On February 26, 2024, Adtran Holdings Inc (ADTN, Financial) released its 8-K filing, detailing preliminary unaudited financial results for the fourth quarter of 2023. The company, a provider of networking and communications platforms, software, and services, operates under two segments: Network Solutions and Services & Support, catering to the broadband access market.
Despite a challenging macroeconomic environment and elevated customer inventories, Adtran Holdings Inc (ADTN, Financial) reported a preliminary Q4 revenue of $225.5 million, which met the mid-point of its guidance. The company saw a sequential improvement in both GAAP and non-GAAP operating expenses, with a 7.6% reduction in GAAP operating expenses and a 15.1% reduction in non-GAAP operating expenses respectively.
Financial Highlights and Challenges
Adtran Holdings Inc (ADTN, Financial) experienced a notable improvement in its gross margin, with preliminary GAAP gross margin for the quarter at 34.8%, a year-over-year increase of 483 basis points (bps) and a quarter-over-quarter increase of 754 bps. This was primarily due to lower purchasing and transportation costs, as well as reduced acquisition-related expenses, amortizations, and adjustments. The non-GAAP gross margin also increased to 41.9%, influenced by a favorable customer and product mix.
However, the company faced a preliminary GAAP operating margin of negative 16.7%, impacted by lower revenue and acquisition-related expenses. The non-GAAP operating margin was negative 1.4%, which was at the upper end of the guidance range. The GAAP net loss attributable to the company for the fourth quarter was $109.9 million, with a diluted loss per share of $1.40. The non-GAAP net loss was $85.9 million, with a non-GAAP diluted loss per share of $1.09.
ADTRAN Holdings’ Chairman and Chief Executive Officer Tom Stanton commented, "Preliminary Q4 revenue came in as expected with non-GAAP profitability at the upper end of our guidance driven by continued gross margin improvements and lower operating expenses. Although revenues continued to remain challenging due to the macroeconomic environment and elevated customer inventories. we believe the fundamental demand landscape remains unchanged. Service providers continue to pursue the same objectives of expanding their fiber footprint and enhancing bandwidth, necessitating global infrastructure buildouts. With the ongoing implementation of our cost improvement measures, we believe that we are transforming into a more streamlined and efficient company. We expect that this will position us well to excel when spending returns to normal levels."
Looking Forward
Adtran Holdings Inc (ADTN, Financial) is actively implementing cost improvement measures to transform into a more streamlined and efficient company. This strategic move is expected to position the company favorably for when spending returns to normal levels. The company will hold a conference call to discuss its preliminary fourth quarter results on February 27, 2024.
Investors and analysts interested in further details can access the conference call webcast through the Investor Relations site at investors.adtran.com. A replay and transcript of the call will also be available on the site.
For more detailed financial information and analysis, readers are encouraged to visit GuruFocus.com for comprehensive coverage and expert insights into Adtran Holdings Inc (ADTN, Financial)'s performance and future prospects.
Explore the complete 8-K earnings release (here) from Adtran Holdings Inc for further details.
