ADTRAN (ADTN) 8 Aug 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to ADTRAN’s Second Quarter Earnings Release Conference Call. [Operator Instructions] During the course of the conference call, ADTRAN representatives expect to make forward-looking statements, which reflect management’s best judgment based on factors currently known.

However, these statements include risks and uncertainties, including the continued spread and extent of the impact of COVID-19 global pandemic, the successful development and market acceptance of our products, competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies and other risks detailed in our Annual Report on Form 10-K for the year ending December 31, 2020. These risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements, which maybe made during the call. It is now my pleasure to turn the call over to Tom Stanton, Chief Executive Officer of ADTRAN. ahead. go please Sir,

Good second We With quarter CFO, is Dimitriz. us me you for ADTRAN’s Foliano. our XXXX Mike morning, you, appreciate everyone. joining today Thank conference call.

the my quarterly then Following will questions have. any you take Mike remarks, will we financial in detail, opening performance and may that review

quarter we We that over past QX. have continued the year in the seen momentum with another strong

EPS the chain year-over-year in revenue quarter $X.XX non-GAAP constraints, and grew total constrained supply was $X.XX Although by to XX% we revenue increased per by year-over-year materially share.

for success are fiber-based by XX% Our market, The bookings product of in regional backdrop In solutions to investments growth our year-over-year. the in the in, we be XX% success is in platforms. that by we providers had growth funding there against high-speed year-over-year a Proposed continues the strong that quarter we led broadband access for demand a service was increased access support connectivity. includes $XX driving in a for connectivity. U.S. Infrastructure our the fiber broadband billion our U.S. in fiber Europe, Bill and Reinforcing growing have across phase bipartisan

spent out speed recent building over cited $XX article be years. from next In initiatives alone high to pledges to funding, are addition EU state provide in the the X broadband to moving A there for broadband. over coverage to the improve access level in forward the underserved increasing this to are infrastructure commitments funding UK universal billion fiber Similar federal connectivity in households. of UK and

transition initiatives cloud-managed continue of from growth their high-risk as we look WiFi XX-gig diversify to base market selection vendors. fiber the for to key see and and supply activity, areas their increased networks, operators away modernize X access our As in vendor

these in still in strong see investment reinforce U.S. growth take end as the company we to fiber Europe, is XXX our last our has customers to XX-gig QX, We past you this cycle look a the service the have remain QX. fiber the history. our advantage investments of of closer most major of the of access product growth in the several markets, in view markets. at deploying phases. provider our and and added our Taking in particularly And This that optimistic well that presence of of key our in software, in key launches over customers highlights solutions positioning fiber XX in year. Given we positioned been one prem early our will successful just latest

revenue customer On the year-over-year, XX% applications increased while XX% software side, our increased SaaS for base year-over-year.

substantial WiFi also of managed our first number as for service Tier segment under X subscribers We our growth SaaS is provider secured the poised our offering. The of business SaaS scale we multiyear SaaS deploying agreements.

during the As XX% QX we $XX.X quarter $XXX.X XX margin. X% European Tier look revenue distribution quarter, one X We services Network contributed and total $XXX.X accounted for while global of customers provider. million, gross million. financials, with at revenue was and for Solutions at XX.X% the had the X service partners million

both a home success As we providers year-over-year, In continues operators U.S. few while QX and like year-over-year. success led diversification. up Europe. service European in were market saw the of having combined Much growth the both distribution combined the regional regional revenue customer our quarters, U.S. the with hundreds with up that noted from regional Tier broadband a operators market, U.S. we previous This portfolio the access, operators a broadband reinforce the serve X in was XX% past to was and in by XX% these partners in of connected mix enterprise quarters, are and in solutions.

projects, future. access exit fiber of the year X exit near Tier and announced deliveries the later in these orders and from for these on we expect two a previously next track this Two to and on one other year. remain us for the lab have of have For begun with place already

to COVID lab announced previously issues. awards, to In our times normal we levels resulting X these global multiple Tier with shortage access certification addition platform higher the fiber our due fiber MSO operators. from achieved from lead Inventory increased the related have remain on logistics negotiation chip with contract and a than X latest Tier

see times to being extended continue becoming component unpredictable. lead more and We

perspective, the that constraints challenges supply this do expect to of these risk gross necessary revenue best into our the We continue mitigate will ability. to and present taking to steps are But issue we year, next and the chain operating near see operational organizational X approach an we those term. to over wins, Tier to disciplined a we secure expenses. From expenses additional to continue targeted in as maintain customer we increases expect margins

fiber access software. platforms, and platforms ahead, to service core home our to Looking in we expect and of see continue areas delivery growth

platforms we Tier Our fiber access regional are upcoming in growth in providers. service to fiber business the for addition ramp continued the are up from deployment fiber we a access gearing in quarters platforms, – in for X seeing

supply service in-home are the demand. and chain constraints are high, platforms, cloud-managed for we For an working delivery gateways bookings to at our all-time through fulfill

the set enhanced will coupled enhanced set broadband our success for with increased in continue and to are marketing portfolio, diversification portfolio improve to – year investment SaaS meet service for with providers. of our side, us customer of us our On we our in high-growth customer the customer success platform having objectives. new to tools One, platform, these a our enable Mosaic tools, care we additional automate with has Continuing a adoption of and positioned segments throughout operations SaaS have and and the well software

all of following his open COVID-XX. of meet With will while will navigate want flexibility continued continue provide we ability needs continually of the these to our Finally, challenges to with resilience ongoing as a have challenges and being I to we Mike And our our to background, the their thank for the questions. call that allowed Mike? employees Their financials. customers. remarks, of execute faced up for us review now

press Thanks, Tom, I’ll third XXXX. and presented financial and reconciliations release all. web second our compared information of will prior results for I XXXX quarter second $XXX.X segment of million our also which with schedules revenue $XXX.X in second in discussing QX be provide XXXX. and quarter $XXX.X schedules our $XXX.X the and on solutions quarter segments, million XXXX. both page present the web network quarter non-GAAP our I’ll good for revenue results be and QX quarter on The category, second million our to at financial GAAP and in supplemental investors.adtran.com. quarter ADTRAN’s by $XXX.X review supplemental expectations Investor referencing at certain revenue Relations morning this million for million our our operating for across the to was $XXX.X in of today. came XXXX and page Subdividing reported of the million versus

quarter revenue to aggregation our $XX.X million Our access services reported XXXX was $XX.X million revenue quarter in million was in the support compared $XX.X $XX.X for XXXX. of quarter in of first compared and XXXX to categories, and prior second revenue and quarter and two of million for Across the quarter million in the million million the of of QX X million $XX second million for other for for XXXX. was revenue in and the XXXX. was million for $X.X to quarter quarter $X.X XXXX. subscriber versus of for in solutions of quarter $XX.X quarter million the quarter Traditional two $X.X and products our Revenue two million $XX.X XXXX and experience $XX.X and QX category compared $XX.X

QX XXXX $XX.X of XXXX. Looking versus at million and for our in $XX.X was revenue million $XX.X U.S. in revenues QX reported geographically, million QX

$XX.X was to two were million prior Our of of quarter customers, and the million revenue one in XX% second we for international XXXX. had million QX $XX.X XXXX revenue for of X quarter the domestic international. In and X $XX quarter, compared was

in the margin the GAAP Non-GAAP gross second quarter quarter XXXX. XX.X% and XX.X% to services mix year-over-year well in attributable as and of prior margin. were gross second the our in for quarter-over-quarter the in was quarter the which improvement quarter in for Our second The to GAAP at both XXXX. margin customer of gross as in margins gross compares as XX.X% compared to XX.X%, and product was XX.X% prior quarter XX% quarter international the and non-GAAP improvement and an

in the to constraints experience worsened During market, the extreme component electronic QX. we quarter, during which continued

$X.X year-over-year prior our of were XXXX The basis operating reported the lower and and more in reported second reduced sales restructuring gross a in operating of $XX.X driven market-driven non-GAAP increased million a Non-GAAP of expenses legal expenses. gross XXXX. in was deferred compared basis compared million to prior of a of volume profitability to non-GAAP XXXX. to and second other attributable costs of stronger basis for quarter prior basis million QX quarter-over-quarter for primarily quarter increase market-driven $XX.X on operating increases improving and on contract operating favorable expect of QX quarter-over-quarter on the and the of operating increase $X.X for for margin gross compared comp basis, sales charges and income second sales in operating the operating We services $X.X and was increases reduced $XX.X The $XX.X result in Total a higher our The legal-related of for mix, quarter XXXX. higher XXXX. $X.X income improvement GAAP partially of in quarter our The $X.X by by QX GAAP million the on million the margins. services this quarter an and due operating a expenses year-over-year partially and $X the prior million to volume volumes, and income million year, of decreases QX prior was continue of $XX.X to quarter-over-quarter in a plans $XX.X to availability expenses Operating further partially in quarter remainder compared XXXX compensation costs. in was operating GAAP result and component professional by offset year-over-year The million were loss and lower million by was services offset driven in of a a XXXX. expenses On tighten in million quarter XXXX two higher to million expenses, to in affecting was margins and QX costs. quarter a The million XXXX in in logistics operating gains increase quarter quarter-over-quarter in increases product QX of plans, million million GAAP professional $X.X for $XX.X QX income increased for loss costs. increased $X.X offset GAAP in by year-over-year were non-GAAP deferred Other and the expenses. to profitability income of were potentially was in decrease compared expenses. during and million the

Our decreases income the the portfolio. GAAP non-GAAP for quarter non-GAAP foreign million realized of both quarter-over-quarter changes related lower second million tax lower other the offset in was market-driven the both changes primarily $X.X quarter’s the million, as tax in current million second our quarter of $X.X allowance. GAAP net million compared Non-GAAP quarter XXXX the was valuation international quarter driven for was The a favorable non-GAAP income fluctuations, other the prior million as decreases for expense by two the offset market-driven $X.X second for of as quarter XXXX. realized million basis quarter $X.X $X.X $X.X additional in in quarter of to XXXX. in income XXXX fair to The to prior gains to the to currency net was compared non-GAAP foreign by of $X.X our expense quarter in the GAAP the operations portfolio, compared XXXX. and of offset in was quarter by be in continue to from other tax of QX company’s deferred an in quarter and of compared two in value year-over-year in second and $X were XXXX currency provision for of prior million generated on our income fair million to and The in quarter and income of other two profits XXXX. investment income $X.X domestic exchange value expense million $XXX,XXX $XXX,XXX losses. were our $X.X the The related and the operations exchange for investment by

dilution and per quarter the share, compared in For assuming both quarter to earnings the share, share Non-GAAP GAAP prior ended, share and the $X.XX per second was $X.XX the earnings XXXX. that per per per of $X.XX of quarter prior compared XXXX. basis quarter XXXX assuming on dilution for $X.XX second per in just the share were share QX quarter a in in to of as $X.XX

cash marketable quarter unrestricted in during sheet, balance million totals securities the the and dividends paying after On quarter. at $XXX.X $X.X million end

accounts For million in XXXX. prior end, we mix $X.X the second million the of at compared quarter the quarter mainly the of quarter quarter trade end of were volumes. days is $XXX.X of first of resulting timing shipments DSOs in year variability in customer year-over-year million days XX receivable generated The those the orders DSOs end sales second attributable at Net quarter Net the the days and $XXX.X $XXX.X and second of XX this to was to XXXX. inventories at the of quarter, $XXX during of end from quarter, to million operations. at and and million in of XX the cash quarter-over-quarter compared quarter

While to market. challenging electronic quarter-over-quarter, our from component inventory the us that product and we higher are to inventory currently in were assist carry down with supply inventories strategic purchases in continue continuity preparation new designed ramp-ups levels buffer

in the the cause ahead of our to the actual the seeing the large we markets exchange our in between component our wider that XXXX range projected which both of million. our we to ability order expect projects, continuing base demand, sell in the the associated range issues gross in the Looking the expectations that mind, the pandemic, we’re differences in million mix, with $XXX book supply. the of will better well quarter, rates variability with we this on component as With basis align be timing with supplies third strength as the the of patterns COVID-XX sales demand next fluctuation revenue quarter and of the nature results. a revenue Note and of customer which and our in may than non-GAAP XX% to to currency that business, margin international third considering the and reflects After quarter expect current of to usual effects ship the be will range XX%. material $XXX from customer

macro factors will tax finally, be ADTRAN’s availability is at and page changes for rate We operating rate. non-GAAP fluctuations anticipate impacting at potential platforms, also project levels, between a available and the mid-XXs investors.adtran.com. relative for additional pandemic, million the we revenue adoption XXXX $XX of of enterprises, XXXX non-GAAP believe movements third to professional Once information on a access percentage the the again, expect million. ongoing We total revenue at associated the our will realized financial quarter and low internationally, third inventory revenue expenses environment in proportion rollouts, be the and be the mix exchange domestically earnings significant laws, $XX the consolidated of to will And spending activity and with our rate broadband quarter services carriers component effects and and of costs, international a in for Relations both Investor variability currency in our of distribution channels. revenue, COVID-XX tax rate web the basis corporate

Now questions. I’ll take back to turn your and it we Tom, over will

Mike. up Thanks open questions it may point, ready any people Dimitriz, have. we’re Alright. for at this to

line the first of question Goldman Rod [Operator Sachs. comes from Instructions] with Your Hall

is Hi, guys. Bala Thanks question. on taking my This for for Rod.

guidance, constraints the color, ONTs in maybe business it the are surprising or is on I you seeing give touch the RGs the and to part given of seeing. the the to access the not industry But and more off, wider to are side supply more aggregation of business? everybody So constraints further kick that on want revenue which

both. About

– would I We’re both. I yes. mean it’s –

no some material So two. is that those there although the difference we really chips there have are is constraints. single sometimes not have product – are say they And set I between constraints, really a different would that on doesn’t that causing

Got the etcetera. projects, RFPs, it. the And on larger

looks some you expect you lab customers exits future, already orders. the near are mentioned placing So like and in that some it

get wanted with next on do color to or some year just this understand apart the the more like supply how this because… half, we So would expect constraints importantly, and look second from I

Yes. mean I expecting next year. things good we’re

just we’ve accelerating be exits, they two, of a lab lab have I for going still strong going still – the stead are other But doing not will are behind. pick we’re early sure next that So this those said, far it don’t that at point. so year. they And kind mentioned field we lab are year. this to And expect one in next of exited placement, through up order They through kind of the exits, clip we to good at like they two I year. are one make deployments

So very I good feel about those.

if question, good here. constraints gross I pretty the may, more on despite one And margins, so margins, obviously,

and the which are given margins inflation carry we margins about higher is on the how think we as fiber revenues, or and strong, I the assume So, which other X also hand, would cost of should increasing portion through you so? gross so go that also, seeing year next Tier growing

your Let are really in base because we’re offering, software our then the are U.S. backdrop also strong strong the platforms there strong margins. bit gross said, think had selling fairly pickup into, a has your that just customer affecting One like got gross both fiber margins, and SaaS in And several demand. or Europe which and is, things some in we’ve gross you me that little I margins. modify

to those question. So know kind positives of the take will Mike it. all of And think I that are I that backend

the on the but as mid-XXs, been to margins that our in products to we’re we make we’ve we’ve said trend we’re low plan expecting past, changes what our additional to mid-XXs. seeing, the to backend, still I efficiency And start in gross same transition over toward and and new I think our Like business. the think

we will, expecting work the mid-XXs. will over to be we time, able We’re that to way our

me add this will margin. this – when gross no material have to thing other been on constraints just in margins impacts exactly work – Let seeing one different. knows year. seeing themselves But It’s will thing this the supply our was We’ve throughout who gross quarter we been out.

targets. us had that good fact the as is up So as to well getting they our actually have picked towards actually have they up held very and

It’s And pretty it’s and for driven out things. by both logistics costs. freight market there tight moving expedite pressures a also price and costs,

And from etcetera, Mike, last constraints, follow-up, higher impact? margin the what’s the supply logistic gross impact costs, quarter, these for

say I’d a than more full it is than and point X. less

Got lot. it. a Very helpful. Thanks

with next question Notter comes George of from Your Jefferies. the line

Hi, you are that much to are much you a Just quarter? product? have guys. much. mention ship – What the Thanks might And be? follow-up. impact how of in How I out you very Did revenue seeing unable then curiosity.

at look a dates That’s me? if I Yes. request can – hear – you

Yes. Yes, I can hear you.

of I product like take where have where you can people quarter. wants this at dollars. this or now want at another quarter, just I sell look orders dates request the enough I of If it product, I and mean people the have I right look millions if was to tens thing wouldn’t this

not it’s about about supply. all So It’s demand.

it. Got

I sense. talking European assume progress makes Xs. then that that the X talking And we’re to, Is Tier about Okay, correct? Tier you’re

Plus one we the Yes. here in U.S. have

about. one guess So talking sure which I’m not you’re I

of then say, one who others negotiations. contract finished two exit those we that going have we that where with, in we’ve about are we’re that ones other two in Europe, in already are we’re talked have I’ll that are And one some those U.S. ongoing, with, through that And the negotiations we contract Europe. in secured we those of So lab are have that MSO

it. Got

I’m being labs. left And the but other are projects ramp? guys guess think for I’m driven activity? to still then like kind question where the really significant orders, Okay, kind then referencing of in where you and my you’re you these over organic for Huawei understand I do the cases get what these replacement those or and driven about – will motivations two you then company field trying situations into I starting are by stimulus in the Are I of guess the the are opportunities are more is, potential how working And trickle you turn of I revenue by there. think trials. labs through do have they mentioned situations time, guess the the exercises? to infrastructure that type you’re

So me the kind let just first part that. of of clarify

one and the the about, are to So we where say, pretty are three, component, talking cases is equipment want lab the exit selling, that customer, is but received is speak three has we there And wanting of with there. we don’t – orders which we’ve of a certain. to where Huawei we means their lab for the exited the I although two were have let’s in entrenched been or for replace that’s is have carriers the

driver. that’s There one Huawei because where through that’s plan is Europe. So all that type major for very carrier is mitigation some don’t of equipment And is there. to talking single have we’re the they that a well not entrenched

a Europe, homes in deploy their passed have expecting it X the very years. $XX been piece specifically to most about in because deployment within they and the and they let’s accelerated certainly have million roughly, Germany, and are of Secondarily plans clear say, UK to X new and much next fiber very in probably

things have both of those on. So you going

okay. Great, it. Got

are. And – are by targets those mean are I what public. the the speak very themselves, carriers companies their numbers, way, about they themselves the

those event? that stream we’ve quickly a event? Is your about it. Right. a seen Is for materiality And Yes. got And more ADTRAN? XXXX turn revenue business? Like do a then that how that you numbers, how into think does to significant XXXX

be year. impactful will Definitely awards going next to. We expect those

you. thank Okay,

Okay.

question Michael of WestPark line the Genovese from Your Capital. with next comes

things. a Thanks few A lot. Great.

a two or broad-based? of total context orders, that was just XXs, it order I more the think more quarter. you And growth maybe the I piece color did and Xs said the for Tier particularly, it they year-over-year was in were that. major wanted on placing XX% And

more more It way way that. than broad-based broad-based to that. was was It

for just those orders now of right initial getting two. We’re kind

have We further, that starting forecast those is with but order two. go placement just

more that. broad-based than much it’s So

Right.

then and products, have that is I in Okay, that that the more is something you’ve seen you of – – really obviously, mean, I rate strong that’s what cycles? But XX%? or that about seen is something previous launch in when past that new a kind you mean, number. extraordinary? growth product launch the this

strong. Unfortunately, numbers numbers would or as not of – thing I can of guidance because ship ever here. that order is on can going guidance this so yes, backlog today right mitigating I mentioned request like of with that could incredibly project of mean, don’t ordering we that earlier big Telmex quarter the growth it’s supply we for the not for The other just that. than seeing whatever, literally with could of But booking the chain – I broader in mean well, first magnitude a could ahead case order than hit going say It’s maybe the some like in are broad. you that’s as beat recall quarter. you all, they little issues? extraordinary. our It’s this on place on. very today. it water being now There I of I a to maybe much dates one drop that. that is throw backlog all one our I’m We questions, in have

very that XXX% access a than I was a the more strong. things, growth, couple other it of sequential noticed of I and mean aggregation, in then And which Okay. quarter was

or up was sequentially. haven’t So double good digits to XX% in pretty growth seems that. those you quarter? like, product like were It seen than it sequential get products that up mean, supply the and I year-over-year of more able I

was it performance. pretty So strong

just more related, you more question though the upside supply constraints are there is to then second and on the for why worse, constraints So, in understand I well just in And And conservative want why repeat gross related in guess the the did or why I but I that somewhat in getting quarter? quarter, even on third color understand margins. the third the quarter that. second my outlook? wouldn’t quarter? you’re supply being last

mix second quarter, in an – of mix. think plays both that say and both that mix seeing and really being in the impact I mix Tier Xs, as we’re Europe to part the as just product segment that. the strong the have had target it in on in growth I U.S., a the you it well was mean out

business And our services improved.

Yes. Service it’s can that availability, mix improves. driving what’s But business as month – materiality mix. supply that of And – was which endpoints, once a it. like And sometimes So I truckload to of right? change, the arrive XXX% is after always a is feels mean, out. end big those as from probably they it chips there this far of is that’s quarter. It’s week supposed slip the then

supply. about it – all it’s just So

Yes.

that of that numbers there availability then, quarter – last was that in-home… reasons just than and access was of the supply for imply the just chain at just this question there So, does that looking more on in aggregation

you that. for a and it were And It’s Yes, less. chip exactly. got tell XXX% we Yes. hoping got we was we that exactly can honestly, than which chip more which I

a times, So one chip. to that. it’s of specific And yes, lot absolutely down it’s

to want is? what you Do say that

No, no, not – I am not...

Thanks a Okay, lot. great.

next Your from question Paul comes of Cowen. Silverstein the line with

Thanks guys.

Xs, up, you obviously recognize the give for, very us update your going hoping can percent but I I’m that and Tom off, total us can now a what all quarters, but revenue account in you we’ve does in this of on it’s First previous number? Tier growth addressed strong given Mike,

if particularly to to Let broaden we we we paraphrased that way need about I want the to I that about have me ourselves the think the ourselves have think it way to here before. consistent on can I see because something I – it. give you. be that trying I’m think don’t get

quarter. going to you every question helps, it the I’m ask Tom, And if same

of majority business. the the It’s

Yes. a it. good That’s to say way

So now over Tier are Mike, how Xs XX%. XX%? they over And been long have

Tier Xs, I Well, I I versus sometimes my even XX%. you mean be, a Tier let Tier But if say Xs were guess would say think Xs, Tier if Tier little to we Xs say, just lumpier. are make say Xs, we would over sure me but that. just we’re

ago, if And meaningfully Tom two – quarters look or XX%? is quarter they ago were that back I a less than

It’s grow third it or I I the we had XX% third of being clip. business a way talking XX% business the we it it know to characterized is was about to continuing before. – of think the over started at first

I lay think, and times, of growth. X I explicitly just Tier we, the So X mean, lot Tier a out

could growing quarter. fast you a in really in think solidly years And at XX% business now. solidly for I XX% to been range. been X Tier at it I has I look the clip So U.S., if being it’s pretty in mean back hone growing number. X almost here by But much on the that the every

months you sale beyond? from for insight any of to next expectations thoughts in been any past the Okay. that three what expecting could it’s incremental so of of, hot to Lumen, your Any know was growth one it’s is initial about asset that change off present. on XX year morning, with presses. Have [indiscernible] already up, revenue I customers does business. the the at hoping your and on revenue that XX think mean? than the And that share I those that I XX% know the over will of for less announcement only they terms Tom, you’ve given some – talking given you’ve in you this I’m terms But secured made you’re thoughts us whatever them heads

seen divestiture like happened. the ago just from happen, them. focus where case go every No divesting time Whenever historical an In network. Verizon last happen, I think we’ve single we’ve explicit by increased their guidance seen improving ones has what we’ve big that seen were on properties. I this some can

that’s that’s market just times Sometimes Many driven. regulatory driven. share

would on we an like focus hope the anything my with So in is see that. would be we’re that change cycles actually approval increased product it doing There is no or them. what

relative one with haven’t to or surprised indicating, not other you what haven’t I’m – way Alright. communicated they you’re to… the

given numbers. haven’t us They

We but haven’t given numbers, are they them, no. in communication with us

awarded, been that referenced opportunities, on year. which dozen you are of the – awarded the to notwithstanding And opportunities two historically, orders, assume to two which the may. one labs. With to I those the of right, opportunities DT, Any be RFPs have you’ve carriers three European can I I i.e., assume, if with cable can the and incremental us also you some the you clear, of Those not assume those six. you’ve if that half insight just one I but awards question, labs, other are this referenced they are were regarding the at? in the two any DT. are respect in that provide of that In a insight opportunities, placed cited Last MSO, historically, give you the where around still one be to midpoint respect around others. expecting Lumen incremental has I which European that had sets,

others. two I negotiations contract which Yes. We’ve MSO, don’t. one, contract mentioned with people are that. we I in mentioned finalized people with negotiations some the that some And also and count

of in those two one you six, are secured the So contract are negotiations other contract. now the of you’ve with, the six

awards be there to The other would those three, when made? visibility any is as

at point, have no. I that don’t this

the for Tom, you ‘XX be And last respect just referenced, of you on the with top are to in calendar been to talking you’ve about those three meaningful other the three year? expecting

I the good think about. I One, really Cable feel

to kind going through XX.X% Cable able already say, take to be are through I understand into think – to let’s of you the lab too early right their give Because field trial forever. I’m cycle the the things lab, these other the One, sometimes the two now. lab,

one because feel that know So good timing. the I I about

two, we’ve done gone really through yet. the – cycle testing, really we not haven’t lab entered but have some other we The

difficult say two. So those on more be to that would

Tom. appreciate response. I Thanks, your

Okay.

with Your of from comes Tieton Bill the next Capital. Dezellem question line

products? you. further And these Thank they say the I’d guess, that ICs? specific it’s are case, is issues into dealing of earlier the like you to dive more that if Did with. to, the or supply general commoditized ASICs are yours I are you’re specifically

typical. plastics run for ICs, far, on than in I once strange, not But reason, while that’s that everything while. a by we I normal course. is other housings, problems make would that but resin was kind of into some there to was mean That’s you that a like for those. is, into run manageable a ran into in run say It our used predominantly you often. something ICs, Every with

ICs. it issue It’s of you predominantly mean So of. think issues. the not IC, that IC most would it’s type And we have IC as if an the to down wasn’t I far it everything. as can is component now benign level

or do would you that to certain you Great. loosen are these a say Thank by that you hearing your ought a issues frame have that insights for time that time? And perspective.

the In is that that We really of know kind online. have do held I’m regard, that fab than about it you of No. because supplier is capacity the coming fab it’s knowledge themselves. chip capacity more to same kind

are we the I we everybody couple If that know line better that and process things. some of will mapping super can don’t just by high-end relief. the chips, is size do capacity doesn’t One, X-nanometer solve capacity a we or relief really, so itself of coming processing fab issues. that and see We where will component in general steer, the process, if see builds, the these and some really of what online

our it’s we have get of to in We’ve and to already don’t a to and capacity you when to I that’s to about. chip we’re have to forecast do now. customers down time order these to ability talking where some type we’re happy, areas actual continue several as that over going But we’re the steer So trying of think products more designs well come the that. harder we will But online, do redesigned endpoint. what real to do keep

the luck process. Thank you with good and Great.

Alright. Thank you.

Management. next of Savageaux from line Your question comes Northland Tim with Capital the

morning. Hi, good

morning. Good

that backers quarter the haven’t outlook A at we among the still is pick them, investment least Tier us? our seems and seeing Tier generally, Is markets, starting Tom, contributor maybe that financial in of you was like of to X new in in of mentioned things. couple and of Are strength changed the and addition front business becoming up. – material a to model. you it couple a that? Xs bankruptcy, Capital or coming is out there, that

just year the because the consistent, good. Xs It was this gotten that I year, they in quarter doubt there like of year, did Tier a but I this – going was pick talking less just up. would that year. is stronger variability I’m more as actually project oriented, not Tier deployments Where would in this material little it’s very also have them, the they about see are every Xs, like lumpier. there It’s just next than it’s expecting And just just and no say, more say in we you’ll and last over but – it’s is of kind forward. see

I be an would expect to that So strength. of area

at some of X of in at initial a some Is mentioned you part new Tier these QX orders then X And all, that meaningful Tier side. Right. least engagements? guidance the your

No, going Maybe no. year. all the that because constraints No, material. case, at here not that on up. to about I that again, is to it’s of end, starting mean, expect at there I only ramp the well, it’s the – supply just just, don’t is be it’s it end be to now

combination follow-up headed. Yes, offset deployments on to of QX That’s normal Tier strength supply. be, X I question a and going to scenario of be rural initial The actually that understood your serve continued some seeing we could was was piece where where broadband seasonality?

going allow be that, the have It’s us which do that can all doubt order flow no what we would about supply. I ship. is to to all

Great. And last me. question for

into the know you if us? with those want I bookings try year-over-year type metric of – up might XX%. back share up You should XX% those and book-to-bill to we two and one And don’t look or revenues a over mentioned at with

that book-to-bill it bit the entire have little X, above constantly I actually year. But don’t a makes in it easier. been the so – has It’s front me anyway,

very Okay, much. thanks

that, With Alright. call. the end like I’d to

joining thank and to we you forward quarter. you for talking So next us, to very look much

this concludes for Thank you participating. and Ladies gentlemen, today’s call. conference

disconnect. now may You