Ceragon Networks Ltd. (CRNT) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents mixed signals: while there's optimism about future growth and strong cash flow, the current financial performance shows declining operating income and net income. The Q&A indicates management's confidence but also highlights some uncertainties, such as memory costs and reliance on specific regions for growth. The slight decline in gross margin and operating income, coupled with improved cash position and receivables, suggests a balanced outlook. Without market cap data, the overall sentiment aligns with a neutral rating, expecting limited stock price movement.
Key Financial Performance
Q4 2025 Revenue $82.3 million, down 23% year-over-year from $106.9 million in Q4 2024. The decline was attributed to changes in regional revenue contributions and market conditions.
Full Year 2025 Revenue $338.7 million, a decline of 14.1% year-over-year from $394.2 million in 2024. The decrease was due to lower demand in certain regions and market dynamics.
Q4 2025 Non-GAAP Gross Profit $28.2 million, a decrease of 23.2% year-over-year from $36.7 million in Q4 2024. This was consistent with the revenue decline.
Q4 2025 Non-GAAP Gross Margin 34.3%, unchanged from 34.3% in Q4 2024, indicating stable profitability on a percentage basis despite revenue decline.
Full Year 2025 Non-GAAP Gross Profit $116.8 million, a decrease of 15.5% year-over-year from $138.2 million in 2024. This was due to lower revenue.
Full Year 2025 Non-GAAP Gross Margin 34.5%, slightly down from 35.1% in 2024, reflecting a minor impact on profitability.
Q4 2025 Non-GAAP Operating Income $3.4 million, down from $12.2 million in Q4 2024. The decline was due to lower revenue and increased operating expenses.
Full Year 2025 Non-GAAP Operating Income $18 million, down from $48.8 million in 2024. The decrease was attributed to lower revenue and higher operating expenses.
Q4 2025 Non-GAAP Net Income $1.4 million or $0.02 per diluted share, compared to $7.7 million or $0.09 per diluted share in Q4 2024. The decline was due to reduced operating income.
Full Year 2025 Non-GAAP Net Income $8.2 million or $0.09 per diluted share, compared to $36.4 million or $0.41 per diluted share in 2024. The decrease was due to lower operating income.
Cash Position at End of 2025 $38.4 million, up from $35.3 million at the end of 2024. The improvement reflects stronger cash generation.
Net Cash Position at End of 2025 $19.4 million, up from $10.1 million at the end of 2024. This was due to reduced short-term loans and improved cash flow.
Inventory at End of 2025 $61.6 million, up slightly from $59.7 million at the end of 2024, reflecting stable inventory management.
Trade Receivables at End of 2025 $99.7 million, down significantly from $149.6 million at the end of 2024, indicating improved collections.
Q4 2025 Free Cash Flow Positive free cash flow in excess of $7 million, reflecting disciplined cash management.
Full Year 2025 Free Cash Flow $15.1 million, excluding acquisition costs, indicating strong cash generation.
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Operating Highlights
Launch of 4 new products in 2026: These products are expected to generate initial revenue this year, driven by observed demand in addressable markets and aligned with tangible revenue opportunities.
Showcasing products at Mobile World Congress: Several products planned for 2026 will be showcased, with strong inbound interest and meeting activity expected to convert customer engagement into trials and revenue.
North America market performance: Execution remains solid, supported by CSP activity and emerging private network opportunities.
India market performance: Activity continues at a steady run rate with early bookings reinforcing confidence in demand.
APAC private network order: A multimillion-dollar private network order was secured with an electricity transmission utility, providing near-term revenue and long-term expansion potential.
Revenue guidance for 2026: Reiterated guidance of $355 million to $385 million, supported by backlog advancement in North America, baseline revenue from India, and potential RFP wins.
Improved cash position: Net cash position increased to $19.4 million at the end of 2025, up from $10.1 million in 2024, reflecting disciplined execution and stronger cash generation.
Focus on execution and differentiation: Prioritizing opportunities with clear customer demand and a path to revenue, while maintaining disciplined capital allocation.
Cost reduction initiatives: Plans to address the recent spike in memory component prices and improve revenue mix between North America and India.
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Risk or Challenges
Global and regional economic admissions: Potential risks from global and regional economic conditions, including those in Israel and the surrounding region, which could impact operations and financial performance.
Fluctuations in exchange rate: Currency fluctuations pose a risk to financial stability and profitability, especially given the company's international operations.
Customer concentration: High dependency on a few customers, with two customers contributing more than 10% of revenues in Q4 2025, which could lead to revenue volatility if these customers reduce orders.
Ordering patterns: Variability in customer ordering patterns could disrupt revenue predictability and operational planning.
Supply chain challenges: Ongoing supply chain issues, including a recent spike in memory component prices, could increase costs and impact product delivery timelines.
Decline in revenue and profitability: Revenues for Q4 2025 decreased by 23% compared to Q4 2024, and full-year revenues declined by 14.1%, indicating challenges in maintaining growth and profitability.
Increased operating expenses: Non-GAAP operating expenses, including sales and marketing, increased as a percentage of revenue, which could pressure margins.
Inventory management: Inventory levels increased slightly, which could indicate potential inefficiencies or risks of overstocking.
Trade receivables: Significant reduction in trade receivables from $149.6 million in 2024 to $99.7 million in 2025, which may reflect challenges in customer payments or changes in credit terms.
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Guidance & Outlook
2026 Revenue Guidance: Ceragon expects 2026 revenue to be between $355 million and $385 million, consistent with the guidance shared in January.
Gross Margin Improvement: The company anticipates an improvement of approximately 1 percentage point in non-GAAP gross margin at the midpoint of the revenue range, driven by improved revenue mix between North America and India and additional cost reduction initiatives.
Operating Margin Outlook: Non-GAAP operating margin for 2026 is expected to be between 6.5% to 7.5% at the midpoint of the revenue range.
Product Launches: Ceragon plans to launch 4 new products in 2026, with some expected to generate initial revenue this year. These launches are aligned with observed demand in addressable markets and tangible revenue opportunities.
Private Network Opportunities: The company highlighted a multimillion-dollar private network order in APAC with an electricity transmission utility, providing near-term revenue in 2026 and long-term expansion potential.
Mobile World Congress (MWC) 2026: Ceragon will showcase several products at MWC in March 2026, which is expected to be a constructive commercial catalyst for demand generation and customer engagement.
Regional Revenue Contributions: The 2026 revenue guidance assumes a baseline of $100 million in annualized revenue from India, additional demand from two existing customers, potential timely RFP wins, and reasonable recoveries in other regions.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What would be needed to hit the high end of the 2026 guidance?
A:Doron Arazi stated that reaching the high end of the range could be achieved through stronger performance in North America and India, with some recovery in other regions. He emphasized that it is not beyond reach.
Q:How is the company handling dollar to shekel issues and what challenges does it pose?
A:Ronen Stein explained that the company has a hedging policy in place and monitors the situation. A 1% change in exchange rates would impact the operating margin by 0.1% annually. They are prepared for potential changes in foreign exchange rates.
Q:What is the outlook for the first half versus the second half of the year?
A:Doron Arazi mentioned that Q1 revenue will reflect regular seasonality and some delays in orders. He expects the second half of the year to be much stronger, with increased confidence in the low end of the range for India.
Q:What is the level of activity in Asia Pacific for private networks and the magnitude of opportunities?
A:Doron Arazi highlighted multiple opportunities in APAC, particularly in mining and energy. He noted that private network opportunities are global, not limited to North America, and the company is encouraged by progress in various regions.
Q:What is the demand for point-to-multipoint solutions in new frequencies?
A:Doron Arazi stated that demand is growing for 60 GHz point-to-multipoint products, especially for security and safety use cases. There is also interest in small cell backhaul and fixed wireless access. The company is in advanced discussions for similar products in FR2.
Q:What is happening with the major Tier 1 customer in North America?
A:Doron Arazi noted that the customer continues to invest in their network. He mentioned a new use case for network resiliency or fiber backup, which could offset any slowdown in traditional rollouts.
Q:What is the progress with the second North American Tier 1 customer?
A:Doron Arazi reported high engagement with weekly and biweekly discussions. The company is tuning solutions for the customer's specific needs and exploring other opportunities.
Q:What is the impact of supply chain and memory costs?
A:Doron Arazi explained that memory issues are more about price than supply. The company is building second and third sources and making product adjustments to mitigate the impact, which is not considered material.
Q:How was the company able to improve accounts receivable by 30% year-on-year?
A:Ronen Stein attributed the improvement to focused efforts and follow-ups with customers, particularly in India, to catch up on payments and improve DSO in both new and older projects.
Q:What could be the financial impact of memory cost increases?
A:Ronen Stein stated that the impact is not material enough to disclose exact numbers and that mitigation plans are in place to address the challenge.
Q:Review of Unclear Management Responses
A:Management avoided providing specific financial details regarding the impact of memory cost increases, citing competitive implications. Additionally, while discussing the high end of the 2026 guidance, the response was somewhat broad and lacked detailed metrics or specific scenarios.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APAC electricity
America CSP
America India
CSP activity
Ceragon ecosystem
Ceragon website
Commission Ceragon
Congress industry
EE revenue
Full Instructions
India activity
India cost
India demand
Israel region
MWC demand
Networks Full
RD market
RFP win
Relations Forward
Revenues decline
activity confidence
assumption
basis decrease
basis share
cash generation
currency
decrease margin
end cash
fluctuation
margin midpoint
network opportunity
percentage revenue
position cash
result Revenues
result line
today view
CRNT Transcript
Ceragon Networks Ltd. (CRNT) Q4 2025 Earnings Call Transcript
Unknown2-17
The earnings call presents mixed signals: while there's optimism about future growth and strong cash flow, the current financial performance shows declining operating income and net income. The Q&A indicates management's confidence but also highlights some uncertainties, such as memory costs and reliance on specific regions for growth. The slight decline in gross margin and operating income, coupled with improved cash position and receivables, suggests a balanced outlook. Without market cap data, the overall sentiment aligns with a neutral rating, expecting limited stock price movement.
Ceragon Networks Ltd. (CRNT) Q3 2025 Earnings Call Transcript
Unknown11-11
The earnings call presents mixed signals: strong cash flow and strategic investments in North America are positive, but declining gross profit and operating income are concerning. The inability to reaffirm guidance and management's vague responses in the Q&A session add uncertainty. Although there are growth opportunities, especially in North America, the lack of clarity on sustainability and AI impact tempers enthusiasm. The market may react cautiously, resulting in a neutral stock price movement prediction.
Ceragon Networks Ltd. (CRNT) Q2 2025 Earnings Call Transcript
Unknown8-7
The earnings call reveals mixed signals. Financial performance shows a decline in net income and cash position, but positive free cash flow and strategic acquisitions offer some optimism. The Q&A highlights uncertainties in India and North America, balanced by potential opportunities in private networks and Tier 1 North American markets. The lack of clear guidance on future opportunities tempers positive sentiment. Overall, the sentiment is neutral due to the balance of optimistic guidance and financial challenges.
Ceragon Networks Ltd. (CRNT) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call highlights mixed signals: a slight revenue increase, but declining margins and profitability raise concerns. Positive guidance for 2025 and strength in India are tempered by acquisition risks and cash flow impacts. The lack of a share buyback program and competitive pressures further neutralize sentiment. The Q&A reveals potential growth in India and North America, but management's vague responses on margin expansion limit optimism. Overall, the market may react cautiously, resulting in a neutral stock price movement.
CRNT Report
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