CAMBIUM NETWORKS CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

The following discussion and analysis of financial condition and results of
operation should be read in conjunction with the consolidated financial
statements and related notes thereto of Cambium Networks Corporation ("Cambium",
"we", "our", or "us") included elsewhere in this Quarterly Report on Form 10-Q
and with the financial statements and related notes and Management's Discussion
and Analysis in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, filed February 24, 2022. Results for the three-month and
six-month periods ended June 30, 2022 are not necessarily indicative of the
results that may be expected for any period in the future.

Overview

We provide fixed wireless broadband and Wi-Fi networking infrastructure
solutions for wireless internet, wireline and mobile network operators who
deliver connectivity services to residential consumers, including in remote
locations, as well as to mid-sized enterprises in connectivity dependent
industries such as hospitality, education and logistics. We also serve local,
state and federal government agencies worldwide in support of public access and
services. Finally, we enable connectivity for outdoor industrial processes as
well as national defense organizations and applications.

Increasing demand for, and dimensionality of connectivity solutions are top
challenges for network operators, particularly in today's staffing constrained
economy. Our integrated network solution makes connectivity as easy and
efficient as possible. We converge an array of elements such as indoor and
outdoor Wi-Fi access points, edge switching and fixed wireless broadband
solutions spanning a wide range of unlicensed and licensed frequencies, through
a single cloud-based or on-premises network management system. The management
system includes a growing list of network intelligence services which enables
operation of one efficient and secure network. The solutions leverage industry
standards making them both affordable and complementary to many existing
technologies. Our multi-gigabit fixed wireless infrastructure can be a
compelling alternative or complement to traditional fiber as well as a
mobile-based fixed wireless infrastructure.

Cambium Networks' integrated network includes radios, switches, appliances, and
services. Our embedded proprietary radio frequency (RF) technology and software
includes intelligent radios, smart antennas, RF algorithms and wireless-aware
switches. These capabilities give network operators the flexibility to adapt to
and optimize their network for changing environments. The cloud-based or
on-premises network management software has open, application programming
interfaces, or APIs, that facilitate the addition of new services to the
network, sourced from Cambium Networks or third parties. For example, Cambium
Networks recently released a Quality of Experience, or QoE, appliance that
enables broadband operators to customize network performance based on end user
needs. All Cambium Networks solutions are backed by our global organization that
provided support services tailored to meet the business needs of our customers.

We were formed in 2011 when Cambium Networks acquired the Point-to-Point, or
PTP, and Point-to-Multi-Point, or PMP, businesses from Motorola Solutions. Prior
to the acquisition, Motorola Solutions had invested over a decade in developing
the technology and intellectual property assets that formed the foundation of
our business, having launched the Canopy PMP business in 1999 and having
acquired the Orthogon Systems PTP business in 2006. Following the acquisition,
we renamed the business Cambium Networks and we leveraged the technology to
continue to develop and offer an extensive portfolio of reliable, scalable and
secure enterprise-grade fixed wireless broadband PTP and PMP platforms, Wi-Fi,
switch and IIoT solutions.

We offer our fixed wireless broadband and Wi-Fi solutions in three categories:

•

PTP: We offer PTP solutions designed to operate in licensed and unlicensed
spectrum from 220 MHz to 6.05 GHz and in licensed spectrum from 6-38 and 71-86
GHz. In addition, our PTP 700 operates in NATO Band IV from 4.4-5.9 GHz, as well
as in the 7 GHz and 8 GHz bands, and meets stringent federal operating,
performance and security standards. The mainstay of our backhaul offering is the
PTP 670 for commercial applications and PTP 700 for defense and national
security applications. In addition, our PTP 820 and PTP 850 series offer
carrier-grade microwave backhaul in licensed spectrum, and our PTP 550 offers
price-performance leadership in spectral efficiency in sub-6 GHz unlicensed
spectrum. In addition to dedicated point-to-point platforms, as technology has
evolved, solutions have developed that, while principally supporting
point-to-multi-point architectures, also support point-to-point applications,
including the 60 GHz cnWave v3000 Client Node and the ePMP Force 425. Revenues
from these products are included in the PMP product category in our revenues by
product category reporting, as that is their primary application.

•

PMP: Our PMP portfolio ranges from our top-of-the-line PMP 450 series to our
ePMP solutions for network operators that need to optimize for both price and
performance to our cnReach family of narrow-bandwidth connectivity products for
industrial communications. The PMP 450 series is optimized for performance in
high-density and demanding physical environments, and includes the PMP 450m with
integrated cnMedusa massive multi-user multiple input multiple output, or
MU-MIMO, technology. The PMP 450 product line also supports the FCC's Citizen
Broadband Radio Service, or CBRS.

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PMP provides a high-quality platform at a more affordable price for less
demanding environments. The ePMP 3000 supports 4x4 MU-MIMO and is complemented
by a broad portfolio of ePMP Force 300 subscriber radios. The FCC and other
regulatory bodies around the world have begun to release the 6 GHz band, ranging
from 5825 MHz to 7125 MHz, to unlicensed us in indoor and outdoor applications.
We have commenced development on both the PMP 450 and the ePMP platform to take
advantage of this new spectrum offering. cnRanger, our Fixed LTE solution,
operates in the 2 GHz (Bands 38, 40, 41) and 3 GHz (Bands 42, 43, 48). Like the
PMP 450 platform, the 3 GHz cnRanger solution supports the CRBS service, while
the 2 GHz bands support the FCC's Educational Broadband Service, or EBS,
classification. cnReach products enable IIoT applications, such as supervisory
control and data acquisition, or SCADA, processes in the oil and gas, electric
utility, water, railroad and other industrial settings. In the fourth quarter of
2020, we began shipping our 60 GHz solution, cnWave, which enables Gbps
networking using the 60 GHz band and includes Meta's Terragraph technology. We
commenced commercial shipment of our fixed 5G platform, 28 GHz cnWave, operating
from 24.25 to 29.50 GHz, encompassing the 3GPP 5G channels N257, N258 and N261
in March of 2022.

•

Wi-Fi: Our Wi-Fi portfolio includes our cnPilot cloud-managed Wi-Fi solutions,
our cnMatrix cloud-managed wireless-aware switching solution, our Xirrus Wi-Fi
solutions, and our Wi-Fi 6 portfolio of Wi-Fi 6 access points which support both
cnMaestro and Xirrus XMS management. cnPilot is for indoor and outdoor
enterprise, small business, and home applications and offers a range of Wi-Fi
access points and RF technology that enable network optimization based on
desired geographic coverage and user density. cnMatrix provides the intelligent
interface between wireless and wired networks. cnMatrix's policy-based
configuration accelerates network deployment, mitigates human error, increases
security, and improves reliability. Xirrus has a portfolio of high-performance
enterprise Wi-Fi access points and cloud-based subscription services. In June
2020, we introduced our first Wi-Fi 6 access point, the XV3-8, which supports
both cnPilot and Xirrus solutions. In January 2021, we announced our XE series,
which incorporates Wi-Fi 6E, support of the 6 GHz band, and we commenced
shipment in the first quarter of 2022. Additional Wi-Fi 6 access points are
under development and will be released throughout 2022. In the first quarter of
2021, we introduced and began shipping the cnMatrix TX 2020R-P. The TX 2020R-P
is the first in a series of switches designed specifically to support PMP and
PTP fixed wireless broadband networks, incorporating the cnMatrix
enterprise-class feature set and incorporating additional features and services
pertinent to network operators deploying fixed wireless broadband networks. The
TX 2012R-P was introduced in April of 2021 and with the December 2021
introduction of the TX 2028RF-P, we have a comprehensive portfolio of switches
to support our range of PMP and PTP network operators, complimenting the EX
series intended to support enterprise Wi-Fi networks.

We generate a substantial majority of our sales through our global channel
distribution network, including, as of June 30, 2022, approximately 170
distributors that we sell to directly, together with over 11,700 value added
resellers and system integrators supplied by these distributors for further
sales to end-users. Our channel partners provide lead generation, pre-sales
support and product fulfillment, and with professional services for network
design, installation, commissioning and on-going field support. Although we
fulfill sales almost exclusively through our channel partners, through our
global sales team we engage directly with network operators in our key vertical
markets including service providers, enterprises, industrials, defense and
national security entities, and state and local governments. Our sales team
responds to bids or requests for quotes, typically in collaboration with a
channel partner. Our distributors carry inventory of our products for resale,
and generally have stock rotation rights only if they simultaneously place an
off-setting order for product. As such, we generally recognize revenue from
sales to distributors on a sell-in basis, and manage our finished goods
inventory to plan for distributor demand.

We outsource production of our products to third-party manufacturers, who are
responsible for purchasing and maintaining inventory of components and raw
materials and, in certain cases, we resell third-party products on a white-label
basis. We believe that this approach gives us the advantages of relatively low
capital investment and significant flexibility in scheduling production,
managing inventory levels and providing a comprehensive solution to meet network
operator demand. The majority of our products are delivered to us at one of
three distribution hubs, where we have outsourced the warehousing and delivery
of our products to a third-party logistics provider and from which we manage
worldwide fulfillment.

Trends impacting our business

Component shortages and increased freight costs

We remain constrained by the global component part shortages, particularly the
shortage in available semiconductor chipsets and related components, as the
global integrated circuit supply is under pressure as demand surpasses supply
capacity, causing foundries to allocate existing supply among their customers.
As a result, we are experiencing increased lead times for the supply of many of
our products, impacting our ability to timely supply our customers. In
particular, semiconductor chips and merchant silicon and related semiconductor
parts are currently in high demand with limited supply, which is resulting in
significantly longer than usual lead times and increased costs for these
components. Shortages and delays in obtaining these and other components has and
may continue to have an adverse effect on our ability to meet customer orders,
and are resulting in increased component and delivery costs. Shortages are
expected throughout 2022. We have also experienced price increases in base
commodities, impacting component pricing

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generally and in particular for electromechanical commodities. These component
shortages and increases in costs have impacted, and are expected to continue to
impact, our sales and revenues, and our gross margins and net income. In
addition, if we are required to continue to make prepayments to our suppliers to
procure inventory, this could further reduce working capital.

Logistics challenges remain as well, as container and trucking shortages
continue to lengthen availability times of containers and carriage, resulting in
increases in relevant freight costs. Ports have increasing lead times with
delays becoming commonplace in the container freight market as port delays,
worker shortages, trucking shortages and the impact of COVID-19 are impacting
the ability to import and export goods, particularly from China. Logistics and
freight costs are increasing substantially as a result. We are also experiencing
increasing rates, resulting in increased use of expedited freight modes due to
supply shortages. The use of expedited freight modes has increased our cost of
revenues, resulting in a decrease in our gross margins, and is expected to
continue in the short term.

COVID-19

The impact of the COVID-19 pandemic, and the disruption to our business and
operations as well as the operations of our customers and suppliers eased during
the second quarter of 2022, as China reopened facilities. Manufacturing delays
resulting from the shutdowns have improved, as have delays in distribution and
warehousing of our products.

The extent of the continued impact of the COVID-19 pandemic on our operational
and financial performance will depend on future developments, including the
duration, severity and spread of the pandemic, government shutdowns particularly
in China, and related restrictions on travel and transportation and other
actions that may be taken by governmental authorities and the impact to the
business of our suppliers or customers, all of which are uncertain and cannot be
predicted.

With respect to liquidity, we believe our balance sheet will provide us the
necessary capital to navigate the COVID-19 pandemic. During 2021, we continued
to enforce several initiatives to conserve cash and optimize profitability,
including limiting discretionary spending, eliminating non-essential travel,
delaying or reducing hiring activities, and deferring certain discretionary
capital expenditures. In the first quarter of 2022, we saw a recovery of limited
business travel to support our partners, customers and suppliers, and we expect
continued recovery throughout 2022.

Impact of war in Ukraine

As a result of the invasion of Ukraine by Russia, and the subsequent sanctions
imposed by the governments of the United States, England and the European Union,
among others, against Russia, Belarus, the Donetsk People's Republic (DNR) and
Luhansk People's Republic (LNR) regions of Ukraine (to complement the existing
sanctions in Crimea), certain Russian banks and certain named individuals, the
Company has ceased the sale of its products, services and technology in these
regions, and closed our operations and terminated our employees in Russia,
resulting in an adverse impact to our revenues and operations. To date, our
outsourced product development in Ukraine continues. However, if the sanctions
continue or increase, or if tensions with Russia escalate, the Company may
continue to experience general business uncertainty that negatively impacts
demand in several of our markets and may adversely impact our product
development, as well as the business of our suppliers or customers, all of which
are uncertain and cannot be predicted.

Digital transformation and new product introductions

While enterprises and governments continue to look to digital transformation to
improve operations by harnessing new technologies, software and applications,
our revenues have been impacted by the component shortages and freight and
logistics delays referenced above, impacting our ability to manufacture and ship
products according to orders. Enterprises seek to gain analytics and improve
security and risk, while governments seek to connect more of the unconnected,
including people, places (such as schools and government buildings) and things
(such as meters, valves, doors, cameras), as well as to enable digital
education, digital economy and digital currency. Each of these digital
transformation objectives are underpinned by the need for increased
connectivity, as employees, customers and others must be able to access the
enterprise network securely from anywhere. As a result, we continue to see
increased interest in connection with our wireless broadband solutions for
customers accessing the CBRS band where we have benefitted from investments we
have made over the past few years in fixed wireless infrastructure technologies
in such areas as PMP, including CBRS-compatible products in the U.S. We have
also seen increases in interest from our new opportunities such as gigabit
wireless solutions with our 60 GHz cnWave millimeter wave products, our
enterprise Wi-Fi 6, and cloud-enabled wireless switching products which enable
higher speed connectivity (gigabits per second) and can be very rapidly deployed
with a lot of flexibility to keep pace with the network demand these digital
transformations are presenting. In the U.S., the first phase of the Rural
Digital Opportunity Fund, or RDOF, launched by the Federal Communications
Commission, or FCC, is expected to accelerate the provision of high-speed
broadband service to millions of underserved communities in the U.S. over the
next ten years, as well as the Infrastructure Investment and Jobs Act and other
national and state funded initiatives to extend and expand broadband access to
citizens and businesses.

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Financial results for the three-month period ended June 30, 2022

•

Total revenue was $69.3 million, a decrease of 25.3% year-over-year

•

Gross margin was 48.3%

•

Total costs of revenues and operating expenses were $66.6 million

•

Operating income was $2.7 million

•
Net income was $2.3 million

Basis of presentation

Revenues

Our revenues are generated primarily from the sale of our products, which
consist of hardware with essential embedded software. Our revenues also include
limited amounts for software products, extended warranty on hardware products
and subscription services. We generally recognize product revenues at the time
of shipment, provided that all other revenue recognition criteria have been met.
Revenues are recognized net of estimated stock returns, volume-based rebates and
cooperative marketing allowances that we provide to distributors. We recognize
subscription services revenue ratably over the term in which services are
provided and our performance obligation is satisfied. We provide a standard
warranty on our hardware products, with the term depending on the product, and
record a liability for the estimated future costs associated with potential
warranty claims. In addition, we also offer extended warranties for purchase and
represents a future performance obligation for us. The extended warranty is
included in deferred revenues and is recognized on a straight-line basis over
the term of the extended warranty.

Cost of revenues and gross profit

Our cost of revenues is comprised primarily of the costs of procuring finished
goods from our third-party manufacturers, third-party logistics and warehousing
provider costs, freight costs and warranty costs. We outsource our manufacturing
to third-party manufacturers located primarily in Mexico, China, Israel and
Taiwan. Cost of revenues also includes costs associated with supply operations,
including personnel related costs, provision for excess and obsolete inventory,
third-party license costs and third-party costs related to services we provide.
Cost of revenues also includes share-based compensation expense and the
amortization of capitalized development costs on software marketed for sale.

Gross profit has been and will continue to be affected by various factors,
including changes in product mix. The margin profile of products within each of
our core product categories can vary significantly depending on the operating
performance, features and manufacturer of the product. Gross margin will also
vary as a function of changes in pricing due to competitive pressure, our
third-party manufacturing and other production costs, cost of shipping and
logistics, provision for excess and obsolete inventory and other factors. We
expect our gross margins will fluctuate from period to period depending on the
interplay of these various factors.

Operating expenses

We classify our operating expense as research and development, sales and
marketing, and general and administrative expense. Personnel costs are the
primary component of each of these operating expense categories, which consist
of personnel costs, such as salaries, sales commissions, benefits, bonuses and
share-based compensation expense. In addition, we separate depreciation and
amortization in their own category.

Research and development

In addition to personnel-related costs, research and development expense
consists of costs associated with design and development of our products,
product certification, travel and recruiting. We generally recognize research
and development expense as incurred. For certain of our software projects under
development, we capitalize the development cost during the period between
determining technological feasibility of the product and commercial release. We
amortize the capitalized development cost upon commercial release, generally
over three years, which is included in cost of revenues. We typically do not
capitalize costs related to the development of first-generation product
offerings as technological feasibility generally coincides with general
availability of the software. In 2022, we expect research and development costs
to increase as we increase the size of our research and development organization
and continue to invest in our future products and services.

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Sales and marketing

In addition to personnel costs for sales, marketing, service and product line
management personnel, sales and marketing expense consists of our training
programs, trade shows, marketing programs, promotional materials, demonstration
equipment, national and local regulatory approval on our products, travel and
entertainment, and recruiting. In 2022, we expect sales and marketing expense to
continue to increase as COVID restrictions are further lifted and we increase
the size of our sales, marketing, service, and product line management
organization in support of our growth, conduct and attend in person marketing
events, and, in particular, as we continue to expand our global distribution
network.

General and administrative

In addition to personnel costs, general and administrative expense consists of
professional fees, such as legal, audit, accounting, information technology and
consulting costs, insurance, facilities and other supporting overhead costs. We
expect general and administrative expense to remain flat as we continue to
enforce several initiatives to conserve cash and improve profitability.

Depreciation and amortization

Depreciation and amortization expense consist of depreciation related to fixed
assets such as computer equipment, furniture and fixtures, and testing
equipment, as well as amortization related to acquired and internal use software
and definite lived intangibles.

Provision for income taxes

Our provision for income taxes consists primarily of income taxes in the
jurisdictions in which we conduct business. As we have expanded our
international operations, we have incurred additional foreign tax expense, and
we expect this to continue. Management assesses our deferred tax assets in each
reporting period, and if it is determined that it is not more likely than not to
be realized, we will record a valuation allowance in that period.

Results of operations

The following table presents the consolidated statements of operations, as well
as the percentage relationship to total revenues for items included in our
consolidated statements of operations (in thousands):

                                             Three months ended June 30,           Six months ended June 30,
(in thousands)                                2021                 2022              2021               2022
Statements of Operations Data:
Revenues                                 $       92,709       $       69,296     $     181,224       $  131,192
Cost of revenues                                 46,617               35,857            90,962           68,587
Gross profit                                     46,092               33,439            90,262           62,605
Operating expenses
Research and development                         12,617               10,576            24,220           22,678
Sales and marketing                               9,718               10,579            19,758           20,727
General and administrative                        7,896                8,085            15,425           15,750
Depreciation and amortization                     1,564                1,534             3,159            2,980
Total operating expenses                         31,795               30,774            62,562           62,135
Operating income                                 14,297                2,665            27,700              470
Interest expense, net                             1,316                  407             2,456              904
Other expense (income), net                          79                 (371 )             121             (294 )
Income (loss) before income taxes                12,902                2,629            25,123             (140 )
Provision (benefit) for income taxes              1,385                  307            (6,254 )           (894 )
Net income                               $       11,517       $        2,322     $      31,377       $      754




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                                            Three months ended June 30,             Six months ended June 30,
                                             2021                2022               2021                 2022
Percentage of Revenues:
Revenues                                         100.0 %             100.0 %           100.0 %              100.0 %
Cost of revenues                                  50.3 %              51.7 %            50.2 %               52.3 %
Gross margin                                      49.7 %              48.3 %            49.8 %               47.7 %
Operating expenses
Research and development                          13.6 %              15.3 %            13.4 %               17.3 %
Sales and marketing                               10.5 %              15.3 %            10.9 %               15.8 %
General and administrative                         8.5 %              11.7 %             8.5 %               12.0 %
Depreciation and amortization                      1.7 %               2.2 %             1.7 %                2.2 %
Total operating expenses                          34.3 %              44.5 %            34.5 %               47.3 %
Operating income                                  15.4 %               3.8 %            15.3 %                0.4 %
Interest expense, net                              1.4 %               0.5 %             1.4 %                0.7 %
Other expense (income), net                        0.1 %              (0.5 )%            0.1 %               (0.2 )%
Income (loss) before income taxes                 13.9 %               3.8 %            13.8 %               (0.1 )%
Provision (benefit) for income taxes               1.5 %               0.4 %            (3.5 )%              (0.7 )%
Net income                                        12.4 %               3.4 %            17.3 %                0.6 %




Comparison of three-month period ended June 30, 2021 to the three-month period
ended June 30, 2022

Revenues

                             Three months ended June 30,                Change
(dollars in thousands)        2021                 2022              $            %
Revenues                 $       92,709       $       69,296     $ (23,413 )     (25.3 )%




Revenues decreased $23.4 million, or 25.3%, to $69.3 million for the three-month
period ended June 30, 2022 from $92.7 million for the three-month period ended
June 30, 2021, with the largest decrease in our point-to-multi-point product
category. Revenues for the three-month period ended June 30, 2022 were
negatively impacted by global supply and distribution constraints affecting the
procurement and shipment of products and lower demand for PMP products. Although
revenues decreased, we continue to increase the number of our channel partners,
which consists of over 11,700 channel partners as of June 30, 2022.

Revenues by product category

                                             Three months ended June 30,                  Change
(dollars in thousands)                        2021                 2022              $              %
Point-to-Multi-Point                     $       59,796       $       28,269     $ (31,527 )         (52.7 )%
Point-to-Point                                   14,066               15,684         1,618            11.5 %
Wi-Fi                                            18,297               24,014         5,717            31.2 %
Other                                               550                1,329           779           141.6 %

Total revenues by product category $ 92,709 $ 69,296 $ (23,413 ) (25.3 )%

Point-to-Multi-Point

Our PMP revenues decreased $31.5 million, or 52.7%, from the three-month period
ended June 30, 2021 to 2022, and represented 64% and 41% of our total revenues
over the same periods, respectively. Decreases in point-to-multi-point revenues
in North America and Europe, Middle East, Africa drove most of the decline due
to lower demand for certain products and supply constraints that negatively
impacted our ability to procure and ship product.

Point-to-Point

PTP revenues increased $1.6 million, or 11.5%, from the three-month period ended
June 30, 2021 to 2022 mostly driven by increased demand for unlicensed PTP for
backhaul products mostly in the Caribbean and Latin America region.

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Wi-Fi

Wi-Fi revenues increased $5.7 million, or 31.2%, from the three-month period
ended June 30, 2021 to 2022. Wi-Fi revenues improved in all regions driven by
increased demand and improved supply along with increased revenues from Wi-Fi 6
products.

Revenues by geography

                                  Three months ended June 30,                Change
(dollars in thousands)             2021                 2022              $            %
North America                 $       49,346       $       31,140     $ (18,206 )     (36.9 )%
Europe, Middle East, Africa           24,943               21,281        (3,662 )     (14.7 )%
Caribbean and Latin America           12,152                7,960        (4,192 )     (34.5 )%
Asia Pacific                           6,268                8,915         

2,647 42.2 %
Total revenues by geography $ 92,709 $ 69,296 $ (23,413 ) (25.3 )%

Revenues decreased in North America, Europe, Middle East, Africa and Caribbean
and Latin America regions, with increased revenues in Asia Pacific from the
three-month period ended June 30, 2021 to June 30, 2022. North America revenues
decreased $18.2 million, or 36.9%, primarily due to lower PMP revenues driven by
lower demand and continued supply constraints, lower PTP revenues driven by
lower demand for backhaul products, partially offset by increased Wi-Fi revenues
mostly due to improved supply and increasing demand. Europe, Middle East, Africa
revenues decreased $3.7 million, or 14.7%, mostly related to lower PMP revenues
partially offset by higher Wi-Fi and PTP revenues. Caribbean and Latin America
revenues decreased $4.2 million, or 34.5%, mostly due to lower Wi-Fi revenues
impacted by supply constraints and lower PMP revenues driven by lower demand
offset by higher PTP revenues. Asia Pacific revenues increased $2.6 million, or
42.2%, mostly due to higher PMP and PTP revenues along with higher Wi-Fi
revenues as a result of increased and larger deals.

Cost of revenues and gross margin

                             Three months ended June 30,                  Change
(dollars in thousands)        2021                 2022              $              %
Cost of revenues         $       46,617       $       35,857     $ (10,760 )         (23.1 )%
Gross margin                       49.7 %               48.3 %                   (140) bps




Cost of revenues decreased $10.8 million, or 23.1%, to $35.9 million for the
three-month period ended June 30, 2022 from $46.6 million for the three-month
period ended June 30, 2021. The decrease in cost of revenues was primarily due
to decreased revenues. In addition, cost of revenues was impacted by higher
production costs due to increases in component charges as a result of component
shortages and increases in component costs.

Gross margin decreased to 48.3% for the three-month period ended June 30, 2022
from 49.7% for the three-month period ended June 30, 2021. The decrease reflects
higher production costs due to increases in component charges as a result of
component shortages and increases in component costs, and higher logistics costs
to meet demand, including costs of alternative distribution, shipment and
transportation modes.

Operating expenses

                                    Three months ended June 30,                Change
(dollars in thousands)               2021                 2022             $            %
Research and development        $       12,617       $       10,576     $ (2,041 )     (16.2 )%
Sales and marketing                      9,718               10,579          861         8.9 %
General and administrative               7,896                8,085          189         2.4 %
Depreciation and amortization            1,564                1,534          (30 )      (1.9 )%
Total operating expenses        $       31,795       $       30,774     $ (1,021 )      (3.2 )%




Research and development

Research and development expense decreased $2.0 million, or 16.2%, to $10.6
million for the three-month period ended June 30, 2022 from $12.6 million for
the three-month period ended June 30, 2021. As a percentage of revenues,
research and development expenses increased to 15.3% in 2022 from 13.6% in 2021
over the same period. The decrease in research and development expense was
primarily due to a $1.8 million decrease in variable compensation expense due to
lower financial performance along with lower

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homologation and regulatory expense of $0.5 million and $0.1 million lower
contractor expense due to the timing of projects offset by higher
payroll-related costs of $0.2 million due to higher headcount and $0.2 million
higher share-based compensation expense.

Sales and marketing

Sales and marketing expense increased $0.9 million, or 8.9%, to $10.6 million
for the three-month period ended June 30, 2022 from $9.7 million for the
three-month period ended June 30, 2021. As a percentage of revenues, sales and
marketing expense increased to 15.3% in 2022 from 10.5% in 2021 over the same
period. The increase in sales and marketing expense was primarily due to $0.8
million higher payroll-related costs, mostly related to merit increases and $0.2
million of severance related to reductions taken in Russia, along with higher
travel-related spend of $0.4 million as restrictions on travel and conferences
imposed by the COVID-19 pandemic are lessening in parts of the world and $0.1
million increase in trade show and marketing-related spend. These increases were
partially offset by $0.7 million lower variable compensation expense due to
lower financial performance.

General and administrative

General and administrative expense increased $0.2 million, or 2.4%, to $8.1
million for the three-month period ended June 30, 2022 from $7.9 million for the
three-month period ended June 30, 2021. As a percentage of revenues, general and
administrative expense increased to 11.7% in 2022 from 8.5% in 2021 over the
same period. The slight increase in general and administrative expense was
primarily due to $0.4 million higher payroll-related costs along with $0.4
million higher professional fees and $0.2 million higher share-based
compensation expense. These increases were mostly offset by $0.8 million lower
variable compensation expense due to lower financial performance.

Depreciation and amortization

Depreciation and amortization expense remained flat from the three-month period
ended June 30, 2021 to the three-month period ended June 30, 2022.

Interest expense, net
                           Three months ended June 30,              Change
(dollars in thousands)         2021                2022         $           %
Interest expense, net    $          1,316         $   407     $ (909 )     (69.1 )%


Interest expense decreased $0.9 million, or 69.1%, to $0.4 million for the
three-month period ended June 30, 2022 from $1.3 million for the three-month
period ended June 30, 2021. The decrease was primarily due to a reduction in the
interest rate on the term loan from 5.25% to approximately 3.0% along with lower
term loan principal balance. The three-month period ended June 30, 2021 included
$0.3 million of additional amortization of deferred debt issuance costs as a
result of the excess cash flow payment of $19.6 million made in May 2021.

Other expense (income), net

                                 Three months ended June 30,            Change
(dollars in thousands)           2021                 2022             $        %
Other expense (income), net   $       79         $          (371 )   $ (450 )   nm




Other expense (income), net changed from expense of $0.1 million for the
three-month period ended June 30, 2021 to income of $0.4 million for the
three-month period ended June 30, 2022, primarily due to foreign currency
fluctuations.

Provision for income taxes

                               Three months ended June 30,               Change
(dollars in thousands)            2021                 2022          $            %
Provision for income taxes   $         1,385         $    307     $ (1,078 )     (77.8 )%
Effective income tax rate               10.7 %           11.7 %




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Our provision for income taxes was $0.3 million for the three-month period ended
June 30, 2022 and $1.4 million for the three-month period ended June 30, 2021.
The effective income tax rates were 11.7% and 10.7% over the same periods,
respectively, and reflect the application of our expected annual tax rate to
pre-tax results for each of the periods as well as discrete tax impacts that
arise during the periods. In the three-month period ended June 30, 2021, the
effective income tax rate of 10.7% was different from the statutory rate of
21.0% primarily due tax benefits arising on employee restricted share vesting
and option exercises. In the three-month period ended June 30, 2022, our
effective income tax rate of 11.7% was different from the statutory rate of
21.0% primarily due to tax benefits arising on Research and Development tax
credits, Foreign Derived Intangible Income, and revaluing of UK deferred tax
assets at a higher future tax rate.

Comparison of six-month period ended June 30, 2021 to the six-month period ended
June 30, 2022

Revenues

                           Six months ended June 30,               Change

(dollars in thousands)       2021               2022            $            %
Revenues                 $     181,224       $  131,192     $ (50,032 )     (27.6 )%


Revenues decreased $50.0 million, or 27.6%, to $131.2 million for the six-month
period ended June 30, 2022 from $181.2 million for the six-month period ended
June 30, 2021, with the largest decrease in our point-to-multi-point product
category. Revenues for the six-month period ended June 30, 2022 were negatively
impacted by global supply and distribution constraints affecting the procurement
and shipment of products, namely the lockdowns in Shenzhen and Shanghai by the
Chinese government to combat increased incidences of COVID-19, which closed our
distribution and warehousing facility and some of our manufacturing facilities.
Both of these restrictions were lifted in the second quarter of 2022. Although
revenues decreased, we continue to increase the number of channel partners,
which consists of over 11,700 channel partners as of June 30, 2022.

Revenues by product category

                                           Six months ended June 30,                 Change
(dollars in thousands)                       2021               2022            $             %
Point-to-Multi-Point                     $     117,595       $   59,195    

$ (58,400 )        (49.7 )%
Point-to-Point                                  31,542           30,398        (1,144 )         (3.6 )%
Wi-Fi                                           30,420           39,522         9,102           29.9 %
Other                                            1,667            2,077           410           24.6 %

Total revenues by product category $ 181,224 $ 131,192 $ (50,032 ) (27.6 )%

Point-to-Multi-Point

Our PMP revenues decreased $58.4 million, or 49.7%, from the six-month period
ended June 30, 2021 to 2022, and represented 65% and 45% of our total revenues
over the same periods, respectively. Decreases in point-to-multi-point revenues
in North America drove most of the decline as supply constraints negatively
impacted our ability to procure and ship product along with lower demand from
service providers.

Point-to-Point

PTP revenues decreased $1.1 million, or 3.6%, from the six-month period ended
June 30, 2021 to 2022 mostly driven by decreased sales in North America as a
result of lower demand for backhaul products.

Wi-Fi

Wi-Fi revenues increased $9.1 million, or 29.9%, from the six-month period ended
June 30, 2021 to 2022. Wi-Fi revenues increased for Wi-Fi 6 and switching
products which benefitted the portfolio. However, Wi-Fi revenues were negatively
impacted in the first quarter of 2022 due to the lockdowns in China impacting
our ability to procure and ship product along with the continued semiconductor
and other component shortages.

                                       30
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Revenues by geography

                                Six months ended June 30,               Change
(dollars in thousands)            2021               2022            $            %
North America                 $     103,541       $   59,461     $ (44,080 )     (42.6 )%
Europe, Middle East, Africa          43,633           41,613        (2,020 )      (4.6 )%
Caribbean and Latin America          22,667           13,044        (9,623 )     (42.5 )%
Asia Pacific                         11,383           17,074         5,691        50.0 %
Total revenues by geography   $     181,224       $  131,192     $ (50,032 )     (27.6 )%


Revenues decreased in North America, Europe, Middle East, Africa and Caribbean
and Latin America regions, with increased revenues in Asia Pacific from the
six-month period ended June 30, 2021 to June 30, 2022. All regions continue to
be impacted by supply constraints. North America revenues decreased $44.1
million, or 42.6%, primarily due to lower PMP revenues primarily from lower
demand from service providers and continued supply constraints along with lower
PTP revenues driven by lower demand for backhaul products, partially offset by
higher Wi-Fi revenues due to increased demand for Wi-Fi 6 and switching
products. Europe, Middle East, Africa revenues decreased $2.0 million, or 4.6%,
mostly related to lower PMP revenues partially offset by higher Wi-Fi revenues.
Caribbean and Latin America revenues decreased $9.6 million, or 42.5%, mostly
due to lower PMP and Wi-Fi revenues driven by decreased demand and supply
constraints. Asia Pacific revenues increased $5.7 million, or 50.0%, driven by
higher PMP and PTP revenues along with higher Wi-Fi revenues as a result of
increased and larger sales.

Cost of revenues and gross margin

                             Six months ended June 30,                  Change
(dollars in thousands)       2021                2022              $              %
Cost of revenues         $      90,962       $      68,587     $ (22,375 )         (24.6 )%
Gross margin                      49.8 %              47.7 %                   (210) bps


Cost of revenues decreased $22.4 million, or 24.6%, to $68.6 million for the
six-month period ended June 30, 2022 from $91.0 million for the six-month period
ended June 30, 2021. The decrease in cost of revenues was primarily due to
decreased revenues. In addition, cost of revenues was impacted by higher
production costs due to increases in component charges as a result of component
shortages and increases in component costs and increases in freight and
logistics charges as a result of cost increases due to container shortages, use
of other distribution, shipment and transportation modes, and increases in costs
by logistics and freight providers to meet the high global demand.

Gross margin decreased to 47.7% for the six-month period ended June 30, 2022
from 49.8% for the six-month period ended June 30, 2022. The decrease reflects
higher production costs due to increases in component charges as a result of
component shortages and increases in component costs, and higher logistics costs
to meet demand, including costs of alternative distribution, shipment and
transportation modes as a result of government shutdowns in China.

Operating expenses

                                    Six months ended June 30,               Change
(dollars in thousands)              2021                2022             $           %
Research and development        $      24,220       $      22,678     $ (1,542 )     (6.4 )%
Sales and marketing                    19,758              20,727          969        4.9 %
General and administrative             15,425              15,750          325        2.1 %
Depreciation and amortization           3,159               2,980         (179 )     (5.7 )%
Total operating expenses        $      62,562       $      62,135     $   (427 )     (0.7 )%


Research and development

Research and development expense decreased $1.5 million, or 6.4%, to $22.7
million for the six-month period ended June 30, 2022 from $24.2 million for the
six-month period ended June 30, 2021. As a percentage of revenues, research and
development expenses increased to 17.3% in 2022 from 13.4% in 2021 over the same
period. The decrease in research and development expense was primarily due to
$3.1 million lower variable compensation expense due to lower financial
performance along with $0.2 million lower homologation and regulatory expense.
The decrease was partially offset by $0.7 million higher share-based
compensation expense, $0.6 million higher payroll-related spend due to increased
headcount, and $0.2 million higher contractor spend and $0.2 million higher
engineering material costs as projects ramp in 2022.

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Sales and marketing

Sales and marketing expense increased $1.0 million, or 4.9%, to $20.7 million
for the six-month period ended June 30, 2022 from $19.8 million for the
six-month period ended June 30, 2021. As a percentage of revenues, sales and
marketing expense increased to 15.8% in 2022 from 10.9% in 2021 over the same
period. The increase in sales and marketing expense was primarily due to $1.1
million higher payroll-related costs, mostly due to merit increases and $0.2
million of severance expense related to restructuring activities in Russia,
along with $0.4 million higher share-based compensation expense. The increase
was also driven by $0.5 million higher travel-related spend as restrictions on
travel and conferences imposed by the COVID-19 pandemic are lessening in parts
of the world and $0.3 million higher trade show and marketing-related spend.
These increases were partially offset by $1.5 million lower variable
compensation expense due to lower financial performance.

General and administrative

General and administrative expense increased $0.3 million, or 2.1%, to $15.7
million for the six-month period ended June 30, 2022 from $15.4 million for the
six-month period ended June 30, 2021. As a percentage of revenues, general and
administrative expense increased to 12.0% in 2022 from 8.5% in 2021 over the
same period. The increase in general and administrative expense was primarily
due to $0.6 million higher payroll-related costs along with $0.3 million
increase in share-based compensation. The remainder of the increase is driven by
$0.3 million of higher business tax expense, $0.2 million higher legal fees and
$0.2 million higher professional fees. These increases were mostly offset by
$1.3 million lower variable compensation expense due to lower financial
performance.

Depreciation and amortization

Depreciation and amortization expense decreased $0.2 million, or 5.7%, to $3.0
million for the six-month period ended June 30, 2022 from $3.2 million for the
six-month period ended June 30, 2021. The decrease in depreciation and
amortization was primarily driven by the amortization of finite-lived
intangibles being fully amortized in the fourth quarter of 2021.

Interest expense, net

                            Six months ended June 30,               Change
(dollars in thousands)        2021                2022          $            %
Interest expense, net    $         2,456         $   904     $ (1,552 )     (63.2 )%


Interest expense decreased $1.6 million, or 63.2%, to $0.9 million for the
six-month period ended June 30, 2022 from $2.5 million for the six-month period
ended June 30, 2021. The decrease was primarily due to a reduction in the
interest rate on the term loan from 5.5% to approximately 3.0% along with lower
principal balance on our term loan. The six-month period ended June 30, 2022
also included $0.3 million of additional amortization of debt issuance costs as
a result of the $19.6 million excess cash flow payment made in May 2021.

Other expense (income), net

                                  Six months ended June 30,             

Change

(dollars in thousands)           2021                  2022            $    

%

Other expense (income), net $ 121 $ (294 ) $ (415 ) nm

Other expense (income), net changed from expense of $0.1 million for the
six-month period ended June 30, 2021 to income of $0.3 million for the six-month
period ended June 30, 2022, primarily due to foreign currency fluctuations.

Benefit for income taxes


                              Six months ended June 30,              Change
(dollars in thousands)          2021                2022          $           %
Benefit for income taxes    $      (6,254 )       $   (894 )   $ 5,360       (85.7 )%
Effective income tax rate           (24.9 )%         638.6 %




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Our benefit for income taxes was $0.9 million for the six-month period ended
June 30, 2022 and $6.3 million for the six-month period ended June 30, 2021. The
effective income tax rates were 638.6% and (24.9)% over the same periods,
respectively, and reflect the application of our expected annual tax rate to
pre-tax results for each of the periods as well as discrete tax impacts that
arise during the period. For the six-month period ended June 30, 2021, the
effective income tax rate of (24.9)% was different from the statutory rate of
21.0% primarily due to the release of a valuation allowance against the loss
carryforwards in the Company's UK entity and tax benefits arising on employee
restricted share vesting and option exercises. For the six-month period ended
June 30, 2022, the effective income tax rate of 638.6% was different from the
statutory rate of 21.0% primarily due to tax benefits arising on Research and
Development tax credits, Foreign Derived Intangible Income, and revaluing of UK
deferred tax assets at a higher future tax rate.

Liquidity and Capital Resources

As of June 30, 2022, we had a cash balance of $45.9 million. Our primary
liquidity needs are: (i) to fund normal operating expenses; (ii) to meet
interest and principal requirements of our outstanding indebtedness; and (iii)
to fund capital expenditures. We believe these needs will be satisfied over at
least the next 12 months using existing cash and using cash flow generated by
our operations. Our future capital requirements may vary materially from those
currently planned and will depend on many factors, including our rate of revenue
growth, the timing and extent of spending to support development efforts, the
timing of new product introductions, market acceptance of our products and
overall economic conditions. We expect to regularly assess market conditions and
may take measures, including raising additional equity or incurring additional
debt if and when our board of directors determines that doing so is in our best
interest.

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