CMBM - NASDAQ

Good afternoon. My name is Mel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks Second Quarter 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. Thank you. Mr. Peter Schuman, Senior Director of Investor and Industry Analyst Relations, you may begin your conference.

Thank you, Mel. Welcome and thank you for joining us today for Cambium Networks second quarter 2021 financial results conference call and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO, and Stephen Cumming, our CFO, are here for today's call. The financial results press release and CFO commentary referenced on this call are accessible on the investor page of our website and the press release has been submitted on a Form 8-K with the SEC. A copy of today's prepared remarks will also be available on our investor page at the conclusion of this call. As a reminder, today's remarks, including those made during Q&A, will contain forward-looking statements about the company's outlook and expected performance. These statements are based on current expectations, forecasts, and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not undertake any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments, to conform these statements to actual results or to make changes in Cambium's expectations or otherwise. It is Cambium Networks policy to not reiterate our financial outlook. We encourage listeners to review the full list of risk factors included in the safe harbor statement in today's financial results press release. We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers except where otherwise noted. A reconciliation of non-GAAP measures to GAAP is included in the appendix to today's financial results press release which can be found on the investor page of our website and in today's press release announcing our results. Turning to the agenda, Cambium Networks President & CEO, Atul Bhatnagar, will provide the key investment highlights for the second quarter 2021 and Stephen Cumming, Cambium Networks CFO, will provide a recap of the financial results for the quarter and our financial outlook for the third quarter and calendar year 2021. Our prepared remarks will be followed by a Q&A session. I'd now like to turn the call over to Atul.

Thank you, Peter. Cambium's business remained strong as the expansion of broadband wireless communications networks continued, and our vision as a high-performance, yet affordable, global infrastructure leader was well received during Q2 '21. Cambium hit two significant milestones as a standalone company during the second quarter 2021. The first achievement was shipping our 10 millionth radio. The second accomplishment was breaking the $90 million revenue barrier in a quarter for the first time, after only breaking the $80 million revenue barrier in Q4 '20 and reaching the $70 million threshold for the first time during Q3 '20. Cambium's momentum continued to build during Q2 '21 with our new multi-gigabit product introductions ramping, increased interest in fixed wireless broadband solutions as performance matches that of fiber, and the attractive cost of ownership of our solutions making Cambium a compelling choice for wireless infrastructure projects around the world for many new emerging applications. We see increased government spending on infrastructure products accelerating this trend over the next few years as broadband is a lifeline to connect local communities and distributed enterprises around the globe. If it can be a wireless solution, it will be a wireless solution because of the ease of installation and operations, speed of service enablement, along with affordability. Cambium had a breakthrough quarter for our Enterprise Wi-Fi business, with revenues for that business significantly exceeding our expectations during the second quarter 2021, reaching record revenues of $18.3 million, increasing by 139% year-over-year and improving by 51% sequentially. We experienced strength across many verticals, including education, public Wi-Fi, and a recovery in the hospitality vertical. Even more importantly, we benefitted from service providers increasingly adopting our complete multi-gigabit wireless fabric solutions consisting of fixed wireless broadband, enterprise Wi-Fi and wireless savvy switching, combined with our cloud-based cnMaestro software solutions to manage the network. Cambium is at the start of a new era of end-to-end wireless speeds equivalent to that of fiber, with our multi-gigabit wireless fabric delivering fiber's performance and reliability at a fraction of the cost and enabling exciting new applications. Customers are adopting our 60 gigahertz cnWave solution to extend fiber networks with reduced capital expense, accelerating time to revenue, and improving their ROI. In addition, fiber operators are using 60 gigahertz cnWave to seamlessly cross streets and railroad crossings, and traverse physical obstacles without the hassles of permits, trenching, and other limitations encountered with legacy wired networks. Around the time of our next earnings call, our forthcoming fixed millimeter wave 5G 28 gigahertz cnWave will further expand our serviceable available market, SAM, as both new and existing customers demand higher broadband performance at the edge of their networks. Network upgrades are multi-year events, and we are at the intersection of the need for powerful, emerging high-speed networks and the introduction of Cambium's leading edge, cost-effective technology. Together with significant government funding as nations want to bridge the digital divide and achieve digital equity, we expect fixed wireless networks to continue to provide meaningful growth for many years to come. Cambium will be a significant beneficiary of these new infrastructure builds. Turning to the results of second quarter 2021, we achieved record revenues of $92.7 million, above the high-end of our outlook. Record non-GAAP diluted EPS of $0.45 also exceeded the high-end of our outlook of between $0.29 and $0.35 per diluted share. We delivered these excellent results in a supply constrained environment where many of our employees and partners continued working remotely during the COVID pandemic. Looking at revenues across our different product lines, our Point-to-Multi-Point PMP business had record revenues, increasing 3% sequentially and up 47% year-over-year, as we continued to see strong momentum in network traffic, increased demand for CBRS solutions, and broadening interest in our new product introductions as we expand our portfolio of solutions offering industry leading spectral efficiency, scalability, reliability, and attractive economics for our customers. As expected, the Point-to-Point business was lower, decreasing 20% sequentially during Q2 '21, due to timing of shipments for Federal products, while improving 12% year-over-year on higher demand for backhaul. Q3 '21 tends to be a stronger quarter for our Federal business. As previously mentioned, we had another record quarter for our enterprise Wi-Fi business, growing 51% sequentially and increasing 139% year-over-year during Q2 '21, due to strong growth of Wi-Fi 6 solutions, and record revenues and attach rates for our wireless-savvy cnMatrix enterprise switching products. This is also the first time in Cambium's history that Wi-Fi revenues reached 20% of company revenues. Looking at some notable customer wins and new product developments, in North America, at a pre-qualification event for the US Olympic trials, Cambium's PMP 450 CBRS solution, featuring our PMP 450b high gain Customer Premise Equipment, was used to backhaul through trees for our new outdoor Wi-Fi 6 product. The guest Wi-Fi network covered the entire perimeter of the track and field area and performed flawlessly. 157 devices connected to the Wi-Fi network that could not get cell reception at the venue due to the mobile network being down mid-event. We won a large new service provider in Vancouver, British Columbia using PMP 450m and PMP 450b for residential broadband access. They selected Cambium for our superior total cost of ownership and quality. In enterprise Wi-Fi, the hospitality market is recovering nicely, and we had a win at a five-star resort in Hawaii, the Halekulani, for our XV2-2 Wi-Fi 6 product. Cambium was selected for coverage of rooms, indoor spaces, and the outdoor pool areas with our new XV2-2T0. We won the deal over a larger competitor as a result of our superior total cost of ownership including our secure cloud management cnMaestro X platform, and the ability to provide a range of different use cases. Cambium's first mover status for the FCC's 3.5 gigahertz CBRS spectrum continued to benefit sales of our PMP 450 products and our CBRS SAS service in both the US and its territories. Our PMP 450m system featuring cnMedusa massive MU-MIMO technology enables service providers to rapidly enhance their networks using the CBRS frequency bands to provide high-performance broadband service to business and residential subscribers. In late July Cambium announced we have deployed over 100,000 fixed wireless broadband devices utilizing CBRS frequency licenses. As of today's call, we now have over 103,000 devices managed by our CBRS SAS service, an increase of approximately 14% since we reported last quarter. In addition to our industry-leading CBRS PMP 450 platform, we now offer a fixed LTE platform for CBRS, the 3 gigahertz cnRanger, for those customers that require standards based platforms. We are differentiated among alternative LTE choices because of cnRanger's operational simplicity and lower total cost of ownership versus our competition. The 3 gigahertz cnRanger platform joins the previously introduced 2.5 gigahertz cnRanger solution. In the Europe, Middle East, and Africa region, EMEA, the strategic wins from Q2 include, Vodafone, one of Italy's top network operators, selected Cambium for a smart city project in the Basilicata region to receive a full wireless fabric deployment. Cambium was selected for outdoor public access to 130 municipalities and the deployment included the use of our ePMP Force 300, cnPilot and Wi-Fi 6 access points, and cnMatrix enterprise switches. We beat out a larger competitor and were selected for our superior performance in outdoors areas. As part of the project we recruited, certified, and on boarded an important new system integrator. In Germany we had numerous enterprise wins in the education market with deployments in the Frankfurt, Stadt Lingen, Landkreis Vulkaneifel, and Tuttlingen school districts. In Africa, our wireless fabric strategy is paying off with a sizable order from a large multi-national operator with a win in Nigeria for our PMP 450m, enterprise Wi-Fi 6 and cnMatrix switches, and our cnMaestro X fabric management software. The project is with the country's largest national carrier to deploy indoor and outdoor Wi-Fi plus switching to the nation's largest countrywide bank, with over 500 offices being connected by Cambium's wireless fabric. In the APAC region, we had a large enterprise win in Korea with our new outdoor Wi-Fi 6 product, the XV2-2T0, in the city of Gangneung. We won this business against two larger competitors as a result of Cambium's performance and value. In Japan, we received a substantial order for outdoor Wi-Fi from a large multi-national hamburger chain for their drive-thru service. And in India, we had an enterprise Wi-Fi win at the Atal Tunnel. The Atal Tunnel is the world's longest tunnel above 10,000 feet and has a total length of over 6 miles. The tunnel operator deployed Cambium Wi-Fi access points to create a mesh network. The mesh network connects all video cameras and IP phones. Several OEM brands were tested in the difficult conditions and Cambium's Wi-Fi was selected as the best due to its greater range, stability, and robustness. In the Caribbean and Latin America, CALA region, we had a record-breaking quarter, with revenues exceeding $12 million for the first time, including record enterprise revenues for the region. We had a large enterprise win with the Ministry of Telecom in Peru. Cambium partnered with a satellite communications provider to deliver Wi-Fi connectivity to over 1,300 rural sites in the Amazonia Region to provide connectivity for primary education and rural health care centers. We won this project based on our reputation and the reliability of our enterprise Wi-Fi and switching products, plus the functionality of our cnMaestro cloud management software. Now that the pandemic is easing in the CALA region, the hospitality industry is recovering. We are seeing extraordinary acceptance of our enterprise solutions throughout the region. Some enterprise wins include the Hotel Regatta in Cartagena, Colombia, Hotel Mocawa in Quindio, Colombia, and in the Mayan Riviera of Mexico, Tulum, two different boutique resorts Ana y José Spa and the Hip Hotel & Spa. In addition, Telesur, the largest service provider in Suriname, has deployed our PMP 450i in the jungles of Guyana to provide broadband solutions for the oil and gas industry. Turning to new product introductions since our previous quarterly update, during this fall we expect to have two significant new product introductions. First, our Wi-Fi 6E product will bring even more performance benefits including the availability of up to 1.2 gigahertz of new clean spectrum in the 6 gigahertz band. With up to seven 160 megahertz channels, Wi-Fi 6E delivers improved performance, increased capacity, and lower latency that enables a new set of high density use cases. Cambium expertise and history with multi-radio AP designs enables us to deliver differentiated Wi-Fi 6E products. We start betas in Q3 for our highly anticipated 28 gigahertz cnWave 5G NR fixed wireless product for early adopters of the technology with POCs this fall and shipments in Q4. We have approximately 30 customers requesting gear for 28 gigahertz cnWave trials, and have received firm orders from one of our distributors to support a specific network operator. Cambium's 28 gigahertz cnWave provides high-capacity, scalable residential access, backhaul for outdoor Wi-Fi access points, 4G and 5G small-cells, and video surveillance networks, at a lower total cost of ownership than fiber. Our highly reliable and rapidly deployable 28 gigahertz cnWave products feature multi-user MIMO, beamforming, and stays up to date for next generation performance enhancements with Cambium's cnMaestro X cloud software. Interest in our 28 Gigahertz cnWave products remains very high and customer activity remains strong ahead of availability. This product paves the way for fixed 5G wireless leadership from Cambium. During this fall we will commence extensive field trials and proof-of-concept deployments in advance of expected commercial shipments in the fourth quarter with product revenues ramping during calendar 2022. We remain very positive on the global use of 60 gigahertz cnWave solutions and see many new use cases developing from a variety of customers around the globe. Cambium's 60 gigahertz cnWave for millimeter wavelengths makes it possible to provide a city with high-speed broadband access by utilizing existing street furniture such as streetlamps, traffic lights and utility poles. As a result, it can be deployed faster and more cost efficiently than wired networks. As we have previously mentioned, 60 gigahertz opens up new markets for Cambium due to its performance and versatility. We had a sizeable win with our 60 gigahertz cnWave technology with Pentanet, a rapidly growing high-speed service provider in Western Australia which is a favorite choice among gaming enthusiasts. Pentanet is using our 60 gigahertz cnWave to backhaul for homes and businesses. Cambium is helping to transform the city of Perth to gigabit speeds throughout the city. In EMEA, we expect the government of France to approve formal use of 60 gigahertz band during Q3 '21. More broadly across the EMEA region we see countries opening access to 60 Gigahertz. Also in the EMEA region, a large service provider in Nigeria, a provider of affordable broadband connectivity to Africa's underserved populations, has selected our 60 gigahertz cnWave to backhaul Wi-Fi in more urban areas. Finally, in North America we have secured a trial network utilizing 60 gigahertz cnWave from a nationwide cable operator for fiber extensions to enterprise customers. We anticipate the first networks being deployed in Southern California later this year. Looking at new developments in our PTP microwave product lines, during Q3 we will be releasing the new PTP 850C with 224 megahertz wideband channel supporting 11, 18, and 23 gigahertz frequencies. The wideband version is backward compatible with the prior narrowband version of the product. Wider channels provide a key benefit of additional capacity for customers. Turning to our cnMaestro Cloud software, our end-to-end cloud powered connectivity solution to manage the network from a single pane of glass. The cnMaestro Cloud software continued to experience strong user growth. Total devices under cloud management in Q2 '21 totaled over 616,600, an increase of 7% from Q1 '21, and up 36% year-over-year. Looking at our Channel, in Q2 '21, we expanded our channel presence by adding over 590 net new channel partners sequentially, and over 2,340 net new channel partners year-over-year, which represents an increase of approximately 6% sequentially and 29% year-over-year. Cambium added some new larger distribution partners during the second quarter, including in North America, we recently added ScanSource as a distributor, and in the Middle East we added Ingram Micro as a distribution partner for a wide variety of wireless connectivity solutions. This fall we plan to return with our presence at the largest WISP trade show of the year, WISPAPALOO

Thanks Atul. Cambium had record revenues of $92.7 million for Q2 '21, above the high-end of our outlook of $85 million to $90 million. This is the first time in the company's history we have broken the $90 million revenue barrier. Revenues increased by 5% quarter-over-quarter and were up 49% year-over-year. We achieved these outstanding results despite the supply chain constraints affecting the entire industry. On a sequential basis for Q2 '21, revenues were higher by $4.2 million. The higher revenues were driven by record shipments of our PMP products, which grew 3% sequentially, due to service providers continuing to scale networks, higher shipments of our new multi-gigabit products, and record revenues for our Enterprise Wi-Fi solutions, which grew 51% 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 geographies North America, our largest region, represented 53% of company revenues, compared to 61% during Q1 '21. On a sequential basis as expected North America had a softer quarter with revenues declining 9%, driven by lower PTP and PMP demand from Service Providers, offset by stronger enterprise Wi-Fi revenues. EMEA, our second largest region, increased 33% sequentially, primarily reflecting stronger PMP and robust enterprise Wi-Fi revenues, and represented 27% of revenues during Q2 '21, compared to 21% of revenues during Q1 '21. CALA had another record quarter, its fourth consecutive quarter of growth, increasing by 16% quarter-over-quarter driven by a significant number of customer wins and the continued recovery in that region, and represented 13% of sales during Q2 '21. APAC increased 23% sequentially and represented 7% of revenues during Q2 '21, compared to 6% of revenues for Q1 '21. Moving to our gross margin, non-GAAP gross margin of 50% increased by 80 basis points compared to Q2 '20. The year-over-year increase in non-GAAP gross margin was primarily the result of higher volumes and mix. On a sequential basis, non-GAAP gross margin in Q2 '21 of 50% was 10 basis points lower than Q1 '21. The lower quarter-over-quarter non-GAAP gross margin was the result of higher freight and distribution costs due to component shortages in the market. In Q2 '21 our non-GAAP gross profit dollars increased by $15.7 million compared to the prior year to $46.3 million and improved by $2 million sequentially. Non-GAAP operating expenses, research and development, sales and marketing, general and administrative and depreciation and amortization in Q2 '21 increased by $4.7 million when compared to Q2 '20, and stood at $28.8 million, or 31.1% of revenues. The majority of the year-over-year increase in non-GAAP operating expenses was a result of higher R&D resulting from increased spending on upcoming technologies and higher sales and marketing due to increased headcount to support higher revenues. When compared to Q1 '21, non-GAAP operating expenses were flat during Q2 '21. Quarter-over-quarter our R&D spend went up due to increased headcount and spend on upcoming technologies while sales and marketing and general and administrative expenses were lower. Record non-GAAP operating margin was 18.9%, up from 10.4% during Q2 '20, and 17.5% of revenues in Q1 '21. We had another good quarter of profitability, with record Adjusted EBITDA for Q2 '21 at $18.4 million or 19.9% of revenues, compared to $7.7 million or 12.3% of revenues for Q2 '20, and compared to $16.5 million or 18.6% of revenues for Q1 '21. 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. While we are presently exceeding our target operating model in certain metrics, we view these metrics on a consistent annual basis and will re-evaluate our targets when appropriate. Moving to cash flow, cash provided by operating activities was $20.1 million for the second quarter 2021. The quarter-over-quarter increase in cash was primarily the result of strong earnings, an increase in accounts payable, and a reduction in inventories, offset by an increase in accounts receivable. This compares to $26.2 million of net cash flow provided by operating activities for the second quarter 2020, and cash used in operating activities of $7.6 million for the first quarter 2021. Non-GAAP net income for Q2 '21 was a record $12.9 million, or $0.45 per diluted share, compared to $4.3 million, or $0.16 per diluted share for Q2 '20, and non-GAAP net income of $11.7 million or $0.41 per diluted share for Q1 '21. The higher non-GAAP net income compared to both the prior year period and prior quarter was primarily due to higher revenues and gross profit dollars, demonstrating improved leverage in our operating model. Turning to the balance sheet, cash totaled $51.4 million as of Q2 '21, an increase of $200,000 from Q1 '21. The sequential increase in cash primarily reflects strong net income and includes a $19.6 million reduction in term loan principal as required by the excess cash flow provision in the term credit agreement. Our intended $2.5 million scheduled principal pay down of debt occurred on July 1 due to a delay processing by the bank and will be reflected in our third quarter financial results. Net inventories of $28.4 million in Q2 '21 decreased by $1.7 million year-over-year and were lower by $3 million from Q1 '21. While the supply chain remains an ongoing challenge, we are working to increase our inventory position over the next few quarters to support the growth in our business. In summary we continued to see sequential growth and record profitability, solid cash flows from operations, with good execution, in what was a very supply constrained quarter. The visibility and predictability in our business remains strong as we enter new product cycles, and we expect increased government funding for our broadband business as we exit calendar 2021. We are gaining scale, improving our operational efficiency, and making excellent progress on achieving our long-term target operating model. Moving to the third quarter 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 August 9, 2021, our Q3 '21 financial outlook is expected to be as follows; revenues between $88 million to $92 million; non-GAAP gross margin between 48.5% to 49.5%; non-GAAP operating expenses between $30.9 million to $31.9 million; non-GAAP operating income between $11.8 million to $13.6 million; interest expense, net of approximately $1 million; non-GAAP net income between $8.6 to $9.8 million or between $0.30 to $0.34 per diluted share; adjusted EBITDA between $12.7 million to $14.6 million; and adjusted EBITDA margin between 14.4% to 15.8%; non-GAAP effective tax rate of approximately 20% to 22% and approximately 29 million weighted average diluted shares outstanding. Turning to our cash requirements, pay down of debt, $2.5 million scheduled debt and an additional $2.5 million due to timing from a second quarter 2021 payment. Cash flow interest expense approximately $1 million and capital expenditures: $2 million to $2.5 million. Looking at the full year 2021 financial outlook, revenues between $357 million to $365 million, increasing between 28% to 31%; non-GAAP effective tax rate of approximately 20% to 22% and adjusted EBITDA margin between 16% to18%. I will now turn the call back to Atul for some closing remarks.

We continued to deliver impressive growth as we overcame global supply chain challenges and made excellent progress on our goal of long-term top line growth in the mid-teens and adjusted EBITDA in the upper teens as a percentage of revenues. We have multiple growth drivers for 2021 and beyond including our gigabit wireless products such as enterprise Wi-Fi 6, 60 gigahertz, and our upcoming 28 gigahertz millimeter wave solutions for fixed 5G wireless, as well as our software-as-a-service cnMaestro X solution. Cambium continues to work diligently with different governments, enterprises, and agencies to help bridge the digital divide using our advanced wireless fabric solutions. We expect increased scale should benefit our operating results, and we remain focused on judiciously managing our costs, while continuing to invest in future innovative products to maintain our technology edge. Finally, I'd like to show my appreciation for our employees, partners, and customers for another great quarter of results in these unprecedented times. This concludes our prepared remarks. So with that, I'd like to turn the call over to Mel and begin the Q&A session. Operator: We will now open the call for your questions.

Thank you. Thank you. Your first question comes from the line of Rod Hall of Goldman Sachs. Your line is now open. You may ask your question.

Hi, guys, thanks for taking the question. My first question was regarding supplies and all the supply constraints. I know you said you'd been impacted by freight costs. But I'm just curious. If we look at the guidance, is there revenue that you're assuming will be impacted by shortage of supplies are difficult to getting supplies? And can you quantify the margin impact at all for us? And then I've got a follow up. Thanks.

Sure. Rod, this is Atul. Our guidance includes what we see in the supply chain constraints. So we have taken all that into account as we give you the guidance for Q3. Just a couple of comments, we saw supply chain constraints as early as last November. And we started working very proactively with the senior execs of all of our key supply chain partners who are working very closely with them. And I think you'll see improvement in chips situation in Q4, and then continuing into 2022. I think Q3 probably will remain tight. But all the conversations we have had with our partners' looks like Q4 onwards - and they are all working very proactively. So getting capacity, and making sure that things ease a little bit. On our side, what we have done proactively is we are definitely adding additional buffer inventory. We are increasing our yields on our manufacturing floors. We are adding test capacity. And as much automation as we can. So this is also a time when we are making sure our processes are running very smoothly.

Hey, Rod just to add to that all guides to Q3 is about the midpoint 3% down sequentially. And to answer your first part of the question, I would say that primarily driven from the supply constraints that we and the rest of the industry are seeing. I would say in general, we're seeing sort of prolonged industry wide supply shortages from the semiconductor side to power supply side as well. So that's impacting us. So it's certainly more of a supply issue than a demand issue. We actually entered the quarter with a very healthy backlog position about 75% and that's continued to grow as we've gone through the first month of the quarter and we've basically got pretty much almost 100% of our guide in place at this point in time. So we're definitely supply constrained. With regards to the gross margin, the midpoint of my guide was coming in at 49%, as you've noticed, that is now reflecting some of those higher input costs from higher component pricings. But we are raising prices. We communicated that to our customers. And so there'll be an offset of that. We anticipate once we work through the backlog materializing in Q4.

Okay, that's really helpful guys. I appreciate that. David just on the gross margin, do you guys have - I haven't looked at your inventory better. I guess you're unwinding more expensive inventory into COGS later. So that'll - there's still going to be a little bit of a drag on gross margins as that occurs and then as Atul said, maybe when the chip situation gets better toward the end of the year, beginning of next that starts to mitigate itself. Is that the right way to think about gross margin?

That's the right way to think about it. Yeah.

Okay, and then I - just a clarification on the products, the millimeter wave product, you guys called out, could you kind of juxtapose that with the millimeter wave stuff that we hear from carriers? I assume this is more of a proprietary millimeter wave interface. But does it have a role to play in fixed wireless access? Maybe just kind of put that into some sort of a juxtaposition with the cellular stuff that's out there. Thanks.

I think the 60 gigahertz millimeter wave or higher frequencies, they are industry standard 802.11ay. So it's all standard. We worked with Qualcomm, Facebook, all of us work together. So that's pretty standard. The 28 gigahertz but it's a band goes from I think 23 to 29. So we call it 28 gigahertz band. There we are focusing on the fixed wireless broadband and as 5G NR standards evolve, the chips will evolve they will add the right API's, so our hardware architecture is designed to evolve towards 5G NR from day one. And so it will also be standard and we will not do mobility, we are totally focused on fixed 5G. So when you compare so called millimeter wave solutions from large service providers, they will be focusing a lot more on mobility. And some of them might do fixed part as well. But we are designing our solution like a hand in the glove for simplicity, ease of deployment, ease of management from day one the way we did in the PMP 450.

Thanks Rod.

Great, thanks, guys.

Thank you.

Thank you.

Thank you. We have the next question comes from the line of Scott Searle of ROTH Capital. Your line is now open. You may ask your question.

Hey, good afternoon. Thanks for taking my questions. I appreciate all the color on the call guys. He maybe for starters, just to dig in on the supply constraint issue, again, I'm not sure if you quantified it for the second quarter in terms of the revenue opportunity that was curtailed by component availability and also, the gross margin impact in the second quarter. I was wondering as part of that as well, you can kind of talk a little bit about linearity that you saw in the second quarter and so far into the third quarter.

Yeah. This is Stephen. We didn't really - it's really tough to quite quantify. I think the way you can look at this is when you think of our guide last quarter of 85 to 90, we actually ended up achieving about 3% better than the high end of our range. I don't know if you can remember, but I was commenting last quarter that we basically had pretty much - in fact, we had all of our guide already covered in our backlog when we gave our last earnings call announcements. So I would say the kudos to our supply chain, they executed almost flawlessly and allowed us to achieve 3% better than the high end of our range. I'm sure there was a little bit of a product that we left on the table that we could have shipped, but we'll pick that up in Q3. I think it's tough to quantify.

Got you, thanks and as a follow up, wanted to dig in on the government funding opportunity when you're talking about things like RDOF and potentially the 65 billion that could come as part of the one point trillion dollar infrastructure package. I think you've talked about really that's certainly a kick in towards the end of this year. I was wondering if you could talk about how the 65 billion of that comes in and with some way should perform, how you'd expect to see it, and how big government funding driven sales could be as we look into 2022 and beyond. I know it's still early days. It's a lot of dollars floating around out there. And you have had some customers that have won RDOF funding. So I wonder if you could just kind of address how you see that as we go into 2022. Thanks.

Sure. Scott. As we said, I think on many calls. The RDOF is a long range program. I think you will - the impact on Cambium, you'll see starting probably 2022, and going all the way to 2027. So that $20 billion, I would say maybe 70% or 80% of that money would be spent in first six, seven years. So we are pretty much on that timeline. Out of top 11 winners in RDOF, six of them already have fixed wireless broadband as a key architecture. That's a very important point. Fixed wireless broadband will give bang for the buck. Ultimately, economics wins in these things. And if you look at CAF II, the last round of government funding around Connect America Fund, I would venture and say maybe 50% or 60% of that money for connectivity did go to fixed wireless broadband, again, because of economics. So we anticipate that we will pick a good chunk, and our approximate number was an on average for the six years, about 60 million a year. So you're pretty much on that. And we are very engaged with three or four key winners and showcasing our solutions. And then other solutions, which are coming from Cambium, like 60 gigahertz in the future enhancements, Wi-Fi 6E, all of those solutions will feed into that. So this is RDOF. Now there are the President Biden initiative, there are lots of local governments' initiative, those are all additional. So I think this entire drive for pervasive connectivity, and approximately 30 million households in the United States, either unconnected or they're grossly under connected. So there's a lot of focus on that affordable networking. And we are very well placed to supply some of that.

Great, thank you.

Thanks Scott.

Thanks Scott.

Thank you. We have the next question comes from the line of Simon Leopold of Raymond James. Your line is now open. You may ask your question.

Thanks for taking the question. First, I wanted to maybe talk a little bit about the product trends in the near-term. In the prepared remarks, you mentioned that you expected federal seasonality to help in September and the Point-to-Point business to rebound a bit. And overall, you're guiding to a sequential decline. So is there some aspects of the business that may be a little bit weaker. And I'm wondering, particularly Wi-Fi will face a difficult sequential comparison after a blowout quarter. Maybe just unpack a little bit of whether there's outliers among the other segments. And then I've got to follow up.

Sure. Simon. First of all, we are very supply chain constrained environment. Demand is strong across the board. But if you look at enterprise business, we are seeing very good adoption of our Wi-Fi 6. We are seeing many segments coming back like education, hospitality, outdoor Wi-Fi, very strong adoption of cnMatrix, our wireless-savvy switching products. So I think then you look at service providers, they are expanding the network, scaling the network, giving more speeds and feeds so that business is strong. Among the regions, all regions are actually seeing a good adoption, good demand. So when it comes to products and demand, we feel pretty good. Point-to-point business, because of dependency on federal is always a little lumpy. And Q3 is the strongest federal quarter. So we anticipate PTB should recover in Q3. So overall, good momentum with new products, good momentum with our strategy of multi gigabit fabric and I think as supply chain gets a little improved in Q4, and in 2022, will start matching pretty well, the demand we are seeing. Any other thing that Stephen you want to mention.

Yeah, I mean, I think PTP we're expecting to see a slight sequential growth, even in light of some of these supply constraints that Atul mentioned. I think our PTP business in general, as we've spoken about that before, it services some of the Federal business that are generally larger deals. And sometimes take takes longer to get across the finishing line. When we look at that PTP business in particular, as we go out to 2022, we feel good about how that momentum is building in that business and the growth there to support some of these federal programs are pretty robust into 2022. But as Atul mentioned, this is more about a supply dynamic than it is around demand.

Thank you for that. And just as a follow up, understanding the supply issues, I wanted to see if you could talk a little bit about the geographies where you do your manufacturing. So specifically - and my recollection is you've got exposure to Mexico and the US not as much to Asia, but I just want to double check the locations of your manufacturing, whether we've got issues in terms of lockdowns, and possibly even whether there's a competitive advantage from your geographies where you manufacture. Thank you.

Yeah. Simon very good question. We actually have a pretty diversified supply chain. And pretty much by design. So Mexico with Flextronics is one of our very key partners for our products with long range partnership. They're very pleased with how the partnership goes. And then a lot of our ODMs manufacture in China, in Shanghai, and some of the designs happens in Taiwan. And some of them are not diversifying into Southeast Asia, places like Thailand, for example. So I think, overall, we feel pretty good about the diversified supply chain. So far, that has not been an issue. They have been delivering what we are asking. And remember, we are growing this year 28% to 31% in this unprecedented climate. So that tells you how well, our supply chain team has been executing in this environment, so pretty pleased. And I think you're right, the diversified supply chain we have is a key strength of Cambium.

Great, thank you for taking the questions.

Sure.

Thanks Simon.

Thanks Simon.

Thank you. We have the next question comes from the line of George Notter of Jefferies. Your line is now open. You may ask your question.

Hi, guys, thanks very much. Obviously, a high percentage of the business goes through distribution channels. I guess I was just curious about your perspectives on channel inventory these days. I think if I recall correctly, you guys strive to have around six weeks of inventory. And in the channel is, I guess given all the supply constraints that are out there, I would imagine the number bounces around, but any update on channel inventories would be great.

Yeah. George its Stephen. Channel inventory actually, which is a good thing was up a little bit for us. We're actually been tracking around the seven weeks, and it's probably a little bit higher than that as we entered Q3, which is a good thing. And that's probably more tied to the linearity of our shipments into the channel rather than a softening in end demand. Given the supply constraints, we were that much more back end loaded with our shipments. And so the distributors received more products in the latter part of the quarter and then took a little bit more time for them to sell it through in the early part of this quarter. So yeah, we're tracking a little bit higher, but we think that's a good thing at this point.

Got it, okay. And then separately, I wanted to ask about cnMaestro X, obviously, new initiative for you guys. I think it's interesting in that you can start to monetize the software business a bit more aggressively. But where are you with cnMaestro X in terms of customer attraction and adoption?

So George, this is still I would say early stage for cnMaestro X traction. We are winning deals. We are going into customers and selling that differentiated features. As we said, our very key goal is that our software revenue, whether cnMaestro X, or is it CBRS SAS service, or is it - or the C and E type of tools we have, we plan to focus on about 10% of our revenue, say next two to three years comes from software. That's the path we are on. And we're pretty pleased to see with the customer, especially with Wi-Fi 6, and some of the new products like 60 gigahertz and 28 gigahertz coming they will all use cnMaestro X. So overall, I think work in progress. And we will update you in every quarter. But so far, it's more early customers, smaller numbers, but continuously increasing quarter-over-quarter.

Great, thank you very much.

Thank you.

Thank you.

Thanks George.

Thank you. We have the next question comes from the line of Samik Chatterjee of JP Morgan. Your line is now open. You may ask your question.

Hi, good afternoon. Thanks for taking my question. I thought I just wanted to go back to the earlier question from Rod on 28 gigahertz product and see if you can size up how you're thinking about that opportunity, particularly if you can help me through how you're thinking about the run rate of that business, what that opportunity could be in a couple of years from now. And have a follow up as well please.

Sure. So I think 28 gigahertz for Cambium is a stepping stone into fixed 5G world. And what we are seeing is good demand coming from EMEA region because a lot of service providers in EMEA region they have 28 gigahertz frequency available and they are adopting standard there. So we are seeing - early demand for the product is really coming from EMEA. After that, I would say we'll probably see CALA, or Asia, again, because of availability of spectrum. North America will be probably little later because the frequency is mostly owned by the big guys for that reason. So when we look at 28 gigahertz, this kind of completes our multi gigabit fabric story. If you look at the first 300 meters or so you have Wi-Fi 6, then you'll have one to two kilometer with meshing, you can go even more with 60 gigahertz, which provides you again multi gigabit and then 28 gigahertz comes, which gives you four to seven kilometer extension from there. So you can start to see the last 10 kilometers wirelessly multi gigabit full pervasive connectivity. That's the opportunity we see. In terms of every network is always land and expand strategy for us. It takes good six months to do POCs then after that it takes probably good one year to 18 months for first set of cities where they deploy it, they check the quality and then it expands from there for next two years. So it's a good you can say three to four, five year life cycle. So nothing will happen in one quarter. But when you look at how the multi gigabit fabric is deployed over three, four years with service providers, it's a substantial business. So this is our 450 PMP business, bringing in multi gigabit connectivity at those type of distances.

Got it and for the follow up, I know you had a strong quarter in Wi-Fi and you highlighted the improvement in some of the customer verticals there. Can you give me a sense of what the current breakdown looks like because it's a quite fragmented market relative to verticals and you're kind of how the competition looks like? So can you give me a sense of what the current exposure looks like between the primary verticals there?

Sure. Well, I won't go into the specific numbers, but I can - let me give you the little bit of color. For us the reason we are winning in Wi-Fi is the simplicity and automation. A lot of our customers are really asking for simpler networks to deploy more automation, ease of cloud management, and superior economics. I think these are the key things we have focused on in our enterprise solution. And with the Xirrus acquisition Cambium picked up a very strong multi radio architecture expertise. So our Wi-Fi 6 products have multi radio architecture, software defined radio. What does software defined radio do for customers? So they can bring Wi-Fi 5 and Wi-Fi 6 client transparently. We can segment the networks properly. So it makes it very easy for them to deploy. Those are the reasons we are winning. But lately, we are also finding that our products with cnMatrix, which is the wireless-savvy switching product, they're also more secure. We have built good security architecture in our Wi-Fi products, the switching product and all managed from cnMaestro. For those reasons we are seeing that we are able to take market share from competition. And for those reasons the segments like education, education has lot of video that needs more capacity, more performance, we are very well placed there because of Wi-Fi 6. The segments like hospitality. It has to be easy to deploy. We are finding good traction there. And then Cambium designs very superior outdoor radios, very, very superior because that's our forte. So when it comes to outdoor Wi-Fi, smart city, city wide type of deployments, we are very superior with our solution. So I think these are the reasons why we are winning, we are gaining share and we see good momentum in enterprise. Anything Stephen you want to -

Yeah. No, I was just going to say - I would just say, additionally, one of the reasons we saw a very strong Q2 is we started to see some end verticals come back online and we spoke about this last quarter. We saw shoots of it, but hospitality and retail which are sizable markets for us have really started to come back online particularly in EMEA. So that was help fueling some of that growth.

One more point I want to make I didn't mention earlier, but I think we are finding a very interesting dynamic. Wi-Fi 6 and 60 gigahertz are going like hand in a glove. And to be frank, we did not know this one year back how these two things will play. But what we're finding is many opportunities. We go in with 60 gigahertz and then we bring in Wi-Fi 6. And in many opportunities we go with Wi-Fi 6. And they say how can I backhaul this Wi-Fi 6 and definitely bring 60 gigahertz. So we are finding that this entire concept of wireless fabric, easy to deploy for this pervasive coverage, those two products have very good connection. And then as we expand to 28 gigahertz with four to seven kilometers that that really become troika for us to bring to the market.

Got it, great, very helpful. Thank you. Thanks a lot.

Thanks.

Thank you.

Thank you. We have the next question comes from the line of Erik Suppiger of JMP Securities. Your line is now open. You may ask your question.

Yeah, thanks for taking the question. In light of strength on the Wi-Fi side any comments or context you can give us about the split between service provider and enterprise.

When I look at the Wi-Fi, we are finding good traction on the enterprise side as we went through the segments, because they are upgrading, but we are also finding that the service provider side, especially the ones who are serving enterprises or who're serving in advanced customers are also adopting the Wi-Fi. I wouldn't have the - we generally don't do that split. But both sides are pulling the product. Both sides are pretty main stream for us. And as I said - Erik, as I said earlier, the additional thing we're finding is service providers are pulling 60 gigahertz first then pulling Wi-Fi 6. In enterprises, they're pulling Wi-Fi 6 first then pulling 60. That's the only kind of little change of dynamics. And another comment I'll make is that 60 gigahertz has a potential long-term to be a very good companion at Wi-Fi especially for back hauling, and both are unlicensed, both are economically very affordable. So I think the future with 60 is definitely just starting and we feel pretty good.

Then can you talk about competitive dynamics with fiber? How much of your business is competing against fiber?

Eric, the way I look at things is there are communities, there are customers who are totally fiber. And it's easy to extend the urban setting, its high density and it perfectly makes sense. Then there are situations which are more rural or more - the homes that are far apart, their wireless is a very cost effective way. And then there are situations where the fiber guys actually are coming to us. Wired guys are coming to us and saying I just want to draw a concentric circle in this community and I think wireless is a cost effective way. We have the operational systems management system, can we use Cambium. Actually we are finding lot of good traction with the wired guys. So we are at this point pretty agnostic, because we have the tools, we have the architecture, we have ease of deployment. And you will see us go in pure wireless situation, you will see a go in hybrid situation where you have fiber or wired network. And we are winning in both.

Very good. Thank you.

Thanks Erik.

Thank you. Next question, we have the line of Tim Savageaux of Northland Capital. Your line is now open. You may ask your question.

Hi, good afternoon. Thanks for squeezing me in there. First question is to follow up on 28 gigahertz. And you've given I think a metric around 30 customer requests for trials. And I think in the release talked about I assume those starting this quarter, the extent you're moving into beta. And my question is really trying to relate that to what you've been talking about on the 60 gigahertz side. I think last quarter, you talked about north of 40 proof of concepts. I wonder if there's any update on that number, or to the extent it sounds like some of those proof of concepts have moved into some further advanced stage of deployment. And where do you think those initial 34 - 28 where do you think that could go in terms of customer interest?

Sure. Thanks. Let me go into 6o first. So on 60 gigahertz we have pretty good global pool right now across the board. Since it's an unlicensed band it is a little easier for service providers to deploy. Many countries are approving it, as we said, France probably will approve in Q3. So at this point, the 60 is definitely moving forward in good adoption. In terms of POCs, POCs are definitely far north of I think probably 50. Now, and many of the POCs from last quarter have moved into deployment. We have installations now in California, for example, with north of 80, 85 access points, and 1000s of users using the multi gigabit service. Similarly, we mentioned Pentanet in Australia, which is going to be using 60 gigahertz. So I think at this point, I would say many are moving towards deployment. And many of them are starting new POCs or new betas. So overall feel pretty good about where we are with 60. And you will see it keep accelerating. I think in our in our Cambium's history 60 will end up becoming a very fast growing product. As we look at last eight years of our product designs and deployments. 28 is a licensed band. So 28 would be driven by service providers who have that license. And as I said earlier, 28 long-term will be Tier 2, Tier 1 service providers across the globe because they have the license band. So we will see - we are seeing good pull from EMEA, we are seeing some pull now from CALA. And then I think North America probably will be at the end. As I said earlier, only large service providers have 28 gigahertz. So I think overall, when you look at long-term, both of these products, they will cater to little different things. 60 will cater to like Wi-Fi unlicensed across the board deep and wide. 28 will cater to Tier 2, Tier 1 service providers across the globe who have the licensed band. And both will be part of that last 10 kilometers providing multi gigabit. So I think that's kind of the color I'll give you and every quarter we'll give you guys a good rundown in terms of the traction, number of POCs, all of that.

Great, thanks for that. And just to follow up. How would you characterize 60 gigahertz revenue contribution in your second half guide? Starting to approach materiality dollars or still pretty minimal.

Yeah, I would say - no, I would say, Tim, it's starting to be meaningful revenue. We don't give it out specifically in terms of numbers, but it's certainly starting to be meaningful revenue for us and it's in the second half. We saw as we've mentioned on previous earnings calls, a lot of POC activity. Certainly that impacted North America. And so now you're starting to see that traction really start to materialize in volume shipments and that definitely will be meaningful in the second half of this year.

Okay, thanks very much.

So I think one way to think about this is if you look at Wi-Fi in say 2000, 2003 when it was starving. Everyone knew it has a potential, but we didn't quite know how big. I think 60 gigahertz is at that stage. And I really believe that 60 and Wi-Fi will be a very good combination, so a lot of potential a lot of new applications. And I think as the last call I mentioned I don't think we will we can predict where all it will go. It'll go in lots of new applications. And we are seeing some of that already.

Okay, thanks very much.

Thanks Tim.

Thank you. We have the next question comes from the line of Chris Howe of Barrington Research. Your line is now open. You may ask your question

Hi, Atul and Stephen, good to be on the call.

Hi.

Hey, Chris.

Hey, Chris.

Hi, yeah. Most of my questions have been answered, but I do have a few remaining, kind of put them under two buckets. One is cnMaestro. You mentioned the devices under management which continued to grow. Can you talk about the growth here in the context of your guidance for the year and as we look longer term, you mentioned kind of a potential contribution as a percent of revenue? So perhaps you could talk about the impact, further adoption of the software would have on your target model as it relates to gross profit. And then my follow up is in regard to the backlog. You mentioned your tremendous executions under this supply chain environment. Can you talk about what contributed to it as far as it might have been a lack of execution by some of your peers?

Okay. Let me let me take the first one. And I'm sure Stephen will have comment on the backlog side. On the cnMaestro our strategy always was to make sure we integrate our products, the fabric products for ease of deployment, simplicity, automation. And that was step one, I think we have achieved that. Our next part of our strategy is to provide highly differentiated features, like security, like upgrading, and would bring applications which really help people run their processes, their networks in a far easier manner, and for which they're willing to pay. And cnMaestro X is moving in that direction. And as we said earlier, our goal is in next two to three years. I think from the software side, cnMaestro X is as one, but along with that we have the CBRS SAS service, and even Wi-Fi 6E will bring some of the SAS services, some of the tools we have pulled together for frequency management, like C and E, those type of things. All of them combined, our goal is that about 10% revenue say two to three years now come from that portfolio. And overall we are heading in that direction, I think it'll start small. But every quarter, we are seeing the increase. And that's the key part we are on to now. We're measuring ourselves. We are making sure that we capture that value charged for it, all of the journeys going on. In terms of the competition, how they have done in with the backlog? I won't really make any comments, but all I'll tell you is we started working on some of the supply chain things very proactively last November, because we could see what was coming. And as a result, we were able to even in this tough climate deliver I think pretty good results.

Yeah. And additionally, Chris, just to add a little bit to that, I mean, I think it's twofold. One is our customers, fearful of not getting the products and supplies. So there's a tendency at the moment with regards to backlog to place orders earlier, which certainly allows us to plan sooner. So that's been a benefit. But and I've commented on this a few times at previous earnings calls. We as a company have done a lot in preparation to be going public around channel management, and really getting our distributors on board with reporting their POS and their inventory. And that's allowed us to really look at their end demand and sort of incentivize them to place orders on us and improve in general overall visibility. It's certainly as Atul mentioned, we'd seen this to be a potential issue in terms of supply constraints earlier on last year. And we took proactive action with buffer bills and working with our suppliers on a strategic perspective to support the growth of the business. So I think we're better positioned the most, but it's certainly challenging times for everybody.

I think maybe another thing Chris, I'll add is, we have very good relationships with senior execs in many of these companies. We're working on a weekly basis, making sure they understand our needs, and also asking for their guidance realistically. So realistically, which chip, when will it improve all of that? So there's a lot of constant dialogue going on for last many, many months.

Thanks Atul. Thanks Stephen.

Thank you.

Thanks Chris.

Next question, we have the line of Jon Lopez of Vertical Group. Your line is now open. You may ask your question.

All right, thanks a lot, guys. So I'll make it quick. I know we're going long. I just had two quick, I guess clarifications. The first one, I just want to get back to the bookings in the backlog side. If I'm remembering right, I think the last two quarters, you guys have been pretty comfortably over 100% booked as of the end of the first month. I think I heard you say it's close to 100% now, which is, so elevated versus normal times, but just down a bit versus the recent history. What are the puts and takes in that metric now versus these last couple of quarters?

Yeah. And this is Stephen. We were a little bit over 100% last quarter. We are around 100% this quarter and that's after the month of the quarter, so not where we're at now that's after the first month of the quarter. I would say when we entered the quarter similar to Q2 we had about 75% of the backlog in place. So that gives you a sense that the booking activity is pretty strong. I don't think you should read anything into it whether it's slightly over a 100% or at a 100%. In general, we see booking activity broadly across pretty much most of our product lines as being strong, so I'm not sure there's much in the way of puts and takes around. In general, the demand is there and it's all about supply.

I see. Okay, that helps. Thanks. And then the second quick one just on the Wi-Fi side, just going back to that again, it was a very sizable jump. I know you guys have talked about it a couple different ways. I guess the one thing I want to make sure of is, is there anything from a channel perspective, like either new channel partners, or perhaps existing partners, they're adding those products to the line cards that influenced that increase. And really the only think I want to make sure we're all thinking through is there any volatility in the next quarter or two that we should be thinking about either digestion or a new partner stock that then has to get sell through up to a certain run rate, like any of those dynamics, you'd call out to us as we think about that line item for the next few quarters?

Yeah, I don't think there's any - this is, Stephen, I don't think there's any one time event that happened in Q2 that created maybe an abnormal quarter. I mean, certainly as I commented earlier, we're seeing some of the larger vertical come back online. So we saw some nice activity in hospitality and retail. You heard from our prepared remarks that we did franchise to more distributors. But that tends to be a very slow gradual process where they get familiarized with Cambium and the products and the training. You don't see a one time, half of them ordering a boatload of products on their shelves. So obviously, we expect that to happen over time, but it's more of a gradual process once we franchise a distributor.

Yeah, maybe one more comment I'll just add is many customers who are Xirrus customers, many years back, we acquired them about two years, two years back. I think two years, we built a lot of credibility with these customers, and some of them are large educational customers, or retail customers. And now we've shown the product. We've shipped Wi-Fi 6. They are now buying products again. So we are seeing momentum there, again, because of the roadmap and the products. And then I'll also say that as customers are transitioning from Wi-Fi 5 to Wi-Fi 6, they are open to new architectures. Now when they evaluate our software defined radio, multi radio architecture, the performance we have, we are picking share, we are beating many competitors, competitors with these superior products. So I think this is organic, what you're seeing right now. And these new channel partners they have not yet engaged in terms of buying so that could be additional later.

Understood, okay, thanks for the thoughts, guys.

Thank you.

Thank you.

Thanks Jon.

Thank you. There's no question at this time, I would like to turn the call over back to Mr. Peter Schuman, Senior Director, Investor and Industry Analyst Relations.

Thank you, Mel. During Q3 '21 Cambium Networks will be presenting and meeting virtually with investors on August 11 at the Oppenheimer Technology Internet Conference, September 1 at the Jefferies Semiconductor, IT Hardware & Communications Infrastructure Summit, and September 9 at the Deutsche Bank Technology Conference. 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.