10-Q · August 4, 2026
Adtran delivered 6.1% year-over-year Q2 revenue growth to $281.1 million, driven by Optical Networking and stronger U.S. demand, while its GAAP net loss narrowed to $10.9 million. However, results deteriorated…
Earnings analysis · 10-Q
ADTN earnings analysis
Filed November 5, 2026 · Our reading of the company's report
The latest report
ADTRAN delivered modest year-over-year revenue growth and improved reported gross and operating margins, with Services & Support and Optical Networking offsetting weakness in Subscriber Solutions and international…
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ADTRAN delivered modest year-over-year revenue growth and improved reported gross and operating margins, with Services & Support and Optical Networking offsetting weakness in Subscriber Solutions and international revenue. GAAP losses narrowed, but operating cash flow fell sharply to $14.1 million for the first nine months and free cash flow was approximately negative $34.0 million after capex. Liquidity is supported by $261.7 million of available credit, but debt covenants, tariff exposure, elevated receivable days and unresolved material weaknesses temper the operating improvement.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.1
What stood out
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Revenue broadly stable, strong year-to-date growth
Third-quarter revenue was $281.2 million, up 0.6% from $279.4 million year over year and approximately flat sequentially versus $281 million in Q2 2026. Nine-month revenue increased 7.1% to $848.4 million from $792.2 million.
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Reported gross margin improved
Gross margin improved to 38.5% from 38.3% year over year and 37.0% sequentially. However, tariff refunds contributed materially: excluding them, quarterly gross margin would have been 36.5%.
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Operating loss and GAAP loss narrowed
Operating margin improved to negative 0.3% from negative 1.0% year over year and negative 3.6% sequentially. Net loss attributable to ADTRAN Holdings narrowed to $9.2 million from $10.3 million year over year and $21.5 million year to date versus $42.1 million.
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Services mix supported profitability
Services & Support revenue increased 6.5% to $49.9 million, while its gross margin rose to 62.0% from 59.1%, primarily because of a higher share of maintenance revenue. Network Solutions revenue declined 0.6% to $231.2 million and its gross margin fell to 33.4% from 34.2%.
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Cash generation remained weak
The company generated $14.1 million of operating cash flow in the first nine months, down $73.4 million from $87.5 million. Capital expenditures were $48.1 million, producing approximate free cash flow of negative $34.0 million and capex equal to 5.7% of nine-month revenue.
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Optical and U.S. demand offset weakness
Optical Networking revenue increased $11.0 million in the quarter, supported by high-risk vendor displacement in Europe and increased enterprise, government and internet-content-provider sales. U.S. revenue increased 6.5% to $128.0 million, while international revenue declined 3.8% to $153.2 million.
What to watch
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Liquidity pressure and negative free cash flow
Cash and cash equivalents plus restricted cash declined to $71.7 million from $95.7 million at December 31, 2025, while nine-month operating cash flow was only $14.1 million against $48.1 million of capex. The company also paid $31.9 million for Adtran Networks exit compensation.
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Debt covenants constrain flexibility
As of September 30, 2026, borrowings under the new JPMorgan facility were $83.0 million, with $261.7 million available, alongside $201.3 million of 2030 convertible notes. Beginning December 31, 2026, the company must maintain a net leverage ratio no greater than 3.25x and fixed-charge coverage of at least 1.25x.
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Working capital absorbed cash
Receivables DSO increased from 66 days at December 31, 2025 to 77 days at September 30, 2026, and accounts receivable reduced operating cash flow by $29.9 million. Inventory also used $18.7 million of operating cash.
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Tariffs threaten margins and demand
The filing identifies new tariff exposure, including 10% or 12.5% Section 301 tariffs on most goods from approximately 60 trading partners. Excluding tariff refunds, quarterly gross margin would have been 36.5% versus the reported 38.5%.
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Material weaknesses remain unresolved
Management reported material weaknesses in internal controls as of September 30, 2026, including ineffective controls over financial statement preparation, presentation and disclosure. The weaknesses previously contributed to restatements for fiscal years 2022, 2023 and 2024 and several 2022-2024 quarterly periods.
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ERP implementation adds reporting risk
The company completed an ERP expansion during the quarter, migrating substantially all remaining operations to the Adtran Networks SAP environment. Management states that implementation-related control changes materially affected internal control over financial reporting, creating execution and reporting risk during the transition.
Management's outlook
The 10-Q does not provide quantitative quarterly revenue or EPS guidance. The filing states that management expects inventory levels to fluctuate and expects to continue incurring research and development expenses, but it does not quantify those outlook items.
Earlier filings 4
10-Q · May 5, 2026
ADTRAN Holdings, Inc. reported a strong Q1 2026 performance with revenues of $286.1 million, representing a 15.5% year-over-year increase, and a significant earnings surprise as non-GAAP EPS of $0.14 beat expectations…
10-K · February 26, 2026
Adtran positions itself as a global supplier of fiber-based communications infrastructure and AI-driven operations (Mosaic One SaaS) serving Service Providers, enterprises and data centers. The company returned to…
10-Q · November 4, 2025
ADTRAN reported Q3 revenue of $279.435 million (up 22.7% YoY) with gross margin expanding to 38.3% and an operating loss narrowing to (1.0%) from (11.5%) a year ago; GAAP loss per share improved to $(0.12) from $(0.38)…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.