Adtran’s CEO says it expects the optical inventory situation to clear up in Q1
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· Adtran's CEO saw customer bookings start to recover in Q3
· Adtran sees success with Fiber-to-the-Prem and in-home platforms
Adtran is the latest vendor to start seeing signs of the optical networking segment emerging from the industry's inventory freeze over the last several quarters.
Speaking to investors during Adtran's fourth-quarter earnings call, Tom Stanton, CEO, said that the first quarter will provide a clearer picture.
“We expect one inventory situation to clear itself up in Q1,” he said. “That's still the case. Inventory was getting better and better throughout the year. We have one outlier that we think will clear up in Q1.”
He added, "exiting Q1, we expect to be in a good place.”
Diverse optical upgrades
Driven by deployments from a mix of service providers, Internet content providers, and enterprise customers, fourth-quarter optical revenues rose across all regions, with non-U.S. revenue up 10% quarter over quarter.
Adtran’s optical networking revenue grew 16% sequentially.
During the fourth quarter, Adtran’s optical networking solutions group added 18 new customers, including a broad mix of fiber broadband customers, government agencies, utilities, and large-scale enterprises.
“The growth in our customers matches the diversity in network upgrade catalyst with our optical customer base,” Stanton said. “In some use cases, broadband operators upgrade their backhaul networks to 100 Gig or regional transport networks to 400 Gig or 800 Gig.”
Meanwhile, Adtran also won contracts with internet content providers to upgrade capacity between large-scale computer sites, large enterprises, or government institutions to upgrade and secure private networks.
Stanton said its broad product portfolio puts it in a good position to deepen its presence with new and existing customers.
Adtran has upgraded all parts of its portfolio, including its new 800 Gig transport solution. In January, Titan Telecoms announced it is using its FSP 3000 TeraFlex™ CoreChannel™ technology to transport 800G services over a 963km backbone link between Sydney and Melbourne.
“With continued advancements in our portfolio, improving customer inventory levels, and growing opportunities across multiple verticals in the optical segment, we are optimistic about the growth opportunities moving forward,” he said.
Optical network solutions dominate revenues
As a result of strong optical networking solutions growth, Adtran’s fourth quarter revenue was $242.9 million, up $15.1 million or 7%, above what it said was the midpoint of its guidance.
Adtran’s optical networking solution category accounted for $81.6 million, or 34% of total revenue, up 16% sequentially.
It also gains in its network solutions and access and aggregation segments.
Network solutions generated $197 million in revenue, accounting for approximately 81% of total revenue in Q4, compared to 80% in the prior quarter. Likewise, access and aggregation delivered $72.7 million, or approximately 30% of the total revenue, and increased 8% sequentially.
However, the services and support segment declined slightly. The segment reported $45.8 million, or 19% of total revenue, in the fourth quarter compared to 20% in the preceding quarter.
Adtran has forecasted revenue between $237.5 million and $252.5 million for the first quarter of 2025.
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