Revenues for the third quarter of 2012 reached $118.0 million, up 2% from $116.1 million for the third quarter of 2011, and down 1% from $119.1 million in the second quarter of 2012.
Net loss in accordance with US Generally Accepted Accounting Principles (GAAP) for the third quarter of 2012 was $(2.7) million or $(0.07) per basic share and diluted share, compared to net loss of $(6.7) million in the third quarter of 2011, or $(0.19) per basic share and diluted share.
On a non-GAAP basis, net income for the third quarter, excluding (a) $1.4 million of equity-based compensation expenses, (b) $0.9 million amortization of intangible assets, (c) $2.9 million inventory step up related to the Nera acquisition and (d) $0.8 million of changes in pre-acquisition indirect tax positions, was $3.3 million, or $0.09 per basic share and diluted share. Non-GAAP net income for the third quarter of 2011 was $0.6 million, or $0.02 per basic and diluted share (please refer to the accompanying financial tables for reconciliation of GAAP financial information to non-GAAP).
Gross margin on a GAAP basis in the third quarter of 2012 was 31.0% of revenues. Gross margin on a non-GAAP basis was 34.5% of revenues.
Operating loss on a GAAP basis in the third quarter of 2012 was $(1.3) million. On a non-GAAP basis operating profit was $4.7 million.
Cash and cash investments at the end of the quarter were $48.6 million.
“We are pleased to achieve a gross margin near our target and reach an operating profit margin of 4%,” said Ira Palti, President and CEO of Ceragon. “We are making excellent progress toward our profitability goal.
“We remain optimistic about the business because we are well-positioned in an attractive sector that is likely to enjoy numerous growth drivers for years to come, but we are not immune to macroeconomic factors that are causing the second half of the year to be slower than originally expected. After a dramatic pickup in bookings to record levels in Q2, we experienced a reversal in the order pattern in Q3. Although a portion of this change is accounted for by some large orders being delayed until Q4, due to the macroeconomic environment, we expect Q4 revenues to decline sequentially. With operators showing extreme caution regarding spending, sales cycles are lengthening and we are assuming no improvement from Q4 levels as we move into 2013.
“In light of our revised revenue assumptions, we are accelerating the implementation of some organizational changes to integrate certain administrative functions and combine our two solutions groups. We will also streamline our regional management structure in Asia. This will reduce our quarterly operating expenses by about 11% and help ensure that we can increase net profits next year despite temporary macro headwinds and provide additional operating leverage once top line growth resumes,” concluded Mr. Palti.
Supplemental geographical breakdown of revenue, third quarter of 2012:
- Europe: 23%
- Africa: 7%
- North America: 7%
- Latin America: 34%
- India: 13%
- APAC: 16%
A conference call will follow beginning at 9:00 a.m. EDT. Investors are invited to join the Company’s teleconference by calling (USA) (877) 260-8900 or international +1 (612) 332-0802 from 8:50 a.m. EDT. The call-in lines will be available on a first-come, first-serve basis.
Investors can also listen to the call live via the Internet by accessing Ceragon Networks’ website at the investors’ page: http://ceragon.com/ir_events.asp?lang=0 selecting the webcast link, and following the registration instructions.
If you are unable to join us live, the replay numbers are: Telephone: (USA) (800) 475-6701 or international +1 (320) 365-3844 Access Code: 267371. A replay of both the call and the webcast will be available through November 29, 2012.