ADTRAN's (ADTN) Q2 Earnings Miss Despite Higher Revenues
ADTRAN Holdings Inc. ADTN reported soft second-quarter 2023 results, wherein both the bottom line and the top line missed the respective Zacks Consensus Estimate owing to a challenging macroeconomic environment. However, revenues increased significantly on a year-over-year basis.
Net Income
On a GAAP basis, net loss in the June quarter was $33.3 million or a loss of 43 cents per share against net income of $2.1 million or 4 cents per share in the prior-year quarter. The year-over-year decline despite top-line growth and income tax benefit was primarily due to higher cost of revenues and operating expenses. Non-GAAP net loss was $0.08 million or breakeven, which missed the Zacks Consensus Estimate by a penny.
ADTRAN Holdings, Inc. Price, Consensus and EPS Surprise
ADTRAN Holdings, Inc. price-consensus-eps-surprise-chart | ADTRAN Holdings, Inc. Quote
Revenues
Quarterly total revenues surged to $327.4 million from $172 million in the prior-year quarter, driven by the increasing demand for ADTRAN’s network solutions and fiber broadband products. The top line however missed the consensus estimate of $330 million.
Revenues from Network Solutions in the reported quarter were $283 million compared with $156 million in the year-ago quarter, with incremental contribution from ADVA. ADTRAN completed the buyout of ADVA in July 2022. The company recorded healthy demand trends, driven by the accelerated expansion of fiber-to-the-home networks, upgrades to in-home Wi-Fi connectivity and the adoption of cloud-based automation tools. The top line was further buoyed by improved customer diversification and end-to-end fiber broadband solutions. Services and Support revenues were $44.4 million, up from $16 million.
Other Details
Total cost of sales increased from $109.5 million to $234.8 million. GAAP gross profit came in at $92.6 million compared with $62.5 million in the prior-year quarter. Operating loss in the quarter was $44.6 million against an operating income of $8.1 million in the year-ago quarter.
Cash Flow & Liquidity
In the first six months of 2023, ADTRAN used $36.2 million of cash for operating activities compared with a cash utilization of $5.9 million in the prior-year period. As of Jun 30, 2023, the company had $124.3 million in cash and cash equivalents with $44.6 million of deferred compensation liability.
Moving Forward
ADTRAN expects the second half of 2023 to remain challenging as customers continue to optimize their inventory levels amid uncertain business conditions. Nevertheless, management remains bullish about the long-term earnings growth prospects of the company.
ADTRAN currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
InterDigital, Inc. IDCC, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. It has a long-term earnings growth expectation of 13.9%.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.
Akamai Technologies, Inc. AKAM, carrying a Zacks Rank #2, delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has a long-term earnings growth expectation of 10%.
Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.
Bandwidth Inc. BAND, sporting a Zacks Rank #1, delivered an earnings surprise of 372.9%, on average, in the trailing four quarters.
Headquartered in Raleigh, NC, Bandwidth operates as a Communications Platform-as-a-Service provider, offering avant-garde software application programming interfaces for voice and messaging services. It is the only application programming interface platform provider that owns a Tier 1 network with enhanced network capacity, primarily catering to business enterprises.
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