ADTN - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to ADTRAN's First Quarter 2022 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 unknown.

However, these statements involve risks and uncertainties, including the continued spread and extent of the impact of the COVID-19 global pandemic, the ability of component supplies to align with customer demand, the successful development and market acceptance of our products, competition in the market for such products, the product and channel mix, component costs, freight and logistic costs, manufacturing efficiencies and other risks detailed in our Annual Report on Form 10-K for the year ended December 31, 2021, and our quarterly report on Form 10-Q for the quarter ended March 31, 2022. could the results be forward-looking the uncertainties from differ made and call. in those statements, risks cause to actual materially during These which may Tom turn now call pleasure is Executive to It over of my to Stanton, ADTRAN. Chief Officer the ahead. go please Sir,

Tom Stanton

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

the key questions mesh adoption quarterly of we Following continues networks, the fiber you financial our diverse Europe. broadband the markets in driven solutions, my will Wi-Fi providers opening and home continued with and buildup then any remarks, with service detail US record our QX This to deployment the solutions will have. of across review take paired demand tools. in of demand of that Mike may and a in by growth trend cloud-based fiber of performance the our mix be for the automation network massive broadband

of platforms and in ramp quarter X was regional Fiber shipments diverse providers key of year-over-year. the and XX% US XX% customers. up following. expected Overall access revenue mix Some for was led included by highlights service year-over-year, included a Tier up the the Europe revenue the in the to

X platforms XX% residential shipments year-over-year, Wi-Fi up latest were mesh systems. Our of Wi-Fi led by our volume

America region. growing backlog Tier XXXX, share XX-gig Omdia In footprint customers following XX-gig combined. EMEA, six and closest in in X SaaS Tier platform. fiber shipped reports two fiber European QX XX% customers our in our award with customer both with of X our EMEA ports growth for in of Dell'Oro rapid bringing a launch provider up are additional from We SDX US-based total access fiber our Continued market next capture North OLT highlights with the secured Mosaic more success of and This the base, the an latest platform, the to One platforms. the service ADTRAN our than vendors continued access fiber year-over-year,

of Tier fiber applications. a our SaaS mesh home ramping and Europe, US solutions three with a pace US service platforms US; are is our quarter: this full success we In these service our strategic fiber Lastly, fiber pay X growth to and of turn, highlighting US a geographic increasing revenue demand the portfolio with The provider; X by access the off. broad sustained continued providers range had partner business driving continued increasingly Wi-Fi we continual quarter investments segments, platforms software along and customer we our fiber had a distribution XX Tier in customers serves X providers -- provider service service was Tier and the access diversification. continued in in that footprint in of ADTRAN a a our of rapid solutions across capture. hundreds customers. selecting Service the regional European and due our perspective, From for base as in access, regional for across success connected driven to providers XX% broadband the and

open has and two our platform This platforms. technology XXX% leadership access past disaggregated by business. over the fiber access XX-gig now been in grown dominates years Our and fiber investment our has access in our success market revenue in driven

XX% a fiber fiber pull-through mesh has in access SaaS applications revenue XX% CPE driven up platforms, increase year-over-year. up in sharp year-over-year and and success Wi-Fi Our for

profitability and mesh SaaS growth higher adopt Wi-Fi these during growth even see business Mosaic areas ahead, supply quarters in to constraints revenue X potential One fiber to chain rates impacted expect the quarter. limit platform. in despite our that segments, platforms in continue XX-gig our the as We our strategic providers more our successfully the our these grew CPE and We market service negatively

expect constraints portfolio on reduce consolidation our outlook chain purchases. chain Despite our the and To material quarters, profitability the optimization, issues impact in to supply industry-wide of to we continue. continue supply cost these remains drive challenges, We the positive. future

have to and broad continue broad-based in fiber We with success across customers capture the footprint of mix US a EMEA.

X during Tier another track operator with customers to the fiber Our deployment customers European quarter. business continues and existing customer ramp award X on large-scale existing Tier -- and for

service fiber opportunities. Tier adoption have access high also continued customers of across We solutions, complete performance. portfolio cloud strong of and driving home funnel regional of growth connected providers strong synergistic software their X a high-scale product have rates additional very and a quarters These our robust SaaS opportunities for of high and multi-gig access a funnel strong of six With customers, mesh customer to a in backlog the ahead. fiber expect our we WiFi these -- these segments for outlook healthy remain segments. high-growth remain mode to platforms,

for generationally their In like ARPA. the scalable time environment is we sustainable when are of fiber and lead that occurring the future increased significant spending funds $XX.X begun similar opportunities. Our and a spending will broadband broadband of of the drive the to portfolio US. deployment broadband that helping in all be In Germany cycle high-growth customer are of US, a spending diversification strong UK Investment to Europe, to is funding infrastructure at fiber Infrastructure Act see continue released success efficient the in investment Jobs enhancements the funding billion Meanwhile, networks. to in more increases have part funding deployment and we drive the and RDOF networks. tens buildings significant and This comes and seeing as in here for to countries

very market-leading shift positioned fiber a vendors. shift operators transitions, presence these well Europe. high-risk they and to given away continue from While is ADTRAN strong these networks, fiber to and benefit portfolio to from next-generation access in growing our

presence, ADVA. I of We on you the remain combination Speaking update business track. to that on want with

before last foreign which investment approval, with closing. close process the expected obtain officials expected in The to as FDI is approval, progressing reach We diligently direct is working QX. are must we with German milestone

further are Our fiber we in networking. around by this of offered Both two our combination. demand to expect making to and continuing the increased chain grow leaders In progress, their we a summary, diversified optimism product funding, with supply proposed portfolio seeing portfolios companies are the demand, for base record continues a customer accelerate record complementary great portfolio. despite constraints, differentiated through combination customer synergies strategic and

will track growth provide financials. for year. background, We and added with are review you With of on a that details some Mike this our

may remarks, Mike's I questions Following you will have. happy any to open up Mike? to be

Mike Foliano

present segment XXXX slightly our will the for the our and I sales expectations category, Tom certain both ADTRAN's quarter. web discussing also by provide driven up presented in Relations of first good GAAP Thank our our came prior to Aggregation I'll our revenue results which schedules on quarter, from & morning and revenue and our results page I'll you, information all. financial referencing on page first press portfolio categories. non-GAAP today. $XXX.X both solutions and and be subscriber investors.adtran.com. experience supplemental financial second Investor reconciliations XXXX at be the million, at higher quarter The in release with cover by schedules quarter supplemental in and Access and

XX% increased all increases by XX% basis, and XX% and regional revenue year-over-year. year-over-year On grew revenue categories. grew in international segments domestic a with quarter by First revenue

as had chain XXXX, to in margin slight logistics supply and experience and is schedules, gross of manufacturing quarter first both The and decrease as our chain primarily decreases partially expenses, reflected quarter-over-quarter of a higher were margin increased margin, the continue gross gross increased by in costs. abnormally non-GAAP supply and sales product both absorption. to year-over-year in offset and the non-GAAP high GAAP the volume attributable which mix, result we supplemental GAAP For customer we

GAAP in travel labor market-driven GAAP we partially To and mainly While the are by higher expenses. The non-GAAP and and expenses, The on expenses, operating the was acquisition-related operating Shifting benefits compensation first offset context legal decrease in GAAP marketing, project benefits do fringe in due The in acquisition-related and the engineering GAAP realized the fees the prior tax improvements quarter-over-quarter year-over-year lower increased. to result to offset GAAP were actively by the operating we our and were and year-over-year gross freight expenses compensation The travel of and increase with was rate and and primarily project a quarter-over-quarter allowance. the basis operating improvement expense, volume compensation to lower in exchange decrease of statement expenses primarily to quarter-over-quarter The fluctuations. chain market-driven The marketing driven income while margin our in spending for increases currency expense to its year-over-year driven and of in company's deferred beginning GAAP was expenses. effect on we non-GAAP engineering of focused labor of decrease higher slightly chain in capitalize results. investments, deferred market-driven estimated quarter-over-quarter and The year-over-year our expense. labor, partially costs, market-driven fringe component by higher expenses. attributable decrease year-over-year and he and sales non-GAAP supply deferred and and valuation operating anticipate R&D Closing driven a lower losses currency the continued legal year-over-year result quarter-over-quarter profitability cost challenges. also expenses the lower quarter-over-quarter expenses, requirement sales improvement. profitability. gains expenses by losses to expenses, expenses, fluctuations. volume position portfolio our operating investment was quarter decreased year operating contributing managing expenses, year-over-year exchange labor, to expenses decreases result non-GAAP The insurance non-GAAP remain US decreases marketing lower higher out provide to income expedite the partially lower quarter's related was improvement expenses year-over-year. operating in was offset of compensation, in XXXX expenses expenses in on non-GAAP $X.X by profitability by year-over-year a benefit variable to realized profitability constraints, of our first quarter-over-quarter non-GAAP our other goods a compared foreign market-driven in higher mainly operating constraints. was lower income, in higher change as annual due on The basis supply and in higher due and Other in result both a the sold to foreign on non-GAAP related our and and decreased dividend operating million, XXXX were

GAAP a $X.XX Non-GAAP income $X.X share per XXXX's dilution. was with of dilution. loss million assuming earnings quarter million assuming first was non-GAAP per The or $X.XX share net $X.X net loss of

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

at at inventories end XXXX the million at the of DSOs XXXX. For the $X.X to fourth the million to end cash from days generated in of end resulting compared in days at XX quarter million $XXX.X of the quarter Net quarter $XXX.X in Net trade we were XXXX. days first compared XX of accounts first end the XX the $XXX.X was of million quarter operations. prior quarter and quarter receivable in the million QX $XXX.X and of

of disruptions, in supply minimize continue extremely higher We level component to electronic as carry raw inventory to materials extended and lead challenging given the a times. associated the market we work

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

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

Now Tom I'll over take to turn back we'll questions. and it your

Tom Stanton

Mike. Thanks, open may up questions ready to at any point, right. people we're All have. Pam, this for

Operator

question Rod Hall the The Please Instructions] Goldman of [Operator first is from line Sachs. proceed. with

Bala Reddy

quarter-on-quarter than Hi. Thanks on this this this color talk maybe other This taking inventory revenues then, June better expecting. here, sequential the thing that my what guidance gives And really on? especially about is want in any a to for guidance or you for and in in maybe Is environment? provide for you on environment. Congrats increase good were Reddy you you quarter. build questions. confidence, more see quarter you really Bala that it's Tom, this Rob. And would could what

Tom Stanton

as Well, up. know, sure. been to trying material Yes inventories you both raw goods. increase in inventories finished And and our we've are

purchase piece quickly, ship I next that second turning we We'll gotten haven't impact And We ameliorated. orders up. problems been firm earlier we're raw fairly it's you we really general. in The somewhat a an more a are this have less in us a we able -- material than placed been And to We're the think of to And of finished we supply-constrained. more brought It's better on position silicon de-commits last this position. get better really the all year at be so that really cycle, forward. we are -- don't to some of to quarter goods Our going are beginning we any had starting supplies. demand-constrained. seeing with definitely more know, have going quarter. as definitely in in feel of complicated of

have on doing on a us teams want And working on them been a I to We big basis. to giving redesigns thank say They've job. constant fantastic alternatives. you

we're being think into environment environment just we're this settling of kind that dealt in to the I execute able So with. and

Bala Reddy

Got it.

lower So de-commits.

that. many you're Now that's looks they've interesting That's companies month not really in increase because had a reporting good. in that de-commits we March, have the like seen it of sharp but seeing

strong wins. your you could you, Tier maybe like follow-up, a clearly wins bunch As the Europe, especially in got XX follow-up year -- momentum as a X had customer you talk for is of to that about past if months a

from Any about are you onwards As RFPs projects you more really also are helpful. be on ramping those there are the step the then it think maybe to, revenue about would that that next expecting more on capturing for is there are waiting or focusing you're scale you are structure and you you, for? thinking here more color

Tom Stanton

Yes, sure.

I is we different the hoping those think where all is case of were but end drive pretty ones going we're much with yeah, to And previously So were up. this starting typically that are the announced for now. we ones which line shipments multiple all in that they have to not environment

we All shouldn't had. issues that in large of orders started to the have them year but pretty of line constraint them make online. all of just that them say, were sure coming supply placing number -- they're a for purchase much I they last had And

just they major or not come need -- because sure decision any to make couple would vendor point of the or There to to there. this have carrier been There's expect isn't the the reason. Europe But of still right definitely -- on decisions. technology in of stalled out make in to have opportunities or be large are for that make at in they're are they portfolio. to vendor because a having, going hiccups would this still real several that I either, of trying those no So their that that them that launch ones are lineup existing that kind phase. A positioning

nothing there. So, slowing down is

not -- our that just focus. the make is sure don't really that's you the only want thing missed I On other that to

to in growing range space drive roughly We and X in the forever. space. there's That no X space. that XX%-plus the continue been into slowdown has Tier And Tier

So yet the feeling all have we're about still come, then, funding. we the funding And right, that. good to stimulus

Bala Reddy

how seeing Right, Thank helpful. Any improving. me, would that for should doesn't the makes Last about margins quarter-over-quarter terms. maybe mix. revenue gross for chain like product gross you. question In or a supply is worsening there scale margins think sense. at from and in down flat year? are be context, color in we nearly half customer second Obviously you it sound flattish slightly situation least But of

Tom Stanton

probably at down some is point kind efficiencies second that some trying but difficult those in in there's, will of this factory Yeah, really nail to environment. the come half, in

it deviation to we from we're grow environment best too to able So is, going we tick-up trying I But of the a way a continues that. may to that I to about forecast. grow. our this whatever to customers And see continue year the as ahead which headlights and and mean, not paying, keep paying to revenue on through happy fully fees expedite be think in see and don't that's in have we're by what you we're something expect. managing

Bala Reddy

much. so Thanks enough. Fair

Tom Stanton

Okay.

Operator

Rosenblatt Hall. is Mr. the next The you, Thank Securities. of line Please Michael question from proceed. Genovese with

Michael Genovese

much. Great. Thank very you

your are. dangerous mean you've the first gross in you thoughts current a when Just about margins to make might talking that past this. think questions. it's I like guess what XX% get and the I to guesses back about I know range, we've I talked been of couple a or lot on the But

update for So, ask could there? I an

Tom Stanton

this. to just Mike on in get me Let step

Mike Foliano

modeling the through been supply year to issues as past of through I'm some is it the tell. a last a say think lot as really of normalized hearing that is be these the have Yes, folks we going when end through get these just issues rate. happen. hard next to we that that that I The quarter-over-quarter return should go to minor year. middle is figuring the we said It really able And hard as part in more improvement through just then of out we I year. know the to

there that when navigating assuming to So, we agreement as that really changes we in low to better that each But in big get see happen. XXs I'm little improvement back point. hard environment this no we actually get minor bit quarter a this other should just is tell at are

Tom Stanton

agree. I

I well think managing something problem if the I is the environment the not now. volatility -- the environment. in we're think It's

I of throw is in get a in works. our think the Shenzhen can COVID the situation going to But that management actually better. wrench

So, are those things more probably the worrisome. are that

Michael Genovese

so in And it is I'm XX%-er. what customer customer has from then your Europe copper And in transitioned new US perspective it was customer to and the I XX%-er a seeing then as fairly Okay. European it new a like a looks fiber customer a long-time is -- think.

that of any else this should possibly think then being as or a lists be these your recent of the we or with customer XX% wins year customer new -- wins XX% or an So, next? a is there is -- understanding? And correct fiber who opportunity in this could

Tom Stanton

Tier the that been near phenomenal. I rate we X always the right has have US think I there here list. X on that XX% and think partners several also XX% European there in growth think couple And the and that could are there's Tier watermark. that are the a distribution I customers be

the to hurts variability. is down like key that right that XX% hoping that some think rest get We're sure I to of have to we business the you'll orders got not where we've not just So, past. And turn is the a make and had your to focus. the has in to because customer see

think the that answer from kind So, to that yes, of continue question see quarter-to-quarter. your I is to change you'll

Michael Genovese

do is as you for that I your one into, it Are go go a competitors guess that me. or my be--? there that do software I out recently made direction other is, M&A you through last like in-home guess a of acquisition. could or then And one you question it SaaS there organically, you could think of would And I companies Great. I think WiFi that there? are guess

Tom Stanton

mean to able I have We would to be now be the right show it -- nice you product.

now best WiFi right the in-home that's We there. solution out have

bridge. crossed we've that So, already

yes, to developments not continue We But and to do portfolio. on a hole that's our work continue in current that.

Michael Genovese

Is that or could ADTRAN the I have ask solution, Plume when you you is an that best? If then. Okay. plus a an solution follow-up ADTRAN say there

Tom Stanton

I'll say -- We portfolio there. let's But is just that's so solutions. have out say multiple our the just -- strongest

Michael Genovese

talking the and Okay, fair on forward look enough. questions back. Thanks. call the to I appreciate

Operator

next question with Please Tieton line Thank you. Bill The is of the from Dezellem proceed. Capital.

Bill Dezellem

questions. of couple A you. Thank

the to relative supply to And chain, So, quarter it factors. First from which you from couple are an the result now perspective one improving, enough ago? up to revenues a of the had months second like reference have the it I'm finally did is is Is or your more bigger has decommits first ordering you wondering the of planning the all, quarter? the the of relative supply months did impact. ramping a that

Tom Stanton

They both an have impact.

silicon of know difficult there that of the And shored ancillary pieces you kind been definitely these then get. pieces. to have So, has silicon as have are seems to are the smaller ordering up major very that

-- like lot doing a earlier I redesigns. have lot a mentioned question, we're in of We an

been on right we've been we're for five redesign that's definitely feels using can't of this. finding, getting -- the we mean happen. that but a -- two to So, When we an we ourselves if make that chip. an And get into That there's we're still a And just have now. have -- commitment I can't years to that we're the going a in decommit still in doing doesn't sure quarter. effort general. they new ongoing things say position. problem It putting get chip right last One we a that. a mean don't thing just very is get large that I we're they to doing we And there's ongoing the serious, to effort start then happened if happen

got so you the hoping. better. you're that commitment, has just never just And gotten So,

we more from significantly say, now more committed vendors. three run then, our still has And of two than, got we -- So ago. dates it our quarters or dates We've into problems as we're attuned basically get customer at as and redesigns people allowing through network. to expedited just their throwing quickly very this. an to is base let's redesigning pipeline commitment process into to these They're The possible.

said, at So, gotten a think, I that's probably like I we've myopic. better little it being but

with think I customers and better situation. us our gotten have the

And so it's both of kind those. of

Bill Dezellem

Tom. helpful What are expect would them? to on of is That's remainder the going in kind in revenue to basis that be And meaningfully the either meaningful. over a incremental from be you secondarily, then going you are projects or would that the And/or this ramping differential large that aggregate quarterly the ramping of projects highlight year? are that revenue

Tom Stanton

there's going of I difficult That's really you different different and because There's let's question, maybe ramp ramps. think kind -- -- been three so four that's such know ramps. on, a there's -- know But that. the about

let me first ramp. the Okay? So do

that our I've supply constraints results. in on. affect I've substantially booking Tier which Tier and movement, supply chain to got is in pile tons current got material chain growth continues is, The incredibly much not Any one right? X Then backlog the first of will second but ramp, is movement ease. ease these X

to phenomenal So it chain at it ease, rate. but continues a supply grow takes some

growing I Then, it's a online. on are ramp that's strong that very like it's -- business. on have launched. got right? year-over-year the It's It's still Tier not now one so mean come that's a basis, in just X just it's recently a So Those I've basis, year-over-year flat. right, XXs

to they the Tier and continue come new through there'll -- dotted that most will online. Tier actually of into probably I be you forecast, there's have get Those I the get know there's are year. the some Xs some year because difficult lab to kind Those cycles So -- ramp. are some and have are then And next early that throughout new I'm to Xs sure that stuff.

So time least that level. the be for takes them ones those other get you, honest the deterministic. to ramp But revenue a because dwarf to are material to it a material with anyways,

It's you're have The ramps. you're this year, really forecast a of chain potential not see to supply we us about availability. potential. all what us going about the seeing is and So is lot what forecast throughout the

Bill Dezellem

last taking So, comment. that

So -- essentially let's question of the identify that trying the in, misplaced million and X my remainder that's say you the quarters. anticipate the say, of or the over $X to $XX Tier coming is just revenue whether incremental would million adding ramps year

a really going because question that's saying limiting You're The the factor. chain, wrong with the that's question. supply is what's to happen

Tom Stanton

for Yes, absolutely. some And it will be time.

right? of about you're Which about all it's this if you. me supply can't tell if talking is to a next if But to going me, that's -- availability. end ask so, you're middle great year be, you're question And I or asking tell what the of chain year year next

Bill Dezellem

Okay. it. you that. me follow-on told question since my I Thank appreciate And you then answer you. negated wouldn't you

thank So time. much you the very for

Tom Stanton

Okay. right. All

Operator

Essi Thank William proceed. with the Paul Woodruff. Please of question K. Mr. The next Dezellem. is line from you,

Paul Essi

much told residential to service taking seem the Not that to SaaS, these million I users. fair And number? as growth you'd your a end about platforms, months you about for users six Is point. wanted on on at be providers it end follow-up this my but would rates me based X.X end us Thank of very you question. one users. the million go you ago pay you had

Tom Stanton

ballpark really in Yeah. I the number. I'll that fair though. be number of with a don't but probably that you, That's But have sounds honest right me, in front

Paul Essi

you this could we that do you Yeah. pushing down? that some think where chain of give given you And sense much Okay. million? you point Can then maybe been Are two slowed in how the situation, supply us time? at have

Tom Stanton

that you isn't right? be that signing constraints million signing isn't. for knowing as SaaS X.X material And is is up supply chain to directly have they're they're because are So The the correlated, going constraints for directly services – up everywhere. everywhere people it really are SaaS capabilities services, it for of as isn't hampered, low. signing up getting and It there that kind

So, necessarily about not point what when about volume you subscribers right actually you're any shipping at just talk of talking you're time. in

So, analysis. but done backlog BPG is service that's don't know. SaaS answer never huge. that, on that, know. know the associated with net the our really I don't I I've that I is

Paul Essi

Good.

– And of backlog that Okay. what rate on forward penetration for going expect to the you would type SaaS?

Tom Stanton

let's mean, – here I the large. are again, very – piece. have about customers. rate SaaS so penetration some I all we you're that's just mean, product – I That's know, say are of of them there both

just little me of color on a that. you give bit Let

European newest amount dilutes CPE number order do of amount has that. because customer significant on large very of that our instance, which customer CPE, and significant they a won't buys For a a

So got about most me. Tier that space services, of you front you're rate. SaaS really Tier very X when Tier number that I have in the to predominantly a and bring to the it really down got talking attachment don't just has X, space. And X But high

Paul Essi

or that is both? to that did Okay. Xs, you're I say, you Tier Is to hear expecting due to due the that fair. And That's accelerate? the or Tier Xs,

Tom Stanton

predominantly in Xs. as Tier There's that but Predominantly Tier some well, Tier X Xs.

Paul Essi

Okay.

XX% XX% or could accelerate this So rate growth forward? going see we

Tom Stanton

Yes.

answer said is think yes. The right? I I But XX%, yes.

Paul Essi

guys enough Okay. to page question you SaaS? as this do disclose go comfortable subject. on this on you And more information last be When you'll feel

Tom Stanton

what you to got be supply chain be to could have on before point some material and on it's little versus your And be going a us things. sell hurting is It two predictability can selling. that bit to what you will – predictable. you when are what It's we

it'd I don't time soon. would hope but frame fairly on be direct I So a that, have

Paul Essi

Okay. Tier X Last run solution, into wireless especially Tarana? of Their question. sight the Have Thank in line you. you area?

Tom Stanton

know, know them run I run I if but really I long don't – around them into into we for really some no. think much. don't mean, I been a and they're doing we time, they've

Paul Essi

you Thank Okay. much. very

Tom Stanton

All Okay. right.

Paul Essi

all That's have. I

Tom Stanton

All right.

Operator

is with next Essi. Please from question line Capital. Mr. Savageaux you, Thank Tim Northland the proceed. The of

Tim Savageaux

this you brought there. dozen brings bucket can to that and give in terms us got number those aggregate? the leveraging color would in spend put it the that kind you noise any if I And off in those think here to many recent X the on aggregate. will the guess pacing European question about homes half maybe about me. you Good metrics four, of morning. win number either from win some how any I've background talked deal or answer the your others new about six recent in passed The of that you aggregate three you've ramp the said or already relative Of six, I forgive I rollouts? guess, this versus of Tier you in,

Tom Stanton

Okay.

Europe the however it. question So some then And this all, of one, we to X carrier. are we without I in I the limited. one, material I remember guess and much bucket national I'm as your it's get. a first year define newest answer four the on say right are that's Eastern then all get supply until to question. be trying can the bucket year. I can not literally first say, carrier be ramping of and names on Tier third you next would here your can't trying kind I because all defining can't or accurate, as just they're it coming And but approvals. mean, others in the off color say, backwards, running And six, that we're they two some will I get really of and and to

Tim Savageaux

– think I that. good. got Well, if so it's neither I'll no can I Well, can we see all I

the sequential QX in Is there what any talked particular? what's guide, you those Tier about you growth Xs. strong, as about -- factors that others? categories pretty the at that talked X, sequential X that Tier to bias rural as Looking You've any driving Tier between growth driving X, consider are which two or is what's outlook

Tom Stanton

in No. segments. orders unlimited availability. We've of effectively all material about It's got those all

in we at based will we the European because strongest end So off the this and we because our base. be whatever But won't supply US. quarter this what of the thought allocated saying, the will requirements to we of of and that of is demand were the Xs where It customer orders. be Xs, where up within Tier versus Tier end ship is Xs Tier

Tim Savageaux

the and outlook. Thanks congrats Great. on

Tom Stanton

you. thank Okay,

Operator

question is proceed. the Savageaux. from with Loop Thank The Please you, Capital. Mr. Fahad line of next Najam

Fahad Najam

we Anything right? could kind peak your million. see Tom, will has question. I'm chain thinking you the that what is tomorrow, think just to quarterly -- right? inflection my Component taking if we with revenue figure And supply you of, today, that? trying for think, us? the you an I been even your you know around years or share going shortages about. -- assuming at Thank story revenue But if point. shortages what's all ask because look can $XXX probably I revenue Do never peak last that out see XX over were So you reason the you do possibly goes, labor forward improves you can the how top

Tom Stanton

is, Yes, sure. The yes. to your answer question

we think I million. that will surpass $XXX

Fahad Najam

function that is fundamentally of the ship there through or because a higher because think that to is capacity is pricing, that more system? more And you volumes

Tom Stanton

we even been mean Eke to number. of bit will is our there current that out continuing a think continuing I through process been have better and we're thought a grow we've I may we soft be to Yes. be And it. able out surpass little Yes. eke to that at continuing turn. growth. get to But

Fahad Najam

I on. appreciate it. then I follow-up a And have

what's has In improved share the worse? the the improving, to in can in and dynamics? you shortages of gotten materially what's days? of terms it's component us impressive Anything the improving guide, peers. in with the that not can your terms XX very at with us of or relative last share least Anything you over definitely What's terms

Tom Stanton

like some covered and and the problem -- in been has a it's chips. just that relatively predictable. kind problematic. the of there was so but what's QX I right? you -- of capacitor around has stable clue significant Then of but same significant that supplies the parts power more the pull-outs. problem a use that that in silicon on redesigns in year We last I, and is of of, do the -- some But headline to to effort that continue couple stated just things. call, that, bit So this really times Those continued I've this little be do more And things with had are that's a the get more can to Yes. fewer where where don't a complicated but doing. just we and chip QX, there can feels inexpensive more logic, and real term have we're it -- use get what a you of have where resistor rid times changed

really semiconductor So effectively are available. design lead trying that of to a the products with thing of made just it's little I not out first just -- that had better. hitting industry place, XX-week in that that coupled just think, has that And kind on it put time

Fahad Najam

have I then And it. Got follow-up. one

us So terms extent that across your shortages you're more you supply Are that your that are Are that? probably towards all product in with more your allocating of can you you more passive component universal seeing higher-margin the products? a the optimization? your portfolio. to components basic Anything shifting share towards higher-revenue maybe supply of of

Tom Stanton

mode process. think don't want -- to I this in not in really a we optimize through We're or No. because lose position to customers really margins we're a

So of mix we're a shipping requirements reflective think strongest -- where we are. the that's it's really

you gross -- to do trying we're about it's the not how meet get demand. really So up not it's really customer -- margin

Fahad Najam

Thank Appreciate you. the answers.

Tom Stanton

Okay.

Operator

Orin you, is proceed. Please next AIGH. Najam. The with Hirschman from Thank Mr. question the line of

Orin Hirschman

How you? Hi. are

Tom Stanton

Good.

Orin Hirschman

Good.

XXs margins couple back gross a questions. the getting of terms In into of

through And say, that then Why push three your push making the help availability also higher, why X%? show and C do higher? eases, that to the does B when your is increase enough margins of it's help X% put the Let's in last question software revenues to going question begin your you will price I to price just to increases assume themselves? And how it to an Part of gross meaningful going eases is book C part really let's gross start to but begin to margins? understand the is, that on increases dramatically. gross margins that Part your margin from impact become really it when to component start on

Tom Stanton

it me one little first bit Let then just to over your turn Mike. on I'll touch a and

XXs would it that at a feel fees we we we reason the freight be expedite in that is, on the actually the overages that the can basis and So because pay quarterly look margins those those we're two yes, And on XX%. we elements two quarterly are our, above let's our a say, impacts to today from paying gross cost, if subtract subtract basis. our

black commitments, yes, the If before. overages, Mike, we're and all not just saying there's right? had commitments already that fees current those the or about that we're some we silicon their it's and about charging subtract market we to that know can think gray above meet extra increases, to that? is the color talking freight buy have or fees So chain. the on -- -- supply costs been on pay on we price get any to are but we and So, extra we -- they there, people XX, this you

Mike Foliano

Yes.

when to us I costing be to we to charge fees to that what -- to extra able customers then able to to points get these think it's same be components. said be it's -- presented keep pay able materials all quarter we to around actually and what able of the last roughly these as is all expedite seven are percentage our be

is we that But at little are some that a expecting also better at we're point? that trouble that closely, normalizes. think So and point as we're The we monitoring very when is go. managing I getting bit

there. So, Then price manage well. in we a some have far as get lot of we to question, better to put helps as kick then start as your ways increase talked just really of extra redesign those costs us go and through will portion increases it, the as They about out Tom this price finding that year. out

back us of the year, things try but that to of with the around suppliers, able that end was be structural now. So more that on structural help more the transitory up because are through price there I too. to back passing from a to components bring get this, previously piece catch the silicon the some we'll that talking come of to increases issues you'll see on lot larger but think about piece should also are I some some that of have But more of

longer-term low target. we as think, in gross mid-XXs, going be believe do we margin to back that So, the to the we're to our said I

Tom Stanton

are get these materially the near-term you expedite of fees, price we're you mid-XXs rid core of increases to not the if way through changes just that now. And of we're in And kind not low that. because then of if off events

Orin Hirschman

the in terms Okay. margin. That's software And really on last of question helpful. gross

Tom Stanton

but with And are Yes. answer something, that's have to with a to have through where new we'll today, good. that. with I'm that happy a The we going I'm relatively out. be right I really boatload and we if -- not just it's materially we'll don't Honestly, know just works the that. Mosaic onboarding -- has we'll phase to the now offset have customers launch been itself enough uptake One. just see to of

Orin Hirschman

you Okay. Thank Great. much. so

Tom Stanton

All right. All right. Thanks.

Operator

with is Thank Capital. from you, next Tieton Please Mr. follow-up a Hirschman. Dezellem line question The question Bill of the proceed.

Bill Dezellem

right. all That's

ADVA, chain demand supply same Capital. that they're of Tieton the all So still announcement? Bill experiencing Dezellem having challenges. the from strength the same presumably, level they are And are since you

Tom Stanton

as they've for I far for have answer from nice what public speak going supply a yes. they're is booking as but that they really believe them. phase as -- are well through made shipments them. Yes. don't really and chain of I want the And to strong

everybody don't have components this -- a think same in all use different industry it. think They that we're seeing they use. I -- the So I is we

profile problematic of that. of is you some on their of ones think their and that conference recently things a I'm get But which I a But a lot can So lot different it In yes. power like ours. just they the general same vendor too supply had sure here is, the is are base information about. than public that the and call we're talking answer cases things

Bill Dezellem

are two of wins or one will your wins from future? that you the the the benefited really is that that in if fact wins that And expected there be their not have sort hearing in be had And of you are to any companies are future? the

Tom Stanton

until in the we close. kind can together we're of way we sell Well, limited that

everybody without very overwhelmingly not there's I -- customer that's that I've calls has jointly. That there So our possible. we think so us of tie customer than That's previous as the doing selling. on start anecdotal can single kind I will seems on coming the customers technologies Other mentioned what quickly be case. before how are been we're base, very, to limited. that continues a and of wait better positive, together, from we positive. just be to the the feeling negative that's not together out and about get our can two joint that maps be can't but presentations as road joint mean, the combination very to for companies, happy response

Bill Dezellem

Great. Thank you.

Tom Stanton

Okay.

Operator

Dezellem. are any lighting Mr. you, team There to the the time, no Thank call additional will for management remarks. questions turn at over further this I so

Tom Stanton

next you a call quarter. you positive joining look to everyone. We for Thank Thank forward us. you. Thank Okay. very much

Operator

That today's for concludes Thank call. your you participation.

lines. now disconnect may your You

ADTRAN (ADTN) 8 May 222022 Q1 Earnings call transcript