Earnings call transcript Q4 2023

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Operator

Good afternoon. Welcome to the Aviat Networks' Fourth Quarter Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note the conference is being recorded.

the to turn host now will conference your over Mr. I Director of Fredrickson, Investor Andrew Relations.

begin. may You

Andrew Fredrickson

and you, XXXX webcast. call fiscal Aviat results and Thank to conference welcome Networks' fourth quarter

in press www.aviatnetworks.com at with hours. a call updated You our today's along release, of approximately find section of our investor can presentation in the replay IR website an two

CFO, company's Pete CEO, outlook, who and David with opening begin me are today will by financial the Peter With review provide strategy Q&A. fiscal followed on will Smith, remarks fiscal the results who Gray, quarter and quarter, Aviat's Aviat's by on our will President and the closing fourth remarks followed for then XXXX.

but during webcast, activity relating call and statements reminder, drivers, forward-looking to management financial a projections, statements regions. products different today's economic limited business, and not and expansions business to, make As including, new in may regarding Aviat's

opinions of involve These and to the reflect of cause actual from company's and differ and webcast as and results materially date forward-looking those other assumptions that call could statements. only the uncertainties statements risks this

events. that XX-K on SEC. company this found in could make or call of undertakes forward-looking our of obligations revisions be these the on to differ actual factors statements the light materially made from can information Additional information in report to revise annual on filed results future with the Form statements cause no or The public any new

non-GAAP at information. other webcast, financial management IR is refer and therein, the call www.aviatnetworks.com financial reference available Additionally, Please which website to supplemental GAAP include non-GAAP a tables of and during release, measures. our and section to which GAAP press reconciliation today's will both and our financial in

Aviat's would the like Pete? this President to to turn At CEO, Peter time, Smith. and over call I

Peter Smith

Thank and on line company fourth fiscal long-term joining to improvement. our everyone. and goals focus of Networks' for Aviat results of growth, for to Andrew, execute margin quarter continued year XXXX. bottom the you afternoon, The and fiscal top us line review good XXXX and Thanks, full key expansion

the of of include a year. prior $XX.X of from versus million, fourth versus QX of Adjusted represents million, EBITDA year. $XX.X period same growth the Highlights last revenue XX% quarter which increase XX.X%

increase marketable debt-free of million of with Non-GAAP balance sheet XX%. cash EPS Strong securities. $XX.X and

full the XXXX growth growth. year of of double-digit to consecutive revenue year represents fiscal million. XX.X% our For This achieved Aviat fiscal line top $XXX.X third

XXXX. operational Adjusted year-over-year, up Year-end EBITDA XX%. a million, we of results increase million, team in $XXX backlog customers EPS well as our over $XX.X from XXX the the year. around growth XX% dedicated last reflect continued as market for and the members XX% effort globe. These of financial and fiscal year demand new the Aviat Non-GAAP in of services products see

with continues CapEx fourth Let's our offerings. XG business telecoms. flat the our see Starting Tier fiscal highlights service microwave opportunity, In key healthy of we year. to to spend US, and discuss products despite our rising thanks backhaul demand demand to differentiated see from for the from down quarter XG X the global providers,

regions. be different growth there continue cycle. the believe XG somewhat into investment as of in This the investment microwave larger initial to We from a build-outs fiber. receives the in curve networks overall coverage build less Operators portion environments. makes And in network by demand backhaul their Aviat's XG rural and continued CapEx will expand XG as from suburban populated domestic funding progresses, densely

X the market the customer beginning the Internationally, Aviat's Aviat. of and products. for early we new are fiscal interest of stages announced and still rollout marked in our geographic Bharti At a win, we year, strong see Airtel the which for XG Tier

Asia Latin Africa, in Pac. momentum building see we America Additionally, and

less data traffic. As up global of XX% makes reminder, than a XG mobile currently

to opportunities in investing many see business. more have X Tier ahead and of operators Tier We years XG win their selective We X infrastructure.

will economic scale from additional can away a drive long-term that our to shareholder when competitors our to offer win Aviat value. we target and distinct capabilities to see business bring and This advantage global will We business continue to accounts new the customer.

to against opportunities of our funnel largest share global market to on Our competitor executing focused we and and strengthen, continues customers. gain are

identified for current Our opportunity competitor Aviat to $XX this replace over funnel million. is

was foreseeable operators pressure in XXXX their from continue revenue fiscal our networks. on to will that remain We seek the this taken backlog the is and competitor Our competitor believe future this and $XX million. $XX will replacements million, for

as Fund, the Shifting to Aviat Deployment, such strong. develop our environment and Government continue well store. Opportunity the BEAD, broadband Broadband rural business funding Digital remain with remains Access to the and the RDOF for programs positioned market Rural we this demand Equity

albeit RDOF RDOF anticipate small. related from continued We the in increasing quarter, orders calendar year in projects XXXX. relatively revenue

year Although dollar be stage space. for continues orders sign in We $XX early an of this at booked RDOF we purchase as view the to quantify impact in to coming from West Aviat of excess to encouraging of this this demand difficult million. blanket the have

allocations the The BEAD represents recent billion Deployment to and $XX.X Broadband program Access announcement a program. positive government of state step Equity or the to unlocking

this of reminder, the bipartisan infrastructure a was law in XXXX. program part As passed

the grant the increasing program rural their and timing begin perspective, announced The will The a states areas. calendar we From begin anticipate allocations aimed approximately year announced the affordability programs. permit of to United planning allocations in availability XXXX. high-speed States, is XX% late especially of at flowing Internet and that underserved across the service in

of a programs funds broadband be in long the release government other will tail If three peak following years an indication, five of to initial spending. are with the

While we and networks encouraged appropriate the deployments will economical the in believe fiber effective strongly areas. of include most BEAD deployment, the wireless funding that notice initial

Aviat subcommittee We technology of neutrality to favors that believe congressional meetings There details no Further, microwave. NTIA, the BEAD, but many benefit. are in and for products seven the state-level right strongly has than the cost-effective Energy this set and recent of of relationships representatives testimony and deployments. believe with and we still advocated Commerce less

update continue appropriate. investor We the to as community will

to a lowest backlog. private reliable, LTE and IP/MPLS management evolved expert with for have high-power record and networks. full of for base stations North driven high for fourth believe total availability point-to-point portfolio on affordable network software we the private end-to-end cost portfolio Moving quarter, routers, demand and core was microwave radios networks, and innovations highly point-to-multipoint automation overall by services. a revenue products, the private including network private of million America In of our $XX solutions, strongest strong packet lowest OpEx ownership, and access turnkey We systems

applications. We around funding microwave upgrade funds. America in opportunity strong networks and vendor that private to remain America share the local and private network The North believe positively ARPA remain the strong LTE state to leading for world. We remains as other North impacted governments growing will in in video environment and of the demand by support data-driven networks

grow business opportunities. international networks private to also through will new The continue

business which our network in indoor year-over-year ultra-high Our radio, significant the IRU the to power private the quarter, UHP. get Aviat XXX we drove increase announced will In new backlog, fourth shortly.

capacity the with of band. USA significant RF of the creating ultra-high concerned XX% opportunity links six about is will replacement highest this XX the band, UHP importantly, a customers in the UHP's a six industry reliability, new in greater supported in XX,XXX upgrade Most performance gigahertz enables radio which the gigahertz longer interference lengths. and more the ever transmit allow with in power gigahertz

is customer and value-add another example to This needs meet innovating deliver Aviat solutions. of

already XXXX. have half begin our expect secured year and We first first to in of shipments order the fiscal

and support eband adding our In make fiscal microwave addition to alongside easier customer multiband multiband simplify the by or for year of including Aviat's total XXXX a ownership UHP it which and WTM their offerings for number IP/MPLS systems. operators platform upgrade released lower microwave in and Aviat radio, cheaper to Vendor-agnostic innovative to solutions, of networks. products networks cost all-outdoor legacy

Airtel. secure lowers a network. with for their radios, the to Frequency better FAS also win barrier our help to networks. third-party software on This Aviat entry which leverage for allows Assurance operators manage Software, helps new them platforms our This network powerful Bharti into

access simplicity Aviat's of and networks allows acquired to RDL-XXXX, products their Redline reliability which operators to managing acquisition via improve for the network the ProVision Support Plus Communications end-to-end.

to the our proud products of are brought to are innovations ahead. these and have offering in solutions to the excited continue and We customers year market we new

featured is believes the in line difficult will perspective. additional the telecom with and intelligence group, bandwidth to that of create demand is use news, we prominently Aviat AI more will peer capacity, this amount estimate point. in share our the applications artificial Since for timing at and demand

a bodes consumes the low artificial needs. backhaul and data, telecom which equipment well branch intelligence lot and latency generative More of specifically, AI of requires for

services in has the Aviat and products. On software front, health software and has assurance frequency fast product assurance invested

for artificial monitor provide to replicate help customers solution are networks of offers This an specialized to both and of their systems health. and set These that customers branch a examples powerful solutions today. help network manage expert knowledge impactful intelligence interference

eases software forward, Going of Aviat that network operations. the additional to customer's intends invest in burden

Moving the chain supply environment. onto

We improvements. to all continue returned supplies to of pre-crisis see performance. our Nearly

remain have year over allocations and XXX XX a allocation. quarter is last This that component improvement components We an XX from in ago.

and times We building normalized. the in now component possible. redundancies lead Additionally, improve continue are de-risking diligent supply to and remain where chain

continue shareholders remain dedication demand. and grow continue without and execute possible an of take financial to great to of reflected focused was our This for fiscal we'll share year. results Our the not has and of be Aviat results. be will and and We a employees. would excellent customers all our This quarter to the in operational and

focus. Aviat's include core values customer

teams the our This voice increase effort by year. represents marketing and customer part year $XXX process. versus focus resulted of our of XX% we million. customer, on of backlog sales in fiscal our prior The advanced the As of an

the added platform a customers. the and metric that state again new the this annually expansion driven I'll service on with report Redline Note customers project-based by of that was and store quarterly providers, fluctuations local business, highlight governments, we Additionally, avoid This to XXX internationally. we

growth high along our believe that beyond. sets these the well cost up switch, Given with for us we year customers in fiscal and XXXX backlog new to

review back before for over comments. that, to let turn coming the David? With some final me our financials David to call

David Gray

Thank you, Pete, and everyone. good afternoon,

fourth some key highlights. XXXX fiscal remarks today, Noting our found our year my release review During this press in financials be full I'll detailed the financial and afternoon. quarter can filed of

fourth and the fourth unless quarter As today discussed fiscal between XXXX of fiscal are of reminder, otherwise. noted a quarter comparisons XXXX, all

$XX.X to million in or million last regions. XX.X% compared year, reported driven million For $XX.X an quarter, of strong for all total of the revenues $XX.X by increase period we and same the as growth fourth

last quarter North of X driven America, revenue our business. period total networks was XX% or XX% of an increase the same the by Tier year, $XX.X and million, from comprised million for private which our $X.X

an million strength year, and last Middle was period for revenue America. same the from $X.X increase $XX.X East with XX.X% the quarter, the or of International particular million in Latin

continuing million fiscal book-to-bill trend $XXX Pete to one, XXXX. started of trailing above our back four-quarter As backlog in our mentioned, grew XX% ratio

margins prior were XX.X% Gross mix. the margin XX.X% XX.X% and and partially was non-GAAP in in compared for by dynamics, offset quarter The year. by XX.X% and price the driven better a gross basis as cost improvement to regional GAAP on

expenses quarter from an million increase deal $XX.X and $X.X costs of of the quarter were were which of $X.X share-based year. prior charges, Fourth operating million, million. GAAP an excludes million compensation expense, increase operating impact Fourth non-GAAP restructuring the $XX.X

related The NEC's increases M&A addition acquisition impacted due expenses of were the both business. in while transport microwave non-GAAP and GAAP to Redline, was expenses of GAAP operating further to primarily by our

increases non-GAAP and of were quarter $X.X last million and to provision compared million $X.X $XX.X to XX.X% $X.X was $X.X year year. GAAP of GAAP respectively. or prior quarter operating non-GAAP million income and compared XX.X%, million million $X.X Fourth tax million and of Fourth

tax has foreseeable future. for As NOLs a the generate million payments will shareholder to continue reminder, $XXX via of value the cash minimal that company

repeat. share-based charges, growth million the margin by tax provision and million GAAP compensation, a marketable quarter million million costs $X.X increase did restructuring compared $X.X which driven was compared net Fourth that onetime income Fourth gain non-GAAP $X.X net which year, noncash securities or $XX.X same an million expansion. excludes M&A-related income, and XX.X% not to quarter for included of $X.X million of as period to was year, $X.X last on last

EBITDA quarter the basis were diluted XX.X% to Adjusted fully period increase same or EPS XX.X% the Fourth quarter quarter. last million year. $XX.X share per $X.XX for of a an in the $X.XX on XX.X%. non-GAAP was margins Adjusted from came the for an per year, prior $X.X EBITDA at increase share million, compared for of

Moving on balance to sheet. the

in million, quarter the a fourth at and from cash quarter of million net no debt, securities Our Fourth position with cash marketable the the $X.X end totaled million supply prior past some consume to $XX.X QX from the significant by of were quarter. from cash flows levels our million QX the up buffer inventory that we operations driven us $XX.X in in two a navigate stock chain issues improvement years. as helped $XX.X $XX.X our of million in of

progress of good in DSO. made terms We

versus is a our DSO and working trade unbilled Our net QX. includes balances AR and payments net declined by of revenue five and net that advanced days key efficiency. Note capital unearned of indicator DSO

remains to plans. balance leaving Our sheet us solid, positioned very execute long-term our well

I'll it some final comments. turn Pete Pete? With that, for back to

Peter Smith

Thanks, David.

up Q&A, opening for like environment, fiscal some the Before context put I'd year few and our to demand a summarize provide around updates.

calls past dynamics months, fiber. of focused to several the channel many on microwave Over the have we received compared

characteristics. channels, detail three see the we'll We vast distinguishing differences and in

order space. to ability the fiber quarter witnessed demand, throughout less crisis. First, revenue. the pattern chain in in than never the supply we was million largest Aviat experienced in this constrained $X the With meet impact The

experienced double The fiber instances many order. space of

times today that we and are crisis, given to the chain can Our prior crisis Note book orders chain similar. lead certain the supply crisis and and the within supply prior a quarter. during ship to today,

not was first. filled As in our an a place customers result, orders which attempt duplicative see to order did

is these inventory business before to crisis, customer networks. Aviat's nature purchases supply critical prioritized. networks. and of utilities. to Due COVID approximately government the the customers to entities The At we are expect the majority outset these mission-critical our customers Second, ramped be XX% of support of chain the networks, private

did disappoint As and a not not customers result, did double we our ensue. ordering

a small are single sourced operate These networks medium-sized often customers networks. to Aviat's of supplier. many Third, and

the insight result, probability the excellent is double of space. prevailed a we low. installations. strongly have we network the operator largest in discourages performed ordering This substitution fiber our that Further, As into mobile since

inventory ISPs. Aviat for the holds Lastly, store

at As customers of do reasonable and our held a have our the for an inventory we customers. have ordering, knowledge result, not incentive double

microwave fiber relates this a versus the comment will spending. discussion as with comparison We CapEx close related it to to

spending microwave. headlines Therefore, As microwave. Aviat's year-over-year. mixture noted US builds that previously by favor shifting CapEx since with is CapEx X to first, Aviat in the is Tier spend fiber call, we network observed undeterred proceed the typically followed this is declining of

integrated than represented year of channel NEC North successfully Networks. acquisition. We with to for grow. transport significant company announced partnership. We a year our Aviat continues and builds on this greater results acquisition years ahead our The Fiscal Redline the acquisition, microwave XXXX XX first America model achieve for XXXX Communications in financial which the

we focused have networks, growth X Our Tier private on strategy Historically, has ISPs. expanded. in and

we a wherewithal we As have the have developed Xs. Tier Tier strategy. portfolio select select and and our value win now overall Xs proposition, pursue include We our to in

As in of to we quarter, currently subject remains our and networks. customary December drivers October transaction, an growth focused the private on NEC expect the broadband approval close conditions. to closing regulatory on the XG, and transaction rural update Aviat to

availability access. government this for to is Aviat is see significant XG The the and upgrade a positioned expand positive countries address efforts rural aim still broadband, select market the that business. cycle In to we there other well in high-speed these of and as catalyst our US government is early. funding Internet

data Lastly, communications we for demand on exclusive see are XXXX fiscal company's Based of for builds increasing our business. critical the needs. outlook, NEC network private we year the establishing and guidance

to million fiscal we our range in We the to be record million pattern, year. upon to and the the will the expect order weather range adjusted million. EBITDA year on the of NEC in revenue and guidance $XXX build closure transaction. for be Revenue XXXX $XX pattern current $XX $XXX fiscal to to backlog, Based update of through of million

project comps than basis sequential on rather a basis. an quarterly annual Our business

fiscal growth compared to first quarter XXXX. year to our expect show modest We

was quarter growth. strong Second

modest strongest. quarter quarter, be fourth the will and Third again, our

as develops, We the will and our our with revisit on guidance we backlog. year timing of work customers the

that, let's it operator, open With questions. up for

Operator

Instructions] Our the from [Operator Scott from will right. All line ROTH. Searle come question first of

begin. may You

Scott Searle

could to color. how was quarterly be start Services, Hey, if should know like good margin quarter. job depend about the gross softer Nice thinking good out Pete, to product on if I bit a looks on anything to afternoon. gross really mix. on taking it had maybe a into Thanks appreciate for the September and I quarter a of at looking bit the a little the on front, quarter. we the read that margins little that wondering tends the there's more And you elaborate quarter? changes? questions.

David Gray

Hey, Scott, take this David. I'll one. it's

margins kind right? the at because From So, to project vice or But equipment. separately business, sequential yes, we we to of were irrespective I those we fairly read tend a favor versa we We inflation think into and and kind higher loan margin standpoint wouldn't to disclosed price expect the for I of that now. of improvement of or experience margins. did think it our an are service have and reality, overall did mix quarter-over-quarter product, and are in the services evaluate dilutive whether a projects moving a outlook, as between outlook much rules. somewhat for in trend project bit it We large But too would overall level, the that one project-based sequentially, our some cost continue. dynamics

guideline. kind overall think, saw think out that FY'XX, to look from similar QX, looking QX we'd of growth somewhat we we As be at of I trend is a a into reasonable I

We but it's that's expect hope think stronger, good. I

Scott Searle

about starting Great. BEAD, spent to and Helpful. you some ARPA been maybe into has filter RDOF but the And funding could, results. time Pete, if talking really I

we as fiscal tribal public timeline? that whether utility some a have and important there look out wondering that it's cases, I'm various been how or, is wins, pipeline looking think 'XX the in of number how I is to coming safety, lands. from

Peter Smith

Yes.

remarks, the We for tribal a we the of listening to -- thanks script. a our lands little think had to cut went part long. prepared everyone I So

respect see they used less XX% the been we strength funds So than other of there need has spent. there. that that said to XXst, -- December researches be some only With ARPA has is by to out that

So projects, going we -- -- we well growth think that, we our is going forward. that And up to our win for bode when we backlog is significantly.

it's Sometimes of -- backlog would our But that the sometimes tied to we is record know network be and is demand, don't. a funds ARPA think could part and that at we private we allocations ARB that

Scott Searle

the like if could, wonder could I Helpful. sounds NEC And on elaborate it the still Great. and if up you time follow October, for tracking the were. just frame. December reiterate transaction, I lastly, to just expectations expectations what that's

goals some retention? gross had a You wondering terms I'm Thanks. et if quick just update of feeling give about in how of on margin, that customer cutting, some in terms your latest thoughts cost and you're us front you cetera. could

Peter Smith

Yes.

in $XXX So we -- to to range. put that second XX% million we said after wanted -- by going year, to we the the the about do when we we we transaction, we and -- said wanted first exiting we announced accretive when to XX customer get to the that thought thought retention, into close, months EBITDA we in make get the revenue. XX% the We to quarter it it fifth were and

we overall targets. bodes in we that well has the say And about all good feel period. NEC our And our I will that for I model. is certainly do transaction, is update will as exceeding been interim cooperative commitments. we those And say profitability So close what extraordinarily definitely to what we have collaboration the would of

Scott Searle

get in much. queue. back so Thanks I'll Great.

Operator

line Thank from moment our next JMP the from question. And next for Securities. question you. our Erik One Suppiger of comes

open. is Your line

Erik Suppiger

a good and Yeah, thanks congrats quarter. on the for question taking

comes going a to First that levels? have question. from I into then back then off, continue the to is And that that seasonally these QX? move to a get is to grow Or follow-up number, it backlog

Peter Smith

have project-based Yeah, so business. right, on we the backlog, a

once So we months. only the backlog every disclosed XX

to year funnel what do. something $X.XX basically So just we David, insight, I from we case backlog XX you the have do add? now, think with once we but be in see that's greater provide than months a our that should million,

David Gray

that one Yes. a book-to-revenue basis, No, are growing on that, our goal add -- ratio essentially XX-month above overall. think orders maintain I our our trailing than a to our faster just to to revenue says which is

Erik Suppiger

of I'm And rural the on Okay. more a secondly, on have how broadband of just sense environment. -- then funding you much your side. you're the projects much the How speaking that and Do funding the available and out this from you at BEAD influencing of point market this RDOF much on the or they working do of there. think some point? How are at funding is getting that

Peter Smith

the What I those as we and million activity continuing. four say. environment know that I I recipients. nature long small of would convert RDOF is those rural purchase last going is it's had We and can largest how we how we mentioned are hard see we That's They script, to orders. blanket in we in point improving take projects were design RDOF of so or to from orders would $XX don't broadband some said recipients, the say into to also see purchases. the demand to what say, what long volume of the quarter,

Erik Suppiger

good. Very

you. Thank Okay.

Peter Smith

you Thank

Operator

our for line of Street. question question. moment from from next One Schmidt Lake Jaeson will come And our next

Your open. line is

Jaeson Schmidt

Hey, for questions. my Thanks taking guys.

Just like your could for to It provide continue update Redline the business. there. see fiscal what's curious It if But good like funnel look 'XX? expectations. on you traction really sounds outperformed the a an you

Peter Smith

those or the -- to expansion. product additional think we software to of management announced some selling XX next listing don't can so is right? cross-selling last of products, we'll and what in the some network first customers of So recognize we front Redline putting starting say. We cost, six ownership year, over And margin days, the we the in I and their took thirdly, business. expected. we're -- year better have our could out months, to I the than down start we the did on versa. what XX we went Here's us. that Canadian funnel two opportunities, land right approximately Redline the public days, And stabilized we'll what broken was vice We Aviat announced then and say But which drive

Jaeson Schmidt

contributor the Okay. helpful. a QX? as how just was just fiscal in of 'XX then a big store And Aviat or follow-up, That's

Peter Smith

In similar was year. contributor X% as about to last to it the year, fiscal X%, pretty

Jaeson Schmidt

Okay, a lot perfect. Thanks guys.

Operator

One our Hills Litchfield question. question of come from And O'Neill our Research. for line from moment Theodore will next next the

Theodore O'Neill

much good quarter, Thank congratulations you and very Peter. the on

Peter Smith

Thanks, Theodore.

Theodore O'Neill

the First sales EBITDA, of for implies as on of as I for If guidance midpoint and range grows it revenue. question guidance. driver EBITDA take that? the the twice fast What's

Peter Smith

Yes.

leverage mix of of we've look, on driven while in to growth by an and So adding midpoint had our here, we a volume. software that do. emphasis of arrived mix top that's doubling continuing in what into get the profitable I is favorable line to think more since all we We we're versus that invest and increase And out North America R&D. on -- plan private growth networks profitability also the

think that plan I to execute Theo, that think question. our that's an thanks. I really So is insightful and

Theodore O'Neill

Okay.

that does, fiber, selling on not the that everyone opportunity allocation all Minnesota saying the BEAD Does to if On state broadband. reach make And getting to to do goals allocations, I've there they're it that happen? they that microwave? go on also for to some New to that is going are read if effort an an Mexico needs of create and

Peter Smith

Okay.

due to our Aviat's selling for responder bit it's about of it's Aviat's So days network the XXX premature little And first that's business. all relationships are effort state governments. let is BEAD early customers our first. excited, private me out for of reason The talk -- but best with a

and really at. about seven and we what Mexico Minnesota so -- New the excited congressional are representatives cited that we So that

there we rep from a There a congressional being So going run this BEAD is the we little in comments fiber on homes. us opportunity -- a it that fiber is to was too for -- time. basically Kentucky bit seven are expensive, think albeit a great is. And out to a said, was then really

-- is too what it doesn't points, and expensive. said to certainly, sense. make connect and fiber Minnesota that And low-density end New Mexico So is

wireless their that we're see starting starting mileage say as we see see using it more money We Congress. they'll and for an to opportunity. to in get So states this

for use procurement to We we So this same we XXX that a business. continue that organization. the need fantastic our development, channel It's think positioned. is to and network the carries state, well same sales private we're think just the

Theodore O'Neill

question to disaster microwave a Okay. in you awareness seeing as the My disaster? destroyed. last use in in among Or happens to your infrastructure sales weather granted because backhaul was last possible authority FCC cable something use there's just clients any network increase benefit special that the week, whenever that is always is like for AT&T Maui a microwave? Are this

Peter Smith

typically the utilities this the Nashville We should this What how we the So in perspective. that bombing when did but we issue. so help happened had, they network the with network. their in damage it's Maui. a respond we did on So monitor recommended we we from networking right? -- this they hit, We do happens when Hurricane's -- have the deployment, -- customer for not disaster, this AT&T it's was so

reliable that and has here's like situations deployed it's faster So traction because more thing it's in this like The to of is fiber. than the I'd microwave emphasize. one reason actually

Theodore O'Neill

you Okay. very much. Thank

Operator

line your will from of Tim our Capital the question. moment One Markets. And for Northland from come next question Savageaux next

is line ready. Your

Tim Savageaux

third be double-digit Thanks growth you on order And in Great. on of the in your when congratulations which year strength backlog and with growth. looks reported. particular, given revenue the you the two, to that start

year-end trying those order that growth two at growth the or relative items. what you're to fiscal 'XX, any 'XX, backlog I you're seeing other have, growth you're relate And from expect I'll you're to visibility really what revenue a about, perspective? kind of my of based a the follow how do that. on And flattish you up order to on in guiding so and the about backlog book as growth ask you couple question international from change fiscal big of given perspective, you into U.S. might that guess, look and then well, annual I'll kind a things to

Peter Smith

see backlog North North flattish the right? networks, principal 'XX growth America, picking private was in of with up. demand the the So -- the environment American that in in we America, So North growth was driver and was backlog

bigger did So in North we'll 'XX. a get from than we America contribution

customers develop growth. that around trying think big to backlog the of really to year fast if the we get we And we'll design sentences But see pace as in, want related about slower projects how will, quarter, fees of the that customers' statement that guidance recently leave the couple also they terms And that, update We and at -- guidance. then to the did our move then at a progresses, guidance. of is. about a roll revenue. out the margin look we completed to in and get hopeful, the how favors we then to some how to -- we're projects if if Tim. come did And wanting in the kind as think how the fast go to We quickly, is

Tim Savageaux

-- expect international? - than that you say is you Can Great. America it on basis a you this at North in percentage faster point, growth can

David Gray

should I got But a rule kind it I North that working wouldn't closer. bit. America go far think big because be against you've of numbers of little a

Tim Savageaux

forward Pete, North And mentioned with greater a as look it. you that Got you America contribution.

mix margins. QX, yet what be to That's accretive private increase we in be that to much to the see gross in volume a accretive saw that networks, of to expect both positive sort pretty you North And in would especially way big QX and expect gross of didn't margins. You America. we shift

dig of well, kind didn't X we gross positive just is You but may more I given those two already, down kind can guess, margin expansion of one on touched that positive we dry, why it see on mix, volume, one mixed have drivers. if

David Gray

And QX at headwind mean this was within that our North be mix for a regional overall we was fluctuates there that XX certainly be volatile, broader product could mix. right, with a America business, software bit, but the can could component. help a went I component actually XX, it did it little have points. swing a Yes. Well, because basis kind that little right? root mix returning large of to in us, do If quarter-to-quarter, us there against a

anything. The positive. QX behind there think wasn't I dynamics So were

And it kind We improvement take expect yes, of we'll continue. that level there. of from to

Tim Savageaux

Okay.

takeaway there? my that is guess, I revenue, software lower just So

David Gray

Yes.

Tim Savageaux

Okay.

me. terminology changed, good. Pete. question And last know has maybe Sounds I don't if for your

quarter, about eventually, got Huawei last all and the you with and backlog foot. to think the that you replacement pipeline, -- revenues talked bookings, I regard we

about last if I funnel million are of I $XX things. don't two commentary bookings now versus million, talking different know you're think, Here $XX of quarter. on those our

whether Your suggest of opportunity? million or of the bookings a backlog sense giving just $XX and expanded would us has the broader funnel you're

Peter Smith

The funnel has expanded.

So sense we're Yes. a opportunity. the you of giving broader

is XX.X% and was be funnel of of to now XX.X%. bookings bookings and we XX% we are quarter, about the in And of year-to-date that revenue at we wanted specific to funnel would say the what a same and So XX%. of QX overall revenue communicate to last end XX.X%, have went the

we see building opportunity there. the So

Tim Savageaux

I lower coming margins. to was one at not guess in I Sorry, Well, I much I lot North America case. other not -- That's assumed me. on and year-end mute. of might a might sounds where factor at that's maybe good like see have Verizon in mix standpoint, for gross But the expected yet it margins. impact have from a you'd was that higher

Peter Smith

Tim. statement, fair a actually That's

David Gray

contributing It factor, was yes. a

Peter Smith

Yes.

say I X say that that would Wall like your Street CapEx. suspicion also is so Tier true. And I'd And research with the to

strong customer X was and Tier strong. continues domestic biggest to be Our

Tim Savageaux

or on And getting the make year it. anyone for Strong I me. last list question to else have you guess XX% did Got XX%? enough real to the for it

Peter Smith

No.

have or not no for the We quarter XX% -- for the and year.

Tim Savageaux

much. very Great. Thanks

Operator

line Kang Dave Riley. our B. One come next question. moment question of for our next the from will And from

is open. line Your

Dave Kang

you. Thank Good afternoon.

First question NEC on the acquisition. is

if a XX-month compared service to to wondering have you? providers since trailing their materially greater change Just they revenue exposure

Peter Smith

no. So

time not So our TTM has investment put thesis. from we they're materially their that -- the -- changed together data not they're

Dave Kang

forward, going material changes? don't you any also expect And

Peter Smith

No, customer. don't. recently, modeled. I And largest visited I X% of X% to customer, we largest their they're Yes, we visited what their within and

here, further. So I'll go

biggest The there points our of the they're leader we today, percentage second way it. and region, was within modeled

would we remains intact. say data So I investment the thesis in used our

Dave Kang

try just are out are we Got to inning just getting And guess, it. what Bard, on find in? saying Some started. then I

plateaued Some are have things actually saying out.

side? your from see you do what So

Peter Smith

it We able on value top 'XX, line our margin, we said fiscal and growth that been Airtel in engineering took expect to when year projects. that Bharti significant execute we contribution we've was from business, low both and

So we demand get lift expect that materializes. some as that we'll margin

that. about good feel we So

Dave Kang

then year? And what's And think What last it. my what projection for for Got you for is -- do your the the David. question was quarter? CapEx

David Gray

Okay.

So I think, $XXX,XXX. about quarter, for the it was,

X% for we of cash this but that for be verify to coming have Just nothing of million. and in year ordinary. higher refreshment bit it's flow. the then this year. going -- some with our got X.X% CapEx FY'XX, But do a We've as to FY plan little We finished up, investments around 'XX out $X.X

Dave Kang

Thank it. Got you.

Operator

for question will our And And follow-up Thank a be Searle ROTH Scott Capital next question. from Markets. actually one you. from our moment next

Your line is open.

Scott Searle

on questions. Hey, couple just geographic follow a to up quickly of Pete,

by network talked led fiber about to evolution then builds being wireless of the backhaul. and transmission You cadence of the

little coverage that incremental they've in at covering a I terms links basically XX% DISH, more now and that's the POPs. gotten Looking will gets to expansion bit more have it. of in commentary assume the those around a mark POP difficult forward it microwave going

arena? thoughts seeing that an not your kind then planning we builds. are XG I'm and you're cusp high-level broad-based network contribution coming from behind at those Thanks. business there. growing upcoming Europe, be if what your very And the that in continues of wondering of a of terms some mix. wireless what component seems as expectations I'm more of always you small So the always They're European like Or opportunity? a and wondering some just guys It on for from of be to future two, a are the kind growth on build on front, expanding should looking transmission used are standpoint big year? fiscal been has portion it of

Peter Smith

Yes.

Okay.

US DISH, like year, right, March deadline cover DISH, January start the position. to microwave quarter be XX% breather we're we the to in the of XX. of months met the to and population first rollout So CapEx federal on six first our to the well restate we to really by for fiscal expect looks taking a DISH feel June and we

-- region, So And fiscal that's We specialists that, that DISH. would some that's growth think projects. one Europe. big about of we help of say, say couple the the the drive we I double-digit what in will would 'XX. in headquartered from have in year a weakness in see I Europe Europe

little So color. a there's

Scott Searle

much. so Great. Thanks

Peter Smith

Thanks.

Operator

now remarks. that any Thank conclude today. you. call will And for the turn will closing Peter Smith Q&A I back for over to

Peter Smith

wireless Yes. Thanks. the and it 'XX. in analysts amount look was in shareholders Well, close update on quarter year. NEC an Talk on We everyone. our getting a the you to soon. days giving Thanks, next year providing thanks for joining the short the to to our forward XX of update call, on to We remarks next listening to extended the and transport transaction. hopefully think time great a investment our fiscal and an

Operator

conference today's concludes you This participating. call. Thank for

now great day. disconnect. have may Everyone a You

Aviat Networks (AVNW) 23 Aug 232023 Q4 Earnings call transcript