ADTRAN Cuts Outlook as Project Delay Squeezes Margins
Preliminary second-quarter revenue of $280.0 million to $282.0 million fell below the company’s guidance.
ADTRAN Holdings (ADTN), a fiber-networking equipment maker, reported a preliminary GAAP operating margin of negative 3.2% to negative 4.0% for the second quarter, reversing from positive 2.2% in the first quarter.
The reversal extended a two-quarter revenue decline and interrupted the margin improvement recorded late last year. ADTRAN attributed the shortfall to a delayed project involving a single customer, while elevated component and freight costs added pressure.
Revenue fell about 1.4% to 2.1% sequentially from $286.1 million in the first quarter, after declining from $291.6 million in the fourth quarter of 2024. The preliminary result landed $1.0 million to $3.0 million below the lower end of ADTRAN’s prior guidance range.
Preliminary non-GAAP operating margin dropped to 3.5% to 4.0% from 6.9% in the first quarter, missing the company’s guided range by at least 1 percentage point. Non-GAAP earnings fell to $0.03 to $0.05 a share from $0.14 and came in $0.08 to $0.10 below analysts’ consensus estimate.
On a GAAP basis, ADTRAN expected a diluted loss of $0.12 to $0.14 a share, compared with losses of $0.01 in the first quarter and $0.02 in the fourth quarter of 2024. The preliminary reconciliation included $0.5 million to $0.9 million of professional fees and other expenses tied to an internal investigation, a benefit-plan adjustment and other one-time business costs.
For the third quarter, ADTRAN expects revenue of $275.0 million to $295.0 million, with both endpoints $8.0 million below its second-quarter guidance range. The company expects a non-GAAP operating margin of 1.5% to 5.5%, lowering both ends of the range by 3.5 percentage points.
Optical networking remained strong despite the customer-specific delay. The reduced third-quarter outlook leaves the delayed project and higher operating costs weighing on the near-term recovery.