Q2 2026 Vecima Networks Inc Earnings Call

February 12, 2026

Operator: Hello, this is the Chorus Call conference operator. Welcome to Vecima Networks Second Quarter Fiscal 2026 Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Analysts and institutional investors who wish to join the question queue, simply press star and one on your touchtone phone. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. Should you need assistance during the conference call, you may signal the operator by pressing star and zero. Presenting today on behalf of Vecima Networks, Sumit Kumar, President and CEO, and Judd Schmid, Chief Financial Officer. Today's call will begin with executive commentary on Vecima's financial and operational performance for the second quarter fiscal 2026 results.

Speaker #2: After the presentation, there will be an opportunity to ask questions. Analysts and institutional investors who wish to join the question queue, simply press star and one on your touchdown phone.

Speaker #2: You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. Should you need assistance during the conference call, you may signal the operator by pressing star and zero.

Speaker #2: Presenting today on behalf of Vecima Networks, Vecima Kumar, President and CEO, and Judge Smith, Chief Financial Officer. Today's call will begin with executive commentary on Vecima's financial and operational performance for the second quarter fiscal 2026 results.

Speaker #2: Lastly, the call will finish with a question and answer period of analysts and institutional investors. The press release announcing the company's second quarter fiscal

Operator: Lastly, the call will finish with a question and answer period of analysts and institutional investors. The press release announcing the company's Q2 fiscal 2026 results, as well as the detailed supplemental investor information, are posted on Vecima's website at www.vecima.com under the Investor Relations heading. The highlights provided in this call should be understood in conjunction with the company's unaudited, interim, condensed, consolidated financial statements, and accompanying notes for the three and six months ended December 31, 2025 and 2024. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws, from which Vecima's actual results could differ. Consequently, attendees should not place undue reliance on such forward-looking statements. All statements other than statements of historical fact are forward-looking statements.

Speaker #1: 2026 results , as well as the detailed supplemental Investor information are posted on website at w-w-w . Under the Investor Relations heading . The highlights provided in this call should be understood in conjunction with the company's unaudited interim condensed consolidated financial statements and accompanying notes for the three and six months ended December 31st , 2025 and 2024 .

Speaker #1: Certain statements in this conference call and webcast may constitute forward looking statements within the meaning of applicable securities law , from which the actual results could differ Consequently , attendees should not place undue reliance on such forward looking statements All statements other than statements of historical fact are forward looking statements .

Speaker #1: These statements include , but are not limited to , statements regarding management's intentions , beliefs or current expectations with respect to market and general economic conditions .

Operator: These statements include, but are not limited to, statements regarding management's intentions, beliefs, or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. Vecima disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events, or otherwise, except as required by law. Please review the cautionary language in the company's second quarter earnings report and press release of fiscal 2026, as well as its annual information form dated 25 September 2025, regarding the various factors, assumptions, and risks that could cause actual results to differ.

Speaker #1: Future sales and revenue expectations , future costs and operating performance . These statements are not guarantees of future performance and invoice risks involve risks and uncertainties .

Speaker #1: Uncertainties that are difficult to predict and are beyond our control . A disclaims any intention or obligation to update or revise any forward looking statements .

Speaker #1: As a result of new information , future events or otherwise , except as required by law . Please review the cautionary language in accompanying second quarter earnings report and press release for fiscal 2026 , as well as its annual information form dated September 25th , 2025 .

Speaker #1: Regarding the various factors , assumptions and risks that could cause actual results to differ These documents are available on my website at Under the Investor Relations heading and on Sedar at WWE At this time , I would like to turn the conference over to Mr. Kumar to proceed with his remarks .

Operator: These documents are available on Vecima's website at www.vecima.com under the Investor Relations heading and on SEDAR+ at www.sedarplus.ca. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead.

Speaker #1: Please go ahead

Speaker #2: Good morning and welcome , everyone . Thank you for joining us in our earnings release today . We announced that is nearing the cusp of a major growth inflection .

Surinder Kumar: Good morning, and welcome, everyone. Thank you for joining us. In our earnings release today, we announced that Vecima is nearing the cusp of major growth inflection. I'm going to start today's call with some comments on this outlook and our expectations for the next 12 months before moving on to an overview of our Q2 highlights. Judd will provide our financial review, and then I'll return to wrap up before we open the call for questions. As you know, the global cable and broadband industries have been preparing for a full-scale transition to next-generation DAA technology for several years now. It's something we've described as a once-in-a-generation technology transition, fundamental to how networks will be built and operated, and requiring major multi-year capital investment by operators. From the start, Vecima made a deliberate decision to lead this transition through sustained investment in a comprehensive portfolio of next-generation solutions.

Sumit Kumar: Good morning, and welcome, everyone. Thank you for joining us. In our earnings release today, we announced that Vecima is nearing the cusp of major growth inflection. I'm going to start today's call with some comments on this outlook and our expectations for the next 12 months before moving on to an overview of our Q2 highlights. Judd will provide our financial review, and then I'll return to wrap up before we open the call for questions. As you know, the global cable and broadband industries have been preparing for a full-scale transition to next-generation DAA technology for several years now. It's something we've described as a once-in-a-generation technology transition, fundamental to how networks will be built and operated, and requiring major multi-year capital investment by operators. From the start, Vecima made a deliberate decision to lead this transition through sustained investment in a comprehensive portfolio of next-generation solutions.

Speaker #2: I'm going to start today's call with some comments on this outlook . And our expectations for the next 12 months before moving on to an overview of our second quarter highlights Judd will provide our financial review , and then I'll return to wrap up before we open the call for questions As you know , the global cable and broadband industries have been preparing for a full scale transition to next generation technology for several years now .

Speaker #2: It's something we've described as a once in a generation technology transition Fundamental to how networks will be built and operated , and requiring major multi-year capital investment by operators from the start .

Speaker #2: Vecima made a deliberate decision to lead this transition through sustained investment in a comprehensive portfolio of next generation solutions . It's a strategy that's positioned Vecima as a global leader in Da technologies , and it's already been and it's already driven meaningful growth .

Surinder Kumar: It's a strategy that's positioned Vecima as a global leader in DAA technologies, and it's already driven meaningful growth. But we've always recognized that the true scale of the opportunity would depend on customers moving to full-scale adoption and deployment. While it's taken time to reach this point, that critical new phase of adoption is approaching. On the broadband side, our lead Tier One customer is now preparing to expand wide-scale deployment and have shared their anticipated product needs and expected timing with us. Based on that outlook, we anticipate a sharp rise in demand for our Entra Remote PHY products, including the EN9000 GAP platform and ERM-3 and ERM-4 RPDs, beginning in Q4. This is a major multi-year upgrade program. Now, with it underway and expanding, we expect it will provide sustained benefits to Vecima over an extended period.

Sumit Kumar: It's a strategy that's positioned Vecima as a global leader in DAA technologies, and it's already driven meaningful growth. But we've always recognized that the true scale of the opportunity would depend on customers moving to full-scale adoption and deployment. While it's taken time to reach this point, that critical new phase of adoption is approaching. On the broadband side, our lead Tier One customer is now preparing to expand wide-scale deployment and have shared their anticipated product needs and expected timing with us. Based on that outlook, we anticipate a sharp rise in demand for our Entra Remote PHY products, including the EN9000 GAP platform and ERM-3 and ERM-4 RPDs, beginning in Q4. This is a major multi-year upgrade program. Now, with it underway and expanding, we expect it will provide sustained benefits to Vecima over an extended period.

Speaker #2: But we've always recognized that the true scale of the opportunity would depend on customers moving to full scale adoption and deployment . While it's taking time to reach this point , that critical new phase of adoption is approaching on the broadband side , our lead tier one customer is now preparing to expand wide scale deployment and the shared their anticipated product needs and expected timing with us .

Speaker #2: Based on that outlook , we anticipate a sharp rise in demand for our products , including the N9000 gap platform and IRM three and four Rpds .

Speaker #2: Beginning in the fourth quarter . This is a major multiyear upgrade program . Now , with it underway and expanding , we expect it will provide sustained benefits to Vecima over an extended period .

Speaker #2: On the commercial side of our portfolio, we also announced today that our lead North American Tier One customer has selected our next-generation IQ platform to underpin the wholesale upgrade of its commercial video network nationally.

Surinder Kumar: On the commercial video side of our portfolio, we also announced today that our lead North American Tier One customer has selected our next generation Terrace IQ platform to underpin the wholesale upgrade of its commercial video network nationally. This includes upgrades to thousands of our customers' existing commercial account properties, as well as ongoing rollouts to service new commercial video contracts, and it represents another multi-year opportunity for Vecima. These two developments, combined with continued strong demand for our high-margin fiber access products and the traction building for new products, like our EN3400, are providing excellent forward visibility. Based on customer indications on a next-twelve-months basis, we're now estimating revenue growth of between 20% to 30% as compared to the last twelve months....

Sumit Kumar: On the commercial video side of our portfolio, we also announced today that our lead North American Tier One customer has selected our next generation Terrace IQ platform to underpin the wholesale upgrade of its commercial video network nationally. This includes upgrades to thousands of our customers' existing commercial account properties, as well as ongoing rollouts to service new commercial video contracts, and it represents another multi-year opportunity for Vecima. These two developments, combined with continued strong demand for our high-margin fiber access products and the traction building for new products, like our EN3400, are providing excellent forward visibility. Based on customer indications on a next-twelve-months basis, we're now estimating revenue growth of between 20% to 30% as compared to the last twelve months....

Speaker #2: This includes upgrades to thousands of our customers existing commercial account properties , as well as ongoing rollouts to service new commercial video contracts .

Speaker #2: And it represents another multiyear opportunity for Vecima These two developments , combined with continued strong demand for our high margin fiber access products and the traction building for new products like our N 3400 , are providing excellent forward visibility based on customer indications .

Speaker #2: On a next 12-month basis, we're now estimating revenue growth of between 20% to 30%, as compared to the last 12 months.

Speaker #2: The anticipated demand profile also positions adjusted EBITDA margin for the same period to break through 20% as our product mix expands , with higher margin offerings .

Surinder Kumar: The anticipated demand profile also positions adjusted EBITDA margin for the same period to break through 20%, as our product mix expands with higher margin offerings and as we make gains in operating efficiency. Paired with the top-line growth expectation, this translates to an anticipated 70% to 85% increase in next 12-month adjusted EBITDA compared to calendar 2025. I want to note that we continue to see some Q3 timing lumpiness related to recent industry consolidation activity. We discussed this on our last call, but we now expect the impact to be modest and further mitigated by a favorable Q3 product mix. By Q4, we expect to see demand ramping up sharply. The developments announced today pave the way for renewed and sustained growth, and they follow on another rewarding quarter for Vecima in Q2.

Sumit Kumar: The anticipated demand profile also positions adjusted EBITDA margin for the same period to break through 20%, as our product mix expands with higher margin offerings and as we make gains in operating efficiency. Paired with the top-line growth expectation, this translates to an anticipated 70% to 85% increase in next 12-month adjusted EBITDA compared to calendar 2025. I want to note that we continue to see some Q3 timing lumpiness related to recent industry consolidation activity. We discussed this on our last call, but we now expect the impact to be modest and further mitigated by a favorable Q3 product mix. By Q4, we expect to see demand ramping up sharply. The developments announced today pave the way for renewed and sustained growth, and they follow on another rewarding quarter for Vecima in Q2.

Speaker #2: And as we make gains in operating efficiency paired with the top line growth expectation , this translates to an anticipated 70 to 85% increase in next 12 month adjusted EBITDA compared to calendar 2025 .

Speaker #2: I want to note that we continue to see some third quarter timing lumpiness related to recent industry consolidation activity. We discussed this on our last call, but we now expect the impact to be modest and further mitigated by favorable Q3 product mix.

Speaker #2: By the fourth quarter , we expect to see demand ramping up sharply . The developments announced today paved the way for renewed and sustained growth , and they follow on another rewarding quarter for Vecima in Q2 .

Speaker #2: So turning to our second quarter results . I'm pleased to report that we achieved solid year over year revenue growth of 3.5% , paired with a significantly stronger gross margin percentage of 44.9% .

Surinder Kumar: So turning to our second quarter results, I'm pleased to report that we achieved solid year-over-year revenue growth of 3.5%, paired with a significantly stronger gross margin percentage of 44.9%. The 850 basis point, the 850 basis point year-over-year improvement in our gross margin reflects an expected return to a more typical and higher margin product mix, as well as continued improvement in our operating efficiencies. We also generated adjusted EBITDA of CAD 10.6 million in Q2, with an adjusted EBITDA margin of 14.4%. In our video and broadband solutions segment, we turned in a productive quarter, marked by steady sales performance, improved profitability, and important product and customer advances. We continue to seed the market with our EN9000 platform, the industry's only gap node, which is gaining deep adoption with customers.

Sumit Kumar: So turning to our second quarter results, I'm pleased to report that we achieved solid year-over-year revenue growth of 3.5%, paired with a significantly stronger gross margin percentage of 44.9%. The 850 basis point, the 850 basis point year-over-year improvement in our gross margin reflects an expected return to a more typical and higher margin product mix, as well as continued improvement in our operating efficiencies. We also generated adjusted EBITDA of CAD 10.6 million in Q2, with an adjusted EBITDA margin of 14.4%. In our video and broadband solutions segment, we turned in a productive quarter, marked by steady sales performance, improved profitability, and important product and customer advances. We continue to seed the market with our EN9000 platform, the industry's only gap node, which is gaining deep adoption with customers.

Speaker #2: The heat hundred and 50 basis point , the 850 basis point year over year improvement in our gross margin reflects an expected return to a more typical and higher margin product mix .

Speaker #2: As well as continued improvement in our operating efficiencies . We also generated adjusted EBITDA of 10.6 million in Q2 , with an adjusted EBITDA margin of 14.4% in our video and Broadband Solutions segment , we turned in a productive quarter marked by steady sales performance , improved profitability and important product and customer advances .

Speaker #2: We continue to see the market with our N9000 platform . The industry's only gap node , which is gaining deep adoption with customers .

Speaker #2: We expect the N9000 platform will continue to pay many short and long term dividends , as it widely cedes broadband networks with a modular , standardized and future proof platform that's capable of being upgraded with multiple successive generations of Docsis or fiber to the home .

Surinder Kumar: We expect the EN9000 platform will continue to pay many short and long-term dividends as it widely seeds broadband networks with a modular, standardized, and future-proof platform that's capable of being upgraded with multiple successive generations of DOCSIS or fiber to the home technology for years to come. We also commenced deliveries of our new EN3400 GAP node, which is a more compact and condensed version of the EN9000, specifically targeted to multi-dwelling unit and enterprise applications. Our innovative new Power Holdover Modules, which provide Entra platforms with protection from power fluctuations in the field, also gained traction in Q2. Both the EN3400 and Power Holdover Modules provided meaningful contributions to our Q2 results and VBS product mix. In our Entra Cloud portfolio, we continued to expand VCMTS trials with our lead customer, while also expanding our engagement with additional customers.

Sumit Kumar: We expect the EN9000 platform will continue to pay many short and long-term dividends as it widely seeds broadband networks with a modular, standardized, and future-proof platform that's capable of being upgraded with multiple successive generations of DOCSIS or fiber to the home technology for years to come. We also commenced deliveries of our new EN3400 GAP node, which is a more compact and condensed version of the EN9000, specifically targeted to multi-dwelling unit and enterprise applications. Our innovative new Power Holdover Modules, which provide Entra platforms with protection from power fluctuations in the field, also gained traction in Q2. Both the EN3400 and Power Holdover Modules provided meaningful contributions to our Q2 results and VBS product mix. In our Entra Cloud portfolio, we continued to expand VCMTS trials with our lead customer, while also expanding our engagement with additional customers.

Speaker #2: Technology for years to come. We also commenced deliveries of our new N3000 400-gap node, which has a more compact and condensed version of the N9000.

Speaker #2: Specifically targeted to Multi-dwelling unit and enterprise applications . Our innovative new power holdover modules , which provided entry platforms with protection from power fluctuations in the field , also gain traction in Q2 , both the 3400 and power rolled over modules provide a meaningful contributions to our Q2 results , and product mix in our intra cloud portfolio , we continue to expand Vmts trials with our lead customer , while also expanding our engagement with additional customers .

Speaker #2: We view VMTS as a major long-term growth driver for Vecima, supporting an addressable market estimated to be worth $350 million US by 2029.

Surinder Kumar: We view vCMTS as a major long-term growth driver for Vecima, supporting an addressable market estimated to be worth $350 million by 2029. I also want to highlight that contribution from vCMTS sales is not yet a significant factor in current revenues or within the strong projected growth for the next 12 months, meaning that vCMTS remains a major incremental growth opportunity for the business. On the fiber access side of the portfolio, Q2 was another successful quarter, with ongoing strength in Entra Optical sales. We also secured our first customer for XGS-PON in the US, and closed an order for our new Entra EXS1610 All PON platform with a European customer. All in all, an excellent quarter for VBS, and our customer engagements for Entra increased to 147 from 123 a year ago.

Sumit Kumar: We view vCMTS as a major long-term growth driver for Vecima, supporting an addressable market estimated to be worth $350 million by 2029. I also want to highlight that contribution from vCMTS sales is not yet a significant factor in current revenues or within the strong projected growth for the next 12 months, meaning that vCMTS remains a major incremental growth opportunity for the business. On the fiber access side of the portfolio, Q2 was another successful quarter, with ongoing strength in Entra Optical sales. We also secured our first customer for XGS-PON in the US, and closed an order for our new Entra EXS1610 All PON platform with a European customer. All in all, an excellent quarter for VBS, and our customer engagements for Entra increased to 147 from 123 a year ago.

Speaker #2: I also want to highlight the contribution from VMTS sales is not yet a significant factor in current revenues or within the strong projected growth for the next 12 months, meaning that VMTS remains a major incremental growth opportunity for the business on the fiber access side of the portfolio. Q2 was another successful quarter with ongoing strength in optical sales.

Speaker #2: We also secured our first customer for XGS Pawn in the US and closed an order for a new entry XS1610 All-Pawn platform with a European customer.

Speaker #2: All in all , an excellent quarter for VBS and our customer engagements for entry increased to 147 from 123 a year ago . To date , 70 of those customers have purchased products from Vecima .

Surinder Kumar: To date, 70 of those customers have purchased Entra products from Vecima. Looking at our other business segments, our content delivery and storage segment achieved another strong quarter, with revenues of CAD 12.3 million, growing sharply both year-over-year and quarter-over-quarter, and gross margin climbing to a very robust 65.1%. These results were supported by increased demand for immediate scale managed IPTV solutions as customers continued to migrate their networks from QAM to IPTV, while also expanding their subscriber bases on IPTV. The second quarter also brought further contribution from our newer dynamic ad insertion products. DAI is providing a compelling use case for operators that are seeking to increase their video ARPUs without having to increase their rates to customers.

Sumit Kumar: To date, 70 of those customers have purchased Entra products from Vecima. Looking at our other business segments, our content delivery and storage segment achieved another strong quarter, with revenues of CAD 12.3 million, growing sharply both year-over-year and quarter-over-quarter, and gross margin climbing to a very robust 65.1%. These results were supported by increased demand for immediate scale managed IPTV solutions as customers continued to migrate their networks from QAM to IPTV, while also expanding their subscriber bases on IPTV. The second quarter also brought further contribution from our newer dynamic ad insertion products. DAI is providing a compelling use case for operators that are seeking to increase their video ARPUs without having to increase their rates to customers.

Speaker #2: Looking at our other business segments , our content delivery and storage segment achieved another strong quarter with revenues of 12.3 million , growing sharply both year over year and quarter over quarter , and gross margin climbing to a very robust 65.1% .

Speaker #2: These results were supported by increased demand for a media scale managed ip-pbx solutions , as customers continue to migrate their networks from Quam to IPTV , while also expanding their subscriber bases on IPTV The second quarter also brought further contribution from our newer dynamic ad insertion products .

Speaker #2: Di is providing a compelling use case for operators that are seeking to increase their video reviews having to increase their rates to customers .

Speaker #2: So , as such , it's a highly effective way for our customers to increase their monetization of video . While retaining and building their subscriber base .

Surinder Kumar: So as such, it's a highly effective way for our customers to increase their monetization of video while retaining and building their subscriber base, and we view it as an important growth driver for CDS. Turning to Telematics, we achieved another highly profitable quarter, with year-over-year revenue growth and an exceptionally strong gross margin of 71.4%. During the quarter, Telematics added 11 new customers and booked 345 new subscriptions for our narrow asset tracking platform. This brought the number of asset tags under management to over 106,000. So a very successful Q2 for Vecima across all three of our business segments, and we're moving forward with a very exciting outlook as some of our largest customers advance to wider scale on adoption.

Sumit Kumar: So as such, it's a highly effective way for our customers to increase their monetization of video while retaining and building their subscriber base, and we view it as an important growth driver for CDS. Turning to Telematics, we achieved another highly profitable quarter, with year-over-year revenue growth and an exceptionally strong gross margin of 71.4%. During the quarter, Telematics added 11 new customers and booked 345 new subscriptions for our narrow asset tracking platform. This brought the number of asset tags under management to over 106,000. So a very successful Q2 for Vecima across all three of our business segments, and we're moving forward with a very exciting outlook as some of our largest customers advance to wider scale on adoption.

Speaker #2: And we view it as an important growth driver for CDs . Turning to telematics , we achieved another highly profitable quarter with year over year revenue growth and an exceptionally strong gross margin of 71.4% during the quarter .

Speaker #2: Telematics added 11 new customers and booked 345 new subscriptions for our narrow asset tracking platform . This brought the number of asset tags under management to over 106,000 , so a very successful second quarter for Vecima .

Speaker #2: Across all three of our business segments, we're moving forward with a very exciting outlook as some of our largest customers advance to wider scale adoption. I'll return to talk more about what we see ahead in just a few moments.

Surinder Kumar: I'll return to talk more about what we see ahead in just a few moments, but first, I'll pass the call to Judd to provide our Q2 financial review. Judd?

Sumit Kumar: I'll return to talk more about what we see ahead in just a few moments, but first, I'll pass the call to Judd to provide our Q2 financial review. Judd?

Speaker #2: But first, I'll pass the call to Judd to provide our Q2 financial review. Judd.

Speaker #3: Thanks , Sumit . Good morning to everyone with us on the call today . I'll be reviewing our second quarter financial performance in more detail .

Judd Schmid: Thanks, Sumit, and good morning to everyone with us on the call today. I'll be reviewing our second quarter financial performance in more detail, and for the purposes of this call, I'll assume that everyone has seen our Q2 fiscal 2026 news release, MD&A, and financial statements posted on Vecima's website. We had another solid quarter of financial results. Starting with consolidated sales, revenue grew to CAD 73.7 million in the second quarter, increasing 3.5% year-over-year and 3.7% quarter-over-quarter. Our Video and Broadband Solutions segment accounted for CAD 59.6 million of our revenues, with VBS sales increasing slightly year-over-year and up 2.8% sequentially compared to Q1. Next-generation Entra DAA products were the key driver of our VBS segment results.

Speaker #3: And for the purposes of this call , I'll assume that everyone has seen our Q2 fiscal 2026 news release . MDA and financial statements posted on Vecima website .

Speaker #3: We had another solid quarter of financial results, starting with consolidated sales. Revenue grew to $73.7 million in the second quarter, increasing 3.5% year over year and 3.7% quarter over quarter.

Speaker #3: Our Video and Broadband Solutions segment accounted for $59.6 million of our revenues, with XBS sales increasing slightly year over year and up 2.8% sequentially compared to Q1.

Speaker #3: Next generation entra Da products were the key driver of our segment results at $56.3 million . Interest sales were steady year over year and up 2.3% on a sequential quarterly basis .

Judd Schmid: At CAD 56.3 million, Entra sales were steady year-over-year and up 2.3% on a sequential quarterly basis. Commercial video sales added CAD 3.2 million to the VBS results and were up 8.7% from Q2 fiscal 2025, and 12% from Q1 fiscal 2026. In our Content Delivery and Storage segment, second quarter revenues of CAD 12.3 million climbed a sharp 20.7% year-over-year, and were up 9.7% from the first quarter of fiscal 2026. This growth reflects significant IPTV installation and expansion activity, including a 39% increase in product sales and slightly higher services revenue year-over-year. We continue to note that quarterly sales variations are typical for the CDS segment.

Speaker #3: Commercial video sales added $3.2 million to the VBS results and were up 8.7% from Q2 fiscal 25 and 12% from Q1 fiscal 26 .

Speaker #3: In our Content Delivery and Storage segment, second quarter revenues of $12.3 million climbed a sharp 20.7% year over year, and were up 9.7% from the first quarter of fiscal '26.

Speaker #3: This growth reflects significant IPTV installation and expansion activity, including a 39% increase in product sales and slightly higher services revenue year over year.

Speaker #3: We continue to note that quarterly sales variations are typical for the CDs segment in our Telematics segment. Second quarter sales of $1.8 million grew 5% year over year, but were 3% lower than last quarter.

Judd Schmid: In our Telematics segment, Q2 sales of CAD 1.8 million grew 5% year-over-year, but were 3% lower than last quarter. The year-over-year gains reflect the increase in the number of tags and assets now being monitored. As we expected, gross margin rebounded in Q2, with gross margins climbing to 44.9%. That compares very favorably to 36.4% in the same period last year, and 42.1% in Q1 of 2026. After normalizing for inventory reserves and warrant expense, our adjusted gross margin also increased sharply to 46.4% from 35.6% last year and 43.9% in Q1 of fiscal 2026.

Speaker #3: The year over year gains reflect the increase in the number of tags and assets now being monitored . As we expected , gross margin rebounded in Q2 with gross margins climbing to 44.9% .

Speaker #3: That compares very favorably to 36.4% in the same period last year, and 42.1% in Q1 of '26. After normalizing for inventory reserves and warrant expense, our adjusted gross margin also increased sharply to 46.4% from 35.6% last year and 43.9% in Q1 of fiscal 2016.

Speaker #3: The improvements in gross margin and adjusted gross margin primarily reflect the return to our higher margin product mix in our VBS segment, and accretive contributions from our CDS segment, as well. Turning now to our second quarter operating expenses.

Judd Schmid: The improvements in gross margin and adjusted gross margin primarily reflect the return to a higher margin product mix in our VBS segment and accretive contributions from our CDS segment as well. Turning now to our second quarter operating expenses. These increased slightly to $29.8 million from $29.3 million in Q2 last year. On a quarter-over-quarter basis, operating expenses were $1.8 million higher. Notable year-over-year changes are as follows: G&A expenses were lower at $6.7 million, or 9% of sales, as compared to $7.3 million, or 10% of sales, in the same period last year. This $600,000 improvement reflects decreased expenses for legal fees, other professional services, training and development costs, offset by higher expense for salary, wages, and benefits.

Speaker #3: These increased slightly to $29.8 million from $29.3 million in Q2 last year . On a quarter over quarter basis , operating expenses were $1.8 million higher .

Speaker #3: Notable year over year changes are as follows G&A expenses were lower at 6.7 million , or 9% of sales , as compared to 7.3 million , or 10% of sales in the same period last year .

Speaker #3: This $600,000 improvement reflects decreased expenses for legal fees . Other professional services , training and development costs , offset by higher expense for salary , wages and benefits , sales and marketing expenses increased to 9.4 million , or 13.13% of sales , from 7.3 million , or 10% of sales last year , reflecting lower finished goods inventory allowance .

Judd Schmid: Sales and marketing expenses increased to CAD 9.4 million, or 13% of sales, from CAD 7.3 million, or 10% of sales last year, reflecting lower finished goods inventory allowance recoveries of CAD 100,000 in the current period, compared to CAD 1.7 million in Q2 of fiscal 2025. R&D expenses for the second quarter increased to CAD 13.2 million, or 18% of sales, from CAD 11.3 million, or 16% of sales last year. This is primarily a result of higher amortization of our deferred development costs, along with lower capitalized labor development costs. As we note each quarter, we defer some of our R&D expenditures to future periods until our products begin commercialization, and so reported R&D expense in a period is typically different than the actual cash expenditure.

Speaker #3: Recoveries of $100,000 in the current period , compared to 1.7 million in Q2 of fiscal 25 . R&D expenses for the second quarter increased to 13.2 million , or 18% of sales , from 11.3 million , or 16% of sales last year .

Speaker #3: This is primarily a result of higher amortization of our deferred development costs , along with lower capitalized labor development costs . As we note each quarter , we defer some of our R&D expenditures to future periods until our products commercialization .

Speaker #3: reported R&D expense in a period is typically different than the actual cash expenditure . Adjusting for this , our actual cash R&D investment was $16.8 million , or 23% of revenues , in the second quarter , up from $15.9 million , or 22% of revenues in Q2 of last year .

Judd Schmid: Adjusting for this, our actual cash R&D investment was $16.8 million, or 23% of revenues in the second quarter, up from $15.9 million, or 22% of revenues in Q2 of last year, as we continue to emphasize our investment in future product developments and building our innovation pipeline. Also included in OpEx for Q2 of last year were $2.8 million in restructuring charges related to our workforce reduction at that time. We continue to monitor and control our operating expenses, contributing to our bottom-line results, and do not foresee any significant OpEx increases in the near term. Now, looking at bottom-line results, second quarter operating income increased significantly to $3.3 million from an operating loss of $3.4 million in the same period last year.

Speaker #3: As we continue to emphasize our investment in future product developments and building our innovation pipeline , also included in OpEx for Q2 of last year were $2.8 million in restructuring charges related to our workforce reduction .

Speaker #3: At that time, we continue to monitor and control our operating expenses, contributing to our bottom line results, and do not foresee any significant opex increases in the near term.

Speaker #3: Now , looking at bottom line results , second quarter operating income , increased significantly to $3.3 million from an operating loss of $3.4 million in the same period last year .

Speaker #3: The $6.7 million improvement primarily reflects VBS higher margin product mix, as well as the increase in CD sales, which typically carry accretive gross margins.

Judd Schmid: The CAD 6.7 million improvement primarily reflects VBS's higher-margin product mix, as well as the increase in CDS sales, which typically carry accretive gross margins, and the CAD 2.8 million restructuring charge taken in last year's Q2. Lastly, net income for the second quarter increased to CAD 100,000, or CAD 0.00 per share, from a net loss of CAD 7.9 million, or a CAD 0.32 loss per share in the same period of fiscal 2025. Additionally, adjusted earnings per share for the second quarter grew to CAD 0.04 from an adjusted loss per share of CAD 0.30 in the same period last year. Turning to the balance sheet, working capital of CAD 49.3 million decreased from CAD 51.2 million at the end of June 2025.

Speaker #3: And the $2.8 million restructuring charge taken in last year's Q2. Lastly, net income for the second quarter increased to $100,000, or zero per share, from a net loss of $7.9 million, or a $0.32 loss per share in the same period of fiscal '25.

Speaker #3: Additionally, adjusted earnings per share for the second quarter grew to $0.04 from an adjusted loss per share of $0.30 in the same period last year. Turning to the balance sheet, working capital of $49.3 million decreased from $51.2 million at the end of June of '25.

Speaker #3: As we discussed as we discussed in our mDNA , the components of working capital can be subject to swings from quarter to quarter .

Judd Schmid: As we discussed, as we discussed in our MD&A, the components of working capital can be subject to swings from quarter to quarter. Product shipments can be lumpy as they reflects, reflect the fluctuating requirements of our customers. Contract timing issues, like those with greater than 30-day payment terms, also affect working capital, particularly if shipments are back and weighted for the quarter. Lastly, cash flow provided from operations for the second quarter decreased to CAD 6.8 million from CAD 15.2 million during the same period last year, primarily related to the changes in working capital. Our net debt position as a whole remains conservative, however, and stood at CAD 66.9 million at the end of the second quarter, down from a peak of CAD 92 million in Q3 of fiscal 2024.

Speaker #3: Product shipments can be lumpy as they reflect , reflect the fluctuating requirements of our customers . Contract timing issues like those with greater than 30 day payment terms also affect working capital , particularly if shipments are back end .

Speaker #3: Waited for the quarter. Lastly, cash flow provided from operations for the second quarter decreased to $6.8 million from $15.2 million during the same period last year, primarily related to the changes in working capital.

Speaker #3: Our net debt position as a whole remains conservative, however, and stood at $66.9 million at the end of the second quarter, down from a peak of $92 million in Q3 of fiscal '24.

Speaker #3: We had forecasted a slight increase in our net debt position for Q2 and continue to focus our efforts on paying down our debt on a final note , the board of directors approved a quarterly dividend of five and a half cents per common share , payable on March 23rd , 2026 , to shareholders of record as of February 27th , 2026 .

Judd Schmid: We had forecasted a slight increase in our net debt position for Q2, and continue to focus our efforts on paying down our debt. On a final note, the board of directors approved a quarterly dividend of CAD 0.055 per common share, payable on 23 March 2026, to shareholders of record as of 27 February 2026. It's important to note that this dividend will be designated as an eligible dividend for Canadian income tax purposes. Now back to Sumit.

Speaker #3: It's important to note that this dividend will be designated as an eligible dividend for Canadian income tax purposes . Now back to Sumit

Speaker #2: Thank you Jed . To recap our expectations for the next 12 months . We are anticipating a year over year revenue gain of 20 to 30% with 12 month adjusted EBITDA margin breaking through 20% based on customer indications .

Surinder Kumar: Thank you, Judd. To recap our expectations for the next twelve months, we are anticipating a year-over-year revenue gain of 20 to 30%, with twelve-month adjusted EBITDA margin breaking through 20% based on customer indications. We expect to see this momentum growing beginning in Q4, driven by Vecima's portfolio strength, our design wins with major customers, and the many other DAA-based gigabit network upgrades that are occurring globally. We anticipate our VBS segment will lead the growth, with strong demand for a wide range of next-generation Entra DAA solutions. Our Remote PHY Device solutions, our EN9000 and EN8400 platforms, and our highly successful Entra Optical fiber-to-the-home portfolio, are all expected to be strong contributors. Additionally, our newer EN3400 platforms and Power Holdover Modules are expected to gain momentum over the next twelve months.

Sumit Kumar: Thank you, Judd. To recap our expectations for the next twelve months, we are anticipating a year-over-year revenue gain of 20 to 30%, with twelve-month adjusted EBITDA margin breaking through 20% based on customer indications. We expect to see this momentum growing beginning in Q4, driven by Vecima's portfolio strength, our design wins with major customers, and the many other DAA-based gigabit network upgrades that are occurring globally. We anticipate our VBS segment will lead the growth, with strong demand for a wide range of next-generation Entra DAA solutions. Our Remote PHY Device solutions, our EN9000 and EN8400 platforms, and our highly successful Entra Optical fiber-to-the-home portfolio, are all expected to be strong contributors. Additionally, our newer EN3400 platforms and Power Holdover Modules are expected to gain momentum over the next twelve months.

Speaker #2: We expect to see this momentum growing beginning in Q4, driven by business portfolio strength, our design wins with major customers, and the many other DA-based gigabit network upgrades that are occurring globally.

Speaker #2: We anticipate our VBS segment will lead the growth . Strong demand for a wide range of next generation entra Da solutions , our remote device solutions , our N9000 and 8400 platforms , and our highly successful optical fiber to the home portfolio are all expected to be strong contributors Additionally , our newer N 3400 platforms and power hold modules are expected to gain momentum over the next 12 months .

Speaker #2: Our VBS results are also expected to be strongly supported by the program win with our lead tier one customer and related uptake of our Terrace IQ commercial video platform. While we haven't yet factored VMT's contribution into our outlook, this too could have a positive impact on our next 12-month results and will be incremental to the demand profile.

Surinder Kumar: Our VBS results are also expected to be strongly supported by the program win with our lead Tier 1 customer and related uptake of our Terrace IQ commercial video platform. Well, while we haven't yet factored vCMTS contribution into our outlook, this too could have a positive impact on our next 12 months results and will be incremental to the demand profile nonetheless. In our content delivery and storage segment, we continue to focus on driving revenue growth through managed IPTV expansions with new and existing customers, and the rollout of DAI. As always, we note, however, that quarter-to-quarter performance in the CDS segment can be lumpy. And in our telematics segment, we're anticipating steady and highly profitable performance from our high margin, recurring software and subscriptions-based monitoring business for vehicles and assets.

Sumit Kumar: Our VBS results are also expected to be strongly supported by the program win with our lead Tier 1 customer and related uptake of our Terrace IQ commercial video platform. Well, while we haven't yet factored vCMTS contribution into our outlook, this too could have a positive impact on our next 12 months results and will be incremental to the demand profile nonetheless. In our content delivery and storage segment, we continue to focus on driving revenue growth through managed IPTV expansions with new and existing customers, and the rollout of DAI. As always, we note, however, that quarter-to-quarter performance in the CDS segment can be lumpy. And in our telematics segment, we're anticipating steady and highly profitable performance from our high margin, recurring software and subscriptions-based monitoring business for vehicles and assets.

Speaker #2: Nonetheless , in our content delivery and storage segment , we continue to focus on driving revenue growth through managed IPTV expansions with new and existing customers and the rollout of Dei As always , we note , however , that quarter to quarter performance in the CDs segment can be lumpy and in our telematics segment , we're anticipating steady and highly profitable performance from our high margin recurring software and subscriptions based monitoring business for vehicles and assets across specimens .

Surinder Kumar: Across Vecima's operations, we're moving forward with a sharp focus on capturing the significant opportunities ahead, both over the next 12 months for high growth and in the long term. Our strategy of building the industry's broadest and most innovative portfolio of interoperable cable and fiber access products and IPTV solutions has created multiple engines for growth. Combined with a wide customer base and deep relationships with some of the world's largest operators and BSPs, we've invested in and built a broad, uniquely innovative and world-leading platform that we enjoy today, and that sets us up for sustained expansion. As wide-scale deployment of DAA now gets underway and IPTV adoption continues to grow, Vecima is uniquely positioned for success, not just in the next 12 months, but for years to come. That concludes our formal comments for today, and we'd now be happy to take questions. Operator?

Sumit Kumar: Across Vecima's operations, we're moving forward with a sharp focus on capturing the significant opportunities ahead, both over the next 12 months for high growth and in the long term. Our strategy of building the industry's broadest and most innovative portfolio of interoperable cable and fiber access products and IPTV solutions has created multiple engines for growth. Combined with a wide customer base and deep relationships with some of the world's largest operators and BSPs, we've invested in and built a broad, uniquely innovative and world-leading platform that we enjoy today, and that sets us up for sustained expansion. As wide-scale deployment of DAA now gets underway and IPTV adoption continues to grow, Vecima is uniquely positioned for success, not just in the next 12 months, but for years to come. That concludes our formal comments for today, and we'd now be happy to take questions. Operator?

Speaker #2: Operations. We're moving forward with a sharp focus on capturing the significant opportunities ahead, both over the next 12 months for high growth and in the long term.

Speaker #2: Our strategy of building the industry's broadest and most innovative portfolio of interoperable cable and fiber access products and IPTV solutions has created multiple engines for growth.

Speaker #2: Combined with a wide customer base and deep relationships with some of the world's largest operators and Bsps . We've invested in and built a broad , uniquely innovative and world leading platform that we enjoy today , and that sets us up for sustained expansion as wide scale deployment of Da now gets underway and IPTV , IPTV adoption continues to grow .

Speaker #2: Vecima is uniquely , uniquely positioned for success , not just in the next 12 months , but for years to come . That concludes our formal comments for today , and we now be happy to take questions .

Speaker #2: Operator

Speaker #1: Thank you . We'll now begin the question and answer session for analysts and institutional investors to join the question to you . You may press star , then one on your telephone keypad .

Operator: Thank you. We'll now begin the question session for analysts and institutional investors. To join the question queue, you may press Star, then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press Star, then two. The first question comes from Ryan Koontz with Needham and Co. Please go ahead.

Speaker #1: You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star.

Speaker #1: Thank you. The first question comes from Ryan Koontz with Needham & Co. Please go ahead.

Speaker #4: Great . Thanks for the question . Nice to hear about the improved outlook this year and gaining momentum there . I wanted to ask about the gap node and what you hear are the the criteria for customers to decide to go with a traditional node design versus a gap node .

Ryan Koontz: Great, thanks for the question. Nice to hear about the improved outlook this year and gaining momentum there. I wanted to ask about the GAP node and, you know, what you hear are the criteria for customers to decide to go with a traditional node design versus a GAP node. I kind of understand, I do understand the future-proof investment thesis, but how do you think customers are deciding to go with one versus the other? What do you think the criteria is?

Speaker #4: I kind of understand I do understand the the future proof investment thesis , but how do you think customers are deciding to go with one versus the other ?

Speaker #4: What do you think the criteria is ?

Speaker #2: Yeah . Okay . Good morning Ryan . Thanks for the question . Yeah . With the gap platform , you know , as we've talked about , you know , we've developed in conjunction with our lead tier one operator , customer , you know , this future proof platform , is modular and scalable and can evolve , you know , both over multiple generations of cable access with Docsis 3.1 , Docsis 4.0 .

Surinder Kumar: Yeah. Okay, good morning, Ryan, and thanks for the question. Yeah, with the GAP platform, you know, as we've talked about, you know, we've developed in conjunction with our lead Tier 1 operator customer, you know, this future-proof platform that's modular and scalable and can evolve, you know, both over multiple generations of cable access, the DOCSIS 3.1, DOCSIS 4.0, and evolve to, you know, fiber-to-the-home modules inserted within that same platform, and longevity in terms of any other use cases that emerge, once those nodes are widely deployed. So, you know, operators are typically seeing that platform allows them, you know, a long runway of capability within the network, you know, from successive generations of access technology.

Sumit Kumar: Yeah. Okay, good morning, Ryan, and thanks for the question. Yeah, with the GAP platform, you know, as we've talked about, you know, we've developed in conjunction with our lead Tier 1 operator customer, you know, this future-proof platform that's modular and scalable and can evolve, you know, both over multiple generations of cable access, the DOCSIS 3.1, DOCSIS 4.0, and evolve to, you know, fiber-to-the-home modules inserted within that same platform, and longevity in terms of any other use cases that emerge, once those nodes are widely deployed. So, you know, operators are typically seeing that platform allows them, you know, a long runway of capability within the network, you know, from successive generations of access technology.

Speaker #2: And evolve to , you know , fiber to the home modules inserted within that same platform . And longevity in terms of any other use cases that emerge once those nodes are widely deployed .

Speaker #2: So , you know , operators are typically seeing that that platform allows them , you know , a long runway of , you know , capability within the network , you know , from successive generations of access technology , you know , you could even go so far as thinking about edge compute and some of the some of the , you know , opportunities that arise therefrom .

Surinder Kumar: You know, you could even so go so far as thinking about edge compute and some of the, you know, opportunities that arise therefrom. So, and we can also mix services within the same platform, you know, cable, DOCSIS, fiber to the home, PON OLTs within the GAP platform. The thermal management is excellent. You know, it gives them a lot of, you know, capacity there, in terms of, you know, the cooling that, the passive cooling that it offers. And in the past, you know, there's been a lot of fragmentation and unique nodes. So, you know, we contributed this standard in conjunction with our operator partner. We are the only manufacturer in the world of this platform today, so we have a significant time to market advantage.

Sumit Kumar: You know, you could even so go so far as thinking about edge compute and some of the, you know, opportunities that arise therefrom. So, and we can also mix services within the same platform, you know, cable, DOCSIS, fiber to the home, PON OLTs within the GAP platform. The thermal management is excellent. You know, it gives them a lot of, you know, capacity there, in terms of, you know, the cooling that, the passive cooling that it offers. And in the past, you know, there's been a lot of fragmentation and unique nodes. So, you know, we contributed this standard in conjunction with our operator partner. We are the only manufacturer in the world of this platform today, so we have a significant time to market advantage.

Speaker #2: So and we can also mix services within the same platform , you know , cable , Docsis , fiber to the home porn sites within , within the platform , the thermal management is excellent .

Speaker #2: You know , it gives them a lot of , you know , capacity . There in terms of , you know , the cooling , the passive cooling that it offers .

Speaker #2: And in the past , you know , there's been a lot of fragmentation and unique nodes . So , you know , we contributed the standard in conjunction with , with our with our operator partner .

Speaker #2: We are the only manufacturer in the world of this platform today . So we have a significant time to market advantage . And as we said , it's being broadly adopted .

Surinder Kumar: As we said, it's being broadly adopted, you know, giving us a great amount of network incumbency at operators like our lead Tier 1.

Sumit Kumar: As we said, it's being broadly adopted, you know, giving us a great amount of network incumbency at operators like our lead Tier 1.

Speaker #2: You know, giving us a great amount of network incumbency at operators like our lead Tier One.

Speaker #4: Got it. That's helpful. You mentioned the thermal management. Is it better than a node, or what differentiates it from a traditional node in terms of thermals?

Ryan Koontz: Got it. That's helpful. And you mentioned the thermal management. Is it better than a node, or what differentiates it from a traditional node in terms of the thermals?

Speaker #2: It's just , you know , how we design the heat dissipation within the platform , how the modules slot into the available slots in the lid , and , you know , all the metal work and the way the heat is passing through to the fins on this type of platform , you know , it's taken 30 or 40 years of experience from from vendors like us , from our operator partner to know that we , you know , the the peak of engineering for for thermal capacity .

Surinder Kumar: It's just, you know, how we designed the heat dissipation within the platform, how the modules slot into the available slots in the lid, and, you know, all the metalwork and then, and the way the heat is passing through to the fins on, on, on this type of platform. You know, it's taken 30 or 40 years of experience from vendors like us, from our operator partner, to know that we, you know, that the peak of engineering for thermal capacity is there, in this platform. So, you know, we've been forward-looking with what we can do with the platform, again, with our operator partners as helping us to define that standard. Yeah.

Sumit Kumar: It's just, you know, how we designed the heat dissipation within the platform, how the modules slot into the available slots in the lid, and, you know, all the metalwork and then, and the way the heat is passing through to the fins on, on, on this type of platform. You know, it's taken 30 or 40 years of experience from vendors like us, from our operator partner, to know that we, you know, that the peak of engineering for thermal capacity is there, in this platform. So, you know, we've been forward-looking with what we can do with the platform, again, with our operator partners as helping us to define that standard. Yeah.

Speaker #2: Is there in this platform . So , you know , we've we've we've been forward looking with with what we can do with the platform .

Speaker #2: Again , with our operator partners as helping us to define that standard . Yeah . Thanks , Ryan .

Ryan Koontz: Uh-huh.

Surinder Kumar: Thanks, Ryan.

Alexandre Ryzhikov: Thanks, Ryan.

Ryan Koontz: Sure. It sounds like the OLT business is picking up. Are you hearing, you know, any changes in terms of fiber deployment plans from customers? Is it still primarily, you know, greenfield deployments, or are you picking up much about rehabbing coax with fiber in the cable industry?

Speaker #4: Sure . It sounds like the the Olt business is picking up . Or are you hearing , you know , any changes in terms of fiber deployment plans from customers ?

Speaker #4: Is it still primarily greenfield deployments? Are you picking up much about rehabbing coax with fiber in the cable industry?

Speaker #2: I think the focus definitely has been on on , you know , network edge out Greenfield expansion on more and more opportunities . Our customers are seeing for that .

Surinder Kumar: I think the focus definitely has been on you know, network edge, oh, greenfield expansion, on more and more opportunities our customers are seeing for that. Of course, the rural subsidy activity is going strong, too, and adding to our customers' footprints and their passings overall. You know, I don't think that overbuild is a focus. We have a lot of capacity on the cable side with 3.1 and 4.0. And you know, the cost advantage is there. So the cable network has got a long runway to it for multi-gigabit, symmetrical, 4.0. You know, there's standardization work being done on generations beyond 4.0 for DOCSIS as well.

Sumit Kumar: I think the focus definitely has been on you know, network edge, oh, greenfield expansion, on more and more opportunities our customers are seeing for that. Of course, the rural subsidy activity is going strong, too, and adding to our customers' footprints and their passings overall. You know, I don't think that overbuild is a focus. We have a lot of capacity on the cable side with 3.1 and 4.0. And you know, the cost advantage is there. So the cable network has got a long runway to it for multi-gigabit, symmetrical, 4.0. You know, there's standardization work being done on generations beyond 4.0 for DOCSIS as well.

Speaker #2: Of course , the rural subsidy activity is going going strong to and adding to to our customers footprints and their passings . Overall , you know , I don't think that Overbuild is is a focus .

Speaker #2: We have a lot of capacity on the cable side with with 3.1 and 4.0 and you know , the cost advantages there . So the cable network is has got a long runway to it for , for multi-gigabit symmetrical port auto .

Speaker #2: You know , there's standardization work being done on generations beyond 4.0 for Docsis as well . But you know , the fiber activity there's there's there's a lot of ground to plow on on expansion of the network itself without overbuilding .

Surinder Kumar: But, you know, the fiber activity, there's a lot of ground to plow on expansion of the network itself, without overbuilding.

Sumit Kumar: But, you know, the fiber activity, there's a lot of ground to plow on expansion of the network itself, without overbuilding.

Speaker #4: Got it, thanks. You talked about a new win for your new video platform. Do you have a rough idea of what your TAM is there, say in North America, for those sorts of products?

Ryan Koontz: Got it. Thanks. You talked about a new win for your new video platform. Do you have a rough idea of what your TAM is there, say, in North America for those sorts of products? I mean, is it still primarily a legacy model? You know, I don't think about, you know, linear being upgraded a whole lot, and I assume you're going to a kind of a switched IPTV-type model there. Can you maybe talk about where we are in adoption for those sorts of products?

Speaker #4: I mean , is it still primarily a legacy model ? You know , I don't I don't think about , you know , linear being upgraded a whole lot .

Speaker #4: And I assume you're going to a kind of a switched IP , IPTV type model there . Can you maybe talk about where we are in adoption for those sorts of products ?

Speaker #2: Yeah . No , you're absolutely right that we are going to IP ABR input switched IP . You can think of . So you know , the feed to the commercial video platforms is evolving from , from a linear , you know , quam feed to , to IPTV ABR .

Surinder Kumar: Yeah. No, you're absolutely right that we are going to IP/AVR input, switched IP, you can think of. So you know, the feed to the commercial video platforms is evolving from a linear, you know, QAM feed to IPTV/AVR. And that's the generational shift that we're seeing in this platform. We've led this market for the past 15 years. And it began with, when networks were converting to all digital from analog and, you know, commercial services, and hospitality in particular, needed a bulk demarcation solution into the property. So, you know, that's been a market we've enjoyed for well over a decade, and we have good visibility.

Sumit Kumar: Yeah. No, you're absolutely right that we are going to IP/AVR input, switched IP, you can think of. So you know, the feed to the commercial video platforms is evolving from a linear, you know, QAM feed to IPTV/AVR. And that's the generational shift that we're seeing in this platform. We've led this market for the past 15 years. And it began with, when networks were converting to all digital from analog and, you know, commercial services, and hospitality in particular, needed a bulk demarcation solution into the property. So, you know, that's been a market we've enjoyed for well over a decade, and we have good visibility.

Speaker #2: And that's the , you know , generational shift that we're seeing in this platform . We've led this market for , for the past 15 years .

Speaker #2: And it began with when networks were converting to all digital from analog . And , you know , commercial services and hospitality in particular , needed , you know , bulk demarcation solution into the property .

Speaker #2: So , you know , that's been a market we've enjoyed for for well over a decade . And we have good visibility . Of course , you know , it doesn't have the the growth engine capacity .

Surinder Kumar: Of course, you know, it doesn't have the growth engine capacity of something like broadband access, but, you know, it's going to be very meaningful to our results and, you know, particularly with this Tier 1, with the amount of units of the prior generation that they have fielded with our Terrace QAMs and our TC600s. You know, so we see a very meaningful contribution over the next 12 months and really, you know, the next 3 years or so as they upgrade that whole footprint. So, you know, I won't get too specific on the TAM side, but, you know, 5 years ago, the commercial videos, you know, maybe 5 to 10 years ago, commercial video drove the entirety of Vecima's business.

Sumit Kumar: Of course, you know, it doesn't have the growth engine capacity of something like broadband access, but, you know, it's going to be very meaningful to our results and, you know, particularly with this Tier 1, with the amount of units of the prior generation that they have fielded with our Terrace QAMs and our TC600s. You know, so we see a very meaningful contribution over the next 12 months and really, you know, the next 3 years or so as they upgrade that whole footprint. So, you know, I won't get too specific on the TAM side, but, you know, 5 years ago, the commercial videos, you know, maybe 5 to 10 years ago, commercial video drove the entirety of Vecima's business.

Speaker #2: If something like broadband access . But you know , it's going to be very meaningful to our And you know , particularly with this , this lead , tier one with the amount of units of the prior generation that they have fielded with our terrorist qualms and our 600 , you know , we see a very meaningful contribution over the next 12 months .

Speaker #2: And really the next three years or so as they upgrade that , that , that , that , that whole footprint . So , you know , I won't get too specific on the Tam side , but , you know , five years ago , the commercial video was , you know , maybe 5 to 10 years ago , commercial video drove the entirety of business .

Speaker #2: So that'll give you a sense of the magnitude.

Surinder Kumar: So that'll give you a sense of the magnitude.

Sumit Kumar: So that'll give you a sense of the magnitude.

Speaker #4: Okay, great. Appreciate that. Thanks so much.

Ryan Koontz: Okay, great. Appreciate that. Thanks so much.

Speaker #2: Thanks , Ryan

Surinder Kumar: Thanks, Ryan.

Judd Schmid: Thanks, Ryan.

Speaker #1: Once again, analysts and institutional investors who would like to ask a question should press star and one on their phone. The next question comes from Alexander Ryzhkov with Langgaard.

Operator: Once again, analysts and institutional investors who would like to ask a question should press star and one on their touchtone phone. The next question comes from Alexander Ryzhikov with LionGuard. Please go ahead.

Speaker #1: Please go ahead

Speaker #5: Hey, thanks a lot for taking my question. I guess I just want to focus on your comments around renewed and sustained growth.

Alexandre Ryzhikov: Hey, thanks a lot for taking my question. I guess, Sumit, I just want to focus on your comments around renewed and sustained growth. I get that your largest customer will ramp up spending on network evolution in 2026 and 2027, and that will drive growth. But I guess, what gives you confidence in growth beyond that upgrade cycle? Maybe if you can just break down the key drivers of growth beyond 2026, calendar 2026, that would be, that would be helpful. And then I have a follow-up.

Speaker #5: I get that your largest customer will ramp up spending on network evolution in '26 and '27, and that will drive growth. But I guess, what gives you confidence in growth beyond that upgrade cycle?

Speaker #5: Maybe if you can just break down the key drivers of growth beyond 26 calendar , 26 , that would be that would be helpful .

Speaker #5: And then I have a follow-up.

Speaker #2: All right . Thanks , Alex . Yeah . You know , of course , you know , that's a very meaningful program . As we've talked about .

Surinder Kumar: All right. Thanks, Alex. Yeah. You know, of course, you know, that's a very meaningful program as, as we've talked about and, and with our, with our lead customer and what'll happen over the next, you know, several years there. I think that, you know, focusing there, you know, that cycle is a significant wholesale upgrade that's happening to the cable network. I think what sometimes gets lost in the picture is that there's continuous segmentation activity and expansion activity that occurs for all operators. So you know, it's not a start, stop type of program. It'll tail off into a more regular run rate type of scenario.

Sumit Kumar: All right. Thanks, Alex. Yeah. You know, of course, you know, that's a very meaningful program as, as we've talked about and, and with our, with our lead customer and what'll happen over the next, you know, several years there. I think that, you know, focusing there, you know, that cycle is a significant wholesale upgrade that's happening to the cable network. I think what sometimes gets lost in the picture is that there's continuous segmentation activity and expansion activity that occurs for all operators. So you know, it's not a start, stop type of program. It'll tail off into a more regular run rate type of scenario.

Speaker #2: And with our with our lead customer and what will happen over the next , you know , several years there , I think that , you know , focusing their , you know , that that cycle is a significant wholesale upgrade .

Speaker #2: That's happening to the cable network. I think what sometimes gets lost in the pictures is that there is continuous segmentation activity and expansion activity that occurs for all operators.

Speaker #2: So , you know , it's not a start stop type of program . It'll it'll tail off into a more regular run rate type of scenario .

Speaker #2: And you know, another thing that I think we’d like people to understand is that, you know, only about 50% of our business today is in cable access.

Surinder Kumar: You know, another thing that I think we would like people to understand is that, you know, only about 50% of our business today is in cable access, so we're already on the path of diversifying business. So, you know, we have a whole set of customers in. You know, when I talk about the 147 engagements we have for cable and fiber access, that are also in their own cycles of moving to the upgrade.

Sumit Kumar: You know, another thing that I think we would like people to understand is that, you know, only about 50% of our business today is in cable access, so we're already on the path of diversifying business. So, you know, we have a whole set of customers in. You know, when I talk about the 147 engagements we have for cable and fiber access, that are also in their own cycles of moving to the upgrade.

Speaker #2: So we're already on the path of diversifying business . So , you know , we have a whole set of customers in , you know , when I talk about the 147 engagements we have for cable and fiber access that are also in their cycles of moving to to the upgrade , we've had these lead tier ones in the whole industry that have led the timing and some very scaled programs , but very typical of Docsis upgrades across the industry is that we will have , you know , multiple other customers come into the fold .

Surinder Kumar: We've had these lead Tier 1s in the whole industry that have led the timing, and some very scale programs, but very typical of DOCSIS upgrades across the industry is that we will have, you know, multiple other customers come into the fold, you know, after these large Tier 1s start to ramp back down to some more of a run rate scenario. And then the fiber access and vCMTS are incremental to our portfolio. Fiber access in the sense of we've added XGS-PON, much larger TAM. You know, we've been a leader in 10G EPON fiber-to-the-home to this point. And, you know, with this much larger TAM in XGS, we announced that we had the first customer win today.

Sumit Kumar: We've had these lead Tier 1s in the whole industry that have led the timing, and some very scale programs, but very typical of DOCSIS upgrades across the industry is that we will have, you know, multiple other customers come into the fold, you know, after these large Tier 1s start to ramp back down to some more of a run rate scenario. And then the fiber access and vCMTS are incremental to our portfolio. Fiber access in the sense of we've added XGS-PON, much larger TAM. You know, we've been a leader in 10G EPON fiber-to-the-home to this point. And, you know, with this much larger TAM in XGS, we announced that we had the first customer win today.

Speaker #2: You know , after these these large tier ones start to ramp back down to to more of a run rate scenario . And then the fiber axis in EMTs are incremental to our portfolio .

Speaker #2: Fiber access in the sense of we've added xgs-pon much larger Tam . You know , we've been a leader in ten gig fiber to the home to this point .

Speaker #2: And , you know , with this much larger Taman Xgs , we announced that we had the first customer win today . You know , our differentiation should should , you know , come into play and give us good market share in that much larger Tam .

Surinder Kumar: You know, our differentiation should, you know, come into play and give us good market share in that much larger TAM. So we've thought about this, you know, and the profile still sets itself up between the new customer additions, the fiber expansion, the addition of vCMTS, to lead us to a sustained growth scenario after this next couple of years of very strong growth that are anchored by our lead customer.

Sumit Kumar: You know, our differentiation should, you know, come into play and give us good market share in that much larger TAM. So we've thought about this, you know, and the profile still sets itself up between the new customer additions, the fiber expansion, the addition of vCMTS, to lead us to a sustained growth scenario after this next couple of years of very strong growth that are anchored by our lead customer.

Speaker #2: So we've thought about this . You know , and the profile still sets itself up between the new customer additions , the fiber expansion , the additions of MTS to lead us to a sustained growth scenario .

Speaker #2: After this next couple of years of very strong growth that are anchored by our lead customer.

Speaker #5: That's very helpful . I guess maybe specifically on MTS , I think you still included in your press release , you know , the Tam for that business .

Alexandre Ryzhikov: That, that's very helpful. I guess maybe specifically on vCMTS, I think you still included in your press release, you know, the TAM for that business, the estimate from Dell'Oro for $350 million. Are your expectations around market share, call it in 2029, still the same as they've been previously? Do you think you can, you know, capture 1/4 of this market? I know currently, essentially, you know, it's a, a single player has all of it. Maybe just help me understand your expectations today around the opportunity there for you.

Speaker #5: The estimate from the Laurel for 350 million . Are your expectations around market share . In 2029 . Still the same as they've been previously ?

Speaker #5: Do you think you can capture a quarter of this market? I know currently, essentially, you know, it's a single player that has all of it.

Speaker #5: Maybe just help me understand your expectations today around the opportunity there for you.

Speaker #2: Yeah . No . Great question . I think like we said , like you reiterated , you know , the market is about 350 million .

Surinder Kumar: Yeah, no, great question. I think, like we said, like you reiterated, you know, the market is about $350 million it'll reach by 2029. There are only, you know, effectively 3 viable vendors in the space, us being one of them. We have our lead win with Cox. And, you know, typically in every segment that we've participated in, you know, we have been successful, and we have the track record of building this meaningful market share. You know, the IP that we brought into bear, it originally started in our MAC Five platforms that we've put into the Entra Cloud and virtualized in vCMTS. We've been a leader in MAC Five for years now.

Sumit Kumar: Yeah, no, great question. I think, like we said, like you reiterated, you know, the market is about $350 million it'll reach by 2029. There are only, you know, effectively 3 viable vendors in the space, us being one of them. We have our lead win with Cox. And, you know, typically in every segment that we've participated in, you know, we have been successful, and we have the track record of building this meaningful market share. You know, the IP that we brought into bear, it originally started in our MAC Five platforms that we've put into the Entra Cloud and virtualized in vCMTS. We've been a leader in MAC Five for years now.

Speaker #2: It'll reach . And by 2029 there are only , you know , effectively three viable vendors in the space . Us being one of them .

Speaker #2: We have our our lead win with Cox . And you know typically in every segment that we participated in , you know we have been successful and we have the track record of building this .

Speaker #2: You know, meaningful market share. You know, the IP that we brought to bear originally started in our MAC platforms that we've put into the cloud and virtualized and MTS.

Speaker #2: We've been a leader in Mac for years now . You know that translates to , you know , a reasonable expectation between what we're doing with Cox , between these other engagements that we've already built , the significant number of them for VMs and the natural timing of the rest of the market as it grows to 350 million .

Surinder Kumar: You know, that translates to, you know, a reasonable expectation between what we're doing with Cox, between these other engagements, that we've already built a significant number of them for vCMTS, and the natural timing of the rest of the market as it grows to 350 million. I think, you know, we've seen that, it's very common to expect that a player like us, when there's only three in the market, and the customer engagements we have, is going to have a respectable market share.

Sumit Kumar: You know, that translates to, you know, a reasonable expectation between what we're doing with Cox, between these other engagements, that we've already built a significant number of them for vCMTS, and the natural timing of the rest of the market as it grows to 350 million. I think, you know, we've seen that, it's very common to expect that a player like us, when there's only three in the market, and the customer engagements we have, is going to have a respectable market share.

Speaker #2: I think , you know , we've seen that it's very common to expect that a player like us , when there's only three in the market and the customer engagements we have , is going to have a respectable market share .

Speaker #5: Great . And then my final question on capital allocation , I know you've talked about prioritizing debt repayment , but if I think about just the multiple on the numbers that you've shared today on 26 EBITDA , you're trading at a huge discount to all of your peers .

Alexandre Ryzhikov: Great. And then my final question, capital allocation. I know you've talked about prioritizing debt repayment, but if I think about just the multiple on the numbers that you've shared today on 26 EBITDA, you're trading at a huge discount to all of your peers. So, you know, why not be more aggressive on debt repurchases? I know the volume is very low, but why not explore an SAB or some other type of a, you know, share repurchase, given where the market is valuing you today? Thank you.

Speaker #5: So why not be more aggressive on debt repurchases ? I know the volume is very low , but why not explore an SAB or some other type of share repurchase given where the market is valuing you today Thank you

Speaker #2: Yeah , well , thanks for pointing that out . And of course , you know , we agree that , you know , there's we have opportunity to the upside and the valuation .

Surinder Kumar: Yeah. Well, thanks for pointing that out, and of course, you know, we agree that, you know, there's -- we have opportunity to the upside in the valuation. You know, I think that, fundamentally, you know, that pathway from our growing performance is going to provide an avenue. I think, as Judd mentioned, you know, we have been focused on bringing down our leverage and our debt position, and we see that happening, you know, relatively, significantly in these next 12 months of the P&L performance and the EBITDA delivery. So, you know, that should open up the opportunity to explore other uses of capital.

Sumit Kumar: Yeah. Well, thanks for pointing that out, and of course, you know, we agree that, you know, there's -- we have opportunity to the upside in the valuation. You know, I think that, fundamentally, you know, that pathway from our growing performance is going to provide an avenue. I think, as Judd mentioned, you know, we have been focused on bringing down our leverage and our debt position, and we see that happening, you know, relatively, significantly in these next 12 months of the P&L performance and the EBITDA delivery. So, you know, that should open up the opportunity to explore other uses of capital.

Speaker #2: You know , I think that fundamentally , you know , that pathway from our from our growing performance is going to provide an avenue , I think , as Judd mentioned , you know , we have been focused on on bringing down our leverage and our and our debt position .

Speaker #2: And we see that happening , you know , relatively , you know , significantly in these next 12 months of , of of the PNL performance EBITDA delivery .

Speaker #2: So , you know , that should open up the opportunity to , you know , explore other other uses of capital . And , you know , one of the topics that does tend to gain the thought process is , is , you know , should we look at share purchases , you know , we haven't done any significant M&A in a while either .

Surinder Kumar: And you know, one of the topics that does tend to gain the thought process is, you know, should we look at share purchases? You know, we haven't done any significant M&A in a while either. You know, that would be the other avenue to turn to. But you know, our first focus is on the cash generation, and that, you know, that is expected to be there.

Sumit Kumar: And you know, one of the topics that does tend to gain the thought process is, you know, should we look at share purchases? You know, we haven't done any significant M&A in a while either. You know, that would be the other avenue to turn to. But you know, our first focus is on the cash generation, and that, you know, that is expected to be there.

Speaker #2: You know , that would be the other avenue to to turn to . But , you know , our first focus is on on , on on the cash generation .

Speaker #2: And that, you know, that is expected to be there.

Speaker #5: Thank you

Alexandre Ryzhikov: Thank you.

Speaker #2: Thanks , Alex

Surinder Kumar: Thanks, Alex.

Sumit Kumar: Thanks, Alex.

Speaker #1: Once again, analysts and institutional investors who would like to ask a question should press star and one on their touchtone phone. As there appear to be no further questions, this concludes today's conference call.

Operator: Once again, analysts and institutional investors who would like to ask their questions should press star and one on their touchtone phone. As there appears to be no further questions, this concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Q2 2026 Vecima Networks Inc Earnings Call

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