ADTRAN Holdings, Inc. (NASDAQ:ADTN) Q4 2023 Earnings Call Transcript
ADTRAN Holdings, Inc. (NASDAQ:ADTN) Q4 2023 Earnings Call Transcript February 27, 2024
ADTRAN Holdings, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, thank you for standing by. And welcome to ADTRAN Holdings Incorporated Fourth Quarter 2023 Earnings Release Conference Call [Operator Instructions]. During the course of the conference call, ADTRAN representatives expect to make forward-looking statements that reflect management's best judgment based on factors currently known. However, these statements involve risks and uncertainties, including the risks detailed in our earnings release, our annual report on form 10-K and our filings with the SEC. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements, which may be made during the call. We undertake no obligation to update any statements to reflect the events that occur after this call.
During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in our investment presentation and our earnings release. The investor presentation found on ADTRAN Investor Relations website has been available, has been updated and is available for download. It is now my pleasure to turn the call over to Tom Stanton, Chief Executive Officer of ADTRAN Holdings. Sir, please go ahead.
Tom Stanton: Thank you, Krista. Good morning, everyone. We appreciate you joining us for our fourth quarter 2023 earnings conference call. With me today is ADTRAN Holdings CFO, Uli Dopfer. Following my opening remarks, Uli will review the quarterly financials performance in detail, and then we'll take any questions you may have. Our fourth quarter revenue came in as expected with operating profitability on the upper end of our guidance range, helped by lower operating expenses and improving gross margins. Revenue of course continued to be impacted by macroeconomic factors and elevated inventory levels. Given the environment, we continue to focus on managing our operational expenses and reducing our inventory levels. Taking a closer look at the results in the fourth quarter.
62% of our revenues came from outside of the US, which is similar to the geographical revenue mix in the first three quarters of the year. On product mix, subscriber solutions was up quarter-over-quarter due to an improving inventory situation with both RGs, residential gateways and ONTs. The access and aggregation solution category was down quarter-over-quarter due to timing of orders with a couple of our larger customers. Optical networking solutions continued to be impacted by inventory reduction initiatives with large customers. Coming into 2024, we remain focused on two strategic initiatives, the investment in fiber based broadband networks in the US and the high risk vendor replacements centered in Europe. These two initiatives have driven us to broaden our presence and strategic relevance in Europe and substantially increase our product portfolio breadth for customers here in the US.
And while 2023 presented headwinds to equipment suppliers, operators continue to invest in deployment of fiber networks across most regions of the world. According to the Fiber Broadband Association, fiber broadband deployments in the US set a record in 2023, passing 9 million homes, up 13% year-over-year from previous year's record of 8.3 million homes passed. These results brought the total homes US passed to 77.9 million. Even with this impressive growth number though, nearly half of the US homes are still not passed with fiber. Similar trends are happening in Europe. In the UK, full fiber coverage increased by 4.6 million premises in 2023 according to Ofcom, now covering 17.1 million premises. As more homes are connected with fiber based broadband enabling multi gigabit speeds per household, upgrades to in home connectivity solutions and middle mile transport are following.
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