Earnings call transcript: Ceragon Q3 2025 misses EPS, stock rises

Ceragon Networks Ltd. reported its third-quarter 2025 financial results, showing a slight miss on earnings per share (EPS) expectations but exceeding revenue forecasts. The company posted an EPS of $0.02, falling short of the expected $0.03, marking a 33.33% negative surprise. Despite this, revenue reached $85.5 million, surpassing the forecast of $83.48 million by 2.42%. In response, Ceragon's stock price increased by 4.82% to $2.32 in pre-market trading.

Key Takeaways

• Ceragon's Q3 2025 EPS missed expectations by 33.33%.
• Revenue exceeded forecasts, showing a positive surprise of 2.42%.
• The stock price rose by 4.82% in pre-market trading.
• The company is expanding into AI-driven connectivity solutions.
• Strong cash position at $43 million, up from $35.3 million at the end of 2024.

Company Performance

Ceragon Networks demonstrated resilience in Q3 2025, with revenue reaching $85.5 million despite a 16.7% decline from the same period last year. The company's strategic focus on AI-driven connectivity and private networks is beginning to show promise, even as it navigates a challenging market environment. The North American and Indian markets remain key revenue drivers, contributing $36 million and $24.4 million, respectively.

Financial Highlights

• Revenue: $85.5 million, down 16.7% year-over-year.
• Earnings per share: $0.02, impacted by a $0.02 foreign exchange fluctuation.
• Non-GAAP Gross Margin: 35%.
• Free Cash Flow: $3.3 million.
• Cash Position: $43 million, up from $35.3 million at the end of 2024.

Earnings vs. Forecast

Ceragon's Q3 2025 EPS of $0.02 was below the forecasted $0.03, resulting in a 33.33% negative surprise. In contrast, the company exceeded revenue expectations, with actual figures coming in at $85.5 million against a forecast of $83.48 million, marking a 2.42% positive surprise. This mixed performance reflects the complex market dynamics the company is navigating.

Market Reaction

Despite the EPS miss, Ceragon's stock price increased by 4.82% to $2.32 in pre-market trading. This positive market reaction suggests investor confidence in the company's long-term strategic initiatives and its ability to capitalize on emerging opportunities in AI-driven connectivity and private networks. The stock remains within its 52-week range, with a high of $5.73 and a low of $1.82.

Outlook & Guidance

Ceragon maintains its full-year 2025 revenue guidance at $340 million and expresses optimism for growth in 2026, anticipating mid-single-digit growth. The company is focusing on expanding its capabilities in AI-driven networks and private connectivity solutions, with promising opportunities in North America, India, and other regions.

Executive Commentary

CEO Doron Arazi highlighted the structural forces reshaping communications networks globally, stating, "Our addressable market continues to grow, driven by two key challenges our customers face: network capacity and network resiliency." He also noted the increasing relevance of AI, saying, "We see that the usage of AI is becoming more imminent and more relevant, such as video analysis and automation."

Risks and Challenges

• Supply Chain Constraints: Continued challenges in component sourcing could impact production timelines.
• Market Saturation: Increasing competition in the connectivity solutions space.
• Macroeconomic Pressures: Potential impacts from global economic fluctuations, including currency exchange rates.
• Regulatory Risks: Potential impacts from geopolitical tensions and regulatory changes.
• Technological Disruption: Rapid technological advancements requiring continuous innovation.

Q&A

During the earnings call, analysts inquired about the impact of AI on network capacity, dynamics with North American tier-one customers, and potential effects of a U.S. government shutdown. Ceragon addressed opportunities in the defense and security markets, highlighting its strategic initiatives to mitigate risks and capitalize on growth opportunities.

Full transcript - Ceragon Networks Ltd (CRNT) Q3 2025:

Operator: Ladies and gentlemen, thank you for standing by. Our call will begin shortly. 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 Networks' third quarter 2025 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 either 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 would now like to hand over the call to our first speaker, Rob Fink, Head of Investor Relations. Rob, please go ahead.

Rob Fink, Head of Investor Relations, Ceragon Networks: Thank you, Operator, and good morning, everyone. Hosting today's call is 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, and the Securities Exchange Act of 1934, as amended, and the Safe Harbor Provisions of the Securities Litigation Reform Act of 1995. Ceragon intends forward-looking terminology such as may, plans, anticipates, believes, estimates, targets, expects, intends, potential, or the negative of such terms, or other comparable terminology, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on expectations that are subject to certain risks and uncertainties, which could cause actual results to differ materially.

These results and uncertainties include, but are not limited to, the company's ability to execute strategic plans, marketing and product strategies on the forecasted evolution of market developments, such as market and territory trends, future use cases, business concept, technologies, future demand, and necessary inventory levels.

The effect of geopolitical situation in Israel and the related regional conflicts, the effects of global economic trends, including rising inflation, rising interest rates, commodity prices, increases in fluctuations, commodity shortage, and the exposure to economic slowdown, risks associated with integration and deployment of acquired businesses, risks associated with delays in the transition of 5G technologies and the 5G rollout, risks relating to the concentration of Ceragon's business on a limited number of large mobile operators, and the fact that the significant weight of their ordering is important compared to the overall ordering by other customers, coupled with inconsistent order patterns that could negatively affect the company, risks resulting from volatility in revenues, margins, and working capital needs, disagreements with tax authorities, tax positions that have been taken as a result of increased tax liabilities, the high volatility in the supply chain of our customers, which from time to time lead to delivery issues and may lead to the company being unable to fill order commitments, and other risks, uncertainties, and other factors that could affect operations, as further detailed in Ceragon's most recent annual report on Form 20F, as published on March 25, 2025, as well as other documents that may subsequently be filed by Ceragon from time to time with the U.S. Securities and Exchange Commission.

Forward-looking statements relate to the date initially made, and they are not predictions of future events or results, and there can be no assurance that they will provide accurate, and Ceragon undertakes no obligations to update them. Ceragon public filings are available on the U.S. Securities and Exchange Commission's website at sec.gov and may also be obtained from Ceragon's website at ceragon.com. Also, today's call will include certain non-GAAP numbers for 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 the company's website. With that, I'll now turn the call over to Doron. Doron, the call is yours.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Morning, everyone. Ceragon delivered a solid third quarter, reflecting the resilience of our operations, strengthening demand across key markets, and continued progress against our strategic roadmap. Visibility improved meaningfully during the quarter, with greater clarity around customer spending plans and project timing. That visibility has continued to strengthen in recent weeks, giving us confidence in our outlook for the remainder of this year and, more importantly, optimism for growth in 2026. Revenue for the quarter was $85.5 million above our expectations. Non-GAAP gross margin of 35% remained high, and non-GAAP EPS was $0.02 but was negatively impacted by $0.02 foreign exchange fluctuation related to a project in India. Excluding this effect, EPS would have been approximately $0.04. Importantly, we generated free cash flow of $3.3 million, further demonstrating the strength and resilience of our business model.

From a technology and market perspective, we are increasingly benefiting from the same structural forces reshaping communications networks globally. The investment in AI is growing from data centers to 5G infrastructure, and this is driving the need for high-capacity, low-latency connectivity. This demand is cascading outward from the core to the metro and ultimately to the wireless edge. Our addressable market continues to grow, driven by two key challenges our customers face: network capacity and network resiliency. These two factors are being amplified by the growth of AI and increasingly data-intensive applications. Ceragon's capabilities, especially our E-band and innovative point-to-multipoint offerings, provide tangible solutions to address these challenges and, in our opinion, creating incremental opportunities for us and giving us durable tailwinds for future growth.

Our carrier customers need to add capacity, especially as data traffic continues to grow and as they attempt to gain market share in the fixed wireless access market. AI is also playing a major role in this increased demand, predominantly for enterprise connectivity. Ceragon's advanced E-band solutions enable operators to replace or significantly augment legacy microwave deployments to increase capacity in an efficient and cost-effective way. As we noted in a recent press release, we recently completed three proof-of-concept E-band deployments with Tier 1 operators and a leading ISP using auto-aligning antennas and E-stabilizers, demonstrating our ability to boost network capacity, extend reach beyond standard E-band solutions, accelerate deployments, and lower total cost of ownership. At the same time, operators are placing greater emphasis on network resilience. Fiber alone cannot ensure continuity.

Global operators are dealing with many fiber cuts and are looking for wireless transport to ensure flexibility and redundancy and to maximize network uptime. Finally, operators are also exploring ways to support more subscribers. This includes fixed wireless access in residential areas and enterprise connectivity solutions requiring higher bandwidth. Some operators are conducting trials involving our 60 GHz technology, which provides fiber-like capacity over short distances with fast and economical deployment. Private networks face similar capacity and resiliency challenges. The use of AI, industrial automation, and advanced video security applications all demand higher bandwidth and greater reliability. Ceragon's 60 GHz point-to-multipoint platform addresses both requirements and is increasingly being used in smart city and enterprise environments.

A notable example is the rollout of phase one of a large smart city project in Latin America, which has the potential to generate approximately $7-$8 million of recurring revenue over multiple years. Another example involves an industry-leading global e-commerce company in the U.S. that is reevaluating its video security connectivity architecture. Its existing network is expensive, bandwidth limited, and dependent on public infrastructure that cannot meet its reliability and latency requirements. Ceragon's 60 GHz solution offers a cost-efficient, rapidly deployable, and secure alternative that delivers fiber-like performance without the complexity or expense of fiber builds. We have already received an order for the initial deployment covering several dozen facilities, and successful execution could pave the way for substantial expansion across hundreds of additional sites. Increasingly, our private network achievements are end-to-end solutions.

Just recently, we were awarded as a prime contractor two projects in the U.S. that involved deployments of private 5G and Wi-Fi technologies to create comprehensive end-to-end solutions. On the managed services and digital twin front, yesterday, we announced a contract with a major Colombian mobile operator that showcases our ability to provide end-to-end managed services in multi-vendor environments using our network digital twin for predictive maintenance. This win underscores Ceragon's expanding capabilities in network reliability and integration, and our pipeline includes additional opportunities that can potentially increase our managed services business meaningfully. In general, our new innovative products and services offerings, which are driven by the convergence of our core and recently acquired capabilities, open for us many new opportunities beyond traditional backhaul. I'm also proud of our ability to generate positive cash flow even under top-line pressure. This underscores the resilience of our model and operational discipline.

Importantly, our balance sheet remains solid, enabling us the flexibility to pursue additional potential acquisitions, supported by the continued confidence and long-term relationship with our bank consortium. Turning to a regional overview, North America again led our growth, delivering record revenue and booking of orders in the quarter, including E2E. This was primarily driven by accelerating deployments of a major Tier 1 customer. Additionally, we see growing engagement across carriers, ISPs, and private networks. In India, revenue was flat compared with Q2. Importantly, visibility has increased as order flow from a major carrier whose purchasing activity had previously been paused has resumed. We are optimistic that this renewed activity with this carrier will continue and potentially accelerate once their debt issue is resolved. We also see other opportunities that can potentially drive significantly higher revenue than current levels in 2026.

For example, we are pursuing a sizable RFP from another major carrier in India, and if successful, this could provide meaningful incremental revenue in 2026. Outside North America and India, results were generally stable, and increased opportunities in EMEA and Latin America give us higher confidence for 2026, even if revenue and bookings were modestly softer for the quarter in some regions. In summary, the third quarter marked continued progress in executing our strategy with increasing opportunities in both CSPs and private networks segments. As near-term visibility has improved, we feel more confident about our $340 million revenue projection for 2025. With business volumes recovering and a mixed shift toward a more active North American market, we see continued opportunity for profitability expansion. Our financial discipline, combined with ongoing investment in our strategic initiatives, positions us to translate future top-line growth into meaningful EPS improvement as we move into 2026.

With that, I'll now turn the call over to our CFO, Ronen Stein, to review the financial results in greater detail.

Ronen Stein, Chief Financial Officer, Ceragon Networks: Thank you, Doron, and good morning, everyone. As Doron described, we delivered solid revenue in the third quarter, particularly in North America. We continue to translate incremental revenue into higher profitability and sustainable cash generation, demonstrating the earnings power of our business model. 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 third quarter results. Revenue for the third quarter was $85.5 million, down 16.7% from $102.7 million in the third quarter of 2024. North America was the strongest region in terms of revenue and contributed $36 million, including E2E. India contributed $24.4 million in Q3 2025 and was the second strongest region.

We had two customers in the third quarter that contributed at least 10% of our revenue. Gross profit in the third quarter on a non-GAAP basis was $29.9 million, which was down 15.1% from $35.2 million in Q3 2024. Our non-GAAP gross margin was 35%, up slightly from the prior year period. The gross margin strength was mainly attributable to our success in North America. Moving on to operating expenses, I'd again note that we have consolidated E2E into our results since February 2025, impacting also total operating expenses. Research and development expenses in Q3 2025 on a non-GAAP basis were $6.8 million, down from $8.6 million in Q3 2024. As a percentage of revenue, R&D expenses on a non-GAAP basis were 7.9% in the third quarter versus 8.4% in the prior year period.

Sales and marketing expenses on a non-GAAP basis in the third quarter were $12 million, up from $10.4 million in Q3 2024. As a percentage of revenue, sales and marketing expenses on a non-GAAP basis were 14.1% in the third quarter as compared to 10.1% in the third quarter of 2024, mainly due to our increased business in North America and our continuous strategic investments. General and administrative expenses on a non-GAAP basis for the third quarter were $5.8 million as compared to $0.4 million in Q3 2024. Keep in mind that our G&A last year included the impact of a $5.1 million benefit related to an initial collection from a $12 million debt settlement agreement reached with a South American customer for which we accounted a credit loss at the end of 2022.

As a percentage of revenue, G&A expenses on a non-GAAP basis were 6.8% in Q3 2025 versus 0.4% in the year-ago period. Operating income on a non-GAAP basis for the third quarter was $5.3 million versus operating income of $15.8 million in Q3 2024. The decline in operating income year over year was impacted by the absence of the $5.1 million credit loss recovery benefit, along with a reduction in gross profit as mentioned before. Financial and other expenses on a non-GAAP basis in the third quarter were $2.8 million compared to $1.2 million in the third quarter last year. As mentioned by Doron, the increase was negatively impacted mainly by a $1.5 million foreign exchange fluctuation related to a project in India. However, the quarterly average foreign exchange fluctuation impact in 2025 is currently lower than the 2024 average.

Our tax expenses on a non-GAAP basis for the third quarter were $0.7 million. Non-GAAP net income for Q3 2025 was $1.7 million or $0.02 per diluted share versus non-GAAP net income of $14.1 million or $0.16 per diluted share in Q3 2024. Without the negative impact of the foreign exchange rate, Q3 2025 non-GAAP EPS would have been $0.02 higher or $0.04 per diluted share. Moving over to our balance sheet, our cash position on September 30, 2025, was $43 million, up from $35.3 million at the end of 2024. Short-term loans were $31 million at the end of the third quarter compared to $25.2 million at the end of 2024. Thus, our net cash position was approximately net $12 million as opposed to $10.1 million on December 31, 2024, reflecting strong free cash flow in Q2 and Q3, partially offset by the acquisition of E2E.

We believe we have cash and facilities that are sufficient for our operations and working capital needs. I'd note that we generated $3.3 million in free cash flow in the third quarter. This speaks to the progress we have made in our business model. Inventory at the end of the third quarter was $58.4 million, down slightly from $59.7 million at the end of 2024. We continue to carefully monitor our inventory levels. Our trade receivables at the end of the third quarter were $111.9 million versus $149.6 million at the end of December 2024. Our DSO now stands at 112 days. Looking at our statement of cash flow, net cash flow generated by operations and investing activities in Q3 2025 was $3.3 million. I'd like to now turn the call back over to Doron to provide a summary and review our outlook. Doron.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Thanks, Ronen. I'm encouraged by the continued progress we are making strategically. The combination of our innovation and the capabilities gained through prior acquisitions has strengthened Ceragon's competitive edge. Our solutions deliver high throughput and low latency that are crucial for today's AI-driven environment demand. Our strong financials enable continued cash generation, investments in R&D and sales and marketing, and funding strategic acquisitions. We are well positioned for continued success. Turning now to our outlook. With improving visibility, we have greater confidence today in our ability to achieve our target of $340 million in full-year revenue for 2025. Importantly, our momentum is increasing, and we are looking to 2026 with even greater optimism. 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 comes from Scott Searle from Roth Capital Partners. Scott, please go ahead.

Scott Searle, Analyst, Roth Capital Partners: Hey, good morning. Thanks for taking the questions. Good afternoon. Doron, maybe to just start in initially on the outlook for the fourth quarter, you're maintaining the $340 million guidance and implies basically flat to sequentially down, but it sounds like the tone of business is improving on that front. I wonder if you could give us some expanded thoughts in terms of what you're seeing sequentially and what are the drivers. Is it still tier ones in North American private networks? Are you seeing India come back to drive that? And maybe as well, give us a quick preview of your thoughts as we enter 2026. Does 2026 look like a year where we should be getting back to growth given a lot of the drivers and vectors you're talking about?

Doron Arazi, Chief Executive Officer, Ceragon Networks: Thanks, Scott. I will start with the first question. We usually do not give specific guidance for a specific quarter, and this is why we basically gave the guidance the way we gave it. I would say it very clearly. I am very optimistic about Q4 on a standalone basis. Main drivers, as we mentioned, are the strengthening, so to speak, visibility from India and from North America. This is for the very near term. In terms of 2026, we are very much encouraged by the funnel of opportunities that we are able to build, especially during the last six to nine months. We see that all across regions, and that drives our optimism about our ability to grow in 2026.

Many of the, so to speak, use cases I found important to mention in my prepared comments are actually indicative of relatively new businesses that Ceragon has not experienced in the past. Obviously, this drives the optimism. People may question, obviously, okay, is India going to be a major factor in your growth? Yes or no? The answer to that would be we think that we can grow in India relative to the current annual run rate, but we definitely build on growth in all other regions.

Scott Searle, Analyst, Roth Capital Partners: Very helpful. If I could just to follow up, a clarification on North America and the immediate outlook and early read on 2026. It was up, I believe it's about 30% sequentially in the September quarter. Is that a comfortable and sustainable level? In your prepared remarks, you're talking a lot about AI, which is not something I've heard you refer to in the past. Obviously, it's been a derivative driver in terms of capacity utilization and data traffic in general. Are you seeing direct links then to vendors, data centers, and otherwise that are actually driving your direct business or these indirect drivers? Thank you.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Okay. First, in terms of North America, indeed, we mentioned an acceleration in the deployment coming from a tier one operator as the major driver for the increased visibility. Would that particular tier one operator continue with the same pace? We're not that sure. Still, our optimism about growth in 2026 is not just built on this operator. As we mentioned a few times in the past, we are seeing stronger engagement with other tier one operators in North America and also with ISPs and private networks. This funnel of opportunities, assuming it will turn into bookings and revenue in the pace we believe it can, will contribute to growth in 2026 in North America as well.

Now, regarding the AI, look, we've been doing a lot of thorough analysis of the markets as part of obviously looking on our strategy and trying to align it with some trends that we are seeing in the markets. What we do see is that, first of all, at enterprise level and also in areas of security, the usage of AI is becoming more imminent and more relevant, such as video analysis and automation. This is one example. Eventually, that immediately requires by far much more capacity with the ability to keep the level of latency at the minimal requirements. Just to give you an example, this opportunity that we started actually executing on in Latin America, they showed us how they use automation based on video analysis to create some, so to speak, command controls and to give automatic commands to certain functions in the city.

It's there. It's happening. We see that more in private networks/enterprise business. And eventually, it drives much higher capacity needs and obviously latency.

Scott Searle, Analyst, Roth Capital Partners: Thanks so much. I'll get back in the queue.

Operator: Our next question is from Ryan Koontz from Needham. Ryan, please go ahead.

Great. Thanks. Can you hear me now?

Yes. Thank you.

It's Ruper. I wanted to ask about your tier one ramp-up here in North America. Nice to see that. What do you think are their main drivers here? Is this mostly capacity upgrades from legacy microwave? Is it new coverage footprint for mobile? Is it fixed wireless? Any clues as to what's driving the strong uptick there from your big customer?

Doron Arazi, Chief Executive Officer, Ceragon Networks: If I need to answer a very short answer to your question, it's all of the above. What we are seeing is a constant demand for higher capacity that is either driven by the continued increasing capacity needs as part of 5G. This particular operator is also very successful in getting more and more subscription on fixed wireless access. Eventually, that creates a bigger load in terms of capacity. They are leveraging their very strong position in the market to cover some additional areas where it makes sense to them economically to build more coverage, either as part of their plans or as part of commitments that they have to the FCC.

Right. Makes sense. Are you hearing any concerns in that regard about coverage of them using satellite direct-to-device type technologies to meet some of those FCC requirements?

I think that in terms of satellite or to be more specific, LEO, our discussions with operators are just giving us, I would say, the understanding that this is another technology that helps giving a better service to the customers wherever they are, if they are in very rural areas. Obviously, it's another augmenting technology that they use. In most cases, they are partnering with the satellite companies. They don't see that as a necessary direct competition. It is the same for our technology. The wireless technology, the more traditional, so to speak, wireless technology has its place and its advantages. Therefore, I would say that LEO is just another technology to make the world more connected, and I would say evenly digitized.

Makes sense. Great. Maybe just one more if I could about what's going on with E2E, maybe an update there. Are you pleased with kind of the commercial activity on private networks and what your outlook is as you look ahead into the next into 2026?

Yeah. First of all, end-to-end is actually meeting the plans that we took into account as part of 2025 plans. I would even dare say that if not for the administration strikes in the U.S., we would probably be ahead of our plan in terms of booking. There's a lot of traction. There's a lot of sizable opportunities on the plate. Some of them are subject to some government approvals. Due to the strikes, it has been delayed. All in all, we are very satisfied with the progress of E2E. I would even dare say that we have started seeing the synergies by bringing this knowledge into the company in a way that we have some similar opportunities in other regions that we would probably not seriously participate if not for the knowledge that is being brought with the acquisition of E2E.

Got it. Great. Maybe just wanted to wrap up. Any comments on supply chain as it relates to availability of parts and costs and any new concerns that we've heard from other hardware vendors about DRAM costs ratcheting up pretty significantly, but any impact on your business?

Generally speaking, we've seen in certain areas a slight increase in components costs. The model and the strategy of Ceragon in this respect is, I would say, a constant pressure and cost reduction efforts, whether it's tactical, talking with vendors and trying to find better commercial terms, and whether it's more strategic by finding second sources and replacing certain components by other components that are cheaper. Generally speaking, we don't see this as a significant or significantly impacting our bomb cost in general, but we monitor that very closely. As to component scarcity, I don't think there is any particular issue at this point that I can describe as a trend or epidemic. As a hardware company, there's always every now and then some shortages in components that I call them tactical, and this is part of the business.

At this point, I don't see any major concern in this regard.

All right. Great. That's all I've got. Appreciate that.

Operator: Our next question is from Christian Schwab from Craig-Hallum. Christian, please go ahead.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Hi, Christian. Can you hear us?

Yeah. Hey, good morning. Sorry about the unmute button I missed. I just have one quick question. I know you don't provide specific guidance, but I'm just trying to bracket what growth and optimism for 2026 means. Should we broadly think about that as mid-single-digit growth, or do you see an opportunity for top-line growth? I'm just trying to gauge the expansion of visibility, India coming back, and what that could potentially mean to top-line estimates for 2026. Any directional clarity as broad as you can give would be great.

Yeah. Look, obviously, we are now in the midst of the annual operational planning for 2026. We are not done yet. It is difficult for me to give you something that is very concrete at this point. I must tell you that we see many scenarios. Obviously, we will eventually have to pick the one that we believe is the most probable scenario. At this point, just to be prudent, I would probably plan for mid-single-digit. I hope that we will come with something that is better once we have finalized our AOP.

Fantastic. Thank you for that color. No other questions. Thank you.

Operator: Thank you. Our next question comes from Theodore O'Neill from Hills Research. Theodore, please go ahead.

Theodore O'Neill, Analyst, Hills Research: Oh, thanks very much. Doron, on your prepared remarks, you talked about the E-band validation. And I'm wondering, what's the expectation following that validation step?

Doron Arazi, Chief Executive Officer, Ceragon Networks: I would say that with most of the cases that we have already done proof of concept, and actually, we had another few of them that I didn't mention on the call, we are now in the process of finalizing the terms, the commercial terms, and the demand. I hope to start seeing orders either in this quarter or next quarter. I'm quite optimistic about seeing more revenues coming out of these new products in 2026.

Theodore O'Neill, Analyst, Hills Research: Okay. In your prepared remarks, you also talked about network resilience where microwave takes out the risk of fiber being cut. Are there specific places or customers that are looking for that as a solution?

Doron Arazi, Chief Executive Officer, Ceragon Networks: Yeah. So that's very interesting because I had an opportunity to visit some of our customers personally. Obviously, my salespeople and region heads did the same. We see that as basically a global phenomena. We see that coming as an issue in North America. We see that coming as an issue in Asia-Pac and also in other regions. I think that eventually, it's not something that is very particular to a specific region. I would say that a solution which is basically building redundancy using wireless is one of the viable solutions that these operators are pursuing. There could be other solutions. The best, or I would say the reason why wireless transport solution is being looked at very intensely is because it's relatively cheap and it's relatively reliable. It gives an immediate solution for fiber cuts.

Theodore O'Neill, Analyst, Hills Research: Okay. And my last question. One of your competitors cited a possible 5% impact on their business if the U.S. government shutdown continues. It looks like it might pick up. It might go away, but it might come back in January. Is there a similar number that you're exposed to if the U.S. government is shut down again?

Doron Arazi, Chief Executive Officer, Ceragon Networks: Look, up until now, the impact of the U.S. government shutdown was not that significant for us. And as I kind of hinted to in some of my comments, it has actually impacted predominantly in areas of private network. At this point, I do not see a very significant impact on Ceragon if that continues for a longer term. We are obviously following very closely on the development in this respect.

Theodore O'Neill, Analyst, Hills Research: Okay. Thank you very much.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Thank you.

Operator: To ask a question, please raise your hand using your mobile or desktop application or press star 9 on your telephone keypad and wait for your name to be announced. Our next question is from Gunther Karger. Karger, please go ahead, Gunther. Gunther, please unmute.

Gunther Karger, Analyst: Can I be heard now?

Operator: Yes.

Gunther Karger, Analyst: Oh, great. Thank you. Doron, is there any comment available regarding defense, military, security type business that's applicable to Ceragon, war-wide?

Doron Arazi, Chief Executive Officer, Ceragon Networks: Yeah. Look, generally speaking, we see quite many opportunities around defense and security. Security is actually one of the areas where we put a lot of focus because we have this 60 GHz point-to-multipoint product that is very strong for security use cases, predominantly video. We are also working on opportunities that are for defense communication networks.

Gunther Karger, Analyst: Yeah. Is this comment applicable to regions or globally?

Doron Arazi, Chief Executive Officer, Ceragon Networks: Look, when I'm trying to kind of scan in my head the funnel of opportunities, I don't think that there is a particular region where I see much higher concentration. Generally speaking, it's all over the place. In terms of security, I would dare say that in some of the countries in Latin America, now that they want to improve their level of security, maybe the list of opportunities is slightly longer. Generally speaking, we see these kinds of opportunities across the globe.

Gunther Karger, Analyst: Thank you.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Sure. Thank you.

Operator: There are no further questions.

Doron Arazi, Chief Executive Officer, Ceragon Networks: Okay. Thank you, everyone. Have a good day.

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