$ADTN earnings report

ADTRAN reported third-quarter revenue of $281.2 million, up 0.6% year-over-year. The revenue result was slightly below the midpoint of the Company's guidance range, according to management. Network Solutions revenue was $ 231,222 and Services & Support revenue was $ 49,945, each reported in thousands. Management identified continued optical-networking growth and increasing growth with hyperscale customers as favorable developments, while also citing a challenging supply environment.

Margins improved sequentially in several reported measures but remained under pressure on a GAAP basis. GAAP gross margin was 38.5 %, compared with 37.0 % in the preceding quarter and 38.3 % in the prior-year quarter. Non-GAAP gross margin was 42.1 %, equal to the prior-year quarter and above 40.7 % in the prior quarter. The Company stated that non-GAAP gross margin included benefit of approximately 200 basis points from IEEPA refunds. GAAP operating margin was -0.3 %, while non-GAAP operating margin was 5.0 %.

The Company reported a GAAP operating loss of $ (754 ) and a GAAP net loss attributable to ADTRAN Holdings, Inc. of $ (9,228 ), each in thousands. GAAP diluted loss per share was $ (0.10 ). On a non-GAAP basis, operating income was $ 14,084, net income attributable to ADTRAN Holdings, Inc. was $ 6,119, and diluted earnings per share was $ 0.09, each with the applicable figures reported in the filing. The difference between GAAP and non-GAAP results included acquisition-related expenses, amortizations and adjustments, stock-based compensation, deferred compensation adjustments and business transformation costs.

Cash conversion was the main weakness in the reported quarter. Net cash used in operating activities was $ (24,470 ) and non-GAAP free cash flow was $ (39,386 ), both in thousands. For the nine months ended September 30, 2026, net cash provided by operating activities was $ 14,115 and non-GAAP free cash flow was $ (33,978 ), in thousands. Cash, cash equivalents and restricted cash were $ 71,724 at September 30, 2026, while non-current revolving credit agreement borrowings were $ 82,961 and non-current convertible senior notes, net of debt issuance costs, were $ 194,223, each in thousands.

For the fourth quarter of 2026, ADTRAN guided revenue to $272.0 million to $292.0 million and non-GAAP operating margin to 1.0% to 5.0%. The outlook explicitly reflects historical seasonality, availability of supply and timing of large customer projects. The guide places execution on supply conditions, project timing, demand from optical networking and hyperscale customers, and the Company's stated objective of converting revenue opportunities into profitability and cash generation.

ADTRAN reported second-quarter revenue of $281.1 million, up 6.1% year-over-year. Management characterized demand across its end markets as strong and said Optical Networking Solutions led the quarter. It also cited 47% year-over-year revenue growth from cloud providers/hyperscalers, enterprise, and government customers, framing the period around optical-networking momentum and a more diversified customer base.

Profitability was positive on the non-GAAP measures disclosed in the release, with gross margin of 40.7%, operating margin of 3.8%, and diluted earnings per share of $0.04. GAAP results remained loss-making, however, with gross margin of 37.0%, operating margin of -3.6%, and diluted loss per share of $0.13. Management attributed the quarter's results to a specific set of near-term factors while maintaining that the underlying business trajectory remained intact.

Cash generation was positive, with net cash provided by operating activities of $25.9 million. Cash and cash equivalents were reported as $79.2 million in the earnings highlights, while the balance sheet reports $79,236 as of June 30, 2026, compared with $95,696 at December 31, 2025. The release did not disclose capital-return activity. The filing also identifies indebtedness, cash-generation capacity, credit-agreement obligations, DPLTA obligations, and ongoing material weaknesses in internal control over financial reporting as risks.

For the third quarter of 2026, ADTRAN expects revenue of $275.0 million to $295.0 million and non-GAAP operating margin of 1.5% to 5.5%. The guided profitability range places attention on the durability of non-GAAP operating performance following the reported 3.8% second-quarter margin, while revenue delivery will test management's stated optical-networking and diversified-customer demand drivers.

The central items to monitor are the persistence of the near-term factors cited for the second quarter, execution against the third-quarter ranges, and continued demand from cloud providers/hyperscalers, enterprise, and government customers. The release provides no prior outlook, so reported second-quarter results cannot be assessed against prior Company guidance from the materials provided.