Good day everyone and welcome to the Ceragon Network Limited Third Quarter 2017 Results conference call. Today’s call is being recorded and will be hosted by Mr. Ira Palti, President and CEO of the Ceragon Networks. Today’s call will include statements concerning Ceragon’s future prospects that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current beliefs, expectations and assumptions of Ceragon’s management. For examples of the forward-looking statements, please refer to the Forward Looking Statements paragraph in our press release that was published earlier today. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including risks associated with the decline of revenues; the risks relating to the concentration of our business in India, Latin America and in developing nations and the political, economic and regulatory risks from doing business in these regions, including potential currency restrictions, the risks associated with the change in Ceragon’s gross margin as a result of changes in the geographic mix of revenues, the risk associated with the loss of a single customer or customer group which represents a significant portion of Ceragon’s revenues, the risk associated with Ceragon’s failure to effectively compete with other wireless equipment providers, and other risks and uncertainties detailed from time to time in Ceragon’s annual report on Form 20-F and Ceragon’s other filings with the Securities and Exchange Commission, and represent our views only as of the date they are made and should not be relied upon as representing our views as of any subsequent date. We do not assume any obligation to update any forward-looking statements. Ceragon’s public filings are available from the Securities and Exchange Commission’s website at www.sec.gov or may be obtained from Ceragon’s website at www.ceragon.com. Also, today’s call will include certain non-GAAP numbers. For a reconciliation between GAAP and non-GAAP results, please see the table attached to this press release that was issued earlier today. I will now turn the call over to Mr. Ira Palti, President and CEO of Ceragon. Please go ahead, sir.

Thank you for joining us today. With me on the call is Doron Arazi, our CFO. We are pleased to report another solid quarter consistent with the parameters that we gave for the second half of the year. Revenue was toward the lower end of our run rate assumption of $75 million to $80 million, but we had very good gross margin over 35%. There were several contributing factors to the high level this quarter, and we haven’t changed our view on what level of gross margin is sustainable going forward. We also had strong bookings in Q3 with a book to bill ratio over 1, so the main takeaway from this quarter is that our profit-focused strategy continues to serve us well and the business is moving along nicely. Timing issues such as order lumpiness and revenue recognition sometimes make it difficult to figure out how things are trending, and we will try to help with our views on what’s on that during our remarks. Looking at the different regions, India continues to be a very strong driver of our revenue. As we know from the pattern earlier this year, orders from this region can e quite lumpy and the timing of revenue recognition depends on the different elements of each deal, which can make it quite difficult to discern the trend. In general, we think that the aggressive build-out resulting from the competition between Bharti Airtel and Reliance Jio will continue for another one to two years. The consolidation between Vodafone and Idea will create a stronger third competitor at some point as well, which is a positive for us. We’re expecting additional orders from this region during the near term, but we don’t know the exact timing, so it’s difficult to talk about trends when these orders…

Thank you, Ira. Since you’ve all seen the press release, I’ll just highlight some of the significant items. Our third quarter revenue of $76 million represented an 18.6% sequential decrease from Q2 in which we recognized over $20 million of extra revenue from additional orders from India received in Q1 that were not part of our plan. As shown in today’s press release, after a big spike in India during Q2, the geographic breakdown of revenue shifted in Q3 to a low percentage from India as expected. It’s worth adding that it’s difficult to define what is a normal level of business from India because of the tendency to be lumpy from quarter to quarter. Revenues from Latin America, Europe and North America all increased sequentially in both absolute dollars and as a percentage of revenue. Asia Pacific and Africa remained about the same. In any case, this one quarter change is not necessarily an indication for longer term trends, which are as Ira described them. We had two above-10% customers in the quarter, a large customer in India and one in Latin America. Non-GAAP gross margin was 35.2% in Q3, which improved sequentially primarily due to the shift in geographic mix of revenue and to a lesser extent due to low shipping costs. While we are encouraged by the trend down of the shipping costs, we do not expect them to be lower in the same magnitude, so we want to be clear that the 35% gross margin we reported for Q3 is not the new normal. However, based on the geographic mix of our orders and the pipeline of potential business, we continue to believe we can sustain gross margins above 32% in Q4. Turning to expenses, in Q3 we continued to keep tight control with operating expenses…

[Operator instructions] First we have the line of Alex Henderson of Needham & Co. Your line is open.

Hi guys. So a lot of content with indications of direction but not a lot of granularity around it, so I was hoping to pin down a little bit of what you’re trying to say. It sounds like you expect some fairly significant orders from India, but you don’t know whether it’s going to land in 4Q or whether it will roll into 1Q. If we don’t assume those land in 4Q, would we be then assuming a fairly weak condition in India again in the fourth quarter, implying a number similar to what we just reported and then towards the upper end of that 2018 number that you just provided a moment ago as that rolls into the first quarter, or how should we be thinking about it? Can you give us a little bit more kind of push and shove on that?

Yes, hi Alex. So if the orders we expect from India will not come on time in which we’ll be able to recognize them as revenue, we expect the same order of magnitude of revenue from India or slightly lower than what you have seen in Q3, probably slightly lower. Yes, if that happens, this will give us a good start most probably to 2018. Whether this will bring us to the higher end of the range of the $320 million in 2018, that’s, I would say, early to envision because as you know, the $320 million is not just comprised of India, although India has a significant portion in it.

Okay, I think I get the gist of that. So again, assuming the India business pushes into ’18, then we would probably sustain margins closer to the 35, maybe a hair lower, but well above your norm because of the lack of India in the mix, so kind of a consistent quarter sequentially on an earnings basis, it sounds like. Is that the right way to think about it?

Generally speaking, yes, with a slight correction, and I think I emphasized that on the script. The 35% is too high, but we do believe that we can be significantly higher than 32%.

I see, but--so maybe a hair lower earnings on an EPS basis, but in the general ballpark, call it $0.03 to $0.04 kind of number. So as we go into 2018, Sprint and T-Mob have been really critical pieces of your puzzle in North America. Do you have any sense as to how long it might take for them to come back in, and what kind of sizing that might be if those companies come back in? I know that there was a fairly large program that was outstanding before the merger talk started to happen. I assume that that would probably come back to the forefront.

Okay Alex, so let’s make some sense of that. Timing, I don’t have better knowledge than I had 48 hours ago, okay, which means we’ll have to work with them and see what the timing is and when they continue in moving and expanding the programs. Let’s remember that on the other hand that at least in the first half and mostly most of the third quarter from our perspective, some of the slow-down by the way in both were not related as much to the merger but were related to all sorts of deployment issues that they had around different strategies and different geographies. We have seen them working out most of those slowly, which I guess that if - and that’s an if - and when they decide to really start moving much faster than they are moving right now, we’ll probably see that towards probably second quarter of next year, but that’s too early to say. You know, I’m at this point guessing from interpolating knowledge from other operators around the world and the way they behave, not from things that we know on the ground at this point.

So with DragonWave having been--having imploded and then getting an asset purchase, I guess is the way I would describe that, by a third party, what’s happening with that install base and competition for that footprint?

We are aggressively going after that footprint and the competition, by the way worldwide, not only in the U.S. We had significant successes in the U.S. and Canada market lately with some of their customers and some of their channel partners which have migrated to use our products, and we are continuing that push worldwide with aggressive programs. But remember, the total number that they had around their products, not the stuff that they did with Nokia, was somewhere below the $10 million a quarter in general lately, so it’s there and we’re going after the install base. Customers are very worried and coming in many ways to us and asking how we can help them move forward, and I’ve seen it in different geographies.

One last question and then I’ll cede the floor. The comment, quote, exploring options, can you talk a little bit about what you mean by that? What is the range of options that you are looking at? Does it range from buying a comparable sized company to buying small assets to possibly selling the company? Is it--what range of options are we talking about here?

All of them. I’ll say it this way - we’re looking at all the options and don’t [indiscernible] one way or the other what’s more probable or less probable, but we have to be diligent in what we do. We look at all the options. Some of them are viable, some of them are less. We look at technology options, market share options, asset options, all sorts of stuff on the table.

So there’s at least one major player that is independent. Is that somebody who’s of interest, or--

By the way, independents out there, there are at least two. There is Aviat and there is Sia [ph], and there are some smaller ones. We look at different options with some of them. I think I indicated on the call in Q2 we are making all sorts of moves with some of the smaller players which are still in business and haven’t gone under like DragonWave, for them to OEM our products in some situations. There’s all sorts of things that you can do strategically to gain the market share and really build on our strengths as the leader technologically and geographical spread to increase market share at this point.

Great, thanks. I appreciate that commentary.

Thank you.

Next we have the line of George Iwanyc of Oppenheimer. Your line is open.

Thank you for taking my question. So Ira, if you remove India from the mix, do you expect growth in the other regions in the fourth quarter, and what type of seasonality are the other regions delivering at this point?

So George, this is Doron. Generally speaking, we hope to replicate more or less the level of revenue we have seen from the other regions in Q4, although the composition between these regions might be slightly different. What was your next--the second question, please?

When you look at, say, a full year, 1Q through 4Q, what type of seasonality does the industry support at this point? Is it still a decline in the first quarter and a stronger second half that we used to see a couple of years ago, or does the lumpiness at this point just remove any normal seasonal patterns?

Yes, I will start with the last sentence. I think that the lumpiness in India is actually scrambling the seasonality. If we take out the lumpiness situation in India, one could assume that the trends that we have seen in the past will continue, which means probably Q1 is weaker and sometimes also Q4 is weaker to [indiscernible] degree, especially due to the holidays towards the end of the year. Usually Q2 and Q3 tend to be stronger, but going back to the caveat with India, you can never know.

Okay. When you look at the overall industry at this point, I think your prior commentary suggested that 2018 could be flattish. How does the market outlook look at this point for the next year?

The market outlook, if I look at some of the analyst reports and if you look at the big guys, I think everyone is indicating a flat year for the next year in general.

Okay, and then with the opportunities for market share gains and potentially gains in public safety or other markets, are you still comfortable that you can do quite a bit better than the overall market?

That’s a question which I’ll answer a little bit differently, because I don’t look at much on doing better than the market at the top line because there’s where the big lumpiness is. I think the focus, and that’s where we are still in planning, and the target of planning is making sure that we do and we are in a position to try and increase the profitability next year with different shifts. Part of it is exactly what you’re saying, with us gaining market share in public safety and the vertical helps us, because it means that we’re getting better dollars, if you can say it this way, in places where the margins are a little bit better. So it’s also focusing on where the mix is and making sure that we gain the market share that we want in the places that are more profitable.

Two final areas of questions for me. One, on the complementary areas, what areas do you see a good and natural symmetry that you could focus on, either internally with your own R&D or through a partnering or acquisition type of strategy?

I think we have talked about it in the past. We look at two vectors on those, and they are--and the way, making sure that we stay within the or close to the customer base that we are, which are mobile operators and where they operate, because that’s their big investment from our strategy which is geographical spread, and as I said on the call, a very close relationship with a lot of the decision makers in that space. So we’re looking at additional product into the mobile operators, mainly into their backhauling network and different technologies, and in some cases extending that network all the way to special cases around the access, where the access is less on the mobile side but [indiscernible] support, for example smart cities, support public safety, support fixed wireless access to the home. We are looking at different adjacent markets in there where the technologies are sometimes smaller, more unique, maybe sometimes more dense in the deployments.

Okay, and the final area, 5G - between now and 2020 when 5G starts to ramp, do you see any other market catalysts that could come into play, either from cyclicality and spending or another event, and when you talk about a 5G ramp, how much would be incremental at this point when you look at how spending has gone with past transitions?

I think that the drivers right now is exactly what we’re seeing and where we are winning, is look at different markets where for one reason or another, a competitive situation comes up with people trying to capture significant market share, usually around real deployment of 4%, LTE or LTE+. I think we refer to that in our success with those operators in the U.S. slowdown and their again competitive situation, India, at some point in Mexico which we believe will return as a competitive state, and I expect that same type of situation to arise in different places around the world. Those are usually the drivers which generate for a period of somewhere between two to three years very aggressive market behavior and expansions of networks, and that’s where we excel and we can capture on those the same way that we are capturing right now. This will drive, as you say, expansion in different places. If we go to 5G, and again as I said on my notes, we don’t expect all of it and only a very small part of it to be incremental. At this point, I don’t have--we have our estimations but if I look at the market estimations from some of the analysts, they do see growth in the market but not in double digit numbers, usually in low single digit numbers around the 5G deployments, and also we have shifts in the types of technologies and a lot of the stuff that we are doing technically right now so we can take our multicore technologies one step further, both in capacities, density, spectrum usage and others to make that available.

Right, thank you very much.

Thank you very much, George.

Next we have the line of Gunther Carter of Discovery Group. Your line is open.

Yes, thank you. Are you still planning to leave the Tel Aviv Stock Exchange in December?

Again, please repeat?

Are you still planning to leave the Tel Aviv Stock Exchange?

Yes, the answer is yes. It’s not planning. I think we had announced and will be effective on--

I think it’s starting November 9.

Thank you.

At this time, we have no further questions in queue. I’ll be happy to turn it back to our hosts for any closing remarks.

Thank you very much for joining us on the call today. I would be glad and we would be glad as a team to further clarification and having one-on-one calls with a lot of you out there, both on the phone and if you approach us and face-to-face over the next few weeks. Thank you and have a good day.

Ladies and gentlemen, that does conclude the presentation for this morning. We thank you very much for your participation and for using our AT&T Executive teleconference service. You may now disconnect.