Adtran Inc (ADTN, Financial) released its Q3 2023 earnings on November 7, 2023. The company reported a revenue of $272.3 million, slightly below the lower end of the guidance range. The GAAP gross margin for the quarter was 27.3%, negatively impacted by an inventory write-off of approximately $21.0 million due to the exit from certain product lines in connection with restructuring and the newly implemented business efficiency program.
Financial Performance
The GAAP operating margin for the quarter was negative 32.8%, impacted by the exit from certain product lines and a $37.9 million goodwill impairment charge related to the Services & Support reporting unit. However, the company managed to reduce GAAP operating expenses by 8% from $137.2 million in Q2 2023 to $125.7 million in Q3 2023. The Non-GAAP operating margin for the quarter was negative 1.9%, which was at the upper end of the guidance range. The company also reduced non-GAAP operating expenses by 6.3% from $122.7 million in Q2 2023 to $114.9 million in Q3 2023.
Net Loss and Business Efficiency Program
The GAAP net loss attributable to the company for Q3 2023 was $72.7 million, with a diluted loss per share of $0.93. The Non-GAAP net loss attributable to the company was $10.8 million, with a Non-GAAP diluted loss per share of $0.14. In response to the current macro-economic environment, customer inventory levels, and its impact on customer spending levels, Adtran Inc (ADTN, Financial) has implemented a comprehensive business efficiency program. The company aims to lower its costs by $90 million by the end of 2024 as compared to 2023.
CEO's Commentary
ADTRAN Holdings’ Chairman and Chief Executive Officer Tom Stanton stated, “We anticipate that the ongoing uncertainty affecting customer spending will extend into 2024. We are actively addressing the challenges in our industry and have implemented a business efficiency program to ensure improvement in long-term shareholder return. Through this program, we are aiming to lower our costs by $90 million by the end of 2024 as compared to 2023. Although the environment has proven to be very challenging, interest in our products continues to grow as we gained market share and added new customers during the quarter. We expect the combination of our continued growth in market share with our new operating model to substantially improve returns to all our stakeholders.”
Financial Outlook for Q4 2023
The company has provided Q4 2023 guidance with regard to non-GAAP operating margin and projected reductions in non-GAAP operating expense as a result of its business efficiency program. However, the company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis due to the difficulty of predicting the timing and amounts of various items within a reasonable range.
Explore the complete 8-K earnings release (here) from Adtran Inc for further details.
