Aviat Networks, Inc. Q2 FY2026 earnings call

• Highest second quarter bookings in the last ten years. Total revenues of $111.5 million, adjusted EBITDA of $11.3 million, non-GAAP EPS of $0.54, and positive cash generation from operations of $23.9 million. • For 2026, Aviat increased total revenues by 5.9%, reduced non-GAAP operating expenses by $3.7 million, and increased both GAAP and non-GAAP earnings per share by over $1, and adjusted EBITDA by $13.2 million. • In private networks, Aviat is a leader in mission-critical wireless networks, launched PISA LTE 5G router for emergency vehicles with first initial order received. • In mobile networks, engaged globally to expand share of demand, with 5G upgrade cycle ongoing. Announced initial purchase order for multi-dwelling unit solution. • Regarding BEAD, policy is to keep impact out of guidance until clarity on timing, but fixed wireless access is capturing 10-15% of BEAD locations served. • Introduced Andy Schmidt as new CFO with over 20 years of public company CFO experience, aligning with Aviat's strategic goals.

In the second quarter of Fiscal 2026, total revenues were $111.5 million. North America contributed $52.9 million, which was 47.5% of total revenues. International revenues were $58.6 million, making up 52.5% of total revenues. For the second quarter, GAAP gross margin was 32.4% and non-GAAP was 32.9%. For the first six months of Fiscal 2026, GAAP gross margin was 32.8% and non-GAAP was 33.4%. Second quarter GAAP operating expenses were $28.8 million, down from $32.9 million in the same period last year. Non-GAAP operating expenses were $27.1 million. Second quarter adjusted EBITDA was $11.3 million, which is 10.1% of revenues. Cash and marketable securities at the end of the second quarter were $86.5 million, with net debt at $18.9 million.

• Aviat is keeping its fiscal 2026 guidance unchanged: full year revenues are expected to be in the range of $440 million to $460 million. • Full year adjusted EBITDA is expected to be in the range of $45 million to $55 million.

• Uncertainty regarding the timing and impact of the BEAD program on the company's financials. • Competition in the market for private networks, mobile networks, and other segments could impact revenue and market share. • Dependence on key customers and the success of new product launches (e.g., MDU solution) which carry execution risks.

Q: Scott Searle asked about the outlook for the second half of 2026, including BEAD, MDU, gross margin, and buyback.

A: Pete Smith mentioned BEAD is expected to materialize between July and December 2026, the cellular router has first PO and is in pipeline with 15 customers, gross margin changes are due to mix, and there's remaining authorization for buyback to be turned on.

Q: Tim Savageaux inquired about backlog, MDU as a driver, and broad-based bookings.

A: Pete Smith stated highest bookings in 10 years, book to bill over one, MDU is a small part of service provider uptick, and bookings are broad-based across state public safety and utility.

Q: Theodore O'Neill followed up on the cellular router and strength in Europe.

A: Pete Smith said the cellular router has 15 engaged customers and will materialize in fiscal 2027, and strength in Europe is due to a new EMEA leader driving focus on private networks.