Sign in
CI

Clearfield, Inc. (CLFD)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue of $49.9M (+2% YoY) and diluted EPS of $0.11 exceeded guidance and beat Wall Street consensus; consensus was $47.6M revenue and $0.05 EPS, implying a clear beat on both top and bottom line* .
  • Gross margin expanded sharply to 30.5% (from 21.9% YoY), aided by improved overhead absorption and recoveries of previously reserved excess inventory; CFO quantified ~1.7–1.8 percentage point benefit from recoveries in Q3 .
  • FY25 revenue guidance raised to $180–$184M (from $170–$185M prior), and Q4 guidance set at $47–$51M revenue and $0.03–$0.11 EPS; management expects tariffs to be non‑material to operating results .
  • Backlog increased to $36.1M (+6% QoQ, +11% YoY), and the company repurchased $5.6M of stock in Q3 with $8.4M remaining under the program, supporting capital return and potential share count tailwinds .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Clearfield segment net sales grew 15% YoY in Q3, with strength in Large Regional Service Providers and MSOs; management reiterated its objective to grow at or above industry rates .
  • Gross margin rose to 30.5% (from 21.9% YoY) driven by improved overhead absorption, productivity initiatives, cost reductions, and favorable recoveries of previously reserved excess inventory ($1.6M of recoveries in Q3) . CFO added the recoveries and lower E&O charges contributed ~1.7–1.8 percentage points to margin versus run‑rate .
  • Product innovation momentum: TetherSmart Multi-Fiber Terminal launched (May), and home deployment kits gaining traction, enabling one‑person installs and broad trials turning into revenue; cabinets sales normalized as industry inventory cleared .

What Went Wrong

  • A one-time $780K valuation charge against Nestor Cables’ deferred tax assets increased income tax expense, partially offsetting net income leverage .
  • Nestor segment remained a headwind on consolidated growth; management expects fiscal 2025 Nestor revenue to be slightly down YoY while focusing on margin improvement and cost structure optimization .
  • Smaller/community broadband customers showed less‑than‑normal seasonal builds given BEAD uncertainty; management flagged delays and planning shifts as revenue timing push‑outs rather than demand destruction .

Financial Results

Consolidated P&L and Margins (oldest → newest)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$48.8 $35.5 $47.2 $49.9
Gross Margin (%)21.9% 23.1% 30.1% 30.5%
Income from Operations ($USD Millions)($2.3) ($4.0) $0.3 $1.5
Net Income ($USD Millions)($0.4) ($1.9) $1.3 $1.6
Diluted EPS ($USD)($0.04) ($0.13) $0.09 $0.11

Q3 2025 Actual vs Wall Street Consensus (S&P Global)

MetricConsensus*ActualSurprise
Revenue ($USD Millions)$47.6*$49.9 +$2.3M (beat)
EPS ($USD)$0.05*$0.11 +$0.06 (beat)
EBITDA ($USD Millions)$2.31*$3.55*+$1.24M (beat)

Values marked with * retrieved from S&P Global.

Segment and KPI Snapshot

MetricQ1 2025Q2 2025Q3 2025
Clearfield Segment Net Sales ($USD Millions)$29.7 $40.6 +15% YoY growth (rev not disclosed)
Nestor Segment Net Sales ($USD Millions)$5.8 $6.6 Modest YoY gross margin improvement (rev not disclosed)
Backlog ($USD Millions)$26.0 $34.1 $36.1
OpEx ($USD Millions)$12.2 $13.9 $13.7
OpEx (% of Sales)34.3% 29.5% 27.5%
Share Repurchases ($USD Millions)$6.2 $4.7 $5.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$170–$185M (Q1 reiterated; Q2 reiterated) $180–$184M Raised and narrowed upward
Net Sales ($USD Millions)Q4 2025—$47–$51M New guidance
Diluted EPS ($USD)Q4 2025—$0.03–$0.11 New guidance
Diluted EPS ($USD)Q3 2025$0.01–$0.08 (issued in Q2) Actual $0.11 Beat prior guidance
Tariff ImpactFY/near-term“Evolving; not expected to be material” “Do not believe tariffs will materially affect results” Maintained stance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/data center adjacencyPositioning FiberFlex for edge electronics; expect BEAD/E‑ACAM to contribute; exploring adjacent markets Targeting data center connectivity outside hyperscale; revenue impact modest in FY26, more in FY27; investments in product marketing and modular Clearview cassette Building pipeline; medium‑term ramp
Supply chain/tariffsDual‑sourced US/MX manufacturing; Asian suppliers shifting to non‑China; do not expect material impact Tightness in battery backup/rectifiers for active cabinets; border/timing challenges; still not expecting material impact Operationally manageable
Product performanceCabinets normalizing; strong connected home momentum; launch of new terminals Home deployment kits gaining revenue traction; cabinets demand increasing; TetherSmart MFT highlighted Improving mix and adoption
Regional/customer mixLarge regionals lumpy; community broadband inventory clearing; multi‑year projects emerging Clearfield segment +15% YoY; large regional/MSO strength; small carriers cautious due to BEAD uncertainty Clearfield strength; community broadband delayed
Regulatory/macro (BEAD, E‑ACAM)BEAD more meaningful in FY26; E‑ACAM near‑term catalyst Continued BEAD uncertainty affecting small carriers’ seasonality; management still constructive on fiber prioritization Timing push‑out; thesis intact

Management Commentary

  • CEO: “Our net sales outperformance in the third quarter was driven by strong customer demand in the Large Regional Service Provider and MSO end markets within our Clearfield segment… We remain focused on executing on our objective of growing faster than the industry and driving market share gains.”
  • CFO: “Our solid top and bottom-line performance was primarily driven by improvements in overhead absorption and recoveries of previously reserved excess inventory, as well as optimized capacity… at all of our North American facilities.”
  • CFO on E&O recoveries: “Last year, we had about $1.7M expense. This quarter, we had a $1.1M gain… about a 1.7–1.8% effect [on gross margin] from our run rate.”
  • CEO on supply chain: “Challenges still go to battery backup and some rectifiers associated with the active cabinet business… related to tariffs… we’ve been absorbing those costs rather than passing them along… lead times have been better… considering alternative suppliers.”

Q&A Highlights

  • Product mix and connected home: Demand for cabinets has normalized and connected home kits are contributing; kits enable one‑person installs and are expanding from trials to ongoing revenue .
  • Margin drivers: Lower E&O charges and recoveries amplified gross margin; CFO quantified ~1.7–1.8 percentage point benefit vs run‑rate .
  • Supply chain/tariffs: Electronics (battery backup, rectifiers) remain tight; tariffs create timing/border frictions but are absorbed and not expected to be material .
  • Data center opportunity: Non‑hyperscale connectivity opportunity seen; modest revenue in FY26, more in FY27; focus on modular differentiation (Clearview cassette) .
  • OpEx trajectory: Slightly up in Q4 on trade shows, travel, audits, consulting; still disciplined .

Estimates Context

  • Q3 2025 results beat consensus: Revenue $49.9M vs $47.6M*, EPS $0.11 vs $0.05*, EBITDA $3.55M vs $2.31M* .
  • Q4 2025 set-up: Company guides revenue $47–$51M and EPS $0.03–$0.11; consensus sits at ~$49.6M revenue* and $0.08 EPS*, both inside guidance ranges, suggesting limited directional revisions unless order momentum inflects .

Values marked with * retrieved from S&P Global.

Q4 2025 Consensus vs Company Guidance

MetricQ4 Consensus*Company GuidanceComment
Revenue ($USD Millions)$49.6*$47–$51 Consensus at midpoint of guidance
EPS ($USD)$0.08*$0.03–$0.11 Consensus mid‑range; room for surprise

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Clear beat on both revenue and EPS versus consensus, with margin expansion supported by inventory reserve recoveries and better absorption; watch sustainability of ~30% GM as recoveries normalize .
  • Raised FY25 revenue guidance to $180–$184M signals stronger demand cadence and improved execution; Q4 guide brackets consensus, limiting near‑term estimate volatility absent incremental news .
  • Clearfield segment strength (+15% YoY) versus Nestor headwinds underscores portfolio positioning toward higher‑margin, North American demand drivers; mix shift should continue to favor consolidated margins .
  • Product cycle momentum (TetherSmart MFT, home deployment kits, cabinet normalization) provides tangible near‑term catalysts, especially in connected home where labor‑lite benefits drive adoption .
  • BEAD delays remain a timing overhang for smaller carriers; E‑ACAM and private/venture builds support base demand—monitor backlog trajectory (+$36.1M in Q3) as a forward indicator .
  • Tariff exposure appears manageable and non‑material per management; remaining watch‑items are electronics supply tightness (battery backup/rectifiers) and border timing .
  • Capital return continues ($5.6M repurchases in Q3; $8.4M remaining), with potential share count leverage to EPS if buybacks persist .

ADDENDUM: Additional Relevant Press Releases (Q3 period)

  • Hawaiian Telcom partnership progress toward state‑wide fiber enablement highlights Clearfield’s role in large, complex deployments; over 1,000 Clearfield PON cabinets expected by year‑end .
  • Q3 earnings call scheduling details and replay access .