Adtran Holdings, Inc. · NASDAQ:ADTN
Adtran — Q2 2024 Earnings Presentation
32 slides from Adtran's earnings presentation, Aug 6, 2024
Slide 1: Adtran Holdings Investor presentation
Adtran Holdings Investor presentation August 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 revenues; ADTRAN Holdings ability to reduce its inventory levels; ADTRAN Holdings’ potential funding opportu
Slide 3: Introduction and business model
Introduction and business model 1
Slide 4: Our vision
OUR VISION is 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: Who is Adtran?
$1.15B FY23 revenue 50 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, fe
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: Business model: 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 More balanced mix of national SPs, regional
Slide 8: Business model: Optical core to customer premise
Business model Optical core to customer premise Metro WDM 5G Optical platforms Access and aggregation platforms Subscriber platforms Open multi-gigabit PON systems, Carrier Ethernet access, Wi-Fi, routers, switches and more Fiber access platforms, 1/10/25/100G Ethernet aggregation, network timing an
Slide 9: Business model: 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 2023-2028: 3.2% CAGR 2023-2028: 2.4% CAGR 2023-2028: 3.6% Sources: PON OLT+ONT: Dell’Oro 5yr Broadband Access and Home Networking Report (July 2024) Metro WDM: Omdia Optical Network Forecast (November 2023) Carrier Ethernet: Omdia Service Provide
Slide 11: Significant tailwinds expected to drive long term growth
Business model Significant tailwinds 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 32 eligible entities already
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: Q2 2024 business update Highlights
Q2 2024 business update Highlights Q2 2024 Revenue at $226m, above mid-point of guidance range (guidance $215m - 235m) Revenue within guidance range Further improvements in non-GAAP gross Margin. Increased by 37 bps QoQ and 334bps YoY Non-GAAP Gross Margin expansion Working Capital improved, down by
Slide 15: Technology update
Q2 2024 business update Technology update Subscriber solutions Latest Wi-Fi 6/6E/7 platforms driving growth opportunities Dozens of customers have adopted Intellifi, our SaaS application for cloud-managed Wi-Fi Access and aggregation solutions Continued to scale SDX 6330 deployments across several l
Slide 16: Well diversified across technology, markets and customer base
Q2 2024 business update Well diversified across technology, markets and customer base Categories Optical networking solutions Subscriber solutions Access & aggregation solutions Market Customers Large Regionals Enterprise / ICP / OEM Domestic International
Slide 17: Revenue by segment, category and region
Q2 2024 business update Revenue by segment, category and region Category Region Q2 2023 Q2 2024 $327.4 $226.0 Services & Support Network Solutions Q1 2024 Q2 2024 $226.2 $226.0 Y-o-Y Q-o-Q Q2 2023 Q2 2024 $327.4 $226.0 Access & Aggregation Subscriber Solutions Optical Networking Solutions Q1 2024 Q2
Slide 18: Financial information
Q2 2024 business update Financial information Q2 2023 Q2 2024 -31% Q2 2023 Q2 2024 38.6% 41.9% +334bps Q2 2023 Q2 2024 -24% Q2 2023 Q2 2024 Q2 2023 Q2 2024 Q1 2024 Q2 2024 0% Q1 2024 Q2 2024 41.6% 41.9% +37bps Q1 2024 Q2 2024 -9% Q1 2024 Q2 2024 Q1 2024 Q2 2024 Revenue ($m) Non-GAAP gross margin Non
Slide 19: Balance sheet and cash flow highlights
Q2 2024 business update Balance sheet and cash flow highlights In $m Q1 24 Q2 24 Trade accounts receivables $187.6 $186.2 Inventories $322.1 $287.9 Accounts payables $159.1 $158.6 Net working capital $350.6 $315.5 Operating cash flow generated $36.6 $19.9 Non-GAAP free cash flow * $23.2 $3.9 Cash $
Slide 20: GAAP to non-GAAP reconciliation
GAAP to non-GAAP reconciliation 6
Slide 21: 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 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 $3.9M of intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations and $2.8 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 SE pre-DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA. (2) Includes non-cash
Slide 27: Free cash flow reconciliation
Free cash flow reconciliation
Slide 28: Appendix
Appendix 6
Slide 29: Guidance for Q3 2024
Guidance for Q3 2024 Previous Outlook (for Q2 2024) Current Outlook (for Q3 2024) Revenue $215m – $235m $215m – $235m Non GAAP Operating Margin -3% – +2% -1% – +3%
Slide 30: 2024 Financial calendar
2024 Financial calendar Second Quarter 2024 Earnings Call - Virtual August 6 Rosenblatt Age of AI - Virtual August 19 Jefferies Semiconductor, IT Hardware, and Communications Technology Summit - Chicago August 28 18th Annual Needham Virtual Security, Networking, & Communications Conference - Virtual
Slide 31: Adtran stock information
Adtran stock information Blackrock 4.7% Vanguard Egora William Blair Goldman Sachs 5.9% Morgan Stanley Other Shareholders YTD stock price development* Shareholder Structure** *Source: Nasdaq ** Release according to Article 40, Section 1 of the WpHG .
Slide 32: Thank you
Thank you