UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 001-38952

CAMBIUM NETWORKS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Cayman Islands	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
c/o Cambium Networks, Inc.
3800 Golf Road, Suite 360 Rolling Meadows, Illinois 60008	(345) 943-3100
(Address of principal executive offices, including zip code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, $0.0001 par value	CMBM	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2022, the registrant had 26,827,554 shares of ordinary shares, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION	33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

i

Note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, forward-looking statements may be identified by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, they should not be relied upon as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

•the impact of continued shutdowns related to COVID-19;

•the impact of the invasion of Ukraine by Russia and related sanctions imposed by Russia, Belarus and certain regions of Ukraine;

•the impact of geopolitical actions, including growing tensions between the U.S. and China;

•the impact of increases in logistics, freight and other shipping costs and constraints on logistics and shipping due to labor shortages, container shortages or other constraints;

•the impact of continued shortages in supply of key components used in the manufacture of our products;

•the unpredictability of our operating results;

•our inability to predict and respond to emerging technological trends and network operators' changing needs;

•the impact of competitive pressures on the development of new products;

•the impact of actual or threatened health epidemics and other outbreaks including the impact of the COVID-19 pandemic;

•our limited or sole source suppliers' inability to acquire or produce third-party components to build our products and the impact of supply shortages, extended lead times or changes in supply of components and other parts required to manufacture our products;

•our reliance on third-party manufacturers, which subjects us to risks of product delivery delays and reduced control over product costs and quality;

•our reliance on distributors and value-added resellers for the substantial majority of our sales;

•the inability of our third-party logistics and warehousing providers to deliver products to our channel partners and network operators in a timely manner;

•our distributors' and channel partners' inability to attract new network operators or sell additional products to network operators that currently use our products;

•the technological complexity of our products, which may contain undetected hardware defects or software bugs or subject our products to the risks of ransomware or malware or other cyber attacks;

•our channel partners' inability to effectively manage inventory of our products, timely resell our products or estimate expected future demand;

•credit risk of our channel partners, which could adversely affect their ability to purchase or pay for our products;

•our inability to maintain an effective system of internal controls, produce timely and accurate financial statements or comply with applicable regulations;

•our reliance on the availability of third-party licenses;

•risks associated with international sales and operations including risks caused by political tensions;

•current or future unfavorable economic conditions, both domestically and in foreign markets; and

•our inability to obtain intellectual property protections for our products.

ii

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Cambium Networks Corporation

Condensed Consolidated Balance Sheets

(in thousands, except for share and per share data)

	December 31,			March 31,
	2021			2022
ASSETS
Current assets
Cash	$	59,291		$	38,397
Receivables, net of allowances of $683 and $735		69,773			64,506
Inventories, net		33,777			40,210
Recoverable income taxes		860			468
Prepaid expenses		12,170			12,741
Other current assets		4,718			5,130
Total current assets		180,589			161,452
Noncurrent assets
Property and equipment, net		10,490			10,732
Software, net		5,867			6,433
Operating lease assets		5,899			5,399
Intangible assets, net		10,777			10,357
Goodwill		9,842			9,842
Deferred tax assets, net		7,604			8,978
Other noncurrent assets		1,200			1,150
TOTAL ASSETS	$	232,268		$	214,343
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	28,241		$	16,543
Accrued liabilities		21,948			25,016
Employee compensation		16,601			6,875
Current portion of long-term external debt, net		2,489			3,138
Deferred revenues		6,880			6,964
Other current liabilities		5,981			6,273
Total current liabilities		82,140			64,809
Noncurrent liabilities
Long-term external debt, net		26,965			26,351
Deferred revenues		5,363			5,647
Noncurrent operating lease liabilities		4,112			3,574
Other noncurrent liabilities		1,551			1,554
Total liabilities		120,131			101,935
Shareholders' equity
Share capital; $0.0001 par value; 500,000,000 shares authorized at December 31, 2021 and   March 31, 2022; 26,892,082 shares issued and 26,735,175 outstanding at December 31, 2021    and 27,000,204 shares issued and 26,825,097 outstanding at March 31, 2022		3			3
Additional paid in capital		124,117			126,437
Treasury shares, at cost, 156,907 shares at December 31, 2021 and 175,107 shares at  March 31, 2022		(3,906	)		(4,321	)
Accumulated deficit		(7,378	)		(8,946	)
Accumulated other comprehensive loss		(699	)		(765	)
Total shareholders' equity		112,137			112,408
TOTAL LIABILITIES AND EQUITY	$	232,268		$	214,343

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Cambium Networks Corporation

Condensed Consolidated Statements of Operations

(in thousands, except for share and per share data)

(unaudited)

	Three Months Ended March 31,
	2021			2022
Revenues	$	88,515		$	61,896
Cost of revenues		44,345			32,730
Gross profit		44,170			29,166
Operating expenses
Research and development		11,603			12,102
Sales and marketing		10,040			10,148
General and administrative		7,529			7,665
Depreciation and amortization		1,595			1,446
Total operating expenses		30,767			31,361
Operating income (loss)		13,403			(2,195	)
Interest expense, net		1,140			497
Other expense, net		42			77
Income (loss) before income taxes		12,221			(2,769	)
Benefit for income taxes		(7,639	)		(1,201	)
Net income (loss)	$	19,860		$	(1,568	)
Earnings (loss) per share
Basic	$	0.76		$	(0.06	)
Diluted	$	0.70		$	(0.06	)
Weighted-average number of shares outstanding to compute    net earnings (loss) per share
Basic		26,115,615			26,749,675
Diluted		28,517,713			26,749,675
Share-based compensation included in costs and expenses:
Cost of revenues	$	19		$	57
Research and development		517			1,022
Sales and marketing		295			627
General and administrative		579			714
Total share-based compensation	$	1,410		$	2,420

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

Cambium Networks Corporation

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2021			2022
Net income (loss)	$	19,860		$	(1,568	)
Other comprehensive loss
Foreign currency translation adjustment		(65	)		(66	)
Comprehensive income (loss)	$	19,795		$	(1,634	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Cambium Networks Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands)

(unaudited)

	Three Months Ended March 31, 2021
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2020		26,035		$	3	$	109,837	$	(1,090	)	$	(44,799	)	$	(564	)	$	63,387
Net income		—			—		—		—			19,860			—			19,860
Share-based compensation		—			—		1,259		—			—			—			1,259
Issuance of vested shares		121			—		—		—			—			—			—
Treasury shares withheld for net settlement		(41	)		—		—		(2,011	)		—			—			(2,011	)
Share options exercised		184			—		1,971		—			—			—			1,971
Foreign currency translation		—			—		—		—			—			(65	)		(65	)
Balance at March 31, 2021		26,299		$	3	$	113,067	$	(3,101	)	$	(24,939	)	$	(629	)	$	84,401
	Three Months Ended March 31, 2022
	Share Capital
	Shares			Amount		Additional paid in capital		Treasury shares			Accumulated deficit			Accumulated other comprehensive loss			Total shareholders' equity
Balance at December 31, 2021		26,735		$	3	$	124,117	$	(3,906	)	$	(7,378	)	$	(699	)	$	112,137
Net loss		—			—		—		—			(1,568	)		—			(1,568	)
Share-based compensation		—			—		2,174		—			—			—			2,174
Issuance of vested shares		94			—		—		—			—			—			—
Treasury shares withheld for net settlement		(18	)		—		—		(415	)		—			—			(415	)
Share options exercised		14			—		146		—			—			—			146
Foreign currency translation		—			—		—		—			—			(66	)		(66	)
Balance at March 31, 2022		26,825		$	3	$	126,437	$	(4,321	)	$	(8,946	)	$	(765	)	$	112,408

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Cambium Networks Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months ended March 31,
	2021			2022
Cash flows from operating activities:
Net income (loss)	$	19,860		$	(1,568	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		863			870
Amortization of software and intangible assets		857			920
Amortization of debt issuance costs		137			77
Share-based compensation		1,410			2,420
Deferred income taxes		(6,367	)		(1,373	)
Provision for inventory excess and obsolescence		(709	)		52
Other		(31	)		81
Change in assets and liabilities:
Receivables		(11,700	)		6,152
Inventories		3,236			(6,485	)
Prepaid expenses		(3,099	)		(578	)
Accounts payable		(6,777	)		(12,109	)
Accrued employee compensation		(6,003	)		(10,276	)
Accrued liabilities		2,221			2,129
Other assets and liabilities		(1,460	)		463
Net cash used in operating activities		(7,562	)		(19,225	)
Cash flows from investing activities:
Purchase of property and equipment		(814	)		(714	)
Purchase of software		(798	)		(1,068	)
Net cash used in investing activities		(1,612	)		(1,782	)
Cash flows from financing activities:
Repayment of term loan		(2,500	)		—
Taxes paid from shares withheld		(1,563	)		(42	)
Proceeds from share option exercises		1,971			146
Net cash (used in) provided by financing activities		(2,092	)		104
Effect of exchange rate on cash		(24	)		9
Net decrease in cash		(11,290	)		(20,894	)
Cash, beginning of period		62,472			59,291
Cash, end of period	$	51,182		$	38,397
Supplemental disclosure of cash flow information:
Income taxes paid	$	92		$	116
Interest paid	$	773		$	95

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Cambium Networks Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Business and significant accounting policies

Business

Cambium Networks Corporation (“Cambium” or “Cambium Networks” or the “Company”), incorporated under the laws of the Cayman Islands, is a holding company whose principal operating entities are Cambium Networks, Ltd. (UK), Cambium Networks, Inc. (USA), and Cambium Networks Private Limited (India). On October 28, 2011, Cambium acquired the point-to-point (“PTP”) and point-to-multi-point (“PMP”) businesses from Motorola Solutions, Inc. in an acquisition funded by investment funds affiliated with Vector Capital and Cambium Networks became the renamed entity subsequent to the acquisition. Cambium Networks completed an initial public offering of its ordinary shares and listed its ordinary shares on The NASDAQ Global Market in June 2019.

Cambium Networks Corporation and its wholly owned subsidiaries provide fixed wireless broadband and Wi-Fi networking infrastructure solutions that work for businesses, communities and cities worldwide. Cambium Networks’ radios are deployed to connect people, places and things with a unified wireless fabric that spans multiple standards and frequencies of fixed wireless and Wi-Fi, all managed centrally via the cloud. The Company’s solutions are deployed in networks by service providers, enterprises, industrial and government connectivity solutions in urban, suburban and rural environments.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Cambium Networks Corporation and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements as of March 31, 2022, and for the three-month periods ended March 31, 2021 and 2022, and the related notes are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements, and, in the opinion of management, reflect all adjustments, which comprise only normal recurring adjustments necessary to state fairly the Company’s financial position as of March 31, 2022 and results of operations for the three-month periods ended March 31, 2021 and 2022 and cash flows for the three-month periods ended March 31, 2021 and 2022. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principals generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, 2021 included in the Company’s annual report on Form 10-K and filed with the SEC on February 24, 2022. The results of operations for the three-month period ended March 31, 2022 are not necessarily indicative of the operating results to be expected for the full year.

Update to Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies disclosed in the 2021 Form 10-K, Part II, Item 8.

Note 2. Fair value

The fair value of the Company’s external debt under its BofA Credit Agreement (as defined below) approximates its carrying value due to the floating interest rate (Level 2 of the fair value hierarchy). The fair value of the Company’s BofA Credit Agreement was $30.0 million and $30.0 million as of December 31, 2021 and March 31, 2022, respectively.

The fair value of cash approximates its carrying value (Level 1 of the fair value hierarchy)

6

Note 3. Balance sheet components

Inventories, net

Inventories, net consisted of the following (in thousands):

	December 31,			March 31,
	2021			2022
				(unaudited)
Finished goods	$	31,991		$	38,520
Raw materials		7,353			7,309
Gross inventory		39,344			45,829
Less: Excess and obsolete provision		(5,567	)		(5,619	)
Inventories, net	$	33,777		$	40,210

Accrued liabilities

Accrued liabilities consisted of the following (in thousands):

	December 31,		March 31,
	2021		2022
			(unaudited)
Accrued goods and services	$	12,278