AVNW - Earnings call transcript Q2 2025

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Operator

Hello, and welcome to Aviat Networks Fiscal Q2 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Andrew Fredrickson. Sir, you may begin.

Andrew Fredrickson

Thank you, and welcome to Aviat Networks Second Quarter Fiscal 2025 Results Conference Call and Webcast.

You can find our press release and updated investor presentation in the IR section of our website at www.aviatnetworks.com, along with a replay of today's call. CFO, Pete opening President fiscal quarter. remarks by Connaway, are will CEO, quarter, today the Michael with review begin on our me Smith, for and Aviat's who followed financial With results will the who the company's will on strategy followed closing and remarks Q&A. provide then outlook, Pete Aviat's by

different company's uncertainties regions. webcast the this reflect actual those products regarding These and and relating other differ and reminder, but could new that not forward-looking including, date during webcast, expansions to opinions statements As the to business business, guidance, and call and call a risks projections, management from results may activity to, of statements only assumptions, economic Aviat's and cause involve today's make as fiscal financial forward-looking in statements and limited materially of drivers, statements.

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

at supplemental financial Pete call and time, and therein, and tables this over will webcast, website during to our CEO, President which Additionally, call non-GAAP financial information. At Aviat's Smith. and include other a today's measures. reference non-GAAP would both and Please turn to like reconciliation release, is I Pete? to the GAAP www.aviatnetworks.com management section available our IR of GAAP which financial press to refer in the

Peter Smith

and good Andrew, afternoon. Thanks,

operational quarter Aviat strong performance for We are Networks. pleased to a of financial report and

ago. year revenue ago XX% of $XX.X gross $X.XX. the up quarter Non-GAAP EPS million, of period. of $XXX XXXX. year up margin same the discuss the million, our period XX.X%, of Non-GAAP EBITDA second a of Let's adjusted Total highlights XX% versus versus of fiscal year

recent the for delivered adjusted has and in to from whole to operating the working adjusted benefited net to margin Aviat on quarter. this the Gross cash and The spending that expenses. dedication strong, improvement revenue generating positive a recognize levels our EBITDA the quarterly factors, quarters. an disciplined Profitability quarterly level as team capital, continuous over and and These at company the were non-GAAP level as in shareholders. in comparable partners to income to in aided company and customers, focus in Let's returned quarter. higher on record well EBITDA. We operations thanks the highest intense resulted addition revenue suppliers, decade focus a margin leverage of had from operating customer

much this what have of to quarter strategy. can do, a strong our still work we be as indicator I following accomplished While see

With results Latin level. end million from to of products services, scale, talk this markets. in regions. XXXX. about just little Pasolink rate our are we the shy year annual America that Revenues meaningful were of Let's quarter quarter we more by Pasolink improved each thanks service the a the end have earnings generating expect quarter acquisition. At $XX to the is This in were related the the the contribution fiscal of contribution in acquisition our to business improving business first strong, and versus the a and India margins the Pasolink robust EMEA providers, and mobile from the

of and confidence the giving will our have orders quarters Pasolink us are year. X the the with from us our target $XXX Pasolink continued fiscal up progress last million, averaged $XX the made. million We we for growth Encouragingly, for pleased by meet we run have setting rate end

Thailand our major contract team. quarter. achievement by Pasolink is This our during shipped first the radio a the have from manufacturer We in second

completed, once in do to believe our customers that improve product move and this lead Although more we for better times still shareholders. to have quarters margins will the for lead we ahead,

expect versus remain facing the we we X our the while U.S., This demand are near-term belief large a in rather to CapEx increase the QX. sequential currently the muted headwinds environment reinforces year, shifts. timing are compared Regarding than that result Tier still related QX to saw of last

continues private safety as large segment strong quarters, have to networks. Moving wireless areas serve demand share safety, place for last Internet business. and several over healthy, other we that this In a providers. of look broadband leader to to gain remains from We of our microwave we in networks to to continue Aviat had continue numerous in environment private service won the for its networks. quarter networks share spending public hold The the with rural we public space, our In addition opportunity. the backhaul statewide

on November. Although since or expect Broadband that to in I not we XXXX billion Access have Deployment program, BEAD, to revenue top do investors' many like and of been $XX related fiscal minds Equity to answer questions the have some would

to importance program First, recognition of of as BEAD as make go alternatives possible. the broadband there in continues wireless far the be funding growing to

Arizona states, fiber to technology. alternative turning cost defined Utah an and upper before such have the connection Some as a threshold for

this expect sentiment bodes We well continue wireless to for which grow, to applications.

Internet companies are BEAD. orbit we about LEO asked low and Secondly, or earth satellite

very Internet value is reliability to service their LEO cost performance a or satellite providers proposition the locations, than a available LEO at services. Internet currently and remote monthly difficult-to-reach lower While from better can Internet customers provide has wireless for what

their products. thanks administration. Aviat our Buy Build what, to ready America new assist backhaul Internet they're America compliant BEAD We and the will the any, our occur if with state needs, and providers broadband to footprint offices see program to stands U.S. that changes service with

have alert secure we software enhancing our software and offering recent made life few software We strengthened cybersecurity products, by a process our service. our announcements. Regarding cycle development vulnerability

with Our cybersecurity latest the software and pace requirements. firmware continues development

our to safe communication Given nature are extremely cybersecurity networks customers keep up critical such on we of, it help is remain threats. the important part we date believe the of from to to measures

using Max. new that offering an longer than exciting a or capacity to competing our total a with a enables Multi-band introducing MB for fewer is customer. XX via This over are wave. a single up lower on in reliability per we second antennas ownership Additionally, better combined product millimeter Max gigabits distances cost resulting solutions, MB of Max smaller more enables solution, and microwave and antenna

expect results would closing to before Michael call We the in to with turn details begin coming shipping the soon. I have to we'll Max back the more coming to customers for now review over remarks. quarter months, to financial of and MB some the share like

Michael Connaway

detailed second found in release note of I'll the XXXX Thank quarter comparisons second and you year very discussed our can noted. everyone. afternoon, the are fiscal fiscal quarter of that XXXX financials unless good all of be press our and Pete, some quarter much, second XXXX, review key otherwise year the results. and between fiscal Please

an in same of last driven $XX.X $XX.X networks. was or For revenue compared growth year XX% the from total million million same an from quarter, of million addition same year, period the the increase we revenues International the $XX.X the from acquisition. or second was of due private quarter million North the was million, period to $XX for primarily by good of quarter, or XX% year. an revenues for reported with last the period This execution last million $XXX.X year-over-year. XX% revenues XX.X% for million comprised the $XX.X $X.X which total our as increase increase of America, of Pasolink

level was Our quarter. a in on XX.X% trailing in the addition impacted GAAP non-GAAP compares the and prior by the XX-month book-to-bill were and Gross were gross of quarter in basis XQ the GAAP XX.X% in over basis. of a XX.X% margins X profitability margins record year. XQ XX.X% in against This margin Gross and non-GAAP mix product Pasolink, on XXXX. a comping to

versus prior acquisitions. of year. exclude were the deal $XX.X an year. Non-GAAP GAAP million, of $XX.X million $X.X were to operating the of Second impact charges, This which the is operating XRF share-based and versus the the million, costs, increase compensation flat quarter increase due expenses restructuring prior Pasolink additions and expenses,

a $XX income in million ago million million a basis. Second on year This non-GAAP $X and compares the GAAP million quarter $XX.X basis $X.X was and GAAP operating to on period. non-GAAP

second quarter million. was tax provision The $X.X

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

net noncash tax the million restructuring and excludes $X.X share-based which net expenses Second million. was nonrecurring was charges, quarter income, $XX.X and non-GAAP other provision income compensation, GAAP M&A-related and

an Second increase or quarter was of per share $X.XX revenues, basis. million a second or earnings the diluted fully non-GAAP came on $X.X for Adjusted last in of XX.X% million year. versus XX% $XX.X at quarter EBITDA

quarterly for mentioned, EBITDA Pete adjusted marks this a As record Aviat.

the to on balance Moving sheet.

marketable the were cash the $XX.X Our million. securities quarter and of end second at

of quarter in operating working $XX.X position. This $XX.X of the bringing best fiscal X from outstanding our cash Our the result operating to generated $XX improvement million We results in was our million, at profitable an activities net Aviat's to quarter, versus improvements first years. cash is and debt least activities million, position XXXX. in thanks of million capital $XX.X from debt

With Additionally, comments. during it back final Aviat Pete? I'll we capital shares. for repurchase that, the to Pete XX,XXX quarter, some turn second to deployed

Peter Smith

Thanks, Michael.

We posted some several have over on the growth drive the scale the we ahead. performance the quarters, results are last company's quarter. in pleased changes and the made with to the in second to team reflection years In

supply in brought new operations leader for leader and chain. our EMEA a have and commercial a We global new

thus We are encouraged impact by their far.

recent strengthened announcement Board function. Scott audit the have In the of addition, Halliday. and to Please refer we

We for stated. operator, purposes, see are the Please as that, modeling for up previously Slide deck questions. leaving seasonality the in our open guidance XX. With investor chart let's

Operator

with question of first line Lake comes Jaeson Our from Schmidt Street. the

Jaeson Schmidt

the want Congrats could or if on that I out in the just quarter? that results. just outperformance drove lay December I results. businesses with X curious the what or really customers strong the to start X strong mean I'm you

Michael Connaway

I'll the recorded to was we almost performance did We on the the revenues to. start Yes. And bookings we good from ramp business, quarter. with that as bookings revenues that Pete on in and we year. Maybe then excess the with rate just the hit on then in committed alluded start of Pasolink how

$XX from had as from was that was well, million. And bookings helpful business really the and acquired quarter recently North upwards year-over-year then Pasolink America. we standpoint a XRF a So in of nice

see where was in the performing about really to book-to-bill quarter, numerical X.XX. than good it row from little those booking the in standpoint from standpoint, And or was remarks, my it then we a talked greater was mathematical a So a but just recent in purchases the quarter third book-to-bill X. above X bit just the a plan. And

a commercial are of kind of those So in what dynamics went well just smattering quarter. the

Jaeson Schmidt

No, really fully all at changed sure in for X. your make And helpful. I U.S. QX. that market? I up to was 'XX your you noted fiscal know Tier comments expectations understand sequentially that's it just have want Okay. surrounding But in

Peter Smith

faster a and U.S. Tier benefit, would the recovery have factored think into guidance I we be X, a our Jason.

So that's think to it. way the about best

Jaeson Schmidt

then jump you. and one last the me, just Got queue. And for I'll back in

on of first You business. CM from in noted kind Thailand the radio the Pasolink your

if curious margins year? the could help Pasolink about rest and where gross scaling are you how we those understand us should this fiscal Just of think

Michael Connaway

the Gross quarter half second of story. think overall We the the in that was in But of into in margins, second that over company And there's the year, probably kind in in, revenues transfer we more where performance more were Yes. the first we rebounded manufacturing quarter. the good little as of versus the likely gross margins position really part we our fourth Pasolink, second CM and Pasolink. quarter. bit nicely for gross that quarter were the really both better the fully, complete that more versus runway a in margins on the mid-XXs

Jaeson Schmidt

of next Our question Partners. Capital line from with Searle Scott comes the ROTH

Scott Searle

in rapidly room at quarter. Really And address Maybe us sounds from the just in, you if exposures, current on more great your to DSOs, improvements? you've look chain in turns detail improvement. evolving a could capital quarter for job little the also tariff could like it quarter, supply Pete, dive Great inventory looks standpoint, the I a current what more if impressive environment? snapback. you any, But got, take to Mike, risks some there's It the this working quick guys. like and could global you through of see bit a had the

quarters? of So we couple how that be next should thinking about the over

Peter Smith

Right.

So inventory and then I'll can do do supply capital. working and Michael the chain the

supply So distinguished management. via itself in COVID, Aviat chain

to to -- ripples it's likely environment the chain. tariffs tariffs is with respect challenging, in going coming supply think produce some the but I

companies to are the about going inventory, happy U.S.-based potential So Pasolink the interruptions with manufacturer. would to deal the X Fortune companies to the that Those tariffs positioned and we've gearing interruptions, learning supply off dusted may then on COVID and XXX say deal chain we have we're a really had supply us chain. playbook, right? last would we've the discussions I are use that pretty say, to very chain that with. And U.S. are transition week, -- confront with X may with any well up the basis supply we deal for contract in I

we as bridge So quarter this we will have complete probably peak build. inventory our

inventory And turn over so start it the I we'll let then that and some And on of into say QX capital. me working would to to beyond, turn Michael cash.

Michael Connaway

No. Yes.

So weaving the which company. the record overall, working for a into was, CFOA was said, the printed million, we as cash capital we that $XX

If in X CFOA comparable of most both the recent QX Aviat those of quarters. back you XXXX, look XXXX of other both at negative QX was and periods, for

that reductions we owned And did even roughly revenues QX. more $XX consider first since capital more because million achieved results impressive of the working when that So we driven were on improved it material sequentially. our we've quarter looks Pasolink in you versus XXXX

how really Pete itself a of in peak provide So right, QX, doesn't alluded on unlock little And kind better. and and tailwind, our inventory that all much said in to on same you all, for do there's Pete materialize pleased the But you that QX Scott, to finished it, bit QX. But probably page. course, underlined it. I you're it to alluded and more He fiscal are, cash with of get that more in XXXX. will Scott, inventories. likely

Scott Searle

talk on end And quickly, some markets. the I'm geographically, sounds number whether other from look if from what and then you little maybe Europe, sales gears seeing standpoint, at the landscape, we're and the networks, engagement of high out could to geographic a you a at a of I carriers right, of provide And from more shifting America, I there how if that's could Latin 'XX a a think hearing stabilization, vendors North little private look like key standpoint, recovered color bit wondering helpful. at broader wonder about I very that across It it's beyond. North American level, and pretty telco macro Very, fiscal service America. Great. nicely. when you front. you provider kind those with given you're bit comfort kind

Peter Smith

Okay.

is take let's briefly. private to perform. just So public market networks continuing I the -- safety

our all for proxy And are Motorola. have bullish space, would sell at well. the space companies Utilities if you If in the set underinvested look at leader utility XX the second is we're in the say industrial safety application analysts biggest you industrial that and years. want for we been into utilities. the bullish, a that look that, utility public space, that as If --

America, Asia, stable. -- say Europe areas on of Eastern the that it's the like, factored there their already strength. folks level X, are I think would It's networks. would outside all On Latin a some we've are And at We of U.S. that but the Tier than Southeast growing then in. we lower U.S. are

Scott Searle

that provide bit you your sounds if could, opening I'm It helpful. a geographies Very lastly, where seeing of RF, terms wondering little and I And of start. in to a off you're applications mentioned like if remarks. that that's color adoption. could you good just in Great.

Peter Smith

So the utilities. is application #X

One was in of due overlap customers. in was only utility diligence things XX% our the there the that remarkable

sales the to cross-selling forces, be cross-training be to -- there's be going -- to -- there's going as train cross-train there's we So going opportunities.

with Europe, in traction a it starting Asia excited limited. in Pac. sales the that. the U.S., see was U.S. East Middle and XRF the And relatively we're was footprint very we're about small to outside little but particularly bit U.S., So outside some really the a And company a

So good. it's

Scott Searle

the it's of range Maybe on million. range back real and of the then one factors the that Congrats $XXX of the in pretty a $XXX But to year range? are the get the again. this I'll quarter last quickly, one still for queue. I'm end broad for just from end what quickly, guidance wondering swing lower to that higher million

Peter Smith

faster things private rural on network of would be swing. be the mobile projects. I would global in in swing broadband, X and conversion would Those the -- network be network up would operators. that you upgrades performance think spending it some That better would

Operator

Our line next with Theodore from HBO Research. question comes the Hills O'Neill of

Theodore O'Neill

little wondering that. the Yes. quarter. a it Congratulations improvement, a with Is Pasolink? issue? the it us do issue? on it you more on mix I Is on wondering give margin was is was I utilization a something could if detail to

Michael Connaway

thing just the question critical mostly One, this, mix, then it had And on we our it, mix, QX revenues. boost than as averages. really our And North of improved than internally incremental since say Great for QX. profits gross sales rebounded nice XQ. it improved in in performance. trades revenues And that QX particular, the obviously hit on well as really ] in you just versus better had And in America question. Aviat's other preset really geographic margins a No. XRF, versus business, business. X in say revenue an call one mix But I'd [ too, was Yes. historical to nodes dispersion nicely our levels. software gross quarter our was which in at our because favorable that's our product quarter of significantly more us Scott

So were QX. in those a all of from things mix additive versus standpoint QX

Theodore O'Neill

XX% was more about wondering any the if that? customers I if talk you could quarter, And in had or you

Peter Smith

Yes.

QX, the customer the has been them and different, So tripped X% versus our level. largest last QX over X of quarters, neither

little we we high very concentration way customer and diversification the little very have have customer So -- risk.

Theodore O'Neill

slide, seasonality Slide compliment just Okay. helpful. you That's want XX. the And very on I to

Operator

comes of question B. Kang line the with Dave Our next from Riley.

Dave Kang

quarter, Nice guys.

despite America very providers. regarding muted is SP I guess, revenue. North X strong Tier question still service First

excess it of they if as working there. So still as And because of down so, the what's couple time line inventories? questions a those have? inventories far Is

Peter Smith

we're It's not there inventory between -- related. It's projects. basically

Dave Kang

there. of issue more timing it's a So

Peter Smith

Yes, yes.

Dave Kang

March going quarter, it how we is to going think should so And the trajectory? that's about still still to be muted? -- be Or

Peter Smith

run think rate not, in guidance. will then the I if Look, they if 'XX. materialize on, factored And have think overall FY it I And we'll their to our into upside. turn QX decide is projects

Dave Kang

Africa, And customers it. you weak. talked last couple quarter, Got being Africa about of also then a

update an Just with there customers? those

Peter Smith

that's and and see dollar remain euro the I for currencies largely would and elevated, by with future. ability Yes. I we level Africa, the rates in the And to that will some the on interest would driven still say weakness being Africa pay. say foreseeable at their that

Dave Kang

it. Got

So probably not this calendar year then or...

Peter Smith

Yes. the relatively business of let's year, be so -- I this I Yes. I'm modest. but Well, say for look, Africa interest not demand that predicting in will rates, calendar think

Dave Kang

And should Germany year, situation. other to expect this countries guess, recession and do we just like and given, I with geopolitical Europe how dealing

So any expectation color on or your Europe?

Peter Smith

good of in and funnel funnel the seeing We're good conversion Europe.

been encouragement So some the there's us. legislation some could which Chinese be vendors, for around

we some the Aviat And dynamics some in potentially the So see recognition of growth I there. proposition, being driver, competitor there's a could are value think Chinese of think us. Dave. growth Europe turn into as And I for factored which

Operator

the Northland Our from Instructions] Capital comes Markets. with line next question [Operator Tim of

Timothy Savageaux

commentary revenue range. QX seasonality to I you expect peak quarter for that's is got and of understand combination down in boil range back given seem maybe go And question. fairly seasonality. be I would to you're But with to the QX seasonality and low would what's the implied guidance bookings I some given end be here. the conservative, what it year, peak. the into the your likely commentary, I Tim in downward But that quarter guess, I'll of slide the guess on to about one this at typically. although that backlog the March your you saying some

to So then I'd and to get your a that love follow-up. response

Michael Connaway

that Look, in I a there reason. Yes. chart mean, we for put

as I'm relates it. year that fairly alluded seasonality on the it out. some So glad the pattern how to well kind setup to folks had is the plays typically choreographed of And

It bit to than QX, greater the revenues we've revenues been all of occur relatively as bigger our increase. you were a those typically than is then less that that XXXX bookings So then it which even QX, the QX, potentially more the quarter, QX. if a we June in relates of XXXX. QX, if shouldn't will gets bookings in X there's little a X, have It's seen adjust But in no what if QX quarters pronounced QX in even a to think Pasolink. QX, is persist greater that which and persistence of QX, outcome And trend. reason than persistent book-to-bill out be normalize revenue versus impact

in So year. that's the kind as we're about of minds our second of the the setup thinking half

Peter Smith

add on have little Tim. this, to I a bit

by in So challenging, And will the if those is quarter April. of March private installs weather X installs some affected of the weather, is of be first the the networks. weeks done

think So to -- we June quarter. conservative to Michael gave his answered be respect the quarter. March want with I the on And perspective

Timothy Savageaux

upside. how in the Okay. we'll and I up QX. and Pete, the get I I even things range on to the First, what could line. could happen that follow of the to if get were on margins the top end But some want a to we'll Great. to on EBITDA factors becomes more you to that And wonder you given question. moment talk about have revenue, lower I difficult let's your would get start that if a mentioned more drive think strong it on range? question in start to

Peter Smith

supply negative a see there's if about that ripple that And Tier consequence, -- project pushouts chain if I ripples. could globally Well, look, be right? delays, The demand, earlier talked that's or that chain if we another negative. a supply tariff-induced, X could there's having

lower we fast the how and be have backlog, could get where design, impact are our take backlog, Thirdly, range. at configure all do wind -- cycle, that network of conversion part customers an If end those conversion, we shipped. we it of the the on the that have up good slower

Timothy Savageaux

the seeing now. you're opposite that of right But kind Okay. of

get low need change to to that to say? to the to Is the fair would end. material downside us something So

Peter Smith

time. want things Look, the are. am anyone And difficult a been there take to -- very than give through we've going don't better I not are to I just idea that

I think again. and we'd the than have prove just the rather we -- to to ourselves opportunity again tweak like model,

Timothy Savageaux

Thought more one Fair had enough. I here.

EBITDA side. On the

there a factors QX there maybe kind nonrecurring or of you are similar but margin of either deterioration were So could EBITDA or kind any in the rate? that increases elsewhere Are or margin discussion, maybe gross see your in that pronounced. would on current OpEx even where are more gross some side in margin that take you off run

Michael Connaway

I nonrecurring like say anything in nature No, that, Tim, the quarter. wouldn't in

Operator

gentlemen, no the in and now remarks. Ladies to for over call the like queue. to showing questions I'm closing further Pete I would back turn

Peter Smith

We to soon. look Thanks, everyone, Aviat's next progress us. Talk joining quarter. you to for on Thanks updating again. you forward

Operator

today's call. for gentlemen, that concludes Ladies you participation. conference Thank and your

disconnect. You may now

Aviat Networks (AVNW) 4 Feb 252025 Q2 Earnings call transcript