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AVIAT NETWORKS, INC. (AVNW)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY25 delivered revenue of $115.3M and non-GAAP EPS of $0.83, with third consecutive quarterly record Adjusted EBITDA of $15.1M (13.0% margin); North America grew 3.2% YoY while total revenue was down 1.1% on international project timing .
  • Results modestly beat S&P Global consensus: EPS $0.83 vs $0.70*, revenue $115.3M vs $114.7M*, supported by strong services contribution and disciplined OpEx, while gross margin dipped ~110–120 bps YoY on mix .
  • FY26 outlook initiated: revenue $440–$460M and Adjusted EBITDA $45–$55M; management expects seasonality with Q1 lowest and Q4 strongest, underpinned by backlog of $323M and TTM book-to-bill >1 .
  • Strategic drivers include expanding public safety/private networks demand and a new ETSI-compliant IRU600 high-power all-indoor radio unlocking international TAM; tariff headwinds mitigated via supply chain pivot (~$1.5M of sourcing moved from China) .
  • Watch items: continued YoY gross margin pressure from mix, international volatility, and unresolved material weaknesses in internal controls (remediation ongoing) .
    Values marked with * are from S&P Global consensus (GetEstimates).

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability: “third consecutive quarter of setting a new record adjusted EBITDA” ($15.1M, 13.0%); non-GAAP EPS up 15% YoY to $0.83 .
    • Demand/backlog: Backlog grew to $323M (up 11% YoY) with TTM book-to-bill >1; public safety budgets up (city police/fire +5%, states +8%) supporting private networks momentum .
    • Product/portfolio: PassLink at ~$140M annualized revenue run-rate exiting FY25; ETSI-compliant IRU600 extends high-power all-indoor franchise internationally .

  • What Went Wrong

    • Gross margin compression: GAAP GM 34.2% and non-GAAP 34.7% vs 35.3%/35.9% a year ago (−110/−120 bps) on regional/customer mix .
    • Modest top-line decline YoY: total revenue −1.1% YoY; international revenue −5.2% on mobile project timing .
    • Internal control weaknesses persist despite progress; remediation remains a FY26 priority and potential overhang .

Financial Results

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($M)116.66 118.20 112.64 115.34
GAAP Gross Margin %35.3% 34.6% 34.9% 34.2%
Non-GAAP Gross Margin %35.9% 35.3% 35.8% 34.7%
GAAP Operating Income ($M)5.46 7.97 9.29 8.88
Non-GAAP Operating Income ($M)10.61 12.57 13.05 12.94
GAAP Diluted EPS ($)0.12 0.35 0.27 0.40
Non-GAAP Diluted EPS ($)0.72 0.82 0.88 0.83
Adjusted EBITDA ($M)11.88 14.84 14.88 15.05
Adjusted EBITDA Margin %10.2% 12.6% 13.2% 13.0%
  • Actual vs S&P Global Consensus (Q4 2025)
MetricConsensusActualSurprise
Revenue ($M)114.67*115.34 +0.67*
Primary EPS ($)0.70*0.83 +0.13*

Values marked with * are from S&P Global consensus (GetEstimates).

  • Mix (Product vs. Services)
Revenue Mix ($M)Q4 2024Q3 2025Q4 2025
Product78.80 76.82 67.41
Services37.87 35.82 47.94
Total116.66 112.64 115.34
  • Geography
Geography ($M)Q2 2025Q3 2025Q4 2025
North America57.96 49.40 58.02
International (Total)60.24 63.24 57.32
• Africa & Middle East12.67 15.09 11.22
• Europe8.35 9.43 8.34
• LatAm & APAC39.21 38.72 37.77
Total Revenue118.20 112.64 115.34
  • KPIs and Balance Sheet
KPIQ3 2025Q4 2025
Backlog ($M)—323
TTM Book-to-Bill>1 >1
Cash & Equivalents ($M)49.4 59.7
Total Debt ($M)73.9 87.6
Net Debt ($M)24.5 27.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY26—$440–$460M New
Adjusted EBITDAFY26—$45–$55M New
Intra-year cadenceFY26—Q1 lowest; Q4 strongest New

For context, FY25 guidance was maintained earlier in the year at $430–$470M revenue and $30–$40M Adjusted EBITDA .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3 FY25)Current Period (Q4 FY25)Trend
Public safety/private networks fundingHighlighted strong demand drivers; record EBITDA, growing NA private networks; Pasolink orders >$35M (run-rate build) ; Q3: first orders for ProVision Plus; services strength City police/fire +5%, state public safety +8% budgets; backlog elevated; expect favorable environment in FY26 Improving demand visibility
Tier-1 carriers/mobileQ2/Q3: International variability; APAC strength; MSP timing impacted mix US Tier-1 spend rebounded vs earlier FY; APAC strong; broader MSP CapEx opportunities in FY26 Stabilizing to improving
BEAD rural broadbandLimited near-term impact (Q2/Q3) States awarding 39–50% to FWA/hybrid; no revenue impact until CY26; not in guidance Positive medium-term setup
Tariffs/supply chainNot emphasized (Q2/Q3)Minimal profitability impact; ~$1.5M sourcing moved from China; mitigation ongoing Risk mitigated
Product roadmap—ETSI-compliant IRU600 opens new int’l markets; highest power all-indoor radio Expanding TAM
Profitability/OpEx disciplineRecord EBITDA; cost control supported non-GAAP OpInc (Q2/Q3) Third consecutive record Adjusted EBITDA; non-GAAP OpEx down YoY Sustained execution
Internal controls—Material weaknesses identified; remediation continues Work-in-progress

Management Commentary

  • Strategy and demand: “This marks our third consecutive quarter of setting a new record adjusted EBITDA… Non-GAAP EPS of $0.83 up 15% year over year.”
  • Public safety tailwinds: “Allocations to city police and fire budgets are growing by 5% and states are growing public safety budgets by 8%... aligns with LMR upgrades… growing demand for Aviat’s suite of backhaul radios, routers and services.”
  • Carrier outlook: “The fourth quarter represented a rebound in spending from U.S. Tier One… APAC strong… fiscal 2026 will have a broader set of opportunities… many emerging markets are still early in building out 5G.”
  • BEAD timing: “We continue to believe that we will not see revenue impact from BEAD until calendar year 2026 and will not include it in any financial guidance until we have better visibility.”
  • Tariffs: “We have indeed seen minimal impact to… profitability… moved nearly $1,500,000 worth of supply purchases from China.”
  • Internal controls: “We did identify material weaknesses in our controls environment… will continue to invest further to remediate.”

Q&A Highlights

  • BEAD and FWA adoption: Management called out multiple states awarding ~39–50% of locations to FWA/hybrid; reiterated no contribution until CY26 and excluded from guidance .
  • FY26 growth posture: Mid-range implies ~low-single-digit growth; management is intentionally conservative given a soft Q1 last year, preferring to “prove [themselves] one more quarter” before raising .
  • Seasonality: Business is project-based; expect Q1 low, Q2/Q3 even, Q4 highest—consistent with emerging pattern across core Aviat, Pasolink, and 4RF portfolios .
  • Mix and margins: Services were strong with margin improvement across all regions in Q4; overall gross margin variability driven by project/region/customer mix .
  • Private vs carrier: Expect better growth from private networks vs carrier in FY26; North American wireless to see slight recovery; emerging markets favorable on connectivity build-outs .

Estimates Context

  • Q4 FY25 beats: EPS $0.83 vs $0.70*; revenue $115.3M vs $114.7M*; consensus based on limited coverage (EPS n=2; revenue n=6)*. Adjusted EBITDA was a company record at $15.1M, with gross margin modestly below prior year on mix .
    Values marked with * are from S&P Global consensus (GetEstimates).

Key Takeaways for Investors

  • Quality beat on both revenue and EPS vs S&P consensus, with a notable upside in Adjusted EBITDA and disciplined OpEx—even as gross margin faced mix headwinds .
  • FY26 guide embeds conservatism and seasonality (Q1 low/Q4 high), but backlog and public safety funding support upward bias if execution remains solid; watch Q1 as a reset quarter .
  • Private networks leadership and IRU600 ETSI launch expand international opportunities; near-term carrier/MSP trends improving, particularly US Tier-1 and select APAC markets .
  • Tariff headwinds appear manageable given proactive sourcing shifts; continued monitoring warranted for further trade developments .
  • Internal control remediation remains a non-operational overhang; successful closure would reduce risk perception and could improve investor confidence .
  • Mix volatility (services/product, regional) will continue to drive quarterly GM; sustained services strength can cushion margin swings, but international project timing remains a swing factor .
  • Medium-term upside optionality from BEAD is intact but firmly post-2025; do not ascribe near-term revenue for this program until visibility improves .

Appendix: Additional Data Points

  • Q4 FY25: Revenue $115.3M; GAAP GM 34.2%; GAAP OpInc $8.9M; GAAP EPS $0.40; non-GAAP GM 34.7%; non-GAAP OpInc $12.9M; non-GAAP EPS $0.83; Adj. EBITDA $15.1M (13.0%) .
  • FY26 outlook: Revenue $440–$460M; Adj. EBITDA $45–$55M .
  • Backlog: $323M; TTM book-to-bill >1 .
  • Cash/Total Debt/Net Debt: $59.7M / $87.6M / $27.9M .
  • CFO transition and preliminary Q4 view (Aug 27): GAAP NI >$4.5M; Adj. EBITDA >$14.0M, later confirmed above in reported results .