Ekinops Q3 2024 marks return to growth, but slow carrier spending patterns remain a challenge

Ekinops saw a return to growth in the third quarter, with revenue rising sequentially. However, the French-based vendor still faced slower service provider spending in the optical segment.  

The French vendor reported a third-quarter revenue of $33 million,  up over 9% and over 4% relative to the second quarter of 2024.

For the first nine months of 2024, consolidated revenue was $96 million, down 11% compared to the same period last year.

“Ekinops thus returns to growth, posting its highest level of revenue since Q2 2023,” the vendor said in its earnings release.

Access rebound, optical struggles

Driven by what the company said was a significant rebound in business in France since the start of the year (+27% over nine months), with operators gradually rebuilding their equipment inventories, Ekinops reported that Access Solutions sales rose over 8% over the period.

Alternatively, Optical Transport Solution sales declined 34% year-over-year.

Besides an unfavorable basis for comparison, Ekinops said that “operators are still reluctant to start making investments in a context of overcapacity with a slowdown in internet traffic growth.”

The company added that Optical Transport sales grew over 16% sequentially compared to the second quarter of 2024.

Software and services were once again a bright spot. As of September 2024, Software and services revenue represented 16% of Ekinops’ total revenue, up 15% year over year.

The company noted that Software and services had “an increasing share of recurring revenue, particularly in Services.”

Regional challenges, opportunities

From a regional perspective, Ekinops saw variances, with France leading most of the growth in the quarter.

Fueled by the rebound in sales of Access Solutions, the company's main business line is in its home market, Ekinops reported robust growth of 18% over the period in France.

Over the first nine months of 2024, Ekinops reported 45% of its total business volume in this region, compared to 34% a year earlier.

However, outside of France, Ekinops said it saw “a decline in its activities, which now account for 55% of its total revenue (vs. 66% a year earlier).”

In North America, Ekinops reported that revenue declined 29% to $19.4 million due to lower carrier Optical Transport solution spending.

Ekinops cited the challenges associated with delays in deploying networks funded by the U.S. Government's BEAD (Broadband Equity, Access and Deployment) program.

“The US market remains marked by a significant wait-and-see attitude adopted by service providers, linked to the slow deployment of the $42 billion federal BEAD program (Broadband Equity, Access and Deployment),” Ekinops said.

Meanwhile, the EMEA region (Europe, excluding France, the Middle East and Africa), representing 33% of Ekinops' revenue (vs. 39% a year earlier), saw a 23% decline in business over the period. The company said the decline was related to a “significant decrease in sales of Optical Transport solutions, on the back of a 17% increase over the same period last year.”

However, on a sequential basis, Ekinops saw a return to growth in this region of 9%.

Finally, Asia-Pacific revenue, which relies on just a few key accounts, was down 31%. Over nine months, the region accounted for 2% of Ekinops' total revenue (identical to the prior year).

Cautious outlook

Ekinops reported an improved revenue level of slightly over $32.7 million for the third quarter.

One of the company's objectives for 2024 – to achieve quarter-on-quarter growth – has been fulfilled, as the company added approximately $1.1 million in revenue in each quarter between the first and third quarters.

The company attributed the growth to Access Solutions inventory easing at operator customers in France and EMEA and the very first deliveries of its new 800G Optical Transport product.

While Ekinops saw gains during the third quarter due to the remainder of the year and the fourth quarter, they remain cautious.

Ekinops said, "The market environment is still difficult, with operators across all regions notably cautious about their investment plans.”
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.
To stay abreast of fiber network deployments, subscribe to Lightwave’s Service Providers and Datacom/Data Center newsletters.