ADTRAN (ADTN) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $281.1 million, up 6.1% year-over-year, driven by strong demand in optical networking, broadband expansion, and significant growth in cloud, enterprise, and government segments, despite a project delay and unfavorable product/customer mix.

• Non-GAAP operating income was $10.6 million (3.8% margin), up from $8 million (3%) year-over-year, though sequentially down due to product and customer mix; GAAP operating margin was -3.6%.

• Net loss attributable to shareholders narrowed to $10.9 million, with GAAP diluted loss per share of $0.13 and non-GAAP diluted EPS of $0.04.

• Refinancing of the credit facility reduced borrowing costs by 200 basis points and extended maturity to 2031, strengthening liquidity.

• Underlying demand remains strong across end markets, with strategic priorities and customer diversification progressing.

Financial highlights

• Q2 2026 revenue was $281.1 million, up 6.1% year-over-year; U.S. revenue grew 12% and non-U.S. revenue grew 1%.

• Optical Networking Solutions revenue reached $109.7 million, up 22% year-over-year and 13% sequentially.

• Access & Aggregation Solutions revenue was $86.9 million, down 5% year-over-year and 4% sequentially.

• Subscriber Solutions revenue was $84.5 million, up 1% year-over-year but down 14% sequentially.

• Non-GAAP gross margin was 40.7%, down from 41.4% a year ago and 43% in Q1 2026; GAAP gross margin was 37.0%.

• Non-GAAP net income was $3.4 million ($0.04 per diluted share), compared to breakeven a year ago and $11 million ($0.14) in Q1 2026.

• Operating cash flow was $25.9 million; free cash flow was $8.7 million.

• Cash and equivalents ended at $79.2 million after share repurchases, dividends, and investing activities.

Outlook and guidance

• Q3 2026 revenue expected between $275 million and $295 million; non-GAAP operating margin guidance is 1.5% to 5.5%.

• Guidance reflects ongoing customer deployment timing, continued strength in optical networking, and diversified markets.

• Long-term targets remain 42%-43% gross margin and 10% non-GAAP operating margin.

• Management expects continued strong demand in core markets, supported by broadband expansion and vendor consolidation.