Executive Summary

Q1 FY25 revenue was $35.5M (+4% YoY) with gross margin improving to 23.1%; net loss narrowed to $(1.9)M or $(0.13) per share, better than company’s prior EPS loss guidance for Q1 (guided $(0.28)-$(0.35)) .
Company reiterated FY25 revenue guidance of $170–$185M and introduced Q2 FY25 revenue guidance of $37–$40M and EPS loss of $(0.16)-$(0.21); Q2 margin expected to normalize lower versus Q1 due to absence of some cost tailwinds .
Clearfield segment grew 6% YoY to $29.7M while Nestor declined 6% YoY to $5.8M; management believes community broadband inventory overhang has “predominantly cleared,” supporting sequential improvement in Q2 .
Backlog increased sequentially to $26.0M (+3.6% vs 9/30/24) though down 40.1% YoY; strong quoting and initiation of new multi‑year projects cited as demand indicators .
Potential tariff changes (China tariffs effective Feb 4, 2025; possible Mexico tariffs) are not reflected in guidance; company highlighted redundancy (U.S./Mexico manufacturing), BABA compliance, and supplier diversification as mitigants .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 23.1% (from 13.7% YoY) driven primarily by ~$2.3M lower excess inventory reserve charges from improved utilization; operating loss halved YoY to $(4.0)M .
Mix and portfolio progress: increased revenue from connected homes products supports strategy to be a comprehensive portfolio supplier; CEO cited progress and strong quoting/new multi‑year projects beyond connected homes and government-funded initiatives .
Management asserts community broadband inventory overhang has “predominantly cleared”; reiterates FY25 outlook and expects sequential improvement in Q2 revenue and profitability .

What Went Wrong

Sequential revenue decline vs Q4 (seasonal and expected): $35.5M (Q1) vs $46.8M (Q4); operating loss persisted and is expected to have lower margin in Q2 vs Q1 as one‑time benefits fade .
International/Nestor softness: Nestor segment revenue fell 6% YoY in Q1; for FY25, management anticipates flat Nestor revenue given European macro and geopolitical headwinds .
Backlog still materially below prior year (down 40.1% YoY to $26.0M) despite sequential uptick; indicates broader demand still normalizing vs last year .

Financial Results

Headline P&L vs prior periods

Metric	Q3 2024	Q4 2024	Q1 2025
Net Sales ($M)	$48.8	$46.8	$35.5
Gross Margin (%)	21.9%	22.8%	23.1%
Operating Income (Loss) ($M)	$(2.3)	$(3.0)	$(4.0)
Net Income (Loss) ($M)	$(0.4)	$(0.8)	$(1.9)
Diluted EPS ($)	$(0.04)	$(0.06)	$(0.13)

Notes: Company had guided Q1 revenue to $33–$38M and EPS loss to $(0.28)-$(0.35); actual revenue landed within range and EPS loss was better than guided .

Segment/Geography and Mix (Q1 2025)

Breakdown	Q1 2025
Clearfield Segment Revenue ($M)	$29.7
Nestor Segment Revenue ($M)	$5.8

Balance Sheet / Cash Flow KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Backlog at Quarter End ($M)	$32.6	$25.1	$26.0
Cash & Cash Equivalents ($M)	$25.6	$16.2	$30.5
Short-term Investments ($M)	$98.2	$114.8	$82.6
Long-term Investments ($M)	$24.2	$24.5	$41.9
Inventory, net ($M)	$74.9	$66.8	$59.2
Cash Flow from Operations ($M)	$3.9 (Q3 CFFO)	$12.9 (Q4 CFFO approx.)	$7.15
Share Repurchases ($M)	$5.5	N/A (program continued)	$6.2

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$170–$185M (initiated Nov 7, 2024)	$170–$185M (reiterated Feb 6, 2025)	Maintained
Revenue	Q2 FY25	N/A	$37–$40M	New
EPS (Diluted)	Q2 FY25	N/A	$(0.16) to $(0.21)	New
EPS (Diluted)	Q1 FY25 (for reference)	$(0.28) to $(0.35)	Actual $(0.13)	Beat vs guide

Notes: Guidance excludes potential tariff impacts given uncertainty at time of issuance; BABA-compliance and supply chain redundancy discussed as mitigants .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY24, Q4 FY24)	Current Period (Q1 FY25)	Trend
BEAD timing	Late 2025 initial revenue; larger ramp FY26	Optimistic long-term; near-term uncertainties from U.S. administration change; still expects more meaningful contribution later (transcript typo “fiscal 2020”)	Timing unchanged to late ’25/’26; tone acknowledges policy uncertainty
E‑ACAM as near-term catalyst	Cited as driver into late 2025	Expect E‑ACAM and inventory normalization to drive FY25 growth	Reinforced
Community Broadband inventory	Overhang at MSO/large regionals; community broadband stabilizing	Inventory overhang in community broadband “predominantly cleared”	Improving
Homes Passed vs Connected mix	Shift toward connected; ~50/50 mix in Community Broadband	~50/50 overall; long‑term goal 2:1 connected:passed; connected helps factory absorption	Execution progressing
Tariffs/BABA	BABA progress and compliance	China tariffs (Feb 4, 2025) and potential Mexico tariffs noted; BABA‑compliant alt and dual-sourcing highlighted	New headwind with mitigation plan
Europe/Nestor	Investments in Estonia; margin improvement work	Estonia facility ramp; microduct revenue projected ~$7M FY25; Nestor revenue flat FY25	Margin-focused, flat revenue outlook
Product innovation	BILT 3D install app; active cabinet momentum	New Ready Connect Terminal (Dec 12) and Distributed TAP architecture (Feb 4)	Portfolio expansion continues

Management Commentary

“We generated increased revenue from products for connected homes, highlighting our continued progress toward becoming a comprehensive portfolio supplier… strong quoting activity… and initiation of new multi‑year projects beyond connected homes and government‑funded initiatives.” – CEO, Cheri Beranek .
“Stronger bottom-line performance and continued gross margin improvements were primarily driven by lower excess inventory reserve costs… We believe that the inventory overhang within our primary market, Community Broadband, has predominantly cleared.” – CFO, Dan Herzog .
“We anticipate Clearfield segment revenue growth to be in line with or above industry forecasts of 12.5% for fiscal 2025.” – CFO, Dan Herzog .
“Our Mexican and U.S. manufacturing sites were strategically designed to provide redundancy… [products] are BABA compliant… [we] respond quickly and mitigate cost increases whenever possible.” – Company statement on tariffs .
“We are in the U-shaped recovery that we anticipated… seeing the uptick… in third and fourth quarter as the build season commences.” – CEO closing remarks .

Q&A Highlights

Large regionals: ~3 customers over $1M in sales; lumpy ordering driven by project dynamics; predominantly “passing homes” products today with runway to expand wallet share .
Visibility: Strong quoting into build season; average lead times ~4 weeks; shifting toward supply agreements to improve visibility; some multi‑year projects emerging .
Homes connected: Currently ~50/50 revenue split; long‑term target 2:1 connected:passed; connected SKUs have higher labor content aiding absorption and margins .
BEAD process: Expect changes to overhead/admin elements; broader fiber strategy likely heterogeneous; optimism that streamlined processes will direct more funds to builds .
Gross margin outlook: Q1 benefited from utilization/one‑time savings; Q2 margin to align more closely with earlier assumptions (i.e., lower than Q1); ramp toward low‑20s to mid‑20s by Q4 as volume improves .

Estimates Context

We attempted to retrieve S&P Global consensus for Q1 FY25 and nearby periods, but the data was unavailable through our tool at the time of analysis (daily limit exceeded). As a result, we cannot provide a definitive comparison to Street estimates for revenue/EPS/EBITDA this quarter [SPGI tool error].
Company-level comparison to its own guidance: Q1 sales landed within guided range ($33–$38M) and EPS loss beat (actual $(0.13) vs guided loss $(0.28)-$(0.35)) .

Key Takeaways for Investors

Margin recovery underway: Q1 gross margin up to 23.1% on lower excess inventory charges; margin likely dips near term in Q2 before improving with volume into 2H FY25 .
Demand signals improving: Sequential backlog uptick and strong quoting/new multi‑year projects; management believes community broadband overhang largely cleared, supporting sequential growth in Q2 .
Mix shift opportunity: Connected‑home momentum supports goal to become full portfolio supplier; higher labor content products aid factory absorption and gross profit trajectory .
FY25 guide intact; Q2 guide constructive: Reiterated FY25 revenue $170–$185M; Q2 revenue guided up sequentially to $37–$40M with narrower EPS loss .
Watch tariffs and Europe: Guidance excludes tariff impacts; mitigation via U.S./Mexico redundancy and BABA compliance. Nestor/Europe targeted for margin improvement with flat revenue outlook .
BEAD/E‑ACAM sequencing: E‑ACAM and private funding likely to drive FY25; BEAD contributions more visible late CY25/into FY26; maintain patience for the “U‑shaped” recovery to inflect in build season .

Appendix: Additional Relevant Press Releases (Q1 FY25 context)

Product expansion: StreetSmart Ready Connect Terminal (compact, craft‑friendly terminal for pedestal applications) launched Dec 12, 2024, supporting distributed TAP/split architectures .
Portfolio addition: Distributed TAP architecture solution announced Feb 4, 2025, expanding options across rural/urban/MDU, aligning with craft‑friendly deployment focus .

Source Citations

Q1 FY25 Press Release (Feb 6, 2025):
Q1 FY25 8‑K (Feb 6, 2025):
Q1 FY25 Earnings Call (Feb 6, 2025):
Q4 FY24 8‑K and Earnings Call (Nov 7, 2024):
Q3 FY24 8‑K and Earnings Call (Aug 1, 2024):
Additional Press Releases: Ready Connect Terminal (Dec 12, 2024) ; Distributed TAP (Feb 4, 2025)

Clearfield, Inc. (CLFD)·Q1 2025 Earnings Summary