Q4 2025 ADTRAN Holdings Inc Earnings Call

February 26, 2026

Speaker #2: Good morning. My name is Julianne, and I'll be your conference operator. At this time, I would like to welcome everyone to ADTRAN Holdings' fourth quarter and full year 2025 financial results conference call.

Julianne: Good morning. My name is Julianne, and I will be your conference operator. At this time, I would like to welcome everyone to ADTRAN Holdings Fourth Quarter and Full Year 2025 Financial Results Conference Call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you will need to press Star, followed by the number 1 on your telephone keypad. Thank you. Mr. Peter Schuman, Vice President, Investor Relations, you may begin your conference.

Operator: Good morning. My name is Julianne, and I will be your conference operator. At this time, I would like to welcome everyone to ADTRAN Holdings Fourth Quarter and Full Year 2025 Financial Results Conference Call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you will need to press Star, followed by the number 1 on your telephone keypad. Thank you. Mr. Peter Schuman, Vice President, Investor Relations, you may begin your conference.

Speaker #2: All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you will need to press star, followed by the number 1 on your telephone keypad.

Speaker #2: Thank you. Mr. Peter Schuman, Vice President, Investor Relations, you may begin your conference. Thank you, Julianne. Welcome, and thank you for joining us today, and welcome to all those joining by webcast.

Peter Schuman: Thank you, Julianne. Welcome, thank you for joining us today, and welcome to all those joining by webcast. During the conference call, ADTRAN representatives will make forward-looking statements that reflect management's best judgment based on factors currently known. However, these statements involve risks and uncertainties, including those detailed in our earnings release, our annual report on Form 10-K as amended, and our other filings with the SEC. These risks and uncertainties could cause actual results to differ materially from those in our forward-looking statements, which may be made during the call. We undertake no obligation to update any statements to reflect events that occur after this call. During today's call, we will refer to certain non-GAAP financial measures. Reconciliations of GAAP to non-GAAP measures and certain additional information are also included in our investor presentation and our earnings release.

Speaker #2: During the conference call, ADTRAN representatives will make forward-looking statements that reflect management's best judgment based on factors currently known. However, these statements involve risk and uncertainties, including those detailed in our earnings release, our annual report on Form 10-K as amended, and our other filings with the SEC.

Speaker #2: These risk and uncertainties could cause actual results to differ materially from those in our forward-looking statements which may be made during the call. We undertake no obligation to update any statements to reflect events that occur after this call.

Speaker #2: During today's call, we will refer to certain non-GAAP financial measures, reconciliations of GAAP to non-GAAP measures, and certain additional information are also included in our investor presentation and our earnings release.

Speaker #2: We have not provided reconciliations of our first quarter 2026 outlook with regard to non-GAAP operating margin, because we cannot predict and quantify, without unreasonable effort, all of the adjustments that may occur during the period.

Peter Schuman: We have not provided reconciliations of our Q1 2026 outlook with regard to non-GAAP operating margin because we cannot predict and quantify, without unreasonable effort, all of the adjustments that may occur during the period. The investor presentation has been updated and is available for download on the ADTRAN Investor Relations website. Turning to the agenda, Tom Stanton, ADTRAN Holdings CEO and Chairman of the Board, will provide key highlights for the Q4 and full year 2025. Tim Santo, our Senior Vice President and CFO, will review the quarterly and full-year financial performance in detail and provide our Q1 2026 outlook, and then we will take questions that you may have. I would now like to turn the call over to Tom Stanton. Operator, we are receiving notification that the line is bad and that recipients are not hearing us correctly.

Speaker #2: The investor presentation has been updated and is available for download on the ADTRAN Investor Relations website. Turning to the agenda, Tom Stanton, ADTRAN Holdings CEO and Chairman of the Board, will provide key highlights for the fourth quarter and full year 2025.

Speaker #2: Tim Santo, our Senior Vice President and CFO, will review the quarterly and full-year financial performance in detail and provide our first quarter 2026 outlook and then we will take questions that you may have.

Speaker #2: I would now like to turn the call over to Tom Stanton.

Peter Schuman: Operator, we are receiving notification that the line is bad and that recipients are not hearing us correctly.

Speaker #3: Operator, we are receiving notification that the line is bad and that recipients are not hearing us correctly. Is there a way to prove the line?

Peter Schuman: Is there a way to improve the line before we proceed?

Speaker #3: Before we proceed.

Speaker #4: You're coming in loud and clear from my end.

Julianne: You're coming in loud and clear from my end.

Operator: You're coming in loud and clear from my end.

Speaker #3: Okay. Maybe just one minute. All right. Thank you very much. Thank you, Peter, and good morning, everyone. ADTRAN delivered a strong fourth quarter and finished 2025 with solid momentum.

Peter Schuman: It may be just my line then. All right. Thank you very much. Thank you, Peter. Good morning, everyone. ADTRAN delivered a strong Q4 and finished 2025 with solid momentum. Our quarterly results reflected higher demand and strong execution, with revenue above the high end of our original outlook, overcoming typical year-end seasonality. Operating leverage continued to improve. Earnings came in above expectations, with all three business categories achieving sequential and year-over-year growth. In Q4, ADTRAN generated revenue of $291.6 million, reflecting a strong year-over-year growth of 20% and sequential growth of over 4%. This marks the sixth consecutive quarter of sequential growth and the fifth consecutive quarter of year-over-year improvement, reinforcing the strength of our company and our key markets.

Peter Schuman: It may be just my line then. All right. Thank you very much.

Tom Stanton: Thank you, Peter. Good morning, everyone. ADTRAN delivered a strong Q4 and finished 2025 with solid momentum. Our quarterly results reflected higher demand and strong execution, with revenue above the high end of our original outlook, overcoming typical year-end seasonality. Operating leverage continued to improve. Earnings came in above expectations, with all three business categories achieving sequential and year-over-year growth. In Q4, ADTRAN generated revenue of $291.6 million, reflecting a strong year-over-year growth of 20% and sequential growth of over 4%. This marks the sixth consecutive quarter of sequential growth and the fifth consecutive quarter of year-over-year improvement, reinforcing the strength of our company and our key markets.

Speaker #3: Our quarterly results reflected higher demand and strong execution, with revenue above the high end of our original outlook. Overcoming typical year-end seasonality. Operating leverage continued to improve and earnings came in above expectations with all three business categories achieving sequential and year-over-year growth.

Speaker #3: In the fourth quarter, ADTRAN generated revenue of $291.6 million, reflecting strong year-over-year growth of 20% and sequential growth of over 4%. This marks the sixth consecutive quarter of sequential growth and the fifth consecutive quarter of year-over-year improvement, reinforcing the strength of our company and our key markets.

Speaker #3: Our US business led the quarterly growth with revenue up 31% year-over-year and 14% sequentially. Non-US revenue grew 12% year-over-year and declined 3% sequentially as expected and consistent with recent ordering patterns among some of our larger European customers.

Peter Schuman: Our US business led to quarterly growth, with revenue up 31% year-over-year and 14% sequentially. Non-US revenue grew 12% year-over-year and declined 3% sequentially, as expected, and consistent with recent ordering patterns among some of our larger European customers. Optical networking solutions grew 33% year-over-year, driven by strong sales to cloud providers and enterprise customers.

Tom Stanton: Our US business led to quarterly growth, with revenue up 31% year-over-year and 14% sequentially. Non-US revenue grew 12% year-over-year and declined 3% sequentially, as expected, and consistent with recent ordering patterns among some of our larger European customers. Optical networking solutions grew 33% year-over-year, driven by strong sales to cloud providers and enterprise customers.

Speaker #3: Optical networking solutions grew 33% year-over-year, driven by strong sales to cloud providers and enterprise customers. This increase also drove the contribution of enterprise and cloud providers to 25% of our revenue in Q4 and 21% for the full year of 2025.

Tom Stanton: ... This increase also drove the contribution of enterprise and cloud providers to 25% of our revenue in Q4, and 21% for the full year of 2025. These results reinforce a trend we are seeing, cloud providers expanding data center capacity and large enterprises upgrading their optical networks. During the quarter, we continued to broaden our optical customer base. We saw solid activity across service providers, cloud providers, enterprises, and public networks, reflecting the flexibility of our optical platforms across different use cases. Access and aggregation revenue grew 9% year-over-year and 6% sequentially, supported by continued fiber access investment across the US and European operators. During the quarter, customer activity reflected a mix of expansion projects and network upgrades as operators advanced deployments.

Speaker #3: These results reinforce a trend we are seeing: cloud providers expanding data center capacity and large enterprises upgrading their optical networks. During the quarter, we continue to broaden our optical customer base.

Speaker #3: We saw solid activity across service providers, cloud providers, enterprises, and public sector networks. Reflecting the flexibility of our optical platforms across different use cases, access and aggregation revenue grew 9% year-over-year and 6% sequentially, supported by continued fiber access investment across the US and European operators.

Speaker #3: During the quarter, customer activity reflected a mix of expansion projects and network upgrades as operators advanced deployments. And subscriber solutions revenue grew 17% year-over-year and 3% sequentially.

Tom Stanton: Subscriber solutions revenue grew 17% year-over-year and 3% sequentially, driven by demand for our residential fiber CPE as customers continue to connect more subscribers. The revenue in this category continues to be generated by a diverse mix of residential, enterprise, and wholesale service offerings. Today, our software solutions serve over 1,000 carrier customers across 3 of our product categories, automating everything from optical networks to in-home subscriber experiences. These customers include nearly 500 service providers adopting our Mosaic One platform, and more than 100 service providers deploying our recently introduced Intellifi cloud-managed Wi-Fi solutions. We are also advancing our agentic AI platform with numerous Mosaic One Clarity customer trials underway before an official launch later this year. As demand for AI-driven automation grows, we see this application suite as an important addition to our software capabilities.

Speaker #3: Driven by demand for our residential fiber CPE as customers continue to connect more subscribers. The revenue in this category continues to be generated by a diverse mix of residential, enterprise, and wholesale service offerings.

Speaker #3: Today, our software solutions serve over 1,000 carrier customers across three of our product categories: automating everything from optical networks to in-home subscribers experiences. These customers include nearly 500 service providers adopting our MosaicOne platform and more than 100 service providers deploying our recently introduced IntelliFi cloud-managed Wi-Fi solutions.

Speaker #3: We are also advancing our agentic AI platform, with numerous MosaicOne Clarity customer trials underway before an official launch later this year. As demand for AI-driven automation grows, we see this application suite as an important addition to our software capabilities.

Speaker #3: Looking at the broader environment, we continue to see sustained fiber investment across our core markets. And the US broadband programs and ongoing investments in data centers are supporting ongoing network expansion.

Tom Stanton: Looking at the broader environment, we continue to see sustained fiber investment across our core markets. In the US, broadband programs and ongoing investments in data centers are supporting ongoing network expansion. In Europe, increased focus on network security and vendor diversification away from higher-risk co-suppliers is reinforcing upgrade activity across the region. These trends are supporting continued demand for upgrades across all three product categories. At the same time, network requirements continue to evolve. Across data centers, between the data center and out to the customer edge, capacity demands are increasing. Service providers, cloud providers, and enterprises are pairing high-capacity fiber networks with automation and software to streamline operations. While this is still an emerging contributor to our revenue, it reinforces the market's longer-term direction towards more intelligence and more automation.

Speaker #3: In Europe, increased focus on network security and vendor diversification away from higher-risk suppliers is reinforcing upgrade activity across the region. These tends are supporting continued demand for upgrades across all three product categories.

Speaker #3: At the same time, network requirements continue to evolve. Across data centers, between the data center, and out to the customer edge, capacity demands are increasing.

Speaker #3: Service providers, cloud providers, and enterprises are pairing high-capacity fiber networks with automation and software to streamline operations. While this is still an emergency contributor to our revenue, it reinforces the market's longer-term direction towards more intelligence and more automation.

Tom Stanton: With our broadband fiber network portfolio, software assets, and regional strength, we are well positioned to support both the current infrastructure cycle and the longer-term evolution towards these more intelligent fiber networks. We delivered a strong Q4 with solid financial results and execution and healthy cash flows. For the full year of 2025, we delivered double-digit revenue growth, with each of our three revenue categories also growing at double-digit rates. We achieved this while expanding gross margins and returning to positive non-GAAP operating margin and EPS. During the year, we strengthened our balance sheet by issuing approximately $200 million of convertible notes at an interest rate meaningfully lower than our revolving credit facility.

Speaker #3: With our broadband fiber network portfolio, software assets, and regional strength, we are well-positioned to support both the current infrastructure cycle and the longer-term evolution towards these more intelligent fiber networks.

Speaker #3: We delivered a strong Q4 with solid financial results and execution and healthy core and healthy cash flows. For the full year 2025, we delivered double-digit revenue growth with each of our three revenue categories also growing at double-digit rates.

Speaker #3: We achieved this while expanding gross margins and returning to positive non-gap operating margin and EPS. Also, during the year, we strengthened our balance sheet by issuing approximately $200 million of convertible notes at an interest rate meaningfully lower than our revolving credit facility.

Speaker #3: We were able to purchase 27.2 million of ADTRAN network shares during Q4 and 46.6 million worth of shares during the calendar 2025, reducing the minority interest to less than 30% as we close the year.

Tom Stanton: We were able to purchase $27.2 million of Adtran Networks shares during Q4, and $46.6 million worth of shares during calendar 2025, reducing the minority interest to less than 30% as we closed the year. As we move into 2026, our priorities remain continued improvement in our leverage model, expanding operating margin, cash generation, and converting the customer momentum that we have been seeing. We continue to operate in a dynamic cost environment, including variability in components such as memory. We are managing that variability through disciplined procurement and price mechanisms that are already embedded in our model. At this time, we are not seeing conditions that change our demand outlook or execution priorities. In summary, we enter 2026 with a positive outlook. Customer trends are favorable in the US and Europe.

Speaker #3: As we move into 2026, our priorities remain continued improvement in our leverage model expanding operating margin, cash generation, and converting the customer momentum that we have been seeding.

Speaker #3: We continue to operate in a dynamic, cost environment, including variability in components such as memory. We are managing that variability through discipline procurement and price mechanisms that are already embedded in our model.

Speaker #3: At this time, we are not seeing conditions that change our demand outlook or execution priorities. In summary, we enter 2026 with a positive outlook.

Speaker #3: Customer trends are favorable in the US and Europe. Customer acceptance of products has been strong, and our product offerings and competitive position has never been better.

Tom Stanton: Customer acceptance of products has been strong, and our product offerings and competitive position has never been better. We have several multiyear tailwinds in our key market segments. With that, I'll turn the call over for Tim to review the financial results in more detail. Tim?

Speaker #3: We have several multi-year tailwinds in our key market segments. With that, I'll turn the call over for Tim to review the financial results in more detail.

Speaker #3: Tim?

Speaker #5: Thank you, Tom. And thank you all for joining us this morning. We delivered strong results for the fourth quarter and full year 2025, driven by solid execution and healthy revenue growth.

Tim Santo: Thank you, Tom. Thank you all for joining us this morning. We delivered strong results for Q4 and full year 2025, driven by solid execution and healthy revenue growth. As scale improved, we delivered higher margins and operating efficiency increased across the business. We remain focused on disciplined cost management as we continue to grow. Over the quarter, we continued to operate with tight financial processes and consistent execution. These remain embedded in how we run the business, improving visibility, planning rigors, and supporting structured capital allocation. While the mix between gross margin and operating expenses can shift from quarter to quarter as revenue moves, our objective remains focused on steady margin expansion as the business scales. As we noted on our previous earnings call, the capital actions we took last year improved our financial flexibility and added optionality.

Speaker #5: As scale improved, we delivered higher margins and operating efficiency increased across the business. We remain focused on disciplined cost management as we continue to grow.

Speaker #5: Over the quarter, we continued to operate with tight financial processes and consistent execution. These remain embedded in how we run the business, improving visibility and planning rigors and supporting structured capital allocation.

Speaker #5: While the mix between gross margin and operating expenses can shift from quarter to quarter as revenue moves, our objective remains focused on steady margin expansion as the business scales.

Speaker #5: As we noted on our previous earnings call, the capital actions we took last year improved our financial flexibility and added optionality. Broadly, our focus remains on simplifying the capital structure and maintaining flexibility to support the business and create value.

Tim Santo: Broadly, our focus remains on simplifying the capital structure and maintaining flexibility to support the business and create value. We will continue to deploy cash thoughtfully to reduce the minority interest over time, while maintaining balance sheet strength and evaluating non-core asset monetization opportunities as appropriate. Turning to the financial results for Q4 2025. Revenue was $291.6 million, up 20% year-over-year and 4% sequentially, above the high end of our original guidance. Year-over-year growth was driven by all three product categories, with optical networking the largest and fastest contributor, with revenue increasing by $26.9 million or 33% from the prior year. Geographically, non-US revenue accounted for 53% of total revenue, while US revenue accounted for 47%.

Speaker #5: We will continue to deploy cash thoughtfully, to reduce the minority interest over time, while maintaining balance sheet strength and evaluating non-core asset monetization opportunities as appropriate.

Speaker #5: Turning to the financial results for the fourth quarter of 2025, revenue was $291.6 million up 20% year over year and 4% sequentially. Above the high end of our original guidance.

Speaker #5: Year over year growth was driven by all three product categories with optical networking the largest and fastest contributor. With revenue increasing by 26.9 million, or 33% from the prior year.

Speaker #5: Geographically, non-US revenue accounted for 53% of total revenue, while US revenue accounted for 47%. Non-gap gross margin increased to 42.5%, up 44 basis points sequentially, and 122 basis points year over year, driven by scale efficiencies, product mix, and cost discipline.

Tim Santo: Non-GAAP gross margin increased to 42.5%, up 44 basis points sequentially and 122 basis points year-over-year, driven by scale efficiencies, product mix, and cost discipline. We remain focused on sustaining gross margin in the 42% to 43% range over the long term. Non-GAAP operating profits rose to $18.8 million, or 6.4% of revenue, exceeding the midpoint of our original outlook and up 103 basis points sequentially and 406 basis points year-over-year. Non-GAAP tax expense in Q4 2025 was $3.8 million, or an effective rate of 22.6%. Non-GAAP EPS was $0.16 compared to $0.05 in Q3 2025 and a loss of $0.02 a year ago. EPS benefited by $0.03 from the acquisition of shares from minority holders in Q4.

Speaker #5: We remain focused on sustaining gross margin in the 42 to 43 percent range over the long term. Non-gap operating profits rose to 18.8 million dollars, or 6.4% of revenue, exceeding the midpoint of our original outlook, and up 103 basis points sequentially, and 406 basis points year over year.

Speaker #5: Non-gap tax expense in Q4 2025 was 3.8 million dollars, or an effective rate of 22.6%. Non-gap EPS was 16 cents, compared to 5 cents in Q3 2025, and a loss of 2 cents a year ago.

Speaker #5: EPS benefited by 3 cents from the acquisition of shares from minority holders in the fourth quarter. We continued to strengthen our financial position during the year.

Tim Santo: We continued to strengthen our financial position during the year. Year-over-year, networking capital improved by $8.7 million due to meaningful inventory reductions, largely offset by increases in accounts receivable due to increased sales. During the year, inventory declined by almost $50 million, including $8 million during Q4. Days inventory outstanding improved by 47 days year-over-year and 10 days in Q4 to 114. DSO increased to 66 days, down by 1 day year-over-year and up 7 days sequentially due to increased sales and the timing of Q4 invoicing. As revenue scales, our focus remains on improving working capital efficiency. Operating cash flow was $42.2 million for the quarter, and free cash flow was $22.5 million.

Speaker #5: Year over year, networking capital improved by 8.7 million dollars due to meaningful inventory reductions largely offset by increases in accounts receivable due to increased sales.

Speaker #5: During the year, inventory declined by almost 50 million, including 8 million during the fourth quarter. Days inventory outstanding improved by 47 days year over year, and 10 days in the fourth quarter to 114.

Speaker #5: DSO increased to 66 days, down by 1 day year over year, and up 7 days sequentially due to increased sales and the timing of Q4 invoicing.

Speaker #5: As revenue scales, our focus remains on improving working capital efficiency. Operating cash flow was $42.2 million for the quarter, and free cash flow was $22.5 million.

Speaker #5: For the full year, we generated 129.8 million in operating cash flow and 60.5 million, in free cash flow, representing healthy increases of 25% and 58% respectively, compared to 2024.

Tim Santo: For the full year, we generated $129.8 million in operating cash flow and $60.5 million in free cash flow, representing healthy increases of 25% and 58% respectively compared to 2024. We ended Q4 with $95.7 million in cash and cash equivalents after purchasing $27.2 million or 1.2 million shares of Adtran Networks stock. For calendar year 2025, we purchased $46.6 million, or 2 million shares of Adtran Networks stock, and now own just over 70%, and meaningfully reduced the interest rate on our outstanding debt as a result of the convertible note offering. Turning to our operational performance for the year, we made meaningful progress across key financial metrics during 2025. Revenue increased 17.5% year-over-year, totaling $1,084 million.

Speaker #5: We ended Q4 with $95.7 million in cash and cash equivalents after purchasing $27.2 million, or 1.2 million shares, of ADTRAN Networks stock.

Speaker #5: For calendar year 2025, we purchased $46.6 million, or 2 million shares, of ADTRAN Networks stock, and now own just over 70%. And we meaningfully reduced the interest rate on our outstanding debt as a result of the convertible note offering.

Speaker #5: Turning to our operational performance for the year, we made meaningful progress across key financial metrics during 2025. Revenue increased 17.5% year over year, totaling $1,084,000,000.

Speaker #5: We expanded full-year non-gap gross margin by approximately 90 basis points to 42.1%, reflecting increased scale, higher efficiency, and favorable product mix. Non-gap operating margin increased to 4.8% in 2025, from negative 0.3% in 2024.

Tim Santo: We expanded full-year non-GAAP gross margin by approximately 90 basis points to 42.1%, reflecting increased scale, higher efficiency, and favorable product mix. Non-GAAP operating margin increased to 4.8% in 2025 from -0.3% in 2024, and non-GAAP diluted EPS returned to a positive $0.23 per share. We delivered a strong year of cash flow generation, with net cash provided by operating activities increasing by $26.2 million to $129.8 million. We remain disciplined on cost structure while positioning the company to convert revenue into sustained earnings growth. Looking ahead at our outlook for Q1 2026, we expect revenue to be between $275 million and 295 million, and non-GAAP operating margin of 4% to 8%, reflecting traditional seasonality and current supply chain dynamics.

Speaker #5: And non-GAAP diluted EPS returned to a positive $0.23 per share. We delivered a strong year of cash flow generation, with net cash provided by operating activities increasing by $26.2 million to $129.8 million.

Speaker #5: We remain disciplined on cost structure, while positioning the company to convert revenue into sustained earnings growth. Looking ahead at our outlook for the first quarter of '26, we expect revenue to be between $275,000,000 and $295,000,000, and non-gap operating margin of 4% to 8%, reflecting traditional seasonality and current supply chain dynamics.

Speaker #5: I will now turn the call back over to Tom.

Tim Santo: I will now turn the call back over to Tom.

Speaker #6: All right. Thanks very much, Tim. Julianna, I think at this point we're ready to open it up for any questions people may have.

Tom Stanton: All right, thanks very much, Tim. Juliana, I think at this point, we're ready to open it up for any questions people may have.

Speaker #7: Thank you. We will now begin the Q&A session. As a reminder to ask a question, please press star, followed by the number 1 on your telephone keypad.

Julianne: Thank you. We will now begin the Q&A session. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Mike Genovese from Rosenblatt Securities. Please go ahead. Your line is open.

Operator: Thank you. We will now begin the Q&A session. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Mike Genovese from Rosenblatt Securities. Please go ahead. Your line is open.

Speaker #7: Our first question comes from Michael Genovese from Rosenblatt Securities. Please go ahead. Your line is open.

David Brown: Great, thanks. You know, a great conference call, you know, clearly upbeat messaging. Tom, can you just talk a little bit more, I guess, specifically about the demand picture in US and Europe, and sort of what you're seeing from your clients on the optical side and on the fiber to the home side? Just talk a little bit more about the drivers of the revenue growth. I guess related to that, like, you know, do you think, obviously, you're not giving full year revenue guidance, but, you know, coming off a year where you grew 20%, you know, do you think double-digit growth is, top-line growth is in the cards for 2026?

Speaker #8: Great. Thanks. Great conference call. Clearly, upbeat messaging. Tom, can you just talk a little bit more? I guess specifically about the demand picture in US and Europe, and sort of what you're seeing from your clients on the optical side, and on the fiber to the home side, and just talk a little bit more about the drivers of the revenue growth.

Mike Genovese: Great, thanks. You know, a great conference call, you know, clearly upbeat messaging. Tom, can you just talk a little bit more, I guess, specifically about the demand picture in US and Europe, and sort of what you're seeing from your clients on the optical side and on the fiber to the home side? Just talk a little bit more about the drivers of the revenue growth. I guess related to that, like, you know, do you think, obviously, you're not giving full year revenue guidance, but, you know, coming off a year where you grew 20%, you know, do you think double-digit growth is, top-line growth is in the cards for 2026?

Speaker #8: And I guess related to that, do you think obviously, you're not giving full-year revenue guidance, but coming off a year where you grew 20%, do you think double-digit growth is top-line growth is in the cards for '26?

Speaker #6: Yeah. So let me start on a little downer, which is we don't give full-year guidance for a reason. And that's because our outlook is typically still our book-to-ship period is relatively small.

Tom Stanton: Yeah. Let me, let me start on a little downer, which is, you know, we don't give full year guidance for a reason, and that's because our outlook is, you know, typically still our book to ship period is relatively small, so it's a little difficult. Let me speak a little bit, though, more about the kind of the environment that we're in right now. I would say it's kind of the same tone and kind of building momentum that we saw throughout last year, and we expected that to continue on, that's exactly what's happening. We on the fiber to the prem side, nothing has slowed down. Programs are still going well. We're still adding new customers to those product areas, you know, we're continuing to operationalize carriers in Europe.

Speaker #6: So it's a little difficult. Let me speak a little bit, though, more about the kind of the environment that we're in right now. I would say it's kind of the same tone and kind of building momentum that we saw throughout last year.

Speaker #6: And we expected that to continue on. And that's exactly what's happening. So we on the fiber to the prem side, nothing has slowed down.

Speaker #6: Programs are still going well. We're still adding new customers to those product areas. And we're continuing to operationalize carriers in Europe. So all of that is just a continuation of the same type of activity we saw last year.

Tom Stanton: All of that is just a continuation of the same type of activity we saw last year. On the fiber front, the dynamic is a little bit different because we were still at the very beginning of the year, kind of crawling out of a, the revenue, inventory uptick that we had seen in our customer base. That cleared itself up last year. We started seeing that real progress in the second half of the year. We also, you know, as you're maybe aware, that, you know, we had won some additional customers, both here in the US with wider scale, kind of tier two deployments, as well as in Europe, where we won some tier ones, and that momentum is just continuing on.

Speaker #6: On the fiber front, the dynamic is a little bit different because we were still at the very beginning of the year, kind of crawling out of the revenue inventory That cleared itself up last year.

Speaker #6: We started seeing that real progress in the second half of the year. We also as you're maybe aware that we had won some additional customers both here in the US with wider scale kind of Tier 2 deployments as well as in Europe, where we won some Tier 1s.

Speaker #6: And that momentum has just continuing on. I would say that is driven not just by the Huawei replacement, which is going on in Europe, but just in general.

Tom Stanton: I would say, you know, that is driven not just by the Huawei replacement, which is going on in Europe, but just in general, I just think activity. We just saw customers starting to unleash capital and trying to increase their bandwidth for obvious reasons. I mean, I think all of them are trying to figure out how they're gonna play in a new AI-driven world. I think MoFi is a driver. We definitely, I mentioned it on the call, we saw some real positive momentum on the enterprise side, which includes ICP carriers, right? Yeah, it's just generally a good environment.

Speaker #6: I just think activity. We just saw customers starting to unleash capital and trying to increase their bandwidth for obvious reasons. I mean, I think all of them are trying to figure out how they're going to play in a new AI-driven world.

Speaker #6: I think MoFi is a driver. We definitely I mentioned it on the call. We saw some real positive momentum on the enterprise side, which includes ICP carriers, right?

Speaker #6: So yeah, it's just generally a good environment.

David Brown: Great. My second and last question will just be on, you know, pretty wide operating margin outlook of 48% for the quarter. Is that, you know, because of things like memory prices, that, you know, that the range is that wide, or is that kind of maybe more of a normal range, and I'm just reading it as being wide?

Mike Genovese: Great. My second and last question will just be on, you know, pretty wide operating margin outlook of 48% for the quarter. Is that, you know, because of things like memory prices, that, you know, that the range is that wide, or is that kind of maybe more of a normal range, and I'm just reading it as being wide?

Speaker #8: Great. And then my second and last question will just be on pretty wide operating margin outlook of 48% for the quarter. So is that because of things like memory prices?

Speaker #8: That the range is that wide, or is that kind of maybe more of a normal range? And I'm just reading it as being wide.

Tom Stanton: To us, I don't think there's any difference in the range that we get than what we typically do. There is tightening supply, as everybody is aware of, on memory. There's some tightening supply on optics. I would say that that's not overly impacting the guidance range. Our kind of operating model is still what we fully expect it to be, what we've communicated, which is, you know, operating expenses in the low 100 range and gross margins in the 42, 43 range, and I don't see we see a deviation from that. Tim, any comments?

Speaker #6: To us, I don't think there's any difference in the range that we get than what we typically do. There is tightening supply as everybody is aware of on memory.

Speaker #6: There's some tightening supply on optics. But I would say that that's not overly impacting the guidance range. Our kind of operating model is still what we fully expect it to be, what we've communicated, which is operating expenses in the low 100 range.

Speaker #6: And gross margins in the 42, 43 range. I don't see we see a deviation from that. Tim, any comments?

Speaker #8: Okay. No. I would reiterate as Tom said, the guidance range is about four points, which if you look historically is where we've been. And it's actually up a little bit from last quarter.

Tim Santo: No, I would reiterate. As Tom said, the guidance range is about four points, which, if you look historically, is where we've been, and it's actually up a little bit from last quarter. You know, the leverage model would remain up from what we guided last quarter.

Speaker #8: But the leverage model would remain up from what we guided last quarter.

Speaker #6: You mean midpoint. Yeah.

Tom Stanton: You mean midpoint. Yeah.

Tim Santo: Right.

David Brown: Perfect. I'll pass it on. Thanks so much.

Mike Genovese: Perfect. I'll pass it on. Thanks so much.

Speaker #8: Perfect. I'll pass it on. Thanks so much.

Speaker #6: Okay.

Tom Stanton: Okay.

Speaker #7: Our next question comes from Ryan Koontz from Needham & Company. Please go ahead. Your line is open.

Julianne: Our next question comes from Ryan Koontz, from Needham and Company. Please go ahead. Your line is open.

Operator: Our next question comes from Ryan Koontz, from Needham and Company. Please go ahead. Your line is open.

Speaker #6: Great. Can you hear me okay?

Ryan Koontz: Great. Can you hear me okay?

Speaker #8: Yeah.

Tom Stanton: Yeah.

Speaker #6: Super. Hey, guys. I wanted to ask about optical. Maybe we can unpack a little bit. And you talked about enterprise ICPs, I assume that's a big driver of optical.

Ryan Koontz: Super. Hey, guys. Want to ask about optical? Maybe if you unpack a little bit, you talked about enterprise ICPs. I assume that's a big driver of optical. You know, do you have any ideas, like, how much of that is really, you know, hyperscale and AI, you know, data center, cloud-related, versus what I would call, like, traditional SP and enterprise networking? Can you maybe help us understand some of those dynamics there within the optical strength?

Speaker #6: Do you have any ideas how much of that is really hyperscale and AI data center cloud-related versus what I would call traditional SP and enterprise networking?

Speaker #6: Can you maybe help us understand some of those dynamics there within the optical strength? Sure. So there was actually good contribution on both of those fronts in the quarter.

Tom Stanton: Sure. There was actually good contribution on both of those fronts in the quarter. I'm trying to think if it was... Yeah, I would say, and this is not having the note in front of me, that the mix on traditional enterprise, including the banking sector and all of the larger enterprise that we play into, is a portion of that. ICP did come in stronger in the quarter than what we had historically seen. We expect that momentum to continue on through this year.

Speaker #6: And I'm trying to think if it was I would say, and this is not having the note in front of me, that the mix on traditional enterprise

Speaker #1: Including the banking sector and all of the larger enterprises that we play into , is a portion of that . And then ICP did come in stronger in the quarter than what we had historically seen , and we expect that momentum to continue on through this year

Speaker #2: Great . And I recall a conversation from OFC last year about this opportunity in morphine , where the , you know , the hyperscalers are , are contracting with traditional SPS or maybe some of the , some of the tier twos like Colt etc.

Ryan Koontz: Great. I recall a conversation from OFC last year about this opportunity in MOFIN, where the, you know, the hyperscalers are contracting with traditional SPs or maybe some of the, some of the tier 2s, like Colt, et cetera, to build for them. Are you seeing some benefit there as well? Would that show up in your SP business, as opposed to your enterprise business, if it was a MOFIN-type deal?

Speaker #2: to build for them . Are you seeing some benefit there as well ? And would that show up in your ESP business as opposed to your enterprise business ?

Speaker #2: If it was a morphine type deal

Speaker #1: No , that would show up in our carrier . We would consider that to be a carrier customer and we're we're definitely seeing that .

Tom Stanton: No, that would show up in our carrier. We would consider that to be a carrier customer.

Ryan Koontz: Mm-hmm.

Tom Stanton: We're definitely seeing that. We talked about that in the last maybe couple of conference calls, how we were starting to see some of the carriers position themselves to be able to do MOFIN. That's just a continuing, ongoing kind of upgrade, cyclical thing that's adding positive momentum to that business, so. That is separate and apart from the enterprise piece that we're talking about.

Speaker #1: We talked about that in the last, maybe, couple of conference calls, how we were starting to see some of the carriers position themselves to be able to do MUFN.

Speaker #1: That's that's just a continuing , ongoing kind of upgrade cyclical thing that's adding positive momentum to that business . So but that that is separate and apart from the enterprise piece that we're talking about

Speaker #2: Great . And maybe just one last if I could on on the fiber to the home side , relative to new footprint , you know , it seems like the US has been a little bit hit and miss .

Ryan Koontz: Great. Maybe just one last, if I could, on the fiber to the home side, relative to new footprint. You know, it seems like the US has been a little bit hit and miss, where some segments do better than others. Any update there on how Q4 turned out in terms of new greenfield footprint and how you're thinking about 2026 going forward for US fiber, the home, greenfield builds?

Speaker #2: Where some segments do better than others . Any update there on on how Q4 turned out in terms of , in terms of new greenfield footprint and how you're thinking about 26 going forward for for US , fiber to the home Greenfield builds ?

Speaker #1: Yeah , I think it was it was I'd call it a solid quarter kind of consistent with what we had seen in the year .

Tom Stanton: Yeah, I think it was a solid quarter, kind of consistent with what we had seen in the year. I'd mentioned that in general, the US business was definitely stronger on a sequential and year-over-year basis. I think we're expecting good things this year. You know, we finally, I probably shouldn't say the word, but BEAD dollars are actually starting to flow. In fact, we got a customer in Louisiana that is expecting BEAD dollars hopefully next week. I don't want to over-rotate on that, guys, because the build out is gonna consistently be driven for most carriers by kind of fiber deployment for this year and then equipment next year. The fact that that's actually flowing is real positive.

Speaker #1: I'd mentioned that the in general , the US business was definitely stronger on a on this sequential and year over year basis . I think we're we're expecting good things this year .

Speaker #1: You know , we finally I probably shouldn't say the word , but be dollars are actually starting to flow I think we got a customer in Louisiana that is expecting b dollars .

Speaker #1: Hopefully next week . So and I don't want to overrotate on that because the the build out is going to consistently be driven for most carriers by kind of fiber deployment for this year .

Speaker #1: And then equipment next year . But the fact that that's actually flowing is , is real positive . I think there's six other states that are expect money any day now .

Tom Stanton: I think there's 6 other states that are expect money any day now. The fact that those dollars are starting to flow, I think is a positive thing. It's just as positive, not just the BEAD dollars, but, you know, from a planning perspective and knowing that it's gonna happen and giving carriers surety as to how they plan their capital budgets is very important.

Speaker #1: So the fact that those dollars are starting to flow , I think is a positive thing . And it's just as positive , not just the B dollars , but , you know , from a planning perspective and knowing that it's going to happen .

Speaker #1: And giving carriers surety as to how they plan their capital budgets is very important.

Speaker #2: Right ? So the planning , engineering and maybe the fiber optic cable spending this year from bead season earlier uptick , you're saying than your equipment would see this year that would follow within .

Ryan Koontz: Right. The planning, engineering, and maybe the fiber optic, you know, cable spending this year from BEAD sees an earlier uptick, you're saying, than your equipment would see this year that would follow?

Tom Stanton: Oh, yeah.

Speaker #2: The quarter or two .

Ryan Koontz: a quarter or two behind.

Speaker #1: Behind you . Yeah . You've got you've got to be able to deploy that fiber . But but I think the positive thing for us , which we don't know how that will impact , and it may just be a just a kind of positive influence is the fact that you get surety in your budget planning cycle for not just your bead funding , but your normal capital spend as well .

Tom Stanton: Without a doubt. Yeah, you've got to be able to deploy that fiber. I think the positive thing for us, which we don't know how that'll impact, and it may just be a kind of positive influence, is the fact that you get surety in your budget planning cycle for not just your BEAD funding, but your normal capital spend as well. I think that that's been missing for some time.

Speaker #1: And I think that that's been missing for some time

Speaker #2: That's great guys . Thanks for the commentary . Thanks , Tom . Okay .

Ryan Koontz: That's great, guys. Thanks for the commentary. Thanks, Tom.

Tom Stanton: Yeah.

Speaker #3: Our next question comes from Christian Schwab from Craig-hallum . Please go ahead . Your line is open

Julianne: Our next question comes from Christian Schwab, from Craig-Hallum. Please go ahead, your line is open.

Operator: Our next question comes from Christian Schwab, from Craig-Hallum. Please go ahead, your line is open.

Speaker #4: Great execution in the quarter , guys . Tom , I know it's so so we're sitting here at the end of February . Non-core assets , sales and potential building sales and leaseback activity .

Christian Schwab: Great execution in the quarter, guys. Tom, I know so we're sitting here at the end of February, non-core asset sales and potential building sales and leaseback activity. Would you be disappointed if we didn't have resolution on both by the end of calendar 2026?

Speaker #4: Would you be disappointed if we didn't have resolution on both by the end of calendar 2026 ?

Speaker #1: Well , leaseback activity more than likely that is not going to happen with the North Tower . Excuse me . The east tower .

Tom Stanton: Well, leaseback activity, more than likely, that is not going to happen with the North Tower, excuse me, the East Tower. Let me be clear on where we are with that. I think we've been trying to talk about this now for a couple of quarters. We did get several lease offers on the building. Financially, it didn't make sense for us because of where we are with our cash position right now and what we'd use for the cash and what that lease would ultimately cost us. We have put that on hold. We can always revisit that if we want to. On the North and South towers, which is the thing that's up for sale, I'm gonna let Tim jump in here and give you an update on that.

Speaker #1: So let me be clear on where we are with that . I think we've been Trying to talk about this now for a couple of quarters .

Speaker #1: We did get several lease offers on the building . Financially , it didn't make sense for us because of where we are with our cash position right now and what we would use for the cash and what that at least would ultimately cost us .

Speaker #1: So we we have put that on hold . We can always revisit that if we want to . Then on the north south tower , which is the thing that's up for sale , I'm going to let Tim jump in here and give you an update on that .

Tim Santo: A lot of activity in the Huntsville market. We're not currently under contract, but we have activity, so we continue to work that, and when the right deal comes along, we will close that. As we had hoped, it would happen in 2025. We are very optimistic it will happen in 2026, but the market will dictate.

Speaker #1: A lot of activity in Huntsville Market . We we're not currently under contract , but we have activity . So we continue to work that .

Speaker #1: And when the right deal comes along , we will close that as as we had hoped it would happen in 2025 . We are very optimistic it will happen in 2026 , but the market will dictate

Speaker #4: Great . Thank you And then on the on the non-core asset side , Tom , do you think that can get resolved this year or is that A fluid situation

Christian Schwab: Great. Thank you. On the non-core asset side, Tom, do you think that can get resolved this year, or is that a fluid situation?

Speaker #1: Yeah . So we're we let me let me try to do this in a proper way . We have taken a look at the non-core assets .

Tom Stanton: Yeah. Let me try and do this in a proper way. We have taken a look at the non-core assets. We've gotten values on what we think the non-core assets that we think are not strategic, right, to our business. We are doing things right now that we think will increase the value of those assets, and we'll reevaluate that in the second half of this year.

Speaker #1: We've gotten values on what we think the non-core assets that we think are not strategic . Right to our business . We have we are doing things right now that we think will increase the value of those assets and will reevaluate that in the second half of this year

Speaker #4: Perfect . And then then my last question , as we go throughout calendar 2026 , you know , is there one area we spoke positively ?

Christian Schwab: Perfect. And then my last question, as we go throughout calendar 2026, you know, is there one area, we spoke positively, obviously, about, you know, finally, loosening up after many years of seeing some progress as BEAD is concerned. You know, as we look at, you know, equipment replacement in Europe, the strength in optical, you know, geographical strength in Europe, et cetera, is there one thing more than another that you're most excited about as we go through 2026, that we can monitor?

Speaker #4: Obviously , about ? You know , finally loosening up after many years of seeing some progress , as bead is concerned . But , you know , as we look at , you know , equipment replacement in Europe , the strength in optical , you know , geographical strength in Europe , etc.

Speaker #4: . Is there one thing more than another that that you're most excited about ? As we go through 2026 , that we can monitor

Tom Stanton: Yeah. I think, let me just hit on a couple. One is, I think enterprise is doing really well.

Speaker #1: Yeah . So so I think I think let me , let me just hit on a couple . One is I think enterprise is doing really well and as I mentioned earlier on the Q and there are multiple drivers for that .

Tom Stanton: Yeah. I think, let me just hit on a couple. One is, I think enterprise is doing really well.

Christian Schwab: Mm-hmm.

Tom Stanton: As I mentioned earlier on the Q&A, there are multiple drivers for that. We expect that to be strong this year. That's that strength is above whatever the company is doing on a corporate average perspective, so that's really good to see. The other is there is some legislation going on. I don't know how much success it's gonna have. It's good that it's going on, but in the EU right now, to accelerate the Huawei replacement piece, it's not so much whether or not that actually happens, which there is a high likelihood it happens, but just the focus on that is positive for our business. I'll remind people, you know, we think that's a near billion-dollar-a-year type opportunity that Huawei is selling.

Speaker #1: We expect that to be strong this year . And so that's that strength is above whatever the company is doing on a corporate average perspective .

Speaker #1: So that's really good to see . The other is there is some legislation going on I don't know how how how much Success is going to have .

Speaker #1: It's good that it's going on . But in the EU right now to accelerate the while we replacement piece , it's not so much whether or not the that that actually happens , which there's a high likelihood it happens .

Speaker #1: But just the focus on that is is positive for our business . And I'll remind people , you know , we think that's a near billion dollar a year type opportunity that while we're selling into the European market , that we think we have a very good chance of being able to to be able to capitalize on so as that pressure continues on and it is , you know , there was legislation that was sent out in the EU in early of last year .

Tom Stanton: into the European market that we think we have a very good chance of being able to capitalize on. As that pressure continues on, and it is, you know, there was legislation that was sent out in the EU in early of last year, that is positive, right? That addresses this issue. I think both of those things are real positive catalysts.

Speaker #1: That is positive , right ? So that that addresses this issue . So yeah , so I think both of those things are positive catalysts .

Speaker #4: Great . Thank you for the clarity . Other questions

Christian Schwab: Great. Thank you for the clarity. No other questions?

Speaker #3: Our next question comes from George Nader from Wolfe Research . Please go ahead . Your line is open

Julianne: Our next question comes from George Notter, from Wolfe Research. Please go ahead. Your line is open.

Operator: Our next question comes from George Notter, from Wolfe Research. Please go ahead. Your line is open.

Speaker #5: Hey , thanks a lot , guys . I guess I just want to keep going on the . The question of Huawei replacement in the EU .

George Notter: Hey, thanks a lot, guys. I guess I just want to keep going on the question of Huawei replacement in the EU. You know, I think the regulatory stance currently basically has it not compulsory to replace Huawei, but I guess suggested would be kind of the idea in terms of the current regulatory environment. I know the stuff that's coming down the pike is going to mandate Huawei replacement, and it sounds like it could be a few years away until that legislation actually requires companies to or carriers to replace Huawei. I guess I'm just curious, like, what has the inflection happening right now? Is there something you're seeing with your customers that, you know, allows them to move more quickly? Is it, is it funding?

Speaker #5: You know , I think the regulatory stance currently basically has it not compulsory to replace Holloway , but I guess suggested would be kind of the the idea in terms of the current regulatory environment and I know the stuff that's coming down the pike is , is going to mandate while we're replacement .

Speaker #5: It sounds like it could be a few years away until that legislation actually requires companies to or carriers to replace Huawei . But I guess I'm just curious , like what has the the inflection happening right now ?

Speaker #5: Is there something you're seeing with your customers that you know , allows them to move more quickly ? Is it is it funding ?

Speaker #5: Is it , you know , more , you know , pressure from political perspective ? I guess I'm just trying to understand what's driving this .

George Notter: Is it, you know, more, you know, pressure, from a political perspective? I guess I'm just trying to understand what's driving this. Thanks.

Speaker #5: Thanks .

Speaker #1: Yeah , sure . Yeah . I agree . Well , let me just make one caveat to that . Although the U.S directive is more of a recommendation The country by country and carrier by carrier requirements are legislative actions are different .

Tom Stanton: Yeah, sure. Yeah, I, I agree. Well, let me just make one caveat to that. Although the EU's directive is more of a recommendation, the country by country and carrier by carrier requirements or legislative actions are different, right? We do have some countries that, in the EU, that have, you know, explicitly been stronger on that. And it's not so much that I think that legislation and the talk of that legislation and the fact that we're even talking about it here, is exactly the point, which is: if you're a carrier and you're doing a new award, you're kind of crazy to be deploying Huawei at this point.

Speaker #1: Right . So we do have some countries that in the EU that have , you know , explicitly been stronger on that . And it's not so much that I think that legislation , in the talk of that legislation and the fact that we're even talking about it here , is exactly the point , which is if you're a carrier and you're doing a new award , you you're kind of crazy to be deploying .

Speaker #1: Wow , at this point . Or if there's a new region , a new footprint that has to be built out , even if they're an approved vendor , you know , you know , you're going to have a problem .

Tom Stanton: If there's a new region, a new footprint that has to be built out, even if they're an approved vendor, you know, you know you're going to have a problem. What that's doing is putting on increasing the braking pressure on continuing to deploy them on an ongoing basis. I would agree that pulling them out is a different thing, and that will take years. You know, we've characterized that north of, and it's an easy math, George, for you to do, right? It's a north of 10 billion dollar opportunity for the pullout. What we're talking about is just on the annual spend, where they're going in and filling in new car, building out new footprint. That kind of activity is going to continue to slow down.

Speaker #1: So what that's doing is putting on increasing the braking pressure on continuing to deploy them on an ongoing basis . I would agree that pulling them out is a is a different thing .

Speaker #1: And that will take years . And , you know , we've characterized that north of and it's an easy math , George , for you to do .

Speaker #1: Right . It's a north of $10 billion opportunity for the pull out . But what we're talking about is just on the annual spend where they're going in and filling in new cards , building out new footprint , that that kind of activity is going to continue .

Speaker #1: Slow down

George Notter: If I look at that $1 billion annual spend, how well positioned do you think you are on that? I mean, obviously, that's across a number of product categories. It's across a large number of-

Speaker #5: If I look at that $1 billion annual spend , how . Well positioned do you think you are on that ? I mean , obviously that's across a number of product categories .

Speaker #5: It's across a large number of specific operators , maybe some you're in , some you're not . I mean , is there a way to kind of pin down that 1 billion in annual spend in terms of what's like really reasonable for .

Tom Stanton: Yeah

George Notter: ... specific operators, maybe some you're in, some you're not. I mean, is there a way to kind of pin down that $1 billion in annual spend in terms of what's?

Tom Stanton: Yeah

George Notter: really reasonable for you?

Speaker #1: You may not . Yeah . Please let me not be so sloppy on that number . The last time we looked at it .

Tom Stanton: Yeah, please, let me not be so sloppy on that number. The last time we looked at it, and we do have another, We have an outside firm trying to take a look at exactly what that number is at this point. That number is derived from about an $800, I think it was $850 or $860 million number for EMEA in our target product areas, and that was in 2024. We think that that number is going to continue to slow down. It was north of $1 billion not that long ago. That number will continue to slow down as we actually pick up that market share. Now, that's for products that are specifically in our product sweet spot, which is kind of mid-mile, regional, network, optical, access, and aggregation.

Speaker #1: And we do have another we have an outside firm trying to take a look at exactly what that number is at this point .

Speaker #1: But that number is derived from about an 800 . I think it was 850 or $860 million number for EMEA in our target product areas .

Speaker #1: And that was in 24 . We think that that number is going to continue to slow down . It was north of $1 billion not that long ago .

Speaker #1: So that number will continue to slow down as we actually pick up that market share . Now that's for products that are specifically in our product sweet spot , which is kind of mid mile regional network optical access and aggregation .

Speaker #1: It is those products that we're actually talking about . So it's really what we believe the Tam is for our products . But but like like I'm trying to say it's a rough number right now and it's just based off of the earnings results of Huawei .

Tom Stanton: It is those products that we're actually talking about. It's really what we believe the TAM is for our products. Like I'm trying to say, it's a rough number right now, and it's just based off of the earnings results of Huawei.

Speaker #5: Great . Thank you very much .

George Notter: Great. Thank you very much.

Speaker #1: Okay .

Tom Stanton: Okay.

Speaker #3: Our last question comes from Dave Kang from B. Riley. Please go ahead, your line is open.

Julianne: Our last question comes from Dave Kang from B. Riley. Please go ahead. Your line is open.

Operator: Our last question comes from Dave Kang from B. Riley. Please go ahead. Your line is open.

Dave Kang: Thank you. Good morning. First, regarding European telcos, you talked about them being front-loaded. Just wondering if you can kind of quantify whether it's 55, 45, or is it more exaggerated?

Speaker #6: Thank you . Good morning . First , regarding European telcos , you talked about them being front loaded . Just wondering if you can kind of quantify whether it's 55 , 45 or is it more exaggerated .

Speaker #1: I'm sorry . Your question broke up for me . Can you repeat it or restate it ?

Tom Stanton: I'm sorry, your question broke up for me. Could you rephrase it or restate it?

Speaker #6: Yeah . Regarding your European telcos , tier ones in the previous calls , you said they tend to be front loaded . Just wondering if they're like 55 , 45 or more like 60 , 40 .

Dave Kang: Yeah. Regarding your European telcos, tier ones, in the previous calls, you said they tend to be front-loaded. Just wondering if they're, like, 55, 45, or more like 60, 40, any color?

Speaker #6: Any color .

Speaker #7: Oh oh oh as far as , as far as

Tom Stanton: Oh, as far as, in the year.

Speaker #1: In the year , is that what you're talking about ? Yeah . Yes . You know , I don't know if I've seen that actual breakout .

Dave Kang: Yeah

Tom Stanton: what you're talking about? Yeah.

Dave Kang: Yes.

Tom Stanton: You know, I don't know if I've seen that actual breakout. Last year, it was probably 60-ish, 40-ish, and this is just off the cuff. This is predominantly

Speaker #1: I would say it's definitely last year . It was probably 60 ish , 40 ish . And this is just off the cuff .

Speaker #1: And this is predominantly in in the access and AG product product category . So you'll see that . And are you that last year you could see that last year in our access and ag number .

Dave Kang: Okay

Tom Stanton: ... in the access and agg product category. You'll see.

Dave Kang: And are you-

Tom Stanton: You'll see that last year. You could see that last year in our access and agg number. You actually saw that kind of big bump in the first half of the year, and then it kind of tailed down. It's not as prominent in the rest of the product areas. They kind of, they're just not on the same cycle.

Speaker #1: You actually saw that kind of big bump in the first half of the year . And then it kind of tailed down . It's not as prominent in the rest of the product areas .

Speaker #1: They kind of they're just not on the same cycle .

Speaker #6: And are you kind of expecting similar dynamics this year or any changes from last year ?

Dave Kang: Are you kind of expecting similar dynamics this year, or any changes from last year?

Speaker #1: Really good question . I will tell you , we weren't happy with that bump because of what that does operationally . You know , bumpy is never as good as smooth .

Tom Stanton: Really good question. I will tell you, we weren't happy with that bump because of what that does operationally. You know, bumpy is never as good as smooth. We have been talking to them about that, and trying to get that to be more even flow this year. I don't know how successful we've been with it at this point, so hopefully you won't see that same type of kind of waterfall.

Speaker #1: So we have been talking to them about that . And trying to get that to be more even flow this year . So I don't know how successful we've been with at this point .

Speaker #1: So hopefully you won't see that same type of kind of waterfall .

Speaker #6: And my second question is regarding the same European telcos just where are we in terms of the , you know , their broadband deployment cycle ?

Dave Kang: My second question is regarding the same European telcos. Just, where are we in terms of the, you know, their broadband deployment cycle? Are we in still early stages or mid or getting towards the late innings?

Speaker #6: I mean , still early stages or mid or getting towards late innings .

Speaker #1: Oh good . Well , if you take Europe as a whole , there's no way to characterize it other than early , you know we've brought just recently some new carriers on that that haven't been deploying with us .

Tom Stanton: Oh, good. Well, if you take Europe as a whole, there's no way to characterize it other than early. You know, we've brought just recently some new carriers on that haven't been deploying with us, and then they all kind of have this Huawei issue as well. If you take specific areas, there are countries that are farther along. The UK is, I would say, kind of more towards the middle. Germany is probably definitely within the first half. It depends on the carrier. Some of them are, haven't started yet.

Speaker #1: And then they all kind of have this wild way issue as well . If you take specific areas , there are there are countries that are farther along .

Speaker #1: UK as I would say , kind of more towards the middle . Germany is probably is definitely within the first half . So it depends on the on the carrier .

Speaker #1: Some of them are haven't started yet .

Speaker #6: Got it . Thank you .

Dave Kang: Got it. Thank you.

Speaker #1: Okay . At this point I think we are no more questions in the queue . So I'd like to thank everybody for for their participation today .

Tom Stanton: Okay. At this point, I think no more questions in the queue. I'd like to thank everybody for their participation today, and we look forward to talking to you next Q.

Speaker #1: And we look forward to talking to you next quarter

Speaker #3: Ladies and gentlemen that concludes today's call . Thank you for your participation . You may now log off .

Julianne: Ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now log off.

Operator: Ladies and gentlemen, that concludes today's call. Thank you for your participation. You may now log off.

Operator: Please wait. The conference will begin shortly.

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