Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vecima Networks Inc (VNWTF, Financial) achieved record revenue of $87.5 million in Q4, up 16% year-over-year and 9% sequentially.
- The company saw strong demand for its EntraOptical 10-gig EPON products, contributing to record segment performance in both Q3 and Q4.
- Vecima Networks Inc (VNWTF) introduced and ramped up deliveries of new products like the ERM3 Remote-PHY devices and EN9000 Generic Access Platform, which are expected to drive future growth.
- The Content Delivery and Storage Segment saw a 10% increase in higher-margin services revenue, contributing to a strong segment gross margin of 56.7%.
- The Telematics segment achieved a 22% year-over-year sales increase in Q4 and maintained a strong gross margin of 67.5%.
Negative Points
- The Content Delivery and Storage Segment experienced an 8% decline in sales year-over-year.
- R&D expenses increased by $1.9 million to $11 million in Q4, reflecting higher capitalized development costs.
- Sales and marketing expenses rose by $700,000 to $8.5 million, driven by higher salaries and trade show participation costs.
- The company recorded a foreign exchange loss of $2 million in Q4, negatively impacting the bottom line.
- Gross margin percentage decreased to 46.5% in Q4 from 50.5% in the same period last year, largely due to a different product mix.
Q & A Highlights
Q: Can you give us an update on how your vCMTS trials with the Tier 1 customer are progressing? When does it move to field trials, and when is the first phase of revenues expected?
A: We are making solid progress on our vCMTS lab trials with the lead Tier 1 customer, which has been ongoing through calendar '24. While I can't specify the exact timing for transitioning to field trials, we anticipate following the typical cadence of lab trials, friendly field trials, and market field trials through fiscal '25. We aim for potential revenue contribution in fiscal '25, marking a significant move in accessing the vCMTS market segment.
Q: Aside from the Tier 1 customer, how many other operators are trialing your vCMTS?
A: While it's early to provide specific metrics, we have a broadening base of engagements with other customers for vCMTS. Our strategy involves working closely with a lead Tier 1 operator to define requirements that align well with the broader market, and we will provide updates as we progress.
Q: Could you share what you're hearing from customers regarding the timing of BEAD program funding for projects?
A: Multiple states have received grants from the federal government and are progressing towards defining projects and selecting sub-grantees, which are our customers. We expect calendar '25 to be a significant year for BEAD rollouts, in parallel with the ongoing RDOF program. We are well-prepared with our fiber portfolio to meet the US build requirements.
Q: How are you thinking about 2025 revenue momentum for the DAA product family, especially if BEAD funding gets delayed?
A: Our planning accounts for multiple growth engines, including BEAD and RDOF programs, as well as cable access network upgrades and international fiber-to-the-home deployments. While BEAD is a component of our pipeline, we are not solely dependent on it for fiscal '25 revenue momentum.
Q: Has the competitive disruption in the industry changed your market share targets in the cable and fiber access category?
A: Despite the consolidation in the industry, we maintain our target of 25% market share in cable and fiber access. We have leading market shares in fiber-to-the-home remote OLTs and remote MAC-PHY for several years. Our market share in Remote-PHY has also increased, and we are well-positioned to achieve our targets.
Q: What will it take for open caching to gain momentum in the IPTV market?
A: The streamers are shifting focus from growth to cost reduction, making open caching more attractive due to its cost-saving and quality-of-experience benefits. We view open caching as a "when, not if" scenario and anticipate gaining momentum as the value proposition becomes clearer to both broadband service providers and streamers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
