Airspan Networks Holdings Inc. (MIMO) CEO Eric Stonestrom on Q4 2021 Results – Earnings Call Transcript

Airspan Networks Holdings Inc. (NYSE:MIMO) Q4 2021 Earnings Conference Call April 12, 2022 8:30 AM ET

Company Participants

Eric Stonestrom – Chairman & CEO

Glenn Laxdal – President & COO

David Brant – SVP & CFO

Conference Call Participants

Chris Howe – Barrington Research

Pierre Ferragu – New Street Research

Blake Mielke – Jefferies

Tim Savageaux – Northland Capital Markets

Franco Granda – D.A. Davidson

James Maxwell – Tocqueville Asset Management LP

Operator

Greetings and welcome to the Airspan Networks Fourth Quarter and Year-end 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Chief Financial Officer, David Brant. Thank you. You may begin.

David Brant

Thank you. The following discussion will include forward-looking statements. Comments that are not statements of fact including projections or future financial results and other items are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause our actual financial and operating results to differ significantly from our forward-looking statements are detailed in our SEC filings available on our Investor Relations website at ir.airspan.com.

We encourage you to review our earnings release and our annual report on Form 10-K for the year ended December 31, 2021 which are available on our website. On this call, we will discuss certain non-GAAP financial measures. For the identification of non-GAAP financial measures, the most directly comparable financial measure, and the reconciliation between the two, see our earnings release and our annual report on Form 10-K.

I will now turn the call over to Airspan’s Chairman & CEO, Eric Stonestrom.

Eric Stonestrom

Thank you, David. Good morning and thank you for joining us for Airspan’s fourth quarter earnings call. Before we begin, I’d like to extend a warm welcome to our shareholders joining us today. I would also like to thank the analysts on the call for following the progress in our business; and finally, a word of appreciation to our employees and partners. The enormous dedication and commitment of our employees is our greatest asset. Thank you to all of you whose hard work is allowing us to thrive during this difficult COVID-19 environment.

I would also like to introduce Airspan’s new President & Chief Operating Officer, Glenn Laxdal. Glenn is a senior technology executive with over 25 years of global experience in the wireless, software and computing industries, most recently at Infinera. He has also held senior leadership positions at Ericsson, Blackberry, and Nortel.

Glenn has deep expertise in working with mobile network operators and understanding the needs of enterprises. Overseeing the Company’s Operations, Customer Service and Product Management divisions, along with the Broadband Mimosa division, Glenn has been with us just about 3 months and his addition represents the commitment we have to the deepening of our management bench, allowing us to execute and accelerate the company’s revenue and growth strategy. Welcome Glenn.

My plan for today is to take you through the enormous opportunity we see in front of us and explain what makes Airspan unique in our ability to monetize these prospects. Then Glenn will discuss the three large and growing markets we focus on. Our CFO, David Brant will then take you through our fourth quarter and full year financial results. And finally, Glenn, David and I will take your questions.

Please turn to Slide 5 in our presentation. Airspan was founded in 1998 to bring real innovation to connecting people to telecom networks. Since then, we have been on a relatively consistent trajectory. In short, we build the wireless technology that connects users to the cloud. We are a U.S based provider of groundbreaking disruptive software and hardware for 5G networks and a pioneer in end-to-end Open RAN solutions.

Airspan’s products are focused on end-to-end radio access networks or RANS as they are known in the industry, including virtualization, base stations, backhaul and network optimization solutions. These products address the approximately $30 billion annual 5G and 4G LTE RAN market. Critical components of the approximately $200 billion spent on network infrastructure build out each year.

We are fortunate to have a number of well-known respected operators and thought leaders as our customers and suppliers, and many of them have become investors as well. Having the world’s leading 5G chipset provider in the industry and Qualcomm and the world’s preeminent hardware manufacturer in Foxconn, as financial partners allows us to fight above our weight. They are joined by a number of financial and operating partners that round out a strategic financing base we are proud to have.

Technical innovation is a core part of our story, with hundreds of patents granted or pending due to the groundbreaking work of our nearly 500 R&D and engineering employees around the world in the U.S., U.K., Israel, Turkey and India. While cutting edge, our products have already succeeded at scale in the field. We have shipped 1 million radios to 1,000 customers in over 100 country. Today our technologies are key components of some of the largest and most innovative networks in the world.

Please turn to Slide 6. A key attribute of Airspan success has been our industry leading deployments, many of which have been recognized and awarded by a number of industry organizations. We have demanding Tier 1 mobile network operators among our customer base, including Reliance Jio in India, who is serving over 400 million mobile customers and adding a fixed connectivity footprint as well.

Rakuten’s network in Japan, which was the first fully virtualized 4G and 5G network operating on Open RAN is another showcase of innovation for us. Our history of groundbreaking innovation also includes working with Sprint, now T Mobile and SoftBank on a highly scalable network deployment model as well.

Reliance and SoftBank went on to become investors in Airspan. A testament to the capabilities of our product set and ease of integration in both existing and greenfield networks. So, Tier 1 carriers both incumbents and disruptors are a key part of our growth strategy. Their need for innovative cost effective 5G and fixed wireless tools is only growing as the 5G rollout gained [indiscernible] focus.

Please turn to Slide 7. Airspan is also proud to supply many of the top telecom service providers around the world. Whether by interacting with a global carrier, private network, or public sector customer, we continue to see excitement from our impressive customer base around our solution. As we’ve grown, we’ve moved beyond a solely direct sales model, adopting a channel management strategy to accelerate and expand the go-to-market on both channels and many OEM deals.

We are encouraged by the OEM partners we have in place and are excited to share more in the coming quarters on this front. We also have had tremendous interest in a new class of go-to-market partners, some of whom were not part of the previous generations of telecom spend. These partners include household names, such as Cisco, Dell, HP Enterprise, IBM, and Microsoft. This is an enormous growth opportunity for Airspan.

Please turn to Slide 8. The demand for connectivity has grown exponentially in recent years, a trend accelerated by the global pandemic. End users today expect reliable, high-speed access to data and applications in all settings from virtual work to the office and from entertainment to gaming. This voracious data appetite has driven the need for an upgraded 5G infrastructure.

As incumbent, challenger and novel use cases are built out, we are in the midst of the largest telecom CapEx cycle in decades, and an unprecedented broadening of the potential customer base for Airspan to pursue. This shift in technology to accommodate faster speeds means a lot more cells and a lot more software, and that requires more processing power at the edge of the network, exactly the area where we excel.

In addition to connecting more types of users, our customers require an order of magnitude greater volume of software features, services and radios. Those attributes line up perfectly with our domain expertise in product set, which is part of what gives us confidence in the opportunity to head for Airspan. To give a sense of scale over the last few years, global 5G subscribers increased from 15 million to 400 million. By 2025, that number is expected to reach 3.4 billion, making this a very deep market. Given this profile and the additional accelerators which we will discuss in a moment, I often refer to this as a 5G Tsunami.

Please turn to Slide 9. It’s not only the fact that CapEx is exploding from network transformation as we move from 4G to 5G, it’s also the way in which it is happening that is so important to Airspan. The maps you see, represent a deployment we did for Sprint, now T Mobile in Long Island, New York. The 50 or so macro towers on the left took about 15 years to permit and build.

As this network was densified, we installed more than 20,000 cells in 9 months, propelling the operator from fourth position to first position in network availability. The results were tangible and powerful to our customer. To put these changes in context, there are approximately 120,000 towers in the U.S. We estimate in the move to 5G, the number will exceed 1 million cells in the U.S alone. So, between carrier and private use cases, you have exponential growth in the number of 5G networks, but given the characteristics of 5G radios, you also have enormous growth in the number of radios per network. These dynamics are what give us tremendous confidence in our opportunity going forward, and have already paid meaningful dividends in our work with our existing large customers.

Please turn to Slide 10 and Glenn will address our key markets.

Glenn Laxdal

Thanks, Eric. I’m very excited to join Airspan at such a pivotal time. The company has a strong foundation of innovation in mobile networks, including small cells, cloud computing and automation, and is well-positioned in some large and growing markets. Today, Airspan operates in three business areas, global carrier networks, private networks and fixed wireless.

While Eric touched on the global carrier space, we see strong growth in the other two sectors as well. We acquired our fixed wireless access business Mimosa in 2018. We doubled revenues since we acquired it and expect to double it again over the next few years. The growth is being driven by spectrum, technology and funding. The new spectrum is available in the mid band, including 6 gigahertz where an additional 1.2 gigahertz is being made available.

We’ve made significant strides in the technology where we can deliver multi gigabit speeds over point to multipoint links in our latest generation of products being launched now. And regarding funding, there is $20 billion of RDOF funding coming available over the next 10 years in the U.S market and other global markets are putting similar packages in place. We expect strong market growth in fixed wireless access going forward and we expect to gain share.

The private networks opportunity is disruptive, and it’s addressing a new CapEx funding. Mobile network technology, 4G and 5G is for the first time being deployed directly by enterprises for their own use cases. 5G is the platform for the Internet of Things, or IoT. Enterprises are launching private networks to run secured, mission critical IoT applications as well as private communications networks.

There are many use cases in the segment, including private networks for hotels, stadiums, campuses, smart factories, transportation, mining, military and air to ground systems. This is a large emerging growth area. And today, we’re partnering with some of the largest web scale companies in the world to address it.

Let me turn it back to Eric for some examples of recent progress we’ve made in each of these markets.

Eric Stonestrom

Thanks, Glenn. On the fixed wireless side, we are particularly proud of our award-winning deployment in Amarillo, Texas. This is a prime example of the opportunity in this space, particularly given the billions of dollars allocated to federal and municipal domestic broadband programs just beginning to be spent. As an example of how we are innovating to better address the broadband stimulus opportunity, we have introduced a new A6, C6 product line, which allows us to address projects previously reserved for fiber base rollouts, as we offer gigabit speeds at much lower cost than a full fiber build.

In private networks, we ended 2021 having executed over 80 private network deployments, including our award winning 5G network in a box product. We see a meaningful acceleration of growth in this area, as evidenced by our recently announced partnerships with industry leaders mentioned above, as well as a substantial number of systems integrators and value-added resellers active in the enterprise upgrade cycle to private 5G, which is a natural next step for millions of Wi-Fi enabled customers

We focus across both indoor and outdoor private 5G deployments. One outdoor private network build out we are particularly excited about is with air to ground communications provider Gogo. We supply the radio hardware, software and air interfaces for what we believe will be the largest private network in the world, covering North America.

In the fourth quarter Gogo announced it completed their 5G air to ground testbed. This is comprised of 7 sites out of 150 tower network expected to be completed later this year as the foundation of the deployment of their nationwide 5G network. Stay tuned for more on this important relationship.

Please turn to Slide 11. While the industry secular tailwinds for 5G are driving the largest CapEx cycle in decades, Western governments and the politicization of 5G have acted as strong accelerators of the adoption and growth of these technologies. These accelerators include direct funding to bridge the digital divide, geopolitical tailwinds from Western governments dismissal of Huawei equipment in their networks, and the resulting push for supply chain diversity away from the large legacy infrastructure providers.

Wireless networks have become national priorities in solving the digital divide, particularly in rural domestic areas and underserved urban districts. In the United States, $15 billion of previously funded initiatives are just first being bid and allocated. While the recently passed infrastructure bill provides an additional $65 billion for broadband deployment nationwide.

Being positioned as the only U.S integrated full radio access company, it gives us a meaningful advantage in our ability to compete successfully for these projects. And these government initiatives are not limited to the United States alone. We expect billions of dollars of programs, some already underway in Germany and the United Kingdom as an example, with more to come around the world.

Please turn to Slide 12. As we look into the next few years, we translate the TAM in the tens of billions of dollars into a project funnel of $3 billion across customer types. These are customer sectors we’re currently engaged with and where we have a solid plan to roll out our products. As we transition into the financial, this is a great point to turn over to David Brant, Airspan’s CFO.

David Brant

Thanks, Eric. Please turn to Slide 14. 2021 was an exciting year of product innovation and revenue growth for Airspan. For the full year, we had revenue of $177 million, up 3% over 2020. Product and software licenses revenue for the year was up 13%. We had gross margins of 44%, up dramatically from 2018 to 32% as we broaden our customer base and type and continue to add more software content into our products and product mix.

Gross margins declined from 2020s 49% due to a lower percentage of higher margin maintenance and support revenues and the effects of supply chain shortages. Gross profit for 2021 was $78 million, down from $84 million in the prior year.

Turning to Slide 15, we saw revenue for the fourth quarter of $50.4 million, up 29% sequentially from the third quarter and down 38% from the same period last year. We’re encouraged by strong revenue from existing customers and expanding revenue in fixed wireless access closing a record here.

In addition, the fourth quarter saw SEC approval of our AirStrand 2200 CBRS small cell, our first 5G solution for cable operators and the start of the deployment with a large cable customer. Gross profit of $20.7 million was up 21% compared to last quarter, although down 44% over last year’s fourth quarter.

Fourth quarter net loss was $19.6 million compared to a net loss of $27 million last quarter, and net income of $8.3 million in the fourth quarter of 2020. Adjusted EBITDA was a loss of $8 million, compared to a loss of $10.4 million last quarter and income of $12.7 million in the year ago period.

Gross margin was 41.1%, down from 44% last quarter and 45.8% in last year’s fourth quarter, with the majority of the variance due to supply chain pressures. Demand for our products is strong. Those supply chain challenges are still leading to increasingly long lead times. We continue to work hard to mitigate these challenges by finding alternative components, instituting multiple technology — technological design changes, and working closely with our partners.

In this environment, supply chain pressures center primarily around components availability, higher spot purchase prices for hardware components, and increased shipping costs. While we have begun to pass some of these expenses on to customers through price increases, we expect the increased cost impact of components and freight continue. We anticipate such supply chain challenges to extend through 2022.

While encouraged for our near-term business prospects, we’re cognizant of the supply chain environment. We expect Q1 ’22 revenue of approximately $38 million at a 32% gross margin due to significant supply chain costs and challenges from COVID-19 restrictions in Asia. We expect Q2 ’22 revenue of approximately $46 million to $48 million with a material improvement in gross margins from the first quarter.

For the full year, we anticipate top line growth of between 10% and 15%. Airspan ended the year with $63 million of cash, while the fourth quarter represented a use of $22 million of cash, approximately $14 million was for working capital requirements.

With that, Eric, Glenn and I will open it up to your questions. Operator, please prompt for questions.

Question-and-Answer Session

Thank you. [Operator Instructions] Our first question come from the line of Chris Howe with Barrington Research. Please proceed with your questions.

Q -Chris Howe

Good morning, Eric. Good morning, David.

Eric Stonestrom

Good morning, Chris.

Chris Howe

Hi. Good morning. David, I wanted to follow-up quickly here on some of your comments around the guidance. You mentioned the Q1 guide. Also, Q2 revenue with a material improvement in gross margin 10% to 15% for the year. How should we think about the second half, particularly as it relates to your comments around the supply chain challenges? They’ll continue to apply some pressure to an extent. But do you anticipate the second half hopefully to show some improvement within different areas of the supply chain challenges?

David Brant

Chris, yes, definitely expect the second half to be stronger in the margin profile than the first half. Q1 was particularly difficult with a number of intense shipping costs that we had to suffer in order to get the products to our customers on the times when they needed it. I see that we were a little back ended in the Q1 as well when I see that Q2 and onwards we will be little more spread out across the quarters. So that will allow us to increase our margin profile as we go out to the second half of the year.

Chris Howe

Okay. And a follow-up question to that. Can you comment on your level of confidence in the current inventory and the channel and how should we look at your capital allocation priorities throughout the business as we move through the year?

David Brant

Well, we work with Foxconn as — Foxconn and [indiscernible] as our manufacturing subcontractors, and they are active in resourcing components for us. We think that will help us in the second half of the year. Inventories we are buying components ahead of some of the products that we — that we’re buying. So, I expect that inventory will continue to be at the levels it was at the end of fourth quarter which is up slightly from Q3, but not substantially greater than that.

Chris Howe

Okay, great. I’ll hop back in the queue to give others a chance.

Operator

Thank you. [Operator Instructions] Our next questions come from the line of Pierre Ferragu with New Street Research. Please proceed with your questions.

Pierre Ferragu

Hi. Hi, Dave, can you hear me well?

David Brant

We can, Pierre.

Eric Stonestrom

Hello, Pierre.

Pierre Ferragu

Thanks for taking my question. I was wondering, about the Mimosa. So, you mentioned since the acquisition, you’ve doubled revenues on that front. And I was wondering how much of that, is, I would say, growing organically, the Mimosa business, which is focused on fixed wireless access. It’s a mid-market of fixed wireless access and all these — like the [indiscernible] deploying that kind of technology versus you guys integrating the Mimosa technology with y’all know, like Carrier Grade [ph] solutions as you — as you’ve done in at least in one geography I can think of. So, I wasn’t worrying about where you stand today in that mix. And as you see the business doubling again, how juicy is that mix evolving?

Eric Stonestrom

Yes, I’ll take that, Pierre. So yes, we’ve been focused, not only on capturing the expanding need for fixed wireless from the variety of sources that have been discussed, but also integrating into our carrier portfolio. And the good news is that the quality of the products that operate in what’s called the unlicensed spectrum, has developed due to our technical innovation, such that carriers are beginning to use these products seriously versus a historical bias against them.

And if you compare us with competitors, like Ubiquiti or Cambium, we have a much stronger proposition for carrier type customers, because we have an integrated management system, we have a very QoS managed approach with these products. So, they can be used for small cell backhaul in a wide sense, and they can be used now more by operators, particularly the one you mentioned, where they have a very comprehensive nationwide backbone for mobility, and they’re saying I’m going to add fixed wireless on top of it.

So, we — in the last quarter managed to secure a major win with a carrier in South America, a major carrier in South America along the same philosophy. We also have with some of the growth and nascent carriers in the U.S significant traction on how to use this type of products as they pursue the fixed wireless opportunities, it gives the carrier such a leverage of their existing valuable spectrum, if they can put fixed wireless users into spectrum that they didn’t have to pay money for. So, it’s just a screaming, logical thing to do, provided you get the speeds high enough and we’ve really made unbelievable breakthroughs with our A6, C6, we are clocking at over 3.5 gigabits.

Right now as we speak 3x MIMO and that product is just being launched to market so it didn’t contribute any revenue through the end of the first quarter. But we see that as a major growth engine, both for these carriers as they adopt it for backhaul and for fixed wireless offload. And also, of course, just as a better offering against the competitors, I mentioned before with fixed wireless connectivity.

Pierre Ferragu

Great.

Eric Stonestrom

[Indiscernible] to answer your [indiscernible] question, looking a year out, a third of that fixed wireless Mimosa business is going to be coming from traditional carriers, the household names that all own spectrum as they use these products to leverage their reach.

Pierre Ferragu

Great, thanks. That’s all I have. And if I may have a quick follow-up, I was wondering on — can you tell us that like Rakuten’s initiative, like the Symphony, new business entity and you guys seem to be part of that initiative as a deeply, deeply rooted partner. So how do you see Symphony changing the game, changing the go to market for you guys, and more broadly, is at an inflection point in the adoption of Open RAN, do you think it’s going to become like a major driver of opportunities for you guys?

Eric Stonestrom

Well, certainly our relationship with Rakuten is very deep. We got very good improvement in network performance in Japan over the last few months to super competitive levels against the incumbents ahead of schedule. So, we have a deep DNA of working together with them and they remain one of our larger customers in the Japan market. In addition, we are involved with Symphony in bids case by case working on something right as we speak. So, I think there is potential to take that mark that model that was built brick by brick in Japan, so successfully and take that to other markets as an innovator disruptive solution.

The timing of adoption of that I’ll lead to them to describe, but I think there’s a lot of interest in the Open RAN concept and independent of the construction to market, it’s a super-hot area at the moment and we’re very active across a wide spectrum of existing customers, brownfield operators, meaning traditional MNOs, new operators and novel upstarts.

Pierre Ferragu

Thanks.

Operator

Thank you. Our next question comes from the line of Blake Mielke with Jefferies. Please proceed with your questions.

Blake Mielke

Hey, good morning, guys. This is Blake on for George Notter. Thank you for taking our questions.

David Brant

Hi, Blake.

Blake Mielke

I was wondering, do you have any sense for the price increases? And if there was a pricing of the backlog, and then how long we should expect the price increases to work their way into the model?

Eric Stonestrom

Yes. So, just in general, we have been able to put new price list into the marketplace. We did that effective April 1. So, no effect through the first quarter. But as new orders are placed, we will see a benefit from those price increases, they averaged between 7% and 10%. We do have contractual obligations, as you mentioned on backlog, such that our entire backlog doesn’t shift to the new pricing. However, we have negotiated new orders from two of our bigger customers with price increases in one case, in excess of 15%. And in the other case, substantial amount at that level.

So, I think it’s reasonable to assume it’s a blend coming into the second half of the year, that will be obviously more impactful in the second half of the year. But we are — because our products are unique and differentiated, we haven’t had any demand destruction due to lead time issues that we don’t have easily replicatable products. We do have pricing power. That said we also have existing contracts that aren’t such that you can just modify them unilaterally.

Blake Mielke

Great. That’s helpful. And then one more, if I may. With respect to the capital structures, we anticipate any new need for additional financing as we look out into 2023 to strengthen the cash position or add some flexibility to navigate these constraints?

David Brant

Let me take that one. We feel we had the resources necessary to execute to our plan. If the right opportunity for additional equity or debt that makes sense to our plans, we would consider that. So, it’s as we look out and see the opportunities and how the market changes. We will think about additional capital, if that opportunity came about.

Blake Mielke

Awesome. Thank you, all.

Operator

Thank you. Our next question is coming from the line of Tim Savageaux with Northland Capital Markets. Please proceed with your questions.

Tim Savageaux

Hi. Pardon me. Hi, good morning. Let’s talk about your growth outlook for this year, especially given that we’re a fair bit on the way into it in terms of Q2. So, you’re talking about 10%, 15% growth. And I don’t know if you guys broke down in detail how your business segmented across the carrier fixed wireless and private areas in ’21. Love any more data on that if you could provide it. But obviously your TAM growth there is much, much higher in the aggregate. I’m assuming that delta is supply driven, but if there are other factors that I guess that’s part of the question. And more specifically, as you look at your Q4 and while your short-term guidance, Q4 in the first half, any chance of quantifying the supply impacts there on both revenue and gross margin? Thanks.

Eric Stonestrom

Yes. Hi, I think — Go ahead, David.

David Brant

Eric? Okay. I think from Q1, we talked about $30 million, $38 million I think that we were — we lost probably up $10 million of revenue to supply chain issues that would have improved our gross margin because we would have had a larger revenue base to spread our fixed costs. And as I said the fixed costs were pretty heavy in Q1 for, in particular, in shipping $48 million is where we’re looking for in Q2 that — and that is supply chain restricted as well. We certainly could do significantly more than that if we weren’t restricted for supply chains issues, Tim.

Eric Stonestrom

Yes, and looking to the back half of the year, the private side is — it’s got a very good tailwind now, the number of engagements is up day over day. The number of Tier 1 Fortune 500 or Fortune 50 companies coming into the CapEx cycle in 5G the first time is something very notable, and I think we are really well-positioned there. So, the — if I look at the second half growth trajectory, it’s converting those private opportunities and that funnel. It’s fixed wireless government stimulus flowing more actively than it has before. And there is concrete progress on that, on some of the bills and the prospects [ph] and the projects we have.

We bid for in our MNO business. We will see significant uptick from a couple of the customers we talked about this year as they’re in a rollout mode as opposed to a design mode. That said, we have supply constraints on the bigger MNOs in terms of lead times that are such that we basically have now a 6 to 7 month horizon on some of those products, which means that the second half does not enjoy much growth, just by virtue of the scarcity of supply.

We have redesigned 7 products in the first part of the year and the latter part of last year to design out several of the components that no longer were available or weren’t available on a reliable base, and we expect that contribution to begin kicking in 2Q as well.

Tim Savageaux

Got it. And if I could follow-up real quickly just kind of along those lines that ended up with which is kind of on the top customer side for calendar ’21. It’s like Jio is about 20% or so. And you mentioned the filing your top three or 63. So we assume that’s one, the Japanese customer, maybe one big U.S. And if I heard you’re right there in that last comment, I guess, you’re probably looking for more growth than ’22 versus from new markets and new customers versus your big kind of established guys. Is that fair to say?

Eric Stonestrom

Halfway correct. Yes, the top two for sure, are contributing less growth. Although we are continuing to go full tilt with them on their rollouts, it’s just that they’re also facing delays from other components and other elements and that means the whole process moves a little more slowly than we would like. As I mentioned before, we do have two of the customers that weren’t in the top three in the first in the 2021 numbers that have reached the launch phase. And that — it’s going to mean there is a more significant contribution from those two, which are existing customers and deep in the adoption phase.

And then the stuff that I mentioned before is the accelerated growth with new names. We do have and have made and we’re very proud of the amount of contractual progress we’ve made with a number of those Fortune 50 companies to allow them to buy and source and use us as a go-to-market. And we made a good investment here over the last couple of months. It hasn’t shown up in the numbers yet, but we’ll show up in the second half.

So, you can call them new customers, but they’re new customers with whom we have now commercial engagement and the engagement of their sales team, which is a huge force multiplier, in terms of the number of people talking about and selling Airspan out to the world.

Tim Savageaux

Got it. Thanks very much.

Operator

Thank you. Our next question is coming from the line of Franco Granda with D.A. Davidson. Please proceed with your questions.

Franco Granda

Good morning team. I wanted to extend my congratulations first Eric on his promotion to Chairman. Congrats, Eric. And then, there’s been a lot of questions around the delays and types of deployments due to a myriad of reasons, including some more odd ones like airlines eluding signal interferences and whatnot. But to what extent does this impact demand today versus just being noise for you guys?

Eric Stonestrom

Yes, hi and thanks for the congrats. Definitely there’s a lot of noise in what you read on things like the airline disputes. In fact, that particular spectrum is used worldwide widely and there’s a chapter and verse on that you can read about on the internet. And it did sort of die down as an impediment. The biggest impact though is site acquisition and spectrum. And excitingly, countries like Germany, like Japan, and the U.S and now with CBRS and now France have all liberalized spectrum.

And France just announced a couple of weeks ago, they’re following the German model. And this is so important, because what this allows the 5G landscape to do is have more operators, people who don’t go and buy a national license for $20 billion, but they buy a regional license, a car manufacturer who might cover the plant that they have, in the — in German industrial heartland.

And so, getting more spectrum available is an impediment. But we’re winning that war a country by country again, Germany, Japan, U.S., now France. So that means it’s now down to the Fortune 50 companies to convince their enterprise customers that this is something they must have. And I have a lot of conviction on that happening.

Then, the second constraint for mobile operators has been the tower landscape, the high cost of tower rental, and we know that difficulty of permitting new sites. Airspan brings tremendous advantage to that landscape. We have Strand mount product as an example. I mentioned we put up 20,000 in — or 25,000 in 9 months, in an example, in 4G, and we have ambitious plans with folks who own over a million miles of overhead cable strand in the U.S. And that this makes the total cost of ownership far more compelling than signing something with a tower company. And that is really in our DNA.

We design product that fit within very tight geographic — I’m sorry, physical requirements, power consumption requirements that allows them to go on rooftops, on the side of buildings, on strands, we can put our equipment, anywhere. And that’s a huge removal of an impediment of a traditional 5G business case, which is how much money do I have to budget for a 30-year lease with the tower company. So indeed, there have been delays. It isn’t the noise you might read about with an airport. It’s the fundamentals of this business, of how do I get physical locations to put up the number of cells that I need.

And as I mentioned earlier in the script, the number of cells is exponentially more in 5G than in previous generations, because it’s a higher spectrum. It’s being used either mid band or millimeter wave and it’s also a higher bandwidth. So, those are all tailwinds for Airspan. And in my mind, it really tell us that the 5G spend cycle is really still at its infancy, because the easy to do upgrades to towers are in process. But the harder to do and the build out of infrastructure for more participants to be in the market, which we’re so excited about is just starting.

Franco Granda

Absolutely. Thanks, Eric, for all the insights. And then look out 4Q seems like very old news now, but you guys mentioned $10 million impact to Q1. Can you give us a similar number to what happened in Q4? And then if you had to say a percentage impact just from the shipping costs to the gross margin, what would that be? Thank you.

David Brant

Okay. So, Q4 we were looking at — we were in the $54 million to $56 million range that we were pushing for. We came out at about $50 million — just over $50 million. So just under 10% impact to Q4. I think the redesigns from the back-end loading of Q1 gave us the problem in Q1. We haven’t — I mean it’s in excess of 5% of — for just our shipping costs, but — sorry, shipping and expediting costs, but we also have a lower amount of revenue, where we’re spreading out our fixed costs. So, it’s — as the revenue grows, we will see improvements in the gross margin due to allocating lower fixed costs against higher revenue number.

Eric Stonestrom

But to be very clear on shipping, we had two customers with critical deadlines in March and the landscape of shipping in March became extremely clouded even if we weren’t producing the product in China, there were dependencies on flight routes. We ended up sending stuff all the way around through the Middle East to get into the U.S and just we can put our fingers on $700,000, $800,000 of expense that when run into two particular customers to keep them happy. And obviously keeping our customers happy is our number one priority. Many of our customers pay their own freight. So, this isn’t an endemic problem. This was a situation at that time. And as we, David mentioned earlier, our Q2 is much more front end loaded, which gives us more time to negotiate with shippers to work on less than 4-day air express terms. And so that’s another reason we expect this is going to clear.

Franco Granda

This is really helpful. And I’m sure if you guys could get through the [indiscernible] the products themselves. And then you talked about the success on GOGO. Now that the testbed is completed, I was curious to get your take on how long there were a lot for them will take and then perhaps what percentage of it has been completed so far?

Eric Stonestrom

Glenn, you want to take that?

Glenn Laxdal

So, we’re going to be deploying the GOGO network over the course of this year. We’ve already completed about a little less than a third of the rollout in terms of cell sites. And so, the remaining deployments are going to be across the Q2 and drifting into the Q3 timeframe, which sets up the 150 sites that Eric had referred to earlier on in his remarks. And so, we’re well into that deployment and so far keeping up with the project.

Franco Granda

That’s very helpful. Thank you, guys.

Operator

Thank you. [Operator Instructions] Our next question is coming from the line of James Maxwell with Tocqueville. Please proceed with your questions.

James Maxwell

Good morning. Are you able to tell us what the cash balance was ending 331?

David Brant

We will disclose that when we do our Q1 results in what will only be a few weeks now, with the rest of our [indiscernible].

James Maxwell

What should we think about in terms of the OpEx run rate and EBITDA breakeven level for the business?

David Brant

Our OpEx run rate, I think we’re going to be reasonably flat as we look out for the next four quarters. And EBITDA will be obviously calculation related to the revenue profile that we’ve alluded to and gross margin improvement.

James Maxwell

Okay. Thank you.

David Brant

Thanks.

Operator

Thank you. There are no further questions at this time. I would like to turn the call back over to Eric Stonestrom for any closing comments.

Eric Stonestrom

Okay, thank you. And thank you to all for the good questions. If we turn to Slide 17, as we wrap up, we would reiterate the huge demand we’re all witnessing for connectivity in every aspect of life. This is leading to a tremendous new appetite for data hungry applications like the metaverse, which is driving this 5G CapEx cycle. We feel we have the right product set and human capital to take full advantage of these tailwinds and look forward to updating you on our progress.

One last note, we will be participating in broker conferences, and one on one meetings in the coming months. We look forward to engaging with investors at these events. Thanks again for your interest and support. That concludes our call.

Operator

Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

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