Cambium Networks is making an initial public offering of its stock, paying down debt and continuing its focus on providing economical wireless network equipment to mid-size network operators around the world.
The company, based in the Chicago, Illinois area, will trade under the symbol CMBM. Shares are being offered for $12 per share, and the company expects to raise nearly $66 million, according to its prospectus filed with the Securities and Exchange Commission. That prospectus reported that Cambium recorded $242 million in 2018 revenues, a 17% year-over-year increase. The company reported that it works with 10,000+ network operators around the world, with about 70% of its revenues coming from existing customers.
Cambium Networks CEO Atul Bhatnagar told RCR Wireless News that the IPO reflects both Cambium being a solidly performing company and the opportunities ahead of it.
As the company has gone through the process of preparing and executing the IPO, he said, “you make sure that for long-term viability, you have the right cost structure, and … you focus on what creates customer delight, what kind of road maps are necessary for long-term solutions, and meeting emerging customer needs. … All those things make you stronger as a company.”
Bhatnagar said that some new opportunities are also presenting themselves for Cambium to take advantage of: the Citizens Broadband Radio Service shared spectrum, and the global move to higher frequencies. The company’s cloud-based management and ability to provide a bird’s-eye view of the network from a single pane of glass, as well as its products’ ease of deployment and scalability allow its customers to focus on their businesses rather than the complexity of the technology that they are deploying, Bhatnagar said. He also noted that Cambium is already using “5G-like technology” such as massive multi-user MIMO.
“We are adopting 5G-like technology proactively,” he said.
The mid-tier network providers which are Cambium’s customers (often in rural, remote or hard-to-reach areas, or in or near small or mid-sized cities) are part of a growing segment, he added. “They are definitely adopting new technology. They also value very good economics,” he said.
Cambium’s prospectus said that its products “are typically deployed by medium-sized service providers, such as wireless Internet service provider networks serving from 5,000 to over 200,000 subscribers, enterprise networks and sensor-heavy industrial networks. We estimate that medium-sized Internet service providers contributed approximately half of our revenues in 2016, 2017 and 2018.”
The company said that it has had rapid revenue growth in the past several years and has shipped more than 4.5 million devices since 2012 — including more than 1 million in 2018.
For 2016, 2017, and 2018, the company’s revenues were $181.4 million, $216.7 million, and $241.8 million, respectively. Meanwhile, its network income was $2.9 million in 2016; $9.8 million in 2017, and a net loss of $1.5 million in 2018.
Cambium provides point-to-point solutions that typically are used for high-speed, high-bandwidth backhaul, and point-to-multi-point access points which are typically deployed to supply wireless broadband, serving a range of 10 to 30 kilometers.
The company added that its PMP solutions are “increasingly used to backhaul video surveillance systems,” while its Wi-Fi solutions are being used in enterprise indoor and large public venues. The company said that while the PTP and PMP solutions make up most of its revenues, it entered the Wi-Fi market in 2016 and that is now a “meaningful portion” of its revenues. In 2018, it expanded into the Ethernet switching market, although the prospectus said that it does not yet have material sales in that segment. In 2017, meanwhile, the company introduced an industrial IoT-specific product line, and “while [that] market remains at an early stage of development, we believe this market presents a significant commercial opportunity.”
Cambium’s existing majority stakeholder is Vector Cambium Networks, part of Wales-based private equity firm Vector Capital. Cambium said that as part of the offering, it will pay slightly more than $30 million in debt as well as $5.6 million to Vector Capital for management fees. The rest of the IPO proceeds will be used for working capital and general corporate purposes; the company also indicated that opportunities for acquisitions or investments in complementary technologies may happen, although it doesn’t have any existing agreements or commitments on that front.
