Q3 2024 ADTRAN Holdings Inc Earnings Call
Placed on mute to prevent any background noise. After the Speakers' remarks, there will be a question and answer period. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.
During the course of the conference call AD trend Representatives expect to make forward looking statements that reflect managements best judgment based on factors currently known however.
However, these statements involve risks and uncertainties, including the risks detailed in our earnings release.
Annual report on Form 10-K, and our filings with the SEC.
These risks and uncertainties could cause actual results to differ materially from those in the forward looking statements, which may be made during the call. We undertake no obligation to update any statement to reflect the events that occur after this call and.
In addition, the financial measures discussed during the course of this conference call are preliminary estimates.
They consequently remain subject to the company's internal controls and procedures and are subject to risks and uncertainties, including among others.
Just in connection with quarter end adjustments.
Finally during the course of today's call, we will refer to certain preliminary non-GAAP financial measures reconciliations of non-GAAP to GAAP measures and certain additional information are also included in our investor presentation and our earnings release.
Speaker Change: The Investor presentation found on <unk> Investor Relations website has been updated and is available for download. It is now my pleasure to turn the call over to Tom Stanton Chief Executive Officer of <unk> Holdings. Sir. Please go ahead.
Tom Stanton: Thank you Rochelle. Good morning, everyone. We appreciate you joining us for our third quarter 2024 earnings Conference call.
Speaker Change: With me today is that Crown Holdings' CFO moved upward.
Speaker Change: Following my opening remarks, we will review the quarterly financial performance in detail and then we'll take any questions you may have.
Speaker Change: We executed according to plan in Q3 and made improvements across several key operating metrics.
Speaker Change: During the quarter, we continue to grow our non-GAAP operating profit and generated positive free cash flow for the third consecutive quarter.
Speaker Change: Our quarter over quarter performance was driven by further improvements in our non-GAAP gross margin as we maintained a reduced cost structure and grew revenue.
Speaker Change: During the quarter. We also saw signs of further improvement in customer activity and bookings.
Speaker Change: Geographically, 55% of our revenues were generated outside of the U S. As we experienced higher demand from both our EMEA and APAC regions.
Speaker Change: Both the U S and non U S regions benefited from a 10% sequential increase and large service provider sales.
Speaker Change: Diving deeper into the portfolio details.
Speaker Change: Optical networking solutions added 13, new carrier customers. This past quarter as we continue to introduce our optical portfolio to our fiber broadband customer base.
Speaker Change: As we have previously noted we had expected our optical networking revenue to bottom in Q3, and we continue to believe that that will have been the case.
Speaker Change: While revenue was in line with our expectations bookings continue to accelerate supporting our optimism.
Speaker Change: And our access and aggregation solutions, we began shipping products to 12, new carrier customers.
Speaker Change: Revenue in our access and aggregation solutions was up outside of North America. However, it was down slightly in the aggregate due to slower sales in the U S. We.
Speaker Change: We expect revenue from our access and aggregation solutions to increase in the upcoming quarter.
Speaker Change: Our subscriber solutions category increased 9% quarter over quarter.
Speaker Change: This growth was driven by an increase in sales of our residential <unk>, nrg's, which were up 25% quarter over quarter, and a strong 102% year over year.
Speaker Change: Within this category, we added 11 new customers.
Speaker Change: Two our latest STG series of Wi Fi platforms.
Speaker Change: As demand for fiber broadband continues to grow we expect to continue to increase our revenue and customers in this category.
Speaker Change: In addition to residential broadband we continue to see strong demand for our carrier Ethernet CPE solutions as carriers connect more businesses with higher speed fiber services.
Speaker Change: Looking ahead, you may have seen our recent press releases announcing customer trials to bring 50 gig PON connectivity to the market.
Speaker Change: As customers begin to realize the value of converging residential business and mobile backhaul into a single network the breadth and power of our open disaggregated networking platforms.
Further differentiate AD trend from our competition.
Speaker Change: While 50 gig access technology is still in its early stages, we remind listeners of the ascendancy of XTS PON, which has quickly become the preferred access technology for PON deployment.
Speaker Change: And adopt the adoption of these higher speed access technologies is an ideal match for our broader fiber networking portfolio.
Speaker Change: As service providers deploy higher speed access networks, they must upgrade their backhaul networks with a mix of 100, 400 800 gig coherent optical solutions.
Speaker Change: We currently offer edge optimize transport solutions to address this need.
Speaker Change: To support these new access technologies, we have a full suite of in home networking platforms, SMB solutions and carrier Ethernet CPE to address the full range of subscriber connectivity needs.
Speaker Change: Okay.
Speaker Change: This complete solution offering from the core to the customer premise is managed by our mosaic software suite and covers everything from optical networking automation to proactive in home network monitoring.
With it we partner to help service providers deliver best in class subscriber experiences as they automate the scale of their fiber networks.
Speaker Change: Transitioning to our operational performance, we continue to make progress with the program, we launched last year to improve our profitability and operating cash flow.
The adoption of these higher speed access technologies is an ideal match for our broader fiber networking portfolio.
Speaker Change: The results can be seen on our non-GAAP gross margins over the last nine months of 2024, which improved from 38, 6% last year to 41, 9% this year.
As service providers deploy higher speed access networks, they must upgrade their backhaul networks with a mix of 100, 400, and 800 gig coherent optical solutions.
Speaker Change: This improvement was directly related to operational efficiencies and lower overhead costs that were driven by both the site and product consolidation.
We currently offer edge-optimized transport solutions to address this need.
To support these new access technologies, we have a full suite of in-home networking platforms, SMB solutions, and carrier Ethernet CPE to address the full range of subscriber connectivity needs.
Speaker Change: This past quarter's performance paired with our improved outlook reinforces our confidence that our long term operating model of gross margin percentages in the low to mid forties and operating profit percentages in the low double digits.
This complete solution offering from the core to the customer premise is managed by our Mosaic software suite and covers everything from optical networking automation to proactive in-home network monitoring.
Speaker Change: We continue to move forward with our capital efficiency program as we are working to monetize non strategic business side assets. We hope to 80 update you next quarter on tangible results as we continue to progress.
With it, we partner to help service providers deliver best-in-class subscriber experiences as they automate the scale of their fiber networks.
Speaker Change: In summary, we had a successful quarter in terms of improving our financial positioning while growing our customer base and investing in our strategic platforms as major opportunities in the U S and Europe are still ahead of us.
Transitioning to our operational performance, we continue to make progress with the program we launched last year to improve our profitability and operating cash flow.
Speaker Change: While we remain confident in our long term outlook, we expect more meaningful growth in the current quarter.
The results can be seen on our non-GAAP gross margins over the last nine months of 2024, which improved from 38.6% last year to 41.9% this year.
We will continue to and we expect more meaningful growth in the current quarter. We will continue to take a cautious approach with our forecast and operating model given the relatively cautious spending and we still see from our service provider customers.
This improvement was directly related to operational efficiencies and lower overhead costs that were driven by both site and product consolidation.
Speaker Change: This approach has proven to be successful over the past few quarters and we have stabilized our results in a difficult macro environment, and we expect meaningful improvements in profitability once market conditions improve.
This past quarter's performance paired with our improved outlook reinforces our confidence that our long-term operating model of gross margin percentages in the low to mid-40s and operating profit percentages in the low double digits.
With that I will turn things over to Julie to provide a review of our financial results and following <unk> remarks, we will answer any questions you may have lea.
We continue to move forward with our capital efficiency program as we are working to monetize non-strategic business side assets. We hope to update you next quarter on tangible results as we continue to progress.
Speaker Change: Thank you Tom and thank you to everyone on the call. This morning.
I will first walk you through our Q3 2024 financial performance.
Speaker Change: Then I will discuss our expectations for the fourth quarter.
In summary, we had a successful quarter in terms of improving our financial positioning while growing our customer base and investing in our strategic platforms as major opportunities in the U.S. and Europe are still ahead of us.
Speaker Change: Revenue in the third quarter was $227 7 million, a sequential increase and above the midpoint of our guidance.
Speaker Change: Our network solutions segment delivered $181 5 million accounting for approximately 80% of total revenues in Q3 compared to 79% in the prior quarter.
While we remain confident in our long-term outlook, we expect more meaningful growth in the current quarter.
We will continue to, and we expect more meaningful growth in the current quarter, we will continue to take a cautious approach with our forecast and operating model given the relatively cautious spending we still see from our service provider customers.
Speaker Change: Our services and support segment delivered $46 2 million or 20% of total revenues in the quarter compared to 21% in the prior quarter.
This approach has proven to be successful over the past few quarters and we have stabilized our results in a difficult macro environment and we expect meaningful improvements in profitability once market conditions improve.
Speaker Change: From a product category perspective excess in aggregation delivered $67 1 million or approximately 29% of total revenue, which was down 4% sequentially.
With that, I will turn things over to Uli to provide a review of our financial results and following Uli's remarks, we'll answer any questions you may have. Uli? Thank you, Tom, and thank you to everyone on the call this morning.
Speaker Change: Our optic optical networking solutions was 75 million with 31% of total revenues. This was also down 4% sequentially.
Uli: I will first walk you through our Q3 2024 financial performance and then I will discuss our expectations for the fourth quarter.
Speaker Change: Subscriber solutions was $90 1 million or 40% of total revenue and this was up 9% sequentially.
Speaker Change: We had one customer represent more than 10% of our revenue in the quarter.
Uli: Revenue in the third quarter was $227.7 million, a sequential increase and above the midpoint of our guidance.
Speaker Change: Okay.
Speaker Change: non-GAAP gross margin during the quarter was 42, 1% an increase of 17 basis points sequentially.
Uli: Our network solution segment delivered $181.5 million, accounting for approximately 80% of total revenues in Q3, compared to 79% in the prior quarter.
Speaker Change: The improved gross margin is reflective of our ongoing efforts to optimize our supply chain and supply related processes.
Our services and support segment delivered 46.2 million, or 20% of total revenues in the quarter, compared to 21% in the prior quarter.
Speaker Change: non-GAAP operating expenses in the third quarter with $93 3 million in line with levels in Q2 2024.
Speaker Change: For the third quarter of 2024, our non-GAAP operating profit was $2 5 million or one 1% of revenues, which was again above the midpoint of our guidance range.
Uli: From a product category perspective, access and aggregation delivered $67.1 million, or approximately 29% of total revenue, which was down 4% sequentially.
Uli: Our optical networking solutions were 70.5 million, or 31% of total revenues. This was also down 4% sequentially.
Speaker Change: This compares to a non-GAAP operating profit of $1 5 million or <unk>, 7% of revenues in Q2 2024.
The.
Speaker Change: And operating margin and profitability was attributable to improved gross margins and stable opex.
Subscriber solutions was 90.1 million, or 40% of total revenue, and this was up 9% sequentially.
Speaker Change: non-GAAP tax expense for the third quarter of 2024 was $1 1 million. This is a result of the non deductibility of impairment charges and losses for which no tax benefit can be realized.
Uli: We had one customer represent more than 10% of our revenue in the quarter.
Non-gap gross margin during the quarter was 42.1%, an increase of 17 basis points sequentially.
Speaker Change: Including the $2 4 million dividend attributed to the minority shareholder interest of <unk> networks.
Uli: The improved cross-margin is reflective of our ongoing efforts to optimize our supply chain and supply-related processes.
As well as 3 million credit related to an adjustment to the redeemable noncontrolling interest.
Speaker Change: In the non-GAAP diluted.
Speaker Change: Interest the non-GAAP diluted loss per share was <unk> negative compared to a loss.
For the third quarter of 2024, our non-GAAP operating profit was 2.5 million or 1.1% of revenues, which was again above the midpoint of our guidance range.
Negative 12 since in Q2 2024.
Speaker Change: Turning to the balance sheet and cash flow statement during the quarter, we continued to improve our capital by $33 9 million.
Uli: This compares to a non-GAAP operating profit of 1.5 million or 0.7% of revenues in Q2 2024.
Speaker Change: Trade accounts receivable were 172 million at quarter end, resulting in DSO of 70 days. This compares to 75 days in the prior quarter.
Uli: The increase in operating margin and profitability was attributable to improved gross margins and stable OPEX.
Speaker Change: Our inventories were down to $282 9 million at the end of the quarter.
Uli: Non-gap tax expense for the third quarter of 2024 was 1.1 million. This is a result of the non-deductibility of impairment charges and losses for which no tax benefits can be realized.
Speaker Change: Accounts payable were $173 4 million an improvement of <unk> of seven days.
Speaker Change: The improved working capital resulted in operating cash flow of $42 million compared to $19 9 million in Q2 2024.
Speaker Change: Consequently, we generated $23 2 million of free cash flow in Q3 2024.
Speaker Change: At the end of the quarter cash and cash equivalents were $88 5 million a quarter.
Uli: in the non-gap dilute interest, the non-gap diluted loss per share was 5 cents negative compared to a loss of negative 12 cents in Q2 2024.
Speaker Change: Order over quarter decrease of $22 7 million.
Speaker Change: This decrease includes the scheduled annual dividend payment to the minority shareholders of <unk> networks is EBITDA of $10 1 million and $17 4 million in repurchases of veteran networks as ECS that were processed during the quarter.
Turning to the balance sheet and cash flow statement.
Uli: During the quarter, we continued to improve our working capital by $33.9 million.
Speaker Change: In summary.
Uli: Trade accounts receivable were $172 million at quarter end, resulting in DSO of 70 days. This compares to 75 days in the prior quarter.
We have made significant strides in our operational performance and execution.
Speaker Change: Revenue increased on a sequential basis, we expanded gross and operating margins and we generated positive free cash flow during the quarter.
Uli: Our inventories were down to 282.9 million at the end of the quarter.
Uli: Accounts payable were $173.4 million, an improvement of DPOs of 7 days.
Speaker Change: We are seeing improvements in each of our key end markets and are growing our customer base.
Speaker Change: The continued trend to increase fiber access and optical transport globally is a catalyst that we believe will help us to drive accelerated profitability and increased cash generation.
Uli: The improved working capital resulted in an operating cash flow of $42 million compared to $19.9 million in Q2 2024.
Uli: Consequently, we generated $23.2 million of free cash flow in Q3 2024.
Speaker Change: Turning now to our outlook for the fourth quarter.
We expect revenues to range between $230 million and $245 million and non-GAAP operating margin between zero and positive 4% revenues.
Uli: At the end of the quarter, cash and cash equivalents were $88.5 million, a quarter-over-quarter decrease of $22.7 million.
Uli: This decrease includes the scheduled annual dividend payment to the minority shareholders of Attran Networks SE of $10.1 million and $17.4 million in repurchases of Attran Networks SE shares that were processed during the quarter.
Speaker Change: Once again.
Additional information is available on <unk> Investor Relations webpage at investors stood at 300 com.
Speaker Change: And finally I'd like to welcome. The addition of our new Vice President of Investor Relations, Peter Schuman, who many of you may know.
In summary,
Uli: We have made significant strides in our operational performance and execution.
Speaker Change: Peter is here today with us and he will be ramping up this new road. Please reach out to him for any investor relations inquiries.
Uli: Revenue increased on a sequential basis, we expanded gross and operating margins, and we generated positive free cash flow during the quarter.
Speaker Change: This concludes the prepared remarks portion of the call and I will now turn the call back over to the operator to begin the Q&A session.
Uli: We are seeing improvements in each of our key end markets and are growing our customer base.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Uli: The continued trend to increase fiber access and optical transport globally is a catalyst that we believe will help us to drive accelerated profitability and increased cash generation.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Speaker Change: If you would like to withdraw your question simply press Star one again.
Turning now to our Outlook for the fourth quarter.
The first question comes from George Notter with Jefferies. Your line is open.
Uli: We expect revenues to range between $230 and $245 million and non-GAAP operating margin between 0 and positive 4% of revenues.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Hi, guys. Thanks, very much nice to see the improved results in free cash flow generation.
Speaker Change: I guess I'd like to start just by.
Uli: Once again, additional information is available on AtTrends Investor Relations webpage at investors.attrends.com.
Speaker Change: Kind of getting an update on where the excess inventory situation is right now I know that.
Uli: And finally, I'd like to welcome the addition of our new Vice President of Investor Relations, Peter Shuman, who many of you may know.
Speaker Change: Yes, the optical business I think was the area that has most recently been been struggling with excess customer inventory, but can you give us an update on kind of where that is.
Uli: Peter is here today with us and he will be ramping up his new role. Please reach out to him for any investor relations inquiries.
Speaker Change: When do you think that inventory be gone and when you expect the business to improve.
Speaker Change: Yes, So I think I mentioned in my notes George that the.
Uli: This concludes the prepared remarks portion of the call and I will now turn the call back over to the operator to begin the Q&A session.
Speaker Change: We did see a pickup in bookings in the quarter.
Speaker Change: Which was which was good to see because as you know bookings had been dropping for a few quarters now.
Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: So I think that's directly related to inventory situations at customers, we still have a a customer.
Speaker Change: Im not saying that there aren't other smaller ones, but.
Speaker Change: A customer in Europe that has.
Speaker Change: An inventory hangover that we think will last through the probably the first part of the first quarter, but I think our expectations are that they are and.
Speaker Change: The first question comes from George Nauder with Jeffrey's. Your line is open.
And we're already seeing from that customer.
George Nauder: Hi, guys. Thanks very much. Nice to see the improved results and free cash flow generation. I guess I'd like to start just by kind of getting an update on where the excess inventory situation is right now. I know that
Speaker Change: Everything of everything so we're already seeing pickups, there, but that's kind of the last big overhang that.
Speaker Change: I would say is notable and on the CPE side I mean.
Speaker Change: We've had some pretty strong growth there so that seems to have worked itself out for for the most part.
George Nauder: You know, the optical business, I think, was the area that's most recently been struggling with excess customer inventory. But can you give us an update on kind of where that is and, you know, when you think that inventory will be gone and when you expect the business to improve?
And same thing on access.
Speaker Change: Got it okay, great and then.
Speaker Change: Yeah, so I think, you know, I mentioned in my notes, George, that we did see a pickup in bookings in the quarter.
Speaker Change: I was also curious if by the way we can talk about that particular customer in Europe, I think you're referencing more optical yes.
Speaker Change: which was good to see because, as you know, bookings have been dropping for a few quarters now. So, I think that's directly related to inventory situations at customers. We still have a customer
Speaker Change: Yes, yes inventory as opposed to every single product line, yes.
Speaker Change: Yes, that's correct now the other the other product lines are.
Speaker Change: I won't call. This optical let me be clear about inventory, but let me be clear about this we have large customers that buy in chunks right. So they'll buy.
Speaker Change: I'm not saying that there aren't other smaller ones, but you know a customer in Europe that has an inventory hangover that we think will last through probably the first part of the first quarter, but I think our expectations are that they'll and we're already seeing from that customer you know that they don't have everything of everything.
Speaker Change: A big block of equipment, and then they'll deploy it over two to three quarters in the buy another big block of equipment I wouldn't consider that inventory I consider that just how they operate.
But that's an ongoing phenomenon that will always be there.
Speaker Change: Got it great.
Speaker Change: So we're already seeing pickups there, but that's kind of the last big overhang that I'd say is notable and on the CP side I mean we
Okay. Thanks, and then also wanted to ask about sort of the real estate update I know you guys said youre going to give people a bigger.
I guess disclosure next quarter, but anything you can say obviously you guys are in the process on the north and South towers I think there was a sale leaseback option here on the East building I'm, just curious on where that is now.
Speaker Change: We've had some pretty strong growth there, so that seems to have worked itself out for the most part, and same thing on access and ag.
Got it. Okay, great. And then
Speaker Change: I would just say its moving forward I mean, we have.
Speaker Change: I was also curious, by the way, when you talk about that particular customer in Europe, I think you're referencing more optical inventory as opposed to the other product lines. Yeah, that's correct.
Speaker Change: Interested parties more than one I think that.
Speaker Change: The financing of different things right and for instance, the sale leaseback environment has gotten better as well.
Speaker Change: Now, the other product lines are, I won't call this optical, let me be clear about, I mean inventory, but let me be clear about this. We have large customers that buy in chunks.
Speaker Change: So we're hopeful we can actually dig into more detail on the next call.
Speaker Change: Great. Okay, I'll pass along thanks, very much I appreciate it okay.
Speaker Change: All right, so they'll buy, you know, a big block of equipment and then they'll deploy it over two to three quarters and they'll buy another big block of equipment. I wouldn't consider that inventory. I consider that just how they operate.
Speaker Change: Okay.
Speaker Change: So next question comes from the line of Michael Genovese with Rosenblatt Securities. Your line is open.
But that's an ongoing phenomenon that will always be there.
Speaker Change: Alright, great. Thanks, so much.
I'd like to see better results I agree with that and I wanted to dig in on the sustainability of.
Got it, great.
The better trend. So this is kind of a broad question, but can you guys. Please I wanted to ask about.
Speaker Change: Okay, thanks. And then I also wanted to ask about sort of the real estate update. I know you guys said you're going to give people a bigger
Speaker Change: Both North America, and EMEA and the big opportunities that you're saying you have in front of you.
Speaker Change: I guess disclosure next quarter, but anything you can say. Obviously, you guys are in the process on the north and south towers. I think there was a sale leaseback option here on the east building. I'm just curious on where that is now.
Both for existing business sort of the kind of.
Speaker Change: Key drivers of the existing business and then the new wins that you are.
Speaker Change: We're going after so I know that's all.
Speaker Change: Lot of questions in there, but I'd love to hear your comments.
I'd just say it's moving forward. I mean, we have...
Speaker Change: Yes, I think it's both so we have some customers as you are aware there are just ramping up so I would call those existing wins.
Interested parties, more than one. I think that
Speaker Change: The financing of different things, for instance, the sale lease back environment has gotten better as well.
Speaker Change: Some of them are operationalized.
Speaker Change: Not at all right and then some of them are as I mentioned before we expect to be operationalized right around the beginning of the year.
Speaker Change: So, yeah, we're hopeful we can actually dig into more detail in the next call.
Speaker Change: And now that operator, operator operationalization happens.
Speaker Change: Okay, I'll pass them along. Thanks very much. I appreciate it. Okay.
Speaker Change: And sometimes we're talking about national carrier Thats, just very country specific and.
Speaker Change: The next question comes from the line of Michael Genovese with Rosenblatt Securities. Your line is open.
Germany as an example that U K is an example of that albeit both of those have all the carriers as well.
Speaker Change: But then we also have some multinationals that were bringing online. So those are coming on country by country I mentioned I think on the last call that.
Michael Genovese: you know both North America and EMEA and the the big opportunities that you're saying you know in front of you um both for existing business so the kind of
Speaker Change: Sweden is one of those larger countries, where we have kind of a wholesale swap out thats going to be happening.
Speaker Change: And although we're already selling to sync three countries with that carrier we have another country that has yet to be online so that we have.
Speaker Change: Key drivers of the existing business and then the new wins that you you know are going after So I know that's a lot of questions in there, but let's hear your comments
Speaker Change: Several of those that will be coming online in the first half with some of them happening right around let's say January February.
Speaker Change: Yeah, I think it's both. So we have some customers, as you're aware, that are just ramping up, so I would call those existing wins. Some of them are operationalized.
Speaker Change: And then we have new carriers that we have won that are not yet.
Speaker Change: One of them just now getting into the lab with a multinational carrier.
Speaker Change: Not at all. Right. And then some of them are, as I mentioned before, we expect to be operationalized right around the beginning of the year.
Speaker Change: We expect that the first country there to be deployed will probably be in Spain.
Speaker Change: That will happen later on in the year. So it's really a mix and then you have really complicate things you have <unk> coming in which is also a mix. We have carriers that are current plans are that they're going to be deploying in.
Speaker Change: and now that operationalization happens and sometimes we're talking about a national carrier that's just very country specific and.
Accessing bead funds and those are existing customers and we have.
Speaker Change: You know, Germany is an example of that, the UK is an example of that, albeit both of those have alt carriers as well.
A mix of those that you are aware and then we have new customers that are just going to be popping up left and right out of.
Speaker Change: But then we also have some multinationals that will bring it online. So those are coming on country by country I mentioned I think on the last call that You know Sweden is one of those larger countries where we have kind of a wholesale swap out that's going to be happening
Speaker Change: Some of them are.
Speaker Change: Very new municipalities or whatever that may actually jump into that mix. So I think it's a broad mix of different customers.
Speaker Change: Okay. So if we can kind of summarize that so.
Speaker Change: I mean the guidance.
Speaker Change: and although we're already selling to I think three countries with that carrier we have another country that is yet to be online. So we have several of those that will be coming online in the first half of some of them happening right around let's say January, February.
Ask your question Greg.
Speaker Change: Yes.
Generally yes.
Speaker Change: Generally debate about growth.
Speaker Change: That's generally what we're seeing right now it is still well.
It is there.
Speaker Change: And then we have new carriers that we have won that are not yet.
Let me see if I can summarize it in a different way or.
Speaker Change: One of them I'm just now getting into the lab with, that's a multinational carrier.
Speaker Change: Our existing customer base is improving and I would say that the majority of what we're seeing right now in order activity is with our existing customer base.
Speaker Change: We expect that the first country there to be deployed will probably be in Spain, and that will happen later on in the year, so it's really a mix. And then you have, to really complicate things, you have Bede coming in, which is also a mix. We have carriers that our current plans are that they're going to be deploying,
Speaker Change: Alright, and so now I would consider what we do in the U K is existing customer base I consider what we do in Germany is existing customer base. So that that's really where youre seeing that improvement and I think that's just a matter of inventory drawdown. There is without a doubt a big push on fiber deployment.
Speaker Change: accessing bead funds and those are existing customers and we have you know quite a mix of those that you're aware and then we have new customers that are just going to be popping up left and right out of some of them are you know very new municipalities or whatever that may actually jump into that mix so I think it's a broad mix of different customers
Speaker Change: For most of the customers I talk to their fiber acceptance rate when they are the first one and the community is very strong and we're seeing that in our subscriber business. So I would say.
Speaker Change: Okay, so if we can kind of summarize though, so I mean the guidance is, you know, the best equestrial growth we've seen for a while. Yeah, that's generally what we're seeing right now. It is still, well...
Speaker Change: I think I think to your question is new versus old and I think really if we're talking about in the near term, it's going to be heavily driven by existing customers.
Speaker Change: Okay, that's super helpful.
Speaker Change: Two more for me.
Is there I think.
Speaker Change: Let me see if I can summarize it in a different way. Our existing customer base is improving, and I would say that the majority of what we're seeing right now in order activity is with our existing customer base.
Speaker Change: You said you had 13, new optical customers in the quarter.
Speaker Change: Is there is there are you seeing any impact from the <unk>.
Speaker Change: The acquisition in this space.
Speaker Change: Companies can acquire it didn't seem to do any better at the service provider business. So.
Speaker Change: Is it a share gain from them.
Speaker Change: right and so now I'd consider what we do in the UK is existing customer base I consider what we do in Germany is existing customer base
Happening now or is that more and more in the future.
Speaker Change: I don't think it's moving the needle now I think I know that their rfps that are regenerated.
Speaker Change: So, yeah, that's really where you're seeing that improvement. And I think that's just a matter of inventory drawdown. There is, without a doubt, a big push on fiber deployment.
Speaker Change: That we're in a more favorable light because of.
Speaker Change: Potential disruption and what happens when you try to merge product lines, but I don't think it's it's not it doesn't materially move that customer base.
Thank you.
Speaker Change: For most of the customers I talk to their fiber acceptance rate when they're the first one in the community is
Speaker Change: On customers that we have.
Speaker Change: Yes.
Speaker Change: very strong and we're seeing that in our subscriber business, so I would say I think I think your question is new versus old and I Think really if we're talking about in the near term, it's going to be heavily driven by existing customers
Speaker Change: Okay, and then final one for me.
Speaker Change: I guess in this scenario is dede were to just not happened.
Speaker Change: I mean first of all do you think that that's a possibility now given.
Speaker Change: The electrical with weak and then secondly, how much would that impact you know.
Okay, that's super helpful
Two more for me.
Speaker Change: How important is bead.
Speaker Change: I think you said you had 13 new optical customers in the quarter. Are you seeing any impact from the announced acquisition in this space? The companies that's getting acquired didn't seem to do any better in the service provider business. Is share gain from them happening now or is that more in the future?
Would there be other drivers in the U S market.
Speaker Change: That could replace some of that if it were to go away what do you think about that.
There are multiple drivers not just in the U S, but around the world and the.
Speaker Change: It'll drivers people on fiber and if so if there is an end user demand that's typically satisfied.
Speaker Change: To the extent that it is not a very rural area.
Speaker Change: I don't think it's moving the needle now. I know that there are RFPs that have been generated.
Speaker Change: And you have got carriers today.
Speaker Change: All of them have been public about about it.
that we're in a more favorable light because of
Speaker Change: That are setting up their capital structure to deploy fiber and you've got private equity coming in to help bolster that capital structure.
Speaker Change: You know the potential disruption and you know what happens when you try to merge product lines But but I don't think it's it's not near it didn't materially move that customer base. You know the add-on customers that we have
Speaker Change: No.
I think it's going to be built now.
You can argue about the elongation of the timeline, depending on how rule you are but this phenomenon.
Speaker Change: And the final one for me, you know, is, I guess in a scenario, if Bede were to just not happen.
Speaker Change: Sure.
Speaker Change: Getting into right now is not a be driven phenomenon I think be just add fuel to that fire.
Speaker Change: Okay, great. Thanks, so much for your questions Okay.
Speaker Change: the election this week? And then secondly, how much would that impact you? How important would there be other drivers in the U.S. market if
Speaker Change: Okay.
Speaker Change: The next question comes from Tim <unk> with Northland Capital markets. Your line is open.
Speaker Change: that could replace some of that if Bead were to go away. What do you think about that? There are multiple drivers, not just in the U.S., but around the world. And the fundamental driver is people want fiber. And if so, if there's an end-user demand that's typically satisfied...
Speaker Change: Hello.
Speaker Change: Yes, sorry about that.
Speaker Change: Yes can you hear me yes.
Speaker Change: Okay great.
I want to focus on the uptick in guidance for Q4, as well, but maybe along a couple of different lines. It sounds like given the commentary on bookings in your previous comments on optical you might expect that to grow in Q4, but.
Speaker Change: you know, to the extent that it's not a very rural area.
Speaker Change: And, you know, you've got carriers today, some of them have been public about it.
Speaker Change: that are setting up their capital structure to deploy fiber and you've got private equity coming in to help bolster that capital structure.
Speaker Change: Anything to call out there from either segments perspective in terms of whats what do you see the potential to drive that sequential growth or also.
Speaker Change: So, I think it's going to be built. Now, you can argue about the elongation of the timeline depending on how rural you are, but this phenomena that we're getting into right now is not a bee-driven phenomena. I think a bee just adds fuel to that fire.
Speaker Change: U S versus international.
Speaker Change: We are a stronger international than in the U S with optical so.
Okay, great. Thanks so much for the questions. Okay.
Speaker Change: I mean without a doubt Europe is growing we expect some growth here in the U S too.
Speaker Change: We have added some.
Speaker Change: The next question comes from Tim Savageau with Northland Capital Markets. Your line is open.
Speaker Change: We'll cross sold customers here in the U S. We started add those are starting to come online. So there'll be some there but to be honest with you what's driving that optimism is just we've seen an increase in the booking rate.
Speaker Change: Hello? Okay, sorry about that. Yep, can you hear me? Yep.
Speaker Change: That's pretty much across the board.
Okay, great.
Speaker Change: Yes, that's where I was going to follow up there so.
Speaker Change: I want to focus on the uptick in guidance for Q4 as well, but maybe along a couple of different lines. It sounds like, given the commentary on bookings and your previous comments on optical, you might expect that to grow in Q4,
Speaker Change: We would expect similar types of increases across segments. I guess is what you are seeing maybe a little more biased.
Speaker Change: Court in Europe.
Speaker Change: Yes, but yes, well the answer is yes.
Speaker Change: If I had to.
Speaker Change: Anything to call out there from either segment perspective in terms of what what you see the potential to drive that sequential growth or also US versus international.
Speaker Change: And you are asking me to so with knowing as little as I know right now.
Speaker Change: I would expect all of the segments of the business to be up in Q4.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Great.
Speaker Change: I wanted to follow up I think you made a comment about Q3 about large carriers, increasing 10% and I'd like to get a little more.
Speaker Change: We are stronger international than in the U.S. with optical. So, I mean, without a doubt, Europe is growing. We expect some growth here in the U.S. too, and that's...
Speaker Change: Color on that is does that commentary across segments I guess, some yes, that's across segments. That's total total business.
We have added some
I love it.
Speaker Change: We'll call cross-sold customers here in the U.S. We've started to add, those are starting to come online, so there'll be some there, but to be honest with you what's driving that optimism is just we've seen an increase in the booking rate.
Speaker Change: Okay and when you.
Speaker Change: You mentioned the access and aggregation.
Down in the quarter in the U S. So I assume.
Speaker Change: That large carrier commentary is probably also internationally or maybe European focus yes, it's literally if I look at the large carrier segment I think every geographic region that.
That's pretty much across the board.
Yeah, that's where I was going to follow up there.
Speaker Change: You'd expect similar types of increases across segments, I guess, is what you're saying, maybe a little more biased.
Speaker Change: We serve was up just some were up more than others.
Toward Europe?
Speaker Change: To get that.
Speaker Change: And you're asking me to so with knowing as little as I know right now I yeah, I would expect all of the segments of the business to be up in key form
Speaker Change: Thanks.
Speaker Change: Yes look stronger.
Speaker Change: No it's not.
Speaker Change: Can you hear sorry, Okay last one for me and I think you kind of answered this to some degree with the existing.
Great, and um...
Speaker Change: I wanted to follow up. I think you made a comment about Q3 about large carriers increasing 10% and I'd like to get a little more
Speaker Change: Customer but.
Speaker Change: We're adding a pretty substantial number of new customers. So for looking at or is it a quarter or quarter of the outlook to the extent that is existing customers.
Speaker Change: color on that is that commentary across segments I guess and yeah that's across segments
Speaker Change: Or are we looking at 25.
For NII distinguish between net new customers and ramps that haven't.
That's total, total business.
Speaker Change: Okay, and we mentioned access and aggregation down in the quarter in the U.S. so I think...
Been won and haven't occurred.
Speaker Change: Maybe if you look at those two categories.
Speaker Change: Some of the new customers you went through here on the call as well as the ramp.
Speaker Change: That large carrier commentary is probably also internationally or maybe European focused.
Speaker Change: The ramp of deals that you mentioned.
Speaker Change: And process.
Speaker Change: Yeah, it's literally, if I look at the large carrier segment, I think every geographic region, you know, that we serve was up. Just some were up more than others.
Speaker Change: It sounds like that should be.
Speaker Change: So it should be 25 growth drivers more so than <unk>.
Speaker Change: Absolutely, yes, the new growth drivers are heavily weighted yes, there'll be in 'twenty five.
Speaker Change: All key to us is getting this.
You get that?
Speaker Change: You've been following the business for a while.
I did, thanks. Yeah, strong day.
Speaker Change: It's all about how long does it take you to get to the lab.
Speaker Change: Take notes and unmute here, sorry. Okay, last one for me, and I think you kind of answered this to some degree with the existing customer, but you are adding a pretty substantial number of new customers.
Speaker Change: That's the hardest.
Speaker Change: Port and that's the hardest part to forecast.
Having said that we've got a few that are really not.
Speaker Change: At the very tail end of that that pool.
Speaker Change: That should happen in the first quarter and then they'll just be.
Speaker Change: So if we're looking at a quarter of the outlook, to the extent that's existing customers, are we looking at 25?
Coming on after that.
Speaker Change: I Hope does that answer your question I'm not sure if I did.
Speaker Change: Yes, thanks very much okay.
Speaker Change: And I distinguish between net new customers and ramps that haven't been won and haven't occurred. Maybe if you look at those two categories.
Speaker Change: Yes.
Speaker Change: Your next question comes from Bill.
Speaker Change: <unk> <unk> from <unk> capital Your line is open.
Speaker Change: Alright, great. Thank you Tom you've you've essentially touched on this with your answer to several different questions, but I wanted to very specifically ask you to discuss.
Speaker Change: some of the new customers you went through here on the call, as well as the ramp of deals that you mentioned. They're already in process.
Sounds like that should be, um...
Speaker Change: The meaningful deployments that are ahead of you and I think that's the phrase that you used.
Speaker Change: There should be 25 growth drivers more so than... Oh yeah, yeah, absolutely. Yes, the new growth drivers are heavily weighted. Yeah, they'll be in 25. I mean, the whole key to us is getting... you know this...
Speaker Change: In your opening remarks, but would you dial in and get that.
As much as you can please.
Speaker Change: Yes so.
Speaker Change: You've been following the business for a while. It's all about how long does it take you to get through the lab. I mean, that's the hardest.
Speaker Change: And as Youre, probably aware, but we have to be a little bit cut.
Speaker Change: Customer sensitive here, but.
part, and that's the hardest part to forecast.
Speaker Change: We have talked about.
A multinational that has multiple countries that we're already deployed in three of those countries, Sweden will be flat.
Speaker Change: Last one that'll be coming on hopefully towards in the first quarter over next year.
You know coming on after that
Speaker Change: Did that answer your question? I'm not sure if I did. It does. Yep. Thanks very much. Okay.
Speaker Change: We have.
Speaker Change: Another.
Speaker Change: Very recent win.
Speaker Change: Your next question comes from Bill Desilam from Titan Capital. Your line is open.
Speaker Change: I don't think it's been publicly announced that.
Speaker Change: We will be coming on it's hard to give a timeframe on that because it's a very large carrier our first deployment our first country for deployment.
Bill Desilam: Great, thank you. Tom, you've essentially touched on this with your answer to several different questions, but I want to very specifically ask you to discuss
Speaker Change: Is Spain.
Speaker Change: And then they have properties throughout the world, including South America.
Bill Desilam: the meaningful deployments that are ahead of you. And I think that's the phrase that you used in your opening remarks. Would you dial into that as much as you can, please?
Speaker Change: And so that's one that will be now.
Speaker Change: We have to compete in each of those areas, but that will be one that.
Speaker Change: <unk>.
I think in aggregate will be a very good customer.
Speaker Change: Yeah, so, you know, as you're probably aware, but we have to be a little bit customer sensitive here, but...
We also have another carrier.
Speaker Change: That.
Thank you for your time. Thank you.
Speaker Change: I spoke to before that we expected to be through the lab at the end of this year.
We have talked about
Thank you. Bye.
Speaker Change: A multinational that has multiple countries that were already deployed in three of those countries, Sweden will be the last one that will be coming on, hopefully towards, you know, in the first quarter of next year.
Speaker Change: As a tier one carrier multinational tier one carrier that.
Speaker Change: Uh huh.
Speaker Change: I think it's progressing really well in fact, we may already be through the lab and now were into an SLA those are the biggest ones.
We have another very recent win.
Speaker Change: We have some carriers both in the U K and in the U S that are kind of at a different tier, but theres still material carriers, we have one that is.
I don't think it's been publicly announced that
Speaker Change: will be coming on. It's hard to give a timeframe on that because it's a very large carrier. Our first deployment, our first country for deployment is Spain and then they have properties throughout the world including South America.
Speaker Change: Here in the U S that have started rolling out with the SPX that has very good growth plans.
Speaker Change: Recapitalized.
And are moving forward, obviously, we have two of those here in the U S that are doing that.
Speaker Change: And the driver for one of them is it's basically going out and just being first in market.
Speaker Change: and so that's one that will be you know now we have to compete in each of those areas but that'll be one that
Speaker Change: And they are.
Speaker Change: Without getting too much into names I mean.
Speaker Change: I think in aggregate it will be a very good customer.
Speaker Change: Very well known for the activity that <unk> been doing and then we have another one that's been in market for a long time very large tier two carrier that is looking to go.
We also have another carrier
Speaker Change: Upgrade their network.
Speaker Change: To 10 gig.
Speaker Change: And.
Speaker Change: All of those are opportunities that will come to fruition in 2025. So it's a broad mix and then you've got beat that just.
Speaker Change: Just this.
Speaker Change: I think it's progressing really well. In fact, we may already be through the lab and now we're into an FOA. Those are the biggest ones.
Speaker Change: It's kind of hard to list the number of customers, we have a very large msos.
Speaker Change: Hopefully, we will be participating in a meaningful way and beat and we have a bunch of other carriers.
Speaker Change: Well as tier ones right in the U S.
Speaker Change: So.
Speaker Change: It's hard to give you a complete list, but in general I would say 25 is looking good.
Speaker Change: here in the U.S. that has started rolling out with the SDX, that has very good growth plans, kind of recapitalized, and are moving forward. I would say we have two of those here in the U.S. that are doing that.
Tom Stanton: So Tom we have.
Followed you all for a long time and.
Tom Stanton: Hum.
Tom Stanton: The number of deployments that that youre talking about seeing significantly greater than what we would normally.
Speaker Change: and the driver for one of them is it's basically going out and just being first in market and they are
Speaker Change: without getting too much into names. I mean, they're very well known for the activity that they've been doing. And then we have another one that's been in market for a long time, a very large tier two carrier that is looking to go and upgrade their network to 10 gig.
Tom Stanton: Think of it in the past.
Speaker Change: Is that a is that a fair perspective, and so essentially we're now transitioning from.
Speaker Change: Yes.
Speaker Change: Difficult.
Speaker Change: Drought, if you will due to the inventory reduction that's taking place across the industry to almost the opposite where the monsoons are coming with with many many deployments.
Speaker Change: just it's kind of hard to list the number of customers we have a very large MSO that you know hopefully will be participating in a meaningful way indeed and we have a bunch of other carriers as well as tier ones right in the U.S.
Speaker Change: About that right.
Speaker Change: I hesitate with the term monsoon because I'm just such a.
Speaker Change: <unk>.
Speaker Change: Not to like to trade.
Thank you. Thank you.
Speaker Change: But in general.
Speaker Change: It's hard to give you a complete list, but in general, I would say, you know, 25 is looking good.
Speaker Change: I agree with your sentiment that we've never had this many opportunities where we have this is a lot of opportunities that were in RFP. This as opportunities that we've won but.
Speaker Change: But we've never had that many come online I mean, if you look at all of the opportunities that we've talked about over the last year year, and a half or so right. One of them is really in full deployment. One of them has just started in full deployment and all the rest.
Speaker Change: The number of deployments that you're talking about seems significantly greater than what we would normally think of in the past.
Speaker Change: At the.
At different stages, including some that were at the tail end of getting into deployment.
Speaker Change: So I would say absolutely yes.
Speaker Change: Is that a fair perspective? And so essentially we're now transitioning from this difficult drought, if you will, due to the inventory reduction that's taking place across the industry.
Speaker Change: In the U S. I think we've been through somewhat of a.
Speaker Change: Slow period and <unk>.
Speaker Change: <unk> gone through a kind of a recapitalization period with some of these carriers and now they're out and their whole mission in life is to deploy fiber.
Speaker Change: to almost the opposite, where the monsoons are coming with many, many deployments. Are we thinking about that right?
Speaker Change: <unk>.
Speaker Change: If you followed the industry for any period of time, we have never seen such a wholesale move.
Speaker Change: Towards a new <unk>.
Speaker Change: Access technology ever right. It's just never been there and you have government stimulus that may or may not come.
Speaker Change: I hesitate with the term monsoon because I'm just such a, you know...
Speaker Change: I tend not to like to trade, but in general, I agree with your sentiment. Yeah, I mean, we have never had this many opportunities where we have – this is not opportunities that we're in RFP. This is opportunities that we've won.
Speaker Change: I think it's going to be really really hard to unwind, but I would not say it couldnt be unwound, because things that you think can't get done and get done sometimes but.
It does not all change the.
Speaker Change: Underlying driver, which is people want fiber connectivity and they'll pay for it.
Speaker Change: But we've never had that many come online. I mean, if you look at all the opportunities that we've talked about over the last year, year and a half or so, right, one of them is really in full deployment, one of them has just started in full deployment, and all the rest are at the, you know, at different stages including some that were at the tail end of getting into deployment.
Speaker Change: And.
Speaker Change: So I think I think the premise of your statement is correct.
Speaker Change: I hope it's a monsoon.
Speaker Change: We'd love to go out and sit in the rain.
Speaker Change: Yeah.
Speaker Change: So, I would say absolutely yes. In the U.S., I think we've been through somewhat of a...
Sounds sounds terrific. Thank you for the.
A complete answer I really appreciate it okay.
slow period and
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: You've gone through kind of a recapitalization period with some of these carriers, and now they're out, and their whole mission in life is to deploy fiber.
Speaker Change: Your next question comes from the line of Brian <unk> with Needham <unk> Company. Your line is open.
Speaker Change: And, you know, if you follow the industry for any period of time, we have never seen such a wholesale move.
Speaker Change: Okay. Thanks.
Most of my question have been answered but.
Tom Stanton: Maybe Tom one last swing.
towards
Speaker Change: The U S broadband business and let's call. It your run rate business, not new customers not bead related.
Speaker Change: a new, you know, access technology ever, right? It's just never been there. And you have government stimulus that may or may not come. I think it's going to be really, really hard to unwind. But I would not say it couldn't be unwound, because things that you think can't get done, get done sometimes. But it does not all change the...
Tom Stanton: Thinking about 25.
Speaker Change: Our existing customer base.
Speaker Change: What is your view on that are there are there is some setbacks here or there.
Speaker Change: Still some of these tier twos that are going through a recap of our going through our <unk> acquisition that are still sounding like software next year or do you think your run rate business.
Speaker Change: you know underlying driver, which is people want fiber connectivity and they'll pay for it.
From 24 to 25, it looks pretty stable and consistent growth.
Speaker Change: and so I think the premise of your statement is correct.
Speaker Change: Yes.
Speaker Change: Alright.
Speaker Change: I hope it's a monsoon. I'd love to go out and sit in the rain.
Taking beat out as kind of being takeout because yes.
Speaker Change: It's hard to know how much of the environment is being impacted today by bead anticipation.
Speaker Change: Sounds terrific. Thank you for the complete answer. Really appreciate it. Okay.
Speaker Change: So it's kind of an unknown probably wait.
Speaker Change: The market that it doesn't happen in that way. It goes away right. So I do think you have people that are thinking hey, let me figure out what beat opportunities I'm going after and how aggressively have to bid before I kind of set in stone my entire capital plan. So that way is on there today.
Speaker Change: Your next question comes from the line of Brian Kuntz with Needham and Company. Your line is open.
Brian Kuntz: Thanks. Most of my questions have been answered, but maybe Tom, one last swing at the U.S. broadband business, and let's call it your run rate business. Not new customers, not bead related, but just think about 25 with your existing customer base.
Speaker Change: So if you take bead out and say that beat is gone and that weight is gone I guess, maybe the easiest way to answer it is I don't know any customer today, that's a material customer to us.
Brian Kuntz: What is your view on that? Are there some setbacks there? Are there, you know, still some of these tier twos that are going through a recap or going through a PE acquisition that are still sounding like soft for next year? Or do you think your run rate business
But I would expect softer.
Speaker Change: I don't yes.
Don't see softer there.
Speaker Change: There may be some that ended up being flat goes away, but you certainly could be delayed right with the change of administration.
Brian Kuntz: From 24 to 25, looks pretty stable and can see some growth.
Speaker Change: It could move out it can move completely out of 25, it could it could but but.
Speaker Change: Yeah, all right, so taking a bead out is kind of a bead takeout because...
Speaker Change: I think I do believe and I could be wrong here, but I do believe the bead weight on capital spending is already in place.
Brian Kuntz: It's hard to know how much of the environment is being impacted today by bead anticipation. So it's kind of an unknown, probably weight.
Speaker Change: So softer would be difficult.
Speaker Change: And you can only be softer for so long before you have a problem you can at some point in time somebody going to rebuild that.
Brian Kuntz: that's on the market, that if B doesn't happen, then that weight goes away, right? So I do think you have people that are thinking, hey, let me figure out what beat opportunities I'm going after and how aggressively I have to bid before I kind of set in stone my entire capital plan. So that weight is on there today.
Speaker Change: Alright.
Speaker Change: And unless it's a really rural rural area.
Speaker Change: I think there is there is just a demand driver that is somewhat of a.
Speaker Change: Kind of constant pressure on getting something build.
Speaker Change: Yes.
Speaker Change: And of that run rate business that you have in the U S. This year.
Brian Kuntz: So if you take bead out and say that bead is gone and that weight is gone, I guess maybe the easiest way to answer it is I don't know of any customer today that's a material customer to us that I would expect softer.
Speaker Change: Just kind of roughly split between tier one tier two tier three for you can you remind us of this year this year it's been.
Speaker Change: Definitely more tier two tier three.
Speaker Change: Less tier one.
Brian Kuntz: I don't, I don't see softer. There may be some that end up being flatter. But it certainly could be delayed, right, with the change in administration, and you know, it could move out, it could move completely out of 25 and a half. It could, it could, but, but I'll, you know.
Speaker Change: Yes.
Speaker Change: I think you understand the reason, yes, and then on the on the optical side.
Can you remind us where you're seeing the most traction for the products that you acquired through AD like which Where's your wheelhouse. If you look at that big optical.
Brian Kuntz: I think, I do believe, and I could be wrong here, but I do believe the bead weight on capital spending is already in place.
Business what applications are you seeing.
So, softer would be difficult.
Speaker Change: The most traction with is it more like Metro optical Metro Metro edge. There is some growth on the enterprise side for secure optical but its metro edge large enterprise.
Uh-huh.
Brian Kuntz: And you can only be softer for so long before you have a problem. You can, at some point in time, somebody's going to overbuild that.
Brian Kuntz: And unless it's a really real rural area, I think there is just a demand driver that is somewhat of a...
Speaker Change: And in Metro edge, I would lump backhaul.
Aggregation networks.
kind of constant pressure on getting something built.
Speaker Change: That's our sweet spot we're strong in.
Speaker Change: Yeah, and of that run rate business that you have in the U.S. this year, you know, how is it kind of roughly split between Tier 1, Tier 2, Tier 3 for you? Can you remind us? This year, this year has been definitely more Tier 2, Tier 3, less Tier 1.
Pretty much all of Europe, including the large carriers and then it's being introduced into the tier three and we're seeing positive movement in the tier three space here as people start to figure out how they are going to back off their networks.
Speaker Change: Great.
Speaker Change: One last question here can.
Speaker Change: Yeah, I think you understand the reason. Yep. And then on the optical side, can you remind us where you're seeing, you know, the most traction for the products?
Speaker Change: Can you update us on your thinking around.
Speaker Change: The minority shares in terms of where your where that where that is now on the balance sheet and what your thinking is.
Speaker Change: Are you seeing redemptions and what can you comment that you can share with investors about.
Brian Kuntz: Where's your wheelhouse if you look at that big that optical
Speaker Change: What's your plan is there.
Speaker Change: business, what applications are you seeing, you know, the most traction with? Is it more like optical? It's MetroEdge. There's some growth on the enterprise side for secure optical, but it's MetroEdge, large enterprise.
Speaker Change: Yes, I mean, so there's a bunch of shareholders are some fairly large ones that we stay in contact with.
Speaker Change: I don't think the mindset on those investors that changed the typical redemptions, we do see redemptions from time to time, we did see a redemption, but it was a very unique case this last quarter.
and in MetroEdge I would lump backhaul of
Speaker Change: Really no change I mean, we right.
Speaker Change: Right now our mission with our capital plan to be honest, we just pay down our debt when we pay down the debt we have the ability then to figure out.
Speaker Change: pretty much all of Europe including the large carriers and then it's being introduced into the Tier 3 and we're seeing you know positive movement in the Tier 3 space here as people start to figure out how they're going to back off their networks.
Speaker Change: What we want to do overtime, we plan on taking those shares in <unk>.
And taking them off the market, but that's our first thing right now is just get rid of our debt.
Got it Super helpful. Thanks, Thanks, guys nice quarter.
Great.
Speaker Change: One last question here. Can you update us on your thinking around the minority shares in terms of where that is now on the balance sheet and what your thinking is forward? Are you seeing redemptions? And what can you comment that you can share with investors about?
Speaker Change: We have another question from the line of George Notter of Jefferies. Please ask your question.
Speaker Change: Oh, hi, Thanks, just a quick one.
Speaker Change: I noticed that your DSO calculation was down I think five days is there an improvement in linearity here or is there improvement in collections or what drove that thanks.
What's your plan, Esther?
Speaker Change: Julie.
Speaker Change: It's just essentially it's customer mix and then.
Speaker Change: Yeah, I mean, so, you know, there's a bunch of shareholders, there's some fairly large ones that we stay in contact with.
Speaker Change: And then of course, we put a lot of effort in and collections also but it's just.
Speaker Change: I don't think the mindset on those investors have changed. The typical redemptions, we do see redemptions from time to time. We did see a redemption, but it was a very unique case this last quarter.
Speaker Change: The result of how how customer fall into our shipments fall, sometimes you know no industry. It's usually the quarters are pretty much back end loaded in sometime.
Speaker Change: Sometimes it moves the needle.
Speaker Change: And the one or the other direction.
Speaker Change: I think linearity, probably got a little bit better George but I don't think it materially change I think still backend.
Speaker Change: Fair enough. Thanks, a lot.
Speaker Change: Okay.
Alright, it looks like we are out of questions. Thank you very much for joining us on the call.
Speaker Change: This morning, and we look forward to talking to you next quarter.
Speaker Change: Ladies and gentlemen that.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.