Adtran CFO Uli Dopfer reported revenues of $226 million during the company’s Q2 2024 earnings call—down 31% year-over-year and flat quarter-over-quarter, with international revenues making up 52.4% of total revenues and domestic revenues contributing 47.6%.
Breaking down the product mix, Dopfer reported that Subscriber Solutions contributed 36.5% of revenues, up 0.9% year-over-year, Access & Aggregation contributed 30.9% of revenues, down 31.9% year-over-year, and Optical Networking Solutions contributed 32.6%, down 48.5% year-over-year.
Adtran CEO Tom Stanton attributed growth in the Subscribers Solution category to the company’s success with Fiber-to-the-Prem and in-home platforms segments, noting that a material percentage of growth in both segments were competitive takeaways.
“We added 12 new Fiber-to-the-Prem customers in Q2, most of this being U.S. regional service providers adopting our latest SDX fiber access platforms,” he said. “We also had 16 new customers who adopted our SDG in-home platforms this past quarter, bringing the total number of customers adopting our latest Wi-Fi platforms to well over 200.”
Stanton also reported that efforts to sell Adtran’s optical solutions into its existing broadband access customer base are paying off.
“In addition to cross-selling success with our optical solutions into the service provider market, we continue to grow our enterprise in ICP customers this past quarter,” he said. “With the recent launch of our 800-gig transport platforms, 100 ZR pluggables, and several key enhancements to our optical network automation capabilities, we are well positioned to continue this momentum going forward.”
Highlighting Mosaic One, Adtran’s flagship software platform, Stanton reported success in U.S. markets.
“We now have more than 400 customers, with the majority of those in the U.S., that have adopted our Mosaic One platform, including more than 200 customers that have adopted multiple applications within this platform,” he said.
Regarding the European market, Stanton reported that Adtran is progressing towards volume deployments of fiber access and optical transport portfolios with multiple large operators in late 2024 through early 2025.
“We remain well positioned in fiber access and optical transport infrastructure to take advantage of the ongoing buildout of fiber networks in the region as well as the shift away from high-risk vendors,” he said.
Decreasing inventory and improving working capital
Dopfer reported Adtran’s Q2 non-GAAP gross margin as 41.9%, increasing by 334 basis points year-over-year.
“The improved gross margin is reflective of our ongoing efforts to optimize our supply chain and supply-related processes,” said Dopfer.
Q2 non-GAAP operating expenses were $93.2 million, down 24% year-over-year.
“The decline in operating expenses is attributable to the impact from our business efficiency program,” said Dopfer. “Year-over-year, we reduced non-GAAP R&D spend by 26% and SG&A expenses by 22%.”
Dopfer also reported an improvement in working capital, with trade accounts receivable at $186.2 million at the end of the quarter. In addition, he reported Adtran had reduced its inventories by $34.2 million compared to Q1 2024.
“The improved working capital resulted in an operating cash flow of almost $20 million compared to $36 million in Q1 2024,” he said. “Consequently, we generated $3.9 million of free cash flow. At the end of the quarter, cash and cash equivalents were $111.2 million, a quarter-over-quarter increase of $4.4 million or 4%.”
Service provider spending caution
Dopfer said, overall, Adtran is confident in its long-term outlook while remaining cautious about spending trends from service providers.
“We made significant strides in operational efficiency, positioning ourselves well to capitalize on market opportunities in the U.S. and Europe,” he said. “Despite near-term market challenges, our competitive portfolio and growing customer base positions us well for future success. While we remain confident in our long-term outlook, we remain cautious due to spending trends from service providers.”
Adtran reported expected revenues to range between $215 million and $235 million for the third quarter of 2024.
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Hayden Beeson
Hayden Beeson is a writer and editor with over seven years of experience in a variety of industries. Prior to joining Lightwave and Broadband Technology Report, he was the associate editor of Architectural SSL and LEDs Magazine.