Ceragon : 2023 Q3 Results Financial Metrics

Q3 2023 Financial Review

November 2023

Proprietary and Confidential	November 2023

Disclaimer

This presentation has been prepared by Ceragon Networks Ltd. ("Ceragon" or the "Company") for informational purposes only. This presentation and the information contained herein are proprietary to the Company and may not be reproduced (in whole or in part) nor summarized, used, distributed, disseminated and/or copied without the prior written consent by the Company.

Ceragon Networks® and FibeAir® are registered trademarks of Ceragon in the United States and other countries. CERAGON® is a trademark of Ceragon Networks Ltd., registered in various countries. Other names mentioned are owned by their respective holders.

Neither this presentation nor any of the information contained herein constitute an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. No offering of securities shall be made in Israel except pursuant to an effective prospectus under the Israeli Securities Law, 1968 or an exemption from the prospectus requirements under such law. This presentation does not constitute a proposal and/or an offer and/or invitation to acquire and/or to be issued shares or any other securities by the Company and/or to engage in any transaction. This presentation has been prepared to provide summary information to its recipients, but it does not, however, purport to present all material information regarding the Company and/or the subject matter thereof, and it is subject to, and must be read in conjunction with, all other publicly available information, including Ceragon's public filings with the Securities and Exchange Commission ("SEC"). In particular, the Company makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein. Historical facts and past operating results are not intended to mean that future performances or results for any period will necessarily match or exceed those of any prior year.

Forward Looking Statements.

This presentation contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended, and the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon's management about Ceragon's business, financial condition, results of operations, micro and macro market trends and other issues addressed or reflected therein. Examples of forward-looking statements include, but are not limited to, statements regarding projections of demand, revenues, net income, gross margin, capital expenditures and liquidity, competitive pressures, order timing, supply chain and shipping, components availability; growth prospects, product development, financial resources, cost savings and other financial and market matters. You may identify these and other forward-looking statements by the use of words such as "may", "plans", "anticipates", "believes", "estimates", "targets", "expects", "intends", "potential" or the negative of such terms, or other comparable terminology, although not all forward-looking statements contain these identifying words.

Although we believe that the projections reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations therefrom will not be material. Such forward- looking statements involve known and unknown risks and uncertainties that may cause Ceragon's future results or performance to differ materially from those anticipated, expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the effects of global economic trends, including recession, rising inflation, rising interest rates, commodity price increases and fluctuations, commodity shortages and exposure to economic slowdown; the effects of the evolving nature of the recent war in Gaza between Israel and the Hamas; risks associated with delays in the transition to 5G technologies and in the 5G rollout; risks relating to the concentration of our business on a limited number of large mobile operators and the fact that the significant weight of their ordering, compared to the overall ordering by other customers, coupled with inconsistent ordering patterns, could negatively affect us; risks resulting from the volatility in our revenues, margins and working capital needs, substantial losses incurred and negative cash flows generated, which, if continue, may significantly adversely impact our results of operations and cash flow; the high volatility in the supply needs of our customers, which from time to time lead to delivery issues and may lead to us being unable to timely fulfill our customer commitments; risks associated with inaccurate forecasts or business changes, which may expose us to inventory-related losses on inventory purchased by our contract manufacturers and other suppliers, to increased expenses should unexpected production ramp up be required, or to write off to parts of our inventory, which would increase our cost of revenues; uncertainties as to the occurrence and timing of the consummation of the transaction with Siklu and the potential failure to satisfy the conditions to the closing of such transaction; and such other risks, uncertainties and other factors that could affect our results of operation, as further detailed in Ceragon's most recent Annual Report on Form 20-F, as published on May 1, 2023, as well as other documents that may be subsequently filed by Ceragon from time to time with the SEC.

We caution you not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Ceragon does not assume any obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release unless required by law.

While we believe that we have a reasonable basis for each forward-looking statement contained in this press release, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. In addition, any forward-looking statements represent Ceragon's views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. In addition, any forward-looking statements represent Ceragon's views only as of the date of this press release and should not be relied upon as representing its views as of any subsequent date. Ceragon does not assume any obligation to update any forward-looking statements unless required by law.

Ceragon's public filings are available on the Securities and Exchange Commission's website at www.sec.govand may also be obtained from Ceragon's website at www.ceragon.com.

Industry Data.

This presentation contains estimates and information that is based on industry publications, reports and peer company public filings. This information involves a number of assumptions and limitations, and you are cautioned not to rely on or give undue weight to this information. The Company has not independently verified the accuracy or completeness of the data contained in these industry publications, reports or filings.

Proprietary and Confidential	2

Revenues- Geographic Split

	Q3/20	Q4/20	Q1/21	Q2/21	Q3/21	Q4/21	Q1/22	Q2/22	Q3/22	Q4/22	Q1/23	Q2/23	Q3/23
Europe	14%	19%	19%	18%	15%	14%	17%	15%	13%	13%	14%	12%	11%
Africa	14%	10%	9%	8%	6%	9%	8%	6%	5%	7%	6%	5%	4%
North America	14%	16%	17%	19%	14%	16%	19%	21%	27%	23%	32%	26%	26%
India	24%	23%	26%	27%	35%	30%	22%	31%	28%	29%	24%	31%	34%
APAC	20%	14%	14%	11%	9%	10%	14%	11%	10%	11%	12%	11%	10%
Latin America	14%	18%	15%	17%	21%	21%	20%	16%	17%	17%	12%	15%	15%
Total	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%

Proprietary and Confidential	3

NON-GAAP Profit & Loss

Actual (Unaudited)

	Q3/20	Q4/20	Q1/21	Q2/21	Q3/21	Q4/21	Q1/22	Q2/22	Q3/22	Q4/22	Q1/23	Q2/23	Q3/23
Revenues	70,581	74,002	68,270	68,621	76,115	77,760	70,319	70,674	78,649	75,531	83,409	86,151	87,260
Cost of Revenues	46,970	52,631	48,087	47,005	52,509	55,199	50,850	49,142	50,699	50,551	55,053	55,747	56,844
Gross profit	23,611	21,371	20,183	21,616	23,606	22,561	19,469	21,532	27,950	24,980	28,356	30,404	30,416
Gross margin	33.5%	28.9%	29.6%	31.5%	31.0%	29.0%	27.7%	30.5%	35.5%	33.1%	34.0%	35.3%	34.9%
Research & Development	7,299	7,694	7,358	7,494	6,640	7,745	6,779	7,493	7,150	7,863	7,692	7,580	7,260
% R&D	10.3%	10.4%	10.8%	10.9%	8.7%	10.0%	9.6%	10.6%	9.1%	10.4%	9.2%	8.8%	8.3%
Sales & Marketing	7,819	8,452	8,186	8,266	8,349	8,681	8,495	9,060	8,280	8,605	9,820	9,415	9,702
% S&M	11.1%	11.4%	12.0%	12.0%	11.0%	11.2%	12.1%	12.8%	10.5%	11.4%	11.8%	10.9%	11.1%
General & Administration	4,754	4,680	3,934	5,247	4,645	4,616	4,803	4,612	6,116	17,647	4,956	6,051	5,451
% G&A	6.7%	6.3%	5.8%	7.6%	6.1%	5.9%	6.8%	6.5%	7.8%	23.4%	5.9%	7.0%	6.2%
Total operating expenses	19,872	20,826	19,478	21,007	19,634	21,042	20,077	21,165	21,546	34,115	22,468	23,046	22,413
Operating profit (loss)	3,739	545	705	609	3,972	1,519	(608)	367	6,404	(9,135)	5,888	7,358	8,003
Operating margin	5.3%	0.7%	1.0%	0.9%	5.2%	2.0%	-0.9%	0.5%	8.1%	-12.1%	7.1%	8.5%	9.2%
Non-GAAP EBITDA	6,467	3,494	3,591	3,552	6,931	4,977	2,333	3,201	9,047	(6,513)	8,441	9,940	10,369
Financial expenses and others,
net	(1,238)	(2,527)	(1,237)	(1,367)	(2,273)	(2,691)	(1,184)	(2,531)	(2,011)	(2,858)	(1,816)	(2,171)	(2,086)
Income Tax	(201)	(1,559)	(347)	(420)	(348)	(855)	(61)	(304)	(269)	(534)	(439)	(787)	(953)
Non GAAP Net income (loss)	2,300	(3,541)	(879)	(1,178)	1,351	(2,027)	(1,853)	(2,468)	4,124	(12,527)	3,633	4,400	4,964
Non GAAP EPS	0.03	(0.04)	(0.01)	(0.01)	0.02	(0.02)	(0.02)	(0.03)	0.05	(0.15)	0.04	0.05	0.06
# of Shares for diluted EPS
('000)	82,244	81,536	82,584	83,424	85,271	83,916	83,959	84,019	85,970	84,348	86,712	86,747	87,228

Proprietary and Confidential	4

Selected Cash Flow Data

(U.S. dollars in thousands)

	Q3/20	Q4/20	Q1/21	Q2/21	Q3/21	Q4/21	Q1/22	Q2/22	Q3/22	Q4/22	Q1/23	Q2/23	Q3/23
Total cash & cash equivalents	29,155	27,101	33,011	28,670	27,235	17,079	24,960	23,592	25,964	22,948	26,423	24,529	33,966
Cash flow from operations	(3,225)	10,677	(1,654)	(2,958)	(667)	(9,740)	(1,816)	(3,173)	8,597	(8,503)	3,509	3,181	13,237
Capital expenditures	(1,230)	(1,342)	(2,003)	(1,728)	(2,336)	(3,328)	(2,726)	(3,079)	(4,487)	(2,129)	(4,430)	(2,879)	(2,386)
Options Exercise	293	390	3,689	269	730	42	81	32	297	-	-	30	-
Proceeds (repayment) of short-
term bank credits and loans,
net	(1,800)	(11,900)	6,000	-	900	2,900	12,150	4,950	(2,000)	7,600	4,350	(2,300)	(1,350)
Other	(50)	121	(122)	76	(62)	(30)	192	(98)	(35)	16	46	74	(64)
Net Change in Cash	(6,012)	(2,054)	5,910	(4,341)	(1,435)	(10,156)	7,881	(1,368)	2,372	(3,016)	3,475	(1,894)	9,437

Proprietary and Confidential	5

Selected Balance Sheet Data

(U.S. dollars in thousands)

	Q3/20	Q4/20	Q1/21	Q2/21	Q3/21	Q4/21	Q1/22	Q2/22	Q3/22	Q4/22	Q1/23	Q2/23	Q3/23
Cash and Cash Equivalents	29,155	27,101	33,011	28,670	27,235	17,079	24,960	23,592	25,964	22,948	26,423	24,529	33,966
Trade Receivables	108,394	107,388	106,712	107,404	109,863	118,310	120,682	122,734	115,871	100,034	100,590	107,592	104,593
DSOs	152	149	141	139	140	149	150	152	142	139	119	121	115
Inventory	51,869	50,627	48,542	52,316	53,203	61,398	58,060	60,710	64,227	72,009	68,742	67,836	70,050
Inventory Days	103	99	92	98	97	111	103	107	114	130	122	116	117
Working capital	102,067	99,446	98,954	99,864	101,615	87,799	87,494	82,105	83,335	77,911	79,518	83,536	88,405
Short-term loans	17,879	5,979	11,979	11,000	11,900	14,800	26,950	31,900	29,900	37,500	41,850	39,550	38,200
Shareholders' Equity	149,662	146,126	146,397	146,310	147,663	137,151	135,856	131,973	132,757	119,783	122,808	126,382	130,514
% - Shareholders' Equity/ Total
assets	55%	54%	50%	50%	50%	47%	45%	43%	44%	41%	42%	43%	43%
Total Balance Sheet	273,759	272,419	291,098	294,416	295,416	292,563	300,187	304,980	302,336	289,318	290,316	294,464	301,134

Proprietary and Confidential	6

Reported results - Reconciliation to GAAP

(U.S. dollars in thousands)

Q3/20

Q4/20

Q1/21

Q2/21

Q3/21

Q4/21

Q1/22

Q2/22

Q3/22

Q4/22

Q1/23

Q2/23

Q3/23

Non GAAP Net income (loss)

Stock based compensation expenses Amortization of intangible

2,300	(3,541)
384	411

(879)

351

(1,178)	1,351
286	1,034

(2,027)

(1,853)

(2,468)

4,124

891 746 689 1,167

(12,527)	3,633
958	1,169

4,400	4,964
808	1,048

assets

Changes in indirect tax positions

Leases - financial expenses (income)

Paycheck protection program Retired CEO compensation

-	1,800
1	(202)
157
229
-	-
-	-

-

1

(186)

-

-

-

-

1. 2

1. 102

1. -
   810-

-

(399)

706

-

-

-

-

(425)

-

(96)

-

1

(1,774)

-

-

-

1

(233)

-

-

-	-
279	1
154
(358)
-	-
-	-

-	-
2	-

1. (364)

-	-
-	-

	Hostile attempt related costs	-	-	-	-	-	-	-	-	3,971	249	-	-		-
	Non-cash tax adjustments	76	2	128	(23)	(53)	8,987	210	136	81	851	853	890		630
	Restructuring and related
	charges	-	-	-	-	-	-	-	-	-	-	-	897		-
	Acquisition -and integration-
	related costs	-	-	-	-	-	-	-	-	-	-	-	-		283
	Equity loss in affiliates	98	538	-	-	-	-	-	-	-	-	-	-		-
	GAAP Net Income (Loss)	1,584	(6,319)	(1,173)	(1,709)	266	(12,212)	(2,288)	(1,520)	(863)	(15,018)	1,968	2,088		3,367
	GAAP EPS	0.02	(0.08)	(0.01)	(0.02)	0.00	(0.15)	(0.03)	(0.02)	(0.01)	(0.03)	0.02	0.02		0.04
	# of Shares for basic EPS
	('000)	81,278	81,536	82,584	83,424	83,717	83,916	83,959	84,019	84,200	84,348	84,354	84,365		84,689
	# of Shares for diluted EPS
	('000)	82,000	81,536	82,584	83,424	84,637	83,916	83,959	84,019	84,200	84,348	84,992	85,313		85,488
	Proprietary and Confidential														7

Quarterly Revenues and Non-GAAP Net Income (Loss)

Proprietary and Confidential	8

Thank You