Tim Savageaux

Tim Savageaux asked about the specific drivers for the expected $10 million sequential increase in data center revenue in Q1, given that the significant 800G ramp is anticipated in Q2. He also sought more color on the near-term gross margin headwinds in Q1, despite an expected increase in CATV revenue. Additionally, he asked for a clearer definition of '800G to dominate revenue' in Q2, specifically if it implies 800G revenue will exceed the combined revenue of 100G and 400G. Finally, he inquired about the expected customer concentration for the projected $1 billion total revenue in 2026, particularly within the data center segment.

Answer

Dr. Stephen Murray, CFO and Chief Strategy Officer, stated that the Q1 data center revenue increase will be driven by continued growth in 400G and some 800G revenue, though not the dramatic ramp expected in Q2. He explained that Q1 gross margins are a wash, with headwinds from the product mix (400G growth) offset by expanding CATV gross margins. He clarified that '800G to dominate' means it will be the largest segment contributor within data center revenue, exceeding 100G or 400G individually. Dr. Thompson Lin, Founder, Chairman, and CEO, added that 800G revenue could be $25 million, but demand is $35 million-$40 million, limited by capacity. For the $1 billion 2026 revenue, Dr. Murray projected that after CATV, the remaining $700 million-ish data center revenue would be dominated by two large hyperscale customers, roughly comparable in size, with a third significant but smaller customer. Dr. Lin confirmed there would be three hyperscale data center customers contributing more than 10% of total revenue for the year.

Tim Savageaux asked about the drivers for the expected $10 million increase in data center revenue in Q1 2026, the gross margin headwinds despite increased CATV revenue, the expected meaning of 800G dominating revenue in Q2 2026, and the anticipated customer concentration for the projected $1 billion in total revenue for 2026.

Answer

Dr. Stefan Murry, CFO and Chief Strategy Officer, explained that the Q1 2026 data center revenue increase is driven by continued 400G growth and some 800G revenue, though not the full ramp. He attributed gross margin headwinds to the product mix, with 400G growing in Q1 before 800G takes over, while CATV gross margins are expanding. Dr. Stefan Murry clarified that 800G dominating revenue in Q2 means it will be the largest contributor within the data center segment. Dr. Stefan Murry and Dr. Thompson Lin, Founder, Chairman, and CEO, projected that for the $1 billion 2026 revenue, two large hyperscale customers would be roughly equivalent in size, with a third significant customer, and overall, three hyperscale data center customers would contribute more than 10% of total revenue.

Tim Savageaux asked if Applied Optoelectronics is observing a dramatic increase in AI optical transceiver demand, particularly for 1.6T and broadly across data centers, in recent weeks. He also followed up on the 800G/1.6T capacity target of 100,000 units per month by year-end, asking if the company would be in a position to ship that full capacity in Q1 next year and if they have orders or commitments to cover such volumes.

Answer

Dr. Stefan Murray (CFO and Chief Strategy Officer, Applied Optoelectronics) confirmed seeing a very strong increase in demand, aligning with the described ramp in AI optical, starting with 800G and expecting 1.6T to be a strong contributor later next year. Dr. Thompson Lin (Founder, Chairman, and CEO, Applied Optoelectronics) clarified that shipping the full 90,000-100,000 pieces per month capacity would likely be seen in Q2 next year due to Chinese New Year and manufacturing cycle times. Dr. Lin also stated that customers are giving 'crazy numbers' for AOI's share, exceeding 300,000 units of 800G plus 1.6T single mode transceivers, confirming these are real demands, not a bubble. Dr. Murray reiterated that the 100,000 units/month capacity is for 800G/1.6T, separate from 400G capacity (targeting 120,000+ early next year), and both have customer commitments.

Tim Savageaux asked if the company is observing a dramatic, step-function increase in AI optical transceiver demand, particularly for 1.6T, in recent weeks. He also followed up on capacity targets, specifically if the company could ship its full 100,000 units per month capacity in Q1 next year and if customer commitments cover these volumes.

Answer

CFO and Chief Strategy Officer Stefan Murray confirmed seeing a very strong increase in demand for AI optical, aligning with the described step-function increase, which is reflected in Q4 data center revenue guidance and expected to be a sustained ramp. CEO Thompson Lin stated that shipping full capacity (90,000-100,000 pieces per month) for 800G/1.6T is more likely in Q2 next year due to Chinese New Year and manufacturing cycle times. He mentioned that customers are providing 'crazy numbers' for AOI's share (over 300,000 800G plus 1.6T single mode transceivers), indicating real demand. Stefan Murray clarified that the 100,000 units per month target is for 800G/1.6T, separate from 400G capacity (120,000+ pieces per month early next year), and confirmed customer commitments cover these volumes.

Timothy Savageaux questioned if Applied Optoelectronics expects to generate material 800G revenue in Q3 2025, asked about opportunities with other major cloud providers besides Amazon, sought clarity on whether recent design wins were with Amazon, and inquired about the implied market share at Amazon from the warrant agreement.

Answer

CFO and CSO Dr. Stefan Murray confirmed the company expects material 800G revenue in Q3. He and CEO Dr. Thompson Lin stated that the three recent design wins were with another existing hyperscale customer, not Amazon. They emphasized significant opportunities with other cloud providers, highlighting their U.S. production as a key advantage that meets TAA requirements. Dr. Murray projected a potential market share of 30-40% at Amazon, with Dr. Lin suggesting it could ultimately exceed 40% due to tariff and domestic supply chain advantages.

Timothy Savageaux asked about the significant 2025 capital expenditure plan, inquiring about its allocation between datacenter and cable TV, the resulting production capacity increase, the potential for a strategic investment to help finance it, and the timeline for capacity additions.

Answer

CFO & CSO Dr. Stefan Murry explained the CapEx is almost entirely for datacenter products, specifically 800G and 1.6T, with a substantial portion targeted for U.S. investment. He noted that financing discussions, including a potential strategic investment, are ongoing but not a prerequisite for starting. CEO Dr. Chih-Hsiang Lin added that the goal is to achieve a monthly capacity of 120,000-140,000 datacenter transceivers by late 2025 or early 2026, with specific 400G/800G AOC capacity reaching 120,000 per month by mid-2025.

Timothy Savageaux inquired about the primary growth drivers for the Q4 guidance, seeking to confirm if data center growth would outpace CATV. He also asked for details on the customer mix driving data center growth, clarification on the status of a new hyperscale customer, and how planned CapEx would expand U.S. manufacturing capacity.

Answer

Executive Stefan Murry confirmed that while CATV growth continues, strong data center growth will be a key driver in Q4, led by 400G and resilient 100G demand, with 800G becoming more material in Q1. He clarified that the 'new' hyperscaler is a re-engaging former customer not expected to reach 10% of revenue in Q4. Regarding capacity, Murry stated that investments in the U.S. and Taiwan are planned to support the company's overall growth trajectory without providing specific revenue capacity figures.

Tim Savageaux asked for clarity on the 2026 outlook for the Aurora Networks business, specifically whether revenue is expected to grow despite a projected EBITDA decline, considering new US wins and potential margin impacts from product mix. He also inquired about the significance and potential revenue size of the new Tier 1 MSO DOCSIS 4.0 win, expected to boost amplifier shipments starting in Q1 2026.

Answer

EVP and CFO Kyle Lorentzen clarified that Aurora Networks' revenue is expected to increase in 2026, but EBITDA will decline due to a shift in product mix (lower-margin DOCSIS 4.0 products replacing higher-margin legacy business) and the impact of stranded costs from the CCS transaction. President and CEO Chuck Treadway added that the market is experiencing a resurgence in DOCSIS upgrade activity, with Comcast's FDX deployment exceeding expectations. Lorentzen stated that the new Tier 1 MSO DOCSIS 4.0 win represents a 'meaningful dollar amount,' specifically 'tens of millions of dollars of opportunity.'

Tim Savageaux inquired about the top-line outlook for the Aurora business in 2026, specifically if revenue growth is expected despite declining EBITDA due to mix, and sought more color on the size and impact of the new DOCSIS 4.0 win with a second Tier 1 MSO.

Answer

Kyle Lorentzen, EVP and CFO, confirmed that Aurora's revenue is expected to be up, but EBITDA will decline due to a mix shift from higher-margin legacy products to DOCSIS 4.0 edge products, and the impact of stranded costs. Chuck Treadway, President and CEO, added that DOCSIS upgrade activity is seeing a resurgence, with Comcast's FDX deployment exceeding expectations. Kyle Lorentzen further clarified that the new DOCSIS 4.0 win represents a meaningful opportunity in the tens of millions of dollars.

Tim Savageaux inquired about the projected indium phosphide revenue capacity by the end of 2026 (around $35 million/quarter) and if demand is expected to fulfill this. He also asked about the increased presence with Tier One customers, new customer orders/qualifications, and the relation to increased investment in six-inch indium phosphide.

Answer

Morris Young (CEO, AXT Inc.) confirmed the target of approximately $35 million per quarter run rate capacity by year-end 2026, stating that demand could certainly use it, but permits are the gating factor. Tim Bettles (VP of Business Development, AXT Inc.) highlighted significant growth in China-based demand. Gary Fischer (CFO, AXT Inc.) emphasized the intense customer concern about supply, with CEOs and GMs discussing long-term demand increases (3-5x over 4-5 years). Morris Young and Gary Fischer stressed AXT's strong position due to vertical integration and prior experience in capacity expansion. Tim Bettles confirmed gaining traction with new Tier One customers, securing design-ins and qualifications, and noted the significant investment and expansion plans for six-inch indium phosphide capacity, driven by customer interest and commitments.

Tim Savageaux asked about AXT's Indium Phosphide capacity expansion targets, the anticipated demand to fulfill this capacity, and the company's engagement with Tier One customers, including investment in 6-inch Indium Phosphide wafers.

Answer

CEO Morris Young stated that AXT expects to reach approximately $35 million per quarter in Indium Phosphide run rate capacity by the end of 2026, with demand expected to fulfill this, though permits remain a gating factor. VP of Business Development Tim Bettles highlighted significant growth in China-based demand and increasing customer commitments. CFO Gary Fischer emphasized the intense and unusual demand environment, with customers projecting 3-5x growth over the next 4-5 years. Tim Bettles also confirmed increased traction with Tier One customers, including new design-ins and qualifications, and a serious commitment to expanding 6-inch Indium Phosphide capacity in line with customer demand and long-term supply agreements.

Tim Savageaux of Northland Capital Markets asked for more details on the indium phosphide market growing too fast for just two players, how the backlog has trended amid export issues, and the specific breakdown of the $10 million backlog between indium phosphide and gallium arsenide.

Answer

Tim Bettles, VP of Business Development, elaborated that the move to higher-speed transceivers for AI not only requires higher quality material, where AXT has an advantage, but also increases the acreage of indium phosphide used per device. He confirmed that new orders are still being received daily. Mr. Bettles stated that over 50% of the $10 million backlog is for indium phosphide and that the company has the capacity to ship this backlog quickly once permits are approved, suggesting a potential upside to Q3 guidance.

Tim Savageaux of Northland Capital Markets sought more detail on the indium phosphide market growing too fast to be serviced by only two players, the potential for accelerated growth, and the composition of the $10 million backlog between indium phosphide and gallium arsenide.

Answer

Tim Bettles, VP of Business Development, explained that the move to higher-speed transceivers for AI creates a dual benefit: it requires higher-quality, low-EPD material and larger device sizes, both of which favor AXT. He noted that with AXT holding about 40% market share, it's difficult for competitors to fill the gap quickly. He also confirmed that over 50% of the $10 million backlog is for indium phosphide and that AXT has the capacity to ship it rapidly once permits are approved.

Timothy Savageaux from Northland Capital Markets sought clarification on the wireless market share growth target for 2025. He then asked about the indium phosphide business, questioning if its strong 44% growth in 2024 would have accelerated in 2025 without the new export controls, given strong AI optical market demand. Lastly, he asked if the recovery from the indium phosphide restrictions could mirror the bounce-back seen with gallium arsenide.

Answer

CEO Dr. Morris Young clarified the wireless goal is to grow their existing 10% market share *by* 30% (to ~13%), not *to* 30%. Executive Tim Bettles projected a baseline indium phosphide growth rate of around 20% for 2025, while acknowledging potential upside. Dr. Young expressed confidence that the recovery for indium phosphide could be stronger than for gallium arsenide, citing AXT's leading market position and the material's critical role for qualified customers.

Tim Savageaux asked about the acceleration of AI infrastructure opportunities, particularly in light of increased demand for optical modules and devices, and how Aeluma is positioned to address higher speed rates like 1.6 terabit for modules and co-packaged optics.

Answer

CEO Jonathan Klamkin confirmed that inquiries from the AI space are growing daily, partly due to supply chain issues, and highlighted a near-term focus on high-speed detectors to meet demand for components in various AI applications (EMLs, silicon photonics transceivers, VCSELs). He emphasized Aeluma's strong positioning for higher speed rates, noting the development of high-speed detectors with 50, 100 gigahertz bandwidth and beyond, expanding their platform from 10/25-gig to higher speeds for 200G VCSELs or EML links.

Tim Savageaux followed up by asking how Aeluma is positioned to address the demand for higher speed rates, specifically 1.6 terabit modules and co-packaged optics, in the AI infrastructure market.

Answer

CEO Jonathan Klamkin asserted Aeluma is "very well positioned," highlighting their development of high-speed detectors with 50-100 GHz bandwidth and beyond. He noted that expanding their platform to support higher data rates for applications like 200G VCSELs and EML links is a top priority for data center markets.

Tim Savageaux inquired about the $50 million in new Cloud and Edge orders, asking how these initial commitments relate to the total voice upgrade opportunity at those customers, especially compared to the scale of the Verizon program. He also sought clarification on whether the recent Verizon CapEx cuts and Frontier integration uncertainty are impacting Ribbon's outlook, and asked for an update on the BEAD funding situation, given previous positive sentiment versus the Q4 push-out.

Answer

CEO Bruce McClelland explained the total addressable market for voice modernization is substantial, but specific numbers are difficult due to varied customer approaches. He noted that the Q4 bookings were for 12-15 month horizons, unlike Verizon's three-year commitment, where Ribbon is about 35% through the first phase. Mr. McClelland confirmed caution regarding Verizon's plans post-Frontier integration due to macro changes. He acknowledged BEAD funding as a significant opportunity for 2026, expressing frustration over the Q4 delay but maintaining a positive outlook for the year.

Tim Savageau asked how the initial cloud and edge orders relate to the total opportunity at those customers, specifically in terms of the proportion of their networks being upgraded. He also inquired about the impact of Verizon's announced CapEx cuts and the Frontier merger on Ribbon's business, especially given their significant existing program. Lastly, he sought an update on the BEAD funding outlook, considering the positive sentiment but the Q4 push-out.

Answer

CEO Bruce McClelland stated that he hesitates to provide a specific total addressable market number for modernization due to varying customer approaches. He clarified that the $50 million in Q4 bookings were for 12-15 month programs, not multi-year commitments, and noted that Verizon's first phase addresses about a third of their network, leaving significant future opportunity. Regarding Verizon, Mr. McClelland indicated a cautious approach until their plans are finalized post-Frontier integration, acknowledging near-term uncertainty from macro changes but expressing confidence in long-term growth. For BEAD funding, he views it as a great opportunity for significant growth in 2026, despite frustration over the Q4 delay, and sees a strong funnel of opportunities.

Tim Savageaux of Northland Capital Markets questioned the sustainability of the IP Optical business's positive EBITDA contribution in Q3, its growth rate, and the potential for it to be a positive contributor or break even in 2026. He also asked for an update on the impact of competitor mergers and trends in data center interconnect (DCI) in Europe. Mr. Savageaux inquired about expectations for AT&T's business and its potential to become a 10% customer next year, and sought to quantify the U.S. government shutdown's impact on Q3 and Q4 revenues, specifically the sequential decline in U.S. revenues.

Answer

CEO Bruce McClelland stated that while Q3's positive IP Optical EBITDA was pleasing, driven by a favorable mix with strong European sales, Q4's mix (more India, less Europe) would affect margins. He affirmed the objective for the business to be a sustainable positive contributor. Mr. McClelland noted a quiet quarter regarding competitor mergers but highlighted new DCI product momentum in Europe and Japan, focusing on transport systems and IP aggregation into data centers, particularly for critical infrastructure with low latency and encryption needs. Regarding AT&T, Mr. McClelland acknowledged their focus on reducing operating costs and driving efficiency, expressing hope for more growth for Ribbon. He confirmed that the shutdown impacted Q3, preventing Ribbon from comfortably reaching the midpoint of guidance, and that the majority of new U.S. federal business was removed from Q4 projections, representing the vast majority of the expected lower numbers.

Tim Savageaux inquired about the IP Optical Networks segment's positive EBITDA contribution in Q3, asking if it could be a sustainable positive contributor or break even in 2026, and what growth rate is anticipated. He also requested an update on the impact of competitor mergers and fundamental trends in the IP Optical segment, particularly regarding data center interconnect in Europe. Furthermore, he asked about expectations for AT&T's business given their strong Q4 capital spending plans and if they could join Verizon on the 10% customer list next year. Finally, he sought to quantify the U.S. government shutdown's impact in Q3 and Q4 and understand the dynamics behind the Q3 U.S. revenue decline.

Answer

CEO Bruce McClelland confirmed that the positive Q3 EBITDA for IP Optical was pleasing, driven by a favorable European mix, and reiterated the objective for the business to be a positive contributor. He noted that current growth has replaced lost Eastern Europe revenue. Regarding competitive dynamics, Mr. McClelland mentioned a relatively quiet quarter but highlighted new products for data center interconnect and successful projects in Europe, focusing on critical infrastructure, low latency, and encryption. On AT&T, he acknowledged their focus on reducing operating costs and driving network efficiency, expressing hope for more growth but not directly addressing the 10% customer list. For the shutdown, Mr. McClelland confirmed that the impact in Q3 prevented them from reaching the midpoint or higher of guidance, and for Q4, the majority of new U.S. federal business has been removed from projections, attributing the Q3 U.S. revenue decline largely to this federal impact.

Tim Savageaux of Northland Capital Markets requested specifics on the record quarter with Verizon, including its revenue contribution, and asked about the dynamics of Verizon's revenue in Q3 and Q4. He also inquired about the strategy of bundling routing solutions with voice deals.

Answer

President, CEO & Director Bruce McClelland confirmed Verizon was over 20% of total sales in Q2, a new record. He explained that while Verizon's equipment shipments would be lower in Q3, strong enterprise growth would lead to a consistent overall quarter. McClelland highlighted the "land and expand" strategy of bundling IP routers for traffic aggregation in voice modernization deals, which serves as a key differentiator and entry point into major service provider networks.

Timothy Savageaux of Northland Capital Markets sought clarification on whether Verizon revenue would return to Q4 levels in Q2, the potential for further growth with Verizon, and the pace of network migrations. He also asked about broader optical market trends.

Answer

CEO Bruce McClelland confirmed that Q2 revenue from Verizon is expected to be similar to Q4's record level, serving as a good planning baseline for the second half of the year. He noted that the migration pace has returned to one switch per week, with a goal to double that rate. McClelland also highlighted strong IP Optical growth in India and Southeast Asia, partly driven by customers seeking Western alternatives to Chinese OEMs and consolidating vendors.

Timothy Savageaux inquired about the potential quarterly revenue run-rate from Eastern Europe if business resumes, the opportunity from carriers like AT&T eliminating TDM/copper networks, and specifics on investments in data center interconnect (DCI).

Answer

CEO Bruce McClelland estimated a potential normalized run rate of $10-$15 million per quarter from Eastern Europe. He detailed how Ribbon's portfolio supports both copper elimination and switching modernization strategies for carriers. Regarding DCI, he clarified that Ribbon is targeting the market through its telecom customers deploying equipment at the data center edge, rather than selling directly to cloud providers.

Timothy Savageaux requested a breakdown of the 2025 mid-single-digit growth guidance by segment, sought to quantify the voice modernization pipeline beyond Verizon, and asked about the IP Optical opportunity from the Nokia-Infinera deal and the potential impact of a Verizon-Frontier acquisition.

Answer

CEO Bruce McClelland detailed that for IP Optical to grow in 2025, it must first offset a ~$25 million headwind from suspended sales to Eastern Europe. For Cloud & Edge, the product and service portions must grow faster than mid-single-digits to overcome flat maintenance revenue. He described a strong pipeline of voice modernization projects in North America and Europe, though none are on the scale of Verizon. McClelland characterized the Nokia-Infinera opportunity as a longer-term play, primarily in Asia Pac and Europe, and viewed a potential Verizon-Frontier deal as a significant catalyst for 2026 and beyond.

Timothy Savageaux asked about the magnitude and timing of MACOM's Indium Phosphide (InP) capacity additions from the beginning to the end of the fiscal year. He also inquired about the materiality of optical devices within the overall data center unit currently and where MACOM expects that to go.

Answer

Stephen G. Daly, President and CEO, declined to disclose specific capacity addition amounts for competitive reasons but stated that the Indium Phosphide PD business (primarily 200G per lane) is growing rapidly, and bringing on capacity is a major focus, with results reflected in guidance and comments. He also declined to disclose revenue by product line or technology, reiterating that the data center business is diversified by end customer, data rate, and product family (optical and electrical), including TIAs, drivers, combo chips, photodiodes, and future lasers (CW and EML). He mentioned new growth vectors like PCIe 6 on the compute side.

Timothy Savageaux inquired about the magnitude and timing of MACOM's Indium Phosphide (InP) capacity additions from the beginning to the end of the fiscal year. He also asked about the materiality of optical devices within the overall data center unit currently and where MACOM expects that to trend in the future.

Answer

Stephen G. Daly, President and CEO, declined to disclose specific InP capacity amounts for competitive reasons but confirmed that the InP photodetector business, primarily focused on 200G per lane, is growing rapidly, and capacity expansion is a major focus. He also declined to disclose revenue by product line or technology for optical devices. Mr. Daly described MACOM's data center business as diversified across end customers, data rates, and product families, including TIAs, drivers, combo chips, photodiodes, and future lasers (CW and EML), with new growth vectors like PCIe 6 for the compute side.

Tim Savageaux asked if the guided data center growth rate of high 20s for Q1 2026 is sustainable or could increase throughout fiscal 2026, given the strong AI optical landscape and demand acceleration, particularly for 1.6T.

Answer

President and CEO Steve Daly stated that the data center growth rate could indeed increase, with scenarios where it could significantly outperform, similar to the previous year. He clarified that current guidance is based on a more conservative base case, and noted that the primary demand and supply shortages are centered around 1.6T, where MACOM aims to be a strategic partner.

Tim Savageaux asked if MACOM's guided high 20s growth for the data center segment in Q1 fiscal 2026 is sustainable for the full year or if it could potentially increase, given the strong demand and AI optical landscape.

Answer

Steve Daly, President and CEO, MACOM, indicated that the data center growth rate could increase beyond the current guidance, with scenarios for significant outperformance similar to the previous year. He noted that 1.6T is driving volume, demand, and supply shortages, positioning MACOM as a strategic partner.

Tim Savageaux of Northland Capital Markets inquired about the drivers for the apparent strength in the cable networking business and asked for clarification on whether the new LPO customer engagements are with new or existing MACOM customers.

Answer

President and CEO Stephen Daly confirmed that MACOM's cable infrastructure business, while a small part of the Telecom segment, is growing and moving in the right direction. On the LPO engagements, he stated they are with customers MACOM has previously supported with other products for their traditional pluggable optical modules, indicating they are existing relationships.

Tim Savageaux asked for Clearfield's observations on the early impact of the Verizon-Frontier merger on fiber builds and potential opportunities arising from the CommScope-Amphenol merger. He also inquired about expected trends for cable segment revenue for the balance of the year, including Q2, given its sharp decline.

Answer

Cheri Beranek, President and CEO, viewed the Verizon-Frontier merger as a significant opportunity, noting Frontier's continued fiber build and Clearfield's investment in a broader sales organization to support it. She stated it was too early to assess the CommScope-Amphenol merger's impact but saw potential opportunities as CommScope focuses on hyperscale. Ms. Beranek explained that community broadband drove growth, while cable revenue was down from Q4 but consistent year-over-year, attributing MSO market fluctuations to larger orders and expressing confidence in regional MSOs' commitment to fiber builds.

Tim Savageaux inquired about the early impact of Verizon's combination with Frontier on Clearfield, as well as any opportunities arising from the CommScope and Amphenol merger. He also asked about the expected trends for the cable segment's revenue throughout the balance of the year, particularly in Q2, given its sharp decline.

Answer

Cheri Beranek, President and CEO of Clearfield, viewed the Verizon-Frontier merger as a significant opportunity, noting Clearfield's existing supplier relationship with Frontier and Frontier's continued commitment to its fiber build. She highlighted Verizon's support for Frontier's fiber network and Clearfield's investment in a broader sales organization to optimize this opportunity. Regarding CommScope and Amphenol, Ms. Beranek stated it's too early to assess the full impact but sees it as a potential opportunity for Clearfield as CommScope may focus more on the hyperscale space. For the cable segment, Ms. Beranek explained that while it was down from Q4, it was consistent with Q1 of the prior year. She anticipates continued growth in community broadband, which was a significant driver, and expects regional MSOs to remain committed to fiber builds, responding to aggressive telco deployments, despite some quarter-to-quarter bumpiness in MSO orders.

Tim Savageaux of Northland Capital Markets questioned when Clearfield expects to see initial BEAD orders and if any have been received yet, noting that some peers have reported initial orders. He also asked if the previously discussed magnitude of the BEAD opportunity, estimated at 4-5% of the total award value, remains accurate for Clearfield.

Answer

Cheri Beranek, Clearfield's President and CEO, explained that while they are seeing quoting activity, significant shipping activity for BEAD is not expected until the summer construction season (fiscal Q3 and Q4). She confirmed that 4-5% of the cost of deployment remains an accurate estimate for Clearfield's addressable products, emphasizing the company's strategy to become a portfolio supplier and noting that the opportunity is a four-to-five-year build.

Tim Savageaux from Northland Capital Markets inquired about Clearfield's expectations for initial BEAD orders, noting that some peers have already received them. He also asked if the previously estimated 4-5% of total BEAD award value remains an accurate representation of Clearfield's addressable market opportunity.

Answer

President and CEO Cheri Beranek explained that due to Clearfield's short lead times, they are seeing quoting activity but not significant shipping activity for BEAD. She anticipates significant revenue from BEAD starting in the summer construction season (fiscal Q3 and Q4). Ms. Beranek confirmed that 4-5% of the cost of deployment remains addressable by Clearfield's products, emphasizing their strategy to become a full portfolio supplier, including new splice cases, to capture more share. She cautioned against overstating the immediate revenue impact, noting it's a four- to five-year build, and while the opportunity is substantial, it would be irresponsible to give a specific number for Clearfield's share.

Inquired about the weaker-than-usual seasonality in the small carrier market, the reasonableness of using industry growth rates for fiscal 2026 forecasting, and any notable end-market shifts underlying the flat Q4 guidance.

Answer

Cheri Beranek attributed the weakness in small carriers to project delays caused by uncertainty around BEAD funding. She agreed that industry growth rates are a reasonable baseline for FY26, while reiterating the goal to outpace the market and highlighting the need to view the Clearfield and Nester segments separately. For Q4, she expects continued strength in the Clearfield segment offset by weakness in the Nester segment, with a revenue mix similar to Q3.

Tim Savageaux of Northland Capital Markets questioned the performance of smaller carrier markets, asking if the seasonal build was weaker than normal. He also asked about the reasonableness of a low-double-digit growth outlook for fiscal 2026 and the key end-market dynamics behind the flat Q4 guidance.

Answer

CEO Cheri Beranek explained that smaller carriers have delayed projects due to uncertainty surrounding the BEAD program, shifting revenue rather than losing it. She affirmed that a growth rate around industry norms is a comfortable outlook for the core Clearfield segment, while the Nestor segment will focus on improving profitability. For Q4, she anticipates continued strong demand from the Clearfield segment will be offset by ongoing weakness in the European Nestor segment.

Sought clarification on the fiscal 2025 guidance, specifically if the 12.5% growth forecast applies only to the Clearfield segment, separate from Nestor. He also asked for more details on the new multiyear projects and the business implications of the shift from 'homes passed' to 'homes connected'.

Answer

The 12.5% growth guidance is indeed for the Clearfield segment, with the Nestor segment expected to have flat revenue. The new multiyear projects are primarily within the community broadband space, involving emerging regionals and new municipal/utility providers. The shift to 'homes connected' products, now at a 50/50 revenue split with 'homes passed' and aiming for 2:1, improves factory utilization and overhead absorption, which is beneficial for gross profit, even though per-product margins are similar.

Timothy Savageaux from Northland Capital Markets sought clarification on the annual guidance, asking if the 12.5% growth forecast was exclusive to the Clearfield segment. He also requested more detail on the new multi-year projects and the business implications of the strategic shift from 'homes passed' to 'homes connected' products.

Answer

Executive Cheryl Beranek confirmed the guidance structure separates the two businesses, with the Nestor segment projected to have flat revenue while the Clearfield segment is expected to grow at or above the market rate of 12.5%. She explained that the multi-year projects are mainly with community broadband providers, including new municipalities and venture-funded entities. Beranek added that Clearfield is now cost-competitive in 'homes connected' products, which, while having similar gross margins to 'homes passed' products, are more labor-intensive and thus improve factory overhead absorption.

Tim Savageaux inquired about the "best Q2 in 10 years" for bookings, seeking an update on the backlog metric and quantification of the book-to-bill ratio for the quarter. He also asked if the MDU order was a key driver of service provider bookings or if other dynamics were at play, and whether the strong bookings were broad-based or driven by large state network projects.

Answer

Pete Smith (President and CEO) stated that the company is reluctant to give specific backlog numbers due to the project nature of the business but confirmed book-to-bill was over 1 for both the last quarter and the current quarter, driven by both service providers and private networks. He clarified that the MDU order is a small part of the service provider uptick and not yet a needle mover, with future orders being more significant. He also confirmed that the strong bookings were broad-based across state public safety and utility sectors, rather than from one-off large state network projects, and that no big state competitions were lost.

Tim Savageaux asked for an update on Aviat Networks' backlog and book-to-bill ratio, noting the company's highest Q2 bookings in 10 years and historical precedents for backlog updates. He also inquired about the MDU order's contribution to service provider bookings and whether recent bookings strength was driven by large state network projects or a more broad-based demand.

Answer

Pete Smith, President and CEO, confirmed that Q2 fiscal 2026 had the highest bookings in 10 years, with book-to-bill over one for both the current and previous quarters, driven by service providers and private networks. He stated that the MDU order was a small part of the service provider uptick and not yet a "needle mover" for backlog, with future orders being more significant. He clarified that recent private network wins were broad-based across state public safety and utility customers, rather than large, one-off state network projects.

Tim Savageaux inquired about the conservative fiscal 2026 growth outlook (around 4%) despite positive indicators like 5-8% funding increases in state/local and 11% backlog growth, asking if any offsetting factors exist. He also sought insights into differing trends within the Tier 1 carrier environment (North America vs. global 5G/PassLink) and the anticipated growth rate differences between the carrier and private network markets for fiscal 2026.

Answer

President and CEO Pete Smith attributed the conservative fiscal 2026 outlook to underperformance in Q1 a year ago, stating a preference for caution until that quarter is in the rearview mirror, while acknowledging positive environmental drivers. He anticipates better growth from the private network space compared to the carrier market, noting Aviat's portfolio is aligned with the higher-growth private network segment (over 55%). Mr. Smith expects slight growth in North American wireless in the latter half of the current year into next, and favorable, albeit episodic, conditions in emerging international markets for network operators due to connectivity needs.

Timothy Savageaux of Northland Capital Markets asked about U.S. revenue seasonality for the June quarter and requested more color on the potential revenue impact of securing a new project with a Tier 1 customer.

Answer

CFO Michael Connaway acknowledged the historical Q4 seasonal strength but affirmed a more conservative outlook aligned with consensus due to macro and tariff uncertainty. CEO Pete Smith added that the demand environment is good, with a book-to-bill over 1. He also stated that Aviat has no single customer over 6.5% of revenue and that a new Tier 1 project could provide a top-line lift of 2.5% to 5% of total revenue.

Timothy Savageaux from Northland Capital Markets asked if Q2 should be considered the peak revenue quarter for the fiscal year given seasonality trends. He also inquired about what factors could cause results to fall to the lower end of the guidance range and if any nonrecurring items boosted the strong Q2 EBITDA margin.

Answer

CFO Michael Connaway explained that while Q3 revenue is expected to be seasonally lower than Q2, persistent strong bookings could lead to Q4 revenue being even higher than Q2. CEO Pete Smith added that potential negative factors for guidance include tariff-induced supply chain ripples, global Tier 1 project delays, or slower customer conversion of backlog. Connaway confirmed there were no nonrecurring items that boosted Q2's financial results.

Timothy Savageaux from Northland Capital Markets asked for clarification on Pasolink's sequential revenue performance, a breakdown of the U.S. revenue weakness between Tier 1 softness and state project pushouts, and the primary drivers for the anticipated record bookings quarter.

Answer

CFO Michael Connaway clarified that Pasolink revenue was up slightly sequentially in Q1, and he attributed the U.S. revenue decline roughly half to Tier 1 weakness and half to private network project pushouts. CEO Pete Smith explained that the expected record bookings are driven by a strong North America bookings environment and growing international Tier 1 demand. He characterized Aviat as "late cycle" relative to broader carrier spending but noted the Pasolink acquisition is helping drive a "V-shaped recovery" through exposure to its growing customer base.

Tim Savageaux asked about the destination and drivers for the newly added 250,000 sq ft of capacity, and the size of the Pinehurst repurposing relative to this. He also questioned the segment guidance, noting that while HPC is expected to grow significantly, Telecom and Datacom growth appears slower sequentially than in the previous quarter, asking for reasons like seasonality. Finally, he inquired about the timeline for the Pinehurst capacity addition compared to Building 10's mid-year pull-in.

Answer

Seamus Grady, Chairman and CEO, explained that the 250,000 sq ft pull-in is driven by several factors, including strong telecom business (DCI and new wins), Datacom growth with existing and new customers, and overall robust demand. He reiterated that adding capacity is a low-risk, high-return decision for Fabrinet. Csaba Sverha, CFO, added that about 120,000 sq ft of office and warehouse space is being converted to manufacturing at Pinehurst, offering over $150 million in revenue upside. Regarding guidance, Mr. Sverha clarified that all segments except automotive are expected to grow, with HPC seeing double-digit growth, DCI growing faster than last quarter, and Datacom also growing. He confirmed the Pinehurst addition is happening now.

Tim Savageaux asked about the specific destination and drivers for the accelerated 250,000 sq ft capacity addition at Chonburi, and the scale of the Pinehurst repurposing in relation to this. He also sought clarification on the segment guidance, noting that while HPC is expected to grow significantly, Telecom and Datacom growth appears slower sequentially compared to the previous quarter, and asked for reasons behind this.

Answer

Seamus Grady, Chairman and CEO, explained that the 250,000 sq ft pull-in is driven by strong demand across telecom (DCI, new business, new customer wins) and Datacom (main customer growth, new customer wins), emphasizing the low downside risk and high upside opportunity of capacity expansion given Fabrinet's strong balance sheet and ROIC. Csaba Sverha, Chief Financial Officer, clarified that HPC growth is lumpy, not linear, but still anticipated to be double-digit. He added that DCI is expected to grow faster sequentially, and Datacom will also grow. Mr. Sverha detailed that the Pinehurst campus repurposing will create about 120,000 sq ft of manufacturing space, adding over $150 million in revenue upside, driven by legacy customer requirements, and is happening rapidly.

Tim Savageau referenced previous comments about accelerating growth in fiscal 2026 and asked if the current first-half growth rate represents a reasonable baseline for the year, or if further acceleration is expected. He also asked about the composition of the sequential revenue guide and the status of component shortages.

Answer

Chairman and CEO Seamus Grady acknowledged the accelerating growth (19% FY25, 22% Q1 FY26, 29% Q2 FY26 midpoint) but declined to provide a full-year guide, expressing optimism due to strong, robust, and sustainable demand across multiple categories. He clarified that the ordering of DCI, DataCom, and HPC as growth drivers was not indicative of their relative demand. Regarding component shortages, Mr. Grady believes issues generally resolve, expecting improvement with possibly another quarter or two of tight supply as capacity ramps.

Tim Savageaux referenced previous comments about accelerating growth in fiscal 2026 and asked if the current 25% growth in the first half of the year represents a reasonable baseline for the full year, or if further acceleration is expected. He also sought clarification on the ordering of DCI, DataCom, and HPC as demand drivers in the sequential guide and inquired about the current status and expected improvement of component shortages, particularly for DataCom.

Answer

Seamus Grady, Chairman and CEO, noted the accelerating growth from 19% in fiscal 2025 to 22% last quarter and a projected 29% this quarter, expressing optimism but declining to provide full-year guidance. He clarified that the mention of DCI, DataCom, and HPC was not in any particular order of importance but rather reflected the sequence in which these categories have grown for the company, with all three showing strong performance. Regarding component shortages, Mr. Grady stated that issues generally resolve, and while certain categories remain tight, he expects improvement over the next one to two quarters as suppliers ramp up capacity, with blue-chip customers typically securing their necessary components.

Tim Savageaux questioned if management still expects accelerating growth in fiscal 2026, sought details on the accelerated expansion of Building 10, and asked if the new telecom systems win contributed materially in Q4.

Answer

CEO Seamus Grady reiterated strong optimism for FY26 growth, driven by Datacom, DCI, and new programs, but did not provide full-year guidance. He confirmed they are evaluating accelerating a portion of Building 10's completion to meet demand, which would increase near-term CapEx. He also noted the new telecom system win began contributing in Q4, but the main ramp is expected throughout FY26.

Timothy Savageaux attempted to quantify the Amazon revenue opportunity, asking if it could reach a level similar to peers' agreements (e.g., $400M/year), making Amazon a 10% customer. He also asked for a ranking of the drivers behind the strong sequential telecom growth in the March quarter, specifically the contribution from ZR, strengthening markets, and new wins.

Answer

CEO Seamus Grady could not confirm specific revenue figures for Amazon due to commercial confidentiality but agreed that the opportunity 'could get to that level.' He views the revenue tied to the warrant as a minimum platform to build upon. Regarding telecom growth drivers in Q3, he clarified that the growth was primarily from 400ZR and a recovery in non-speed-rated products. He noted that the major new wins (like Ciena) were still in qualification stages and did not contribute meaningfully to Q3 revenue, with their growth still to come.

Timothy Savageaux asked for clarification on telecom growth drivers beyond ZR, the outlook for Q4 given multiple tailwinds, the non-optical guidance, and a relative ranking of new systems opportunities.

Answer

CEO Seamus Grady and CFO Csaba Sverha responded. Grady confirmed telecom growth was driven by ZR and a competitive business win, with the Ciena ramp yet to come. He agreed the setup for the second half of the year is optimistic. Sverha guided for sequential growth in automotive and flat-to-slight growth in lasers. Grady declined to rank the new business wins.

Timothy Savageaux of Northland Capital Markets sought clarification on a new 400G business win, the datacom product mix shift, the revenue timing for 1.6T products, and an update on the Ciena business ramp.

Answer

CEO Seamus Grady clarified the new 400G win is a telecom DCI product with an existing customer and the datacom mix shift occurred within their main customer. He noted that while some 1.6T revenue is already present, a significant ramp is still ahead. The Ciena business ramp is expected to become material in about nine months.

Tim Savageaux asked for the final optical DSP revenue figure for 2025, recalling previous guidance of $60 million-$70 million.

Answer

CFO Steve Litchfield stated that MaxLinear does not break out specific numbers but highlighted consistent doubling of revenue over the last two to three years (from less than $20 million three years ago), expressing satisfaction with progress and excitement for the future, citing strong visibility and backlog. For the follow-up, Tim asked if MaxLinear expects to grow faster than 30% overall in 2026, referencing the 2025 growth rate. CFO Steve Litchfield declined to provide full-year guidance but expressed confidence in outgrowing the industry in 2026, driven by infrastructure, PON, and industrial multi-market recovery.

Tim Savageaux asked about MaxLinear's optical DSP revenue for the full year 2025. He also sought clarification on whether the company expects to achieve an overall growth rate faster than 30% in 2026.

Answer

Steve Litchfield (CFO) stated that MaxLinear does not break out specific optical DSP revenue but noted consistency with the doubling seen over the last three years, starting from less than $20 million. He highlighted strong visibility and backlog for the first half of 2026. Regarding overall growth, Steve Litchfield (CFO) expressed confidence that MaxLinear can outgrow the industry in 2026, driven by growth in infrastructure, PON, and industrial multi-market segments, though he did not provide full-year guidance.

Tim Savageaux asked for a breakdown of the Q4 2025 infrastructure guidance, which implies over 20% sequential growth, specifically identifying the big drivers like optical or wireless.

Answer

CFO Steve Litchfield confirmed that infrastructure is the biggest contributor to Q4 growth, with modest moderation in broadband/connectivity and improvements in the industrial multi-market. He emphasized strong back-end infrastructure growth leading to good 2026 revenues without providing specific line-item breakdowns.

Tim Savageaux sought clarification on MaxLinear's 'accelerating growth' commentary, specifically whether it applies to the entire business or primarily the optical data center segment. He also asked for an update on the AI optical business, including thoughts on the higher or lower end of the $60 million-$70 million range for 2025, and if the wireless side would see similar absolute dollar growth. Finally, he asked for a breakdown of the drivers for the expected sequential growth in the infrastructure segment for Q4.

Answer

CEO Kishore Seendripu clarified that 'accelerating growth' refers to new opportunities in data center connectivity, wireless infrastructure, and storage accelerators, which represent brand new revenues with huge total addressable markets and tiny current shares, thus growing much faster than the overall company. CFO Steve Litchfield expressed excitement about the infrastructure outlook, with optical leading growth as new data center wins ramp into production next year. For Q4, Mr. Litchfield confirmed infrastructure as the biggest contributor to sequential growth, with modest moderation in broadband and connectivity, and improvements in the industrial multi-market segment, but declined to provide specific line-item breakdowns for infrastructure drivers.

Timothy Savageaux asked about the specific drivers behind the strong sequential growth in the Broadband segment in Q1, the reason for the flat performance in Infrastructure, and the expected customer concentration for the AI optical business.

Answer

CFO Steve Litchfield attributed the Q1 broadband strength to a broad-based recovery that was already underway, noting major new PON wins have not yet ramped. For Infrastructure, he explained that optical performed as expected, but the segment's overall flatness was due to the wireless business, which is still in recovery. CEO Kishore Seendripu stated that optical revenue will inherently be concentrated, expecting a 2/3 split from 2-3 major module makers in the long term.

Timothy Savageaux of Northland Capital Markets asked for the final 2024 optical revenue figure, a potential revenue range for the optical business in 2025, and commentary on the potential impact of the recent Amazon/Jabil agreement.

Answer

CFO Steven Litchfield disclosed that 2024 optical revenue exceeded the high end of the initial $10M-$30M range but was below the $40M stretch goal. He affirmed that a $60M-$70M target for 2025 is reasonable. While declining to comment on the specific Amazon/Jabil agreement, he confirmed Jabil is a good partner.

Tim Savageau asked about the BEAD opportunity, specifically if the $1 billion to $1.5 billion quantification is fully incremental to Calix's current run rate business, and if it could lead to a higher growth rate (e.g., in the twenties) in 2027.

Answer

CFO Cory Sindelar suggested discussing 2027 projections at the Analyst Day. He noted that some BEAD work might come at the cost of other projects due to limited industry resources, requiring increased capacity for it to be fully additive. Sindelar emphasized that BEAD primarily opens up more premises revenue, leading to an acceleration of subscriber-related revenue, which is a key driver.

Tim Savageaux asked about the BEAD opportunity, specifically if the quantified $1 billion to $1.5 billion opportunity (presumably over 3-5 years) would be fully incremental to Calix's current run rate business, and if it could lead to a higher growth rate, potentially in the twenties, in 2027 compared to the 10%-15% target.

Answer

CFO Cory Sindelar suggested attending Investor Day for 2027 color. He noted that some BEAD work might come at the cost of other projects due to limited industry resources (crews), meaning not all revenue would be fully incremental unless capacity increases. He emphasized that BEAD opens up more premises revenue as networks are built, leading to new subscribers and accelerating overall revenue, which Calix is excited about.

Tim Savageaux asked about the dynamics driving strong revenue from large and medium carriers, referencing specific customers like Verizon and CityFibre, and how that might affect the second-half outlook. He also requested more color on a newly won large cloud customer.

Answer

CFO Cory Sindelar stated that demand is broad-based and the outlook is not reliant on any specific customer, noting large customer revenue is inherently lumpy. CEO Michael Weening attributed demand to providers choosing Calix as a long-term partner for the AI transition. He confirmed the new win was a 'net new, very large' cloud-only customer, which he views as a positive indicator for the future.

Timothy Savageaux inquired if Verizon's increased fiber build plans were a factor in the large customer strength and asked about potential opportunities with Frontier. He also asked about any tailwinds from the DZS bankruptcy.

Answer

CEO Michael Weening confirmed Verizon is a long-term partner and Calix benefits from their continued fiber expansion. CFO Cory Sindelar stated it was too early to comment on Frontier. Regarding DZS, Weening expressed empathy for affected customers and said Calix is focused on offering a "helping hand," which may result in future opportunities.

Timothy Savageaux asked if the guidance for lower gross margin improvement, driven by a mix shift to systems, could be offset by stronger-than-expected revenue growth, potentially returning the company to double-digit growth by year-end. He also inquired about growth prospects with large carriers like Verizon.

Answer

CEO Michael Weening framed the mix shift towards subscriber systems as a long-term positive, as it represents laying the footprint for future monetization. CFO Cory Sindelar noted that the company could return to a double-digit annualized growth rate by the second half of the year. Regarding large carriers, Weening expects Verizon to continue investing at a consistent, albeit lumpy, rate and sees opportunities with other medium and large carriers who are recognizing the need to differentiate.

Timothy Savageaux of Northland Capital Markets asked about the potential implications of Verizon's fiber build plans and its planned acquisition of Frontier. He also inquired about any significant shifts in the customer segment mix (small, medium, large) within the Q4 guidance and whether future growth is expected to be primarily small carrier-driven.

Answer

CEO Michael Weening called Verizon a good, strategically aligned customer but said it was too early to comment on the Frontier news. CFO Cory Sindelar stated there were no significant changes to the customer segment mix in the Q4 guide and that they expect progress across all segments in 2025. Weening elaborated that the need to transform from a network operator to an experience provider is a crisis facing all segments, creating opportunities across the board.

Tim Savageaux inquired about the components of Viavi Solutions' fiscal Q3 guidance, specifically the contribution from Spirent (considering 13 weeks vs. 10 weeks in the prior quarter) and the underlying organic growth, especially given the 'countercyclical' sequential revenue increase.

Answer

CFO Ilan Daskal and CEO Oleg Khaykin clarified that Spirent's business typically sees a weaker first half of the calendar year, but some government orders pushed from the prior quarter into fiscal Q3, making it relatively stronger than normal. Oleg Khaykin confirmed that the overall Q3 guidance reflects mid-single-digit sequential organic growth for Viavi, which is extraordinary for a normally seasonally down quarter. He attributed this to the strength in data center, aerospace & defense, and the Spirent business more than offsetting the traditional seasonal weakness in the service provider segment. Oleg Khaykin also projected that the June quarter (fiscal Q4) would be stronger than the March quarter due to continued strength in data center and aerospace & defense, combined with a tailwind from service providers.

Tim Savageaux from Northland Capital Markets sought clarification on the Q3 revenue guidance, specifically distinguishing the contribution from Spirent's product lines, considering its seasonality and Q2 push-outs, from Viavi Solutions' organic growth. He also inquired about the impact of the company's evolving mix towards aerospace and defense and AI data centers on the traditional Q4 seasonality, which typically sees a strong uptick.

Answer

Ilan Daskal, CFO, explained that Spirent's Q3 contribution would be tempered by its typical calendar first-half weakness, though Q2 order push-outs would make it stronger than usual for the quarter. Oleg Khaykin, President and CEO, confirmed the extraordinary organic growth, attributing it to the robust performance of the data center, aerospace and defense, and Spirent businesses, which are now more than offsetting the traditional seasonal weakness in the service provider segment. Khaykin further projected that Q4 would be stronger than Q3, with service providers becoming a tailwind alongside continued strength in data center and A&D.

Timothy Savageaux sought to quantify the size of the fiber lab and production business as a percentage of revenue and the potential revenue impact of the 'prudence' baked into the Q4 guidance due to tariffs.

Answer

CEO Oleg Khaykin estimated the fiber lab and production business is around 20% of NSE revenue. He noted that after a significant increase in the March quarter, the June quarter would see a pullback but still be stronger than December. Regarding the guidance, Khaykin suggested that a 'reasonable number to take a hedge' for potential revenue slippage due to tariff delays would be in the range of $5 million to $10 million.

Timothy Savageaux sought to confirm that the carrier strength in North America was driven by fiber monitoring and asked if this strength was concentrated with large Tier 1s or was more broad-based. He also asked about the drivers of the sequential revenue uptick in Europe and requested clarification on the Q3 seasonality commentary.

Answer

President and CEO Oleg Khaykin clarified that while some Tier 1s in North America are starting to adopt fiber monitoring, the key driver in the region is actually hyperscalers. He noted that Europe's uptick was driven by NEMs and that the region typically lags the U.S. by 1-2 quarters. Regarding seasonality, he confirmed the Q3 outlook is better than a typical seasonal decline, expecting NSE to be flat to slightly up before the contribution from the Inertial Labs acquisition.

Timothy Savageaux from Northland Capital Markets asked whether the strong carrier spending outlook is a temporary "budget flush" or a more sustained recovery, and also inquired about current product lead times.

Answer

President and CEO Oleg Khaykin asserted that the spending increase is from pent-up demand after two years of underinvestment, not a budget flush, representing a fundamental return to base business. He also noted that while mainstream field products have short lead times, bleeding-edge products like 1.6T and 800G face lead times of 3 to 6 months due to high demand for critical components like SerDes.

Tim Savageaux from Northland Capital Markets asked about the total addressable market (TAM) for the emerging defense and drone opportunity and questioned which specific verticals were driving the company's sequential growth guidance for Q3.

Answer

CEO Angus Pacala explained that the defense market TAM is currently included within the broader robotics vertical and is not broken out separately due to its rapidly evolving nature. For the Q3 outlook, Pacala attributed the expected growth to Ouster's overall diversification and the continued strength and momentum within the industrial vertical, which has been a consistent growth driver for the company.

Timothy Savageaux asked for an update on the competitive landscape, particularly regarding China-based suppliers, and requested more detail on the plan to double the Total Addressable Market (TAM).

Answer

CEO Angus Pacala stated that Ouster has long competed with Chinese firms and that its REV7 sensor has increased its competitiveness. He emphasized Ouster's strategic positioning as a secure Western provider with manufacturing in Thailand and the U.S. Pacala confirmed that new products, including the long-developing DF series, are expected to double the company's TAM, marking the largest market expansion in its history.

Tim Savageaux from Northland Capital Markets asked for details on the expected drivers of Q3 sequential growth, whether momentum implies Q4 growth, and the factors behind the strong US performance in Q2.

Answer

CEO & Chairman Tom Stanton indicated that all product segments are trending positively, with Subscriber Solutions and Optical expected to be particularly strong in Q3. Regarding Q4, Stanton stated that while the company doesn't give guidance that far out, he "would not be surprised" if current momentum overcame seasonal patterns. He attributed the Q2 US growth to a mix of inventory normalization and new business wins.

Tim Savageaux of Northland Capital Markets asked if ADTRAN is reaching an inflection point in cross-selling synergies and inquired about the potential scale and ramp-up timeline for the new Southern European customer win.

Answer

CEO Thomas Stanton affirmed that cross-selling momentum is significantly increasing, citing the new European win and expanded business with two U.S. Tier 2s as proof. He suggested this is partly due to customers completing inventory destocking. For the new European carrier, he indicated they are 'in a hurry' and the opportunity could reach 'tens of millions a quarter' once fully ramped.

Timothy Savageaux sought more color on the drivers for the modest Q1 revenue growth guidance, asking about product or geographic contributions. He also asked about the indirect network impact of AI on carrier spending and requested an update on new European customer ramps in the access business.

Answer

CEO Thomas Stanton explained that the modest Q1 growth is positive given typical seasonality. He anticipates stronger Access and Aggregation growth, led by European customers who tend to have stronger early-year buying patterns. Stanton confirmed that AI is causing carriers in both the U.S. and Europe to evaluate their networks, which he expects will drive future upgrades. He also noted that while new European customer ramps are contributing, the larger, established customers remain the primary revenue drivers for now.

Timothy Savageaux focused on the Q4 guidance, asking for the key drivers behind the expected sequential growth by product segment and geography. He also sought clarification on a comment about a 10% increase in sales to large carriers and questioned whether new customer wins were primarily a 2025 growth story.

Answer

Executive Thomas Stanton attributed the Q4 optimism to a broad-based increase in booking rates, stating he expects all business segments to grow, with international markets being a key driver for optical. He confirmed the 10% large carrier growth was across all segments and geographies. He also affirmed that major new customer wins are heavily weighted to be 2025 growth drivers, given the time required for lab approvals and deployment ramps.

Tim Savageaux of Northland Capital Markets requested a deeper analysis of the A&S segment, focusing on the revenue mix between next-generation DOCSIS 4.0 and legacy products, and the potential long-term growth rate for RemainCo.

Answer

CFO Kyle Lorentzen clarified that the majority of A&S revenue is now from next-gen products, with legacy technology accounting for less than 50%. He declined to provide a specific growth guide for 2026, citing the cyclical, project-driven nature of the A&S business. CEO Charles Treadway emphasized that the 2025 EBITDA guidance for RemainCo represents a significant improvement over 2024.

Tim Savageaux from Northland Capital Markets sought details on the A&S segment's revenue mix between next-generation DOCSIS 4.0 and legacy products, and asked if RemainCo could achieve double-digit growth.

Answer

EVP & CFO Kyle Lorentzen stated that next-gen products now constitute the majority of A&S revenue. He declined to provide a specific 2026 growth guide, citing the cyclical, project-based nature of the A&S business. President & CEO Charles Treadway added that the 2025 EBITDA guidance for RemainCo represents a significant year-over-year improvement.

Timothy Savageaux inquired about demand trends from carriers for fiber builds, noting positive industry commentary, and asked about the potential impact from Charter's announced delay in its network upgrade.

Answer

President and CEO Chuck Treadway stated that customers project growth in homes passed and connected over the next three years, which will benefit CommScope. He confirmed quarter-over-quarter improvement in this area, though not back to 2022 levels. While declining to comment on a specific customer, he acknowledged that CommScope is seeing delays in the ANS segment.

Tim Savageaux from Northland Capital Markets questioned the baseline for the "above trend growth" expected in 2026, asking about Q4 seasonality. He also probed whether 2026 revenue could reach a new high watermark and sought to assess the inventory situation at Charter.

Answer

CFO Walter Jankovic indicated an expectation for sequential growth from Q3 to Q4 but refrained from specific guidance due to uncertainties. He stated it was too early to provide a 2026 revenue target but reiterated confidence based on positive tailwinds. He declined to comment on any specific customer's inventory or ramp schedule, speaking only in general terms about the deployment process.

Timothy Savageaux of Northland Capital Markets requested an update on amplifier availability for DOCSIS deployments and asked if an aggressive spending ramp was expected from a large U.S. customer. He also questioned the drivers for the flat-to-down Q2 Broadband revenue guidance.

Answer

CEO Nimrod Ben-Natan reiterated that amplifier availability is progressing according to their initial plan. CFO Walter Jankovic declined to comment on specific customers but explained the Q2 guidance is prudent due to macro uncertainty. Both executives clarified the Q2 forecast reflects expected timing shifts in large projects and a more conservative approach to 'book and burn' revenue due to the tariff situation.

Timothy Savageaux questioned the drivers behind the higher 2025 gross margin forecast, the reasons for increased broadband OpEx despite revenue declines, and the rationale for the revised long-term growth outlook.

Answer

CFO Walter Jankovic attributed the higher gross margin forecast to a favorable product mix with a higher proportion of cOS software licenses versus hardware nodes. He explained that broadband OpEx is increasing to support the growth of 'Rest of World' customers. Regarding the long-term outlook, he stated the company is prudently managing the business based on a revised low double-digit CAGR from 2023-2028, aligning with updated market analyst forecasts that show a near-term dip.

Timothy Savageaux of Northland Capital Markets asked if the prior expectation for accelerating Broadband revenue growth in 2025 is no longer valid and if revenue could potentially decline. He also questioned the drivers for the high Q4 Broadband gross margin guidance and the increasing customer concentration.

Answer

CFO Walter Jankovic confirmed that the previous expectation of accelerating growth in 2025 no longer applies due to the Unified transition. While not providing specific 2025 guidance, he stated that even in their most conservative scenarios, they expect total company EPS for FY25 to be above the FY24 guidance. He attributed the strong Q4 margin guidance to a favorable product mix, specifically cOS, which CEO Nimrod Ben-Natan added is a unique Q4 event. Walter Jankovic also noted the Q3 concentration was expected and that revenue from non-top-2 customers is expected to increase in Q4.

Tim Savageaux of Northland Capital Markets observed that Ciena's cloud business appeared more diversified among providers in the quarter and asked management to comment on this trend.

Answer

President and CEO Gary Smith confirmed the trend, stating that Ciena is seeing a "step function" increase in demand from all four major hyperscalers. He also highlighted that the customer base is broadening to a larger group of cloud players who now recognize the network is critical to monetizing their massive GPU investments, making the demand more diversified and durable.

Timothy Savageaux of Northland Capital Markets asked about any competitive changes following the Nokia-Infinera deal and whether Service Provider growth could be the primary driver for fiscal '25 revenue growth.

Answer

CEO Gary Smith asserted that Ciena remains well-positioned with a multi-year technology advantage and sees the competitor's need to rationalize portfolios as a short-term opportunity. He clarified that while the Service Provider recovery is solid, he expects a significant ramp in Cloud revenue to be the main driver pushing Ciena toward the high end of its annual guidance range.

Timothy Savageaux asked for quantification of the expected second-half revenue contribution from Lighthouse and sought to size the aggregate opportunity of new trials relative to the Omantel deal. He also asked if the enterprise IoT inventory correction was clearing up sooner than anticipated.

Answer

Executive Jacob Suen stated that Airgain has a multiyear, multimillion-dollar contract with Omantel and expects low seven-figure revenue from them in the second half of 2025, with a significant ramp in 2026. He noted that a European trial is slated for Q3, pending CE certification. Suen emphasized the large market need for Lighthouse in areas where traditional infrastructure is cost-prohibitive or slow to deploy. Executive Michael Elbaz confirmed that the inventory correction in the enterprise IoT business is indeed resolving sooner than expected, but cautioned that the aftermarket automotive inventory issue will require additional time to sort out.

Timothy Savageaux asked for metrics to assess the size of the Lighthouse opportunity, such as subscribers or base stations, and questioned how the 50 planned Omantel sites fit into the broader addressable market. He also requested a quantification of the number of Lighthouse trials currently ongoing or expected throughout 2025.

Answer

Executive Jacob Suen stated the 50 deployments with Omantel are just a small fraction of the total opportunity, with more details on the strategic partnership to be announced at MWC. He reiterated the $700M SAM for Lighthouse and described two main applications: indoor solutions and outdoor product sales, highlighting the new Lighthouse Solar product. Executive Michael Elbaz added that the company aims for 'a trial a month' to build a global customer pipeline. Jacob Suen then quantified the current trial pipeline, confirming two completed in Q1, two committed for Q2, and one for Q3, all with major mobile network operators.

Timothy Savageaux asked for details on the 5G network infrastructure opportunity, questioning if the initial Lighthouse order is part of a larger rollout and the potential opportunity size. He also inquired about the expected growth contribution from the 5G systems business in 2025 and whether the automotive segment is the primary driver for Q4's sequential growth guidance.

Answer

Executive Jacob Suen confirmed the initial Lighthouse order from an international MNO is part of a larger deployment discussion that includes recurring service revenue, highlighting a significant time-to-market advantage. CFO Michael Elbaz noted it was too early for specific 2025 guidance but confirmed the expanded addressable market is driven by new platforms like Lighthouse and AC-Fleet. Elbaz also affirmed that the automotive market is the main driver for the Q4 sequential growth guidance, which accounts for the wider-than-usual guidance range.

Inquired about the second-half guidance, specifically the expected growth from the organic DZS business and the possibility of achieving breakeven by year-end. Also asked for an update on the opportunity pipeline related to the U.S. rural fiber market and the BEAD program.

Answer

CEO Charles Vogt confirmed the analyst's breakeven assessment was reasonable but stated the company is providing only a 'soft guide' for H2 2024. He highlighted synergies from the NetComm acquisition as a key factor. Regarding the BEAD program, Vogt noted progress in state-level fund allocation and confirmed DZS has certified its products with the NTIA, expecting meaningful revenue from the program in H2 2025.

Questioned the 2024 CapEx guidance, which he initially thought was doubling, and asked for growth expectations for the Point-to-Point (PTP) and Point-to-Multi-Point (PMP) segments.

Answer

The CFO clarified that the 2024 CapEx outlook of $9 million to $11 million is actually slightly lower than 2023, not doubling. For 2024, the Point-to-Point business is expected to see flat to modest growth, while the Point-to-Multi-Point business is expected to grow in the mid to upper teens.

Asked for confirmation that the annual revenue guidance accounts for the TAIMU contract cancellation and inquired about the timeline to achieve positive adjusted EBITDA and positive cash flow.

Answer

The company confirmed the annual guidance includes offsets for the TAIMU cancellation. They expect to be close to or achieve positive adjusted EBITDA in the December quarter, or the following one. Positive cash flow is anticipated one to two quarters after reaching EBITDA breakeven, contingent on revenue growth.

Timothy Savageaux of Northland Capital Markets inquired about the regional breakdown of the Q4 revenue guidance, the nature of new business in India, the total receivable exposure to BSNL, and the expected timeline for 5G trials in China to convert to deployment revenue.

Answer

VP of Finance Eric Lam clarified that Q4 revenue is expected to be balanced between Japan and India, with India's contribution coming from service revenue on existing BSNL projects. Lam stated the BSNL receivable is over $50 million and the company is confident in its eventual collection following a government revival plan, though timing is uncertain. He also noted that for the China 5G opportunity, a major test must be passed, after which it could become a significant revenue contributor in 2020.

Tim Savageaux of Northland Capital inquired about the 5G optical transport opportunity in China, asking about the partner involved, the potential timing and size of the opportunity, and the overall demand environment. He also questioned whether the weaker Q2 guidance was driven by volatility in India or Japan.

Answer

CEO Tim Ti confirmed a partnership for a 5G backhaul project with a major China carrier but could not disclose the partner's name. VP of Finance Eric Lam added that it was too early to predict the timing or size of the opportunity as it is still in the testing phase. Regarding the Q2 outlook, Lam explained that Japan's revenue is facing uncertainty due to its 5G transition, while India is expected to be a more dominant contributor in the short term, following a Q1 with a relatively even mix between the two regions.

Tim Savageaux from Northland Capital inquired about the 2019 growth outlook, questioning if the company could sustain its growth given drivers like 5G and India versus potential lumpiness. He also asked about the timing of Japan's 100-gig upgrade and the potential for revenue from China.

Answer

VP of Finance Eric Lam acknowledged uncertainty for 2019 revenue, noting that while India's contribution would be strong, significant 5G-related revenue might not materialize until late in the year, causing potential "hiccups." CEO Tim Ti added that Japan's 5G migration is slowed by new vendor selections and that India's revenue is tender-based, leading to quarterly fluctuations. Regarding China, he expects some 2019 revenue from the Tongding partnership and the uSTAR goBox product.