ADTN - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to ADTRAN’s First Quarter 2021 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 judgments based on factors currently known.

mix, align risks the including pandemic, acceptance impact of supplies involve and continued the detailed for our of channel in statements XX, report Form the XX-K the component of our year product in efficiencies ending XXXX. manufacturing demand, competition for expense such of to annual costs, these products; and the and and the December products, market the uncertainties, and spread component other risks ability successful However, development customer market with COVID-XX on global results These forward-looking differ risks and made uncertainties could may which from cause during the actual in call. to those be the materially statements, It to to the is Stanton, over my call turn pleasure of Chief now ADTRAN. Tom Executive Officer ahead. go Please

Tom Stanton

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

key by history. solutions, we the look This our for of for that If year. business. momentum the a my recorded Following then for half in the ADTRAN. financial expect indicators and year last the any provide year-over-year we have. and performance be by revenue Mike for primarily an detail may our first from driven at highest you quarter We there in positive take product that exciting review opening non-GAAP broadband and this quarter the continuing success year-over-year, We EPS bookings remarks, positive to increased questions our strong $X.XX several XX% a had will quarterly are we demand will was grew fiber-based outlook any the market, second

than $X a eight with access to In in home. the high-speed billion an President the cloud-managed demand has consumer connectivity of are residents side, the broadband Biden speed are capable U.S., that’s we for countries. in referred On all governments the for committed broadband perspective, as Wi-Fi to to high-speed increased more U.K. necessity year for The plan. part its $XXX as in investments to all high see Americans. hard-to-reach to premium multibillion a pledged member electricity proof funding across proposed gigabit the broadband future infrastructure prioritizing connectivity accelerate dollar ever. for broadband being He billion also funding broadband new fiber-based Similar paired continue From has areas. EU broadband Government

out we government investment in from addition In speed for continue others private access, see access high networks are technology a products. XG and spending, X refresh From and utilities XX investment broadband cloud-based build cycles to Wi-Fi gig around equity, driving connectivity. of increased to to growth standpoint, fund services fiber increased municipalities, fiber the future and our mesh

will growth ADTRAN software, EMEA in Dell’Oro’s access, In initiatives vendor highlights Finally, key in-home base. XXXX fiber ahead areas our growing market programs mitigation major of at and we of key our our both servers, gains. that share QX presence see supply of customer advantage a Taking diversification terms well-positioned being in vendor Europe, with take also strong trusted us. our chain year-over-year target and risk and report are along accelerating status market delivery areas. OLT investment the across fiber North of see the portfolio, our closer are and the reinforce platforms selection you share these in we to markets, also look noted growth cycles differentiated in PON including vendor are fastest access, success that several -- as and vendor With U.S. America

being led mesh by For quarter Wi-Fi the our in-home revenue was managed gateways. service delivery record platforms, growth QX cloud with

past by our base the by year. have we where our grown side, software On the XX% was cloud-based offerings in our led customer growth SaaS

quarter million. with at was the contributed As total $XX.X XX% Solutions revenue Services million, for margins. $XXX.X we Network gross revenue Global look at $XXX.X accounted of while the million for financials, XX% QX

two During access, with and mix had solutions. in success portfolio customers, distribution service with the connected-home partners the serve quarter, of regional broadband hundreds a we we having both providers and of reinforces both distribution customer XX% U.S. partners. enterprise are diversification. This Tier the Xs These and

continue efforts new XX our with customer make to diversification customers. We addition QX good and progress provider of acquisition toward service in an

saw XX expect that like our up and operators to gig QX half regional led adopted by solutions favorable to market, second software to our U.S. solutions, are their XX% operators a Much continue connected-home U.S. networks was technology as a base regulatory in and we up that expect continue Europe. due government -- to customers the factors. and year-over-year, we the were platforms operators In both fiber We with grow are XXXX, the customer broadband the XX% access while from was our upgrading combined of success combined by growth European revenue in regional regional year-over-year. broadband

demand to continue increasing offerings. and We for fiber access, our connected-home cloud-based see

fiber The Our and areas up XX% in in-home SaaS access growth year-over-year platforms service were delivery these offerings than offset copper more grew business. our aggregation decline and increased year-over-year, in access the XX% business traditional XX% year-over-year.

the we year. exit the of expect around these and fiber great for to For to the of Tier make continue announced projects, previously lab X middle each the access progress

on global related as more increased from network fiber than issues. portfolio and logistics In with higher XX begin X we our levels are addition access Tier MSO the to Inventory customers Tier times COVID-XX the in we full to experiencing track announced transition due also shortage globally previously growth still remain gig fiber to awards, with they X deployments. and chip these are to lead several projects normal

expect see that this the extend into will We and continue lead for time to continue some times future.

steps do a midterm. over the continue that to disciplined operational taking best the the risk constraints perspective, the We past chain efficiency. the our we organizational improve our we ability, operational to structural implemented maintain continue year our of From The are in to but mitigate approach near-term changes to necessary challenges supply these present to or an expenses.

disciplined We expenses quarterly management. non-GAAP over have year expense through X% reduced our operating by

wins, we As additional slight do R&D expenses. secure in Tier we see to increase a expect X

product several fiber In for On that will we the the of our recipients. introduced gigabit products services RDOF the during platforms, quarter. simplify new fiber-based access low announced areas deployment key side, several we density in advantages

in-home deployments gateway. service For ramp we Wi-Fi mesh delivery begun to our X platforms, have of cloud-managed

platforms, was revenue especially As going very for strong a mentioned record previously, this mesh for area. and bookings our in we service growth Wi-Fi, in-home QX delivery order have quarter forward

marketing have tools end-to-end that are our networks, primary the providing while broadband performance access demand cloud-based proactively for the two teams. and increased actionable side, of the for growth. we areas operations optimize In category, we On to software seeing in-home insight and SaaS

we time. to grew will base earlier, noted SaaS increase for our offerings pay-as-you-grow XX% SaaS year-over-year. continue by projects are over As customer programs that multiyear typically

offer to we also edge orchestration that addition solutions, our domain SaaS In software programmability multi-vendor the leading simplifies access open networks. of

seen gateways. recently increase multi-vendor low-end an IT category In launched additions, modernize this We in customer we providers gateway their as including IoT our integrations and portfolio, very service in have processes. our enterprise OSS

the routers, additions to class business the all of the business connectivity cloud-based automation demand We simplify switches, are for that our latest large-scale networks industrial Ethernet consists next-generation Wi-Fi, products to enterprise IoT that gateways applications. have updated sensor to IoT IoT of of growing fiber these access support portfolio These cores. a backlog of

to Continued our enable in we with investment having growth meet us will products the coupled continue additional diversification us our our has customer throughout success the to success also in are for portfolio, This well-positioned portfolio objectives. and year.

weather I and COVID-XX answer On difficult financials, resilient storm. provide company. that and have our may questions call spoke remained to will I review them. extremely thank impact QX throughout how the last to will employees Mike? we They flexible of time our and to I this that his its proud Mike, background, continue following be happy say first to want year, you With of our want any am a the have. of I on now remarks,

Mike Foliano

our first quarter. for results and to I’ll expectations Tom, you, second our the morning Thank review XXXX and good quarter provide all.

revenue revenue at the the QX in and my in XXXX. compared million on in $XXX.X in first quarter present www.adtran.com/investor. XXXX The web revenue report, ADTRAN’s our referencing segment schedules first Relations certain category, first $XXX.X and million Solutions webpage reconciliations Investor this versus be million by was the our across I’ll came our million, in quarter During results for financial quarter also Subdividing and for on $XXX.X $XXX.X press information GAAP financial I’ll discussing which supplemental QX and at $XX.X million segments, XXXX and supplemental to non-GAAP reported with today. page release Network both of prior our presented million XXXX. our schedules operating $XXX.X of be quarter

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

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

in Our first QX XXXX to quarter $XX of in the international XXXX. quarter million, compared of and was XXXX for $XX.X one revenue of $XX.X million million

stated, these we of of both in were quarter, two the As domestic. revenue Tom had XX% customers, first

in higher both compared quarter product XXXX. quarter compared by for in year both manufacturing was first both quarter margins our gross margin non-GAAP XX%, XX.X% of the to prior offset to in Non-GAAP and gross in are driven in decreases XX.X% gross for as volume attributable gross international in efficiencies. quarter both the improvement the GAAP non-GAAP XX.X% products to XXXX. in margins Our the by partially at quarter was services and and the XX.X% were margin customer XX.X%, and GAAP GAAP and as and mix of quarter-over-quarter The of mix, domestic first segments. product quarter the first prior year-over-year this and The

decrease and XXXX and Operating in was a component in result continue, compared $X.X costs. loss loss prior decreases the basis operating lead to reduced expenses, expenses The million driven increases prior $X.X by related market and XXXX. to During our the a the operating $XX.X expense million, were both quarter quarter travel $XX.X employee contract first sales extended in availability and decrease Total quarter XXXX an of expenses, sales expenses, costs. a component compared both volume, profitability of non-GAAP for Other and quarter, million in and was quarter project-related and decrease income expenses, XXXX. reductions. operating of basis both reduced expenses labor operating income The decrease component margin quarter contract expenses was million non-GAAP offset of benefit one in lower offset we million in expenses SG&A, logistics more partially in decrease for volume services in of quarter and costs. to reported driven improvement and related on and expenses operating which by the of GAAP profitability year-over-year The legal quarter was labor improvement million, to was in The loss improving XXXX. million GAAP increases an of increases expect for higher and quarter to expenses. higher was $X.X employee offset expenses. other the expenses year-over-year operating in and in higher R&D expenses, R&D SG&A, by partially by by in R&D for loss Non-GAAP GAAP expense one lower other QX of expenses was offset non-GAAP $X.X by XXXX. gross in XXXX. expenses quarter to of $XX.X and on favorable of deferred million, operating basis the GAAP year-over-year compared operating expenses loss R&D million compared million non-GAAP operating quarter partially $XX.X prior the quarter-over-quarter mix was reported first quarter-over-quarter experienced driven to a and income income times, we quarter was in for gross which to and in quarter higher in one and result first in and affecting $X.X on compensation in was driven increases $XX.X a million and R&D also quarter-over-quarter potentially million reduced expenses. in in lower a margins. was of the in an operating lower quarter quarter our higher The year-over-year compensation On restructuring reduced primarily and was The and reduced million market to SG&A by one a $X.X R&D decreases legal and compared lower prior expenses. quarter-over-quarter operating of operating project GAAP marketing-related expense planned operating in the our travel and offset both in services SG&A, due by basis, deferred operating partially in $XX.X expense sales of The of XXXX million, related and SG&A, $X partially expense marketing one benefit a $X.X of operating attributable The $X.X expenses million prior and driven for non-GAAP increase

to Act fourth first XXXX of XXXX. quarter quarter and $X.XX prior the investment in first in investment and portfolio. net increases returns share one the $X.XX was for for The million million the the gains, the a of our and related $X.X per $X.X were to prior quarter to $X.X income other million, provision company’s XXXX. per of per by $X of tax quarter of million to and other share compared compared and were part the of related million, the XXXX. $X.X of quarter in income million to year-over-year share, quarter non-GAAP foreign Non-GAAP in increases the tax be $X.X prior share GAAP benefit $X.X in The claims, of and in quarter-over-quarter The net due QX assuming for and the by Earnings GAAP as net quarter deferred $X.XX non-GAAP the $XX compared XXXX per a continue assuming across were per increases Our as international related income of non-GAAP a first benefit market loss $X.XX partially XXXX. of in on prior XXXX. to reduced of XXXX. fair driven income The operations a realized compared loss million was XXXX offset million, current million currency million expense $X.XX calculations income those foreign income our the quarter both other the XXXX GAAP loss shift dilution $X.XX GAAP was CARES quarter in both portfolio quarter was dilution quarter basis jurisdictions. as as prior in a currency the XXXX in our were of in a first per to exchange higher of our share in and of for Non-GAAP was loss first one non-GAAP one in net a The valuation quarter higher non-GAAP value finalizing $X.X profitability benefits well of to tax benefits operations a on operating first in one the a the the of share, realized of share and the passage for $XXX,XXX, net quarter of quarter allowance. for generated as to quarter extent, XXXX to the in lesser offset domestic compared first was exchange first of gains. compared primarily of in quarter’s driven tax in from and the to loss expense carryback as by a as XXXX our by quarter changes primarily of an and the loss a filing of quarter $X.X in the quarter and $X.X in tax our quarter of expense EPS additional basis per million other finalization

cash securities million balance end $X.X On paying after unrestricted $XXX.X totaled in million the sheet, for and quarter marketable quarter. the at dividends

is year-over-year quarter, first quarter, the the compared days at days, DSOs of from year During and XXXX. we $XXX.X the The $XXX.X shipments mainly sales accounts operations. end volumes. quarter resulting $XXX.X prior quarter end million of XX million $XX.X were to receivable compared first variability timing end the XXXX in end generated million at the as cash of in quarter to at at quarter-over-quarter in end mix and in Net Net $XX.X million the XX to of of attributable customer trade of days the inventories XX XXXX. million and DSOs and the during quarter, at the QX was

quarter-over-quarter, preparation slightly buffer we and down to were in inventory and new inventories designed strategic carry purchases inventory continue aid supply continuity. ramp-ups to levels While higher product for

rates projected our will ordering gross expectations second range Looking business, quarter align quarter a of fluctuations second which as as the $XXX expect that pandemic, the component expect mix, quarter, nature our sales will continuing to XX% the COVID-XX patterns revenue to customer customer in of of the basis we base range international the ahead currency timing with and to the our margin of results. actual revenue in large our that Keeping the the well non-GAAP book million. the markets in next and supplies effects XXXX projects, demand, of from exchange on be million of may associated to sell, ship differences in to with the XX%. the After we variability the cause that ability material be of our between mind, considering $XXX we in and

our non-GAAP expenses basis quarter factors be non-GAAP in finally, for will significant macro second of XXXX be carriers COVID-XX pandemic, about $XX associated the anticipate of realized relative levels, broadband tax the expect potential in XXXX the second effects adoption to $XX environment adtran.com/investor. -- on the our million proportion corporate and services currency Investor additional spending and ongoing variability exchange will our the impacting rate the activity at distribution financial XXXX consolidated international revenue, the changes platforms, operating the be percentage in laws, in revenue also for availability, And believe We relative revenue earnings movements of tax mid-XXs rate. to Relations the and again, project at revenue low we channels. will a rollouts, component mix access inventory million. and We available Once information with enterprises, the quarter of is of rate total of rate to fluctuations professional the webpage ADTRAN’s for

to Now, I’ll turn it back Tom. over

Tom Stanton

Great. to up Christina, Thank open ready you, may questions any we’re have. for at point, people Mike. this

Operator

first Sachs. Goldman Rod of Instructions] line Hall [Operator from you. Thank question the comes from Your

line open. is Your

Rod Hall

guys. question. U.S. Hey, just a Xs in on visibility. Thank bit you Tier for dig picking the to my the wanted I little into

follow-up get chain visibility or as a I’ve I -- shortages got some a to the as We’re whether into the suppliers half X that. disruptions little starting supply guys other you hearing year. and people am you visibility Then to from that? improve chain Tier is that about how are look supply second And worried what seeing curious feel just you about of bit

Tom Stanton

little serious of that at orders, that ones been better larger think about a place feeling to I sure And Board the really pretty have the least constraints carriers the on we’re others. purchase good coming some are been they supply think than place not are trying forecasts do I than the that understand things have it. least at if more and in maybe past. typically,

pretty just visibility with would that’s across better say, Board Tier I the is X, much the that’s So and Board. not across

Rod Hall

could on. semiconductors, is see Okay. it -- customers Thank up you’re seeing and all on do that in you of guys coming that kind through on upward think freight if for Just or I thing respect? not here? and but just and you so your steel you think inflation Do that will on inflation pressure on then am the pressure just more comment different more do is underlying could you you, Tom. part other what take curious And the sorts of to margin? most pass you what’s costs and

Tom Stanton

take the take Well, if having mean, a overall I I let’s we’re purchasing look semiconductors to -- costs at the ability down. still drive out.

I on extent -- were this tariff. able those But to [Audio of to customer we be my some continue to that to onto to the that be So passing things actually some and do would accelerate things consider a be respects, these the semiconductor costs Gap] off the guess base? that would or

Rod Hall

All right. Thanks a lot. Okay.

Tom Stanton

Okay.

Operator

of next from comes Your question line George Notter from the Jefferies.

Your line is open.

George Notter

maybe And there very Thanks record bookings think sense guess, up? you end of is do us now? extending market backlog giving more much. a the of where visibility going I I is to number start number in right longer you bookings guys. Hi, mentioned a kind just book-to-bill Thanks. us or give the rate I question customers the some the consumption call, it start, at a or you or and give -- guess are think, dated of for Tom simply you is POs on also, then could earlier,

Tom Stanton

was I but I give a to typically don’t know giving how Mike, I say the about book-to-bill going without We give that don’t something -- but which don’t Yeah. you it, don’t answer that, off number. can we of that. is, anyways, -- you manage to the booking,

me strong it just Let a say booking quarter. was

this stronger first than booking COVID year of last at line in coming when was of this that. it actually part and had -- and uptick including So we is kind the was

feeling wise we’re bookings good. So

and further tell are future, customers into those much versus buying Now things buy I typically to the as our which quarter trying if year. do to the is we out, take commit try we really this that in out analysis scheduled will into them shipments that as how the is far far people you, to

If strong was a you remove it that, very quarter. booking still

trying only way can’t the can’t really I to effectively shelf to thing you keeping in -- there’s it their the on they that I put inventory well, Now and are shelves is, versus explicitly gauge tell that. our no

I from to over been -- is Although, is let’s coming Tier increase we’ve the strong. of say, seeing -- seeing that demand It’s of and the we what demand typical seeing. last, three didn’t it’s we’re very segment at look lot -- what not order very quarters, in have growth atypical. Xs been we a that is if out those just I mean, that we really growing

George Notter

Is Got a you that it. I coming think sales you Tier percentage And last sales us gave of QX? for X of give quarter set. from here could percentage number us customer guys there

Tom Stanton

know gave percentage of sales. if we don’t I a

was I $XX and year-over-year. it over million think $XX -- we grew it gave million or and sequentially

it’s course. now, So over that of number

George Notter

Great.

very Okay. you Thank much.

Tom Stanton

growth that not you’re other I one the phone know too. we -- did in about anymore, but the Hey. thing, thing, one segment And just talk on Okay.

So you can up -- that number you from may be to perspective. a come with able

George Notter

Okay.

Tom Stanton

Christine. Okay,

George Notter

Thank you.

Tom Stanton

Okay.

Operator

the line from Park. Michael Capital comes West next Your Genovese question of from

Your line is open.

Michael Genovese

Tom. Great. It’s Hi, WestPark Thanks. Hi, Mike. Capital.

year no question always business. room is completely? there come plan being first and the now it that’s it completely ahead talk in the to business of book-and-ship mean, changed, to question. a in nature first my is has you orders now a just So for my So question book-and-ship But I my -- used business, about a is

Tom Stanton

it be some nice no. would if it No. ways would in no, was, -- I but

a period right I where runner months us the supply have to or So you’re of But we things now and parts you’re a a to in selected and orders the from pieces now a our large six placing of into orders time. now, highest mean, if still majority are within want even constraint. ship they liable from two amount, them week for year not run come real

orders come and it’s more it’s we a of of would the still to us term shifted perspective, longer but majority -- in within -- still more and quarter the So our within they definitely -- I ship it’s say month. definitely them toward but the typically want

Michael Genovese

half you supply managing or X is for shortage, about demand there do is to When supply how business demand feel your are demand you’re look shortage year, Great. and thinking being the or in like of that? there at the projects for Tier a those balance -- second potential you you

Tom Stanton

at, infrastructure large Xs, it an if from perspective. we’re look Tier think, I you at by good and

you have almost product to by So type. go

the X you that’s been some in at look Tier coming If business forecast on Europe, time. that’s for

RGs true. we we’ve chain typically lined expecting I got like U.S., same into the up variability with half. In the the already increase So say, that is the from there’s would is forecast in that the we’re supply and the second for in predominantly things O&Ts. Where run and issues customer where that’s

through So we on end user is products those problems, devices, can run into the roof. because the demand for

It’s just of keep because did forecasting that’s problematic. type We combined customers XX% going -- that. been We’ve not roof. product forecast more it’s up but, was that the through up, like the yes, our year-over-year. it think to weren’t that’s I able

Michael Genovese

what like, is buy Does many you? of a -- customers that include Wi-Fi your percent of from meaningful your piece Wi-Fi business, that how X devices,

Tom Stanton

our the on itself A a X on got and RG The in is real material drive sudden that think count us far from we some course repercussion. that. O&T customers new percentage for anymore, place we for all so a relatively buy right? so they’re of been not -- Wi-Fi the have vendors everything large We is hurts again, to Wi-Fi of can’t starting we do It’s thing not our forecast handle the But on of got required and it’s we’ve demand. for out-stripping you us. up. we’ve here, just that So forecasted orders de-committing, -- chips that side. causes when you’ve us, got now Future

to So that fight we’re continuing challenge.

Michael Genovese

similar Is rate faster stuff at the than or the stuff? a growing O&T Wi-Fi

Tom Stanton

I yeah, it’s the the okay… I I But it’s actual those would -- SKUs. leading say, would say probably charge, have don’t breakout of

Michael Genovese

this quarter? is quarter final where I is question XQ but beat, margin final outperformance my too? so the point you color. -- better in My -- than line the this just attribute a appreciate in guided And you all in -- question the performance You just of gross is do

Tom Stanton

a mix. It was Mix.

Michael Genovese

mean mix You or that be or mixed domestic domestic mix would or mix?

Tom Stanton

just Xs to you that a probably, the Because going No. question think So we it yes. mean, I a It right? be. There lot of definitely could saw, -- that roof No. if through is and it was is of infrastructure the well, the Tier growth your answer good was business, are mix.

Michael Genovese

Thank you.

Tom Stanton

Okay.

Operator

from line Capital. Savageaux of next from Tim Your comes Northland the question

Your line open. is

Tim Savageaux

Hi. of over the was have And X U.S. very on of you One status a while, in in the question you year was any under last and this move or business year you I more some customer Xs and customer. Tier I Good if follow-up, XX% two since three. broadly XX% re-attain characterize year. historic excluding think, expect Tier the then on service year? you morning while, XX% long a growth, assuming and your I that And U.S. a we your customers, do had last any wonder on wonder congrats could I if your speaking, had historic without to comments been growth, as you’ve think it’s terms bookings. a maybe quarter provider then especially

Tom Stanton

Yeah.

question. good a that’s So

let’s So in talk Tier the Xs about U.S.

the actually just So in of kind U.S. say could I and North Xs America. the Tier --

Mexico. has what in happened include let’s So

in the our seeing is are seeing those also say, those things Xs that. Tier in think But sight we lot You’re market are PON lose a Tier Xs. a copper share and we of happen. in One PON shipments growing I business and decline of let’s people two

we a if have seeing so have, roof, we through call copper, our that did today would definitely growth not business, right, numbers number you be our -- the but could that legacy So decline. business, copper it you’re legacy

and don’t is have of fiber think statement is I if I I know business. At -- point in [ph]. time, this XX% over that in our

ago, business. If than it back you can was a less XX% look of our year

in Tier fiber the in copper, you’re that while some course is that of So business affecting decline you’re of seeing Xs. growth huge seeing the and

And… answers And I question if so know don’t not, that or your so.

Tim Savageaux

great. That’s Yeah.

And broadband perhaps quarter? if II for whether can in different know to whether to don’t we point you the booking QX at regard you whether revenue-wise comment follow-up, there’s fairly and any expect just record revenue quarter some saw saw might has I what to into we from any, booking what’s on standpoint? to what reasonably CAF a overall that a of if in booking could and a you adjusting bookings assume Just with continued sort record there’s that’s character strength. services strength after or seeing soon some similar

Tom Stanton

Yeah.

way, So, the by answer your question. last I finish didn’t to the

that. So just kind let finish of me

we in the know, of award, a Tier a in for you shipping that the of second expect to as year. XGS one won X source here sole award things half is we U.S. start did which is So those the That

after So business point. X I Tier that trajectory the you’ll see change think

that’s On problem the bookings yeah, what supply. strength, right is biggest -- now our

Our problem is not bookings.

the a out So the significant I dependent in that do, take actually I falls and largely actually, real to happen the that mean, of to customers thing same gets happen we amount where to is the sight of to have with has better. is it thing that in it we QX record third And when I don’t quarter QX. quarter. walked this wanted when And orders as going can a think upon for line will same to cure of

ability dependent So to I think product. on our supply it’s highly

Tim Savageaux

much. Okay. Thanks very

Tom Stanton

Okay.

Operator

the comes Your of Cowen. Silverstein from from Paul line next question

Your line is open.

Paul Silverstein

impact but guys. RDOF extent? an if what apologize expect Thanks did and have said and first Tom, when off, you you address you I already to this, to

Tom Stanton

didn’t. I I year. would way, be some shipments the surprised have customers. I start would good by bigger But a ramp we really this second I the the in there’s a that. an seeing half it haven’t we’ll large seeing not the that -- think in We and customers the we’ll course, sure of of that some the of the smaller of half there’s, of year. line didn’t if good already some a we so customer No. don’t seeing sight in U.S. -- am second to chance hopefully of in RDOF this -- I we’re start to incumbent start But seen not

Paul Silverstein

impact that think do it it’s have level year meaningful confidence too to as you or So a much say a what… have will to next do you a is -- given

Tom Stanton

as should next It next but of impact. should course, impact Yeah. tailwind nice It yes. have time a have longer have meaningful to meaningful Yeah. know, a build, be should you it a They a year. year,

Paul Silverstein

think, you gross from which about been term is line, you’ve margin then, Mike, again, ask this. on I do All apologize, candid standpoint quarter, margin right. a I the very I And so this question every I’ll longer it but ask

of they large given structure that equal, us? said lower I have you you large Xs, these to think the expect long-term things of been that model historically in will you at case But All historically the projects probably of XXs. remain as volumes? drive margin of margin least does non-U.S. out as assuming -- low terms those to ones some impacts least the at one or advertised look do in prospective these the the being for as model Tier projects it think in consistently come -- should lower that has you’ve

Mike Foliano

No. same the what in low-to-mid It’s Paul, the think, it’s XXs. still said past. as I’ve I

us I that I additional a driving middle And it’s Xs, through those So looking well. gives start as the of can Tier volume of at a that little the take if range. bit tailwind think, you

there’s model. forward, no going change plans think same I So our that in really still to

Tom Stanton

mean, mitigated. Europe, is been put two in I I that would also going add, -- was affect on Paul, lightly, predatory, I to One has that pricing other think things predatory there there’s it somewhat us.

haven’t types to And we But type where a Europe case margins historically. I today the sustainable we yet think have that wasn’t of that positive of So then out you, our the tried business around. numbers I margins in predominantly positive will, customer the point. impact some haven’t forecasted kicking the and margins, is this at start at really XX% base, gross which -- and really Xs Tier that here being point, up we is in U.S., that very that but SaaS put draw we basically mean, have that XX% customer I think, year-over-year

Paul Silverstein

one question, have projected them on. these of particular panning XX is quick last it. respect extent Tom, to the projects any Got there days may. to It’s out to if insight customers you? in terms I large the further incremental I with only mean… And that But

Tom Stanton

Yeah. Yeah.

Paul Silverstein

have more? XX you days …

Tom Stanton

I mean on everything there. start half There’s Yeah. Yeah. to seeing second still, shipping the we’re getting Right. ramp of from planning in no still is this changes real there. year and them then

there’s So material change. no

Paul Silverstein

appreciate guys. I it. Thanks,

Tom Stanton

at right. I to joining time. the At you next for to talking point, Okay. this everybody this going to appreciate and look call. we’re us All I forward quarter end

Operator

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

disconnect. may You now

ADTRAN (ADTN) 9 May 212021 Q1 Earnings call transcript