ADTN - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to ADTRAN's Second Quarter 2019 Earnings Release Conference Call. [Operator Instructions]

During the course of the conference call, ADTRAN representatives expect to make forward-looking statements which reflects management's best judgment based on factors currently known.

However, these statements involve risk and uncertainty, including the impact of the company's assessment and of its success and ultimately inventory reserve, 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 31, 2018.

These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements which may be made during the call. pleasure Executive the Officer my Tom over now Chief Stanton, of is to call turn to It ADTRAN. Sir, please go ahead.

Tom Stanton

Good second call. Thank us ADTRAN's Julianne. morning, appreciate Foliano. We you, you CFO, for Mike our me quarter With conference XXXX today is everyone. joining

and opening detail, Mike performance remarks, take will my review the we Following financial your quarterly will in then questions.

pleased quarter and solid the second of During progress the performance continued quarter, with our we XXXX. were for

our towards the customer strengthen financial we broadband meet strong solutions. goals During geographic traction accelerate experience fiber objectives, execution customer, and our and quarter, our product and our subscriber to achieved diversification with

a From for increase. contributed million, $XX.X increase Services total over year-over-year perspective, a basis. revenue quarter the Network in of company & revenue the Solutions Support and same XX% a was XX% quarter quarter the for XXXX. $XXX.X $XXX.X top accounted Global million up at on year-over-year line million, XX% a XX% for the or revenue majority

the U.S., timing of networks. ADTRAN our During customers three LATAM, the last infrastructure XX% Similar products. second build with due customer having quarter, help and best impact three different their revenue international customers to markets we around in quarter quarter, Europe our revenue came finished key underscoring to the from the located of we is regions, XX% as the world

We our been next-generation the has that a internationally decade. the focus years. how role play for several strategic platforms in built base networks a customer our Expanding for XX-gig believe fundamental fiber will next over past are market-leading access ADTRAN

paying operators to The made as first their investments our first of business is XX% half services scalable as customer's broadband are over last they offer fiber have off the move platforms which enhance XX-gig flexible half. for and key we the years that considerations looking open few grew one are over portfolio experience. Our offerings

new awards as our customers with quarter. existing the with particular, the momentum to regions traction then customers activity significant key To the during and during target in of secured In in XX-gig continues end market awards gain we wins market globe. number to traction our a with and quarter we continue solution ramp the Europe new PON around of

award for As SDX we software-defined European for Tier expected X with year. an will is another a Tier with play roll integrations platform, a which for secured role a out highlight, our strategic Further, operator X our access to we operator. solutions SDN next-generation European initiative next

significant for two entered we trials SDX. Additionally,

is North second Tier first trial a is X the with The service cable provider. lab a X European trial field operator third a and a with American Tier MSO

of the open We reach quarter the XXXX with during and of availability customers solution solution. the and expand deeply hardened the help disaggregated the also This SDX range cabinet-ready, architecture, more purpose access general innovative to built released fiber an into is PON network.

expected and to and this our have new in after continue XXXX at broadband capabilities deployed heavily Huntsville. to new QX significant field-proven widely also platform here press invest We release month customers be some exciting are upcoming Access winning month. in a announced event our for we fiber and new Summit included Total platform

recognized path G.fast as X a operational in portfolio based a X infrastructure, service in second-generation As new carrier to Development leading gigabit in Tier networks our award multiple larger on the fiber for quarter industry's the portfolio currently carrier. delivery their G.fast varies ADTRAN North extend taken the extension service during of excellence America with that market, and operators report Tier the of where Rim, Pacific are solutions Europe, fiber we underway gigabit know, to you innovation portfolio. its to and many I'm added by the individual continues pleased be goals.

we capabilities, and to seen the gigabit efficiently connected LATAM, X service We a have pass, the can symmetrical revenue and seek as accelerate globally interest premise. trials methods of U.S. a underway to in and maximizing fiber transition economically network delivery becoming renewed all premises in Tier potential operators key advanced their ensuring investments of

a Further, Tier now a we expanded X that CPE capabilities our that that business strategic upon with includes G.fast award leadership our in SmartRG with carrier. new Pacific operator solutions our build and

higher having on of impact leverage a ability broadband clear acquisition Our investments parties. path SmartRG services is delivers had their by in third previously that to been customer's to positive our value a over-the-top and provided already

customer years customers a many of in of that home have positive network and ATC view network SmartRG extension way. instance, ADTRAN manager Midwest, the For ADTRAN they implemented a including be They should their considered shared a XX been software performance, for that full based service. a of the experience broadband analytics. With have in of is device customers' the greatly SmartRG our by and has recently Rural real-time communications, now broadband over Carrier impacting smart-home that Local Exchange into usage their in now insight management deployed, Suite

secured the to number device we manager of quarter. SmartRG a pleased contracts have am that I report record added during

contracts measurement on of a process into impact are effect recurring the a testing January and in requirement the growth backlog of have as XXXX SRG's revenue such customers have of mandatory positive America STC's support applications will and XXXX. Connect that Fund in in that We installations These strong to performance goes beyond.

also and is able services we to location, gateways. the networks to expedite operators customers leveraging the with residential North SmartRG quarter, super-vectoring, in can investments richest services, that deployed, it access is small leverage of America expanded This recent ultra-broadband With delivering speeds infrastructure. delivery or the where SRXXXac internet the the broadband experience, During Wi-Fi device product business have multi-gigabit to portfolio in near-gigabit independent building first business. the can ultrafast deliver of now homeward the the

swaps disruptive application for In deployment addition, to migration and device gigabit-capable Fiber-to-the-Home and future, of an to customer testing. gateway Fiber-to-the-Home wireless the this the easy deployments allows reintegration model eliminating

be you anybody questions answer any and let may the I'll to happy Mike, have. that, With go we'll financials, over

Mike Foliano

good third Tom result you, view Thank review I'll and our all. our for quarter quarter. also second to morning and the

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

like I'd get discuss into the numbers, of the I Before the information. nature preliminary to

corrections was our note reported expenses rates, and income, obsolete on operating to determine on affect working balance other income operating that revenue, gross potential sheet. affect inventory. our total changes necessary shareholders' per required, issued. results. the in could assessing the release excess If are and and would will As reserves net statement finalize assets, we an are any share net for gross earnings to release, Please announced and profit, We're assessment press and if our reasonableness of changes updated or equity current income the not are but assets inventory, income margin, tax total be this

the With numbers. that let's on move to

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

and Support global this million QX quarter of Our $XX.X for quarter Aggregation reported XXXX million of quarter our revenue Across & Services & to categories, compared million $XX.X compared two for million million second first $XXX.X revenue and two last to was in quarter Access quarter revenue of the year. million $XX in year the last was XXXX of $XX XXXX. of $XX.X in

$XX.X for $X.X Other was for & quarter quarter last for Traditional the quarter QX our category of Experience revenue Products XXXX. of $X.X Subscriber the quarter Revenue one and $X.X million one compared versus and $XX.X XXXX for million million year. two & million of million was for million to Solutions XXXX quarter of for for $XX.X

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

international million XXXX for one Our million of XXXX. XXXX for compared quarter revenue to $XX.X two $XX.X of two quarter of was quarter in and $XX.X million

the these published Relations our webpage at on of reporting www.adtran.com. Investor categories each We've of

we said, XX% three of during Tom revenue have As customers the quarter.

year second Our this GAAP margins of last are XX.X% gross at compared of quarter quarter second the to XX.X% estimated in quarter the for XX% reported XXXX. and

by in XX.X% gross gross improvements margins increases primarily Non-GAAP gross at decrease The in of year-over-year was two quarter offset prior in driven The the versus partially our mix, estimated and in driven quarter quarter second last XX% increases volume. margins were non-GAAP by quarter-over-quarter non-GAAP in for product by product margins. in our margins year. the services XX.X% are

$XX.X last year. of Total $XX.X to XXXX. million quarter in a of of reported quarter million for $XX.X expenses last million to million million operating $XX.X XXXX quarter two expenses $XX.X and $XX.X were two quarter second were last for our compared million two quarter compared and quarter basis, operating non-GAAP On

expenses The was primarily The to result legal non-GAAP increase to quarter-over-quarter increase in a systems. million SmartRG QX Operating is picked of quarter and to for services is the year-over-year the to incremental contract second expense in loss that increased in compared acquisition. non-GAAP expense attributable million $X.X an income operating quarter primarily expenses operating of GAAP related of up last $XX.X $X.X prior we related year. basis million at of estimated a and reported on the loss IT the

of quarter million our operating by year. income compared operating business $X.X to increase sales QX in in operating driven estimated loss non-GAAP income quarter-over-quarter two was XXXX increased $X.X gross quarter partially two by $X.X in and volumes, million expenses. incremental for margins improved million and a of is last Non-GAAP offset of services at The in of XXXX

in million of was non-GAAP primarily sales increase product both is All domestically compared internationally. ago, quarter million XXXX. operating loss gross as and other compared attributable QX operating year in to quarter quarter with higher to last XXXX our portfolio the volumes The QX a for million and income two for our $X.X $X.X margins to of income $X.X higher two

in income from investment gains other the was equity unrealized primarily market-driven in The portfolio. our quarter

by to Our second provision profitability estimated income benefit $X.X fluctuations of ended provisions tax recorded primarily of other to equity in for for in XXXX portfolio. quarter return million quarter of was of a return just $XXX,XXX driven the two of be result quarter The expense the was non-GAAP income shifts the compared XXXX is and of to in for investment result $X.X million first were an an $XXX,XXX quarter compared of of quarter GAAP income as a The Company’s benefit the in our that million other last as non-GAAP of benefit XXXX $X.X XXXX. quarter in quarter, XXXX. in was two tax expense XXXX. a offset tax that a to million $X.X the QX adjustment The and by our to

compared of per to Earnings of XXXX. $X.X a $X.XX of a quarter and compared net income the net year the of estimated of XXXX. of is share quarter XXXX of basis GAAP in at the estimated Non-GAAP $X.X quarter million in quarter last $XXX,XXX two last second loss second and last loss to per in a the million million compared and is share to $X.X to the quarter loss to year. GAAP a million share prior income for be of be $X.X quarter is quarter $X.XX $X.XX on million per estimated for second quarter for $X.X two

GAAP Non-GAAP to share quarter share a $X.XX per year. and $X.XX in non-GAAP $X.XX this We’ve earnings last operating disclosure. earnings results loss provided of share reconciliation the per diluted quarter estimated of of and for earnings compared per in a quarter two last diluted at is year our per between share second

at cash paying net after the Now of million dividends. $X.X turning million totaled quarter $XXX.X in sheet. to marketable balance and Unrestricted debt end securities

we receivable last to days the days last quarter, from quarter cash generated second quarter The trade at days quarter million versus quarter resulting XX mainly XX mix. million at compared XX in For were attributable a operations. DSO to XXXX. end, of accounts $XXX.X $X.X of Net the during the and end shipments is the timing of increase of international of and quarter customer in DSOs

at end at $XXX.X the quarter second million estimated to compared are the XXXX. and million $XX.X at in the quarter the quarter $XX.X of of two million prior end in Inventories

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

Our X at spending carrier current customer. capital a expectations include the temporary European slowdown Tier effect access in of a for

the of that informed XXXX. will We spending have been beginning resume normal at

of As accommodate widened the yet not this the our revenue have current we expectations to effect range full been has slowdown determined, variability. of this

that range our of XXXX in to million. $XXX be $XXX revenue expect We will million quarter third the

rates the After second meant taking be second I quarter there, margins our prior of quarter currency into non-GAAP and expect basis effect account anticipated on I that mix, exchange consistent with the potential third a will said quarter we sorry, – quarter. gross

Our third quarter a consistent gross quarter. second with be on basis will non-GAAP margins the

also We be expenses down the for quarter over expect operating will second non-GAAP the quarter that slightly amount. third

possible be revenue low a movements; associated our revenue channels estimates. to will mid-teens enterprises; as earnings of our for inventory in services carriers Broadband the to our third levels, percentage proportion relative variability resolution following: Finally, of revenue; with America both the tax anticipate macro well rate platforms; projects; the rate revenue factors environment in in as project activity believe distribution to impacting we fluctuations adoption Connect of realized the of reserve international basis XXXX on E&O quarter the the inventory the XXXX Access rollouts; We the the total revenue timing spending consolidated related be rate rate. exchange and and our and the the currency for and mix and and to non-GAAP of will international; professional domestic significant adjustment

by ADTRAN’s and the Investor information website going financial follow link. is Additional available Relations www.adtran.com Investor to at Relations

the turn Tom. to over call I’ll back that, With

Tom Stanton

Thanks, we’re for questions ready may up open Julianne, that have. any Mike. to people

Operator

first Your from question Instructions] Hall Goldman Sachs. comes [Operator Rod from

open. is line Your

Ashwin Kesireddy

process, structural Hi. of could Thank Any this Ashwin comments or control just of your talking some you you for trying the not on follow whether about what what to impact have then I Rod. I on is comment cost worst-case result could on I’m the taking my guess you’re question. if This currently And behalf internal onetime triggered expectations. was potential understand we a in like I further sort up. deficiencies increases. wondering and is are assessing? or

Mike Foliano

Okay.

this Ashwin, is Michael.

start of just me background. bit little a with Let

we’ve develop reserves. use a a our at everything a inventory to method fairly and quite For here XX,XXX on basis, while that looks detailed throughout we tool excess more and It business, SKUs used than obsolete the that what it a through that it bring our finished all value. net the of that believe materials goods. from raw And back be to would for to calculates realizable realtime inventory we reserve

were number actually make may back tool significant is is inputs. sure of it because we went all What inputs that at requires necessary those fairly on the complicated to level not have those have looked of we a inputs, validation right. that that did and When of exactly all the been

we in of that by reserve all other output companies Now reserve for believe for out at space we our the move But process the do, inventory fluctuations tool in to like this more the that a and the certain we at as be a companies what is high And in our tool won’t there some is reasonable. looking are level what value. we’ve seen inventories. time simplify at not other market of much the that a that, is

kind of that’s background it. So on the

see period don’t think be would what in one-time? I seen whether changing long-term it in versus around or a reserved issue other the I the just a And from would not past. that be your we’ve was question any amount significantly

Tom Stanton

from companies still place audit But what we’ve of you sure of Mike. been, Let that, audit – the external will once looked really the from look to me would at we to done, the make has said say, kind that go and everything through our at if agree have that historical I having know. we is everything completion with

Ashwin Kesireddy

it. Got

So those are…

Tom Stanton

your Does that question? answer

Ashwin Kesireddy

if could this to? back? Yes. was But to could in opportunities I Tier It you spending they of wondering other the my you not some guess surprising European come on that And see does. I what follow-up they confidence comment Are on given completely gives deploy spectrum. projects really is there pipeline more you slowdown. think amount money have you X it’s the that that of on or spend

Tom Stanton

Sure. Yes.

thing typically year is there has this of that gotten the the with – carrier with of been at from the carriers. So is that the timing us. next carrier, the very resumption the us And confidence beginning forthright feedback we’ve that gives directly

– So know that also for and we continues. product itself requirement the the

not they that – So to and done still going so to go have away. have they that’s things get

getting award without As as pieces, the Tier carrier the names, a far X – that’s G.fast incremental with mention G.fast, and same into did I carrier. the larger European in

Ashwin Kesireddy

you. Thank Understood.

Operator

question Silverstein Cowen. next from Your from comes Paul

open. is line Your

Paul Silverstein

couple Thanks, may. A of questions, if guys. I

know customers, constitute the as off, a on about sensitivity there’s can three of XX% revenue? disclosure. you First percentage But I what the individual us collectively tell carrier

Tom Stanton

We don’t typically comes that’ll give don’t that I Paul. that, out, – don’t – come know when but we

Paul Silverstein

there’s don’t quarter-after-quarter that it lot – ties you I a the is strikes year-after-year which into typically it know question, all you you second have opportunities. and I – have you but, of me a mean Tom,

nice for awards a that others and we’ve all of a talking while. awards, potential get G.fast been that opportunity big a release the opportunities, represent whether slew number AT&T You about telMAX, of

guess twofold. you And question to so I is my

hard how to the nature insight revenue of of timing any now new as of to given But the to today, you’ve there of do customers. revenue are awards opportunities? predict, current of magnitude these any that get concentration the and referenced have awards does in it relate – and And flow the that company? it’s the these to forecast One, I your timing magnitude really you terms that

very a been competitive fine leader. have always you mean access I broadband

the prominent to decipher, what to among one or these degree to extent also And what I’m had it degree Historically, trying is plagued concentration the a four there’s revenue with opportunities? awards, but healthy been is concentrated that another. revenue diversifying three, has You’ve company. always extent new highly to projects of

Tom Stanton

doubt problems the we’ve of carrier the that one a revenue can And necessarily typically you larger Without just, doesn’t quarter because materially. impact the diversification, the help. stream, a larger and it’s any in opportunity, with any is one have as one we really the quarter typically

capital one company, company, that that opportunities G.fast largest have the now, that one at of So globally. because company call right the slowdown a is facing shift issue but right? an is we issue that have a capital example we same the a it at shouldn’t So of I and that we’re

So help now. year come that’s not been a diversification from the when a

push big working Our to has the at of I that. the outside with in the and MSO three market, more top did we’re U.S. right market, been you to those opportunities look now to and be reference to one of continues as know specifically MSOs there try the traditional markets carrier broaden

new We are The of customers which year, and beginning let’s PON have, XX-Xgig start the is, problem market Europe, year into year. in the and X towards the most is of say, XX alt is landed customers Tier of the shipping, since end itself, this tail makeup carriers. approximately those the them, next will of or

So to four it those X. a Tier takes make

but to lead a some you’re lumpiness to it’s and And hard you talking material is come to We’re X that that’s it that with it’s continuing about that going and have our upset diversification the carrier order to base. Tier get extent does But you, outside near that about. of away focus on the in place term. not go work that traditional to the something is,

Paul Silverstein

call, for us portion while fiber reflects about quick think, on about albeit has market, is to One opposed maybe a of to I the you traditional the give ongoing may. you various been DSL what heard talk ever based for you talk in one market heard space any fiber-PON and now. sense just your I your solutions? revenue shift now One flavored the as I’ve last Can optic shifting that I’ve fiber-based than this before, more solutions question. if

Tom Stanton

were But on out and is is talked it really growing to come have the the fastest break vectoring opportunity that highlighting with our reason and we’ve a last front portion the XX-gig think – to more penetration is do reason basis. I had you trying we – as we really cuff. I will we’re the copper-based than ongoing it with Europe that more have. it’s talked historically that and time, an I my don’t about we in off want portion definitive The more broadened been in I solutions. know, have of in it historically don’t material into is I talked about and that fiber me. But notes, speak that to about we just than and the the opportunity, it what

diversification, continues we that door XX-gig to there’s enough, opportunity which and opening But In to the diversification, diversification. see that – here, U.S. kind in has help led on, to with been albeit this the be MSOs, the U.S. some push which our and us, fiber going the led biggest base but fiber in we’ve opportunities always space So kind our has the here really opened got not towards of is again, will of in the so to Europe. traditional has going slow in to that EPON near XX-gig carrier term some

Paul Silverstein

pass you. I’ll it. on. Thank Got it

Tom Stanton

Okay. you. Thank

Operator

comes from Valera & Needham from Company. Your Rich next question

open. is line Your

Rich Valera

you as has the does and for Tom, customers? if rollouts? had still that going G.fast completed do is Or to wondering a that was that the the of selected like to X targeting European just that? say that to with or win carrier. they the have of nationwide you. they’re the Tier understanding that so, that’s And kind a the follow-up that? done prior if Thank how broad business spending. of and case? – of a be super-vectoring that Is vectoring kind going kind And the initially. nationwide? as talk the they super-vectoring on scope Can Is Just about that upgrade My were they paused vectoring –

Tom Stanton

Yes, sure.

base. rollout to delayed. a that But basically fact, a on nationwide. business, for – the it plans with year, for continues service in and into of is well. little that of view as as hopeful actually are it the continues we’re our as continue on year super-vectoring, and year So, yes, broaden on customer footprint on, next only will albeit but not that very within that now next continue far the rollout to multiple and right businesses MDUs for biggest now it’s lower The piece. tens is it’s our the to it cost G.fast – just is the of it would But is millions It not gigabit as include and residential

a a So from Vectored it stated small specific migration continues has and it’s a not be project, be then fiber. is to VDSL, – and been VDSL, G.fast their to ultimately move super-vectoring,

Rich Valera

you Got will of last be it. few rate one a tough with think the you’ve than kind years? this rate in program, of the answer actually when another now to that that resume, got would been higher, G.fast program, you similar, expect annualized revenue that customer, to run be things it’s lower And I your when but know run

Tom Stanton

if mean, to hate G.fast, the G.fast, I giving about know they’re as end the no-win us tried timing of the a good have very about get to next IP integration which And the I to year. towards speculate we I overlay of you and year. of I think is into forecast game.

– but I a – towards the solid a That middle end major don’t like tell I see of trajectory that let have fourth we to until won’t I’d So don’t change, the will forecast happen quarter. you – me yet.

Rich Valera

other – a also of hoping recently historically enough. customers. fair to delve was into couple I large Okay,

Latin row. anything it turned they’re slowing. look recently, couple continuity a at looks So in like any us of kind second kind comments Latin And they’ve America how it your can and have of didn’t to that been of a But they customer? the strong an customer, for sense but in historically any on on this year? your give suggest off now sound since of of you of things sense have been half all the you like And in of quarters American there was for

Tom Stanton

have have history VDSL you goal our are specific that tell plan of would that their with but tell phase you that, that which different a I goal. buy demand, footprint way order a they Well, significantly they material in of of – first customer that their in expansion. Vectored goal, meet they would to not to more the to goal is are amount they they

demand that. to and continuing and like operate their things time just and try their we’re them lines with meet So to

Rich Valera

then you that it. accurate? think you’ve didn’t indirectly. I Is that It – think Got to includes CPE. with just but maybe on them them you have win like NBN, by got referred which And name, don’t another mention may them sounds I

Tom Stanton

is in Yes. picked CPE of Without true an award as as naming the G.fast customer, expansion that it we a Australia up fairly current well significant our business

Rich Valera

shipping? And Got when those would to expected start it. be

Tom Stanton

quarter. won’t, half, guess some as I first on first CPE in the maybe The as early there’s dependencies But that. the would – my would be sometime

Rich Valera

– the putting from on historically? that like, second is your in understand X entire otherwise fourth going that in been of then European in it’s us quarter the customer perspective seasonality the aside XQ? going to rest a your about half, Is be in Tier the how And than the sounds we business it. there seasonality be that softer Got think different X would would make non-EU anything Tier it

Tom Stanton

with No. If line point looked in and everything customers base at if would problem I we expect. what that this looks at time, what in the look are at customer I portion of say rest and would – the forecasts our the is else material no, are a European I

Rich Valera

my for gentlemen. question, Thanks enough. Fair Okay. taking

Operator

comes [Operator next Your question Partners. from Michael Instructions] Genovese MKM from

Your open. line is

Michael Genovese

if issue I this customer implications broader it with guidance, Tom, leading thanks. wanted of Great, lower to one and ask, risk first about all, the to if there’s could of spread. this

Tier is of, narrative other year, the you on have lines? a carrier pausing that, carriers pursuing have you but you’re infrastructure if sort I see with spend along those lot other happening spectrum other, customers what spend and don’t X So is some Europe opportunities. do and big, think had in to this that you that any customers

just beyond need carrier? about this can one you we whether talk So to just spreading worry about

Tom Stanton

answer You the let can is question, take the me directly a no. look just answer – where at your

notwithstanding So – European the base is today, we’re seeing concentrated. the where right in carriers that we now, awards have very any

immaterial So potential slowdown any off in the that that has awards material would of plans the in is based any changes we’ve of had any impact talk deployment point at there relatively their recent unfortunately. no this Then with activity. us been be for of of other time, piece

Michael Genovese

it there’s Okay. infrastructure on European analysis or we the though about? you you sort impact weakness do don’t maybe something is that as you of, that any, But about worry the – guess exposure think could sounds just analyze have be quite market market, just should going this I worried that you if but like CapEx even not

Tom Stanton

themselves that. we don’t is answer see should don’t I Any right billion want time so you pretty we direct the the about, see dollar impact. I direct so And in what conversations tell at be what's played having this available check out now underplay with to we’re an auctions everybody that. much that the don't don’t can so see just have and I and worried point to –

Michael Genovese

directly could in How this if of us Number not things. just but XX% XX% touched one, Great. close are customers, your then sort those updates wanted little And with update for cable having your – yet? then to who on Is just a to carriers, to, just I three MSO U.S. two where are updates the just bit two in it combined are want space. the just I sort the area? Great. you we please? of XX% that of, Tier And ask you revenues specifically we Xs customer on

Tom Stanton

One, we…

Michael Genovese

the ones. then two cables and Tier So

Tom Stanton

I Yes. of if it's yet. I have don't Cable Mike, believe front in don't at me. XX% I that is – know

of half be with kicking my if in quite we're still think deployment the don't fact just the where time in solution, a in with I at the lab so new XX% would we going I year do material but progressing – still it don't lab that's actually big kind of In OLT start and still the would through next we through I point be, math not way. head, more this customers guess of the the will we're in our would we're that in, and where are remote at with first those sometime in off. there, expect my one largest yet, far uptick And

MSOs. And two that's the true really top with customers, top the two

relatively products products of real to customers. just those new which have kind small. we're movement a remote that EPON trigger of trial they're largest customer and business existing third up do coming now some to the So customer We third in in is but stage is and – here for early. We both with, that's that existing a do, going it's for the buying be that the product still the

One has quite As a been far are as the ongoing other these both two project for now. right some for carriers carriers, actually – negotiations of both with that in projects have – those they of we're well, time. been

first So half. end expect there it change not XX% they're the that I material the tail would a the is be of today. to in that extent would towards

Michael Genovese

at the the is? NG-PONX GPON still one at focus and other – it that Is where

Tom Stanton

hate NG-PON one say G.fast but at I to another. at and this

Michael Genovese

Yes. G.fast right.

Perfect. Thank appreciate update. Okay. Tom. you, I the

Tom Stanton

right. All

I forward end the session Okay. today. all end All you that, to talking With to time next the look of right. Thanks. our during quarter. we'll

Operator

today's conference concludes call. This

You disconnect. may now

ADTRAN (ADTN) 18 Jul 192019 Q2 Earnings call transcript