EXFO Inc (NASDAQ:EXFO) Q3 2019 Earnings Conference Call - Final Transcript
Jul 10, 2019 • 05:00 pm ET
Thank you. (Operator Instructions) And we'll go first to Thanos Moschopoulos with BMO Capital Markets.
Hi, Good afternoon. Philippe, you mentioned that the Test and Measurement business has been outpacing market growth. Give a sense for what the market's been growing at over the last few months?
Yeah, thanks Thanos. Yeah, we believe again from our assessment that the market around our T&M in the addressable market is between 4% to 5% is what we believe that the market is growing. And therefore, we do believe that we've been gaining market share.
And just given your commentary regarding how 5G should play out, just make sure I understood correctly, we should be seeing an acceleration in the coming quarters in the Test and Measurement business, I mean notwithstanding quarterly volatility obviously, but given the 5G buildout heading into 2020 that should be picking up, right?
I think they'll be -- on the -- the whole fiber buildout, there'll be two main contributor to growth. One will be the 5G buildout that I see as already started. So we're seeing that in North America, Thanos, with a lot of our key service provider customer that are putting more and more of fiber in cities, where they are going to deploy or about to deploy 5G. The other buildout that's going to happen, that will also have a positive impact on our Test and Measurement as we head into 2020, will be around the FTTH mainly in Europe, where we're starting to see an increased area of deployment in -- a few countries that have been behind in terms of overall deployment on bringing FTTH or fiber to the home.
And then on the SASS business, the issues you highlighted with customers pausing to look at virtualization. It sounds like maybe another two or three quarters of that perhaps weighing on growth before that segment starts to accelerate or what would you say in that regard?
Yeah. On the SASS side, as I mentioned, so you've touched on the first kind of growth, which is that the fiber buildout for 5G and then on the SASS side there's two growth potential for our business. The first one is the RAN deployment, so they're starting as we speak now and into 2020 putting new radio and we do believe we have an opportunity to provide our solution around RAN optimization and geolocation. And the second one is, as they virtualize the rest of the network, the virtual EPC and virtual IMS, we'll have an opportunity. And I think the proof point that we've now demonstrated with Three UK, which is now a -- what we believe one of the first telco cloud wireless network, virtualized network. And we've proven that we are solution now has been deployed there. We believe we'll be able to do the same in some of these other opportunities and that will be more into the latter part of 2020 and into 2021. But we'll see a few -- what