Wednesday, July 26, 2023

AT&T sets sights on profitable 5G and fiber customers, cost cutting

 AT&T posted Q2 revenues of $29.9 billion, up 0.9% year over year, and operating income of $6.4 billion, up 29.3% year over year. Communications Q2  revenues were $28.8 billion, up 0.5% year over year due to increases in Mobility and Consumer Wireline, which more than offset a decline in Business Wireline. Operating income was $7.2 billion, up 7.4% year over year, with operating income margin of 24.9%.

“The direction we set three years ago is sound, and we’re on the right trajectory. Compared to last year, Mobility service and broadband revenues are up, Adjusted EBITDA is up, free cash flow is up, Mobility and Consumer Wireline margins are up and customer lifetime values are up,” said John Stankey, AT&T CEO. “We’re focused on growing the right way, adding profitable 5G and fiber customers. We are also committing to an incremental $2 billion-plus in cost savings beyond the $6 billion we have accomplished over this period, reflecting our continued march to operating the company in a more focused and streamlined fashion. Our results give us full confidence in delivering our full-year financial guidance.”

Some highlights

  • Mobility revenues were up 2.0% year over year to $20.3 billion due to higher service revenues, partially offset by lower equipment revenues. Service revenues were $15.7 billion, up 4.9% year over year, primarily driven by subscriber and postpaid ARPU growth. Equipment revenues were $4.6 billion, down 7.2% year over year, driven by lower volumes.
  • Delivered 326,000 postpaid phone net adds with continued strong ARPU growth and historically low levels of churn
  • Consumer wireline revenues were $3.3 billion, up 2.4% year over year due to gains in broadband more than offsetting declines in legacy voice and data and other services. Broadband revenues increased 7.0% due to fiber growth of 28.0%, partly offset by a 13.7% decline in non-fiber revenues.
  • Total broadband net losses, excluding DSL, were 35,000, reflecting AT&T Fiber net adds of 251,000, more than offset by losses in non-fiber services. AT&T Fiber now has the ability to serve 20.2 million customer locations and offers symmetrical, multi-gig speeds across parts of its entire footprint of more than 100 metro areas.
  • Latin America - Mexico revenues were $967 million, up 19.7% year over year due to growth in both service and equipment revenues. Service revenues were $635 million, up 18.9% year over year, driven by favorable foreign exchange, higher wholesale revenues and growth in subscribers. Equipment revenues were $332 million, up 21.2% year over year due to favorable foreign exchange and higher sales.

Verizon posts Q2 wireless service revenue growth and cash flow

Verizon reported total operating revenue of $32.6 billion, a decrease of 3.5 percent from second-quarter 2022, however, total wireless service revenue grew 3.8 percent to $19.1 billion. Net income was $4.8 billion, a decrease of 10.3 percent from second-quarter 2022, and consolidated adjusted EBITDA of $12.0 billion, up 0.8 percent year over year.

Some highlights

Total Broadband:

  • Total broadband net additions of 418,000, reflecting a strong demand for fixed wireless and Fios products. This result included 384,000 fixed wireless net additions, an increase from 256,000 fixed wireless net additions in second-quarter 2022. This is the third consecutive quarter that Verizon reported more than 400,000 broadband net additions. Verizon now has nearly 2.3 million subscribers on its fixed wireless service. 
  • 54,000 Fios Internet net additions, an increase from 36,000 Fios Internet net additions in second-quarter 2022. 

Total Wireless: 

  • Total wireless service revenue3 of $19.1 billion, a 3.8 percent increase year over year.
  • Postpaid phone net additions of 8,000, and retail postpaid net additions of 612,000. Total wireless postpaid phone gross additions increased 2.0 percent year over year, primarily driven by a 6.9 percent year over year growth in Consumer postpaid phone gross additions.
  • Total retail postpaid churn of 1.07 percent, and retail postpaid phone churn of 0.83 percent.

"In the second quarter, we showed progress in our key priorities of growing wireless service revenue, delivering healthy consolidated adjusted EBITDA, and increasing free cash flow," said Chairman and CEO Hans Vestberg. "We look forward to extending our network leadership in the second half of the year by continuing our rapid C-Band deployment as we are laser focused on providing value to our customers. The steps that we have taken to improve our operational performance are working, and we are confident that we will achieve our financial targets for the full year."

  • Total Verizon Business revenue was $7.5 billion in second-quarter 2023, a decrease of 1.9 percent year over year. Growth in wireless service revenue was more than offset by lower wireline revenue and lower wireless equipment revenue.
  • Business wireless service revenue was $3.4 billion, an increase of 5.3 percent year over year. This growth was driven by continued strong net additions and pricing actions implemented in recent quarters. 
  • Business reported 308,000 wireless retail postpaid net additions in second-quarter 2023, including 144,000 postpaid phone net additions. This was the eighth consecutive quarter that Business reported more than 125,000 postpaid phone net additions.

Orange group revenues climbed 2.6% in Q2

Orange Group revenues in Q2 reached EUR 10,926 billion, up 2.6% over a year earlier.

Some highlights:

  • Accelerated revenue growth in the quarter was driven by the performance of retail services[3], which benefited from price increases. Retail services rose 4.3% in 2Q (+3.6% in 1H) and more than offset the continued decline in revenues from wholesale services, which fell 4.1% in 2Q (-5.9% in 1H). Equipment sales again recorded strong growth in 2Q with an 8% increase (+8.8% in 1H).
  • France decreased 1.3% in 2Q (-1.5% in 1H), with the accelerated growth in retail services of 3.4% excluding PSTN unable to offset the anticipated decline in wholesale services revenues. Recent price increases will, however, yield results in the second half of the year.
  • Europe grew 2.7% in 2Q (+3.3% in 1H), driven by Spain, which confirmed its recovery with an increase of 2.1%, and solid performances from Poland (+5.5%) and Belgium & Luxembourg (+3.0%).
  • Africa & Middle East continued to post very strong growth rising 12.0% in 2Q (+10.5% in 1H) with double-digit increases across all growth engines (mobile data, fixed broadband, Orange Money, B2B).
  • The Enterprise sector grew 2.4% in 2Q (+0.8% in 1H) as a result of revenues from IT & Integration services and Mobile, which more than offset the structural decline in the Voice and Data legacy businesses.

“Our first-half results are in line with our objectives for 2023. They confirm the relevance of the implementation process initiated in the context of our 'Lead the Future' strategic plan and provide confidence for the achievement of our 2025 objectives. In Europe and in France, our quarterly results in retail services show the positive momentum of our value strategy, underpinned by price increases the benefits of which in France will be fully visible in the second half of the year. We can also confirm the continuing recovery in Spain, where EBITDAaL rose by 11% in this first half. The excellent performance in Africa and the Middle East is down to our investments in the network, the satisfaction of our customers and the very strong rebound of Orange Money. These results offset those of Orange Business, whose EBITDAaL was still sharply lower despite a 2.4% increase in revenues in the second quarter. Our teams are fully focused on executing our transformation plan there,” stated Christel Heydemann, Chief Executive Officer of the Orange group.

Ribbon posts Q2 revenue of $211 million, rising IP Optical sales

Ribbon Communications Inc. reported revenue for the second quarter of 2023 of $211 million, compared to $206 million for the second quarter of 2022 and $186 million for the first quarter of 2023.

  • International represented 53% of sales
  • Enterprise represented 32% of product sales

"Ribbon delivered solid results in the second quarter with sequential and year-over-year growth in both revenue and earnings. IP Optical Networks continued to build momentum with sales increasing 24% versus the same period in 2022, extending the trend of double-digit growth for the fourth consecutive quarter. Shipments to India continued to grow, and our cross-sell strategy resulted in strong growth in North America and Japan. Sales of our Cloud & Edge communications products to Enterprise customers grew 94% year over year, including a new strategic U.S. Federal agency win supporting modernization of critical voice communications," stated Bruce McClelland, President and Chief Executive Officer of Ribbon Communications. "We continue to anticipate a stronger second half and are maintaining our full year guidance range for 2023, but, due to the overall projected mix, Adjusted EBITDA is expected to be towards the lower half of our $95-110M range, a significant 50% improvement vs. 2022."

For the third quarter of 2023, the company projects revenue of $215 million to $225 million, Non-GAAP gross margin is projected in a range of 51.5% to 52.5%, and Adjusted EBITDA is projected in a range of $26 million to $32 million.

MaxLinear posts sales of $183.9 million in Q2, cancels Silicon Motion merger

MaxLinear reported Q2 net revenue of $183.9 million, down 26% sequentially and down 34% year-over-year.

GAAP gross margin was 55.9%, compared to 56.5% in the prior quarter, and 58.7% in the year-ago quarter.  GAAP diluted loss per share was $0.05, compared to diluted earnings per share of $0.12 in the prior quarter, and diluted earnings per share of $0.40 in the year-ago quarter. Non-GAAP diluted earnings per share was $0.34, compared to $0.74 in the prior quarter, and $1.11 in the year-ago quarter.

“Even as we navigate a challenging demand environment with fiscal discipline and operational efficiency, our solid execution and innovative product offerings are enabling us to maximize strategic business opportunities across all our end markets. In 2023, we continue to lay important groundwork in Wi-Fi, fiber broadband access gateways, and wireless and optical datacenter network infrastructure, which will be the foundation for our growth throughout 2024,” commented Kishore Seendripu, Ph.D., Chairman and CEO.

In addition, MaxLinear announced its decision to terminate its pending merger agreement with Silicon Motion.

NETGEAR posts Q2 net revenue of $173.4 million, looks forward to WiFi 7

NETGEAR posted second quarter 2023 net revenue of $173.4 million, a decrease of 22.3% from the comparable prior-year quarter, however the company says the results are above the high end of previously issued guidance. There was a second quarter 2023 non-GAAP net loss per diluted share of $0.16, as compared to net loss per diluted share of $0.19 in the comparable prior-year quarter.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “In the second quarter, NETGEAR delivered revenue of $173.4 million, above the high end of our guidance, and non-GAAP operating margin at the high end of our guidance. Sales to our service provider partners outperformed our original expectations and appear to be stabilizing due to increased demand as well as improved inventory carrying levels held by our largest partner. More importantly, momentum behind our premium CHP products, represented by our Orbi 8 and Orbi 9 and 5G mobile hotspots, again materially outperformed the broader market. As expected, CHP retail partners continued to reduce their inventory levels, but we believe the market is starting to stabilize. In the SMB business, while we continue to be challenged by channel inventory compression to historically low levels as partners navigate through the uncertain macroeconomic environment, overall end user demand growth for our SMB products remained strong. Our ProAV managed switch products continued to impress, with end user sales growing 44% year over year.”

Mr. Lo continued, “We are excited about the imminent launch of WiFi 7 and stand ready with a number of compelling new product introductions, across both the Orbi and Nighthawk brands. The innovation is just as robust in the SMB business – as we are adding support for video broadcasting protocol SMPTE 2110 with the introduction of our M4350 line of our Pro AV managed switch products. Demand is also growing for our comprehensive Armor security service as we reached 804,000 total paid subscribers in the quarter and we are on track to reach 875,000 paid subscribers by year’s end.”

A10 Networks reports s of $65.8M, encouraging signs for 2H2023

A10 Networks reported Q2 revenue of $65.8 million, up 14.1% sequentially from Q1 and in-line with expectations. Non-GAAP net income was $14.5 million, or $0.19 per diluted share (non-GAAP EPS), compared with non-GAAP net income of $13.4 million, or $0.17 per diluted share in the second quarter of 2022.

The second quarter results demonstrated sequential improvements consistent with our expectations and our continued focus on our business model,” said Dhrupad Trivedi, President and Chief Executive Officer of A10 Networks. “Spending from large enterprises and tier-one service providers in North America remains volatile, but we are seeing encouraging signs, particularly for security solutions, that support our confidence for continuing improvements in the second half of the year.”

“A10 remains solidly profitable, with earnings per share exceeding last year’s levels even on slightly lower revenue, demonstrating our systemic profitability and the focus on our business model,” continued Trivedi. “For the first six months of 2023, our Adjusted EBITDA margin increased by 248 basis points to a record 26.6%, compared to 24.1% last year. We continue to balance profitability and growth as we navigate headwinds.”

Rakuten Mobile Selects Oracle Policy and Charging

Rakuten Mobile has chosen Oracle Communications' cloud native converged policy and charging solutions to support its4G and 5G services, with plans to onboard to Rakuten Symphony's Symworld™ Marketplace. 

These solutions will run on Rakuten Symphony's Symcloud Cloud Native Platform (CNP) and will help execute on the operator's vision for an automated, high-performance architecture that easily scales to support consumer and business use cases across industries.

"Partnering with Oracle ensures that we are delivering on Rakuten Mobile's top priorities of maintaining the highest service quality levels and customer experience on our fully virtualized, cloud native, mobile network. Oracle's policy and charging solutions position us to rapidly launch innovative offerings to meet new customer demands, including new data and voice service plans for enterprise and individual customers," said Tareq Amin, Co-CEO of Rakuten Mobile and CEO of Rakuten Symphony. "The new collaboration is in-line with our commitment to extend our Symcloud validation and support for the BSS/OSS ecosystem players. It also allows us to easily onboard the Oracle solutions on Symcloud Cloud Native Platform (CNP) as a first step to potentially offering rapid and simplified deployment of these industry-leading services to global telco customers in the future."

"In five short years, Rakuten Mobile has earned the well-deserved reputation of global technology disruptor with its bold vision to embrace a fully cloud native network, a common cloud platform, and autonomous operations," said Jason Rutherford, senior vice president and general manager, Oracle Communications, Applications. "Deploying Oracle's converged policy and charging technologies will help empower more intelligent policy decisions and shorten the runway to quickly test, launch, and monetize new services."