ADTRAN Holdings, Inc. Q4 FY2025 earnings call

• Fourth quarter revenue was $291.6 million, up 20% year-over-year and 4% sequentially. - U.S. business had 31% year-over-year growth and 14% sequential growth; non-US revenue 12% year-over-year growth and 3% sequential decline. - Optical networking solutions grew 33% year-over-year. - Access and aggregation revenue grew 9% year-over-year and 6% sequentially. - Subscriber solutions revenue grew 17% year-over-year and 3% sequentially. - Software solutions serve over 1,000 carrier customers, including nearly 500 service providers adopting Mosaic One platform and over 100 deploying IntelliFi cloud managed Wi-Fi solutions. - Continued fiber investment in core markets, with U.S. broadband programs and data center investments supporting network expansion; Europe has increased focus on network security and vendor diversification.

Optical networking solutions grew 33% year-over-year, with enterprise and cloud providers contributing 25% of Q4 revenue and 21% for the full year 2025. Access and aggregation revenue grew 9% year-over-year and 6% sequentially. Subscriber solutions revenue grew 17% year-over-year and 3% sequentially. Optical networking solutions' growth was driven by strong sales to cloud providers and enterprise customers. Access and aggregation revenue was supported by continued fiber access investment. Subscriber solutions revenue was driven by demand for residential fiber CPE.

• Expect first quarter 2026 revenue to be between $275 million and $295 million. - Non-GAAP operating margin of 4% to 8% for first quarter 2026, reflecting traditional seasonality and current supply chain dynamics.

• Supply chain variability in components such as memory; tightening supply on memory and optics. - Uncertainties related to the implementation of legislation regarding Huawei replacement in Europe which could impact business.

Q: Talk about demand picture in U.S. and Europe and drivers of revenue growth, and on operating margin outlook.

A: Tom mentioned demand continuing with fiber to prem programs going well, adding new customers, and enterprise side strong. Tim reiterated guidance range is about four points historically consistent.

Q: Unpack optical, enterprise ICPs, etc.

A: Optical had good contribution from traditional enterprise and ICP, momentum to continue.

Q: Fiber to the home side new greenfield footprint.

A: Q4 solid, U.S. business stronger, bead dollars starting to flow.

Q: Non-core asset sales and leaseback activity.

A: Leaseback activity on east tower on hold, north-south tower sale with activity.

Q: Huawei replacement in EU.

A: EU directive is recommendation, but country-by-country actions, carriers hesitant to deploy Huawei now.

Q: European telcos front-loaded and broadband deployment cycle.

A: European telcos access and ag product category front-loaded last year, trying to even flow this year; Europe broadband deployment cycle early, some countries more advanced like U.K. in middle, Germany in first half.