Matthew Cavanagh

Matt Cavanagh inquired about the target customer types for Clearfield's new Nova Platform, its long-term revenue potential, the reasons behind community broadband customers' faster BEAD project deployment compared to larger counterparts, and the quantifiable revenue impact of the U.S.-made optical fiber shortage on Clearfield's fiscal 2026 outlook.

Answer

Cheri Beranek, President and CEO, explained that initial Nova customers would be existing community broadband providers opening data centers, with the platform becoming a dominant offering in 2-3 years and eventually integrated into community broadband. She noted that community broadband providers are more nimble for BEAD deployments, and Clearfield is tracking 319 potential recipients. Regarding the fiber shortage, Ms. Beranek stated it's difficult to quantify the revenue impact due to over year-long lead times for BABA-compliant fiber, leading to no specific BEAD revenue guidance for FY2026.

Matt Cavanagh asked about the target customer type and medium-to-longer-term revenue opportunity for Clearfield's new Nova Platform, the reasons community broadband customers might move faster on BEAD projects and its impact on Clearfield's outlook, and if Clearfield could quantify the revenue impact of the potential fiber shortage on its fiscal 2026 outlook.

Answer

Cheri Beranek, President and CEO of Clearfield, explained that the initial target customers for the Nova Platform are existing community broadband customers opening data centers, as well as traditional database environments, with future expansion into adjacent markets. She noted that while near-term revenue contribution in fiscal 2026 would be modest, Nova is expected to become the company's dominant product offering in 2-3 years, with its modularity eventually integrated into community broadband solutions. Regarding BEAD, Ms. Beranek stated that community broadband providers are typically more nimble than larger counterparts, allowing them to optimize deployments and respond quickly to funding availability. Clearfield is systematically tracking 319 potential BEAD recipients. On the fiber shortage, Ms. Beranek indicated it's difficult to quantify the revenue impact, as lead times for BABA-compliant bare extruded fiber exceed a year, which is inconsistent with an aggressive BEAD program. The industry is exploring waivers, and this uncertainty is why there is no specific BEAD revenue guidance for fiscal 2026.

Matthew Cavanagh, on behalf of Ryan Koontz at Needham & Company, asked for color on the underlying growth drivers for the information security and space and mission systems businesses.

Answer

Chairman and CEO Mark Dankberg detailed the growth drivers for these segments. For encryption, growth is fueled by the critical need for quantum-resistant technology and a major refresh cycle for mission-critical equipment. For space and mission systems, drivers include technology insertions for NASA programs, standardization of inter-satellite links, and participation in unique national security and international programs like the European Space Agency's Moonlight lunar relay project.