Record Bookings, a Squeezed Margin, and a Shifting Competitive Landscape
Ceragon's India-driven order surge and rivals' retreat coincide with a cost storm that compresses margins
CRNT · Earnings Call · 2026-08-11
Ceragon Networks reported a quarter that splits the story into two: a demand engine firing on all cylinders — record bookings, a decade-best backlog — and a cost environment that is squeezing margins and forcing guidance down. Both are real, and both matter for the next few quarters.The Demand Engine: India and the Competitive Void
The headline is the order book. Revenue of $93.9M, up 14% year over year, was good, but the real signal is what's coming. Bookings in Q2 hit their highest since Q1 2024, and the first-half book-to-bill is the best in ten years. CEO Doron Arazi attributed this to "particularly strong execution in India" and a structural shift in competition: “We believe that 2 significant competitors are without visible technological continuity and may be observed as effectively out of the market.” — Doron Arazi, Chief Executive Officer · 2026-08-11India is the centerpiece. The company has booked roughly $120M in orders through late July, predominantly from two leading mobile operators, for 4G/5G expansion and fixed wireless access. The new IP-50EX platform and multi-band solutions are winning business because they deliver fiber-like capacity with faster deployment and lower TCO. This is a Tier 1 story, but it's also testament to how the competitive vacuum is opening doors. This competitive tailwind has been building; in May, Arazi highlighted: “We see a higher or stronger level of engagement with many customers that are basically potential customers to us...” — Doron Arazi, Chief Executive Officer · 2026-05-19
Similarly, North America remains strong, with revenue from an existing Tier-1 carrier slightly above expectations, though supply-chain timing shifts some revenue into Q3. A new Tier-1 has completed a proof-of-concept on the 5G FR2 solution and is now in commercialization discussions. The CEO noted the increased interest in LEO connectivity following the SpaceX IPO but framed it as complementary: “the fundamental limitation is area spectral efficiency... if you need very high capacity, at this point, at least, the LEO is not a great solution.” — Doron Arazi, Chief Executive Officer · 2026-08-11
The Cost Storm: Why Margins Are Under Pressure
The demand story is undeniable, but the bottom line is not cooperating. Non-GAAP gross margin fell to 32.2% from 35.2% a year ago, and CFO Ronen Stein was blunt: “Given the magnitude and breadth of the cost pressures, we do not currently expect our mitigation initiatives to appreciably offset the pressure in the near term.” — Ronen Stein, Chief Financial Officer · 2026-08-11 The company cut full-year gross margin guidance to 33.5%-34.5% from 35.5%, and operating margin to 5%-6% from 6.5%-7.5%. The culprit is a component costs surge driven by the AI-driven "perfect storm" in semiconductors, as well as geographic mix dragged by India's lower-margin business.Arazi elaborated: “the issue is the disruption in the supply chain and time line of getting components.” — Doron Arazi, Chief Executive Officer · 2026-08-11 The CFO added that H2 cost pressures will persist, with improvement expected only gradually in 2027 as product redesigns and potential price increases take effect. Earlier calls downplayed tariff effects, but the hardware crunch is now front and center; as Arazi said back in August 2025: “So far, we have not seen any change in buying patterns from the CSPs.” — Doron Arazi, Chief Executive Officer · 2025-05-07
So I cannot guide on a quarterly basis, but the H2... this is supposed to be already covered. So the costs, we don't see in 2026 in the second half much improvement on the cost side.
Beyond Hardware: Private Networks and Managed Services
Amid the margin fog, the strategic narrative is expanding beyond traditional wireless transport. Private networks delivered record bookings in North America, and global private network growth is forecast above 30% CAGR over four years. The company is now competing for end-to-end projects combining wireless transport with private 5G and LTE. As Arazi said: “we continue to assume in our analysis that a single high-digit growth in revenue is a reasonable assumption.” — Doron Arazi, Chief Executive Officer · 2026-08-11Meanwhile, managed services are adding a recurring revenue layer: a 2-year, $3.5M contract with a Mexican operator and a 5-year agreement worth up to $70M with a Tier-1 APAC operator. This is a deliberate shift to longer-duration relationships, as management noted on the call: “Managed and professional services remain an important part of our strategy to increase the value we provide to customers while building a more diversified revenue base.” — Doron Arazi, Chief Executive Officer · 2026-08-11
The private network opportunity is real, but it carries longer sales cycles and will take time to show up in revenue. The immediate tension is between the strong demand signals and the supply chain challenge that is capping profitability. Ceragon is betting that the competitive dislocation gives it enough time and share to ride out the cost storm.