Ceragon Networks Q2 2026 Earnings Report

Ceragon Networks EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.00
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Ceragon Networks Revenue Results

• Actual Revenue: $93.91 million
• Expected Revenue: $86.45 million
• Beat/Miss: Beat by +$7.47 million
• YoY Revenue Growth: N/A

Ceragon Networks Announcement Details

• Quarter: Q2 2026
• Date: 8/11/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 8:30AM ET

Ceragon Networks (NASDAQ:CRNT) is a global provider of wireless backhaul solutions, specializing in high-capacity, low-latency connectivity for mobile operators and private networks. The company designs and manufactures a portfolio of microwave and millimeter-wave equipment that serves as a fiber alternative for carrying voice, data and video traffic between cell sites and core networks. Ceragon’s solutions are engineered to support the rigorous performance requirements of modern 4G and 5G deployments, with an emphasis on scalability, reliability and efficient spectrum utilization.

The company’s product lineup includes point-to-point and multi-point radio platforms, as well as software-driven network management tools that enable operators to plan, deploy and monitor end-to-end transport networks. Ceragon also offers professional services such as network optimization, integration and ongoing technical support. These offerings are designed to help communications service providers, enterprises and government agencies accelerate the rollout of broadband services and ensure quality of service in challenging environments.

Founded in 1996 and headquartered in Tel Aviv, Israel, Ceragon Networks has built a presence in more than 130 countries across the Americas, Europe, Asia-Pacific, the Middle East and Africa. Its customer base spans tier-one mobile operators, fixed-line carriers and private network operators in industries such as public safety, transportation and energy. The company continues to invest in research and development to advance its portfolio of wireless transport solutions and address the growing demands of next-generation networks.

Ceragon Networks Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Ceragon reported Q2 revenue of $93.9 million, up 14.2% year over year, while first-half bookings and book-to-bill reached their strongest levels in a decade. Management cited particularly strong momentum in India, E-band products, and private networks.
• Positive Sentiment: India bookings reached approximately $120 million through late July, driven by 4G/5G network expansion, modernization, and fixed wireless access deployments. Management expects most of these orders to convert into revenue during 2026.
• Positive Sentiment: North American demand remains healthy, with private-network bookings reaching a record and a successful 5G FR2 proof of concept with a prospective Tier 1 carrier. Ceragon expects this new customer relationship to begin contributing meaningful revenue in 2027, while managed-services wins include contracts worth $3.4 million in Mexico and up to $70 million in APAC.
• Negative Sentiment: Component shortages, longer lead times, and higher supply-chain costs reduced Q2 non-GAAP gross margin to 32.2% from 35.2% a year earlier. The company lowered its 2026 gross-margin outlook to 33.5%–34.5% and operating-margin outlook to 5%–6%, while maintaining revenue guidance of $355 million–$385 million.
• Neutral Sentiment: Management said demand and order visibility are strong, but the timing of component availability limits its ability to convert bookings into revenue. It expects gradual margin improvement in 2027 through product redesign, cost initiatives, software sales, and potential customer price increases.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Our call will begin shortly. Ladies and gentlemen, thank you for standing by, and welcome to Ceragon's second quarter 2026 earnings call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you will need to raise your hand using your mobile or desktop application, or press star nine on your telephone keypad and wait for your name to be announced. I must advise you that this call is being recorded today. I'd now like to hand over the call to our first speaker today, Rob Fink, Head of Investor Relations. Rob, please go ahead.

[Rob Fink, Head of Investor Relations at Ceragon]

Thank you, operator, and good morning, everyone. Hosting today's call are Doron Arazi, Ceragon's Chief Executive Officer, and Ronen Stein, Chief Financial Officer. Before we start, please note that today's discussion includes forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, projected financial performance, future initiatives, business outlook, development efforts, and anticipated results, timelines, and other matters. Forward-looking statements are based on expectations and assumptions and involve risks and uncertainty that could cause actual results to differ materially.

[Rob Fink, Head of Investor Relations at Ceragon]

These risks and uncertainties include, among others, global and regional economic conditions in Israel and the region, fluctuations in exchange rate, customer concentration, ordering patterns, supply chain challenges, and others matters further detailed in Ceragon's most recent annual report on Form 20-F and other documents that are filed with the Securities and Exchange Commission. Forward-looking statements are accurate only as the date they are made, and Ceragon undertakes no obligation to update them. Ceragon's public filings are available on the Securities and Exchange Commission's website at sec.gov and on Ceragon's website at ceragon.com. Also, today's call will include certain non-GAAP measures. For a reconciliation between GAAP and non-GAAP results, please see the table attached to the press release that was issued earlier today, which is posted on the investor relations section of Ceragon's website. With that, I will now turn the call over to Doron.

[Rob Fink, Head of Investor Relations at Ceragon]

Doron, the call is yours.

[Doron Arazi, CEO at Ceragon]

Thank you, Rob, and good morning, everyone. Ceragon delivered a strong second quarter, as recently introduced technologies and solutions are creating a clear competitive advantage.

[Rob Fink, Head of Investor Relations at Ceragon]

Doron-

[Doron Arazi, CEO at Ceragon]

Driving demand in key markets with particularly strong execution in India. Revenue for the second quarter was $93.9 million, up 14% year-over-year, and non-GAAP EPS was $0.02. Booking in the second quarter reached their highest level since the first quarter of 2024. Bookings and the book-to-bill ratio in the H1 of 2026 represent the highest in the last 10 years for any H1 period. This demonstrates the strong competitive position Ceragon has established, especially in the faster-growing segments of our market. Additionally, the recent changes in the competitive landscape are opening more opportunities for us. We believe the two significant competitors are without visible technological continuity and may be observed as effectively out of the market. The third competitor's future commitment to the market is uncertain. Subsequently, customers are looking for an established technology leader, like Ceragon, to fill the gap.

[Doron Arazi, CEO at Ceragon]

Given these dynamics, we are capturing more opportunities, engaging in RFPs with potential new customers, and being asked to bid on projects involving new use cases. Driving our results were demand in India, the continued adoption of our E-band products, and private network wins as customers continue to invest in capacity, network modernization, and new connectivity applications. Our portfolio is increasingly well-aligned with those investments. At the same time, we continue to expand the ways in which we serve customers beyond our traditional wireless transport business, including end-to-end private network solutions and managed services. Customer interest and demand in our newest products and solutions is encouraging. Positive results from proof of concept projects are helping to drive this interest from both existing customers and many potentially new customers in both proven and many new use cases. I start with India, a region with continued strong demand.

[Doron Arazi, CEO at Ceragon]

As we recently announced, we have booked approximately $120 million in orders from operators in India through late July. These orders are primarily driven by two of the country's leading mobile operators and support both the expansion and modernization of nationwide 4G and 5G transport networks. Fixed wireless access remains an important driver for this activity. As operators expand broadband coverage and address rapidly increasing data consumption, they require higher capacity transport that can be deployed quickly and economically. Our new IP-50CX platform and multi-band solution are winning this business for us, as they are well-suited to the requirements of the Indian market. In general, demand for our innovative E-band wide portfolio is very strong. This is consistent with the trend we discussed last quarter, as customers increasingly recognize E-band as an attractive way to deliver fiber-like capacity while accelerating deployment and lowering total cost of ownership.

[Doron Arazi, CEO at Ceragon]

Given the exceptionally strong bookings in India during the H1, and based on our visibility for the remainder of the year, 2026 has the potential to be one of the strongest bookings years in India in quite some time. Turning to North America, this market also remains strong and active for Ceragon. Revenue from our existing key Tier 1 carrier customer was slightly higher than what we had anticipated during the quarter. We overcame some of the supply chain timing issues we discussed on our last call, but some of their revenue has shifted from the second quarter to the third quarter as expected. More importantly, the underlying demand environment with this customer remains healthy.

[Doron Arazi, CEO at Ceragon]

Across North America more broadly, engagement is strong from both CSPs and ISPs around many of the themes we have discussed previously, including higher capacity network architectures, even for fiber redundancy, even as the new microwave and next generation wireless transport solutions that can provide additional capacity with attractive deployment economics. These are areas where we believe Ceragon's technology and expanding product portfolio position us very well. We were successful in our proof of concept field trials with our 5G FR2 solution for a new Tier 1 carrier in North America, and now we are in commercialization discussions with this potential new customer. We also recognize the increased interest in LEO connectivity technology, which has grown even further following the IPO of SpaceX. We believe that such satellite-based technologies are very important for global connectivity and the digitization trend.

[Doron Arazi, CEO at Ceragon]

However, we view these technologies as complementary to terrestrial technology, not as a substitute. We believe wireless backhaul such as what Ceragon provides, will remain the dominant solution for high capacity connectivity. Anecdotally, we would also remind investors of the recent announcement by SpaceX highlighting its intent to build a terrestrial network in the U.S. If this happens, it may become another opportunity for us. Private network business in North America was particularly encouraging with record bookings. In general, private network opportunities are accelerating globally, and our recently introduced capabilities are aligned with the needs of this market segment. The recently announced deals are evidence of our ability to serve various use cases within private networks. We are encouraged that our continued investment in this segment is bearing fruit. What is particularly encouraging is the diversity of these opportunities.

[Doron Arazi, CEO at Ceragon]

We are increasingly competing for broader end-to-end projects that combine advanced wireless transport with technologies like private 5G and LTE, enabling IoT connectivity, automation, and other mission-critical applications. These opportunities are reflective of industry estimates that predict private network growth will exceed 30% CAGR over the next four years. We believe we are well-positioned for significant growth in this segment, despite inherently longer sales cycle when compared to our traditional carrier business. Growth is not expected to be in a straight line, but our pipeline is expanding, the range of use cases is broadening, and we are seeing greater conversion of opportunities into bookings. We believe this can become an increasingly meaningful contributor to Ceragon over time. Our momentum also extends beyond the business and geographies that drove the majority of second quarter revenue.

[Doron Arazi, CEO at Ceragon]

In managed services, we recently secured a two-year, $3.4 million contract with a major mobile operator in Mexico. This is an important win because it demonstrates the opportunity to expand Ceragon's relationship with customers beyond equipment and into broader long-term or long-duration service engagements. Managed and professional services remain an important part of our strategy to increase the value we provide to customers, while building a more diversified revenue base. We also recently secured an additional five-year agreement worth up to $70 million with a Tier 1 mobile operator in APAC. We believe the duration and scale of this engagement validate our ability to build long-term strategic relationships with major operators and expand our role as their networks evolve. In EMEA, we have begun to see the payoff from our recent leadership changes and investments.

[Doron Arazi, CEO at Ceragon]

Bookings in the second quarter in this region were the highest in almost three years, and we continue to pursue new opportunities that could help us continue this momentum. In Latin America and the remainder of APAC, I already mentioned the notable success from a recently announced new managed services deal and the renewal of a five-year contract with a Tier 1 operator, respectively. In general, we continue to take a selective approach in these regions. When I step back and look at the H1 of 2026, I am pleased by the breadth of the momentum across Ceragon. India is performing exceptionally well. North America remains a strong market for our traditional carrier business, while private networks continue to gain traction. We are establishing larger and longer duration managed services relationships, and we see emerging opportunities in EMEA as the competitive landscape evolves.

[Doron Arazi, CEO at Ceragon]

Together, these developments reinforce our view that the underlying demand environment for Ceragon solutions remains strong. At the same time, as discussed last quarter, the supply chain environment continues to be challenging from both cost and lead times. These trends are not unique to Ceragon, as our observations are consistent with commentary across the broader telecom and technology industries. However, we continue to implement mitigation initiatives across procurement, product design, and our supply chain to minimize the impact on our business conversion, revenue, and profitability. The strong bookings in the H1 of 2026 and increasing interest from existing and new customers in both the CSP and ISP domain, as well as private networks, are strong signals for our superior technology and solutions.

[Doron Arazi, CEO at Ceragon]

With our new CTO on board and our internal plans for introducing new technologies and products in the mid to long term, our confidence in Ceragon's long-term success is only increasing. With that, I will turn the call over to Ronen to review our financial results in greater detail.

[Ronen Stein, CFO at Ceragon]

Thank you, Doron, and good morning, everyone. Q2 2026 was another profitable quarter on a non-GAAP basis, with positive free cash flow generated by operating and investing activities. To help you understand the results, I will be referring primarily to non-GAAP financials. For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures, we refer investors to today's press release. Let me now review the second quarter results. Revenues for the second quarter were $93.9 million, up 14.2% from $82.3 million in Q2 2025. Our strongest regions in terms of revenue for the quarter were India and North America at $45 million and $21 million respectively. We had two customers in the second quarter that contributed more than 10% of our revenues. Gross profit for the second quarter on a non-GAAP basis was $30.3 million, an increase of 4.4% compared to $29 million in Q2 2025.

[Ronen Stein, CFO at Ceragon]

Our non-GAAP gross margin was 32.2% compared to 35.2% in Q2 2025. Gross margin was negatively impacted by geographical and product mixtures along with some cost pressures, as mentioned previously by Doron. Given the magnitude and breadth of the cost pressures, we do not currently expect our mitigation initiatives to appreciably offset the pressure in the near term. As a result, we anticipate that these component costs and supply chain challenges will continue to pressure gross margins over the remainder of 2026. As another mitigation plan for our current challenges, we are also focusing on increased software sales. Turning to operating expenses. Research and development expenses for the second quarter on a non-GAAP basis were $8.2 million, up from $7.2 million in Q2 2025. As a percentage of revenue on non-GAAP, R&D expenses were 8.7% in the second quarter as compared to 8.8% in the second quarter last year.

[Ronen Stein, CFO at Ceragon]

Sales and marketing expenses for the second quarter on a non-GAAP basis were $12.3 million, up from $11.1 million in Q2 2025. As a percentage of revenue, sales and marketing expenses on a non-GAAP basis were 13.1% in the second quarter, compared to 13.5% in the second quarter last year. General and administrative expenses for the second quarter on a non-GAAP basis were $5.7 million, compared to $5.9 million in Q2 2025. As a percentage of revenues, non-GAAP G&A expenses were 6.1% in the second quarter, compared to 7.2% in the second quarter last year. Operating income for the second quarter on a non-GAAP basis was $4 million, compared to $4.7 million for Q2 2025. As a percentage of revenues, non-GAAP operating income was 4.2% in the second quarter, compared to 5.7% in the second quarter last year.

[Ronen Stein, CFO at Ceragon]

As a reminder, operating income was also negatively impacted versus 2025 due to adverse foreign currency movement in the Israeli shekel. Financial and other expenses for the second quarter on a non-GAAP basis were $1.6 million, compared to $1.7 million in the second quarter last year. Foreign exchange conditions stabilized during the quarter. Our tax expenses for the second quarter on a non-GAAP basis were $0.7 million. Net income for the second quarter on a non-GAAP basis was $1.7 million or $0.02 per diluted share, compared to $2.5 million or $0.03 per diluted share for Q2 2025. As for our balance sheet, our cash position at the end of the second quarter was $34.8 million, compared to $38.4 million at the end of 2025. Short-term loans at the end of Q2 2026 were $12 million compared to $19 million at the end of 2025.

[Ronen Stein, CFO at Ceragon]

Thus, at the end of the second quarter, we had a net positive cash position of approximately $22.8 million, compared to a net cash position of approximately $19.4 million at the end of 2025. We believe we have cash and facilities that are sufficient for our operations and working capital needs. Our inventory at the end of the second quarter was $59.5 million, down from $61.6 million at the end of 2025. Our trade receivables at the end of the second quarter were $101.3 million, up from $99.7 million at the end of 2025. Our DSO now stands at 107 days. With respect to our cash flow, net cash generated by operations and investing activities was $0.3 million in the second quarter, compared to approximately $5.6 million in Q2 2025.

[Ronen Stein, CFO at Ceragon]

Net cash provided by operating activities was $5.1 million, while net cash used in investing activities was $4.8 million, compared to $10.8 million and $5.1 million respectively in Q2 2025. Turning to our 2026 guidance. We reiterate our 2026 revenue guidance of $355 million-$385 million. Given the underlying business strength and the anticipated cost challenges in the H2 of 2026, we now expect our full year 2026 gross margin to be between 33.5%-34.5%, versus 35.5% previously, and operating margin to be between 5%-6%, versus 6.5%-7.5% previously, both at the midpoint of our provided revenue range for 2026. The reduction in non-GAAP gross margin reflects our current view of the full year impact of the anticipated cost pressures. That concludes my prepared remarks, and I'd like to now turn the call back over to Doron for any remaining comments. Doron?

[Doron Arazi, CEO at Ceragon]

Thanks, Ronen. There will always be moving pieces in our business from quarter-to-quarter, and today those include components costs, supply availability, and geographic mix. But the underlying fundamentals that matter most to our long-term outlook remain encouraging. Demand for our technology and solutions is increasing, our addressable market is expanding, and we are converting more of these opportunities into meaningful bookings and long-term customer relationships. With that, I'll now open the call for questions.

[Operator]

To ask a question, please raise your hand using your mobile or desktop application, or press star nine on your telephone keypad and wait for your name to be announced. Our first question will be from Scott Searle from ROTH Capital. Scott, please go ahead. Please go ahead. Scott, are you able to unmute? We will move to Ryan Koontz from Needham. Ryan-

[Scott Searle, Analyst at ROTH Capital]

Oh, she is?

[Operator]

Oh, sorry. Okay, go ahead, Scott.

[Scott Searle, Analyst at ROTH Capital]

Oh, my apologies. Hey. Yeah, thanks. Good morning, good afternoon. Thanks for taking the questions. I apologize for my confusion there. Hey, Doron, just maybe to dive in, I am not sure if I heard a book-to-bill number, but I would be curious if you had it. Given the reiterated guidance for 2026, given the performance in the second quarter, at the lower end, it would imply sort of flattish the H2 versus the H1, given the strength that you are seeing in India, given the bookings that you are seeing in India, and it sounds like even the recovering strength, in the third quarter for North America would imply a number higher than, I think, flattish versus the H1.

[Scott Searle, Analyst at ROTH Capital]

I am kind of wondering what your thought process is there and the swing factors that get you from the low end of the range to the high end of the range?

[Doron Arazi, CEO at Ceragon]

Yeah. Thank you for this question, Scott. The issue is not the demand. The issue is not the visibility. The issue is the disruption in the supply chain, and timeline of getting components. Let's not forget, the AI explosion has created the perfect storm in the domain of chips and active components for many industries. While timeline for delivery of these components are lingering, and the level of confidence in meeting timelines is also being kind of reduced a little bit, we prefer to take the approach in which we keep these revenue guidance within this frame, because this is the main, so to speak, visibility problem that we have. To summarize, it's not about the demand. It's about the ability to get the components in time, to deliver, and to convert these great orders into revenue.

[Scott Searle, Analyst at ROTH Capital]

Very helpful. If I could follow up, as my follow-up question, just specifically in North America was a little weaker this quarter. It sounds like your Tier 1 slipped shipments from the second quarter into the third quarter. But I'm wondering on the private networks front, how did that progress sequentially from March to June? It sounds like you've got a good backlog of business, so the visibility from North America may be into the H2 of the year. Since you touched on it, Starlink, I'm wondering if you're actually seeing any opportunities created from there, if there are any discussions ongoing on that front, or if at this point it's basically just kind of speculating if they start to build out a terrestrial network. Thanks.

[Doron Arazi, CEO at Ceragon]

Thanks. I'll start with the second question. Look, we probably all heard the same messages coming on the conference calls they had a while ago. They did not indicate anything that is more specific, such as what is the architecture, or more details about the architecture of this new terrestrial network, and so on and so forth. So I think that it's still early to assess how this is going to play out. But if I'm trying to kind of get the messages from that call, they would definitely want to build a network that can be built very fast, and at the same token can be quite competitive to the existing legacy networks. In such case, especially when they will start aggregating much more data in their existing antennas, the backhaul will become a very important element in the architecture.

[Doron Arazi, CEO at Ceragon]

I don't think that at this point, their technology can carry such amount of data. I'm not sure that it will be able to carry such amount of data even in the long term, but that's something that we can leave out. Based on all these assumptions, I think that there can be an opportunity for players in the millimeter-wave and microwave domain to help them build their network very fast with a level of service that can compete with the incumbents. Now to your first question. Look, North America looks good. We anticipated that the second part and predominantly Q3, will look better for us because of all the reasons that we described already in the call of the first quarter results.

[Doron Arazi, CEO at Ceragon]

Basically, we are a bit positively surprised in Q2, but the general trajectory is what we discussed already, which indicates that we believe that the H2 will be much better. With regard to private networks, yes, the business is growing and is growing nicely. I just want to remind you that the conversion of private network projects into revenue is much slower than just sending our equipment to a Tier 1 operator and recognizing it within the same quarter. I do not think that the impact of the strength, in terms of booking and backlog of private networks, will be that significant in the short term. But all in all, the bottom line for North America is positive. We believe that the second part of the year could be stronger than the first one.

[Scott Searle, Analyst at ROTH Capital]

Thanks so much. I will get back in the queue.

[Operator]

Our next question is from Ryan Koontz from Needham. Ryan, please go ahead. Ryan, please go ahead. Okay. We will take the next question.

[Ryan Koontz, Analyst at Needham]

Can you hear me?

[Operator]

Oh, yes. We can.

[Ryan Koontz, Analyst at Needham]

Oh, great. Sorry about that. Super. With regards to India, what are you seeing there in terms of changes in mix and the use case? It's great to hear the strength coming from India. Is this mostly for rural coverage? Are you looking at FWA in urban areas at all? Or what kind of use cases are you seeing in India that are giving you the confidence and the bookings here, and how's that affecting your product mix?

[Doron Arazi, CEO at Ceragon]

Yeah, so I think that the business in India is driven by two main, so to speak, phenomena. One, there's still operators who have not completed the upgrade of the network even to 4G. This is one part of the business strength. The other part, and that's for the more advanced operators. In the 5G era, the operators in India are looking to expand the business, predominantly bringing connectivity to residential areas and to enterprise, which means more fixed wireless access use cases. There, you're talking about much higher capacity that is needed for the backhaul, and in those cases, they are using either our IP-50CX product or multi-band that can ensure minimum level of connectivity with much bigger capacity on average. These are the two main phenomena that are driving the demand.

[Ryan Koontz, Analyst at Needham]

Great. That's helpful. Then maybe on the U.S. side, sounds like your new Tier 1 you're trying to ramp with, you're really just working through the operational processes and maybe commercial processes and you think you have a still a good shot of seeing some share gains in 2027 there?

[Doron Arazi, CEO at Ceragon]

Yeah, I would say that this strengthening relationship with this new Tier 1 operator will start driving a meaningful revenue for us in 2027. I do believe that we, and I think I also mentioned that in the previous call, I do believe that we will start getting the orders quite soon, maybe even in Q3. But in terms of impact on revenue, it is going to become meaningful in 2027.

[Ryan Koontz, Analyst at Needham]

Great. That is helpful. Then maybe lastly on the LEO impacts, it is interesting, I hear what you are saying on Starlink. If they build, this would give them time to market to get to the microwave for the density in more urban areas. I assume the other LEOs, namely AST SpaceMobile and their collaboration with the U.S. incumbent mobile operators, at this point, you are not seeing any slowdown in the rural build in terms of their thoughts around the 2027 and beyond?

[Doron Arazi, CEO at Ceragon]

We do not see any slowdown. I need to kind of reiterate the main, so to speak, observation, given what we know. I do not know what I do not know, but based on all the public announcements, including some announcements and discussions about the technology and the current capabilities, the fundamental limitation is area spectral efficiency, which means bits per square kilometer. In this respect, if you need very high capacity, at this point at least, the LEO is not a great solution. The LEO is an amazing solution for increasing coverage, predominantly for mobility, because you know that once you start getting into homes and so on and so forth, the signal cannot go through walls and this kind of stuff.

[Doron Arazi, CEO at Ceragon]

The way I see the world is that this is a great collaboration between the opcos and the LEO players to basically improve the level of service for the opcos and reach out to these very rural areas where they do not have coverage and it does not make sense for the opcos to invest in more, so to speak, fundamental technology. That is the reason why we see this collaboration. It is about coverage, it is not about capacity.

[Ryan Koontz, Analyst at Needham]

That's very helpful. Thanks so much. That's all I've got.

[Operator]

Our next question is from Tyler Burmeister from Lake Street Capital Markets. Tyler, please go ahead.

[Tyler Burmeister, Analyst at Lake Street Capital Markets]

Thanks. You guys hear me all right?

[Operator]

Yes.

[Tyler Burmeister, Analyst at Lake Street Capital Markets]

All right. Maybe first, I was wondering if you could give us any idea how much of the $120 million bookings year-to-date in India would you expect to convert to revenue this year? It sounds like the H2 gross margin impact is largely all component supply chain-related, but I'm just wondering, is there any potential impact as well from just a stronger mix in India than maybe you're expecting at least earlier this year?

[Ronen Stein, CFO at Ceragon]

Good morning. The $120 million is expected mostly to be converted this year, or fully all, but mostly this year. This is the expectation. Some of it was already converted. I remind that the $120 million is bookings over this year-to-date till end of July, when it was announced.

[Doron Arazi, CEO at Ceragon]

I would just add to Ronen's point in terms of your question about gross margin, how should we think about gross margin. Let's not forget, when we take my previous comment, when I'm expecting, obviously subject to the supply chain challenges, that North America revenue will be stronger in the second part of the year as opposed to the first part. With the fact that India continues to be strong, we see the contribution of North America helping us to improve the gross margin. But the bottom line is that Ronen has actually indicated how the gross margin for the year is going to look like in his comments, and that's basically based on a better mix between North America and India for the second part of the year.

[Doron Arazi, CEO at Ceragon]

I think that all in all, with the prepared comments, you can anticipate the gross margins on the second part of the year.

[Tyler Burmeister, Analyst at Lake Street Capital Markets]

Great. Appreciate that. Then maybe just a follow-up there on the gross margin side of it. With your updated supply chain timelines, component timelines, do we expect to see any directional rebound in gross margin into Q4? Do you expect some of these challenges to persist into 2027? Any update on a timeline for improvement from some of these component challenges would be great. Thanks.

[Ronen Stein, CFO at Ceragon]

I cannot guide on a quarterly basis, but the H2, as Doron just mentioned and completed my prepared remarks, this is supposed to be already covered. The costs, we don't see in 2026, in the H2, much improvements on the cost side. On the mixture side, both regional end product, and trying to sell more software, as I commented in my prepared remarks, we expect the margins to streamline on the annual basis, as I just mentioned.

[Ronen Stein, CFO at Ceragon]

For the next year, we continue to have, and for the future, we continue to have more initiatives that will just take a small time, both on cost initiatives as well as the fact that once agreements with customers will get renewed or something like that, we will continue to push for higher prices because this has already been discussed, not only on our part, but also other players in the market. I think that everybody understands that current prices cannot continue if costs continue to go up.

[Doron Arazi, CEO at Ceragon]

Just as a general comment, I think that we're truly in a perfect storm, and this situation is not sustainable for a very long time. Because of that, we believe that we'll start seeing gradual improvement in 2027. As Ronen Stein hinted, it may come from different angles. Starting with building a more efficient product in terms of BOM cost and redesign, and some of the comments that we already mentioned in this regard in our prepared comments, but also from the angle of price increase. It's a full industry issue, and while today we may have some sort of contracts that we are honoring, obviously many of the contracts and some of the orders are always, or almost always, being opened up on an annual basis.

[Doron Arazi, CEO at Ceragon]

That will also give us another opportunity to also discuss pricing with our customers, so we are not absorbing everything within our industry.

[Tyler Burmeister, Analyst at Lake Street Capital Markets]

Appreciate that. All right. That is all from me, guys. Thanks.

[Operator]

Okay, our next question is from Ben Taxdahl from Craig-Hallum. Ben, please go ahead.

[Ben Taxdahl, Analyst at Craig-Hallum]

Hey, can you guys hear me?

[Operator]

Yes, please go ahead.

[Ben Taxdahl, Analyst at Craig-Hallum]

Perfect. I am on for Christian Schwab here. A lot of my question has been answered. I am just wondering, maybe a little bit more broadly, how does this demand environment shape up to ones in years past? Then maybe if you could tie in there, what is your initial thoughts on 2027? I know maybe you cannot give a number, but can you tie that all together? That would be very helpful.

[Doron Arazi, CEO at Ceragon]

I would say the following, without giving any sort of specific guidance to 2027 and beyond, we continue to assume in our analysis that a single high digit growth in revenue is a reasonable assumption. Obviously, if we will be able to accelerate the execution of our new strategy with regard to private networks, it can become, so to speak, a driver for even a higher growth. On the legacy business of the CSP, ISP, all these public networks, our assumption is that on the one hand, we have new opportunities because of the competition environment that is, generally speaking, diluted and making our life, in terms of attaining new customers, easier. If that becomes even bigger for us, it can also outpace the low single digit growth that is expected for this piece of the business.

[Doron Arazi, CEO at Ceragon]

All in all, when I look at our strategy, we are doing two things. First of all, we are increasing our TAM beyond just selling point-to-point product to either private networks or public networks. That by itself is increasing our TAM, and since we are directing our business towards private networks end-to-end, which is expected to grow in a relatively high pace, we feel that at this point, without doing a very in-depth analysis, a high single digit growth for this to come is prudent and makes sense.

[Ben Taxdahl, Analyst at Craig-Hallum]

Perfect. That is all I got. I appreciate it.

[Operator]

Okay, our next question is from Theodore O'Neill from Litchfield Hills Research. Theodore, please go ahead.

[Theodore O'Neill, Analyst at Litchfield Hills Research]

Yes. Hi. Congratulations on the quarter. I wanted to circle back on SpaceX's discussion about what they would do with their terrestrial network. Elon Musk is talking about earlier this month, I guess last week, that you're talking about trying to create a terrestrial network that would run on the acquired EchoStar frequencies, and which would be, I think, completely different frequency than what the major carriers are using now. Is that something you could participate in if they decided to go that way, or is it strictly just the microwave backhaul part that you would be addressing?

[Doron Arazi, CEO at Ceragon]

We are addressing predominantly the backhaul or the transport part of any network, which is our main competency. In this respect, assuming they will use this spectrum in a very good way, the question I'm asking myself, and I think many others, are, okay, that's great, and what's going to happen in the aggregation points after you are able to serve more subscription? How do you going to manage your network architecture starting from the aggregation point? For that, I don't think they gave information, or at least I was not exposed to such information about the architecture, and this is my main focus in my comments. I believe that if they want to move fast, one of the challenges will be, okay, I got much more subscription. I got much more customers to serve. I actually got much more traffic in the access.

[Doron Arazi, CEO at Ceragon]

How do I plan the transport part so that my network can be as efficient and as good as the, I would say, legacy terrestrial ones?

[Theodore O'Neill, Analyst at Litchfield Hills Research]

Okay. Thank you very much, Doron.

[Doron Arazi, CEO at Ceragon]

Sure.

[Operator]

Great. There are no further questions, so that concludes today's call. Thank you for your participation. You may now disconnect.

Participants

Analysts

• Rob Fink, Head of Investor Relations at Ceragon
• Doron Arazi, CEO at Ceragon
• Ronen Stein, CFO at Ceragon
• Scott Searle, Analyst at ROTH Capital
• Ryan Koontz, Analyst at Needham
• Tyler Burmeister, Analyst at Lake Street Capital Markets
• Ben Taxdahl, Analyst at Craig-Hallum
• Theodore O'Neill, Analyst at Litchfield Hills Research