ADTRAN (ADTN) is trading modestly higher today after reporting Q1 earnings results last night. Since you may not be familiar with ADTRAN, some background would help. The company is a supplier of networking and communications equipment which enables voice, data, video and Internet service across a variety of network infrastructures. The company realigned its organizational structure in 2015. As a result, the company now reports its financial performance based on two segments: Network Solutions and Services & Support.
Network Solutions includes software and hardware products sold to CSPs (communications service providers) and enterprise customers. Its core product areas are Broadband Access, Optical, and Internetworking. It was not that long ago that just having Internet connection was enough. Now that the Internet has become engrained in all aspects of our everyday lives, customers want high-speed broadband connectivity everywhere, all the time. ADTRAN is enabling CSPs to meet this demand with a unique portfolio of products.
By year-end 2016, ADTN had shipped almost 10 million VDSL2 vectoring ports. The company says it's leading the introduction of great technology innovations like XGS PON, NGPON2 tunable optics, G.fast and the enablement of Gigabit communities. XGS-PON, a new standards-based technology ADTRAN is developing, supports 10Gbps symmetric fixed wavelength PON over new or existing fiber infrastructure. This technology enables CSPs to double the useable lifespan of a fiber network regardless of the multi-Gigabit service rate delivered.
G.fast is quickly gaining momentum among CSPs for its ability to enable Gigabit speeds over existing copper infrastructure, such as in multi-dwelling units (MDUs). ADTRAN is a leader in the development of this technology and is participating in more than 108 G.fast trials with CSPs on six continents.
ADTRAN is focused on being a top global supplier of Access infrastructure from the Cloud Edge to the Subscriber Edge. The company is accelerating the industry's transition to open, programmable, scalable networks. Complementing these products is the ADTRAN Mosaic Software-Defined Access (SD-Access) architecture, which combines modern Web-scale technologies with open source platforms. The Mosaic cloud platform and Mosaic OS provide operators with a highly agile, open-services architecture.
Its Services & Support segment is set up to complement its Network Solutions portfolio. ADTN provides a full-range of network implementation, maintenance and managed services. This includes engineering, site preparation, cabinet placement, installation, configuration, turn-up and test, training and project management services.
Turning to the Q1 results, non-GAAP EPS rose 29% YoY to $0.18 while revenue rose 19.8% year/year to $170.3 mln. Both results were better than market expectations. There was no forward guidance as is usually the case. ADTN says it started 2017 setting a company record for Q1 revenue, driven by increasing momentum in its ultra-broadband product sales and continuing strength in its services area. Most notably, ADTN had very strong performances in its fiber to the premises and vectoring products in both its domestic and international markets.
In sum, investors appear to be pleased with the Q1 results as the stock is trading modestly higher. The stock has been trending lower since mid-December when it traded as high as $23.75. So today's report was some welcome good news for investors although the move is pretty muted.