Preliminary F4Q20 Results: Record Revenue and Above Consensus Guidance

Key Points

  • President and CEO Atul Bhatnagar indicated that Cambium’s record results reflect “the strong demand for wireless broadband connectivity and the increased need for improved networking infrastructure.” Bhatnagar went on to say that demand for infrastructure projects “remain[s] robust, driven by work[ing], learn[ing], and play[ing] from home and accelerated by government funding.”  
  • Cambium beat on both the top and bottom lines in F4Q20. Revenue was $82.8 million above consensus of $76.9 million, an 8% beat and up 29% YoY. Non-GAAP EPS of $0.38 was also above consensus of $0.27, an $0.11 beat. Non-GAAP EBITDA margin of 16.8% was a record.
  • Adjusted EBITDA guidance for F1Q21 was for $12.6-14.5 million, which is above consensus of $9.8 million. Revenue guidance of YoY growth of $81-85 million is above the previous consensus of $73.3 billion. 
  • The stock is trading at a forward PE of 39x, above its three-year average PE of 17x and near the company record of 41x. Over the last three years the stock has traded from a low of $3.91 in March 2020 due to COVID concerns to a high of $43.05 just a few days ago.
  • Read our initiation and other reports on Cambium Networks on our website, and join us for our Fireside Chat with President and CEO Atul Bhatnagar on February 25th, which is open to all.

Our Insights

While some large network vendors are seeing flat revenue, Cambium grew nearly 30% YoY in C4Q20, and guided for over 35% YoY growth in C1Q21. The stock is trading at near record PE of 39x, but the stock moved up in the aftermarket based on the report. 

The company indicated that the RDOF initiative should start to ramp for Cambium in late 2021. Also, if hospitality and higher education start pulling out of the COVID lockdowns, then it could see upside to its full-year guidance.

The biggest concern seems to be meeting the increasing demand with possible semiconductor tightness.