Cambium Networks Corporation (CMBM) on Q1 2021 Results - Earnings Call Transcript
Operator: Good afternoon. My name is Abigail, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Metrics First Quarter 2021 Financial Results Conference Call. Thank you. Mr. Peter Schuman, Senior Director of Investor and Industry Analyst Relations, you may begin your conference.
Peter Schuman: Thank you, Abigail. Welcome, and thank you for joining us today for Cambium Networks' First Quarter 2021 Financial Results Conference Call, and welcome to all those joining by the webcast.
Atul Bhatnagar: Thank you, Peter. The momentum continued to build for Cambium's business as our vision as a high-performance, yet affordable global wireless infrastructure leader for broadband communications accelerated during the first quarter 2021. During the last week of January, Cambium Networks shipped our nine millionth radio since becoming a stand-alone company. Interest in fixed wireless broadband solutions is becoming mainstream as performance matches that of fiber and the attractive cost of ownership for our solutions make Cambium a competitive and economically superior solution for wireless infrastructure projects around the world, propelled by increased government spending.
Stephen Cumming: Thanks, Atul. Cambium had record revenues of $88.5 million for Q1 2021, above the high end of our outlook of $81 million to $85 million. Revenues increased by 7% quarter-over-quarter and were up 46% year-over-year. On a sequential basis for Q1 2021, revenues were higher by $5.7 million. The higher revenues were driven by record shipments of our PMP products, which grew 7% sequentially due to service providers continuing to scale networks driven by requests for increased capacity, higher demand for CBRS compatible solutions, CARES Act and CAF2 funding and higher shipments of our new multi-gigabit products. Our Point-to-Point revenues performed better than expected, growing 4% sequentially due to increased demand for backhaul. Enterprise Wi-Fi solutions reached a new record and grew 11% quarter-over-quarter, driven by higher shipments of our new Wi-Fi 6 products and record shipments of our cloud-savvy switching products. Looking at revenues by geography. North America, our largest region, represented 61% of company revenues compared to 55% during Q4 2020. North America had a record quarter with revenues growing 20% on a sequential basis, driven by PMP from service providers, a recovery in PTP and strong Wi-Fi, including record revenues of our switching products. EMEA, our second largest region, decreased 13% sequentially, primarily reflecting softer PMP and PTP revenues as a result of timing of shipments and represented 21% of revenues during Q1 2021 and 26% of revenues during Q4 2020. CALA had another record quarter growing 1% quarter-over-quarter, driven by a significant number of customer wins and a continued recovery in that region and represented 12% of sales during Q1 2021. APAC decreased 11% sequentially and represented 6% of revenues during Q1 2021 compared to 7% of revenues for Q4 2020. Moving to our gross margin. Non-GAAP gross margin of 50.1% decrease by 90 basis points compared to Q1 2020. The year-over-year decrease in non-GAAP gross margin was primarily the result of mix and higher freight and distribution costs due to component shortages in the market. On a sequential basis, non-GAAP gross margin in Q1 2021 of 50.1% was 110 basis points lower than Q4 2020. The lower quarter-over-quarter non-GAAP gross margin was a result of product mix and higher freight and distribution costs due to component shortages in the market. In Q1 2021, our non-GAAP gross profit dollars increased by $13.5 million to $44.3 million compared to the prior year and improved by $1.9 million sequentially. Non-GAAP operating expenses, research and development, sales and marketing, general, administrative, depreciation and amortization in Q1 2021 increased by $1.1 million when compared to Q1 2020 and stood at $28.8 million or 32.6% of revenues. The majority of the year-over-year increase in non-GAAP operating expenses was a result of higher G&A expense and R&D resulting from increased incentive compensation due to higher revenues. When compared to Q4 2020, non-GAAP operating expenses decreased by approximately $300,000. The quarter-over-quarter decrease reflects lower R&D from the timing of regulatory costs, higher R&D tax credit and lower sales and marketing expenses resulting from less spend for trade shows and other events. Non-GAAP operating margin was a record 17.5%, up from 5% during Q1 2020 and increased from 16% of revenues in Q4 2020. We had another excellent quarter of profitability with adjusted EBITDA for Q1 2021 at a record $16.5 million or 18.6% of revenues, compared to $4.4 million or 7.3% of revenues for Q1 2020, and up from $13.9 million or 16.8% of revenues for Q4 2020. We see continued leverage in our business and remain committed to driving our adjusted EBITDA to our target model of 18% to 19% of revenues. Moving to cash flow. Cash used in operating activities was $7.6 million for the first quarter of 2021. The quarter-over-quarter decrease in cash was primarily the result of payments for variable compensation and increase in accounts receivable as we had delays in receiving key components, thereby impacting the timing of shipments of final goods and delaying collections, a decrease in accounts payable, and an increase in pre-paid inventories as we secure strategic supplies resulting from higher revenues, offset by improved earnings. This compares to $800,000 of net cash flow used by operating activities for the first quarter of 2020 and $15.1 million net cash flow provided by operating activities for the fourth quarter 2020. Non-GAAP net income for Q1 2021 was a record $11.7 million or $0.41 per diluted share compared to $1.4 million or $0.05 per diluted share for Q1 2020. A non-GAAP net income was $10.7 million or $0.38 per diluted share for Q4 2020. The higher non-GAAP net income compared to the prior year period was primarily due to higher revenues and gross profit dollars, demonstrating improved leverage in our operating model. The increase in non-GAAP net income compared to Q4 2020 was primarily attributable to higher revenues and gross profit dollars as we efficiently scale our business. Turning to the balance sheet. Cash totaled $51.2 million as of Q1 2021, a decrease of $11.3 million from Q4 2020. The sequential decrease in cash was primarily the result of payments for variable compensation and increase in accounts receivable due to supply constraints affecting linearity of shipments, a decrease in accounts payable and an increase in prepaid inventories as we secure strategic supply to support the growth of the business, offset by improved earnings. Net inventories of $31.4 million in Q1 2021 decreased by $1.1 million year-over-year and decreased by $2.5 million from Q4 2020. Given the rapid growth in revenues and low inventory levels, we expect a modest increase in inventories over the next few quarters. In summary, we are within line of sight of achieving our long-term target operating model by accelerating growth, gaining scale and improving our operational efficiency. Our results demonstrate the tremendous operating leverage we have in our business. We continue to have improved visibility and predictability into our business. Given the global semiconductor shortages, we remain supply constrained, which we expect to impact our sequential growth during Q2 2021. Moving to the second quarter of 2021 financial outlook. Please note that Cambium Networks' financial outlook does not include the potential impact of any possible future financial transactions, acquisitions, pending legal matters or other transactions. Accordingly, Cambium Networks only includes such items in our financial outlook to the extent they are reasonable. However, actual results may differ materially from the outlook. Considering our current visibility as of May 6, 2021, our Q2 2021 financial outlook is expected to be as follows: revenues between $85 million to $90 million. Non-GAAP gross margin between 49% to 50%. Non-GAAP operating expenses between $30.2 million to $31.2 million. Non-GAAP operating income between $11.4 million to $13.8 million. Interest expense net of approximately $1.1 million. Non-GAAP net income between $8.6 million to $10.3 million or between $0.29 to $0.35 per diluted share. Adjusted EBITDA between $12.4 million to $14.8 million and adjusted EBITDA margin between 14.6% to 16.4%. Non-GAAP effective tax rate of roughly 17% to 19% and approximately 29.2 million weighted average diluted shares outstanding. Turning to our cash requirements. Paydown of debt, $2.5 million scheduled debt and an additional $19.6 million reduction in term loan principal as required by the excess cash flow provision in the term credit agreement. Cash flow interest expense approximately $900,000 and capital expenditures of between $2.5 to $2.9 million. Looking at the full year 2021 financial outlook. Revenues between $345 million to $359 million, increasing between 24% to 29%. and adjusted EBITDA margin between 15% to 17%. I'll now turn the call back to Atul for some closing remarks.
Atul Bhatnagar: We continue to strive to achieve our goal of long-term top line growth in the mid-teens and adjusted EBITDA in the upper teens as a percentage of revenues, which we are presently delivering. Cambium has multiple revenue drivers to reach these goals, including our new gigabit wireless products such as enterprise Wi-Fi 6, 60 gigahertz and in the middle of this year, 28 gigahertz millimeter wave solutions for Fixed 5G wireless. We continue to – we expect to continued adoption of CBRS compatible solutions as we can now add software as a service to the list of growth drivers of 2021 with the inclusion of our cnMaestro X solution. Our profitability should benefit from increased scale in our business while we judiciously manage our costs, although we will continue to fuel new investments in R&D to maintain our technology edge. Finally, I would like to show my appreciation for our employees, partners and customers for another outstanding quarter of results during these unprecedented times. This concludes our prepared remarks. So with that, I would like to turn the call over to Abigail and begin the Q&A session.
Operator: Thank you. Our first question comes from the line of Rod Hall with Goldman Sachs. Your line is now open.
Rod Hall: Hi, guys. Thanks for taking the question. So my first question was going to be regarding visibility. You raised the full year guidance here. And wondering if, particularly your carrier customers are showing you a little bit more visibility because of the supply shortage. Are people ordering early? What's going on with orders here and visibility from your point of view? And then I do have a follow-up to that.
Stephen Cumming: Yes, Rob, this is Stephen. I think overall visibility in our business has continued to improve really since we became a public company. And I think it's twofold. One is, we've actually invested a lot of time, effort and systems in improving that visibility. We have channel management tools and such forth that we can really gauge what the ultimate sell-through is and POS activity overall for our customers. I do think to your comment though, additionally, given the tighter supply constraints, we are seeing a tendency for our customers to place orders sooner and the – and our distributors seeing visibility sooner from their customers. So I think that is improving things. We've been entering the quarter. We actually like to enter the quarter or exit sort of the first month of that given quarter with in excess of 60% of billings and backlog in place, we are way ahead of that. And since really Q1 of last year, we've seen that continue to improve. We're certainly north of 75% in Q4, and we're better than that in Q1, and we're tracking ahead of that in Q2. So visibility is getting better. And I would additionally say that visibility into future quarters is improving as well as those customers are putting longer-term orders on us. So overall, a much better picture for our view.
Rod Hall: Okay, great.
Atul Bhatnagar: Maybe, Rod, if I can just add one more point. The new products we have introduced, I think, are finding new applications, new customers so the funnels are also getting stronger. So definitely, as we go into the next few quarters, you will hear more about it, just, I think, more demand.
Rod Hall: Okay, thank you, Atul. And then I wanted to follow-up on Wi-Fi. We – the numbers you guys printed were a little bit below what we expected. I was curious if that's – if they were below what you expected. And then sort of as part of this question, you guys have talked about 40% to 60% growth this year in Wi-Fi. Are you still thinking that as the hospitality industry comes back online? And so I'm just kind of what the – what you're thinking on Wi-Fi and whether this was below what you had expected for the quarter?
Atul Bhatnagar: Yes. So let me give a quick rundown and then if Stephen wants to add. We absolutely think 40% to 60% is right on, fantastic demand on enterprise products, good acceleration. We were supply constrained in Q1. So we feel very good where we are with the product lines, the Wi-Fi 6 adoption, some of the new markets, which we are getting traction in. Hospitality definitely strengthening, coming back. So we are actually pretty hopeful and confident about that market.
Stephen Cumming: Yes. So I think – just to add to that, I think it was actually pretty – Wi-Fi was pretty much in line with our expectations from what we guided last quarter. I think, as Atul mentioned, really, it becomes more of a supply issue than a demand situation. We are seeing hospitality. And we mentioned this last quarter. We're seeing the hospitality market come back online, in particular, in Europe. And we're also seeing opportunities in Wi-Fi for new markets like logistics and medical. They're providing sort of rich feeding grounds for us. And as we start to see some of these government subsidies going into other regions of the world, we're finding, particularly in Europe, WiFi5EU program really driving new demand for our Wi-Fi product. So we feel good about the numbers. We actually hit a record for Q1. We expect sequential increase for Q2 and feel good about the 40% to 50% growth trajectory.
Rod Hall: Okay. You're not worried about supplies being a risk to the Wi-Fi growth later in the year. Do you think that will be fine?
Stephen Cumming: No, we factored that into our calculations and guidance. So we think 40% to 60% hold.
Rod Hall: Okay. All right. Thank you, guys.
Atul Bhatnagar: Rod, maybe one maybe one more data point is outdoor Wi-Fi is accelerating because one of the effects of COVID is government, countries, they want connectivity everywhere. And many situations, public Wi-Fi, outdoor situations are accelerating and that's where we have a very superior differentiation. So we feel pretty good where we are.
Rod Hall: Okay. Great. Thank you.
Atul Bhatnagar: Thank you.
Operator: And our next question comes from the line of George Notter with Jefferies. Your line is now open.
George Notter: Hi, guys. Thanks very much and congratulations on the nice results here. I guess I wanted to sort of go back to the question on supply constraints. Can you give us a sense for how much revenue you weren't able to ship in Q1 because of supply constraints? And then also, obviously, component pricing is going up. Any thoughts on how that might have had an impact on your margins?
Stephen Cumming: Yes. So this is Stephen, again. I would say – it's really tough to quantify that. I think we still came past the upper end of our guidance. I think the supply constraints for us are going to be more of a Q2 impact with it possibly drilling into Q3. And so you saw from our guide, sequentially, we've guided 1% down. And we said last quarter, we felt Q2 would be more likely to be the tighter quarter for us. As a company, we've done a lot of things to get ahead of this. We actually started looking at the supply chain way back last year and building buffer stock. So I think we're in a better situation than most. But I think really, Q2 is going to be the tougher quarter to us, and that's built into our guide.
Atul Bhatnagar: Yes, maybe one more point to add. We have excellent relationships with our strategic suppliers. And the reason for that is that the kind of solutions Cambium works on is state-of-the-art, cutting-edge, 60 gigahertz, 28 gigahertz, Wi-Fi 6 indoor/outdoor. They value our inputs as the system architects of our company work very closely with them. So as Stephen mentioned, we proactively worked with them as early as last year, November because we knew the paucity of chips was coming. So I think we have – compared to competition and other companies, I think we're well positioned. And everything we are guiding, we are taking those things into account.
Stephen Cumming: Yes, this is Stephen, again. With regards to your other question on gross margins, certainly, again, with our guide, we guided gross margins 49% to 50%. So we are seeing the impact as a result of the higher component costs reflected in our guidance. And obviously, a little bit higher cost from the overall freight and surcharges associated with the supply constraints as well. You've seen, as a company, we've done a lot around the gross margins and over the last year, you've seen them improve quite materially. I would expect, once we work through these supply constraints, you should expect to see our gross margins come back into the 50s. And obviously, we still have expectations of driving towards our longer-term gross margin model of that 51% to 52%.
George Notter: Got it. If I could just ask one more follow-up. This is a bit of a change in subject here, but I wanted to ask about cnMaestro X. You guys, I think, introduced that in the quarter. There's a big trial going on with your customers. I'm just curious what the initial feedback looks like and what kind of acceptance you're getting on that. Thanks.
Atul Bhatnagar: And I think as we mentioned in the commentary as well, very good reception. Good – we have over 0.5 million users using Maestro as a platform. And now with the value-added services, data storage, duration of data storage, some of the security features, deployment features. I think it's still early, but so far, so good, very positive feedback is helping customers deploy networks in a far more easier manner. And then for many of these government broadband initiatives, you're seeing – we are winning quite a few deals. One of the reasons is they find the ease of management, ease of deployment through cnMaestro as a key differentiator. And cnMaestro acts as just additional features for which we are now monetizing. So – and every quarter, we'll give you guys a good rundown how that entire monetization part is going.
George Notter: Thanks.
Atul Bhatnagar: Thank you.
Operator: And our next question is from Scott Searle with ROTH Capital. Your line is now open.
Scott Searle: Hey, good afternoon. Thanks for taking my questions. Atul, you referenced RDOF in your opening comments. There are a lot of different government and regulatory initiatives out there for various subsidy programs to bridge the digital divide. I was wondering if you could address what revenues were attributable to that in the first quarter? And how big the pipeline of opportunity is there, right? If you look at RDOF, and you start adding up some of the potential numbers from the broadband infrastructure bill, if that – if and when that ever passes, some big numbers there. So I wonder if you could frame that for us a little bit in terms of where we are today. Maybe what that could mean over the next 18 months?
Atul Bhatnagar: Sure, I think as we said probably last quarter, RDOF for Cambium in a meaningful manner, I think we'll still probably end of 2021, early 2022 is when you'll see a lot of momentum behind that. I think what you're seeing in RDOF right now is early projects and the Cambium is winning quite a few of them, but they're still early infrastructure, backhaul, those type of things. The real RDOF formula for Cambium starts on access parts, the Point-to-Multi-Point, Wi-Fi, those type of products get going. And as we said earlier, I think you will see a significant spend of RDOF will be probably first six years. And that means if you were to kind of time it, I would say, in the late this year, early 2022 is when things will start in a significant manner. And until then, you'll hear projects here and there. But the real momentum, the wheel will, I think, start moving, my guess is late this year or early next year. And we are very well positioned with the early RDOF winners, approximately half of them are already using some Cambium product or the other. So that's probably just a little bit of color on that.
Scott Searle: Great. Very helpful. And as a follow-up, 60 gigahertz seems like it's gaining some momentum for you. I think you specifically referenced starting to move into urban markets, which, in my mind, says larger bids, larger opportunities. I'm wondering if you could give us an update in terms of how big you think that is this year. And now with the 28 gig product coming behind it, different technology, different solution, but I'm wondering if you could size the 28 gig opportunity versus the 60 gig opportunity, comparable, smaller, bigger? Thank you.
Atul Bhatnagar: Okay. So this year, for 60 gigahertz, at least for, I would say, Q2 and Q3, lots of POCS. I think we are probably over north of 40 POCs already. And I think I would still say Q2 and Q3, but fantastic reception so far, in terms of quality, performance, MU-MIMO architecture Cambium has on 60 gigahertz, customers are pretty pleased. So, my sense is, Scott, that acceleration of 60 for Cambium in terms of size of the deals and all that generally happens, T plus 6, six months after you do the POC. So, you can say towards the end of the year early next year, for 60 gigahertz would be a good exploration time. 28 gigahertz we will start to POC – we have actually done with one customer very early quick testing, and very good results. But real POCs will start probably in a July-ish timeframe. And then we will volume ship in probably late Q3. And then I would say Q4 and Q1 probably would be again POCs. And then maybe timing wise, I will say, mid-2022 is when you start to see 28 accelerate. Now let me differentiate the two a little bit for you. Both are phenomenal multi-gigabit products. Both have taken us two-year plus to design and build. There’s a lot of R&D and a lot of differentiation built into these products. One, 60 gigahertz will give you, say, 1 kilometer to 2, depending on the terrain and weather and all that, and then 22 gigahertz will start to give you probably 4 to 7 kilometer depending again on terrain and weather. So now you can see on the edge, we truly have multi gigabit. 28 gigabit is a Fixed 5G path. So globally, it will be pretty well received as a standard. And our anticipation is that EMEA will lead. And we already have a sizable set of deals, because there is a significant pent-up demand for that product. 60 gigahertz will also be a global product. And probably less in the infrastructure whereas 28 gigahertz can really, since it covers the distance, it will go more infrastructure product. But they are hand in the glove, both go hand in hand, when you are deploying multi gigabit network. And with the last 300, 400 meters, you've got Wi-Fi 6. So, we feel our wireless fabric has truly – is coming very close to scaling. And all those products will be significant winners, different regions. 60 gigahertz you will see in North America lead the world in a major manner. So, I think you'll see a little bit of differentiation across territories.
Scott Searle: Great, thank you.
Atul Bhatnagar: Thanks, Scott.
Operator: And our next question is from Simon Leopold with Raymond James. Your line is now open.
Simon Leopold: Thanks. I appreciate that. First, just a quick one. You were asked earlier about the supply chain constraint effect on March. I guess I'm more interested in understanding what you've assumed for the revenue headwind in your June guidance and the gross margin headwind, it sounds like you could sell more if you could get all the components you needed. Just trying to understand how to quantify that headwind.
Stephen Cumming: Yes, I think, the way we try to – there's always an assumption that you get the perfect mix Simon and that's obviously not the case. But I think between the lower and upper end, we've tried to build in the – on the lower end, the lack of availability on our components and at the higher end, assuming a better case scenario in component availability. I mean, certainly, there are situations where lead times get pushed out and deliveries get missed. And so, I guess, we've probably been a little bit more aggressive at sort of de risking those upper and lower ends. But again, it's tough to give you a number on how much more we could do if supply was not an issue, but we've tried to factor that into our upper and lower end on our guidance.
Simon Leopold : So, just to make sure I understand you, if somebody makes the assumption that you do a high end of sales, we should assume the high end of gross margin and vice versa, low end of sales would mean the low end of gross margin?
Stephen Cumming: Absolutely. Yes. If that's what you referring to, absolutely, yes, yes.
Simon Leopold : Great. No, I appreciate that. Now, the longer-term question I wanted to see if you could talk about is really the changing dynamics of competition, specifically, I'm thinking about operators like T-Mobile and Charter talking more about efforts to sell services into rural markets, which historically was the turf of your primary customer base, the WISP. I certainly heard your commentary about moving into urban. So, it's not as if you're not making a counter attack. But I want to get your sense of how you see, the competitive landscape of operators like T-Mobile and Charter, push technology that isn't necessarily yours into the footprint where you've historically sold? Thank you.
Atul Bhatnagar: Yes, Simon, excellent question, by the way. And I will give a good color on this. I think Cambium is finding that we are moving up the value chain. That's the key statement I'm making, probably for the first time. I think the kind of capability we have added into our portfolio over the last, say 12 months, is opening lots of doors for Cambium globally in not just Tier 2, but Tier 1s as well. And I think what's happening is people are noticing the innovation of 60 gigahertz, the quality, they're noticing the 28 gigahertz product coming. So, I think different regions, we have good traction with the kind of names you're throwing. So, I will not give you specific names, but you are not that far off from anticipating next year, or two years where Cambium could go. It's all because of their innovation, well, I think we're doing and yet maintaining the quality through a lot of software-defined radios and software features. So I think as we evolve the company, you will start to hear over next say, five, six quarters some name, which will not be too far from some of your guesses.
Simon Leopold : Thank you. I appreciate that insight.
Operator: And our next question is from Erik Suppiger with JMP Securities. Your line is now open.
Erik Suppiger: Yes, thanks. One, I was just curious, what are the lead times on some of the longer lead time components that you're looking at? And then my question more on than that is, how much are you competing with fiber today? Is that becoming the primary competitor? Or how much do you see fiber as the alternative to fixed wireless broadband today?
Atul Bhatnagar: Okay, so Erik thanks for the questions. Lead times, many of the products especially on the Wi-Fi frontier, the lead time for the chips could be as much as 52 weeks. And my sense is that you will see the lead times probably start shrinking as we go as we go into Q4, because I think every chip company is also working proactively to bring it down. But as of now, many of the chips could have as much as north of 50 weeks lead time.
Stephen Cumming: But Eric, just add to that, as we said earlier, we got way ahead of this. So, we were building buffer stocks and putting in orders back in – even as early as Q3 last year. So, we're obviously not perfect. There's always some risk and uncertainties around this. But we're probably well positioned or better positioned than most. But certainly, we're dealing with some long lead times.
Atul Bhatnagar: Yes. So last November timeframe, we saw this coming. So, we had beefed up our forecast working very closely proactively with our partners. So, I think as I said, you will see us much better position because we did not wait till February or March. We had given much higher forecast for our – and we were growing as a company. So it was a little easier to look ahead as well. But I would say, yes, lead times are high. But I do anticipate them coming down to probably late Q3 early Q4. Now your second question, fiber.
Erik Suppiger: Yes.
Atul Bhatnagar: We are actually finding significant wins. Alaska Communications, we just talked of one of them. So, as I said, always that you will see mix and match of appropriate solutions in RDOF, and any other government initiative, we are very focused on economics. I think ultimately the solutions which win, they win because of economics, performance, going hand-in-hand. And fiber guys actually are finding Cambium to be a great partner. And there are high-density areas where they already have fiber, where it makes sense for them to extend fiber. But there are many areas where they need to extend, which are tough terrain, they come to Cambium; or they are dispersed low-density neighborhoods, they come to Cambium. So, I think we are finding this to be not really a competitive but a symbiotic relationship. And this is why when you look at even the RDOF winners, some of the RDOF winners we're working with, they do fiber as well. So, Cambium is very well positioned to be actually a significant enabler of broadband to both wireless and wireline. Now that current wins and current deals are showing us that.
Erik Suppiger: Very good. Thank you very much.
Atul Bhatnagar: Thanks, Eric.
Stephen Cumming: Thanks, Eric.
Operator: Our next question is from Jon Lopez with Vertical Group. Your line is now open.
Jon Lopez: Hi. Thanks very much. I had two. The first one if I look at the annual guidance, and we take your commentary around Wi-Fi, those aspirations being intact, it kind of implies that Point-to-Multi-Point and Point-to-Point, I don't know, maybe flatten out or even kind of trend down a little bit in the second half relative to the first. Am I thinking about that right? Or are there other factors I'm not taking into account?
Stephen Cumming: Well, I mean, Jon this is Stephen. I think when you are looking at year-over-year comparisons, right, you saw that in Q1 Point-to-Multipoint had year-over-year growth in something like 60 odd percent. And it's still pretty strong for Q2. So, when you look at the second half in relation to those year-over-year, comps, from a percentage perspective, it is going to be lower. I think overall, we're expecting Point-to-Multipoint to be north of sort of 35% growth. Point-to-Point, it's more of a mature. So obviously, and a little bit lumpier given the exposure that we have to some of the defense contracts. So that's going to be flattish, I think that's the right assumption there. And obviously, we've already given your Wi-Fi numbers between 40% and 60%. So I hope that – to put some color around it.
Jon Lopez: Now that helps a lot. Yes, that helps a lot. Thank you. My second question, I wanted to come back to the topic of competition. And I think you guys mentioned at the outset and Point-To-Multi-Point, some comfort that you're picking share up against, I think you said, larger and smaller competitors. You have one large competitor, that – they have had a couple of sort of relatively high profile missteps, one of them not that long ago with the security issue. I guess I'm wondering, do you see sort of tangible evidence that you are, in fact, picking share up relative to that competitor, or is this more like anecdotal looking at sort of your business relative to the peer set?
Atul Bhatnagar: No, I think, Jon, this is more anecdotal. I think we are picking share more on a broad basis. Not just large competition, but I think we have a lot of regional competition as well in Europe or CALA or Asia. I think at this point, I would say more broadly, because of the type of new products we have, they are highly differentiated. They all are managed from a single pane of glass. So I think, to me at this point, it's not just one company. I think this is more a broad frontier. We are picking up share. We're picking new customers. We're getting in new territories, new applications. That's what's driving it.
Jon Lopez: Okay. I'm sorry, just to clarify that. I guess what I was asking is, you're looking at your business and sort of saying, your growth looks kind of better than the peer set more so than you're saying we've identified, say, competitive displacements here or there. Is that the right way to think about your commentary?
Atul Bhatnagar: No, I think you are right. I'm saying we are more broad-based, anecdotal, just the tide is rising for us across our front.
Jon Lopez: I got you. Okay. Thanks very much for the thoughts. I appreciate it.
Atul Bhatnagar: Thanks Jon.
Stephen Cumming: Thanks Jon.
Operator: And there are no further questions. I will now turn the call back over to Mr. Peter Schuman, Senior Director, Investor and Industry Analyst Relations for closing remarks.
Peter Schuman: Thank you, Abigail. During Q2 2021 Cambium Networks will be presenting and meeting virtually with investors on May 18 at the Needham Virtual Technology & Media Conference; May 26 at the J.P Morgan Global Technology Media and Communications Conference; May 27 at the Barrington Research Virtual Spring Investment Conference; and May 28, with Raymond James Virtual Bus Tour. In the meantime, you are always welcome to contact our Investor Relations Department at (847) 264-2188 with any questions that arise. Thank you for joining us and this concludes today’s call.
Operator: Ladies and gentlemen, that concludes today's quarterly earnings call. Thank you for your participation. You may now log off.
