Inventory Issue of Optical Networks Resolved in the First Quarter

The optical network market shows signs of recovery, and Adtran has become the latest supplier to witness the gradual easing of industry inventory backlog. During the fourth quarter earnings conference call, CEO Tom Stanton pointed out to investors that “the first quarter will show clearer market trends.
“We expect specific inventory issues to be cleared this quarter, “Stanton said.” The current trend is consistent with previous judgments. Inventory levels have continued to optimize over the past year, with only a few remaining issues expected to be completely resolved in the first quarter. “He further emphasized,” We are confident that we will enter a healthy operating track by the end of the first quarter.”

Diversified demand drives network upgrade

Benefiting from the collaborative deployment of service providers, Internet content providers and enterprise customers, the company’s optical network business achieved global growth in the fourth quarter, of which the non US market revenue increased by 10% month on month. The revenue of the optical network sector increased significantly by 16% month on month.
“During the reporting period, Adtran’s Optical Network Solutions division added 18 new customers, covering a diverse range of fields including fiber broadband operators, government agencies, public utilities, and large enterprises. The diversification of customer structure confirms the widespread demand for optical network upgrades, “Stanton explained.” Typical application scenarios include broadband operators upgrading their backhaul networks to 100G and regional transmission networks evolving to 400G/800G.”
The company also won orders from Internet content providers for backbone network expansion, and provided private network upgrading and security reinforcement solutions for government and enterprise customers. Stanton pointed out that the fully upgraded product matrix has effectively enhanced customer stickiness, with the 800G transmission system already put into commercial use – Australian Titan Telecoms announced in January this year that it will adopt its FSP 3000 TeraFlex ™ CoreChannel ™ Technology has successfully launched 800G service on the 963 kilometer backbone link from Sydney to Melbourne.
With continuous product innovation, reasonable customer inventory, and the expansion of opportunities in multiple vertical fields of optical networks, we remain optimistic about our business growth prospects, “Stanton concluded.

Optical network business leads revenue growth

The strong performance of optical network solutions drove Adtran’s fourth quarter revenue to $242.9 million, exceeding the expected median by 7% (a month on month increase of $15.1 million). This business segment contributed $81.6 million in revenue, accounting for 34% of total revenue, with a month on month increase of 16%.
The core business segments of the company are all showing a growth trend: the revenue from network solutions is 197 million US dollars, accounting for 81% of the total revenue, up from 80%; The revenue from access and aggregation business was 72.7 million US dollars, a month on month increase of 8%, accounting for 30%. But the service support business narrowed slightly to 45.8 million US dollars, with its proportion decreasing from 20% to 19%.
For the first quarter of 2025, Adtran has provided a revenue guidance of $237.5 million to $252.5 million, with the median month on month remaining stable.