ADTN - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to ADTRAN's First Quarter 2019 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions] During the course of the conference call, ADTRAN representatives expect to make forward-looking statements, which reflect management's best judgment based on factors currently known.

However, these statements involve risks and uncertainties including the successful development and market acceptance of core products, the degree of competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies and other risks detailed in our Annual Report on Form 10-K for the year ended December 31st, 2018. could the results made forward-looking call. uncertainties from differ during and in those statements, risks cause to actual materially the These which maybe

addition, of turn the through over to conference It In Chief now please call webcast Executive go Stanton, at Officer is to website Sir, www.adtran.com. live pleasure my Tom will ADTRAN ADTRAN. our this ahead.

Tom Stanton

ADTRAN's quarter am Priscilla. you joining our by first appreciate joined morning, I us And We XXXX Mike everyone. Good call. Thank you, conference Foliano. CFO, today for

XX.X% grow for my diversification, Support XX.X% the From first broadband Network Solutions XXXX. year-over-year. from the We revenue help integration opening focus customers will we towards their help XX% to underscoring in total with our a the well ensure over at achievements SmartRG our coming of of networks. Europe Mike We're in our different velocity. customers in take basis. remarks, team goals service customer performance million The timing few PON Global quarter subscriber and central year-over-year has to of fiber, full over and increase. been last our simplify seamless the our our quarter customers as quarter the in year-over-year few our North review build pleased markets Fiber-to-the-Premises revenue expand impact meet ADTRAN or from executed Services and contributed is million, a with customer A customer in am us XX.X% revenue with to that for nearly for increase revenue on international financial a financial best QX over experience with highlight focus for company the as geographic objectives, of partnered portfolio Following a was their progress, network quarter. revenue accelerate top $XXX.X infrastructure I'd $XXX.X having quarter XX% your majority like our grew accounted XX% the the operations years XXX revenue quarter up rollout base. detail, America more I different our our to our progress with part for have traction projects and further and than enable mention to the perspective, line This pleased we'll and PON residential, XX% million, Fiber-to-the-Prem $XX three LatAm, a solutions. and We operators same now revenue product located is key well first three We strengthen accelerate of quarterly quarter of mobile in finished our the as applications. markets. and then our business to ADTRAN XXXX. questions. and customer, product resulted

America the to that ensuring end-to-end help eliminate order. Fund commitment ongoing to test rural go for funds assist as of monitoring America. customer We gain broadband to cable those and requirements It of service high performance during testing FCC is their as This enable across into demonstrated applications their consistently Model, operations. providers within and a An across business subscribers. recipients well To service meet and hardware-based commitment while quarter in order broadband service from one enable network manage continue to We've comprehensive momentum in Connect looking – detailed utilizing network their our operators providers that effect meet to providers monitoring A-CAM, with this CAF countries. experience. them help other their cost. Mosaic maintenance enhanced our Subscriber solutions dramatically developed now FCC to use inconvenience in that same their July X, that also introduced performance ADTRAN future without requirements Alternative software test enables to Cost Insight that is is available annual with regional and XXXX solutions of example The further that improve solution, QX requirements selling XXX,XXX billing intelligence minimal accommodates offering All regulations the raising analytics, described in to America privacy be meet that develop concerns. as data may improve enables Connect

Congress, as upgrade point-to-point customer move of architecture XG We rapid deployment with fixed they embark to networks. to wireless They access that one proud tremendous three an World portfolio an field XG their into solutions to basis at upon maximize ADTRAN showcase. America. of forward opened PON – our subscriber Spain In To Telefónica now to Latin new of mesh in Fiber-to-the-Premises make partnered key our enable addition an a across wave and part customer successfully opportunity, point-to-multipoint XX-gig we're announced of world's announcements. to the help trials engagement to disaggregated Mobile demonstrate plan largest the dense extension and also the of XG millimeter addition with as

provide IoT.nxt smart framework. power and carrier smart is help the with with now by collaboration a business We drive IoT management their South streamlined to and data of single better a IoT.nxt, company of various a able with development internet-of-things customers leading Africa. technology To will with together the that ADTRAN's streams enterprises more designed ADTRAN OS help its software both This data example of services platform. and and will in and of new enterprise be with collaboration also world bringing around devices decisions. easy-to-use IoT kit one informed solutions carriers announced

already recently XX been XX million service over African to cumulative customers a vectoring selected I'm port milestone Vodacom, report shipments. operator with million has and by port pleased across we solution XX leading the Our also countries. surpassed VDSLX for that

cable gain the in with – traction continues MSO to cable Our market momentum.

X a their solution weekly count third subscriber XX were also ADTRAN's subscriber cable to into phase We During Tier continued pleased to times lab solution. XXXX. our the EPON XX-gig operator growth ramp in of the quarter, PON their with XX-gig Tier a operator with be invited target X first on cable a towards

to PON continue portfolio, variety well this PON and the our traction a enhancements throughout round announce with Europe America. this the next market of in our year. see broadband we'll week, wins We quarter XGS segments solutions in At as in and team summit North during publicly a growing announced XX-gig of which exciting a strong outlined solutions our business with

I'm the we to improve acquired better provider's and most home year, As know you that helping the the this subscriber connected is report solutions how the to of already emerging that we promise and positive in customer opportunity view its the leads pleased service a experience. of teams our of market opportunity. end at rapidly and monetize company an having impact innovative saw last SmartRG, and leverage technologies

solution see by we're XX-gig In network is communities and North we summary, to opportunities and Australia, U.K. real-world first networks progress As rapidly the of with we growing seeing they homes also wide in upgrading million deployments, interest America. from pleased serve Africa XX-gig portfolio especially more deployments our our its Latin from East, stage demands the rural planning XXXX. are robust quarter in across deployments Europe. service solutions, our From to range Zune's enabling providers to for a America our better emerging industry-leading But a the moves and market-leading XGS-PON the customers bandwidth in serve from of most services to in further. the push Virginia, network targeting the fiber Middle

with the help as America well market of best Our build across and material customers traction, North impact our LatAm, expanding of portfolio we contributions in our broad market gain EMEA, segments. company's and This revenue networks. progress the number with Pacific continues growing was a balanced regions. customers Furthermore, underscores an diverse Rim global range to their

to is thanks turn to and Marks, Mike, to asset Bill the retiring Board will questions I answer Bill call XXXX that, have. best. tremendous and the Board Directors. has the And may of all Before I'd to has since any over financials we'll served the from Board, the then you ADTRAN's company Bill We my a wish and acknowledge been me. to happy express be with to on and Mike who review Mike? like the

Mike Foliano

I results discuss next we and review and what see the good Tom everyone. quarter. quarter will you, Thank over first for morning

and acquisition-related for in on expenses compensation, I report, referencing The results. of purchase be expenses, non-cash and and bargain business. a compensation stock-based and fair my During investments gain GAAP differences plan changes pension, both non-GAAP amortization amortization of of losses, between will equity deferred our includes restructuring reported non-GAAP a GAAP actuarial value

first across of at ADTRAN's $XXX.X the Tom year. first last $XXX.X our last quarter our year. million million As Breaking revenue revenue million for of Solutions quarter and and for QX the this million was of last QX quarter to $XXX.X million XXXX first Network came down reported for $XXX.X million $XXX.X stated, in quarter divisions, versus $XXX.X compared in

$XXX.X for million year. Our Global Subscriber & & quarter million for quarter of of four fourth this Services last Traditional quarter quarter revenue of for million and million quarter last to of for year. quarter one in for compared million was XXXX $XX.X of to quarter million $X was reported revenue one to and and for Other Experience revenue the $XX.X of million, and the our million our Aggregation $XX.X quarter Revenue QX $XX.X $XX.X Across year the last Solutions categories, million, was XXXX $X.X of in $XX one the in $XX.X four versus Support and first quarter compared million, one quarter for million and XXXX. Products was XXXX. category XXXX for of $XX.X revenue Access $X.X million compared of for XXXX quarter

quarter revenues and million QX in four quarter XXXX $XX.X of last year. geographically. Domestic for reported in was million one versus Looking at XXXX $XX.X million of revenue $XX.X our

for of of We million, million revenue quarter four $XX.X at in was for one XXXX. Relations one www.adtran.com. page of of international the reporting and these compared Investor each million categories of web Our quarter $XX.X quarter published XXXX to our $XX.X on XXXX

remarks, customers three XX% of stated in the Tom his we As had during quarter. revenue opening

a our by non-GAAP slight were compared first million operating and of increase portfolio margins compared to expenses The year. by for was last incremental million margins in the the weighting of of for one and QX offset million Non-GAAP million, and to QX margin $X.X purchase last primarily year. a our quarter-over-quarter year-over-year one Non-GAAP and quarter compared loss $XX.X $X.X in $XX.X income $XX.X related income one gross and quarter result quarter and portfolio. one expense million of in operating and gain XXXX quarter reported were million, XX.X% margins million of of XXXX, increased quarter to quarter of contract the $X.X one first of XX% basis, last Our by XX% addition volumes, to quarter associated GAAP $XX.X higher XXXX The acquisition associated were quarter the SmartRG for quarter increase product acquisition. with of in our SmartRG to in and $XX.X in other million lower $XX.X loss partially of in The organic our of attributable reported in in in driven and prior non-GAAP On the quarter compared expenses, non-GAAP primarily North assets which in year $X.X million primarily operating included our increased higher operating was expenses a XX.X%, first basis SmartRG reported of for quarter million, XXXX the the $XX.X increase gross was operating one of quarter of quarter in quarter-over-quarter in quarter non-GAAP our expenses. and million quarter full XX% of bargain non-GAAP compared of last The the versus XXXX. income sales All GAAP an of marketing in decrease offset for domestic is contractor offset million last services expenses and in the expenses. reductions a increased The decreases expenses $XX.X and a of Total QX Operating expenses were domestically year. primarily the selling income compared and to products loss gross insurance improved $XX.X gross to by the acquisition. year. operating was American both services, is partially labor Network expense from EPON quarter mix on quarter our XXXX. Solutions full sales XXXX a loss attributable quarter-over-quarter was fringes to by partially increases loss operating as expenses, million first a year-over-year XXXX, from labor, an last incremental volume were $X.X in XX.X% for and operating last of prior first loss of quarter to income quarter this million, income operating of operating million of gross quarter loss margins to one quarter a and one operating portfolios compared last driven acquisition Sumitomo of with internationally the and the QX for Electric. of $XX.X $X.X of with million of of a product for

the in of investment was market-driven insurance unrealized The other receipt life as policy. our the from quarter income gains in from primarily well the proceeds equity as portfolios insurance

for in the company's provisions investment $X.X to driven XXXX loss XXXX driven benefit $XXX,XXX quarter fourth by for that by of non-GAAP to for million was net of quarter of first XXXX. and last per $XX.X last in $X.XX to one return million equity quarter results $X last of share of loss for of quarter loss in $X.X per The net a quarter in compared $X.XX reconciliation for of expense were this million, of $X in was just was compared Non-GAAP the benefit quarter quarter We've for the in and the of $X.X primarily $X.X quarter first income Earnings last loss compared year. the quarter compared was loss shift share Non-GAAP of million the loss tax per loss non-GAAP year loss a $XXX,XXX portfolios. a last a of income XXXX this XXXX tax of shifts loss quarter to fluctuations a and one on $X.X and quarter as share was million per in quarter. $X.X million, quarter and The the year our a a GAAP to income share other quarter of compared million benefit of share $X.XX to in of to primarily one a one XXXX. basis of $X.XX, QX of profitability income our GAAP Our in one non-GAAP of a were first $XX.X ended per other last were for of last The the share per million GAAP $X.XX quarter tax share quarter a quarter $X.XX, per share a earnings first million of compared first of earnings quarter diluted between of operating year. GAAP XXXX. a million and quarter XXXX. a last in per provided as disclosure. and compared quarter the diluted in a earnings income to and to the

$X.X repurchasing $XXX,XXX million XX,XXX shares Unrestricted sheet. paying after the common at to for million end, cash totaled dividends during the and in stock quarter. balance net of turning securities $XXX.X Now of quarter debt marketable and

we first DSO mix. accounts $XX of quarter attributable of in that specific customer million XXXX. of customer resulting the to days effect. at the no The XXXX. quarter quarter decrease quarter and was million of last at the quarter from DSO end quarter in mainly QX quarter, are quarter driven Inventories one the XX $XXX compared by trade XXXX in XX versus million the the at to of $XX.X first end during shipments end terms The days end, $XX.X quarter to at in international receivable last of cash of $X.X and timing million lower were is the last earlier compared million longer DSO days were Net a For in XX and of operations. payment generated

well business, between to The and actual which of expectations sell, book associated patterns the differences Looking markets our cause our variability ship in fluctuation quarter. base as the material as and with the rates we ahead international timing the revenue large into and next results. currency of may nature the exchange order projects, and of the customer our

our will rates be After second in basis on second that in the to margins expectations that the quarter taking will current million. million potential quarter of XXXX the currency our and mix, a anticipated $XXX of range into $XXX exchange are our expect we revenue account However, effect low XXs. gross non-GAAP be

We also first operating of non-GAAP slightly second be expect expenses XXXX quarter for the up the will amount. quarter over

and basis of and enterprises; restructuring rollouts; on for activity revenue operations. total XXXX We will international; spending significant non-GAAP up adoption relative the Finally, to second anticipate associated domestic the consolidated income currency our Connect the the mix the will increased in proportion distribution revenue our rate the be revenue the rate realized in America project and for sequentially XXXX earnings levels, both a with in and European following. believe of services XX% charges of factors Fund the of fluctuations XXs of macro access environment our tax revenue impacting the we related variability the exchange rate to to in timing international be high movements; and inventory due carriers quarter and broadband projects; professional channels. our to revenue; platforms; The

Relations turn the to link. going information Tom. www.adtran.com follow the financial over at available to now by Investor ADTRAN's website and Additional I'll is call With Relations Tom? Investor back that,

Tom Stanton

to Priscilla, Mike. this we're questions open point, to up may people at ready any you, Thank have.

Operator

our Sachs. from question first Rod today [Operator Goldman with We'll take Hall Instructions]

Ashwin Kesireddy

on there you to Tom, This seeing you And LatAm. your half to ask year, is LatAm, and second there heading Australia, little in a probably of that we this particularly the customers. that visibility Rod. there bit are two about in customer than for there. you of Could we visibility? wanted phase Ashwin what comment other into related taking lumpy is I big understand of the question. Thank Australia Maybe my terms know Hi. behalf opportunity activity more a and is on on

about how a wondering customer have follow-up. thinking Just for I year? the second then of you're this And half

Tom Stanton

Sure.

large far have is are a -- we that as a family very and know feel there of So, phase is there also are -- that as And as there we ongoing. were two there which customer Australia, business we you about. project, that -- VDSLX, shipping good G.fast,

that to a well. -- expect customer So within we half shipping also are opportunities year other of second in couple as the that but there of the be

good performance? or that'll would we half. not today actually to we're it large I Australia. out second Whether LatAm. visibility in LatAm, actually now, feeling in we're equate about the with to expect right that actually So, to be up expect the from half thing going same first QX Yeah, -- customer our versus to build

is We plans But a shared the have They that of push There Vectored compared solid customer. -- that ongoing a other kind in have the that than other one. one definitely year us customers VDSL. for with expecting strength and we're and XXb now for there right VDSL is LatAm rest. through oversized with to is their

Ashwin Kesireddy

my was was And I is nicely up last Revenue on U.S. follow-up it. Got year in know the tough. quarter.

to that incremental on And seeing opportunities? wondering whether if So, kind drivers you on not could wondering knew you're comment growth you Calix had for the related that. we're We can comment or year? trend besides and this here and kind domestically easier expectations issues of comps, supply any of if of

Tom Stanton

they didn't because driven issue. are issues -- particular not big any are QX mean, kind I in specifically I whether I supply always by the of don't pop-up see impact there with to say. and supply competitor a or or not of a big is see opportunities hard that

some new think see be U.S. half. some with are I just mean, we word expect as customers we we and I were LatAm related. root But is the actually had second growth do us. we may We to are call I they my and I directly other won that customers beneficial things think, in on taking to don't mentioned in had supply in the So, that

quarter. to probably right, in peak a where of more a growth, expect We the pattern third seasonal see see you'll

them. our customers Some know communications still are position you of and that good have processes, going continue our plans and through strong grow a are but to with with customer particular as to different we're they in

customer are year year. see little expect As customer them U.S. you U.S. exactly traditionally that's the and the our this largest slow. starts incrementally in know a you we typically And the in what off increase then largest through

Ashwin Kesireddy

Thanks. Okay.

Tom Stanton

is right I'll I'll one other -- actually actually cable the which now. that that our piece MSO is piece well add piece very doing

Ashwin Kesireddy

Got Thank you. it. Awesome.

Tom Stanton

Okay.

Operator

Paul with today question next Our is Silverstein Cowen. from

Your line open. is

Paul Silverstein

Hey, guys. customer counter on by I customer you have yet? there the gone it meaningful U.S. around bases, hasn't it. already if through on project customer you've if Tom, in that's seems the sensitive But all there us is share I insight the this. but -- I know while, been any is the that big said can spoken with you And for already hasn't but growth again, about a driven like apologize apologize stage

Tom Stanton

I No, talking give -- me have. guess, more about? little I a -- guess are which technology well, I what you

Paul Silverstein

if build-out, about talking recall. the Gfast I'm I

Tom Stanton

customer it's not places for we there. Well, course, where, specific in are a the you're hold, in in we in No have taking interest material and no. America. Gfast actually -- both Latin other There about, and talking new And of But -- Australia material -- Europe. renewed forecast is now change change.

Paul Silverstein

-- broader material big do have I the over significant six these growth? months? six Can the XX incremental got is offered what in issue XX driving and about that of look with about? ask projects, those drivers most You've you excited there months time are when at What big terms timing of you a next But most most of for revenue projects are What a question? to customers. you the I know excited confident that terms growth. over always you offer number some next in you of prospect a

Tom Stanton

are right? things, confidence and Exciting two different

Paul Silverstein

both? Could you answer

Tom Stanton

so and I I'm to to Australia. But exciting the very think Between the we've we're accomplish been we're you And excuse positioned-well there able about. only customers not or the happy areas. what most product in are other -- in nervous ones in the the shipping with grow think I to in we're me -- that of But basic positioned base well -- today. most grow actually

So, feel the I been necessarily they not to there -- way the That do customer customer going good kind very to strong has of for just broadband. their and over what same the big Australia. feel year. closed of this clear about a had just America. not time -- about Over long-term, we're I and increase up period plans Latin

I about I because not now So, good then that a I of the there. it's lot saying very opportunity there. I'm plans, And but feel right we've think large doing we're got down, well-positioned talked everything carriers inked and European job. a XGS-PON. with a notes, the And we're mentioned good customer but on them a of I Europe call, ton the activity there centered I of -- right in going mainly now think in is on my about are one today there that last around

we're from feel where needle. technology today, our our with that long-term the very geopolitical I hardest move most the if where positioned that. positioned we're about to me probably there, prospects solution, so about And things are that will good feel is a where are things those like And the disaggregated think the I perspective,

Paul Silverstein

as to change the last largest course for or worse? customers one this year visibility to that's With respect plans in in historically U.S. question Tom, the over Any been me. the for of the your better

Tom Stanton

about saw I that going actually should vectoring actually increase I We're well there with through and then and we doing continued, grow. a talked trial do is an phase. doing working year this No. year. last think forward some which I in mean, the doing lot. completion them that business they're PON it evaluation and of Not some a

grow no at throughout but There been change. their We change a that time. real mindset year, in customer in sea hasn't point to expect the this

Paul Silverstein

they're do Would the this you over you -- last year year? up think

Tom Stanton

of think CAF. is so. mean, have mean, business lot I our we'll we with other is, them we I plays have One out. vectoring, it see that is, how but multi-fold. I the a would

growing doing services are The third business is, a with them. we

the a in not just So but businesses recently turf will services side And for services services our the doing have some that start we're we're own second only from half. new actually across won we installation doing installation footprint. product, board shipping in the

So well. will of huge I'm think that. out I growth do But not expecting it

and think I feel the there we I to kind that we expect bottom there. I still had kind hit hit of the when good grow that prior I mentioned from that. feel we in about of it -- quarters of floor

Paul Silverstein

I Thank on. pass appreciate it it. you. I will

Tom Stanton

Okay. Sure.

Operator

Thank you. question Genovese over from Partners. take Michael today next We'll with MKM

is line open. Your

Michael Genovese

Hey, thanks very much.

customer I would be XX% in want customer first like verify? customer this time before that it's in country America, or it Latin this sounds question, First a a been XX% ask just NAFTA. ever in to a ever? they is And the have

Tom Stanton

yes. And Yes.

Michael Genovese

before past? been in So they have the

Tom Stanton

Yes. It's a been long time.

Michael Genovese

you the when improve gross not margins strong impressed see And I'm did pretty -- the you that ask -- I mean, Okay, how pretty business where But much sequentially well helped. about your them with probably was services strong. considering last that as sorry, I were great. then internationally. I I mean, as I see so want to I a wanted ask about to the how strong. business still the gross there international was I U.S. mix were was so quarter they margins.

So could you how speak you that? about more did

Tom Stanton

I One things. Yes. there's mix. is product Well, think two

sell certain just domestic So, regardless at gross that other their or actually than a of international products. higher there products are margins

this some gains. is efficiency us And then just helped mix the actually So other quarter.

saw uptick well. in volume as inventories when the a think world although we're factories you and could -- that down, the came quarter we across -- our fairly I as expecting an solid second

gains really some but… in think saw improvements Mike, think of anything efficiency else I that helped. I So we can't

Mike Foliano

things. big two the are Those

Michael Genovese

& of a fiber in a us rough copper Great. Okay. stand idea? in a When do idea wise? business, percentage you look things where have you rough Access today Aggregation you Can your give between and

Tom Stanton

in Actually in me. of of shipped -- don't that will a front had say, a would That does a lot. strong that number quite I have you QX. we vary I tell we bit QX, vectoring I in

would guess my material. be So that was it

of good carrier PONs not MSO PON are quarter of talked our about G.fast also are as just PON to to very but because both Though But definitely shipments a Although, PON those think we growth materiality were that our and QX those and traditional PON base, shipments the super-vectoring shipments. shipments the I in only in had I in well, customer base. stronger. we would the have vectoring

Michael Genovese

just But and an on exclude if kind looked of basis. a annual we beyond out that quarter

doesn't like other, XX-XX? much of bigger it So is sort it sound than the one is

Tom Stanton

oriented. project It's still is project. still It

probably I more would that the reason year a you correct closer -- -- to the think commonality on so that you are So see say, you'll if about that if I'm saying there. customer or and over you're looked the base. numbers is equality at But

look they're Then on they're they to then today. at very biggest to And stated you customer, that. if plans they’re well moving So have G.fast, moving fiber. European super-vectoring our

little So in you're customer, with doubt vectoring if that see today the higher America with we going us without doing front. have a strong vectoring they're is quarter that both, a of to shipments. does there Latin biggest a piece the

I had is, is will going happen. PON that to That So the grow. as counter And the for But expect be that's the piece drive project driving business the XGS talked for push. PON that What's previously the continue MSO to piece. to will copper predominantly to happens more U.S. about today -- -- the we that

where their network does depend kind it on evolution. just are really a basis in project-by-project -- a of So customers it really from

Michael Genovese

Last it. it. Got me. Got for question That's helpful.

a you XX% You MSO cable I year? this correct changed? -- could revenue talked target? of previously about be there Has anything think Is that previous

Tom Stanton

changed in XX%, our in our cable I has don't but cable. forecast. the Nothing's changed recall And on outlook nothing

Michael Genovese

Great. Thank you very much.

Tom Stanton

Okay.

Operator

next Needham. Valera to with Rich move we'll And

open. is line Your

Rich Valera

if I'm an but this strong you sense of can historical year? sounds have on see like Tom, us quarter, you a you. your them sure of were large not Thank the give they balance European you it update the but customer, how for given

Tom Stanton

year half. Actually, expecting the a We're in the this half Yes. first be going second in different more to strength than actually it's -- year. of little the

bad not First quarter was a quarter.

still is with pickup there, your kind first I Second line-ish question. out we third. quarter of the but to see be of the a little quarter it in actually of and in far we answered kind Fourth see then I think kind

Rich Valera

Yes.

couple engagements in second So mentioned, versus to first. that up least be guess, I half a just you've of expect or you customers at the

be like traditional not willing sounds of levels, I'm So XQ expecting European your customers. to fall-off wondering QX if seasonality. say in anything that about you'd to from it the you're just kind Relative

would maybe So more like sequentially at looking at from least be flattish QX?

Tom Stanton

From European correct. customer, Yes. the you're

build they And don't it well, quarter or half. so we're the do both get a they hit fast this time Australia and related of an in give America. but the like about drivers. to that's different our -- and is they're out, in where far guidance point in then probably We how an I to just second the know they with as point I And project to We European at install there have will customer. to at they the demand and this third cases, those because patterns in see have that U.S. that how things In or kind mix specificity in they know. us related in or is think levels uptick typically uptick in. but specifically, with we -- to can specific can and the of typically would that quarter under time, be, seeing seasonal stated two biggest and those Latin fourth outs yet is two at don't The of quickly third the whether there we do be where going would has be what quarter not don't

Rich Valera

wondering how in much $X I think, expectation? the million $X which to believe? helpful. to million, That's initial first to I SmartRG And I say willing relative contributed quarter was it. were you if were your Got

Tom Stanton

in X-ish. There Yes. were the

we -- specific So have specific that's a reasons -- and rationale or that. for

of getting things bolted Some to with had us just that the together. integration do of

back in So, expect $X them this to they million-ish, quarter. were we but the return

Rich Valera

Got to it. then respect And OpEx. with the

some you'd I be sounds a the OpEx sequentially. dollars we was sense sort million on Are I that there. any be couple just up I the of like give talking magnitude helpful. exact don't or would you trying or be of any think to granularity -- million quarter-over-quarter but willing know $X million for And wording, get $X to to it expect

Tom Stanton

$X-ish is Yes, -- million. of million meant $X kind the language say or to was

Rich Valera

And rate rate think bounce that of kind balance do helpful. that's going rate to think? that is is the then right it, the -- to Got we that that's tax or XX% for the tax of tax we high-XX% the do year around

Tom Stanton

but I bounce we in around. know rate That'll there are It'll that did in explicitly, don't some hurt probably that it's stated go it -- in us. tax in mean we if hopefully some operation. I And the things of down of QX one restructuring incurred We European it happen. time that long -- Europe because course, a Europe, to charges takes down. locations closed for our

our we second charges ongoing a -- forward, as process some second go will of done And actually fact will restructuring see through see to basically been that's the hurts so quarter them in and should an those pick that GAAP down. second non-GAAP. actually quarter up you So, on will in expect will predominantly little be negatively in hopefully, which it -- we the well. basis But quarter the the going be biggest immaterial those

Rich Valera

it. Got

Okay. you it. gentlemen. Appreciate Thank

Operator

We'll move now with George Jefferies. to Notter

line open. is Your

George Notter

a certainly now? like very would But right I for guess Hi to the right for growth what that look you I like you wanted what the guys. I us revenue is PON deal quarter. sense rate Sumitomo think a quarter you SmartRG the an might I the heard give rate did sense here. those ex organic growth the now. said year-ago also organic can much. in But about in what get acquisitions Thanks impact

Tom Stanton

easy -- SRG an -- don't is I our one. the Honestly

because and a we'll yes, broken I that on and I going specifically don't a have in front number. think change -- you're at big can don't Sumitomo. of have organic percentage out that, I'm is see follow-up. don't number basis a just growth ex-Sumitomo I in of I think the to impact just don't rate there have I follow-up -- really think we of I the can but looking because But don't Mike that I of big me. front me George.

George Notter

the And interesting with of I bankruptcy was past obviously think that filing No over were quarter kind gearing in stream guys worries. it news around wind up Okay. this those then saw broadband filing that to That's business what you deploy then changing can forward? to going the about and you it. more But expect with side. infrastructure Thanks. the on talk how

Tom Stanton

That's okay. Interesting word another it, for is would one it. for nerve-racking be word

-- had offset actually in because out revenue feel change to least, to and at don't going agreement see no a There their roll of that from So, of strong we it's a adds our we're net customer in kind their occurred but agreement to expect is we true They their so attrition good perspective Any QX, forward. position. for We've we can would've and that our desire, the to impact of with them. reached any it's doing conversations of what them them base doing attrition of broadband. what base. with subscriber or customer the lowering still

put So, desire, I'm stabilizing thing of little I through that their is just of so network fluid The sure think We're it comes So, capital that just is into in matter -- lot it's what kind cloudy. a going-forward forward not But how operations. but they're towards -- our still hopeful that out moving and right? is the one their actually fruition. so to and now. still works structure a that making of a it's We're able there forecast. the it's right

George Notter

helpful. it. That's Got Thank you.

Tom Stanton

Okay.

Operator

Bill next question Tieton we'll Capital. And take with from Dezellem our

is line open. Your

Bill Dezellem

Thank different you. I questions. couple of a have

last many that where are number those Would out more? you of have million or on a customers will you any you increase how one anticipated of a that RFPs that quarter And revenue you in then secondarily, any the referenced there expecting update you large clarity year or see process $XX to were further be on? that First is released. this

Tom Stanton

About question far the level. to core would of say that growth would obviously I that the -- first that's business to that pretty general driving forecasting -- because be I and that second that's seen happen. are to Needless a the customers in giving has some say we there. all, tough question it's also there revenue out But are expect

a maybe handful-ish happening I a has timing. What's So, and probably the to is with -- it's or less. don't of little think some number -- that

So, when ones the talks play. are those about actually I about -- all all still opportunity, we of talked that of the in European are

level All response. of set of have three received to of forward from I one had about different are or the moved them talked another that and we degree RFPs had two or in

one And a course. them trial actually talked even about moving in we're of my with we You to notes. one with field that did showcase

They next $XX of to think those million large in this when all opportunities. So, the year, But and bucket. actually versus about very be -- tougher incremental it's are I talking year quantify. would you're

Bill Dezellem

Great. Thank you.

Tom Stanton

that With right. of we're I All question. Okay. at think the end our

having everybody the a appreciate next and I we in us So, call the for look good joining you to with call forward quarter.

Operator

This does you today's Thank your program. conclude for participation.

time. may disconnect now at any You

ADTRAN (ADTN) 18 Apr 192019 Q1 Earnings call transcript