Adtran Holdings, Inc. · NASDAQ:ADTN
Adtran — Q3 2024 Earnings Presentation
31 slides from Adtran's earnings presentation, Nov 7, 2024
Slide 1: Adtran Holdings Investor Presentation November 6, 2024
Adtran Holdings (Nasdaq: ADTN) Investor Presentation November 6, 2024
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements Statements contained in this investor presentation which are not historical facts, such as those relating to expectations regarding future revenue and future non-GAAP operating margin; future service provider spending; future profitability, and gr
Slide 3: Introduction and Business Model
Introduction and Business Model 1
Slide 4: Our Vision
OUR VISION To enable a fully-connected world, where the power and freedom to communicate is available to everyone, everywhere, in a secure, efficient and sustainable environment.
Slide 5: Key Differentiators: Who is Adtran?
Key Differentiators Open, disaggregated platforms with vendor-neutral capability Extensive global design support and supply orchestration capabilities (Supply chain) Customers = NSPs, RSPs, ASPs, SMBs, enterprises, tribal communities, governments and agencies: local, state, federal Simplified pricin
Slide 6: Global Presence
Global Presence Americas: Canada United States (HQ Global) Brazil APAC: Japan China Hong Kong Singapore India Australia EMEA: Germany (HQ Europe) England Switzerland Poland Finland Sweden France Italy Israel South Africa Saudi Arabia
Slide 7: Adtran is a Global Vendor with Scale and Diversity
Business model Adtran is a Global Vendor with Scale and Diversity Portfolio differentiation Customer diversity Geographic diversity Strength in focus markets Optical core to customer premise End-to-end automation & insights Enhanced security and assurance Balanced mix of national SPs, regional SPs,
Slide 8: From the Core Through the Door
Business model From the Core Through the Door Subscriber experience Access domain Optical domain Access & aggregation (Nx10/100G) ONT Residential Wi-Fi Regional transport (Nx100/400/800G) Fiber access platforms NID Fiber monitoring 100ZR DWDM systems Edge router 5G Business solutions Sync & Timing A
Slide 9: Market Trends
Business model Market Trends Pandemic accelerated digitalization and capacity demand 5G, work from home, AI and streaming drive multi-gigabit fiber access Deglobalization and consolidation impacts vendor selection Open, disaggregated, sustainable and cloud-centric systems Online meetings and e-comme
Slide 10: Fiber Networking Market Forecasts
Business model Fiber Networking Market Forecasts CAGR: ~3.6% CAGR: ~4.0% CAGR: ~6.5% Sources: PON OLT+ONT: Dell’Oro 5yr Broadband Access and Home Networking Report (July 2024) Metro WDM: Omdia Optical Network Forecast (May 2024) Carrier Ethernet: Omdia Service Provider Switching and Routing Forecast
Slide 11: Factors Expected to Drive Long-Term Growth
Business model Factors Expected to Drive Long-Term Growth BEAD* High risk vendor replacement $42.5b in broadband funding to provide service to 7m+ under/unserved homes Expect ~90% to be served with fiber Funds allocated through grant process at state level 55 eligible entities already completed the
Slide 12: Corporate Social Responsibility
Business model Corporate Social Responsibility EcoVadis Adtran, Inc. Adtran Networks SE CDP Climate Change 2023 B- A- Adtran, Inc. Adtran Networks SE Environmental Sustainability is integral part of product strategy through process-based product ecodesign and lifecycle assessment (LCA) Involvement o
Slide 13: Business Update
Business Update 5
Slide 14: Q3 2024 Preliminary Highlights
Q3 2024 business update Preliminary Highlights Q3 2024 Revenue of $228m, up sequentially and above mid-point of guidance ($215m-$235m) Revenue above mid-point of guidance range Q3 24 Non-GAAP Gross Margin of 42.1%, increased 17 bps QoQ and 176 bps YoY Non-GAAP Gross Margin Expansion Operating Cash F
Slide 15: Technology Update
Q3 2024 business update Technology Update Subscriber solutions Strong growth in 10 Gig ONTs, 10 Gig Carrier Ethernet CPE and multi-Gig Wi-Fi 6/6E/7 platforms Dozens of customers have adopted Intellifi, our SaaS application for cloud-managed Wi-Fi Access and aggregation solutions Scaling SDX 6330 hig
Slide 16: Preliminary Revenue by Segment, Category and Region
Q3 2024 business update Preliminary Revenue by Segment, Category and Region Category Region Q3 2023 Q3 2024 $272.3 $227.7 Services & Support Network Solutions Q2 2024 Q3 2024 $226.0 $227.7 Y-o-Y Q-o-Q Q3 2023 Q3 2024 $272.3 $227.7 Access & Aggregation Subscriber Solutions Optical Networking Solution
Slide 17: Well Diversified Across Technology, Markets and Customer Base
Q3 2024 business update Well Diversified Across Technology, Markets and Customer Base Categories Optical networking solutions Subscriber solutions Access & aggregation solutions Market Customers Large SPs Regional SPs Enterprise / ICP / OEM Domestic International Note: Potential differences may be d
Slide 18: Preliminary Financial Information
Q3 2024 business update Preliminary Financial Information Q3 2023 Q2 2024 Q3 2024 -16.4% +0.8% Q3 2023 Q2 2024 Q3 2024 40.3% 41.9% 42.1% +176bps +17bps Q3 2023 Q2 2024 Q3 2024 -18.8% +0.1% Q3 2023 Q2 2024 Q3 2024 Q3 2023 Q2 2024 Q3 2024 Note: All results are approximate due to the preliminary nature
Slide 19: Preliminary Balance Sheet and Cash Flow Highlights
Q3 2024 business update Preliminary Balance Sheet and Cash Flow Highlights In $m Q2 24 Q3 24 Trade accounts receivables $186.2 $172.0 Inventories $287.9 $282.9 Accounts payables $158.6 $173.4 Net working capital $315.5 $281.6 Operating cash flow generated $19.9 $42.0 Non-GAAP free cash flow * $3.9
Slide 20: Guidance for Q4 2024
Guidance for Q4 2024 Previous Outlook (for Q3 2024) Current Outlook (for Q4 2024) Revenue $215m – $235m $230m – $245m Non GAAP Operating Margin -1% – +3% 0% – +4%
Slide 21: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation 6
Slide 22: Cost of Revenue, Gross Profit and Gross Margin Reconciliation
Cost of Revenue, Gross Profit and Gross Margin Reconciliation (1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations. (2) Includes expenses for restructuring pr
Slide 23: Operating Expense Reconciliation
Operating Expense Reconciliation (1) Includes $4.0M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $0.6 million of legal and advisory fees related to a potential strategic transaction which are both in
Slide 24: Operating Loss Reconciliation
Operating Loss Reconciliation (1) Includes intangible amortization of backlog, inventory fair value adjustments, developed technology, customer relationships, and trade names acquired in connection with business combinations. (2) Includes expenses for restructuring program designed to optimize the a
Slide 25: Other Expense Reconciliation
Other Expense Reconciliation (1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees. (2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries.
Slide 26: Net Loss and Loss per Share Reconciliation
Net Loss and Loss per Share Reconciliation (1) Represents the non-controlling interest portion of the Company's ownership of Adtran Networks pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA. (2) Includes non-cash cha
Slide 27: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (1) Purchases related to capital expenditures.
Slide 28: Appendix
Appendix 6
Slide 29: 2024 Financial Calendar
2024 Financial Calendar 18th Annual Needham Virtual Security, Networking, & Communications Conference - Virtual November 19 Deutsches Eigenkapitalforum - Frankfurt November 25 - 27
Slide 30: Explanation of Use of non-GAAP Financial Measures
Explanation of Use of non-GAAP Financial Measures Set forth in the tables below are reconciliations of gross profit, gross margin, operating expenses, operating loss, other (expense) income, net loss inclusive of the non-controlling interest, net loss attributable to the Company, net income attribut
Slide 31: Thank you
Thank you