-wise there may be others, and we move reasonably fast with the new designs, new products, they value that.

Our next question comes from the line of Chris Howe of Barrington Research.

I wanted to ask a question, gotten a lot here on the supply chain. But as we move, let's say, from the first half of calendar '22 into the second half, we want to be cautious with our stance. And I think caution is a good approach in this environment. But as things ease slightly, can you talk about the changing mix of the business, how you foresee the second half looking? My mind is centered on the cnMaestro product and software services, how those may in turn be able to offset some of the supply chain challenges as we get to the end of the horizon, hopefully sooner rather than later.

Yes. Let me go into that a little bit. We have been working very diligently on the software front, and we all realize the more software content, the better for linearity as well as able to deal with some of these shocks. So there are 3 key things we have done. Number one, we already have WiFi subscription and CBRS subscription experience. and we have back-end systems, which we are now scaling. So good experience, and you will see in '22, continued focus on that. Secondly, we are also taking cnMaestro X and integrating more vertical -- curated vertical ecosystem, vertical software like hospitality. We're working with partners who have the hospitality software and then we go to managed service providers in enterprise. And we are increasing our value of cnMaestro X so that we can start to monetize cnMaestro X with those key vertical applications, that's the second very key initiative we have. The third thing we are doing is we are making it mandatory as we go into '22, that as we come up with new products, whether it's 60 gigahertz features or its 28 gigahertz software, the cnMaestro X and our Cambium care support will be mandatory. So we are doing a lot of very specific things to drive the software revenue in the right direction. And our stated goal has been 10% of Cambium revenue in 2 years will come from software. So these are the kind of things we're working on. And every quarter, we'll give you more visibility into what we are doing to drive that revenue in the right direction.

Our next question comes from the line of Jon Lopez of Vertical.

I apologize because I sort of hopped on late here. So if you covered some of this stuff, we can skip it and catch it later. But I think my first question is around the cadence of what happened in Q3. And I guess my question specifically is your -- your OpEx actually came in quite a bit below where you had guided it and where we had modeled it, which I guess would lead me to believe that you started adjusting for this at some point during the quarter. So maybe just talk to like when did these issues become apparent to you? And how did the OpEx wind up where it wound up?

Yes, Jon, I'll take this. And Atul, if you want to add anything at the end. So yes, unfortunately, you missed sort of quite a deep discussion early on in the call, but I'll cover it at a high level. I would say from a supply chain perspective, when we gave our guidance, we felt we've sort of covered and comprehended, derisked a lot of the challenges. As we went through the quarter and sort of mid- to latter -- I would say, latter part of August, we started to see a higher level and elevated level of decommits from our suppliers, which led us to the situation. I think we also attacked into a secondary market quite successfully in previous quarters. And that was an area that also dried up. So it really built as we went through the sort of second half of the quarter, as we started to see that elevated level of decommit, we did start to think about our OpEx and areas where we can go back discretionary spending we did. I would say one of the other components with the favorability on OpEx as a result of the lower top line revenue, there is a variable compensation element that helped us out in Q3 as well. So that was sort of the drivers on the OpEx. But you're right, as we started to see this sort of accelerate through the quarter, we did course correct a little bit.

Got it. Understood. And then again, I apologize, my guess is you probably covered this, so you can give me a quick version or not at all. But I guess the one product group, I wonder about most is the WiFi product group. And there you had a really, really big jump in calendar Q2, which is now basically reversed in calendar Q3. I'm assuming supply chain issues were obviously a big part of that. But I guess my question is, of your entire product stack that kind of seems like the most transactional, i.e., I think there are other alternatives to you in those markets. And I'm wondering how much of that demand do you think is perishable. And how much of whatever elevated bookings are resulting from this. Do you think it's reliable for that product set looking out into calendar '22?

Yes, let me take that. So when you look at our enterprise business, there are about 3 key segments which drive our growth. One is hospitality. As I said, hospitality is coming back. And there, we are integrating some of the very key hospitality applications with our software. So I think there is stickiness there as we work with different channel partners. The second is education. There also, we have education applications integrated with our Xirrus product line. And that's why you see when you look at our wins, you'll see good midsized universities, education institutions as key wins. And the third key area, which is emerging, I think, as a good segment for us is multi-dwelling units. And so when we look at all of these architectures, which are beginning to move towards WiFi 6, there's a level of stickiness. I would not say that if we don't supply, of course, people can go somewhere else. But by and large, so far, we see good demand, good adoption overall. And our outdoor WiFi is coming in volume shipments in early Q1. So as we go into the outdoor setup, which is a very strong partner with 60 gigahertz. 60 gigahertz and WiFi 6 is a hand in a glove. A lot of installations, a lot of deals we are watching or we are winning, they have that combination. So what I would say, there's no bullet proofness. There is significant stickiness to the segments we are serving.

I would just add to that, Jon, just to quantify a few things. During Q3, we saw record bookings in our enterprise business. We entered Q4 with a record backlog in enterprise. I think from a stickiness, we've been winning bigger and bigger deals. And that makes us that much more relevant to our customers. So I don't think we see this as a transactional issue. I think we think the business is gaining more and more momentum, especially as we look into 2022.

Like the Morocco deal we announced in the prepared remarks, that's 20,000 access points. So I think you're beginning to see Cambium now go into that size deals, which are solution sales, not transactional sales.

There are no further questions at this time. I'm now turning the call back to Mr. Peter Schuman, Senior Director of Investor and Industry Analyst Relations for closing remarks.

Thank you, Judith. During Q4, Cambium Networks will be presenting and meeting virtually with investors on November 16 at the Needham Virtual Security Networking Communications Conference; November 17, at the ROTH Capital Virtual Technology Conference; On December 6, at the Raymond James Virtual Technology Investor Conference; and on December 14 at the Oppenheimer Technology 5G Summit. In the meantime, you're always welcome to contact our Investor Relations department at 847-64-2188 with any questions that arise. Thank you for joining us, and this concludes today's call.

Ladies and gentlemen, that concludes today's quarterly earnings call. Thank you for your participation. You may now log off.