Cambium Networks Corporation (NASDAQ:CMBM) Q3 2022 Earnings Conference Call November 3, 2022 4:30 PM ET
Company Participants
Peter Schuman – Vice President of Investor and Industry Analyst Relations
Atul Bhatnagar – President and Chief Executive Officer
Andrew Bronstein – Chief Financial Officer
Conference Call Participants
Scott Searle – ROTH Capital Partners
Paul Essi – William K. Woodruff
Operator
Good afternoon. My name is Sean, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Cambium Networks’ Second (sic) [Third] Quarter 2022 Financial Results Conference Call. [Operator Instructions] Thank you.
Mr. Peter Schuman, Vice President, Investor and Industry Analyst Relations, you may begin your conference.
Peter Schuman
Thank you, Sean. Welcome, and thank you for joining us today for Cambium Networks third quarter 2022 financial results conference call and welcome to all those joining by webcast. Atul Bhatnagar, our President and CEO; and Andrew Bronstein, our CFO, are here for today’s call. The financial results press release and CFO commentary referenced on this call are accessible on the investor page of our website and the press release has been submitted on a Form 8-K with the SEC. A copy of today’s prepared remarks will also be available on our investor page at the conclusion of this call.
As a reminder, today’s remarks, including those made during Q&A, will contain forward-looking statements about the company’s outlook and expected performance. These statements are based on current expectations, forecasts, and assumptions. Risks and uncertainties could cause actual results to differ materially. Except as required by law, Cambium Networks does not undertake any obligation to update or revise any forward-looking statements for any reason after the date of this presentation, whether as a result of new information, future developments, to conform these statements to actual results or to make changes in Cambium’s expectations or otherwise. It is Cambium Networks policy to not reiterate our financial outlook. We encourage listeners to review the full list of risk factors included in the safe harbor statement in today’s financial results press release.
We will also reference both GAAP and non-GAAP financial measures and specifically note that all sequential and year-over-year comparisons reference non-GAAP numbers except where otherwise noted. A reconciliation of non-GAAP measures to GAAP is included in the appendix to today’s financial results press release which can be found on the investor page of our website and in today’s press release announcing our results.
Turning to the agenda, Cambium Networks’ President and CEO, Atul Bhatnagar, will provide the key investment highlights for the third quarter 2022 and Andrew Bronstein, Cambium Networks’ CFO, will provide a recap of the financial results for the third quarter 2022 and present our financial outlook for the fourth quarter 2022. Our prepared remarks will be followed by a Q&A session.
I’d now like to turn the call over to Atul.
Atul Bhatnagar
Thank you, Peter. Cambium continued growth in our third quarter with revenues of $81.2 million, increasing 17% sequentially, ahead of the high end of our outlook of between $72 million to $76 million announced during the Q2 ’22 quarter call. Profitability improved significantly, with strong gross margin and EPS of $0.40, ahead of the high end of our outlook of between $0.16 to $0.20. We saw improved supply of components for enterprise products including record revenues for Wi-Fi, switching, and SaaS solutions. Cambium had better product mix and spending was lower than anticipated due to our tight cost controls.
We anticipate improving demand for fixed wireless Point-to-Multi-Point PMP solutions driven by new technologies and stronger demand for Point-to-Point PTP for defense applications. Our enterprise solutions also remained strong, and we expect further improvements in the supply chain. We had an exceptional quarter for our enterprise solutions, with record demand, growing 60% sequentially and increasing 257% year-over-year, including record Wi-Fi 6, Wi-Fi 6E, and switching revenues. Our switching business had strong backlog which we were able to fulfill during Q3 ’22. We continue to gain market share and now expect our enterprise business to grow by more than 50% for calendar year ’22.
During Q3 ’22, we shipped our 13 millionth radio as a standalone company. Cambium’s ONE Network solution is a compelling choice for wireless infrastructure projects around the world, featuring our attractive total cost of ownership, cloud-managed wireless fabric of solutions integrating multiple communications standards, and emerging broadband technologies, with network management from a single pane of glass.
Turning to the results of the third quarter 2022, looking at revenues across our product lines. Our PMP business revenues decreased 8% sequentially and decreased 48% year-over-year, due to lower demand as service providers move from our legacy PMP 450 products ahead of the ramp of new gigabit technologies including both 28 GHz cnWave 5G Fixed technology and the introduction of 6 GHz products expected during Q4 ’22.
The PTP business decreased by 2% sequentially during Q3 ’22, while year-over-year revenues improved 11% due to higher shipments for our federal defense business using Cambium’s PTP 700 technology for fixed wireless broadband communications. We had our largest quarter of defense bookings in the company’s history during Q3 ’22, although Hurricane Ian in Florida caused delays in shipments at the end of Q3 ’22. We expect higher defense shipments during Q4 ’22.
Our enterprise business had record revenues of $38.3 million during Q3 ’22, increasing by $14.4 million or 60% sequentially, and higher by $27.6 million or 257% year-over-year, due to record demand for our Wi-Fi 6 and 6E solutions, record switching revenues, and increased growth in SaaS solutions. We have established a strong reputation for our enterprise feature set and product quality, and are being well received by the hospitality, education, healthcare, and other verticals.
Looking at some notable customer wins and new product developments. In North America, a large wireless service provider in Texas, Community Internet Providers CIP selected Cambium’s PMP 450 platform, cnHeat, and 60 GHz cnWave for greenfield sites. Cambium was selected for its superior performance and attractive total cost of ownership, planning capabilities including FCC mandated Broadband Data Collection BDC reporting, and scalability. The customer was previously with one of our largest competitors and has signed a long-term agreement to deploy Cambium products.
In Kentucky, Midway University selected Cambium’s enterprise Wi-Fi, switching, and 60 GHz cnWave fixed wireless backhaul to upgrade their network. Cambium was selected due to our portfolio breadth and superior performance in both indoor and outdoor applications. Cambium’s 60 GHz cnWave was selected to deliver high-speed access to remote locations that would have otherwise required expensive fiber to reach.
In the Europe, Middle East, and Africa region, EMEA, we continued to have healthy demand for our enterprise business and continued to win larger projects. We received a substantial commitment from a service provider in Northern Africa for our new 28 GHz cnWave 5G Fixed platform. We won this deal as a result of Cambium’s quality, reliability, scalability, and our technology roadmap. We had two large Managed Service Provider MSP wins in France for initial deployments in the hospitality vertical. These wins included Cambium’s Wi-Fi 6 access points, and cnMaestro X cloud management solutions. Cambium’s ONE Network makes it easy to plan, deploy, and manage affordable gigabit speeds for the home and enterprise.
In the Asia Pacific, APAC region, we had a strong quarter in the hospitality vertical, with a sizeable enterprise win at a large chain of luxury hotels in India for over 16 locations. Cambium was selected through a leading hospitality MSP partner for better overall Wi-Fi performance, total cost of ownership, easy management with cnMaestro and strong support. And in the Caribbean and Latin America, CALA region, we had a smart city win for the city of Rio De Janeiro for our enterprise business including both our Wi-Fi 6 access points and cnMaestro X software to provide 5,100 Wi-Fi hotspots across the city.
Turning to new product introductions, since our previous quarterly update. The industry is eagerly awaiting the availability of new 6 GHz spectrum to enable the delivery of Gigabit data rates to the edge of the network. Cambium will have an industry leading position when our next- generation multi-gigabit ePMP 4600 product is released before year end. Approximately, 10 customers are doing proof-of-concept of our technology, and we have already received our first significant order. One customer utilizing an experimental license achieved actual throughput of 1.8 gigabit per second at 1.5 miles, with 1.2 gigabit per second download and 640 megabit per second upload, to each subscriber module. Cambium’s 6 GHz ePMP 4600 leverages the significant technology advantages of 802.11ax standards technology and provides higher performance than our competition at a significantly more affordable cost.
Use of 6 GHz for fixed wireless Point-to-Multipoint operation is available in the U.S. today on a limited and controlled basis. However, broad access will require use of Automated Frequency Coordination AFC. AFC is similar to Citizens Broadband Radio Service’s CBRS Spectrum Access Service or SAS in that it facilitates sharing of spectrum with incumbent users. We expect the FCC to approve use of AFC in early 2023, and as with CBRS SAS, we intend to provide a complete solution, hardware, and AFC services under cnMaestro.
In the enterprise market, we are launching new outdoor access points in Q4, including a Wi-Fi 6 product for high-volume outdoor markets such as public Wi-Fi, hospitality, education, municipality, transportation, and logistics applications, and a connectorized Wi-Fi 6 and 6E software defined radio targeted for outdoor use for higher education, stadiums, and campuses. In 60 GHz, we recently introduced the new cnWave V2000, which fills out our 60 GHz cnWave portfolio for the service provider market. The new product features longer range than our V1000 product and fills the midrange customer needs. This technology is targeted for the CCTV, Wireless Internet Service Provider WISP, warehouse and logistics, and smart city markets. The product offers Point-to-Point connectivity with up to 3.6 gigabit per second and a range of up to 1 kilometer.
Also, within our 60 GHz cnWave product lineup, we are introducing a 1 and 2 gigabit Bridge in the Box solutions, which provide a pair of cnWave radios pre-configured for out-of-box operation for connectivity for up to 1 kilometer away. The deployment-friendly solution can be used for high-bandwidth internet connectivity, including remote cameras or CCTV video feeds, for activities such as concerts, athletic events, farmers’ markets, or to connect cabins, lodges, machine shops, barns, or garages.
Within Cambium’s 28 GHz cnWave 5G Fixed, our 4X4 Multi-User MIMO and software defined radio architecture delivering 400 megabit per second speeds was released in late Q3 and is now available. Our next version of 28 GHz cnWave 5G Fixed featuring even higher performance including 8X8 Multi-User MIMO and speeds of 2 gigabit per second will become available within a few quarters with a software update. Network operators are now able to support scaled deployments for business and residential subscribers in urban, suburban and rural locations at scale.
After our Q3 ’22 quarter end, Cambium landed one of our largest PMP contracts in our company’s history, a multi-million-dollar per year, multi-year deal, for 28 GHz cnWave 5G Fixed, from a customer in the CALA region. We are very excited that customers have validated our technology, and we are now moving into the commercial phase of deployment with larger size deals.
Looking at our cnMaestro cloud software, our end-to-end cloud-powered connectivity solution to manage the network from a single pane of glass, the cnMaestro cloud software continued to experience strong user growth. Total devices under cloud management in Q3 ’22 was over 866,000, an increase of over 3% from Q2 ’22, and up approximately 21% year-over-year. For our premium cnMaestro X offering, we booked a major deal with a large service provider in Asia for 20,000 seats for fixed wireless broadband during the third quarter and are continuing to see healthy growth in revenue for this product. Revenue for cnMaestro X, which includes both enterprise and fixed wireless solutions grew 227% sequentially during the third quarter.
Turning to our channel, in Q3 ’22, we expanded our channel presence by adding over 285 net new channel partners sequentially, and over 1,400 net new channel partners year-over-year, which represents an increase of over 2% sequentially and 13% year-over-year. We continue to expand our reach into new mid-market customers around the world. Also in the channel, in early October, Cambium participated at a well-attended WISPAPALOOZA trade show, which is focused on service providers and channel partners within the industry and featured several new product introductions from Cambium including 6 GHz, 60 GHz, 28 GHz, home gateways and routers.
Cambium’s cnHeat RF mapping tool received the 2022 WISPA Association service of the year award. cnHeat makes it easy for all fixed wireless broadband service providers to plan their fixed wireless access networks, assess the effective coverage of their networks, market their services to served addresses, and meet their FCC-mandated Broadband Data Collection BDC reporting requirements. Software is becoming an increasingly important part of Cambium’s growth story and is now showing up in a more meaningful way in our financial results.
I will now turn the call over to Andrew for a review of our Q3 ’22 financial results and Q4 ’22 outlook.
Andrew Bronstein
Thanks Atul. Cambium reported revenues of $81.2 million for Q3 ’22. Revenues increased by 17% quarter-over-quarter and increased by 7% year-over-year. During the third quarter, our global supply constraints continued to ease, leading to increased production and shipment of our high-demand enterprise products. On a sequential basis for Q3 ’22, revenues were higher by $11.9 million. The higher revenues were primarily the result of increased enterprise solutions, while PMP revenues were lower for legacy PMP 450 products ahead of customers anticipating a technology transition, partly offset by improved supply benefitting ePMP shipments, while PTP revenues were down slightly.
Moving to our gross margin. Our non-GAAP gross margin was 51.3% was significantly better than anticipated, increasing by 350 basis points compared to Q3 ’21. The year-over-year increase in our non-GAAP gross margin was the result of higher volumes and a greater mix of higher margin enterprise and PTP products. On a sequential basis, non-GAAP gross margin improved by 240 basis points compared to Q2 ’22. The higher quarter-over-quarter non-GAAP gross margin was the result of higher volumes, an increased mix of enterprise solutions, tight cost controls, lower freight costs and increased pricing, offset in part by higher component costs due to inflation and supply chain challenges.
In Q3 ’22, our non-GAAP gross profit dollars of $41.6 million increased by $5.4 million compared to the prior year due to higher volumes and improved mix of enterprise products, and increased by $7.8 million sequentially, due to higher volumes, improved pricing and a higher product mix of enterprise products and lower freight costs. This was offset in part by higher component costs due to inflation and supply chain challenges. While we achieved our target gross margin on a quarterly basis, our longer-term goal remains a consistent non-GAAP gross margin target of 51% to 52% on an annual basis.
Non-GAAP operating expenses, including amortization in Q3 ’22 increased by approximately $300,000 when compared to Q3 ’21, and stood at $27.9 million, or 34.3% of revenues. The increase in operating expenses compared to the prior year period was primarily due to higher travel costs related to sales and marketing, increases in G&A for professional services and IT, offset by lower variable compensation and tight controls around headcount. When compared to Q2 ’22, non-GAAP operating expenses increased by approximately $300,000 as well. Quarter-over-quarter sales and marketing increased slightly primarily because of higher promotional materials, R&D increased related to the timing of expenditures for materials, while G&A was lower due to less professional services as result of our tight cost controls.
Non-GAAP operating margin for Q3 ’22 was 17%, up from 11.4% during Q3 ’21, and up from 9.1% of revenues in Q2 ’22. Non-GAAP net income for Q3 ’22 was $11.3 million, or $0.40 per diluted share, above the previous outlook of between $0.16 to $0.20 per diluted share and compared to $6.7 million, or $0.23 per diluted share for Q3 ’21, and non-GAAP net income of $5 million, or $0.18 per diluted share for Q2 ’22. The higher non-GAAP net income compared to the prior year period was primary due to higher gross profit dollars, while higher net income compared to the prior quarter’s results was primarily a result of both higher revenues and gross profit dollars.
Adjusted EBITDA for Q3 ’22 was $14.7 million or 18.2% of revenues, compared to $9.6 million or 12.6% of revenues for Q3 ’21, and compared to $7.8 million or 11.3% of revenues for Q2 ’22. Our operating model remains solid. We are beginning to regain some operating leverage in our business as Cambium increased revenues to more than $80 million. We remain committed to consistently driving our adjusted EBITDA to our long-term target of 18% to 19% of revenues.
Moving to cash flow, cash provided by operating activities was $2.2 million for Q3 ’22, and compares to $11.8 million for Q3 ’21, and $10 million for Q2 ’22. Our cash flow was impacted as we increased accounts receivables as a result of higher revenues and timing and certain product inventories increased to support the anticipated growth of our business.
Turning to the balance sheet, cash totaled $44.9 million as of September 30, 2022, a decrease of $1.1 million from Q2 ’22. The sequential decrease in cash primarily reflects higher accounts receivable due to growth in revenues, and increased inventories to support the faster growth of the business.
Net inventories of $50.6 million in Q3 ’22 increased by approximately $21.9 million year-over-year, while increasing by $3.2 million from Q2 ’22. Inventories were higher sequentially because of an increase in component and finished goods inventories as we continue to grow our business. While the supply chain remains an ongoing challenge, we are working to selectively increase our inventory positions in certain products for the remainder of the year.
In addition, we recently announced that we are selectively increasing prices by an average of about 5% for a wide range of products due to inflation and supply chain costs that are resulted in higher manufacturing costs, including the cost of chips. This price increase will take effect for all orders placed on or after November 26. However, we will not increase prices for backlog, as long as the customer requests a ship date that is within our published lead times and on or before March 31, 2023. We expect that the full impact of this price increases will be realized by Q3 ’23.
In summary, the third quarter was much better than anticipated due to strong demand for our enterprise products, a full quarter of uninterrupted operations in China, and a continued improvement in our supply chain environment. Our backlog remains strong and we are at the start of new product cycles. We expect to continue to regain scale, improve operational efficiency, and make significant progress toward achieving our long-term target operating model.
Moving to the fourth quarter outlook, Cambium Networks financial outlook does not include the potential impact of any possible future financial transactions, acquisitions, pending legal matters, or other transactions. Considering our current visibility as of today, our Q4 ’22 financial outlook is expected to be as follows. We expect revenues of between $80 to $84 million, representing approximately 1% sequential growth at the midpoint, we remain supply constrained in certain components, our non-GAAP gross margin we expect to be between 48.7% to 49.7%, non-GAAP operating expenses of between $30.6 million to $31.6 million and non-GAAP operating income of between 8.4 and $10.2 million.
Interest expense net of approximately $500,000, and non-GAAP net income of between 6.6 and $7.8 million or net income per diluted share of between $0.23 and $0.27, adjusted EBITDA between 9.5 and $11.3 million, and adjusted EBITDA margin between 11.9% and 13.4%, a non-GAAP effective tax rate of approximately 17% to 20% and approximately a 28.5 million weighted average diluted shares outstanding. Our cash requirements are expected to include a pay down of debt of $700,000, cash interest of approximately $400,000, and CapEx of between 2 and $2.2 million.
I will now turn the call back to Atul for some closing remarks.
Atul Bhatnagar
We delivered a solid quarter of results and are expecting a strong finish to the year, ending on a high-note with increased revenues, strong profitability, significant new product introductions, increasing chip supplies, and a return to growth for our PMP business driven by 60 GHz cnWave, 28 GHz cnWave 5G Fixed, and the imminent launch of affordable 6 GHz fixed wireless solutions.
Our enterprise business remains strong, led by Wi-Fi 6 and 6E, wireless savvy switching products, and solid growth in our software-as-a-service solutions. The Cambium ONE Network integrated wireless fabric is resonating with customers and brings together ease of deployment, scalability of networks, and lower total cost of ownership as the world deploys next-generation high-performance wireless broadband.
We remain focused on judiciously managing our costs, improving our operations, continuing to invest in innovative products to maintain our technology edge, and expect increased scale will benefit our future operating results. I’d like to show my appreciation for our employees, partners, and customers during these unprecedented times.
This concludes our prepared remarks. So with that, I’d like to turn the call over to Sean and begin the Q&A session.
Question-and-Answer Session
Operator
[Operator Instructions] Our first question comes from Samik Chatterjee with J.P. Morgan.
Unidentified Analyst
This is MP on for Samik Chatterjee. First of all, congratulations on a strong quarter. So my question is regarding like this quarter has been very strong. I just wanted to ask in your outlook given a tough macro situation and moderation in CapEx from service providers as well as the broadband — like the broadband service providers as well as the telcos. So how do you look into 2023? How like do you still believe for a double-digit growth that you generally guide?
Atul Bhatnagar
Yes. My overall message for 2023 is, we are very well positioned for solid growth. And there’s a reason behind that. We prepared for this. If you look at the amount of innovation in the last two years we’ve been bringing about, and we are working very diligently on technology validations for the next-generation networks. So overall, our organic growth in 2023, I think mid-teens type of a number around that, we feel pretty good. 5G fixed rollout is happening. We are beginning to see larger deals and now proof points are coming, as I mentioned in my call. PMP definitely in Q4 starts turning around with these new products. We have proof points with 6 gigahertz, as I mentioned, 1.8 gigabit per second and 1.5 miles. Now we are beyond that validation and these networks will scale. Supply situation is improving for us. Enterprise growth continues and Cambium is a mid-tier market, if Cambium doesn’t go out to a very large service providers worldwide, which is very seasonal, which is we go after the mid-tier market, both for enterprise and for service providers, which is very resilient for us. So Samik (sic) [MP], we feel pretty good about 2023.
Operator
[Operator Instructions] Our next question comes from Scott Searle with ROTH Capital Partners.
Scott Searle
Nice job on the quarter, guys and I see the Wi-Fi business recovering pretty strongly there. Maybe just to dive right in to looking at your guidance for the fourth quarter, gross margin is coming down a little bit sequentially. I assume part of that is just margin mix, less Wi-Fi. So I was wondering if you could kind of talk us through the puts and takes on that front, particularly how you see Point-to-Multipoint ramping up into the fourth quarter and how the supply chain is behaving on that front?
Andrew Bronstein
Yes, I’ll take that one, and thanks for the question. So we see the gross margin coming down a bit in the fourth quarter, and you’re exactly right, it’s because mainly of mix. And as we said during the commentary, we had — we were able to fulfill some accumulating backlog, especially in the enterprise switch area. And the level of revenue that we see coming from that in the fourth quarter will likely be lower than the third quarter, and that will have an impact on the margin. Also, there’s — as we mentioned during the call product transition in terms of PMP, and we do see PMP beginning to get to a growth stage in the fourth quarter on a sequential basis. And that’s going to be driven by the new products that we’re introducing into the market and commercializing.
And then also, we still see the impact of inflation in terms of cost increases from our suppliers. And that’s one of the reasons for the increase — the major reason for the increase that I mentioned in terms of our pricing beginning later on in Q4. That impact on pricing will have a very minimal effect in the quarter, but begin to ramp up more so in the second quarter of next year and a full impact in the third quarter as we look ahead.
Maybe just a…
Atul Bhatnagar
Scott, if I can just add to what Andrew mentioned. I think in general, Andrew and I both feel very good about our long-term model of 51% to 52% for 3 reasons. Reason number one, the software is playing more and more meaningful role in Cambium, and this again has been a 2-year work. Second, mix is also going to help us as we move forward with our new products, both enterprise and new designs, which are coming out. And third, defense is becoming, again, a larger business. So I think in general, the margin — gross margin is in the right direction. And we feel pretty good, where we will be in terms of long-term model.
Scott Searle
That’s very helpful. If I could just follow up on that point, and then I had one follow-up. The — just for the component challenges on the Point-to-Multipoint front. For the new products, are you pretty well positioned on that? And then talking about that 51% to 52% gross margin, is that something that’s achievable in ’23? And then if I could, specifically around 6 GHz, huge market opportunity there. I know you’re just starting to ship now, but Atul, I was wondering if you could put a framework around it in terms of, I don’t know, quantifying the interest level, what that pipeline of opportunity looks like? Or where you think that’s going to be in 2023? Because huge, huge product opportunity there, given the price points that you can be delivering gigabit like speeds, I’m kind of wondering what’s going to deem success for that product line when we’re looking into 2023?
Atul Bhatnagar
Okay. Let me take 6 GHz question, first, because I think that’s a strategic question. We were very gratified and very pleasantly surprised as our 10 pilots come back with performance numbers in 6 GHz band. We never shared the performance number of that 1.8 gigabit at 2.1 miles. But now customers are saying, wow, very affordable products, very large bandwidth available. So 6 GHz is going to be a, I think, a very strong product line of Cambium. Having said that, I would still say that first half of ’23 would be large sub trials, POCs across the board, and again, working with FCC, making sure AFC, all that gets approved, and we are working closely with them. So my sense is that second half is, when you will see lots of those POCs turn into production networks. So that’s one key point.
Second is the Cambium’s key strategies based on merchant silicon standards based and very affordable pricing. So it matches all of that. So very excited and U.S. will lead it. Rest of the world, I think, will follow after that. And on the 51% to 52% gross margin, let me pass it to Andrew.
Andrew Bronstein
Yes. So on the long-term operating model of 51% to 52%, I think that we will see within the next two years. I do think that next year, as we continue to improve our mix and look at trade-off of headwinds in front of us in terms of inflation as well, the way we see it is we’re going to be in around the 50% mark, which is a nice improvement over the past couple of years as well. And in terms of components for new products, yes, we are well positioned to be able to ship those out as soon as we are able to commercialize the products and get approval from the FCC, et cetera. And that’s one of the reasons for the increase in inventory as we continue to strategically buy supplies for those products and getting ready for those product launches. So hopefully, that answers all parts of your question.
Operator
[Operator Instructions] And our next question comes from George Notter with Jefferies.
Unidentified Analyst
This is Kyle on for George Notter. We’re trying to get a sense for how much of your Wi-Fi momentum right now is driven by demand versus more of the easing of supply that you’re talking about or Wi-Fi components just easier to get than PTP, PMP. Can you quantify it at all? How much you thought the quarter came from benign supply versus demand picking up? And is there any other structural reason, why you’d see more growth in Wi-Fi versus PMP and PTP other than the fact that the PTP has this wait for effect going into the fourth quarter?
Atul Bhatnagar
Thanks, Kyle. First of all, in Wi-Fi, Cambium is emerging as a strong mid-tier enterprise player globally. I think that’s a pretty important statement I’m making. It has taken us 5 to 7 years with the right road map, right features, understanding customer needs. We are now a strong brand in that mid-tier segment. Just to give you an idea how much growth or acceleration or adoption Cambium is getting, we have added in last 3 quarters, 2,600 new customers.
And the reason Cambium is winning is 3 words. Number one, simplicity. Our products are simple. Number two, we have added a lot of automation in cnMaestro for scaled enterprise networks. And number three, affordability. Our solutions have a lower total cost of ownership. And by the way, these words, our customers are telling us.
And at this point, the segments which are accelerating for us are managed service providers serving multiple dwelling units, MDU markets, hospitality, healthcare, education. And we are beginning to get into some verticals globally, where these values of simplicity and lower TCO is playing very well. So I think, overall, this is not about chip supply. The bigger companies can get more chips than Cambium. Cambium is earning its way in through superior solution, superior TCO.
Andrew Bronstein
I would add to that, too, just in terms of your question about the level of shipments that happened in the quarter because of improved supply. I would quantify that somewhere around the $5 million range. And most of that is related to what we had said earlier about the switches that we were able to fulfill and get supply, get inventory to fulfill orders, where customers were really wanting that product — that particular product and begin to fulfill those orders. So we’ll continue to — it’s a very popular product. We’re going to continue to see nice sales in Q4 and beyond. But in terms of being able to satisfy kind of backlog that was growing, it was about $5 million of shipments.
Atul Bhatnagar
And Kyle, to add, we are making our solutions sticky, not necessarily by hardware. We are making our solutions sticky by providing APIs for smart locks, like, for example, for hospitality and hotels. We are providing a lot of good software in Maestro and making it easier for them to integrate Cambium products in their enterprise applications. So overall, we feel pretty good about 23% and continue the growth.
Unidentified Analyst
Okay, great. And one last one for me, it looks like the guide was solid for revenue and gross margin going into Q4, but OpEx seems a little higher. Are there specific areas that you’re investing in maybe ahead of the launch of the new products? Is there some additional sales and marketing that you’re doing? Could you contextualize anything important that you’re spending on right now and when revenue scale might pick up to cover the OpEx investment?
Andrew Bronstein
Yes. There’s really two areas. One is within R&D, and you’re right about the new products and the right — it’s really regulatory activity that happens as a result of getting approvals ahead of those launches. And the other is with the success that we’ve had in the enterprise business this year, which, as you know, is going to be in that $100 million range of total revenues for the year. The sales compensation reflective of that and the people who sell those products will hit overages in the fourth quarter. So there will be some additional sales and marketing costs in the fourth quarter.
Operator
[Operator Instructions] Our next question comes from Paul Essi with William K. Woodruff.
Paul Essi
First question is on your switch business, I know you’re gaining market share there. You’re growing very rapidly versus the market. How long do you think you can sustain that growth in the switches? And who are you taking market share from?
Atul Bhatnagar
So Paul, first of all, switching is a very large market and there are a lot of generic players there. Our switching business caters to only wireless savvy products. The savvy — we always say wireless savvy switching. And it’s a very good companion to our Wi-Fi. Very, very good companion to Wi-Fi 6 and 6E products, it has a very good cloud management, single pane of glass. So I think overall, we’ll keep growing, but this is not a generic switch. But for the wireless networks, for wireless internet service providers, for midsized enterprise networks, for smart city projects, very well positioned to grow in those markets.
Paul Essi
Okay. Second question is on the 28. Your main competitor there, I’m wondering, are they going to be able to maintain the spend that you guys have? And do they have a 2 gig coming next year like you guys do? Do you know if there’s one in the works?
Atul Bhatnagar
On 28 GHz 5G, and I think Paul, you asked a very good question. I think the companies which are adopting 5G fixed are going to do well, because 5G is a very key standard, which is bringing a lot of key feature sets and speeds and feeds. And again, we bet on that 3 years back, and now we have the products. It has taken us good investments. I think who are wants to enter has to also invest substantially. As of now, you will see, Cambium as a very key leader in 5G fixed. I’m not talking 5G mobile, 5G fixed. And we don’t believe, as of now, there is another company, which has the kind of feature set and performance we have. And that’s why we are beginning to close those deals. We always had the POCs going now they’re turning into production networks. So the key answer, I don’t know another company, but as the market expands, I’m pretty sure others will enter as well.
Operator
At this time, I would like to turn it over to Peter Schuman for closing remarks.
Peter Schuman
Thank you, Sean. During Q4 ’22, Cambium Networks will be presenting and meeting with investors on November 15 at the Needham Virtual Security Networking and Communications Conference; and on November 16 at the ROTH Capital Technology Conference in New York, and December 13 at the Oppenheimer 5G Summit. In the meantime, you are always welcome to contact our Investor Relations Department at 847-264-2188 with any questions that arise. Thank you for joining us and this concludes today’s call.
Operator
Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.
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