Ceragon Networks Ltd. (CRNT) Q3 2024 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the Ceragon Networks Earnings Call. Our presentation today will be followed by a Q&A session. [Operator Instructions] I must advise you that today's call is being recorded. I'd like to hand the call over now to our first speaker Rob Fink, Head of Investor Relations. Rob, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us today. Hosting today’s call is Doron Arazi, Ceragon’s Chief Executive Officer; and Ronen Stein, Chief Financial Officer. Before we start, I would like to remind everyone that certain statements made on this call, including projected financial information and other results could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not subject to historical facts. Such statements reflect current expectations and assumptions of Ceragon's management. Actual results may differ materially, as they are subject to certain risks and uncertainties, which could cause the actual results to differ materially from those projected in forward-looking statements. These risks and uncertainties could affect results of operations. Such risks are discussed in detail in Ceragon's most recent Annual Report on Form 20-F as published on March 21, 2024, as well as in other documents that may subsequently be filed by Ceragon from time to time with the Securities and Exchange Commission. Forward-looking statements related to the date initially made and they are not predictions of future events or results and there could be no assurances that they will prove to be accurate, and Ceragon undertakes no obligation to update them. Ceragon's public filings are available on the Securities and Exchange Commission's website at sec.gov and they may also be obtained from Ceragon's website at ceragon.com. Also, today's call will include certain non-GAAP numbers. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier this morning which is posted on the Investor Relations section of Ceragon's website. With that I will now turn the call over to Doron. Doron the call is yours.

Thank you, Rob, and good morning, everyone. Ceragon delivered another strong quarter in the third quarter of 2024, benefiting from continued execution and from robust demand especially in India. We achieved our targets for growth and profitability and narrowed our full-year outlook, maintaining the midpoint but putting a finer point on the range. Increasingly, diversification is playing an important role in our success. The geographical diversification has already proven itself this quarter, while we also make progress in diversifying our business into private network business. For example, in this quarter we added four new Private Networks customers to our customer base. And since the beginning of the year we have penetrated 16 new Private Networks customers, representing approximately $11.5 million in incremental bookings from customers in the private networks sector. We are also making good progress in our product roadmap. For example, we have generated meaningful orders from our new IP50EX, and increased interest in our Upcoming IP-50EX Premium that is about to be released shortly. This product is intended to use mmW frequency over a much longer distance, exploiting the high capacity advantage of these frequencies and reducing total cost of ownership. We have started a soft promotion of our first Neptune-based product, the IP-100E, and have already seen very positive feedback. The first version of this product is intended to deliver 25Gps capacity in a single box with a compelling total cost of ownership profile. We intend to present the first units of this product at the Mobile World Congress. We have recently started multiple new POCs for our Network Digital Twin and the initial feedback is very positive. I’d now like to provide an overview of our Q3 highlights by region. Noting that on today’s call we will focus primarily on activities in North America and India, the two regions that have, and we expect will continue to have, the greatest impact on our results in the near term. In North America, revenue was $24.5 million. In the private networks segment we have built a very strong pipeline and are working to leverage our completed projects, to build our brand in this domain. In fact, our success with the City of Cincinnati continues to be a case study deployment for us and the level of satisfaction is also driving proactive references from existing customers to new potential customers, adding to our funnel of opportunities. We are also leveraging Siklu’s strong brand in the Enterprise Security domain for attaining more business. Our bookings for private networks declined in the quarter compared to the prior quarter. We believe this was a timing factor, associated with seasonality and longer sell cycles and not a demand factor, as supported by the healthy funnel we have built. We anticipate private networks playing an increased role in our growth going forward. In communications service providers segment, Q3 has demonstrated some slowdown in the ordering pace primarily from Tier 1 customers, similar to the dynamic some of our peers have mentioned. Following multiple discussions with our main customer, we believe this was a short term phenomenon, relating mostly to timing of network build over the year. We are off to a much stronger start in the fourth quarter related to bookings, as we have received a substantial value of orders which supports our current assessment. In India, revenue was $50.5 million, an all-time record quarter for Ceragon. We have been shipping and deploying equipment related to both, our long standing customer as well as the new customer we won in Q4 2023. These deployments are supporting both customers in their expansion of 4G and 5G networks. In addition, due to our technological strength and market leader position, we are further growing our business in India and diversifying to another customer that recently announced a multi-billion dollar project for upgrading its network to 4G and 5G. Since Q3, we have received more than $18 million in orders from this customer for microwave products, further increasing substantially our market share. We expect more orders from this customer in the coming quarters for our Microwave as well as our E-Band solution. Since participating in the India Mobile Congress, we are encouraged by the increasing level of traction we are receiving in India and see large opportunities for 2025. We believe that we will see much higher demand for E-Band products in 2025 and our IP-50EX Advanced provides capabilities that fit the specific needs of the Indian market, so we are very well positioned to capitalize on incremental growth opportunities. Since there are multiple discussions about the general business environment, I would like to share with you our observations. Indeed, we have seen a slowdown in certain public network domains outside of India. We believe this is primarily driven by the global economy and the level of demand for 5G by network users. In addition, in Latin America, Africa and some countries in Asia PAC, Chinese competition is very fierce in these regions, driving business softness there. In these regions, we are increasing our focus on the private networks segment where there is lower Chinese presence. We also see an interesting opportunity in the current market conditions as multiple service providers are now focusing on Fixed subscriber growth, and using wireless technology with 5G high frequencies. We are in multiple discussions with large operators exploring opportunities to leverage Siklu’s point-to-multipoint technology to address this increasing need in other frequencies. With that, I’ll turn the call over to Ronen Stein, our CFO, to discuss the results in more detail. Ronen, over to you.

Thank you Doron, and good morning, everyone. Doron spoke to our revenue diversification, an important strategic point, and he also mentioned our ability to extract operating leverage from our business model. I’d like to highlight the operating leverage, as we drove increased operating income even with modest gross margin compression. To help you understand the results, I will be referring primarily to non-GAAP financials. For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures, we refer you to today’s press release. Let me now review the actual results. Revenues were $102.7 million, up 17.7% from $87.3 million in Q3 2023. Our strongest regions in terms of revenues for the quarter were India and North America with $50.5 and $24.5 million, respectively. Our third strongest region in terms of revenues was EMEA with $14.9 million. We had three customers in the third quarter that contributed more than 10% of our revenues. Gross profit for the third quarter on a non-GAAP basis was $35.2 million, an increase of 15.9% compared to $30.4 million in Q3 2023. Our non-GAAP gross margin was 34.3% compared with gross margin of 34.9% in Q3 2023. We continued to achieve high gross margins despite the change in regional revenue mix. We achieved this by increasing revenues and recognizing continued improvement in product costs. We also maintain control over our fixed costs, all of which had a positive effect. Our gross margins may continue to fluctuate from quarter to quarter, due to changes in product and regional mix. As for our operating expenses, in general, operating expenses in 2024 fully include the impact of the Siklu acquisition at the end of 2023 and thus impact the comparison to 2023 operating expenses. Research and development expenses for the third quarter on a non-GAAP basis were $8.6 million, up from $7.3 million in Q3 2023. As a percentage of revenue, our R&D expenses were 8.4% in the third quarter compared to 8.3% in the third quarter last year. Sales and marketing expenses for the third quarter on a non-GAAP basis were $10.4 million, up from $9.7 million in Q3 2023. As a percentage of revenue, sales and marketing expenses were 10.1% in the third quarter compared to 11.1% in the third quarter last year. General and administrative expenses for the third quarter on a non-GAAP basis were $0.4 million, compared to $5.5 million in Q3 2023. As a percentage of revenues, G&A expenses were less than 1% in the third quarter compared to 6.2% in the third quarter last year. The main reason for the reduction in G&A is the impact of approximately $5.1 million benefit related to payments on account of a debt settlement agreement reached with a South American customer, for which we accounted a credit-loss at the end of 2022. This payment reduced our G&A expenses in the quarter. I’d note that Siklu has been successfully integrated in the first half of 2024 and therefore we have not recorded any integration costs related to Siklu in our GAAP operating expenses. Operating income for the third quarter on a non-GAAP basis was $15.8 million compared with $8.0 million for Q3 2023. As a percentage of revenues, non-GAAP operating income was 15.4% in the third quarter compared to 9.2% in the third quarter last year. Without the approximately $5.1 million debt collection benefit included in the G&A, non-GAAP operating income would be $10.8 million and as a percentage of revenues 10.5%. Financial and other expenses for the third quarter on a non-GAAP basis were $1.2 million, positively impacted from favorable foreign exchange changes and to a lesser extent reduction in interest expenses, as we continue to strengthen our balance sheet. Our tax expenses for the third quarter on a non-GAAP basis were $0.6 million. Net income for the third quarter on a non-GAAP basis was $14.1 million, or $0.16 per diluted share, compared to $5.0 million, or $0.06 per diluted share for Q3 2023. Without the approximately $5.1 million benefit related to the debt collection included in the G&A, non-GAAP net income would be $9.0 million or $0.10 per diluted share. As for our balance sheet, our cash position at the end of the third quarter was $34 million, compared to $28.2 million at the end of 2023. Short-term loans were $25.2 million compared to $32.6 million as of December 31, 2023. Therefore, we shifted to net positive cash of $8.8 million compared to a negative net cash position of $4.4 million at December 31, 2023. We generated significant cash in the quarter, and continue to reduce our debt as a result. We believe we have cash and facilities that are sufficient for our operations and working capital needs. Our inventory at the end of Q3 2024 was $59.8 million, down from $68.8 million at the end of December 2023. The reduction is mainly related to our continued efforts since 2023 to streamline inventory levels following the improvement in components availability, and substantial shipments to India. We continue to monitor inventory levels, taking into consideration the improvements in the availability of components and expected changes in demand. Our trade receivables at the end of Q3 2024 are at $121.6 million, as compared to $104.3 million at the end of December 2023. Our DSO now stands at 118 days. As for our cashflow, net cash flow generated by operations and investing activities in the third quarter of 2024 was $10.7 million. We are reiterating the midpoint of our full-year outlook. For 2024, we expect revenue of $390 million to $400 million, representing growth of 12% to 15% compared to 2023. This guidance includes the contribution from Siklu. You will note that we have narrowed the expected range, increasing the bottom-end of the range by $5 million and decreasing the top-end by a similar amount, leaving the midpoint unchanged. This reflects our visibility with just two months left in the year. Non-GAAP operating margins are targeted to be at least 10% at the mid-point of the revenue guidance. As a result, we expect increased non-GAAP profit, representing another record year, and positive free cash flow for the full year of 2024. With that, I now open the call for your questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Scott Searle from ROTH Capital. Scott, please go ahead.

Hi, good morning. Good afternoon. Thanks for taking my questions. Doron, Ronen, congrats on the quarter. Nice job. Hi, maybe to just start off on India, a record quarter. Doron, I'm wondering if you could talk a little bit about how the outlook is shaping up for India, as you look into the fourth quarter. And I know it's a little bit early, but your maybe initial thoughts on 2025, in terms of the sustainability of that kind of strength, particularly it sounds like you've got that, that third major customer start to ramp up?

Yes. So I think that we are very well positioned for another strong year in India. For a few reasons. First of all, we are able to diverse our business between three customers or three major customers and obviously we continue to speak with other customers. And on top of that, the situation in India nowadays, is that while maybe on the classical 5G mobility part, they don't see yet a very strong ROI. And most of the customers, at least we are working with, are focusing on, first of all enhancing their network to 4G, and are looking for more use cases that can help them generate more revenue, primarily in the fixed wireless domain. And that requires more capacity - capabilities. And this is why we believe that 2025 can be another strong year for us. And we obviously are talking with all these customers, and getting some initial indications, and it looks like indeed they plan to continue investing, based on the strategy that I was just trying to describe in like two sentences.

So Doron, just to follow-up. So in terms of higher capacity, that means more e-band, which you guys are pretty well positioned for?

Yes. So to be more precise, at this point, the vast majority of our business is in the microwave that, is helping them to enhance their network to 4G, and obviously to cover some uncovered areas. What we see now is that demand for e-band is increasing, and we believe that on the second part of 2025, we will see more deployment of e-band.

Great, very helpful. Maybe moving on to the private network side, it seems like demand there continues to be pretty strong. I wonder if you could talk about from a vertical market standpoint, where you're seeing some of that demand. And if you could clarify a little bit, sounds like Siklu, you might be taking it from V-band to other frequencies. I just wanted to clarify that - when with your, your opening remarks, I was thinking more, in the 28 to 39 gig ranges is kind of what you're talking about. I was wondering if you could provide any clarity on that front?

Yes, so let's start with the second question. So as I explained in my prepared remarks, and also just right now to the previous question. We see a trend in, I would say many operators, T1 operators around the world of the trial to leverage these high frequencies, towards fixed wireless access. It looks like, at this point mobility using these high frequencies, is not that of a viable solution. And many operators are trying to divert the usage of this, these frequencies into helping them with fixed wireless offering. Now if you look at the solutions that are in the market nowadays. The 5G standard solutions are very expensive and it still or it doesn't work, at least for some of the operators, and it doesn't make a reasonable ROI for them, to go for the standard 5G. Maybe this will change down the road, but at this point, many of the operators are looking for solutions at these frequencies that, are not necessarily 5G standard. And by that reducing the cost dramatically. We believe that the technology that was developed by Siklu for the V-band point to multipoint could be, so to speak, converted into solutions at the 26 to 39 or 28 to 39 frequencies. And as we speak, we are actually in multiple discussions with different operators, to see whether this could be a viable solution for them. Now, as to your first question about the private networks, look, we are focusing on, I would say four main segments that we believe are, I would say, less agnostic to technology. And at the same token, the demand for more capacity for enhanced private networks is critical. One is defense, the second one is generally speaking, public safety. And third one is energy. And the last one, is government and state solutions that needs private networks. We feel that there is a demand in all of these segments that, is strong enough for each and every one. There is a reason why it is strong, but generally speaking, these are the main focus areas for us.

Great. And lastly, if I could the guidance on the year, kind of extrapolating that into the fourth quarter implies flattish to up 10%. I wonder if you could just give us some thoughts, in terms of what the swing factors are to either end of that range. And lastly, use of the cash. You're in a luxury position now of generating a fair amount of cash. How are you thinking about redeploying that? Thanks.

So I will start by saying that, the fourth quarter is primarily the fourth quarter revenue results is primarily dependent on delivery, which means to what extent our customers will stick to the plan, to basically accept our products. Sometimes they have their own decisions that are driven by end year on their side, and therefore there could be some fluctuations. We had the similar situation in the past, so we are very careful. But I would say that we have the backlog, we have the orders and it's more about the timing of delivery that can make the numbers either on the high end, or on the low end of the range. In terms of accumulating cash. Look, first of all, if we continue with this growth, obviously the need for more working capital is taken into account. Secondly, let's not forget we're still leveraged by certain dollar value of loans, with the interest that we have today. This is a burden that if we can reduce it to the minimum possible, we can just create additional few cents on an annual basis, to our shareholders and improve our results. Obviously, we continue to look into acquisition opportunities. Obviously, we are talking about small opportunities. And if we find a right match like the Siklu case that is proven to be quite successful, we will explore that kind of acquisition seriously, and we use the cash to make this kind of acquisitions.

Great, Doron, Ronen, thanks so much. Great job on the quarter and look forward to seeing you guys next week in New York.

Thank you so much, Scott.

Thank you, Scott.

Our next question is from Ryan Koontz from Needham & Company. Ryan, please go ahead.

Hi, can you hear me okay?

Yes. Hi, Ryan.

Hi. Great, thanks for the question. I wanted to follow-up on your private network opportunity there. Can you speak a little more about the channel, how that may be different, what sorts of channels you're maybe lighting up to access these new markets, I assume primarily in North America? And whether these channels will have any impact on your cost of sales as it relates to your model as you grow the private networks business? Thank you.

Sure. So first of all, our go-to-market strategy is primarily based on sales people who are basically chasing direct deals.

Okay.

So this is one part of it. And generally speaking, we have already made this shift and added the firepower in terms of salespeople that we thought is needed in 2024. So this is already part of our sales and marketing. We do use, and we intend to maybe even use more, some may business development consultants to help us with the penetration. I don't think it's going to change dramatically the sales and marketing expenses. And obviously, there's multiple deals that are by far much smaller. And we have a very strong indirect business in North America, but also outside North America with very valuable distributors. And these are, I would say additional stream or vector to approach the market specifically for the smaller deals.

Got it. That's really helpful. And for these larger deals that you're direct on, what's the kind of range of the size of deals you think that you typically are pursuing direct there?

Usually it will be a few million dollars deal. It can start small and develop. We've seen this kind of situation where you start with a couple of hundreds of thousands of dollars and then you expand. And we have also seen situations where you win an RFP for a few million dollars and then there's a change requests and additions and suddenly numbers could be higher by 50% and even more. But the typical deal would probably be low end single digit of million dollars.

Okay. That's super helpful. And maybe a follow if I could around gross margins and your internal silicon development there, any puts or takes we should think about as we model forward into '25 in terms of your fab costs or FPGAs et cetera?

So, so at this point, I don't think that it will make a big change to our gross margin in 2025. I think that in 2025, the volume of selling this product based on the demand we see for 25 gig product is not going to be that high. I believe that towards the second part of the year we'll start seeing a more significant ramp up of orders. So all-in-all, I don't think we at this point need to model any significant change in gross margins.

That's fair. Great. That's all the questions I had. Thanks for that.

Thank you so much.

Our next question comes from Rommel Dionisio from Aegis Capital. Rommel, please go ahead.

Thanks. Can you hear me, Doron?

Yes. Hi, Rommel, how are you?

Great, thank you very much. Doron, over the last few years you've targeted growth in managed services and private networks and really seen a great job as a result of your efforts. As I'm increasingly hearing from you, I think from our recent conversations, the potential that you see in millimeter wave and obviously with the new products, I know the IP-100 is coming. I wonder though if you could just give us a kind of a longer term outlook that you have for that business. And how you plan to target that, whether it's broadening the product portfolio, the opportunity that you see in Millimeter Wave here over the next several years of growth in that segment of the market. I wonder if you could just give us a little more of your thoughts on that, please?

Yes, if you look at the analysts’ reports that are covering our space, they project double digit growth for the Millimeter Wave. While the total market is not going to grow that much, it's more of a low single digit. And this is why we're putting so much focus on Millimeter Wave. And I think that with the most recent IP-50EX with its different versions that are meant to cover different use cases, together with the 100E that will be very compelling in terms of capacity versus total cost of ownership, we can probably accelerate our growth in this particular part of the market and take a bigger market share. And by that we can probably outpace the low single digit growth that is expected for the market as a whole. So that's the strategy behind focusing so much on Millimeter Wave products and solutions.

And how should we think about the long term margin opportunity also from that businesses that theoretically grows as a percentage of your total revenues over time? Thanks.

Look, that obviously depends on the competition. At this point, I believe that our IP-50EX series and the upcoming 100E will put us in a position where we can increase our gross margins slightly relative to the current margins we have seen. And obviously, if the competition catches up, it's always something that we are taking into account. It doesn't change the range that we said a few times recently that our long term objectives is to still be in between the 35% to 38% gross margin and the fluctuation will probably be primarily due to the regional mix as we've seen, for example, in this last quarter.

Great, that's very helpful. Thank you, Doron.

Sure.

Our next question comes from Robert Marcin from TB Partners. Robert, please go ahead.

Congratulations on an excellent quarter, Doron, especially considering how challenging the end markets have been.

Thank you so much, Robert.

Let's talk about this Siklu opportunity and fix wireless. I know it's very early and you're still testing the technology, but if some Tier 1 operators around the globe really want to penetrate a fixed wireless approach for incremental broadband, I guess, someone's doing it here in the U.S. with, as you said, very expensive cellular 5G technology. A pink company, let's say. How big could that TAM be over a five year period? Is that a $50 million or would that be a $500 million opportunity? Can you give us some sense of if this thing sort of takes off, how big could it be?

Well, knowing the nature of the best and knowing the customers that we are talking with, I can think about anything between $50 million and $150 million over two to three years.

That would be a nice addition to our growth rate. Thanks for sizing that for us, as an opportunity early in the process. On a different subject, there's supposedly a lot of money around, for I guess broadband, rural broadband in the U.S. tens of billions of dollars. It seems like none of it ever got spent, despite the fact that the Democratic administration, tried to spend themselves out of money in the last few years with our deficit. Is there any opportunity that with a change in administration, and perhaps some more government efficiency, that money gets spent and not just for rural fiber, but for rural broadband and we get a significant bump in the U.S. business at some point in our lifetimes, from these subsidies that have been out there and unused forever?

Robert, I'm not a politician, and for me as an outsider to North America, or to the U.S. I see, I read different publications. I don't know what Trump is going to do. Maybe you know better than I. I think that there's different, looking at the messages that are coming across, there could be different opportunities. If for example, for example, the issue of immigrants is indeed something that you will be taking care of. It could increase the cost of building infrastructure. So almost by definition, and that's a theory that I'm sharing with you, it's my own theory. As a result of that, fiber will become even less economically viable solution, as opposed to wireless. That could be an opportunity maybe with Trump's approach to be more, so to speak, to give more freedom in terms of the decision makers, by the investors. Maybe the strict guidance to use primarily fiber, will change to just give the minimum capacity. You decide, which technology you want to use in order, to make your ROI the best possible. And that can obviously change and move the needle towards more wireless transport, as opposed to fiber. But all these things are theories, and I assume you know better than I, what Trump is going to do.

I don't know if Trump knows what he's going to do. Okay, last question. We will see revenue from the Neptune related products, start to scale in 2026, correct?

Yes, look, I hope to start seeing revenue on the second part of 2025, but this is my hope. And when looking into 2025, and now working on the annual operational plan, we're baking a very small portion into - this product in terms of revenue.

Yes, I guess my question is who's going to buy it with your, the profile of your client tell right now, which is - that a Tier 1 product for U.S. and Europe, European companies or you're not very well represented there. So I'm just trying to figure out, does - the success of that product require three, four or five major new customers?

So I mentioned in our prepared comments that, we did some sort of soft promotion with certain customers around the globe. Most of them are our customers, but some of them are prospects. I think that it is a viable solution, for T1 operators in North America. It could also be a viable solution, for countries where maybe the width of the channel, is not that big. But they are still in a situation, where they want to increase the capacity using E-band solution. So maybe they will not get to 25 gigabit per second, because of the channel bandwidth - channel width, but they - will be still able to multiple their current width, for a cost that is very compelling. Especially as opposed to the option of putting two radios next to each other. And therefore I can see viable opportunities across the globe. And yes, it's probably going to start with T1 operators.

All right, thank you. And actually let me get one more in. What's the odds of you doing a small bolt-on, in the private network arena in 2025? Handicap that for me, buddy?

There's always a chance. I want. So 10% chance or 70% chance? Well, I'm not in the business of statistics.

Okay. Appreciate all your responses, and congratulations again on the solid court.

Thank you, Robert. Appreciate it.

[Operator Instructions] The next question comes from [Gunther Parker]. Gunther, please go ahead.

Hi Gunther, can you hear us?

All right, if there no further questions, and I think we can close the floor.

Can you hear me now?

Yes, Gunther, now we can hear you.

I'm sorry before, with regard to the North American market again and again focused on the administration change that, you already addressed. But with regard to the defense sector, do you see any meaningful change in that area?

I don't think I have sufficient knowledge about, specifically about the defense. What I do know, is that it's a - federal stuff, and it requires certain level of, I would say clearances to be able to sell there. Now on the one hand we are selling already to different defense units, across the world. And in some of the cases, we are making or doing this clearance process, using the relationship between the Israeli Ministry of Defense, and the other countries Ministry of Defense. I'm not sure, if this is a viable or easy, relatively easy way to do this kind of things, with the American defense. It looks to me that it's much more complex. But I can assure you that definitely, if we find some sort of an avenue to get in there, I think that we have a very compelling technologies, and some very recent use cases that could be of an interest to the American military.

Thank you, Doron and continued good luck.

Thank you so much, Gunther.

[You want to close the call]

Ceragon continues to focus on its growth initiatives, primarily millimeter wave products, private networks and managed services, and improves its strategic position in the market. We are adding new customers each quarter, and growing our addressable market. Short-term fluctuations in buying patterns in the U.S., likely related to election concerns, have not diminished our current outlook, and we are making up for these fluctuations, and the headwinds in other regions, by our strong business in India. With our healthy funnel of opportunities, we expect that the ramp up in our private networks business, especially in the regions suffering from head winds, will help resume growth in the longer run. Our new products and solutions as well as Neptune based future product, are gaining meaningful traction and positive feedback respectively. These market signals, together with our longer-term product roadmap, are building our confidence in long-term growth, as they are expected to result in increasing market share in our space. I look forward to updating you further on our next quarterly call. Have a good day everyone.