ADTRAN, Inc. (NASDAQ:ADTN) Q3 2019 Earnings Conference Call Transcript

Oct 31, 2019 • 10:30 am ET

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ADTRAN, Inc. (NASDAQ:ADTN) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen thank you for standing by and welcome to ADTRAN's Third Quarter 2019 Earnings Release Conference Call. [Operator Instructions]. After the speakers' remarks, there will be a question-and-answer period. [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 involve risks and uncertainties including the impact of the company's successful development and market acceptance of core products the degree of 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 ended December 31, 2018. 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.

It is now my pleasure to turn the call over to Tom Stanton Chief Executive Officer of ADTRAN. Sir, please go ahead.

Executive
Thomas R. Stanton

Thank you, Lisa. Good morning everyone. We appreciate you joining us for our third quarter 2019 conference call. With me today is ADTRAN CFO Mike Foliano. Following my opening remarks, Mike will review the quarterly financial performance in detail. And then we will take your questions. Our progress in the quarter was overshadowed by a pause and shipments to a large customer in Latin America and the slowdown in spending by a large customer in Europe. With the exception of these two Tier one international customers, our business grew 20% over the previous period. From a topline perspective revenue for the quarter was $114.1 million down 19% on a year-over-year basis. Network Solutions accounted for the majority at $94 million a 22% decrease over the same period in 2018. Global Services Revenue contributed $20.1 million up 17% over the previous period and up 4% year-over-year. Our domestic revenue increased 10% over the previous quarter largely driven by sales of our PON fiber access and CPE solutions and we continue to gain traction globally with our 10 gig XGS PON and Gfast solutions while we continue to see a high level of fiber and broadband extension opportunities across most of Europe Australia and Latin America and even in some emerging markets.

Our domestic business continues to be slow as major operators contemplate their 5G and fixed wired investments. In Europe, the investment in fiber infrastructure is being led by emerging alternative network operators which in turn are pushing incumbent providers to invest. In Australia, the national network build is now into a mixed technology phase where we will see some fiber-to-the-node migration to fiber to the premise and we will start seeing the ramp of CPE deployments. In LATAM we expect to continued broadband deployment in Mexico from the restart a year earlier or earlier this year. In North America, despite headwinds in some of the largest operators, there are some positive trends in fiber broadband deployment with Tier two and regional service provider segments and some rural electric co-ops and