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| Statement |
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| On the core, it does tend to be a little bit lumpy, but we remain confident in our previous guidance of 100 basis points improvement for the full fiscal year versus the fiscal '23 on the core business |
| Together these actions should result in reduced lead times, lower working capital, and improved costs |
| So all those factors combined really kind of a confluence of events, but again it could be a little bit lumpy, but so I think our full-year guidance is solid |
| The improvement was driven by higher software revenue, favorable project mix and moderating material costs |
| Record non-GAAP EPS of $0.97 |
| For the first six months of fiscal '24, North America is up 6% versus the prior year and bookings remain strong |
| Our strong balance sheet allowed us to capitalize on the NEC acquisition opportunity |
| And then we've got pretty solid synergy roadmap to improve our cost structure there and get the Pasolink margins moving north here in the not too distant future |
| So we feel pretty good about that |
| Keeping it to the guidance the same implies that there's some really good stuff going on with the core Aviat business |
| This is a good indication of the healthy demand and we expect this to remain strong in the quarters ahead as operators spend Rural Digital Opportunity Fund or RDOF awards |
| Aviat had a record amount of sales in the first half of fiscal year 2024 in the Aviat store |
| On top of our product offerings, we remain optimistic on the Huawei share gain opportunities in many regions |
| And then also in the Americas, Pete mentioned the record store revenues in the first half that also is margin accretive as well as we had some favorable easing material input costs |
| We have a large installed base of Pasolink and with the Aviat portfolio, we have a strong value proposition for network migration |
| In private networks, Aviat is well positioned to grow and we see demand remaining strong |
| As we mentioned, we believe Aviat has the industry's leading portfolio of E-Band and Multi-Band products with single and dual channel band, single box multi-band, extended distance and vendor agnostic multiband, 5G will drive a shift towards these technologies where we are well positioned |
| You cited a couple of factors and you're also very strong |
| In developing countries where wireless is more ubiquitous, 5G spend is still in front of us, and we will benefit in all 5G phases |
| How should we be thinking about gross margins? David Gray Yes, okay, so this quarter was a record quarter for gross margins for the core Aviat business and again that was largely attributable to software and favorable project mix |
| Our plans to integrate our network management software, ProVision Plus with Pasolink products will deliver improved functionality and ease of use to Pasolink customers |
| We expect the demand for microwave backhaul in mobile networks to remain strong in the years ahead |
| So obviously, the gross margins were surprisingly strong, especially given the international mix |
| This is a sign of our confidence in the work that we have done thus far and our line of sight to improve profitability in the Pasolink business |
| In mobile networks, we are encouraged by the dialog with customers, expect this market will continue to provide growth prospects for Aviat as microwave transport spend for 4G and 5G networks remains healthy |
| We continue to benefit from the long-term trends in private network investments, 5G rollout in mobile networks and the expansion of rural broadband coverage |
| Our recently announced partnership with Smartfren Telecom in Indonesia is a good win for Aviat |
| It's a pretty solid growth this year, right, 7%, 8% something like that |
| We are pleased to report that Aviat's continued its solid execution and achieved revenue and margin growth in the quarter |
| And we think that when that comes, that unlicensed broadband service comes in, it will pave the way for more lightweight backhaul and we think that's going to have a positive effect on both RDOF and BEAD appropriations |
| Statement |
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| Second quarter GAAP net income was $2.9 million down from $6.0 million last year due to the previously mentioned M&A related expenses |
| North America, which comprised 54% of our total revenue for the quarter was $51.3 million, a decrease of 1.4% from the same period last year due to timing of public safety projects |
| So it was a little bit lower than we had anticipated in Q1, if you will |
| But in that context, you seem to be and you typically see seasonal declines in revenues in Q1, given your kind of implicit Pasolink guide, you seem to be guiding to that again |
| Progress continues to be made with all states having submitted their proposals to the National Telecommunications and Information Administration or NTIA for review and approval, we have received some questions from investors regarding the potential conflict of the BEAD program and the enhanced Alternative Connect America Cost Model program or enhanced ACAM with the concern that Aviat customers may be excluded from receiving BEAD funding |
| Second quarter operating income was $5.0 million on a GAAP basis and $12.6 million on a non-GAAP basis compared to prior year GAAP of $8.7 million and a non-GAAP of $11.4 million or a decrease of 42% and an increase of 10.9% respectively |
| And then what about margins from Indonesia and India as well? I mean, are they going below I assume they can be below corporate average? Peter Smith So look, India, we've said before, is below corporate average |
| Much has been made of the forecast, the decline in operator spending according to Dell 'Oro, worldwide RAN revenues are projected to remain approximately flat |
| On the look, the Indonesia business is being driven by The Pasolink product, which is below corporate average |
| Yes, a little bit lower than Indonesia |
| So with that very limited sample of activity in the quarter, we think we'd likely redo extrapolation errors inconsistent with our true expectations of this business if we were to break it out separately |
| we are protected from a slowdown in any one country or region |
| And what I would also talk a little bit more about is the six gigahertz frequency, it that's been delayed from the summer of 2023 |
| I wouldn't expect that level of margins to persist in the near-term |
| Lastly, if I could, Pete, just to follow-up on your comments on North America, just want to clarify not to read into the softness year-over-year |
| So we expect our low revenue quarter to be the quarter we're in and we'll move progressively up over the next four quarters |
| We've seen some commentary from Calix and others talking about a little bit of a pause, not just related to ACAM, but just kind of digestion and application for those BEAD funds, I know that traditionally has not been a big customer base of yours in terms of wireless sized BEADS |
| So now with Pasolink, that we do expect that to be somewhat dilutive to our margins in the near-term |
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