Ceragon Networks (CRNT) grows H1 2026 sales but net loss widens on higher finance costs
Rhea-AI Filing Summary
Ceragon Networks Ltd. reported unaudited results for the six months ended June 30, 2026. Revenues were $178.9 million, up from $170.9 million, with growth led by India at $75.0 million and North America at $52.2 million, while EMEA, Latin America and APAC declined.
Gross profit rose to $59.8 million but the gross margin edged down to 33.4% from 33.7% due to product and geographic mix and cost increases. Operating income improved to $2.3 million. However, financial and other expenses increased to $4.5 million, mainly from mark-to-market revaluation of acquisition-related holdback liabilities and higher foreign exchange losses, resulting in a net loss of $3.4 million versus $2.2 million a year earlier.
Ceragon generated $11.6 million of operating cash flow, ended the period with $34.8 million in cash and cash equivalents, and used $8.5 million for investing activities and $6.7 million for financing activities. The company amended and extended its syndicated Credit Facility, maintaining $77 million of loan capacity and total facilities of $97 million, now maturing August 31, 2028, and was in compliance with all financial covenants.
Positive
- Credit Facility extended to August 31, 2028, with total bank guarantees and loan capacity of $97 million, supporting liquidity and confirming compliance with updated financial covenants.
- Positive operating cash flow of $11.6 million in the first half of 2026, while funding $8.5 million of capital and development investments and reducing short-term bank loans.
Negative
- Net loss widened to $3.4 million from $2.2 million year over year, driven largely by a $2.6 million increase in financial and other expenses.
- Financial and other expenses more than doubled to $4.5 million, mainly from mark-to-market revaluation of acquisition-related liabilities and higher foreign exchange losses, pressuring bottom-line results.
Filing Explained
Existing holders face a larger disclosed share base, while two litigation claims remain unresolved.
This Form 6-K is a foreign private issuer’s interim report. It furnishes unaudited consolidated financial statements and the related operating review for the six months ended
The equity statement attributes 601,247 shares to option exercises and RSU vesting and 49,985 shares to acquisition consideration during the six months. Issuing additional shares increases the total share count and reduces an existing holder’s percentage ownership absent offsetting changes.
The filing also discloses a lawsuit served on Ceragon Peru on
The Peru matter’s stated next milestones are a merits defense by
Key Figures
Revenue H1 2026: 178,917 $ thousands
Net loss H1 2026: 3,434 $ thousands
Operating cash flow H1 2026: 11,596 $ thousands
+5 more
8 metrics
Revenue H1 2026
178,917 $ thousands
Six months ended June 30, 2026 revenues
Net loss H1 2026
3,434 $ thousands
Six months ended June 30, 2026 net loss attributable to ordinary shareholders
Operating cash flow H1 2026
11,596 $ thousands
Net cash provided by operating activities for six months ended June 30, 2026
Cash and cash equivalents
34,771 $ thousands
Balance as of June 30, 2026
Total assets
313,776 $ thousands
Condensed consolidated balance sheet as of June 30, 2026
Total shareholders' equity
172,050 $ thousands
Shareholders' equity as of June 30, 2026
Credit Facility loans capacity
77 $ millions
Available under Credit Facility for loans as of June 30, 2026
Financial and other expenses, net
4,519 $ thousands
Six months ended June 30, 2026 financial and other expenses, net
Key Terms
Credit Facility, Earn-Out, share-based compensation, ASC topic 280, +2 more
6 terms
Credit Facility financial
"The Company entered into the revolving Credit Facility, dated as of March 14, 2013"
A credit facility is a flexible loan arrangement that allows a borrower to access funds up to a set limit whenever needed, similar to a company having an overdraft option on a bank account. It matters to investors because it indicates how easily a business can secure cash when required, affecting its ability to manage expenses, invest, or respond to financial challenges.
Earn-Out financial
"The change in Earn-Out during the six months ended in June 30 2026 was classified"
An earn-out is a deal feature in mergers and acquisitions where part of the purchase price is paid later only if the acquired business meets specific future targets, such as revenue or profit goals. It matters to investors because it shares risk between buyer and seller—similar to paying for a used car only if it reaches promised mileage—affecting projected cash flows, valuation assumptions, and the likelihood of future payouts.
ASC topic 280 regulatory
"The Company applies ASC topic 280, "Segment Reporting""
ASC Topic 280 is a U.S. accounting rule that requires companies to break down and report the financial results of their major business parts—like showing the revenues, profits and assets for each ‘department’ or geographic area. For investors, this is like getting a multi-lens view of a company rather than a single aggregate number, making it easier to see which activities drive performance, spot risks, and compare businesses across peers.
performance obligations financial
"recognize revenue when a performance obligation is satisfied"
Performance obligations are the specific promises a company makes to deliver goods or services to a customer under a contract, treated as separate deliverables when a customer can benefit from them on their own. Investors care because these promises determine when and how much revenue a company records — like breaking a bundled purchase into separate billable parts — which affects reported earnings, growth trends and the clarity of future cash flows.
cash flow hedges financial
"Cash flow hedges: Change in net unrealized losses"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
FAQ
How did Ceragon Networks (CRNT) perform financially in the first half of 2026?
Ceragon reported revenues of $178.9 million and a net loss of $3.4 million for the six months ended June 30, 2026. Revenues grew 4.7% year over year, but higher financial expenses offset improved operating income.
What were Ceragon Networks (CRNT) revenues by region for H1 2026?
For the first half of 2026, revenues were $75.0 million in India, $52.2 million in North America, $24.9 million in EMEA, $14.2 million in Latin America, and $12.7 million in APAC. India and North America grew, while other regions declined.
What is the status of Ceragon Networks (CRNT) liquidity and credit facilities?
As of June 30, 2026, Ceragon held $34.8 million in cash and cash equivalents and had total credit facilities of $97.0 million. It utilized $12.0 million in short-term loans under a $77 million Credit Facility and met all covenants.
How did Ceragon Networks (CRNT) margins and operating income change in H1 2026?
Gross profit increased to $59.8 million, with gross margin slightly lower at 33.4%. Operating income improved to $2.3 million from $1.1 million, as restructuring and acquisition-related charges declined despite higher sales and marketing expenses.
What drove the increase in Ceragon Networks (CRNT) financial expenses in H1 2026?
Financial and other expenses rose to $4.5 million, mainly due to a $2.0 million change in mark-to-market revaluation of acquisition-related holdback liabilities and a $1.4 million increase in foreign exchange losses, partly offset by lower interest expenses.
What legal proceedings did Ceragon Networks (CRNT) disclose for 2026?
Ceragon disclosed proceedings involving Ceragon Peru with a subcontractor claim of about $560,000 and Ceragon Brazil with a customer claim of about $1 million. Both matters are at an early stage, and the company stated it cannot assess outcomes.
AI-generated analysis. How Rhea-AI works. Not financial advice.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Washington, D. C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2026
Commission File Number: 0-30862
 (Translation of registrant’s name into English)
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(Address of principal executive offices)
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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____
EXPLANANTORY NOTE
Ceragon Networks Ltd. (the “Registrant”) is furnishing on this Form 6-K its unaudited interim consolidated financial statements for the six months ended June 30, 2026, and the related Operating and Financial Review and Prospects for such period. The Registrant is also furnishing the consent of its independent registered accounting firms to the incorporation by reference into Registrant’s Registration Statement on Form F-3 (No. 333-295619) of its opinion on the Registrant’s consolidated financial statements included in Registrant’s Annual Report on Form 20-F for the year ended December 31, 2025.
Exhibits
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Exhibit Number
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Description
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99.1
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Unaudited financial statements of Ceragon Networks, Ltd. for the six months ended June 30, 2026.
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99.2
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Operating and Financial Review and Prospects for the six months ended June 30, 2026.
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101
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Interactive Data File relating to the materials in this report on Form 6-K is formatted in Extensible Business Reporting Language (XBRL).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by the registrant under the Securities Act of 1933.
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CERAGON NETWORKS LTD.
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Date: August 13, 2026
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By: /s/ Ronen Stein
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Name: Ronen Stein
Title: Chief Financial Officer |
Exhibit 99.1
CERAGON NETWORKS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2026
U.S. DOLLARS IN THOUSANDS
UNAUDITED
INDEX
Page | |
Condensed Consolidated Balance Sheets | F-2 - F-3 |
Condensed Consolidated Statements of Operations | F-4 |
Condensed Consolidated Statements of Comprehensive Income | F-5 |
Condensed Consolidated Statements of Changes in Shareholders' Equity | F-6 |
Condensed Consolidated Statements of Cash Flows | F-7 |
Notes to Condensed Consolidated Financial Statements | F-8 - F-24 |
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CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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ASSETS
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CURRENT ASSETS:
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The accompanying notes are an integral part of the consolidated financial statements.
F - 2
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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| Unaudited | |||||||||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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COMMITMENTS AND CONTINGENT LIABILITIES
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SHAREHOLDERS' EQUITY:
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The accompanying notes are an integral part of the condensed consolidated financial statements.
F - 3
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
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The accompanying notes are an integral part of the condensed consolidated financial statements.
F - 4
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
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The accompanying notes are an integral part of the condensed consolidated financial statements.
F - 5
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in Shareholders’ Equity
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Six months ended June 30, 2025:
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Ordinary shares
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Share
capital
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Additional
paid-in
capital
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Treasury shares at cost
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Balance as of January 1, 2025
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Exercise of options and vesting of RSUs
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Share-based compensation
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Shares issued as consideration in connection with the acquisition of End 2 End Technologies, LLC
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Shares issued as consideration in connection with the acquisition of Siklu Communication Ltd.
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Balance as of June 30, 2025 (Unaudited)
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Six months ended June 30, 2026:
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Share
capital
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paid-in
capital
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Treasury shares at cost
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Accumulated other comprehensive
loss
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Total shareholders' equity
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$ thousands
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Balance as of January 1, 2026
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Share-based compensation
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Shares issued as consideration in connection with the acquisition of End 2 End Technologies, LLC
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Balance as of June 30, 2026 (Unaudited)
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*) Represent an amount lower than $1 thousand.
The accompanying notes are an integral part of the condensed consolidated financial statements.
F - 6
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
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Six months ended
June 30,
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Cash flow from operating activities:
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Adjustments required to reconcile net (loss) to net cash provided
By operating activities:
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Loss from sale of property and equipment
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Cash and cash equivalents at the beginning of the period
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Cash and cash equivalents at the end of the period
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The accompanying notes are an integral part of the condensed consolidated financial statements.
F - 7
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 1: |
General
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| a. |
Ceragon Networks Ltd. ("the Company") is a global innovator and leading solutions provider of end-to-end wireless connectivity, specializing in transport, access, and AI-powered managed & professional services. The Company provides wireless transport solutions and services that enable cellular operators, other service providers and private networks to build new networks and evolve networks towards 4G and 5G services. The Company’s unique multicore technology and disaggregated approach to wireless transport provides highly reliable, fast to deploy, high-capacity wireless transport for a wide range of communication network use cases with minimal use of spectrum, power, real estate, and labor resources. It enables increased productivity, as well as simple and quick network modernization. The Company delivers a complete portfolio of turnkey end-to-end AI-based managed and professional services that ensure efficient network rollout and optimization to achieve the highest value for its customers.
The Company sells its products through a direct sales force, systems integrators, distributors and original equipment manufacturers. The Company's wholly owned subsidiaries provide research and development, marketing, manufacturing, distribution, sales, professional services and technical support to the Company's customers worldwide.
|
| b. |
On December 4, 2023, the Company completed a series of definitive agreements with Siklu Communication Ltd. (“Siklu”) and Siklu Inc. (the “Seller”), referred to as the “Siklu Acquisition”. In the framework of the Siklu Acquisition, the Company acquired all of the outstanding shares of Siklu and the assets and business activities of the Seller. Siklu is a privately held Israeli-based company which is a provider of multi-Gigabit “wireless fiber” connectivity in urban, suburban and rural areas. The acquired portfolio of products of Siklu is widely deployed in Fixed Wireless Access applications, addressing the needs of Telecom Service Providers delivering Internet access to commercial properties or business campuses as well as to private homes, apartment building and/or gated communities. Additionally, these solutions address the growing Smart City application, connecting wirelessly the many properties and assets of the cities (e.g CCTV cameras for security, traffic or parking management, Wi-Fi Access points, or IOT sensors).
|
| c. |
On January 31, 2025, the Company completed a series of definitive agreements with End 2 End Technologies, LLC (“E2E”), and E2E’s stockholders (the “E2E Sellers”), referred to as the “E2E Acquisition”. In the framework of the E2E Acquisition, the Company acquired by way of merger E2E. E2E is a US systems integration and software development company that serves Private Networks, primarily in the Energy and Utilities markets. E2E provides a full end-to-end solution for private networks, primarily serving customers in Oil and Gas, Utilities and industrial verticals. E2E is essentially a systems integration company that designs, deploys and manages connectivity solutions to its customers as well as other related devices. In addition, E2E has developed a software solution to help manage the customers’ networks and monitor certain operational and business-related metrics.
|
| Note 2: |
Summary of Significant Accounting Policies
|
| a. |
Condensed consolidated financial statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission regarding condensed financial reporting. In the management`s opinion, the unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s unaudited condensed consolidated financial position as of June 30, 2026, as well as its results of operations and cash flows for the six months ended June 30, 2026, and 2025. The results of operations for the six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the year ending December 31, 2026.
|
F - 8
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 2: |
Summary of Significant Accounting Policies (Cont.)
|
| b. |
Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. On an ongoing basis, the Company's management evaluates estimates, including those related to the fair value of acquired intangible assets and goodwill and the useful life of intangible assets, tax assets and liabilities, fair values of share-based awards, inventory write-offs, warranty provision, incremental borrowing rate (IBR) used for lease liabilities measurement, and allowance for credit loss. Such estimates are based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.
|
| c. |
Significant accounting policies
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission (the "SEC") on April 15, 2026. There have been no significant changes to these policies during the six months ended June 30, 2026.
|
| d. |
Recently adopted Accounting Standards
In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient to measure credit losses on current accounts receivable and contract assets under ASC No. 606, “Revenue from Contracts with Customers.” The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. For public business entities, ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption of ASU 2025-05 is permitted. The Company adopted this ASU as of January 1, 2026. The adoption of this new ASU did not have a material impact on the Company's condensed consolidated financial statements.
|
| e. |
Recently issued but not yet adopted Accounting Standards
|
| 1. |
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses. The ASU requires, among other items, additional disaggregated disclosures in the notes to the financial statements for certain categories of expenses that are included in the consolidated statements of operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the effect of adopting the ASU on its disclosures.
|
F - 9
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 2: |
Summary of Significant Accounting Policies (Cont.)
|
| e. |
Recently issued but not yet adopted Accounting Standards (cont.)
|
| 2. |
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40). The amendment modernizes the accounting for software costs and enhances the transparency about an entity's software costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted, and may be applied either through a prospective, retrospective or a modified transition approach. The Company is currently evaluating the timing of adoption and impact of this amendment on its Consolidated Financial Statements and related disclosures.
|
| 3. |
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The update provides recognition, measurement, presentation, and disclosure requirements for government grants, including guidance for grants related to an asset and grants related to income. The amendments introduced two permitted approaches for asset-related grants: a deferred income approach or a cost accumulation approach. The guidance is effective for the Company beginning January 1, 2029, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statement.
|
| f. |
Restructuring and related charges
During 2026 and 2025, the Company approved cost reduction and re-organization plans that included, among other things, downsizing the Company’s number of employees (the “Restructuring Plans”).
The Company recorded contractual and termination severance pay and other related costs for the impacted employees.
The liabilities related to the restructuring plans as of June 30, 2026, and 2025 amounted to $
The Company does not expect to incur additional costs related to the 2026 and 2025 Restructuring plans.
|
| Note 3: |
Credit Losses
The Company is exposed to credit losses primarily through sales to customers. The Company’s expected loss allowance methodology for trade receivables is developed using historical collection experience and current and future economic and market conditions.
The estimate of the amount of trade receivable that may not be collected is based on the geographic location of the trade receivable balances, aging of the trade receivable balances, the financial condition of customers and the Company’s historical experience with customers in similar geographies. Additionally, specific allowance amounts are established to record the appropriate provision for customers who have a higher probability of default.
|
F - 10
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 3: |
Credit Losses (Cont.)
|
|
The following table provides a roll-forward of the allowance for credit losses that is deducted from the trade receivables balance to present the net amount expected to be collected:
|
|
June 30,
2026
|
December 31,
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Balance, at beginning of period
|
|
|
||||||
|
Provision for expected credit losses
|
|
|
||||||
|
Recoveries collected
|
(
|
)
|
(
|
)
|
||||
|
Amounts written off charged against the allowance and others
|
(
|
)
|
(
|
)
|
||||
|
Balance, at end of period
|
|
|
||||||
| Note 4: |
Inventories
|
|
June 30,
2026
|
December 31,
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Raw materials
|
|
|
||||||
|
Work in progress
|
|
|
||||||
|
Finished products
|
|
|
||||||
|
|
|
|||||||
|
During the six-month periods ended June 30, 2026, and 2025 the Company recorded inventory write-offs for excess inventory and slow-moving inventory in a total amount of $
As of June 30, 2026, the Company has an outstanding inventory purchase orders with its suppliers in the amount of $
|
F - 11
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 5: |
Fair Value Measurement
The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, short-term deposits, accounts receivable, prepaid expenses and other assets, accounts payable, accrued expenses and other liabilities, approximate their fair value due to the short-term maturities of such instruments.
The hierarchy for inputs used in measuring fair value is broken down into three levels based on the inputs as follows:
Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.
Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.
Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Foreign currency derivative contracts are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments.
The liability with respect to the Earn-Out Consideration regarding the End 2 End Acquisition is classified within Level 3, as this liability is valued using valuation models. Some of the inputs to these models are unobservable in the market.
The following table sets forth the Company’s assets that were measured at fair value on a recurring basis as of June 30, 2026, and December 31, 2025, by level within the fair value hierarchy:
|
|
Fair value measurements using input type
|
|||||||||
|
Fair value
|
June 30, | December 31 | |||||||
| hierarchy | 2026 | 2025 | |||||||
| $ thousands | |||||||||
|
Derivatives instruments
|
Level 2
|
|
|
||||||
|
Earn-Out
|
Level 3
|
|
|
||||||
The change in Earn-Out during the six months ended in June 30 2026 was classified into net income (loss).
F - 12
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 6: |
Derivative Instruments The Company enters into foreign currency forward and option contracts with financial institutions to protect against the exposure to changes in exchange rates of several foreign currencies that are associated with forecasted cash flows and existing assets and liabilities. The Company accounts for its derivative instruments as either assets or liabilities and carries them at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.
The fair value of derivative contracts in the consolidated balance sheets at June 30, 2026 and December 31, 2025 were as follows:
|
|
Other accounts receivable and prepaid expenses
|
Other accounts payable and accrued expenses
|
|||||||
|
June 30, 2026
|
||||||||
|
$ thousands
|
||||||||
|
Derivatives designated as hedging instruments:
|
||||||||
|
Currency forward contracts
|
|
(
|
)
|
|||||
|
Total derivatives
|
|
(
|
)
|
|||||
|
Other accounts receivable and prepaid expenses
|
Other accounts payable and accrued expenses
|
|||||||
|
December 31, 2025
|
||||||||
|
$ thousands
|
||||||||
|
Derivatives designated as hedging instruments:
|
||||||||
|
Currency forward contracts
|
|
(
|
)
|
|||||
|
Total derivatives
|
|
(
|
)
|
|||||
F - 13
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 6: |
Derivative Instruments (Cont.)
|
|
The notional amounts of outstanding derivative contracts in U.S. dollars at June 30, 2026 and December 31, 2025 were as follows:
|
|
June 30,
2026
|
December 31,
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Derivatives designated as hedging instruments
|
||||||||
|
Currency forward contracts
|
|
|
||||||
|
Total derivatives
|
|
|
||||||
|
The maximum length of time over which the Company is hedging its exposure to the variability in future cash flows for forecasted transactions is up to 12 months.
For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains or losses from contracts that were not designated as hedging instruments are recognized in "financial and other expenses, net".
The effect of total loss from derivative contracts designated as cash flow hedges in the consolidated statements of operations for the six months ended June 30, 2026, and 2025 was as follows:
|
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
|
|
|
||||||
|
|
|
|
||||||
|
|
|
|
||||||
|
|
|
|
||||||
|
Total
|
|
|
||||||
| Note 7: |
Short-term loans
|
|
In March 2013, the Company was provided with a revolving Credit Facility by four financial institutions. The Credit Facility was renewed and amended several times during the past years according to Company's needs and financial position.
In June 2023, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by an additional year to
In June 2026, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by an additional 26 months to
|
F - 14
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 7: |
Short-term loans (Cont.)
|
|
As of June 30, 2026, the Company has utilized $
As of June 30, 2026, the total credit facilities for bank guarantees and for loans is $
The Credit Facility is secured by a floating charge over all Company assets as well as several customary fixed charges on specific assets.
Repayment could be accelerated by the financial institutions in certain events of default including in insolvency events, failure to comply with financial covenants or an event in which a current or future shareholder acquires control (as defined under the Israel Securities Law) of the Company.
The Credit Facility contains financial and other covenants requiring that the Company maintains, among other things, minimum shareholders' equity value and financial assets, a certain ratio between its shareholders' equity (excluding total intangible assets and goodwill) and the total value of its assets (excluding total intangible assets and goodwill) on its balance sheet, a certain ratio between its net financial debt to each of its working capital and accounts receivable.
As of June 30, 2026 and 2025, the Company met all of its covenants.
|
| Note 8: |
Commitments and Contingent Liabilities
|
| a. |
Israel Innovation Authority
|
|
During the six months ended June 30, 2026, and 2025, the Company received several grants from the Israel Innovation Authority (“IIA”). The grants require the Company to comply with the requirements of the Research and Development Law, however, the Company is not obligated to pay royalties on sales of products based on technology or know how developed from these grants. In a case involving the transfer of technology or know how developed from the grants outside of Israel, the Company may be required to pay royalties related to past sales of products based on the technology or the developed know how. The Company recorded the IIA grants as a reduction of research and development expenses in the six months ended June 30, 2026, and 2025 in the amount of $
|
|
|
Prior to the Siklu Acquisition, Siklu had received research and development grants from the IIA. The Company assumed Siklu's contract with the IIA, which requires the Company to pay royalties to the IIA on sales of products based on technology or know-how developed from the grants. The royalties were calculated at the rates of
|
| b. |
Charges and guarantees:
As of June 30, 2026, and December 31, 2025, the Company provided bank guarantees in an aggregate amount of $
|
| c. |
Litigations:
The Company is currently involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
|
| 1) |
Class Action (District Court of Tel Aviv - Economic Department)
On January 6, 2015, the Company was served with a motion to approve a purported class action, naming the Company, its Chief Executive Officer and its directors as defendants (the “Defendants”). The motion was filed with the District Court of Tel-Aviv (the “Court”). The purported class action alleges breaches of duties by making false and misleading statements in the Company's SEC filings and public statements. The class action claimed amount is approximately $
On May 27, 2021, following a procedure that included filing of various pleadings and affidavits, the Court ruled to certify the motion as a class action, while applying the Israeli Law (the “Ruling”).
On September 12, 2021, the company filed a motion for a rehearing on behalf of the Defendants in order to revert the Ruling (the “Rehearing Motion”).
On January 3, 2022, a hearing was held in Court in the Rehearing Motion before the Honorable Justices K. Kabub, R. Ronen and T. Avrahami.
On January 27, 2022, a judgment was rendered in the Rehearing Motion. The Court ruled that the Ruling was erroneous as it applied Israeli Law, instead of foreign law, and held accordingly that the law that will apply is U.S. law. The Court further held that the case will be returned to the first judicial instance and will be adjudicated as a class claim under U.S. law. The Court commented that the Company’s claims based upon the Statute of Limitations should prima facie also be adjudicated under U.S. law.
|
F - 15
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 8: |
Commitments and Contingent Liabilities (Cont.)
|
| c. |
Litigations (Cont.)
|
|
1) |
Class Action (District Court of Tel Aviv - Economic Department) (Cont.) |
|
On March 20, 2022, following the Court's decision, the Plaintiff filed to the first judicial instance, an amended class action claim, based on provisions of U.S. law. The Plaintiff estimated the amended claim amount at $
On June 28, 2022, following a joint application filed by the parties in order to approve certain procedural matters, the Court issued a decision suggesting that the parties should consider initiating another mediation procedure. On July 5th, 2022, following the court's decision, the parties filed a notice informing the court that they believe that the time to consider initiating another mediation procedure, will be only after the parties submit their pleadings.
On November 3, 2022, the Defendants submitted their Statement of Defense, based on U.S law. On February 5, 2023, the plaintiff submitted his response to the Defendants’ Statement of Defense.
On June 15, 2023, the court rejected a motion filed by the Defendants to rule on the issues of Statute of Repose and Limitations as a preliminary matter, and held that those issues will be dealt with as part of the main hearing. Additionally, the parties conducted preliminary procedures, including discovery and questionnaires, and filed related motions.
On September 21, 2023, a preliminary hearing was held. At the conclusion of the hearing, the court ruled that it would issue written decisions on the discovery issues and then set dates for further proceedings.
On September 28, 2023, the court approved the defendants’ motion for document discovery and determined that the documents in question are indeed relevant. As a result, the court has directed the plaintiff to furnish the requested documents by October 28, 2023. Alternatively, the court has given the plaintiff the option to waive any claims associated with these documents.
On October 1, 2023, the court granted the plaintiff's motion for document discovery and ordered the company to produce all requested documents and to complete some of the answers to the questions included in the plaintiff questionnaire within 45 days. In making this decision, it was determined that, in addition to the documents already provided to the plaintiff, the company is required to disclose thousands of additional documents and document types. These materials, however, were deemed irrelevant and extended beyond the approved grounds for the class action request. The discovery and disclosure of such documents would impose a substantial burden on the company.
As a result, on December 31, 2023, the company sought permission to appeal the district court's decision and requested a delay in its implementation. The Supreme Court granted a stay on the execution of the district court's decision and scheduled a hearing for January 25, 2024. During the hearing, the Supreme Court, presided over by the Honorable Judge Grosskopf, acknowledged the company's contentions. It clarified that the extensive disclosure mandated by the district court exceeded the necessary requirements in accordance with the law and suggested that the plaintiff negotiate agreements with the company. These agreements are aimed at significantly reducing the scope of disclosure, particularly concerning the period for which documents and correspondence must be provided. Following discussions both outside the courtroom and before the Honorable Judge, where the parties presented their arguments on each dispute demand, partial agreements were reached. These agreements outline the documents the company will provide to the plaintiff.
|
F - 16
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 8: |
Commitments and Contingent Liabilities (Cont.)
|
| c. |
Litigations (Cont.)
|
|
1) |
Class Action (District Court of Tel Aviv - Economic Department) (Cont.) |
|
Validated by the Supreme Court, these agreements substantially reduced the disclosure requirements outlined in the district court's decision. The plaintiff, in turn, waived certain demands entirely and significantly narrowed others. For the limited remaining requirements, it was established that the company would convey its position on transferring the requested documents to the plaintiff in the reduced format proposed during the hearing. It was also decided that if no agreements are reached concerning these documents, the court will make a decision on the matter.
On March 26, 2024, the Company provided the plaintiff with the required documents, in accordance with the agreements between the parties.
On March 12, 2024, following the submission of pleadings by the parties, the Supreme Court reduced the amount of expenses imposed by the district court against the Company in its decision, dated October 1, 2023, since the appeal resulted in a reduction in the extent of disclosure initially determined by the district court.
In April 2024, the parties have agreed to refer the dispute to a mediation procedure before the esteemed retired judge, Dr. Avi Zamir. To date, two mediation meetings have been held.
On January 30, 2025, the parties filed an update with the court, indicating that, as part of the mediation process, they have reached preliminary understandings. As a result, the court was requested to grant the parties an additional 60-day period to allow them to finalize a settlement agreement, which will then be submitted to the court’s approval.
During the period that has elapsed since that update was filed, the parties have submitted several motions seeking extensions to finalize the settlement agreement and submit it for the Court’s approval. Pursuant to the parties’ last motion, which the Court granted, the Court extended the deadline for the parties to complete the necessary steps prior to submitting the settlement agreement for the Court’s approval on September 1, 2026.
Although the parties have not yet reached a conclusive and binding settlement agreement, nor has the settlement agreement been submitted for court approval (or approved by the court), the company estimates, based on its external legal counsel and all facts and circumstances, that the probable loss under the settlement agreement will be approximately $
|
F - 17
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 8: |
Commitments and Contingent Liabilities (Cont.)
|
| c. |
Litigations (Cont.)
|
| 2) |
Third -party notice regarding devices allegedly lost in the Company
On March 16, 2025, the Company was served with a third-party notice from the police (the “Notice”).
According to the Notice, on October 15, 2024, a company named ADSL EICHUT LTD (“ADSL”) and its owners, filed a lawsuit against the police in the Magistrate’s Court in Tel-Aviv, regarding four (4) devices allegedly lost during a police operation that took place on January 7, 2018, during which the police raided ADSL’s warehouse 9 and seized numerous electronical devices. The plaintiffs are seeking compensation from the police in the amount of approximately $
In the Notice, the police argue that the seized devices belonged to the Company and were therefore transferred to it, and that if the four devices were indeed lost, they were apparently lost while in the Company’s possession.
Accordingly, in the Notice the police assert that if they are found liable for compensation, they are entitled to indemnification from the Company.
The Company filed a Statement of Defense on July 6, 2025. In the Statement of Defense, the Company argued, inter alia, that the third-party notice should be dismissed due to its late submission and the police’s attempt to conceal this fact. Additionally, the Company asserted that the notice should be denied on its merits, since the police are not entitled to any indemnification from the Company, given that the claim pertains to actions and/or omissions by the police that are unrelated to the Company; and in any event the equipment in question was either never transferred to the Company, or had already been returned to the plaintiffs pursuant to a previous settlement agreement.
On July 20, 2025, a pre-trial hearing was held. During the hearing, it was decided that the parties would complete the document disclosure proceedings by September 15, 2025, and that they would be summoned to a pre-mediation meeting.
According to the decision at the hearing, on September 15, 2025, the Company sent the police an Affidavit of Disclosure of Documents. Since the police had not sent the Company an Affidavit of Disclosure of Documents, on September 30, 2025, the Company filed a motion to order the police to send the Company an Affidavit of Disclosure of Documents. On October 10, 2025, the Court ordered the police to respond to the motion by October 20, 2025.
On October 27, 2025, the police sent us an Affidavit of Disclosure of Documents and the documents.
On November 16, 2025, a pre-mediation meeting was held. Following this meeting, the parties agreed to attempt to resolve the matter in a mediation session.
Mediation meetings were held on January 14, 2026, February 9, 2026, March 25, 2026 and April 16, 2026.
On April 27, 2026, the plaintiffs informed the Court that the mediation process had failed.
On June 16, 2026, the plaintiffs submitted their evidence. Pursuant to the Court’s decision dated May 18, 2026, the police are required to submit their evidence by August 10, 2026, and the Company is required to submit its evidence by October 14, 2026.
A preliminary hearing was scheduled for November 23, 2026.
As advised by the Company's lawyers, at this early stage, the Company is unable to assess the probability of a favorable or unfavorable outcome in connection with the Notice.
|
F - 18
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 8: |
Commitments and Contingent Liabilities (Cont.)
|
| c. |
Litigations (Cont.)
|
| 3) |
Judicial proceeding against Ceragon Networks Peru S.A.C (“Ceragon Peru”)
On April 16, 2026, a local subcontractor of Ceragon Peru filed a lawsuit against Ceragon Peru seeking payment of approximately $
Ceragon Peru was served with the process on July 24, 2026. It may raise any procedural objections by August 11, 2026, and will file its statement of defense on the merits by September 11, 2026.
Since the agreement with the subcontractor contains and arbitration provision, Ceragon Peru will file a procedural defense to preclude the court to solve this case, forcing the subcontractor to commence an arbitration proceeding.
Since the process is still in its early stages, the Company is unable to assess the success of Ceragon Peru’s position.
|
|
| 4) |
Lawsuit for damages against Ceragon América Latina Ltda. (Ceragon Brazil)
In July 2026, a customer of Ceragon Brazil filed a lawsuit against it seeking payment of approximately $
Since the process is still in its early stages, the Company is unable to assess the probability of a favorable or unfavorable outcome in connection with the claim. |
| Note 9: |
Shareholders' Equity
|
| a. |
Ordinary shares
The ordinary shares of the Company entitle their holders to receive notice to participate and vote in general meetings of the Company, the right to share in distributions upon liquidation of the Company and to receive dividends, if declared.
|
| b. |
Stock Options and RSUs plans
In 2003, the Company adopted a share option plan which has been extended or replaced from time to time. The plan previously in effect was the Amended and Restated Share Option and RSU Plan as amended on August 10, 2014 (the “Plan”). Under the Plan, options and RSUs were granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over
The Company has reserved sufficient authorized but unissued Shares for purposes of the Plan and the New Plan (together the “Plans”) subject to adjustments as provided in the Plans.
|
F - 19
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 9: |
Shareholders' Equity (Cont.)
|
|
The following table summarizes the activities for the Company’s stock options for the six months ended June 30, 2026:
|
|
Six months ended
June 30, 2026
|
||||||||||||||||
|
Number
of options
|
Weighted
average
exercise
price
|
Weighted average remaining contractual term
(in years)
|
Aggregate
intrinsic
value
|
|||||||||||||
|
$ thousands
|
||||||||||||||||
|
Outstanding at beginning of year
|
|
|
|
|
||||||||||||
|
Granted
|
|
|
||||||||||||||
|
Exercised
|
(
|
)
|
|
|||||||||||||
|
Forfeited or expired (*)
|
(
|
)
|
|
|||||||||||||
|
Outstanding at end of the period
|
|
|
|
|
||||||||||||
|
Options exercisable at end of the period
|
|
|
|
|
||||||||||||
|
Vested and expected to vest
|
|
|
|
|
||||||||||||
(*) During the six months ended June 30, 2026,
|
The weighted average fair value of options granted during the six months ended June 30, 2026, and 2025 was $
The intrinsic value of options exercised during the six months ended June 30, 2026, and 2025 was $
The following table summarizes the activities for the Company’s RSUs for the six months ended June 30, 2026:
|
|
Six months ended
June 30, 2026
|
||||||||
|
Number of RSUs
|
Weighted average fair value
|
|||||||
|
Unvested at beginning of year
|
|
|
||||||
|
Granted
|
|
|
||||||
|
Vested
|
(
|
)
|
|
|||||
|
Forfeited
|
(
|
)
|
|
|||||
|
Unvested at end of period
|
|
|
||||||
|
As of June 30, 2026, the total unrecognized estimated compensation cost related to non-vested stock options and RSUs granted prior to that date was $
|
F - 20
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 9: |
Shareholders' Equity (Cont.)
|
|
The following table sets forth the total share-based compensation expenses included in the consolidated statements of operations for the six months ended June 30, 2026, and 2025:
|
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Cost of revenues
|
|
|
||||||
|
Research and development, net
|
|
|
||||||
|
Sales and Marketing
|
|
|
||||||
|
General and administrative
|
|
|
||||||
|
Total share-based compensation expense
|
|
|
||||||
| Note 10: |
Revenues
The Company recognizes contract liabilities, or deferred revenues, when it receives advance payments from customers before performance obligations have been performed. The balance of deferred revenues approximates the aggregate amount of the transaction price allocated to the unsatisfied performance obligations at the end of the reporting period.
The following table presents the changes in deferred revenues balance during the six months ended June 30, 2026:
|
|
Six months ended
June 30, 2026
|
||||
|
$ thousands
|
||||
|
Balance, beginning of the period
|
|
|||
|
New performance obligations
|
|
|||
|
Reclassification to revenue as a result of satisfying performance obligations
|
(
|
)
|
||
|
Balance, end of the period
|
|
|||
|
The Company elected to apply the optional exemption under ASC 606 paragraph 10-50-14(a) not to disclose the remaining performance obligations that relate to contracts with an original expected duration of one year or less.
|
F - 21
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 11: |
Segments and Geographic Information
|
| A. |
The Company applies ASC topic 280, "Segment Reporting", ("ASC 280"). The Company operates in one reportable segment (see Note 1 for a brief description of the Company's business). Reportable segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”). The Company’s CODM is its chief executive officer. The Company’s CODM manages the business and evaluates operating performance based on consolidated net income (loss). The Company’s CODM does not regularly review asset information and, therefore, the Company does not report asset information. The CODM uses consolidated net income to monitor actual operating results to forecasts and prior periods.
|
|
| B. |
The following table summarizes the Company’s segment revenue, significant segment expenses, and segment net income (loss): |
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Revenues:
|
|
|
||||||
|
Cost of revenues
|
|
|
||||||
|
Gross profit
|
|
|
||||||
|
Less:
|
||||||||
|
Employee-related (1)
|
|
|
||||||
|
Other segment items (2)
|
|
|
||||||
|
Financial and other expenses, net
|
|
|
||||||
|
Taxes on income
|
|
|
||||||
|
Net loss
|
(
|
)
|
(
|
)
|
||||
(1) Employee-related includes employee salaries and commissions, payroll taxes, benefits, and outsourced labor costs.
(2) Other segment items include consulting and professional services, depreciation of property and equipment, amortization of intangible assets, share-based compensation expenses, acquisition and integration-related charges, marketing expenses, finance and legal expenses, travel expenses, subcontractors costs, software and subscription costs, overhead expenses and restructuring and related charges.
F - 22
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 11: |
Segments and Geographic Information (Cont.)
|
| C. |
The following table presents the total revenues for the six months ended June 30, 2026, and 2025, allocated to the geographic areas in which they were generated. Revenues are attributed to geographic areas based on the location of the end-users.
|
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
North America (*)
|
|
|
||||||
|
EMEA (**)
|
|
|
||||||
|
Asia-Pacific
|
|
|
||||||
|
India
|
|
|
||||||
|
Latin America
|
|
|
||||||
|
|
|
|||||||
|
(*) As of June 30, 2026, and 2025,
(**) Including Europe, Middle East and Africa.
|
|
June 30,
|
December 31,
|
|||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Long-lived assets, net:
|
||||||||
|
Israel
|
|
|
||||||
|
Others
|
|
|
||||||
|
Total long-lived assets, net (*)
|
|
|
||||||
| (*) |
Long-lived assets are comprised of property and equipment, net and operating lease right-of-use assets.
|
F - 23
CERAGON NETWORKS LTD. AND SUBSIDIARIES
Notes To Condensed Consolidated Financial Statements
| Note 12: |
Earnings Per Share
The following table sets forth the computation of basic and diluted income per share:
|
| a. |
Numerator:
|
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
$ thousands
|
$ thousands
|
|||||||
|
Numerator for basic and diluted income per share -
|
||||||||
|
Net (loss) available to holders of ordinary shares
|
(
|
)
|
(
|
)
|
||||
| b. | Denominator: |
|
Six months ended
June 30
|
||||||||
|
2026
|
2025
|
|||||||
|
Denominator for diluted income (loss) per share -
|
||||||||
|
Weighted average number of shares
|
|
|
||||||
|
Denominator for diluted income (loss) per share - adjusted
|
|
|
||||||
|
The total weighted average number of shares related to the outstanding options and RSUs excluded from the calculations of diluted net earnings per share due to their anti-dilutive effect were
|
F - 24
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Components of Results of Operations
Revenues. We generate revenues primarily from the sale of our products, and, to a lesser extent, services. The final price to the customer
may largely vary based on various factors, including but not limited to the size of a given transaction, the geographic location of the customer, the specific application for which products are sold, the channel through which products are sold, the
competitive environment and the results of negotiation.
Cost of Revenues. Our cost of revenues consists primarily of the prices we pay contract manufacturers for the products they manufacture for
us, the costs of off the shelf parts, accessories and antennas, the costs of our manufacturing and operations facilities, estimated and actual warranty costs, costs related to management of our manufacturers' activity and procurement of our
proprietary and other product parts, supply chain, shipping, cost of royalties, and cost of our operations related facilities, as well as inventory write off costs, depreciation of equipment and amortization of intangible assets. In addition, we pay
salaries and related costs, primarily to our delivery, operations, engineering and customer support employees, and fees to subcontractors, relating to installation, maintenance, and other professional services.
Significant Expenses
Research and Development Expenses, net. Our research and development expenses, net of government grants, consist primarily of salaries and
related costs for research and development personnel, subcontractors' costs, costs of materials, costs of R&D facilities and depreciation of equipment. All of our research and development costs are expensed as incurred, except for development
expenses, which are capitalized in accordance with ASC 985-20 and ASC 350-40. We believe that continued investment in research and development is essential to attaining our strategic objectives.
Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of compensation and related costs for sales and marketing
personnel, trade show and exhibit expenses, travel expenses, commissions and promotional materials.
General and Administrative Expenses. Our general and administrative expenses consist primarily of compensation and related costs for
executive, finance, information systems and human resources personnel, professional fees (including legal and accounting fees), insurance, maintenance costs for information systems software, provisions for credit loss (doubtful debts), depreciation
expenses, and other general corporate expenses.
Restructuring and related charges. Restructuring expenses consist primarily of costs associated with a reduction in workforce,
consolidation of excess facilities, termination of contracts, and the restructuring of certain business functions. Restructuring and related expenses are reported separately in the consolidated statements of operations.
Acquisition- and integration-related charges. Acquisition-related expenses include those expenses related to acquisitions that would
otherwise not have been incurred by the Company, including professional and other services fees, such as legal, audit, consulting, paying agent, and other fees. In addition, Acquisition-related expenses include the fair value adjustment of the
Earn-Out liability. Acquisition-related costs are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.
Integration-related expenses represent incremental costs related to combining the Company and its business acquisitions, such as primarily third-party consulting and other third-party services
related to merging the previously separate companies' systems and processes.
Financial and other expenses, net. Our financial and other expenses, net, consist primarily of gains and losses arising from the
re-measurement of transactions and balances denominated in non-dollar currencies into dollars, interest paid on bank loans and factoring activities, holdback amount fair value adjustments, other fees and commissions paid to banks, actuarial losses,
and other expenses.
Taxes on income. Our taxes on income consist of current corporate tax expenses in various locations and changes in deferred tax assets and
liabilities, as well as changes in reserves for uncertain tax positions.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S (“U.S. GAAP”). These accounting principles require
management to make certain estimates, judgments and assumptions based upon information available at the time they are made, historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates,
judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the periods presented.
Our management believes the accounting policies that affect its more significant judgments and estimates used in the preparation of its consolidated financial statements and which
are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
|
•
|
Revenue recognition;
|
|
•
|
Inventory valuation;
|
|
•
|
Business combination.
|
Revenue recognition. We generate revenues from selling products and services to end users, distributors, system integrators, and original
equipment manufacturers (“OEM”). The Company recognizes revenue when (or as) it satisfies performance obligations by transferring promised products or services to its customers in an amount that reflects the consideration the Company expects to
receive. The Company applies the following five steps: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance
obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.
The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company
considers the promise to transfer tangible products, software products and licenses, network roll-out, professional services and customer support, each of which are distinct, to be the identified performance obligations. In determining the
transaction price, the Company evaluates whether the price is subject to any variable consideration, to determine the net consideration which the Company expects to receive. As the Company’s standard payment terms are less than one year, the
contracts have no significant financing component. The Company allocates the transaction price to each distinct performance obligation, based on their relative standalone selling price. Revenue from tangible products is recognized when control of the
product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied).
The revenues from customer support and extended warranty are recognized ratably over the contract period and the costs associated with these contracts are recognized as incurred.
Revenues from network roll-out and professional services are recognized when the Company's performance obligation is satisfied, usually upon customer acceptance.
The Company accounts for rebates and stock rotations provided to customers as variable consideration, based on historical analysis of credit memo data, rebate plans and stock
rotation arrangements, as a deduction from revenue in the period in which the revenue is recognized.
Inventory valuation. Our inventories are stated at the lower of cost or net realizable value. Cost is determined by using the moving
average cost method. At each balance sheet date, we evaluate our inventory balance for excess quantities and obsolescence. This evaluation includes an analysis of slow-moving items and sales levels by product and projections of future demand. If
needed, we write off inventories that are considered obsolete or excessive. If future demand or market conditions are less favorable than our projections, additional inventory write-offs may be required and would be reflected in cost of revenues in
the period the revision is made.
Business Combination. We apply the provisions of ASC 805, “Business Combination” and we allocate the fair value of purchase consideration
to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is
recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain
intangible assets include, but are not limited to, future expected cash flows from customer relationships, acquired technology and acquired trademarks from a market participant perspective, useful lives and discount rates. Management’s estimates of
fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Acquisition-related expenses are recognized separately from the business
combination and are expensed as incurred.
Results of Operations
The following table presents interim consolidated statement of operations data for the periods indicated and as a percentage of total revenues (in thousands of U.S. dollars).
|
Six months ended
June 30, 2026
(Unaudited)
|
Six months ended
June 30, 2025
(Unaudited)
|
|||||||||||||||
| $ |
%
|
$ |
%
|
|||||||||||||
|
Revenues
|
178,917
|
100.0
|
170,914
|
100.0
|
||||||||||||
|
Cost of revenues
|
119,114
|
66.6
|
113,375
|
66.3
|
||||||||||||
|
Gross profit
|
59,803
|
33.4
|
57,539
|
33.7
|
||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Research and development, net
|
16,346
|
9.1
|
15,581
|
9.1
|
||||||||||||
|
Sales and Marketing
|
26,899
|
15.0
|
24,019
|
14.1
|
||||||||||||
|
General and administrative
|
12,343
|
6.9
|
12,376
|
7.2
|
||||||||||||
|
Restructuring and related charges
|
1,660
|
0.9
|
3,732
|
2.2
|
||||||||||||
|
Acquisition- and integration-related charges
|
233
|
0.1
|
704
|
0.4
|
||||||||||||
|
Total operating expenses
|
57,481
|
32.1
|
56,412
|
33.0
|
||||||||||||
|
Operating income
|
2,322
|
1.3
|
1,127
|
0.7
|
||||||||||||
|
Financial and other expenses, net
|
4,519
|
2.5
|
1,906
|
1.1
|
||||||||||||
|
Taxes on income
|
1,237
|
0.7
|
1,468
|
0.9
|
||||||||||||
|
Net income (loss)
|
(3,434
|
)
|
(1.9
|
)
|
(2,247
|
)
|
(1.3
|
)
|
||||||||
Six months ended June 30, 2026, compared to six months ended June 30, 2025
Revenues totaled $178.9 million in the first six months of 2026 as compared to $170.9 million in the first six months of 2025, an increase
of $8.0 million, or 4.7%. Revenues in the North America region increased to $52.2 million in the first six months of 2026, from $44.4 million in the first six months of 2025. Revenues in the India region increased to $75.0 million in the first six
months of 2026, from $67.7 million in the first six months of 2025. Revenues in the EMEA region decreased to $24.9 million in the first six months of 2026, from $26.6 million in the first six months of 2025. Revenues in the Latin America region
decreased to $14.2 million in the first six months of 2026, from $15.0 million in the first six months of 2025. Revenues in the APAC region decreased to $12.7 million in the first six months of 2026, from $17.2 million in the first six months of
2025.
Cost of Revenues. Cost of revenues totaled $119.1 million in the first six months of 2026, compared to $113.4 million in the first
six months of 2025, an increase of $5.7 million, or 5.1%. The increase was primarily attributed to a $2.8 million increase in material costs, a $2.0 million increase in Shipping and storage, a $1.9 million increase in employee-related salary
costs, a $1.7 million increase in other direct costs, a $0.9 million increase in Overhead, partially offset by a $3.6 million decrease in services costs.
Gross Profit. In the first six months of 2026, gross profit increased to $59.8 million, or 33.4% as a percentage of revenues, from $57.5 million, or 33.7% in
the first six months of 2025. The increase in gross profit is mainly attributed to the increase in revenues, offset mainly by product and geographic mix as well as cost increases.
Research and
Development Expenses, Net. Research and development expenses, net, totaled $16.3 million in the first six months of 2026, compared to $15.6 million in the first six months of 2025, an increase of $0.7 million, or 4.9%. The increase
was primarily attributed to higher subcontractor expenses of $0.4 million and higher third-party material purchasing expenses of $0.2 million and a net increase of $0.1 million in other research and development expenditures. As a percentage of
revenues, research and development expenses, net, represent 9.1% and 9.1% in the first six months of 2026 and 2025, respectively.
Sales and Marketing Expenses. Sales and Marketing expenses totaled $26.9 million in the first six months of 2026, compared to $24.0
million in the first six months of 2025, an increase of $2.9 million, or 12%. This increase was primarily attributed to an increase of $2.0 million in salaries and related expenses, an increase of $0.6 million in travel expenses, an increase of $0.5
million in software and hardware maintenance, an increase of $0.4 million in overhead, offset by a decrease of $0.3 million in agents’ commissions and a decrease of $0.3 million in other sales and marketing expenses. As a percentage of revenues,
sales and marketing expenses represent 15.0% and 14.1% in the first six months of 2026 and 2025, respectively.
General and Administrative Expenses. General and administrative expenses totaled $12.3 million in the first six months of 2026, compared
to $12.4 million in the first six months of 2025, a decrease of $0.1 million, or 0.3%. The decrease was primarily attributed to a change of $0.5 million in credit loss expenses and a decrease of $0.5 million in IT-related costs, offset by an increase
of $0.5 million in salary and employee-related expenses and an increase of $0.4 million in office expenses. As a percentage of revenues, general and administrative expenses represent 6.9% and 7.2% in the first six months of 2026 and 2025,
respectively.
Restructuring and related charges. Restructuring and related charges totaled $1.7 million in the first six months of 2026 as compared to
$3.7 million in the first six months of 2025, a decrease of $2.1 million. The decrease was primarily attributable to lower termination severance pay and related employee costs.
Acquisition- and integration-related charges. Acquisition- and integration-related charges totaled $0.2 million in the first six months of
2026 as compared to $0.7 million in the first six months of 2025, a decrease of $0.5 million.
Financial and other expenses, Net. Financial and other expenses, net, totaled $4.5 million in the first six months of 2026 as compared to $1.9 million in the
first six months of 2025, an increase of $2.6 million. The increase was mainly attributable to a change of $2.0 million in mark-to-market revaluation of acquisition-related holdback liabilities and an increase of $1.4 million in foreign exchange
rate losses, offset by a decrease of $0.8 million in interest expenses.
Taxes on income. Taxes on income totaled $1.2 million in the first six months of 2026 as compared to $1.5 million in the first six months
of 2025, a decrease of $0.3 million. The decrease was mainly attributable to a decrease in current tax expenses of $0.3 million.
Net income (loss). The Company had a net loss of ($3.4) million in the first six months of 2026 as compared to a net loss of ($2.2)
million in the first six months of 2025, a change of ($1.2) million. As a percentage of revenues, net (loss) was (1.9%) and (1.3%) in the first six months of 2026 and 2025, respectively. Despite a $2.3 million increase in gross profit, net results
were affected by a $1.0 million increase in total operating expenses and a $2.6 million increase in finance expenses, partially offset by a $0.3 million decrease in income tax expense.
Liquidity and Capital Resources
Since our initial public offering in August 2000, we have financed our operations primarily through the proceeds of that initial public offering, proceeds from exercise of stock options, follow-on
offerings, cash provided by operating activities, and various loans and facilities from banks, including factoring and grants from the IIA.
The Company entered into the revolving Credit Facility, dated as of March 14, 2013 by and among the Company and Bank Hapoalim B.M., HSBC Bank Plc, Bank Leumi Le’Israel Ltd. and First International
Bank of Israel Ltd. (the “Credit Facility”). The Credit Facility has been renewed and amended several times during the past years according to the Company’s needs and financial position.
In June 2023, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by additional year to June 30, 2024. This amendment also included
an increase of $9.8 million to $72 million to the Credit Facility for Loans and a decrease of $11.9 million to the bank guarantees credit lines to $45.9 million.
In December 2023, in connection with the acquisition of Siklu, the Company signed an amendment to the Credit Facility in which it obtained the approval of the syndication of banks to carry out
Siklu's acquisition and added additional bank, Bank Mizrahi Tefahot Ltd., to the syndication agreement. This amendment also included an increase of $5 million to $77 million to the Credit Facility for Loans.
In June 2024, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by an additional 2 years to June 30, 2026. This amendment also
included a decrease of $5 million to the bank guarantees credit lines to $40.9 million.
In June 2026, the Company signed an amendment to the Credit Facility pursuant to which the term of the Credit Facility was extended by an additional 26 months to August 31, 2028. This amendment also
included a decrease of $20.9 million to the bank guarantees credit lines to $20.0 million, and the approval of an un-committed bank guarantee credit line of $20.0 million. In addition, the covenants have been updated as following: ratio of financial
debt, net to accounts receivable increased from 30% to 50%, ratio of financial debt, net to net working capital increase from 30% to 50%.
As of June 30, 2026, the Company has utilized $12.0 million of the $77 million available under the Credit Facility for short-term loans. During 2026, the credit lines carried interest rates in the
range of 4.75% and 5.42%.
As of June 30, 2026, the total credit facilities for bank guarantees and for loans is $97.0 million.
The Credit Facility is secured by a floating charge over all Company assets as well as several customary fixed charges on specific assets.
Repayment could be accelerated by the financial institutions in certain events of default including in insolvency events, failure to comply with financial covenants or an event in which a current or
future shareholder acquires control (as defined under the Israel Securities Law) of the Company.
The Credit Facility contains financial and other covenants requiring that the Company maintains, among other things, minimum shareholders' equity value and financial assets, a certain ratio between
its shareholders' equity (excluding total intangible assets and goodwill) and the total value of its assets (excluding total intangible assets and goodwill) on its balance sheet, a certain ratio between its net financial debt to each of its working
capital and accounts receivable.
As of June 30, 2026 and 2025, the Company met all of its covenants.
Net cash provided by operating activities was $11.6 million for the six months ended June 30, 2026. In the first six months of 2026, our cash provided by operating activities was predominantly
affected by the following principal factors:
|
|
• our net loss of ($3.4) million;
• $6.9 million depreciation and amortization expenses;
• $3.1 million increase in trade payables;
• $2.6 million share-based compensation expenses;
• $2.6 million increase in accounts payable and accrued expenses;
• $2.1 million decrease in operating lease right-of-use assets;
• $1.6 million decrease in inventory; and
• $0.8 million decrease in other accounts receivables;
|
These factors were offset mainly by:
|
|
• $2.1 million decrease in operating lease liability
• $1.5 million increase in trade receivable, net; and
• $1.1 million decrease in deferred revenue.
|
Net cash provided by operating activities was $13.4 million for the six months ended June 30, 2025. In the first six months of 2025, our cash provided by operating activities was predominantly
affected by the following principal factors:
|
|
• our net loss of ($2.2) million;
• a $28.1 million decrease in trade receivable, net;
• $7.0 million depreciation and amortization expenses;
• $2.2 million share-based compensation expenses;
• a $2.1 million decrease in operating lease right-of-use assets;
• a $0.1 million decrease in inventory; and
• a $0.1 million decrease in accrued severance pay and pensions, net.
|
These factors were offset mainly by:
|
|
• a $18.1 million decrease in trade payables;
• a $2.5 million decrease in accounts payable and accrued expenses;
• a $2.3 million increase in other accounts receivables;
• a $0.9 million decrease in operating lease liability; and
• a $0.2 million decrease in deferred revenue.
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Net cash used in investing activities was approximately $8.5 million in the first six months of 2026, attributed
to the purchase of property and equipment of $5.6 million, software development costs capitalized of $2.9 million, compared to $15.7 million in the first six months of 2025 attributed to the purchase of property and equipment of $7.4 million,
software development costs capitalized of $1.7 million and payments made in connection with business acquisitions, net of acquired cash of $6.6 million.
Net cash used in financing activities was approximately $6.7 million in the first six months of 2026, compared to net cash used in financing activities of $4.0 million in the
first six months of 2025. In the first six months of 2026, our net cash used in financing activities was primarily due to $7.0 million repayments of bank credit and loans, net, offset by $0.3 million of proceeds from exercise of stock options. In
the first six months of 2025, our net cash used in financing activities was primarily due to $4.7 million repayments of bank credit and loans, offset by $0.7 million of proceeds from exercise of stock options.
Our capital requirements are dependent on many factors, including, among other things, working capital requirements to finance the business activity of the Company and the
allocation of resources to research and development, marketing and sales activities. We may decide to raise capital if we require it, subject to changes in our business activities.
We believe that current cash and cash equivalent balances, together with the credit facility available with the lenders, will be sufficient for our requirements through at least
the next 12 months.