CERAGON NETWORKS LTD

Ceragon Networks Ltd. is a leading wireless transport specialist providing high-capacity wireless connectivity solutions to global markets, primarily serving wireless (mobile) network service providers and private networks. The company generates revenue from the sale of its products and, to a lesser extent, services. A significant portion of its business, approximately 47.9% ¹ in 2025, 49.2% ² in 2024, and 44.8% ³ in 2023, is concentrated with a limited number of large mobile operators, which introduces volatility due to inconsistent ordering patterns and reliance on case-by-case purchase orders rather than long-term contracts. The company's business model is characterized by providing cost-efficient alternatives to wire-line connectivity, particularly fiber optics, for high-speed data transport in cellular networks and private networks, emphasizing rapid deployment and lower costs.

The company's product portfolio includes innovative, field-proven, high-capacity wireless transport solutions utilizing microwave and millimeter-wave radio technologies. These solutions are offered in four configurations: All-outdoor, split-mount, all-indoor, and disaggregated transport. Key product platforms include the IP-20 and IP-50, which provide a wide range of solutions for diverse networking scenarios and support ultra-high capacity. The IP-20C-HP offers up to 4 Gbps ⁴ per link for backhaul, while the IP-50E provides up to 20Gbps ⁵ for fronthaul, with the next-generation E-band IP-100E expected to reach 25Gbps ⁶. The acquired Siklu product line, including EtherHaul and MultiHaul platforms, delivers ultra-fast, cost-effective wireless connectivity in the mmWave spectrum (V-band 60GHz license-exempt and E-band 70/80GHz lightly licensed), with capacities ranging from 1Gbps to 20Gbps ⁷. Additionally, the company offers a comprehensive suite of turn-key services, including network planning, site survey, network rollout, maintenance, and optimization, complemented by proprietary software tools like "InSide Software" and "Ceragon Digital Twin."

For the fiscal year ended December 31, 2025, Ceragon reported total revenues of $338.7 million ⁸, a decrease of 14.1% ⁹ from $394.2 million ¹⁰ in 2024. Cost of revenues decreased by 12.9% ¹¹ to $224.2 million ¹² in 2025 from $257.3 million ¹³ in 2024. Gross profit for 2025 was $114.6 million ¹⁴, representing a gross margin of 33.8% ¹⁵, down from $136.9 million ¹⁶ or 34.7% ¹⁷ in 2024. Operating income was $7.1 million ¹⁸ (2.1% ¹⁹ of revenues) in 2025, a significant decrease from $38.7 million ²⁰ (9.8% ²¹ of revenues) in 2024. The company incurred a net loss of $2.1 million ²² in 2025, compared to a net income of $24.1 million ²³ in 2024, resulting in a net loss of (0.6%) ²⁴ of revenues in 2025 versus a net income of 6.1% ²⁵ in 2024. Cash and cash equivalents stood at approximately $38.4 million ²⁶ as of December 31, 2025. The company utilized $19.0 million ²⁷ of its $77 million ²⁸ credit facility for short-term loans. Total remaining contractual lease obligations were approximately $17.7 million ²⁹ as of December 31, 2025, with $4.9 million ³⁰ due in the next 12 months. Outstanding inventory purchase orders amounted to $18.2 million ³¹.

Year-over-year, revenues decreased by $55.5 million ³² in 2025. Regionally, North America revenues increased to $112.8 million ³³ in 2025 from $89.9 million ³⁴ in 2024, while India revenues decreased significantly to $116.7 million ³⁵ from $167.6 million ³⁶. EMEA revenues declined to $49.3 million ³⁷ from $65.0 million ³⁸, Latin America to $30.4 million ³⁹ from $37.2 million ⁴⁰, and APAC to $29.7 million ⁴¹ from $34.5 million ⁴². The gross margin contracted by 0.9 percentage points ⁴³ from 34.7% ⁴⁴ in 2024 to 33.8% ⁴⁵ in 2025, primarily due to the decline in revenues, partially offset by a more favorable regional mix and improved supply chain costs. Operating expenses increased as a percentage of revenues from 24.9% ⁴⁶ in 2024 to 31.7% ⁴⁷ in 2025, driven by higher sales and marketing expenses, and a significant increase in general and administrative expenses due to a change in credit loss expenses.

During 2025, Ceragon completed the acquisition by merger of E2E, a systems integration and software development company, for approximately $8.5 million ⁴⁸, with up to an additional $4.3 million ⁴⁹ subject to achieving certain financial goals primarily in 2025. This acquisition contributed to the company's revenue and expanded its offering to private networks. The company also launched its new SoC-based IP-100E platform, the 25Gbps ⁵⁰ E-band radio, in 2025, with mass production and productization planned for late 2026. Research and development efforts continued, with net expenses totaling $30.4 million ⁵¹ in 2025, representing 9.0% ⁵² of revenues. The company also initiated a restructuring of its human resources and employee structure, including establishing new R&D centers in additional countries.

Ceragon views generational transitions in wireless technology, specifically the ongoing shift from 4G to 5G and the anticipated future evolution to 6G, as primary growth engines for the foreseeable future. The company's product development roadmap is designed to introduce 5G-based products and to capitalize on emerging 6G technologies. The IP-100 platform, which includes the IP-100E 25Gbps ⁵³ E-band radio launched in 2025, is expected to significantly increase wireless transport product capabilities in terms of higher capacity and lower latency, optimized for 5G mobile market use cases. Mass production and productization of the IP-100E platform are planned for late 2026, with significant commercialization not expected before that time. The IP-100 platform is also expected to expand product coverage beyond the 4-86 GHz ⁵⁴ range to include W-band (up to 110 GHz ⁵⁵) and D-band (up to 170 GHz ⁵⁶) products.

The company is actively expanding its service and software offerings into new areas, including managed services and software-based tools and services like SaaS solutions, to support the design, implementation, operation, monitoring, and maintenance of wireless communication networks. This expansion includes proprietary software such as "Ceragon Digital Twin," which creates a virtual representation of physical networks for analysis, emulation, diagnosis, and optimization, and "Ceragon Insight," a unified network intelligence and management software suite. The acquisition of E2E in January 2025 for approximately $8.5 million ⁵⁷, with potential additional consideration of up to $4.3 million ⁵⁸, is a strategic move to further expand the company's offering to private networks, bringing capabilities in system integration and proprietary vendor-agnostic management software.

Ceragon is also expanding into new market fields, specifically the private networks market, to diversify its operations and customer base. This includes addressing the needs of oil and gas, public safety, municipalities, government, utilities, defense, and smart cities. The acquired Siklu product portfolio is widely deployed in Fixed Wireless Access applications and Smart City applications, connecting various assets. The company's Professional Services are designed for private networks, offering end-to-end support from planning and design to deployment, management, and maintenance. Investments are being made to expand system integration capabilities to support more use cases and verticals in the private networks domain.

Operationally, Ceragon is focusing on improving execution in development, manufacturing, and sales and marketing to meet demand while increasing profitability. The company has invested efforts in diversifying its manufacturers and suppliers base, including an initiative to shift certain manufacturing operations to India. Research and development expenses are intended to be maintained or slightly increased, with a focus on extensions to IP-based networking product lines and new technologies for future product concepts. The company's engineers are continuously working to redesign products to improve manufacturability, testability, and reduce costs.

Planned capital allocation includes continued capital expenditures to meet expected business growth, which were $13.6 million ⁵⁹ in 2025. The company's capital requirements are dependent on working capital needs, and resource allocation to R&D, marketing, and sales activities. Ceragon believes that current working capital, cash and cash equivalent balances, along with the Credit Facility of $117.9 million ⁶⁰ available from five financial institutions, will be sufficient for its expected requirements through at least the next 12 months.

Ceragon faces several material risks, including those related to global economic trends such as recession, rising inflation, and interest rates, which can increase operating costs and financing expenses. Geopolitical tensions, including the war situation between Iran and Israel and the conflict in Ukraine, pose risks of supply chain disruptions, increased shipping costs, and potential loss of sales in affected regions. The company's business is highly concentrated on a limited number of large mobile operators, with approximately 47.9% ⁶¹ of total revenues in 2025 attributed to three customers, making it vulnerable to order reductions or cancellations and collection risks, particularly in emerging markets like India where 34.4% ⁶² of 2025 revenues were earned. Delays in generational technology transitions (e.g., 4G to 5G, 6G) and their rollout can negatively impact future revenues and profitability. The business is also subject to significant volatility in market demand, which can lead to incurred losses and negative cash flows, as evidenced by a net loss of $2.1 million ⁶³ in 2025. Intense competition from larger generalist wireless equipment providers and emerging solutions like LEO satellite networks could lead to declining demand and pricing pressures. Cybersecurity risks are heightened by increased breaches and the integration of AI tools, which introduce data privacy, intellectual property, and operational disruption risks. The company's reliance on third-party manufacturers and single-source suppliers, along with global electronic component shortages, can disrupt timely product deliveries and increase costs. Furthermore, expanding into new service and software offerings and market fields like private networks presents distinct operational and market challenges, including longer sales cycles and uncertain market acceptance. The company is also exposed to fluctuations in currency exchange rates, particularly between the U.S. dollar and NIS, INR, Euro, NOK, NGN, and ARS, which can negatively impact financial results, with $2.0 million ⁶⁴ in losses from exchange rate fluctuations in 2025 not fully offset by hedging. Legal proceedings, such as the class action claim with an estimated maximum potential loss of approximately $1.162 million ⁶⁵, also pose financial and reputational risks.

Management's message to shareholders emphasizes a strategic focus on diversifying the customer base and revenue streams, particularly through expansion into new service and software offerings and the private networks market. They highlight the importance of capitalizing on generational technology transitions, such as the shift to 5G and the development of 6G, as key growth engines. The acquisition of E2E in January 2025 for approximately $8.5 million ⁶⁶, with potential additional consideration of up to $4.3 million ⁶⁷, is a clear strategic priority to expand the private networks offering. Another strategic priority is the development and commercialization of new products, exemplified by the launch of the SoC-based IP-100E platform in 2025, with mass production planned for late 2026. Management also stresses the ongoing commitment to research and development, aiming to maintain or slightly increase R&D expenditures to enhance existing products and develop new technologies. They acknowledge the inherent volatility in market demand and customer ordering patterns, and the challenges posed by intense competition and supply chain issues, while actively pursuing operational improvements and cost control measures to increase profitability.