Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR

15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2023

Commission File Number: 0-30862

CERAGON NETWORKS LTD.

(Translation of registrant’s name into English)

3 Uri Ariav st., Rosh Ha’Ayin, Israel, 4810002

(Address of principal executive offices)

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, 2023, 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. 333-217194) 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, 2022.

Exhibits

Exhibit Number	Description

99.1	Unaudited financial statements of Ceragon Networks, Ltd. for the six months ended June 30, 2023.

99.2	Operating and Financial Review and Prospects for the six months ended June 30, 2023.

101	Interactive Data File relating to the materials in this report on Form 6-K is formatted in Extensible Business Reporting Language (XBRL).

This Report on Form 6-K and the exhibits hereto are hereby incorporated by reference into the Registrant’s Registration Statement on Form F-3 (No. 333-217194), as amended and supplemented from time to time.

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.

	CERAGON NETWORKS LTD.
Date: September 28, 2023	By: /s/ Ronen Stein
	Name: Ronen Stein Title: Chief Financial Officer

Exhibit 99.1

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2023

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

	Page

Interim Consolidated Balance Sheets	2 - 3

Interim Consolidated Statements of Operations	4

Interim Consolidated Statements of Comprehensive Income (loss)	5

Interim Consolidated Statements of Changes in Shareholders' Equity	6

Interim Consolidated Statements of Cash Flows	7

Notes to Interim Consolidated Financial Statements	8 - 20

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	Note		December 31, 2022		June 30, 2023
					Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	22,948	$	24,529
Trade receivables (net of allowance for credit losses of $22,410 and $22,961 at December 31, 2022 and June 30, 2023 (unaudited), respectively)				100,034		107,592
Other accounts receivable and prepaid expenses				15,756		15,813
Inventories		3		72,009		67,836

Total current assets				210,747		215,770

NON-CURRENT ASSETS:
Severance pay and pension fund				4,633		4,705
Property and equipment, net				29,456		30,494
Operating lease right-of-use assets				17,962		16,724
Intangible assets, net				8,208		9,027
Other non-current assets				18,312		17,744

Total non-current assets				78,571		78,694

Total assets			$	289,318	$	294,464

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	Note		December 31, 2022			June 30, 2023
						Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Trade payables			$	67,384		$	62,769
Deferred revenues				3,343			3,104
Short-term loans				37,500			39,550
Operating lease liabilities				3,745			3,246
Other accounts payable and accrued expenses				20,864			23,565

Total current liabilities				132,836			132,234

LONG-TERM LIABILITIES:
Accrued severance pay and pensions				9,314			9,054
Deferred revenues				11,545			12,170
Operating lease liabilities				13,187			11,827
Other long-term payables				2,653			2,797

Total long-term liabilities				36,699			35,848

COMMITMENTS AND CONTINGENT LIABILITIES		6

SHAREHOLDERS' EQUITY:		7

Share capital:
Ordinary shares of NIS 0.01 par value – Authorized: 120,000,000 shares at December 31, 2022 and June 30, 2023 (unaudited); Issued: 87,834,902 and 87,873,775 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively; Outstanding: 84,353,681 and 84,392,252 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively				224			224
Additional paid-in capital				432,214			434,221
Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2022 and June 30, 2023 (unaudited).				(20,091	)		(20,091	)
Accumulated other comprehensive loss				(11,156	)		(10,620	)
Accumulated deficit				(281,408	)		(277,352	)

Total shareholders' equity				119,783			126,382

Total liabilities and shareholders' equity			$	289,318		$	294,464

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except per share data)

	Six months ended June 30,
	2022			2023
	Unaudited

Revenues	$	140,993		$	169,560
Cost of revenues		100,250			111,028

Gross profit		40,743			58,532

Operating expenses:
Research and development, net		14,292			15,750
Sales and Marketing		18,134			19,974
General and administrative		9,898			11,542
Restructuring and related charges		-			897

Total operating expenses		42,324			48,163

Operating income (loss)		(1,581	)		10,369

Financial expenses and others, net		1,516			3,344

Income (loss) before taxes		(3,097	)		7,025

Taxes on income		711			2,969

Net income (loss)	$	(3,808	)	$	4,056

Basic net income (loss) per share	$	(0.05	)	$	0.05
Diluted net income (loss) per share	$	(0.05	)	$	0.05

Weighted average number of shares used in computing basic net income (loss) per share		83,989,766			84,359,762

Weighted average number of shares used in computing diluted net income (loss) per share

83,989,766

85,152,634

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands

	Six months ended June 30,
	2022			2023
	Unaudited

Net income (loss)	$	(3,808	)	$	4,056
Other comprehensive loss:

Change in foreign currency translation adjustment		444			908

Cash flow hedges:
Change in net unrealized losses		(3,655	)		(1,889	)
Amounts reclassified into net income (loss)		293			1,517
Net change		(3,362	)		(372	)

Other comprehensive income (loss), net		(2,918	)		536

Total of comprehensive income (loss)	$	(6,726	)	$	4,592

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

U.S. dollars in thousands (except share and per share data)

Six months ended June 30, 2022:

	Ordinary shares		Share capital			Additional paid-in capital		Treasury shares at cost			Accumulated other comprehensive loss			Accumulated deficit			Total shareholders' equity
Balance as of January 1, 2022		83,931,596	$	224		$	428,244	$	(20,091	)	$	(9,507	)	$	(261,719	)	$	137,151

Exercise of options and vesting of RSUs		100,534		*	)		113		-			-			-			113
Share-based compensation		-		-			1,435		-			-			-			1,435
Other comprehensive loss, net		-		-			-		-			(2,918	)		-			(2,918	)
Net loss		-		-			-		-			-			(3,808	)		(3,808	)

Balance as of June 30, 2022 (Unaudited)		84,032,130	$	224		$	429,792	$	(20,091	)	$	(12,425	)	$	(265,527	)	$	131,973

Six months ended June 30, 2023:

	Ordinary shares		Share capital		Additional paid-in capital		Treasury shares at cost			Accumulated other comprehensive loss			Accumulated deficit			Total shareholders' equity
Balance as of January 1, 2023		84,353,681	$	224	$	432,214	$	(20,091	)	$	(11,156	)	$	(281,408	)	$	119,783

Exercise of options and vesting of RSUs		38,571		-		30		-			-			-			30
Share-based compensation		-		-		1,977		-			-			-			1,977
Other comprehensive income, net		-		-		-		-			536			-			536
Net income		-		-		-		-			-			4,056			4,056

Balance as of June 30, 2023 (Unaudited)		84,392,252	$	224	$	434,221	$	(20,091	)	$	(10,620	)	$	(277,352	)	$	126,382

*) Represent an amount lower than $ 1.

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Six months ended June 30,
	2022			2023
	Unaudited
Cash flow from operating activities:

Net income (loss)	$	(3,808	)	$	4,056
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		5,775			5,135
Loss from sale of property and equipment, net		20			30
Stock-based compensation expense		1,435			1,977
Decrease in accrued severance pay and pensions, net		(369	)		(344	)
Increase in trade receivables, net		(4,173	)		(6,910	)
Decrease (increase) in other accounts receivables and prepaid expenses (including other long-term assets)		(3,056	)		551
Decrease in operating lease right-of-use assets		1,873			1,897
Decrease in inventory, net of write off		449			4,059
Increase (decrease) in trade payables		1,339			(3,955	)
Increase (decrease) in other accounts payable and accrued expenses (including other long-term liabilities)		(1,706	)		2,326
Decrease in operating lease liability		(4,071	)		(2,518	)
Increase in deferred revenues		1,303			386

Net cash provided by (used in) operating activities		(4,989	)		6,690

Cash flow from investing activities:

Purchase of property and equipment		(5,368	)		(5,472	)
Purchase of intangible assets, net		(437	)		(1,837	)

Net cash used in investing activities		(5,805	)		(7,309	)

Cash flow from financing activities:

Proceeds from exercise of stock options		113			30
Proceeds from bank credits and loans, net		17,100			2,050

Net cash provided by financing activities		17,213			2,080

Translation adjustments on cash and cash equivalents		94			120
Increase in cash and cash equivalents		6,513			1,581
Cash and cash equivalents at the beginning of the period		17,079			22,948

Cash and cash equivalents at the end of the period	$	23,592		$	24,529

Changes of property and equipment not resulted in cash outflows as of June 30, 2022 and 2023 amounted to $ 2,316 and $ 638.

The accompanying notes are an integral part of the interim consolidated financial statements

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 1:

GENERAL

Ceragon Networks Ltd. ("the Company") is a global innovator and leading solutions provider of wireless transport. The Company helps operators and other service providers worldwide increase operational efficiency and enhance end customers’ quality of experience with innovative wireless backhaul and fronthaul solutions. The Company’s unique multicore technology and disaggregated approach to wireless transport provides highly reliable, fast to deploy, high-capacity wireless transport for 5G and 4G networks 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 and technical support to the Company's customers worldwide.

As to principal markets and major customers, see notes 9a and 9b.

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim consolidated financial statements

The accompanying interim 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 interim financial reporting. In the management`s opinion, the interim consolidated financial statements include all adjustments of a normal recurring nature necessary for the fair presentation of the Company’s interim consolidated financial position as of June 30, 2023, as well as its results of operations and cash flows for the six months ended June 30, 2022 and 2023. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023.

Use of estimates

The preparation of the interim 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. Actual results could differ materially from those estimates.

Significant accounting policies

The accompanying interim 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 May 1, 2023.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING (Cont.)

There have been no changes to the significant accounting policies described in the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 that have had a material impact on the interim consolidated financial statements and related notes.

Restructuring and related charges

During 2023, the Company approved a cost reduction and re-organization plan that included, among other things, downsizing the Company's number of employees in a certain territory (the "2023 Restructuring Plan").

The Company recorded contractual and termination severance pay and other related costs for the impacted employees.

The liabilities related to the restructuring plan as of June 30, 2023 amounted to $ 838.

The Company does not expect to incur additional costs related to the 2023 Restructuring plan.

NOTE 3:

INVENTORIES

	December 31,		June 30,
	2022		2023
			Unaudited

Raw materials	$	35,111	$	36,351
Work in progress		143		185
Finished products		36,755		31,300

	$	72,009	$	67,836

During the six-month ended June 30, 2022 and 2023 the Company recorded inventory write-offs for excess inventory and slow-moving inventory in a total amount of $ 644 and $ 3,528 respectively that have been included in cost of revenues.

As of June 30, 2023 the Company has an outstanding inventory purchase orders with its suppliers in the amount of $ 48,453. The commitments are due primarily within one year.

NOTE 4:

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.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 4:

FAIR VALUE MEASUREMENT (Cont.)

The following table sets forth the Company’s assets that were measured at fair value on a recurring bases as of December 31, 2022 and June 30, 2023, by level within the fair value hierarchy:

		Fair value measurements using input type
	Fair value hierarchy	December 31, 2022			June 30, 2023
					Unaudited

Derivatives instruments, net	Level 2	$	(1,415	)	$	(1,719	)

Total liabilities, net		$	(1,415	)	$	(1,719	)

NOTE 5:

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 interim consolidated balance sheets at December 31, 2022 and June 30, 2023 were as follows:

	Other accounts receivable and prepaid expenses		Other accounts payable and accrued expenses
	December 31, 2022
Derivatives designated as hedging instruments
Currency forward contracts	$	-	$	(1,270	)
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	8	$	(153	)

Total derivatives	$	8	$	(1,423	)

	Other accounts receivable and prepaid expenses		Other accounts payable and accrued expenses
	June 30, 2023
	Unaudited
Derivatives designated as hedging instruments
Currency forward contracts	$	-	$	(1,644	)
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	-	$	(75	)

Total derivatives	$	-	$	(1,719	)

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 5:

DERIVATIVE INSTRUMENTS (Cont.)

The notional amounts of outstanding derivative contracts in U.S. dollars at December 31, 2022 and June 30, 2023 were as follows:

	December 31, 2022		June 30, 2023
			Unaudited
Derivatives designated as hedging instruments
Currency forward contracts	$	42,848	$	25,783
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	16,082	$	6,482

Total derivatives	$	58,930	$	32,265

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 expenses and others, net".

The effect of derivative contracts on the interim consolidated statements of operations for the six months ended June 30, 2022 and 2023 was as follows:

	Six months ended June 30,
	2022		2023
	Unaudited

Operating expenses	$	293	$	1,517
Financial expenses	$	617	$	620

NOTE 6:

COMMITMENTS AND CONTINGENT LIABILITIES

Israel Innovation Authority:

During the six months ended June 30, 2022 and 2023, 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 the 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, 2022 and 2023 in the amount of $ 208 and $ 277 respectively.


	b.	Charges and guarantees:

As of June 30, 2023, and December 31, 2022, the Company provided bank guarantees in an aggregate amount of $ 26,740 and $ 28,737, respectively, with respect to tender offer guarantees, financial guarantees, warranty guarantees and performance guarantees to its customers.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6: COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

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)	Motion to Approve a 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 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 plaintiff seeks specified compensatory damages in a sum of up to $ 75,000 as well as attorneys’ fees and costs.

The Company filed its defense on June 21, 2015, which was followed by disclosure proceedings.

The plaintiff filed his reply to the Company’s defense by April 2, 2017. A preliminary hearing was held on May 22, 2017, in the framework of which the Court set dates for response to the Company’s above-mentioned requests as well as dates for evidence hearings.

In May 2017, the Company filed two requests: the first, requesting to dismiss the plaintiff’s response to the Company’s defense, or, alternatively, to allow the Company to respond to it; the second, to precede a ruling with regards to the legal question of the governing law.

On July 17, 2017, the court issued its decision in the first request, denying the requested dismissal of plaintiff’s response to the Company’s defense, but allowing the Company to respond to it; on July 29, 2017, the Court issued its decision in the second request, and denied it. The Company filed its response on September 18, 2017.

On October 2, 2017, the plaintiff filed a request to summon two of the Company’s officers (Company's Chairman, Mr. Zisapel and Company's Chief Executive Officer, Mr. Palti).

The first evidence hearing took place on November 2, 2017 and the second and final evidence hearing took place on January 8, 2018.

Summaries were filed by the plaintiff on March 21, 2018 and the Company filed its summaries on June 12, 2018. The plaintiff filed their reply summaries on September 5, 2018.

On October 4, 2018, an interim decision regarding dual listed companies, which corresponds with the Company’s arguments in this case, was rendered by the Supreme Court of Israel. This Supreme court decision upholds two recent rulings of District Court of Tel-Aviv (Economic Department), which determined that all securities litigation regarding dual listed companies should be decided only in accordance with US law (herein after: “Supreme Court Decision”).

In light of this, on October 15, 2018, the plaintiff asked from court to add a plea to his summaries. The court has approved plaintiff’s request and gave to the defendants the right to reply. In accordance, the Company’s response was submitted on December 4, 2018. Plaintiff’s reply to Company’s response was submitted on December 26, 2018.

On April 14, 2019 the court rendered a decision resolving that according to Supreme Court Decision, examination of the legal questions standing in the basis of the Motion, should be based upon US law.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6: COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

Therefore, the court allowed the plaintiff to amend its Motion within 45 days, so that it would include an expert opinion regarding US law, and an argument regarding US law implementation in the specific circumstances.

The Court also decided that amendment of the Motion is subject to plaintiff’s payment of 40,000 NIS to the Company.

On September 23, 2019, the plaintiff filed an amended Motion (“the Amended Motion”), which includes an expert opinion regarding US federal law and lengthy arguments that were added on top of the original Motion, specifically, in reference to discovery proceedings and evidence hearings that were held as part of the original Motion.

Therefore, on September 25, 2019, the Court rendered a decision pointing out that the Amended motion seems to include the plaintiff’s summaries, and so ordered the plaintiff to clarify whether he is willing to relinquish submitting any additional summaries regarding the evidence that were heard in the original Motion.

On October 2, 2019, plaintiff responded, alleging that since the Amended Motion does not include any new facts, there is no need in submitting additional summaries regarding the evidence that were heard to this point.

On December 30, 2019 the Company submitted a motion to dismiss the Amended Motion. The Company alleged that the Amended Motion includes new causes of action, and specifically that the addition of legal causes of action according to US Federal law, cannot be filed due to the specific statute of limitations.

On January 20, 2020, the plaintiff filed its response. Also, the Court accepted the Company’s request to submit its response to the Amended Motion after a decision in the Company’s motion to dismiss will be rendered.

On February 24, 2020 the court issued a decision, according to which, the Motion will be decided upon the current court documents, unless either of the parties will file a request to hold a hearing in the matter.

On May 27, 2021, the Court ruled to certify the Motion as a class action, while applying Israeli Law (the “Ruling”). According to the Ruling, the class action shall include several causes of action according to the Israeli Securities Act and the Israeli Torts Ordinance, concerning the alleged misleading statements in the Company’s SEC filings. The Ruling has addressed also the size of the alleged aggrieved shareholders who may be included and be represented in the class action.

On June 9, 2021 the Court issued a decision suggesting that the parties will refer the case to a mediation procedure.

The Company believed that the Ruling is erroneous and that the Company has strong defense arguments, and therefore, on September 12, 2021, filed a motion for a rehearing on behalf of the Company and its directors in order to revert the Ruling (the “Rehearing Motion”).

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6: COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

On October 20, 2021, the Plaintiff submitted his response to the Rehearing Motion and the Company submitted its reply to the Plaintiff’s response on November 23, 2021. In light of the fact that the Ruling applied and was based upon Israeli Law (instead of the relevant foreign law), the Tel Aviv Stock Exchange filed a motion requesting the court to allow it to join the proceedings as Amicus Curiae, in order to express its principle opinion that the applicable law, in so far as dual listed companies are concerned, is the foreign law, as well as regarding the negative implications of the court’s application of Israeli law on dual listed companies.

Meanwhile, and without delaying or derogating from the Rehearing Motion, the Company agreed to the Court’s suggestion that the parties will refer the case to a mediation procedure After several mediation meetings were held, the mediation process ended without reaching a settlement.

On January 3, 2022 a hearing was held in court in the Rehearing Motion Following the hearing, on January 25, 2022, the Attorney General joined the proceedings of the Rehearing Motion and submitted his position in collaboration with the Securities Authority. The Attorney General’s principle position as outlined, was that the applicable law in so far as dual listed companies are concerned is the foreign law, and in Ceragon case - US law.

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 US 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 the US law. The court further held that the Company’s claims based upon the Statute of Limitations should also be adjudicated under the US law.

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 US law.

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 5, 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, which are still pending.

A preliminary hearing is scheduled for September 21, 2023, after a previous hearing was cancelled.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6: COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

Generally speaking, and as As was held in the judgement rendered in the Rehearing Motion, U.S law presents a higher bar for Plaintiffs in comparison to Israeli law in proving claims regarding misleading representations to investors. However, given that the class action is being adjudicated under U.S law and that the Court has yet to address the parties’ pleadings, and because of the preliminary stage of the lawsuit, the amount of loss cannot be reasonably estimated.

Claim against Station Enterprises Ltd. regarding breach of the Lease Agreement

A dispute has arisen between the Company and Station Enterprises Ltd, with respect to the lease agreement signed between the parties on April 11, 2019 (the "Lease Agreement"), under which the Company leases its offices and labs in Rosh Haayin.

The Company, the lessee, claims that Station Enterprises was late in delivering the possession to the lessee and has not fulfilled its maintenance and management obligations. Therefore, the Company claims that Station Enterprises breached its contractual obligations, causing the Company damages and expenses.

Due to the said breaches, the Company has set-off the rent and management fees against outstanding debts of Station Enterprises towards the Company and provided Station Enterprises with a set-off notice.

On 8 February 2022 Station Enterprises notified the Company on the termination of the Lease Agreement, and also on the exercise of the bank guarantees provided to it in connection with the Lease Agreement, in amount of NIS 2,492,327. The Company rejected the alleged termination notice, which was provided with no legal grounds, and further required Station Enterprises to avoid from exercising the bank guarantees. This demand was disregarded, and the bank guarantees were realized in full.

Under these circumstances, the Company filed a claim against Station Enterprises, in the framework of which the court will be asked to issue a Declarative Order, declaring that the notice of termination was invalid and that Lease Agreement is valid and in force; to order Station Enterprises to reimburse the Company for the amount of the exercised bank guarantees; to order Station Enterprises to uphold and fulfil its contractual obligation and undertakings under the Lease Agreement and the management agreement; and to compensate the Company for the damages caused to it in an amount of 1.2 million NIS.

On October 13, 2022, Station Enterprises Ltd. submitted a new claim against the Company, for its eviction of from the leased premises. On March 27, 2023 the judge ordered the consolidation of the hearings in the two lawsuits.

The parties agreed to refer the dispute in both claims to mediation. The first mediation meeting was scheduled for May 8, 2023.

A date for the first pre-trial hearing was set for June 21, 2023.

On June 27, 2023, a mediation meeting took place between the parties. The parties are currently engaged in negotiations regarding the points in dispute in the lawsuits.

A date for the first pre-trial hearing was set for November 9, 2023.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6: COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

The amount of loss cannot be reasonably estimated because of the preliminary stage of the lawsuit.

NOTE 7:

SHAREHOLDERS' EQUITY

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.

Stock Options and RSUs plans

In 2003, the Company adopted a share option plan which has been extended or replaced from time to time. To date, the plan that is currently in effect is the Amended and Restated Share Option and RSU Plan as amended on August 10, 2014 (the “Plan”). Under the Plan, options and RSUs may be granted to officers, directors, employees and consultants of the Company or its subsidiaries. The options vest primarily over four years, subject to certain exceptions. The options expire between six to ten years from the date of grant. The Plan expires in December 2023. The Company needs to reserve, and the Board of Directors has reserved, sufficient authorized but unissued Shares for purposes of the Plan subject to adjustments as provided in the Plan. Since the last amendment in 2014, the Company has reserved 14,957,511 units under the Plan. As of June 30, 2023, an aggregate of 734,418 ordinary shares were available for future grants under the plan.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 7: SHAREHOLDERS' EQUITY (Cont.)

The following table summarizes the activities for the Company’s stock options for the six months ended June 30, 2023:

	Six months ended June 30, 2023
	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value

Outstanding at beginning of year		5,305,732		$	2.95		3.83	$	19
Granted		607,478			1.93
Exercised		(17,915	)		1.70
Forfeited or expired		(644,249	)		3.06

Outstanding at end of the period		5,251,046			2.82		3.58	$	153

Options exercisable at end of the period		2,725,843		$	2.94		2.52	$	17

Vested and expected to vest		3,933,732		$	2.87		3.19	$	76

The weighted average fair value of options granted during the six months ended June 30, 2022 and 2023 was $ 1.00 and $ 1.06, respectively.

The intrinsic value of options exercised during the six months ended June 30, 2022 and 2023 was $ 62 and $ 43, respectively.

The following table summarizes the activities for the Company’s RSUs for the six months ended June 30, 2023:

	Number of RSUs			Weighted average fair value

Unvested at beginning of year		2,108,339
Granted		429,620		$	1.88
Vested		(20,656	)
Forfeited		(159,303	)

Unvested at end of period	$	2,358,000

As of June 30, 2023, the total unrecognized estimated compensation cost related to non-vested stock options and RSUs granted prior to that date was $ 4,121, which is expected to be recognized over a weighted average period of approximately one year.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 7: SHAREHOLDERS' EQUITY (Cont.)

The following table sets forth the total share-based compensation expenses included in the interim consolidated statements of operations for the six months ended June 30, 2022 and 2023:

	Six months ended June 30,
	2022		2023
	Unaudited

Cost of revenues		257		226
Research and development		20		477
Sales and Marketing		579		738
General and administrative		579		536

Total share-based compensation expense	$	1,435	$	1,977

NOTE 8: 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 reporting period.

The following table presents the changes in deferred revenues balance during the six months ended June 30, 2023:

	Six months ended June 30, 2023

Balance, beginning of the period	$	14,888
New unsatisfied performance obligations		3,099
Reclassification to revenue as a result of satisfying performance obligations		(2,713	)

Balance, end of the period		15,274
Less: long-term portion of deferred revenue		12,170
Current portion, end of period	$	3,104

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 8: REVENUES (Cont.)

Remaining performance obligations represent contracted revenues that have not yet been recognized, which includes deferred revenues and non-cancelable contracts that will be recognized as revenue in future periods. The following table represents the remaining performance obligations as of June 30, 2023, which are expected to be satisfied and recognized in future periods:

		2024				2025 and thereafter
Unsatisfied performance obligations		$	670			$	11,500

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.

NOTE 9: CUSTOMERS AND GEOGRAPHIC INFORMATION

The following table presents the total revenues for the six months ended June 30, 2022 and 2023, allocated to the geographic areas in which it was generated. Revenues are attributed to geographic areas based on the location of the end-users.

	Six months ended June 30,
	2022		2023
	Unaudited
North America (*)	$	28,296	$	48,572
Europe		22,791		22,741
Africa		10,032		9,153
Asia-Pacific and Middle East		17,239		19,625
India		37,300		46,933
Latin America		25,335		22,536

	$	140,993	$	169,560

(*) As of June 30, 2022 and 2023, 81% and 93% represent revenues in the United States.

Major customer data as a percentage of total revenues:

In the six months ended June 30, 2022, the Company had revenues from two customers that represent two groups of affiliated companies equaling 22.4% and 14% of total revenues. In the six months ended June 30, 2023, the Company had revenues from two customers that represents one group of affiliated companies equaling 25.2% of total revenues and a costumer that equal 18.8% of total revenues.

CERAGON NETWORKS LTD. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 10: EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted income (loss) per share:

Numerator:

	Six months ended June 30,
	2022			2023
	Unaudited

Numerator for basic and diluted income (loss) per share -
Net income (loss) available to holders of ordinary shares	$	(3,808	)	$	4,056

Denominator:

	Six months ended June 30,
	2022		2023
	Unaudited
Denominator for diluted income (loss) per share -
Weighted average number of shares		83,989,766		84,359,762
Add – RSUs and stock options		-		792,872
Denominator for diluted income (loss) per share - adjusted		83,989,766		85,152,634

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, results of negotiation, and the mixture of products and services.

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 facility, estimated warranty costs, costs related to management of our manufacturing facility, supply chain and shipping, as well as inventory write-off costs and amortization of intangible assets. In addition, we pay salaries and related costs to our employees and fees to subcontractors relating to installation services with respect to our products.

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, materials costs, and equipment depreciation. 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 system and human resources personnel, professional fees (including legal and accounting fees), insurance, provisions for credit losses and other general corporate expenses.

Restructuring and related charges. Our Restructuring and related charges expenses consist primarily of contractual and termination severance pay and other related costs for the impacted employees.

Financial expenses and others, net. Our financial expenses and others, net, consist primarily of gains and losses arising from the re-measurement of transactions and balances denominated in non-dollar currencies into dollars, gains and losses from our currency hedging activity, interest paid on bank loans, other fees and commissions paid to banks, actuarial losses and other expenses.

Taxes. Our tax expenses consist of current corporate tax expenses in various locations, changes in deferred tax assets and liabilities, as well as changes in reserves for uncertain tax positions.

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, 2022 (Unaudited)					Six months ended June 30, 2023 (Unaudited)
	$			%		$			%
Revenues		140,993		100			169,560		100
Cost of revenues		100,250		71.1			111,028		65.5
Gross profit		40,743		28.9			58,532		34.5
Operating expenses:
Research and development, net		14,292		10.1			15,750		9.3
Sales and Marketing		18,134		12.9			19,974		11.8
General and administrative		9,898		7.0			11,542		6.8
Restructuring and related charges		-		-			897		0.5
Total operating expenses		42,324		30.0			48,163		28.4
Operating income (loss)		(1,581	)	(1.1	)		10,369		6.1
Financial expenses and others, net		(1,516	)	(1.1	)		(3,344	)	(1.9	)
Taxes on income		(711	)	(0.5	)		(2,969	)	(1.8	)
Net income (loss)		(3,808	)	(2.7	)		4,056		2.4

Six months ended June 30, 2023, compared to six months ended June 30, 2022

Revenues. Revenues increased by 20.3% from $141.0 million in the first six months of 2022 to $169.6 million in the first six months of 2023, an increase of $28.6 million. Revenues in the North America region increased from $28.3 million in the first six months of 2022 to $48.6 million in the first six months of 2023. Revenues in the India region increased from $37.3 million in the first six months of 2022 to $46.9 million in the first six months of 2023. Revenues in the APAC region increased from $17.2 million in the first six months of 2022 to $19.6 million in the first six months of 2023. Revenues in the Latin America region decreased from $25.3 million in the first six months of 2022 to $22.5 million in the first six months of 2023. Revenues in Africa region decreased from $10.0 million in the first six months of 2022 to $9.2 million in the first six months of 2023. Revenues in the Europe region decreased from $22.8 million in the first six months of 2022 to $22.7 million in the first six months of 2023.

Cost of Revenues. Cost of revenues increased by 10.8% from $100.3 million in the first six months of 2022 to $111.0 million in the first six months of 2023, an increase of $10.7 million, Attributed mainly due to:

•

Increase of $12.5 million relates to $9.6 million higher material costs, primarily due to higher volume of revenues as well as increased cost of some components and $2.9 million due to inventory write-off.

•

Increase of $1.2 million in services costs.

•

Increase of $0.6 million in salaries and employee-related expenses.

•

Decrease of $3.3 million due to lower shipping and storage costs.

•

Decrease of $0.3 million due to lower other production costs.

Gross Margin. Gross profit as a percentage of revenues increased from 28.9% in the first six months of 2022 to 34.5% in the first six months of 2023. This increase is mainly attributed to increased revenues coupled with improved margins derived mainly from a higher mixture of revenues from North America.

Research and Development Expenses, Net. Our research and development expenses, net, increased by 10.2% from $14.3 million in the first six months of 2022 to $15.8 million in the first six months of 2023, an increase of $1.5 million. The increase was primarily attributed to higher salary and employee-related expenses of $1.3 million, and an increase of $0.3 million in other research and development expenses, offset by an increase of $ 0.1 million in IIA (Israeli Innovation Authority) grants. Our research and development efforts are a key element of our strategy and are essential to our success. We intend to maintain our focus on research and development initiatives, and we foresee that an increase or a decrease in our total revenue would not necessarily result in a proportional increase or decrease in the levels of our research and development expenditures.

Sales and Marketing Expenses. Sales and Marketing expenses increased by 10.1% from $18.1 million in the first six months of 2022 to $20.0 million in the first six months of 2023, an increase of $1.9 million. This increase was primarily attributed to an increase of $0.4 million in sales commissions expenses, an increase of $0.3 million in trade shows and marketing expenses, an increase of $0.3 million in travel expenses, an increase of $0.2 million in share-based compensation as an increase of $0.1 million in AR credit insurance, higher salary and employee-related expenses of $0.1 million as well as an increase of $0.5 million in other sales and marketing expenses.

General and Administrative Expenses. General and administrative expenses increased by 16.6% from $9.9 million in the first six months of 2022 to $11.5 million in the first six months of 2023, an increase of $1.6 million. The increase was primarily attributed to an increase of $0.7 million in salaries and employee-related expenses, an increase of $0.5 million in credit losses expenses, an increase of $0.2 million in consultants' fees, and an increase of $0.2 million in other general and administrative expenses.

Restructuring and related charges. There were no restructuring costs in 2022 as compared with $0.9 million in 2023. The increase was primarily attributed to contractual and termination severance pay and other related costs for the impacted employees.

Financial expenses and others, Net. Financial expenses and others, net, totaled $1.5 million in the first six months of 2022 as compared to $3.3 million in the first six months of 2023, an increase of $1.8 million. This increase was mainly attributable to an increase of $2.2 million in interest expenses, offset by a decrease of $0.2 million related to exchange rate differences and a decrease of $0.2 million in bank commissions.

Taxes on income. Taxes on income totaled $0.7 million in the first six months of 2022 as compared to $3.0 million in the first six months of 2023, an increase of $2.3 million. The increase was mainly attributable to an increase in deferred taxes of $1.6 million, an increase of $0.2 million in tax exposures reverses as well as a decrease in tax credits from previous years of $0.5 million.

Net income (loss). The Company had a net loss of $(3.8) million in the first six months of 2022 as compared to a net income of $4.1 million in the first six months of 2023, a change of $7.9 million. As a percentage of revenues, net loss was (2.7%) in 2022 compared to net income of 2.4% in 2023. The increase was attributable primarily to higher revenues and gross profit offset by higher operating, financial and tax expenses.

Liquidity and Capital Resources

As of June 30, 2023, we had approximately $24.5 million in cash and cash equivalents.

On June 26, 2023, the Company renewed a total credit line of $117.8 million with the banks for an additional year (until June 30, 2024) while changing the mix of facilities to the following amounts: $72.0 million dedicated for short-term loans facility and $45.9 million dedicated for bank guarantees.

The credit facility is provided by a bank syndicate, with each bank agreeing severally (and not jointly) to make its agreed portion of the credit lines to us in accordance with the terms of the credit agreement. Such credit agreement includes a framework for joint decision-making powers by the banks. As of June 30, 2023, we had $32.4 million available under our credit facility in the form of loans and $23.1 million available in bank guarantees outstanding in respect of tender offer guarantees, financial guarantees, warranty guarantees and performance guarantees to our customers.

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 the total value of its assets (excluding total intangible assets) on its balance sheet, a certain ratio between its net financial debt to each of our working capital and accounts receivable. As of June 30, 2023, the Company met all of its covenants.

The Credit Facility is secured by a floating charge over all Company's assets as well as several customary fixed charges on specific assets.

Net cash provided by operating activities was $6.7 million for the six months ended June 30, 2023.

In the first six months of 2023, our cash provided by operating activities was predominantly affected by the following principal factors:

• our net income of $4.1 million;

• a $5.1 million of depreciation and amortization expenses;

• a $4.1 million decrease in inventories, net of write-offs;

• a $1.9 million increase in stock-based compensation expenses; and

• a $0.4 million increase in deferred revenues.

These factors were offset mainly by:

• a $6.4 million increase in trade receivables and other accounts receivables;

• a $1.6 million decrease in trade payables and accrued liabilities;

• a $0.6 million decrease in operating lease liability, net; and

• a $0.3 million decrease in accrued severance pay and pensions, net.

Net cash used in operating activities was $5.0 million for the six months ended June 30, 2022.

In the first six months of 2022, our cash used in operating activities was predominantly affected by the following principal factors:

• our net loss of $3.8 million;

• a $7.2 million increase in trade receivables and other accounts receivables;

• a $2.2 million decrease in operating lease liability, net;

• a $0.3 million decrease in trade payables and accrued liabilities; and

• a $0.4 million decrease in accrued severance pay and pensions, net.

These factors were offset mainly by:

• a $5.8 million of depreciation and amortization expenses;

• a $1.4 million increase in stock-based compensation expenses;

• a $1.3 million increase in deferred revenues; and

• a $0.4 million decrease in inventories, net of write-offs.

Net cash used in investing activities was approximately $7.3 million in the first six months of 2023, attributed to the purchase of property and equipment of $5.5 million and purchase of intangible assets of $1.8 million, compared to $5.8 million in the first six months of 2022 attributed to the purchase of property and equipment of $5.4 million and purchase of intangible assets of $0.4 million.

Net cash provided by financing activities was approximately $2.1 million in the first six months of 2023, attributed mainly to proceeds from short-term bank credit and loans, net, compared to $17.2 million in the first six months of 2022, attributed to proceeds from short-term bank credit and loans, net of $17.1 million and proceeds from exercise of stock options of $0.1 million.

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 and when we may 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.

Document and Entity Information	6 Months Ended
Document and Entity Information	Jun. 30, 2023
Cover [Abstract]
Entity Central Index Key	0001119769
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Document Type	6-K
Document Period End Date	Jun. 30, 2023
Entity Registrant Name	CERAGON NETWORKS LTD.
Entity Address, Address Line One	3 Uri Ariav st., Rosh Ha’Ayin,
Entity Address, Postal Zip Code	4810002
Entity Address, Country	IL

INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
CURRENT ASSETS:
Cash and cash equivalents	$ 24,529	$ 22,948
Trade receivables (net of allowance for credit losses of $22,410 and $22,961 at December 31, 2022 and June 30, 2023 (unaudited), respectively)	107,592	100,034
Other accounts receivable and prepaid expenses	15,813	15,756
Inventories	67,836	72,009
Total current assets	215,770	210,747
NON-CURRENT ASSETS:
Severance pay and pension fund	4,705	4,633
Property and equipment, net	30,494	29,456
Operating lease right-of-use assets	16,724	17,962
Intangible assets, net	9,027	8,208
Other non-current assets	17,744	18,312
Total non-current assets	78,694	78,571
Total assets	294,464	289,318
CURRENT LIABILITIES:
Trade payables	62,769	67,384
Deferred revenues	3,104	3,343
Short-term loans	39,550	37,500
Operating lease liabilities	3,246	3,745
Other accounts payable and accrued expenses	23,565	20,864
Total current liabilities	132,234	132,836
LONG-TERM LIABILITIES:
Accrued severance pay and pensions	9,054	9,314
Deferred revenues	12,170	11,545
Operating lease liabilities	11,827	13,187
Other long-term payables	2,797	2,653
Total long-term liabilities	35,848	36,699
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital: Ordinary shares of NIS 0.01 par value – Authorized: 120,000,000 shares at December 31, 2022 and June 30, 2023 (unaudited); Issued: 87,834,902 and 87,873,775 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively; Outstanding: 84,353,681 and 84,392,252 shares at December 31, 2022 and June 30, 2023 (unaudited), respectively	224	224
Additional paid-in capital	434,221	432,214
Treasury shares at cost – 3,481,523 ordinary shares as of December 31, 2022 and June 30, 2023 (unaudited).	(20,091)	(20,091)
Accumulated other comprehensive loss	(10,620)	(11,156)
Accumulated deficit	(277,352)	(281,408)
Total shareholders' equity	126,382	119,783
Total liabilities and shareholders' equity	$ 294,464	$ 289,318

INTERIM CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Thousands	Jun. 30, 2023 ₪ / shares	Jun. 30, 2023 USD ($) shares	Dec. 31, 2022 ₪ / shares	Dec. 31, 2022 USD ($) shares
Statement of Financial Position [Abstract]
Trade receivables, allowance for credit losses current \| $		$ 22,961		$ 22,410
Ordinary shares, par value \| ₪ / shares	₪ 0.01		₪ 0.01
Ordinary shares, shares authorized		120,000,000		120,000,000
Ordinary shares, shares issued		87,873,775		87,834,902
Ordinary shares, shares outstanding		84,392,252		84,353,681
Treasury stock, ordinary shares		3,481,523		3,481,523

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Revenues	$ 169,560	$ 140,993
Cost of revenues	111,028	100,250
Gross profit	58,532	40,743
Operating expenses:
Research and development, net	15,750	14,292
Sales and Marketing	19,974	18,134
General and administrative	11,542	9,898
Restructuring and related charges	897	0
Total operating expenses	48,163	42,324
Operating income (loss)	10,369	(1,581)
Financial expenses and others, net	3,344	1,516
Income (loss) before taxes	7,025	(3,097)
Taxes on income	2,969	711
Net income (loss)	$ 4,056	$ (3,808)
Basic net income (loss) per share	$ 0.05	$ (0.05)
Diluted net income (loss) per share	$ 0.05	$ (0.05)
Weighted average number of shares used in computing basic net income (loss) per share	84,359,762	83,989,766
Weighted average number of shares used in computing diluted net income (loss) per share	85,152,634	83,989,766

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 4,056	$ (3,808)
Other comprehensive loss:
Change in foreign currency translation adjustment	908	444
Cash flow hedges:
Change in net unrealized losses	(1,889)	(3,655)
Amounts reclassified into net income (loss)	1,517	293
Net change	(372)	(3,362)
Other comprehensive income (loss), net	536	(2,918)
Total of comprehensive income (loss)	$ 4,592	$ (6,726)

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)
$ in Thousands

Total

Ordinary shares [Member]

Additional paid-in capital [Member]

Treasury shares at cost [Member]

Accumulated other comprehensive loss [Member]

Accumulated deficit [Member]

Balance at Dec. 31, 2021

$ 137,151

$ 224

$ 428,244

$ (20,091)

$ (9,507)

$ (261,719)

Balance, shares at Dec. 31, 2021

83,931,596

Exercise of options and vesting of RSUs

113

^[1]

113

Exercise of options and vesting of RSUs, shares

100,534

Share-based compensation

1,435

$ 0

1,435

Other comprehensive income (loss), net

(2,918)

Net income (loss)

(3,808)

Balance at Jun. 30, 2022

131,973

$ 224

429,792

(20,091)

(12,425)

(265,527)

Balance, shares at Jun. 30, 2022

84,032,130

Balance at Dec. 31, 2022

$ 119,783

$ 224

432,214

(20,091)

(11,156)

(281,408)

Balance, shares at Dec. 31, 2022

84,353,681

Exercise of options and vesting of RSUs

$ 30

$ 0

Exercise of options and vesting of RSUs, shares

38,571

Share-based compensation

1,977

$ 0

1,977

Other comprehensive income (loss), net

536

Net income (loss)

4,056

Balance at Jun. 30, 2023

$ 126,382

$ 224

$ 434,221

$ (20,091)

$ (10,620)

$ (277,352)

Balance, shares at Jun. 30, 2023

84,392,252

[1]	Represent an amount lower than $1.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flow from operating activities:
Net income (loss)	$ 4,056	$ (3,808)
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	5,135	5,775
Loss from sale of property and equipment, net	30	20
Stock-based compensation expense	1,977	1,435
Decrease in accrued severance pay and pensions, net	(344)	(369)
Increase in trade receivables, net	(6,910)	(4,173)
Decrease (increase) in other accounts receivables and prepaid expenses (including other long-term assets)	551	(3,056)
Decrease in operating lease right-of-use assets	1,897	1,873
Decrease in inventory, net of write off	4,059	449
Increase (decrease) in trade payables	(3,955)	1,339
Increase (decrease) in other accounts payable and accrued expenses (including other long-term liabilities)	2,326	(1,706)
Decrease in operating lease liability	(2,518)	(4,071)
Increase in deferred revenues	386	1,303
Net cash provided by (used in) operating activities	6,690	(4,989)
Cash flow from investing activities:
Purchase of property and equipment	(5,472)	(5,368)
Purchase of intangible assets, net	(1,837)	(437)
Net cash used in investing activities	(7,309)	(5,805)
Cash flow from financing activities:
Proceeds from exercise of stock options	30	113
Proceeds from bank credits and loans, net	2,050	17,100
Net cash provided by financing activities	2,080	17,213
Translation adjustments on cash and cash equivalents	120	94
Increase in cash and cash equivalents	1,581	6,513
Cash and cash equivalents at the beginning of the period	22,948	17,079
Cash and cash equivalents at the end of the period	$ 24,529	$ 23,592

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Statement of Cash Flows [Abstract]
Changes of property and equipment not resulted in cash	$ 638	$ 2,316

GENERAL

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

NOTE 1:

GENERAL

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 and technical support to the Company's customers worldwide.

As to principal markets and major customers, see notes 9a and 9b.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2:

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim consolidated financial statements

Use of estimates

Significant accounting policies

Restructuring and related charges

The Company recorded contractual and termination severance pay and other related costs for the impacted employees.

The liabilities related to the restructuring plan as of June 30, 2023 amounted to $ 838.

The Company does not expect to incur additional costs related to the 2023 Restructuring plan.

INVENTORIES

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 3:

INVENTORIES

	December 31,		June 30,
	2022		2023
			Unaudited

Raw materials	$	35,111	$	36,351
Work in progress		143		185
Finished products		36,755		31,300

	$	72,009	$	67,836

As of June 30, 2023 the Company has an outstanding inventory purchase orders with its suppliers in the amount of $ 48,453. The commitments are due primarily within one year.

FAIR VALUE MEASUREMENT

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

NOTE 4:

FAIR VALUE MEASUREMENT

The following table sets forth the Company’s assets that were measured at fair value on a recurring bases as of December 31, 2022 and June 30, 2023, by level within the fair value hierarchy:

		Fair value measurements using input type
	Fair value hierarchy	December 31, 2022			June 30, 2023
					Unaudited

Derivatives instruments, net	Level 2	$	(1,415	)	$	(1,719	)

Total liabilities, net		$	(1,415	)	$	(1,719	)

DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

NOTE 5:

DERIVATIVE INSTRUMENTS

The fair value of derivative contracts in the interim consolidated balance sheets at December 31, 2022 and June 30, 2023 were as follows:

	Other accounts receivable and prepaid expenses		Other accounts payable and accrued expenses
	December 31, 2022
Derivatives designated as hedging instruments
Currency forward contracts	$	-	$	(1,270	)
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	8	$	(153	)

Total derivatives	$	8	$	(1,423	)

	Other accounts receivable and prepaid expenses		Other accounts payable and accrued expenses
	June 30, 2023
	Unaudited
Derivatives designated as hedging instruments
Currency forward contracts	$	-	$	(1,644	)
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	-	$	(75	)

Total derivatives	$	-	$	(1,719	)

The notional amounts of outstanding derivative contracts in U.S. dollars at December 31, 2022 and June 30, 2023 were as follows:

	December 31, 2022		June 30, 2023
			Unaudited
Derivatives designated as hedging instruments
Currency forward contracts	$	42,848	$	25,783
Derivatives not designated as hedging instruments
Currency forward and option contracts	$	16,082	$	6,482

Total derivatives	$	58,930	$	32,265

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.

The effect of derivative contracts on the interim consolidated statements of operations for the six months ended June 30, 2022 and 2023 was as follows:

	Six months ended June 30,
	2022		2023
	Unaudited

Operating expenses	$	293	$	1,517
Financial expenses	$	617	$	620

COMMITMENTS AND CONTINGENT LIABILITIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 6:

COMMITMENTS AND CONTINGENT LIABILITIES

Israel Innovation Authority:


	b.	Charges and guarantees:

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)	Motion to Approve a Class Action (District Court of Tel Aviv - Economic Department)